In pursuit of the level playing field: Musings on Arbitrator Duties of Disclosure

Following the decision in Aiteo Eastern E&P Co Ltd v Shell Western Supply and Trading Ltd, I have been giving some thought to arbitrator duties of disclosure generally.

Halliburton Company v Chubb Bermuda Insurance Ltd established the “fair minded and informed observer” test for evaluating arbitrator impartiality – essentially whether a reasonable person, aware of relevant facts, would consider that there was a real possibility that the tribunal was biased.  It is, rightly, a high standard and, Aiteo notwithstanding, successful challenges are extremely rare. 

The disclosure issue arises when we look at what constitutes making that person aware of “relevant facts”.  Halliburton doesn’t help us much on this, simply saying that arbitrators must disclose circumstances that might reasonably give rise to justifiable doubts as to their impartiality. 

My own sense is that the starting point has to be that there is no asymmetry of information, that everyone: parties, institution, co-arbitrators, counsel, are all privy to the same information, regardless, and this is where I might diverge from others, of whether the information rises to a level of a ‘relevant fact’ that might lead an observer to conclude there was an appearance of bias.

Now the difficulty I have always had about the way the test for whether or not something should be disclosed is formulated is the arbitrator is not a disinterested party.  What do I mean by that? Essentially I mean that an arbitrator is being asked to provide information about circumstances that a party might think would trigger doubts as to the arbitrator’s impartiality – but I am not sure that an arbitrator can properly evaluate that question – given that most arbitrators would not concede that they could ever been seen as anything other than wholly impartial.  In fact, for many years, people talked openly about making sure that you appointed an arbitrator with the maximum level of pre-disposition towards your client and the minimum level of bias.

So if we accept the premise that the question is a difficult one for arbitrators to answer, then we have to make it easier for them to do so.

And, in my view we have to have to have the maximum amount of disclosure with the minimum number of challenges.  

So what does maximum disclosure and minimum challenges really come down to?

I would say trust.

Arbitrators have to trust that by disclosing anything that flashes across their mind will not impact their chances of being selected.  The arbitration institutions have done a good job on the whole of dealing robustly with challenges and, generally challenges to arbitrators rarely succeed in the courts (leaving Aiteo aside on both counts).  But differences in approaches to disclosure can mean that arbitrators are not selected for cases and this can have a chilling effect on disclosure. 

In Aiteo Mr Justice Jacobs expressly recognized that disclosing a fact does not mean that fact was disclosable, but, at least anecdotally, it appears that institutions may not be differentiating between disclosures which can lead to inconsistencies. And parties have to trust that arbitrators have robust practices in place to ensure that there is no asymmetry of information or suppression of other relevant facts.

That brings me to checklists, nudges and databases.

If we are going to properly address disclosure, every case needs these three things.

First: a checklist sent to every arbitrator on their appointment.  Pretty much all the institutions and rules have the same standards for disclosure but they vary enormously in how much guidance you are given on what is a ‘relevant fact’, and nothing is more irritating to an arbitrator than finding out you lost out on an appointment because you disclosed something that someone else wouldn’t have disclosed.  Some institutions do send a set of questions in the form of a checklist to the arbitrator, others have similar questions on their website but not sent to arbitrators, others have no guidance, leaving it entirely up to the arbitrator.  Here we need a universal standard and a standard form checklist to ensure consistent levels of disclosure from arbitrators.

Second, a nudge, from the institution, at certain intervals during the arbitration to review and update your disclosures, would be enormously helpful in reminding arbitrators of their continuing duty to disclose.

Third, the arbitrator needs to be meticulous about maintaining a database of their matters.  Here, institutions can help as well, for example, the AAA now has the function to automatically run a conflict check using the data it has on your previous cases.  

Much of this issue is about trust and a level playing field, not only between the parties but also between the arbitrators, who should be able to expect that all arbitrators are meeting the same standards in terms of managing their practices.