Halliburton Company V Chubb Bermuda Insurance Ltd [2018] EWCA Civ 817: Arbitral Appointments In Related Or Overlapping References

The Court of Appeal's decision is considered by David Turner QC of 4 New Square on Monday 23rd April 2018.

The question of whether an arbitrator can accept appointments in related or overlapping references can arise with surprising frequency, especially in the context of excess layer insurance programmes. In Halliburton, the Court of Appeal held that (1) an arbitrator should have made disclosure of later references but (2) on the facts of the case, neither the fact of the later references nor the failure to disclose them would have led a fair-minded and informed observer to conclude that there was a real possibility that the arbitrator was biased.

THE FACTS

Following the Deepwater Horizon explosion in the Gulf of Mexico on 20 April 2010, numerous claims were made against BP (the lessee of the rig), Transocean Holdings (the owner of the rig, which also supplied crew and drilling teams) and Halliburton (which provided cementing and well-monitoring services to BP. Both Halliburton and Transocean had purchased excess liability insurance on the Bermuda Form from Chubb: the policies were governed by New York law but provided for arbitration in London by three arbitrators.

Halliburton settled private claims against it for approximately US$1.1bn. Transocean paid US$212m to settle the private claims which it faced, and also paid civil penalties of around US$1bn to the US Government.

Chubb declined to indemnify Halliburton in respect of the sums paid to settle the private claims, contending that the settlement was not a reasonable settlement and/or had been entered into without Chubb's consent. Accordingly, in January 2015, Halliburton commenced an arbitration. Following disagreement between the parties, the High Court was asked to appoint the third arbitrator. In June 2015, Flaux J appointed M as the third arbitrator (referred to as "Reference 1"). Prior to his appointment, M had disclosed that he had previously acted as an arbitrator in arbitrations to which Chubb was a party, including appointments on behalf of Chubb, and that he was appointed in two current arbitrations in which Chubb was involved.

In December 2015, M accepted an appointment from Chubb on an arbitration involving Transocean which also arose out of the Deepwater Horizon explosion ("Reference 2"). In August 2016, M also accepted an appointment as a substitute arbitrator on another claim made by Transocean, but this time against a different insurer on the same layer as Chubb ("Reference 3").

In November 2016, Halliburton learned of M's appointment in References 2 and 3. In the same month, potentially dispositive preliminary issues of...