High Court Addresses Arbitrator Impartiality Issues in Film Production Insurance Industry

Introduction

In the case of H1 & Anor v W & Ors, the High Court of Justice delves into an arbitration matter that questions the impartiality of an arbitrator within the film production insurance industry. This examination is centered on the legal framework provided by the Arbitration Act 1996, particularly section 24 concerning the removal of an arbitrator due to circumstances that give rise to justifiable doubts about their impartiality. The case underscores the importance of arbitrator neutrality, the proper conduct for managing disputes, and the implications of preconceived notions regarding evidence or witness credibility.

Key Facts

The claimants, referred to as “the insurer,” sought the removal of a sole arbitrator identified as “W” based on alleged apparent bias. The insurer purported that W made several comments suggesting prejudgment towards witnesses and evidence, failed to maintain impartiality, and had personal relationships with several witnesses which, according to the insurer, might influence his assessment of the evidence.

During preliminary hearings of an ongoing arbitration concerning a film production insurance policy, W was accused of indicating that he held predetermined views favoring the insured’s witnesses – whom he knew personally – over the insurer’s. Additionally, W’s comments regarding a witness who provided reports to both parties led to allegations that he misperceived the concept of a witness “switching sides,” revealing a potential bias against the insurer.

After the insurer applied for removal under section 24 of the Arbitration Act 1996, the court had to consider whether a fair-minded and informed observer, apprised of all the facts, would conclude that there was a real possibility of bias by the arbitrator.

Legal Principles

The arbitrator’s duty of impartiality and fairness is enshrined within section 33 of the Arbitration Act 1996. For concerns of apparent bias, the test established in Halliburton Co v Chubb Bermuda Insurance Ltd [2021] is applied, asking whether a fair-minded and informed observer would suspect bias in an arbitrator.

In applying this test, factors such as the industry context, arbitrator’s experience and reputation, confidentiality in arbitral proceedings, and financial interest in future arbitrations were considered. The court recognized that in a specialist industry, prior acquaintance with witnesses is likely but should not influence an arbitrator’s evaluations.

The court made clear the distinction between expressing provisional views, which is permissible, and predetermining the outcome irrespective of evidence or cross-examination, which is not. Bubbles & Wine Ltd v Lusha [2018] was cited to assert the appropriateness of an arbitrator indicating preliminary views, and Jackson v Thompson Solicitors [2015] distinguished between predisposition, which allows for open-mindedness, and predetermination, which suggests a closed mind.

Outcomes

The court concluded that, based on the totality of W’s comments, there was a real possibility of bias apparent to the objective observer. Despite W’s limited experience, expressions of impartiality regarding some matters, and the industry norm of knowing witnesses, his statements regarding certain witnesses, before hearing evidence, were found to cross the threshold into unacceptable bias.

Consequentially, W was removed as arbitrator under section 24(1) of the Arbitration Act 1996, and the payment of his fees was upheld until the procedural hearing’s conclusion. The court’s decision also involved the anonymization of the parties, witnesses, and the arbitrator in the published judgment, weighing the principle of open justice against arbitration confidentiality.

Conclusion

The H1 & Anor v W & Ors case serves as a judicial reminder of the critical role of arbitrator impartiality in maintaining the integrity of the arbitration process. The court’s rigorous application of the apparent bias test illustrates the benchmark against which arbitrators’ conduct is measured. This decision reinforces the judiciary’s commitment to upholding the principles of fairness and impartiality underpinning the Arbitration Act, setting a precedent for future challenges related to arbitrator bias within specific industries.