In a recent judgment of BYL and BYM v. BYN, the Singapore International Commercial Court (“the Singapore Court”) dismissed the challenge to an arbitral award on the grounds of arbitrator bias. In doing so, the court has continued to apply stringent tests to establish the bias of an arbitrator.
The plaintiffs alleged that the arbitrator had made delayed and partial disclosure of a co-counsel relationship with the legal representatives of the other side while the final award was still being drafted and finalized. The Court relied on IBA Guidelines on Conflict of Interest in International Arbitration 2014 (the “IBA Guidelines”) to establish the duty of the arbitrator to disclose the circumstances which give rise to doubts as to the arbitrator’s impartiality and independence from the time he was engaged to act as a co-counsel. However, the Court held that on the available evidence the reasonable suspicion test for establishing arbitrator bias was not met. In this article, we seek to explore the co-counsel relationship as a ground of arbitrator bias and critique the test of reasonable suspicion bias adopted by the Court.
The courts across jurisdictions have opined that the test of arbitrator bias is not whether there is an actual bias, as it would involve an onerous burden of proof, but whether there is a justifiable apprehension of bias. The reasonable suspicion test which the case follows involves an assessment of whether there are circumstances which would give rise to reasonable suspicion or apprehension in a fair-minded reasonable person that the arbitrator may be biased and that a fair hearing may not be possible. In line with this, the IBA Guidelines provide guidance on the circumstances in which the arbitrator has a duty to disclose and state that “non-disclosure cannot by itself make an arbitrator partial or lacking independence: only the facts and circumstances that he or she failed to disclose can do so”. This has also been affirmed by the Indian courts and the English Court of Appeal which state that non-disclosure of a fact gives rise to justifiable doubt as to the arbitrator’s impartiality, however this in and of itself cannot justify an inference of apparent bias. Thus, there is a consistent tilt towards proving “something more” for establishing arbitrator bias.
On the contrary, the US Supreme Court has held that an arbitrator’s failure to disclose any prior relationship is sufficient to dismiss an arbitral award on grounds of evident partiality. A similar approach can be observed from the decision of the Paris Court of Appeal wherein an arbitral award was set aside due to an arbitrator’s failure to disclose alone and the court did not delve into circumstances which could have given rise to justifiable doubts. Recently, the Costa Rican Court had also annulled an arbitral award on related grounds of the arbitrator’s failure to disclose.
The peculiar facts before the Singapore Court involved the plaintiffs challenging the arbitral award on grounds of arbitrator bias. The plaintiffs had themselves appointed the said arbitrator, who prior to the finalization of the award was engaged by the firm representing respondents in a separate arbitration. The Court in its decision relied on the fact that the arbitrator did not have any “material contact” with the legal representative of the other side thereby clearing him of bias. The court also remarked that the plaintiffs “never articulated how this might have been possible.”
However, such a stance of the court blurs the line between actual bias and apparent bias which is considered to be sufficient for a challenge to the arbitrator. The English Court of Appeal had in its 2001 decision drawn a distinction between actual bias and apparent bias. Actual bias entails a demonstrable situation where a judge or an arbitrator has been prejudiced in reaching its decision while apparent bias involves the existence of only a reasonable apprehension that the person involved may have been biased. In the judgment, the Singapore Court’s emphasis on the fact that plaintiffs did not adduce sufficient evidence to prove the bias only creates a conundrum for the understanding of the reasonable suspicion tests. The test only mandates that the possibility of bias is shown and putting the burden of fostering any additional evidence only counters the step towards impartiality of the arbitral proceedings.
The requirement of establishing “something more” amplifies the burden resting on that party alleging arbitrator bias. This means that the burden of apparent bias when allegations against the deciding authority are as heavy as actual bias. In the judgment itself, despite the arbitrator’s engagement as a co-counsel, followed by multiple meetings with the firm, the Court was of the opinion that more evidence would be required to prove bias. Putting this onerous burden on the plaintiffs grays the lines between apprehension and actual bias and begs the question, what would qualify as “something more” if not for evidence indicating actual bias.
The need to pursue the apparent bias test in its true form stems from the very nature of arbitration proceedings. Given the role played by the parties in the appointment of an arbitrator, the subsequent questioning of the independence and impartiality of the arbitrator by the same party poses questions as to the consensual nature of the arbitration. Further, arbitrators, unlike judges, do not have to confer on previous awards, thereby making it imperative to ensure the independence of arbitrators. Therefore, it is crucial that when there is suspicion with respect to the impartiality of an arbitrator, the standard of proof for the alleging party is not kept equivalent to actual bias.
The issue of independence and impartiality of arbitrators has become pervasive due to the growing incidents of dual roles of arbitrators and counsels played by the same individual in separate arbitrations. While it acknowledges that failure to disclose in itself should not be ground for dismissal of an arbitrator, it is pertinent that to maintain confidence in the arbitral process, the test for arbitrator bias is not stringent. The idea is not to establish the presumption of partiality but to underscore prudency of the reasonable suspicion test.
Atharva Kotwal and Isha Goel are Fourth year Law Students at National Law University Delhi, India.
Suggested citation: Atharva Kotwal and Isha Goel, Unpacking Bias as Justification for Arbitrator Dismissal Across the World, JURIST – Student Commentary, September 22, 2020, https://www.jurist.org/commentary/2020/09/kotwal-goel-bias-arbitrator/.
This article was prepared for publication by Vishwajeet Deshmukh, a JURIST staff editor. Please direct any questions or comments to him at commentary@jurist.org
