Laker Airways Incorporated v. FLS Aerospace Ltd and another.
(England and Wales) High Court (Queen's Bench Division, Commercial
Court), Rix J., 20th April 1999.
International Arbitration -
application to remove party appointed arbitrator on grounds of
unconscious bias - s. 24 of the Arbitration Act 1996 - consideration
of the test to apply on applications for removal - arbitrator
practised from same Chambers as Counsel for the appointing party -
whether grounds for removal of arbitrator for want of impartiality.
Facts:
The Respondent was engaged by the Applicant to maintain its
aircraft. The contract provided for arbitration. Disputes arose, which
were referred to arbitration in accordance with the arbitration
agreement. The Respondent appointed Mr Burnton QC, of 1 Essex Court,
as its arbitrator. At that time Mr Sullivan, who had recently joined 1
Essex Court, was already instructed in the dispute on behalf of the
Respondent. He did not know Mr Burnton at the time. Shortly
afterwards, the Applicant learned that Mr Burnton and Mr Sullivan
acted from the same Chambers and, by its US Attorneys, asked the
Applicant to make a new appointment. The Respondent refused stating
that barristers were self-employed, but shared office space and
clerks. It pointed out that Mr Burnton's independence could not be
questioned and suggested that the request was part of a campaign to
delay the arbitration.
There followed a number of other arguments between the parties over
the constitution and seat of the tribunal but, during the course of
these, the Applicant, by its London solicitors, wrote to Mr Burnton
asking him to resign on the grounds that the presence of Mr Burnton
and Mr Sullivan in the same Chambers might colour Mr Burton's view of
these arguments and because the "Chinese Walls" within
Chambers might be insufficient to prevent the passing of information
or the holding of informal discussions within Chambers of which the
Applicant would be ignorant. Mr Burnton offered to resign, if
requested to do so by both parties, but declined to do so on the
request of one party.
The Applicant applied to the court to remove Mr Burnton under s. 24
of the Arbitration Act 1996 on the grounds that circumstances existed
that gave justifiable doubts as to Mr Burnton's impartiality, in that
he practised from the same set of Chambers as the advocate instructed
in the arbitration, and in parallel litigation, on behalf of the
Respondent. Affidavits were served by Mr Bolkenhol, the president of
the Applicant, and Mr Burnton. The court allowed the General Council
of the Bar of England and Wales to make representations and
submissions were also made on behalf of the Respondent. The Applicant
did not appear and was not represented.
Held:
Given the Applicant's non-appearance, the application would be
dismissed. But, because of the important issues raised, the court
would express its views on these.
The test for removal of an arbitrator under s. 24 of the
Arbitration Act 1996 was objective in at least two respects. First,
the court had to find that circumstances existed, and were not merely
believed to exist, although it was possible that a belief could be a
circumstance. Secondly, the circumstances found by the court had to
justify doubts as to the arbitrator's impartiality. An unjustifiable
or, perhaps, an unreasonable doubt was not sufficient. It was not
enough honestly to say that one had lost confidence in the
arbitrator's impartiality. But, on the other hand, doubts, if
justifiable, were sufficient. It was not necessary to prove actual
bias.
This statutory test appeared to reflect the common law of England
regarding questions of bias and, from the recent cases of R v.
Gough [1993] AC 646 and R v. Bow Street Magistrate, ex parte
Pinochet (No 2) [1999] 2 WLR 272, it appeared there were, at
least, three principles at work.
Fist, actual bias would, of course, always disqualify a person from
sitting in judgement. But, even in the absence of actual bias, the
importance of public confidence in the administration of justice was
such that the appearance of bias would disqualify.
Secondly, no one could be judge in his own cause. This covered any
situation where a judge was a party to the case or had a pecuniary or
proprietary interest in it or, as in the very unusual circumstances of
Pinochet (No 2), was so closely connected with a party to the
proceedings that he might be said to be acting in his own case. In
such a case, disqualification was automatic and there was no question
of investigating whether there was likelihood or suspicion of bias.
Thirdly, either as another aspect of apparent bias or as the
principle which was properly called apparent bias, there was the rule
for which R v. Gough was the modern authority; namely that a
judge was disqualified if there was a real danger that he was biased.
It was this last principle that applied in this case; there being
no allegation or suggestion of actual bias by Mr Burnton. Neither had
the principle nemo judge in sua causa been invoked. A judge
could not be said to be a judge in his own cause because he knew the
advocate, even if he knew him well or shared or had shared tenure in
the same set of Chambers with him.
In connection with the third principle, that of apparent bias, the
view of the Department Advisory Committee on Arbitration Law, in their
February 1996 Report, was also relevant. It had rejected the inclusion
of a separate requirement of independence and it was clear from this
Report that it was not in the minds of the draftsmen of the
Arbitration Act 1996 that an arbitrator's impartiality could be
questioned merely because he came from the same set of Chambers as
Counsel. Such an argument had also been rejected in Pilkington Plc
v. PPG Industries Inc (unreported 1st November 1989) and, on a
challenge to a barrister sitting as a deputy official, in Nye
Saunders v. Alan E Bristow (1987) 37 BLR 92. Such an argument had
also been rejected, in the International context, by the Paris Court
of Appeal in KFTCIC v. Icori Estero Spa (unreported 29th June
1991).
As for the arguments advanced in Mr Bolkenhol's affidavit, these
were unsustainable. Counsel who shared Chambers did not have a common
economic interest. The fact that they shared expenses did not mean
they had a financial interest in the outcome of each other's cases.
They did not share fees or profits. Although it was the duty of
Counsel to advance his client's case within the limits of his
professional responsibilities and the duty of the arbitrator to
adjudicate impartially between the parties, a conflict of interest
only arose as an impediment where the same person (or what, in law,
was regarded as the same person) undertook conflicting duties to
different clients or put himself in a position where he had a conflict
between his duty to his client and his own self interest. This would
occur if barristers were employed by the same organisation or were all
partners of one another in the same firm and then sought to appear
against or before one another. But it was the essence of practice of
the Bar that this was not the case. Barristers were self-employed and
were prohibited by the rules of their profession from entering
partnership or accepting employment precisely in order to maintain the
position where they could appear against or in front of one another.
If it were otherwise, public access to the bar would be severely
limited.
If barristers were employees or in partnership than it might be
that even the most successful "Chinese Walls" would not be
enough to prevent a conflict of interest arising out of the danger
that obligations of confidence would be prejudiced. But, since
barristers were independent self-employed practitioners, the burden
should be on the Applicant to show that the organisation of Chambers
gave rise to justifiable doubts about an arbitrator's impartiality
because of the danger of accidental or improper dissemination of
confidential information or because of the danger that the arbitrator
would not observe the rule against holding conversations with only one
party outside the presence of all the parties to the arbitration.
For the Respondent: Mr M Sullivan (instructed by Messrs Watson
Farley & Williams).
For the General Council of the Bar of England and Wales: Mr G
Leggatt QC.
The applicant did not appear and was not represented.
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