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English Court removes arbitrator for apparent bias

In the recent case of Cofely Ltd v Anthony Bingham & Knowles Ltd [2016] EWHC 240, England’s High Court made an order for the removal of the arbitrator (Anthony Bingham), pursuant to section 24 (1)(a) of the Arbitration Act 1996, on the grounds of apparent bias, as in the previous 3 years, 19% of the arbitrator’s appointments and 25% of his income had come from cases involving one of the parties in the arbitration proceedings. Further, the manner in which the arbitrator responded to requests for information about his relationship with that party to the arbitration raised a concern.

Cofely Ltd, a major construction company, had appointed Knowles, a well-known firm of claims consultants, in respect of a construction dispute it was involved in. A dispute then arose between Cofely and Knowles, with Knowles claiming that Cofely had breached provisions of the Success Fee Agreement they had entered into.

Pursuant to an arbitration agreement in the Success Fee Agreement, Knowles served notice of arbitration on Cofely and applied to the Chartered Institute of Arbitrators (CIArb) for the appointment of an arbitrator. In the application, Knowles asked for Anthony Bingham to be appointed as arbitrator and stated that it was preferable that the arbitrator had quantity surveying and delay analysis experience. Despite, Cofely’s objection (in their view it was not necessary for the arbitrator to have quantity surveying and delay analysis experience), the CIArb appointed Bingham.

The arbitration commenced and Knowles made an application for a partial award, which the arbitrator granted, finding in favour of Knowles on its claims and directing Cofely to pay it £1 million. Cofely paid the partial award, without challenge.

Subsequently, a judgment was issued in Eurocom Ltd v Siemens plc [2014] EWCH 3710 (TCC), in which the court found that there was a strong prima facie case that Knowles, when applying for the appointment of an arbitrator in that case, had falsely claimed conflicts of interest in respect of some other potential arbitrators, so that Bingham would be appointed. Following the Eurocom judgment, Cofely’s solicitors wrote to Knowles and then also Bingham, requesting information about Knowles’ dealings with Bingham, but Bingham repeatedly questioned the relevance of such and subsequently ruled that the tribunal was properly constituted and that there was no conflict of interest.

Cofely then applied under section 24(1)(a) of the Arbitration Act 1996 to remove Bingham as arbitrator on the grounds that circumstances existed that gave rise to justifiable doubts as to his impartiality. The Court ruled that Cofely was entitled to have Bingham removed as arbitrator and if he would not resign, the Court would grant an order removing him.

The Court referred to the relevant test for apparent bias under Section 24(1) (a) of the Arbitration Ordinance (which reflected the common law test), namely whether the fair- minded and informed observer, having all the facts, would conclude that there was a real possibility that the tribunal was biased.

The Court held that the following in relation to Bingham’s appointment gave grounds for doubt about the appointment and justified his removal:

  • In the past 3 years he had acted as either arbitrator or adjudicator 25 times in cases involving Knowles as a party or a party representative.
  • Of those 25 cases, 22 related to cases where Knowles was acting for the claimant/referring party, and 3 related to cases where Knowles itself was the claimant/referring party.
  • This constituted 18% of Bingham’s total appointments and 25% of his total income as arbitrator/adjudicator over the past 3 years.
  • In all 25 cases, Knowles had requested the  appointment of someone who was both a quantity surveyor and a barrister, which would significantly reduce the pool of possible candidates and increase the likelihood of Bingham being appointed.

The Court also found that the following raised concerns of apparent bias:

  • In light of the Eurocom case, it was reasonable for Cofely to inquire about the nature of Bingham’s  relationship with Knowles, and yet Bingham’s response involved avoiding addressing the requests and instead gave the appearance of seeking to foreclose further inquiry by demonstrating their irrelevance and, moreover, doing so in an aggressive manner.
  • Although it had been reasonable for Bingham to have called a meeting to address Cofely’s concerns, the meeting instead became a hearing at which Bingham ruled that there was no apparent bias and that the tribunal was properly constituted, when neither of the parties had asked for such ruling. Further, the transcript of that hearing showed how Bingham had effectively cross-examined Cofely’s counsel and did so aggressively and in a hostile and inappropriate manner. 
  • These concerns were further highlighted by Bingham’s witness statement, which showed that he did not recognise the relevance of the relationship information or the need for disclosure and this lack of awareness demonstrated a lack of objectivity and an increased risk of unconscious bias.

The construction arbitration community in Hong Kong is not large. Many arbitrators may have been appointed by the same party or law firm frequently. Whether the Hong Kong Courts will apply this case in considering applications for removing arbitrators in similar situations remains to be seen. Perhaps the way the arbitrator was responding to Cofely’s inquiries was a more important factor in determining whether there was apparent bias.

Key Contacts

Kwok Kit (KK) Cheung

Partner | Litigation and Dispute Resolution

Email or call +852 2825 9427

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