Impartiality of arbitrators in LMAA arbitration

English court rules that the arbitrator in an LMAA arbitration was entitled not to disclose its previous appointments by the same counsel.

A recent decision of the English High Court drew attention to a hotly debated topic of impartiality and independence of arbitrators. The defendants in an LMAA (“London Maritime Arbitration Association”) arbitration questioned impartiality of the claimant-appointed arbitrator and the entire tribunal on the grounds that their procedural rulings were biased, such bias being allegedly the result of the claimant’s party-appointed arbitrator’s previous appointments by the claimant’s law firm. The defendants then challenged the arbitral award on this ground in the English High Court, but the challenge failed.

Background

The case V and another v. K [2025] EWHC 1523 (Comm) concerns an LMAA arbitration. The underlying facts are as follows. Under a Memorandum of Agreement (“MOA”) dated 14 July 2022, K undertook to sell a vessel for a price of $13,100,000 to V or its nominee, N being such nominee. On 29 September 2022, though, V was put on the SDN list of the U.S. Office of Foreign Assets Control (“OFAC”). The next day, on the grounds of the OFAC designation of V, K purported to terminate the MOA and claimed the release of the deposit of $1,965,000. On 14 February 2023, K commenced an LMAA arbitration against V and N, claiming that it was entitled to terminate the MOA and to take the deposit. The Tribunal agreed with K and rendered a Partial Final Award in its favour, which was published on 12 August 2024 (the “Award”).

Defendants challenge the arbitrators

During the arbitral proceedings, V and N, defendants in the arbitration, started to question the impartiality of K’s party-appointed arbitrator, Mr. H. They did it on the grounds of the relationship between Mr. H and K’s law firm and one of its partners. The defendants also claimed that because of a potential claim against K’s law firm in the High Court which they threatened to bring in relation to an allegedly wrong legal advice provided to a bank to “block all amounts received from [V]”, there is an “own interest conflict” in relation to K’s law firm.

Defendants stop participating in the arbitration

On 1 February 2024, V and N wrote to the Tribunal alleging that the Tribunal is in repudiatory breach of their contractual agreements with the parties and their breach was accepted by V and N. Since then, V and N ceased to participate in the arbitration.

Challenging the Award in the High Court

In September 2024, V and N, now claimants in the High Court proceeding (“Claimants”), challenged the Award under s.67 and s.68 of the UK Arbitration Act 1996 (“Act”). S.67 of the Act allows challenging an arbitral award on the grounds of lack of jurisdiction, s.68 (with further reference to s.33) – on the grounds of serious irregularity, one of such occasions of “serious irregularity” being the failure of the tribunal to “act fairly and impartially”.

S.68 challenge

Although the Claimants alleged several grounds under s.68 of the Act, by the time of the hearing, they dropped all the grounds except of the alleged lack of candour by K’s party-appointed arbitrator, Mr. H, in misrepresenting its relationships with solicitors of both parties. That challenge failed, as it “was hopeless in any event”, as put by the judge.

S.67 challenge

Regarding s.67 challenge, this challenge failed as well. Although Mr. H did not disclose that for the last 5 years he received 14 (out of total 88) appointments from K’s law firm, i.e. 16% of all appointments, the Court found, at paragraph 106, that “Mr. H had no duty of disclosure of his previous [K’s law firm] arbitral appointments in the present case”. The Court grounded its judgment on the Supreme Court’s decision in Halliburton Co v Chubb Bermuda Insurance Ltd [2021] AC 1083 (“Halliburton”) and the LMAA Advice on Ethics.

As to the former, the Court referred to the following passage by Lord Hodge in Halliburton, at [44], when he stated that “LMAA similarly explains that multiple appointments are relatively common under their procedures because they frequently arise out of the same incident. Speed and simplicity are necessary because of the tight limitation periods in maritime claims. There is a relatively small pool of specialist arbitrators whom parties use repeatedly. LMAA terms give arbitral tribunals the power to order concurrent hearings where two or more arbitrations raise common issues of fact or law without requiring the consent of the parties. Disclosure of multiple appointments should be required only when it is arguable that the matters to be disclosed give rise to the appearance of bias. LMAA points out that the IBA Guidelines recognise that in certain types of arbitration no disclosure of multiple appointments is required if parties are familiar with such custom and practice…”

As to the latter, the Court cited with approval paragraph 1.8 of the LMAA Advice on Ethics: “It has been suggested that the frequent appointment of arbitrators on different cases by the same appointing person, party or entity may give rise to a lack of independence, or a perception of bias. However, it remains the case in maritime arbitration that the pool of arbitrators and the number of specialised law firms and other representatives who appoint arbitrators is not large and it is accepted as inevitable that such circumstances will arise. This is not considered to be a matter for disclosure although an arbitrator should always be satisfied as to the other matters referred to in these notes …”.

Conclusion

The judgment confirms the high threshold for challenging an arbitrator under the UK 1996 Arbitration Act. In particular, the Court extensively cited, with approval, the passages from Halliburton. The Court agreed with the Halliburton judgment that “[t]he professional reputation and experience of an individual arbitrator is a relevant consideration for the objective observer when assessing whether there is apparent bias as an established reputation for integrity and wide experience in arbitration may make any doubts harder to justify. But the weight which the fair-minded and informed observer should give to that consideration will depend upon the circumstances of the arbitration and whether, objectively and as a generality, one could expect people who enter into references of that nature to be informed about the experience and past performance of arbitrators” [67]. The Court also said, referring to Halliburton, that “[t]he fair-minded observer is neither complacent nor unduly sensitive or suspicious and the conclusions which they reach must be justified objectively” [52]-[53].

Updated: 3 July 2025

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