The Supreme Court has rejected a bid to remove a QC appointed to arbitrate a dispute arising from the Deepwater Horizon oil spill because he failed to disclose later appointments in other cases arising from the disaster.
Following the spill in the Gulf of Mexico in 2010, thousands of civil claims were brought against BP, which leased the oil rig, Halliburton – which provided cementing and well-monitoring services – and Transocean, which owned the rig and provided services to BP, some of which overlapped with Halliburton. BP also claimed against Halliburton and Transocean.
Following a trial in the US in which judgment apportioned blame between the parties, Halliburton settled the claims against it for $1.1bn (it was only held 3% responsible) and sought to claim a proportion of the settlement under its insurance policy.
Chubb Bermuda Insurance (then called ACE) refused on the basis that the settlement was not a reasonable one. It pushed back against a similar claim from Transocean (held 30% responsible) for the same reason.
The former led to an arbitration. Each party selected their own arbitrator, but they could not agree on the chairman. This resulted in an application to the High Court, at which Chubb’s first-choice candidate, Kennth Rokison QC, was selected.
The dispute arose from Halliburton’s discovery in 2016, that without its knowledge Mr Rokison subsequently accepted appointment as an arbitrator in two other Deepwater Horizon disputes – one was Transocean’s claim against Chubb and the other a Transocean claim against another insurer.
However, the High Court refused Halliburton’s application under section 24 of the Arbitration Act 1996 to remove the QC on the grounds potential bias, a decision upheld by the Court of Appeal.
The latter ruled that, while Mr Rokison ought to have disclosed his proposed appointment in the subsequent arbitrations, an objective observer would not in the circumstances conclude there was a real possibility Mr Rokison was biased.
Giving the lead judgment – with which Lord Reed, Lady Black and Lord Lloyd-Jones agreed – Lord Hodge dismissed the appeal.
He acknowledged the QC’s long-established reputation for integrity and impartiality but found Mr Rokison had breached his legal duty to disclose his later appointments to Halliburton.
This was because, at the time of that appointment, “the existence of potentially overlapping arbitrations with only one common party was a circumstance which might reasonably give rise to the real possibility of bias”, the judge said.
It was common ground that the failure to disclose was innocent and inadvertent – Mr Rokison believed there was not a material overlap.
Lord Hodge said: “Having regard to the circumstances known to the court at the date of the hearing at first instance, I am not persuaded that the fair-minded and informed observer would infer from the oversight that there was a real possibility of unconscious bias on Mr Rokison’s part.
“First, there appears to have been a lack of clarity in English case law as to whether there was a legal duty of disclosure and whether disclosure was needed; that can be seen from the judgment at first instance of the able and experienced commercial judge.
“Secondly, the time sequence of the three references may explain why Mr Rokison saw the need to disclose reference 1 to Transocean but did not identify the need to tell Halliburton about reference 2.
“Thirdly, his measured response to Halliburton’s robust challenge disclosed that it was likely that references 2 and 3 would be resolved by the preliminary issue and that there would not be any overlap in evidence or legal submissions between them and reference 1.”
Further, there was no question of Mr Rokison having received any secret financial benefit in this case – “if that objection were valid it would mean that every party-appointed arbitrator receives a disqualifying benefit” – and finally there was no basis “for inferring unconscious bias in the form of subconscious ill-will in response to the robustness of the challenge” to his appointment.
“As Popplewell J stated, he responded in a courteous, temperate and fair way and there is no evidence that he bore any animus towards Halliburton as a result.”
Lady Arden gave her own, concurring, ruling.