Conflict Of Interest – Apparent Bias Of Arbitrator – IBA Guidelines

In the case of W Limited v M SDN BHD [2016] EWHC 422, Mr Justice Knowles of the Commercial Court considered an application to have two awards set aside on the grounds of apparent bias. His Judgment, which was handed down on 2 March 2016, is important for international arbitration as it considers not only the common law test for apparent bias but also highlights a number of weaknesses in the 2014 edition of the IBA Guidelines.

The facts

Following an arbitration between M SDN BHD and W Limited, relating to a project in Iraq, W Limited applied to have two awards set aside pursuant to s.68 of the Arbitration Act 1996 on the grounds of apparent bias based on an alleged conflict of interest.

Mr David Haigh QC ("the arbitrator") was the sole arbitrator and had been appointed in May 2012. He is a partner in a medium-sized Canadian law firm although he has worked almost exclusively as an international arbitrator for a number of years with virtually no involvement in the running of the firm. For instance, he had not attended partnership meetings for the previous six or so years.

At the time of the arbitrator's appointment, a company ("Q") was a client of the firm. M SDN BHD was a subsidiary of another company ("P") and, following an announcement in June...