Disclosure by Adjudicators
Court judgments from adjudication cases are numerous, though not always significant in directing the practice of the process of adjudication or the practices of adjudicators. A recent international arbitration case, however, has addressed issues that have a resonance for the appointment of adjudicators (and members of other tribunals) concerning the disclosure of connections with one of the parties.
In recent years a debate has arisen concerning the abilities of adjudicators and the confidence parties may have in achieving a reliable and robust result from the process. The debate has come about for two reasons, above all. Firstly, discontent with the result, in both the Decision itself and in the management of the process by the adjudicator; secondly, with uncertainty as to the independence and impartiality of the adjudicator. It is upon the second of those reasons that this paper is focussed.
There is a view abroad that the best way to achieve appointment of the best adjudicator for the particular dispute (or at least a capable one), is for the referring party to apply to an ANB (named in the contract or otherwise) and to have faith that an appropriate appointment will be made. This paper does not concern itself with the pros and cons of the various appointment mechanisms that exist, though it may be noted, in passing, that all reputable nominating bodies have now in place robust systems for training, CPD and regular assessment of panellists.
Party confidence in the tribunal lies at the heart of any system of non-court dispute resolution; the same may be said of the process of litigation, too. Party uncertainty about the abilities of the tribunal members can be said to arise for the following reasons:
- Lack of knowledge of the appointed person(s)
- Previous experience of unsatisfactory performance
- Perception that the tribunal may not be entirely independent of both parties (or, perhaps, of their representatives).
Where parties possess a choice in the identity of their tribunal, that choice is most often exercised upon the basis of familiarity with the tribunal member, experience of their abilities, or (most unreliably) reputation. Confidence bred of familiarity can open the door to accusation of want of independence. Reliance upon reputation alone can often be misplaced. What are the parties to do and, especially, what is the adjudicator to do when approached by an ANB or by the parties themselves?
The world of adjudication is not a closed one, but it is a narrow one. There are a relatively few people who practise as adjudicators. Further, many adjudicators also maintain a consultant practice whereby they dispense advice on claims or even represent parties in dispute resolution. It is inevitable, in such circumstances, that most practitioners know, or know of, most other practitioners and well as many party representatives. Whilst personal knowledge of others involved in a case may not, of itself, fundamentally undermine the essential independence and impartiality which should be reposed in a tribunal, it does chip away at the edges of those requirements and may lead to suspicion of potential bias. And that may lead to a challenge to the Decision itself.
All adjudicators, whether or not practising in the field of international arbitration (and most do not) should be familiar with the IBA Guidelines on Conflict of Interest (2014)  and the “traffic light” test that is set down therein. The classification of non-waivable red, waivable red, orange and green lights is a very helpful guide to tribunal practitioners in their decisions to accept or decline an offered appointment, and when and what to disclose to the parties before an opportunity is accepted. Therein lies a problem; the IBA document lays down only guidance; there is no power of compulsion even in the field of international arbitration, let alone in adjudication. In every case, it is for the tribunal member to decide for him/herself whether to accept an offered appointment and, if minded to accept, what, if anything, to disclose to the parties.
It is unheard of for the IBA Guidelines to be introduced as a facet of appointment of adjudicators, and the remainder of this paper that notes features of the Guidelines, does so by using them as a source of useful guidance on this issue, rather than strict requirements to be followed.
Close contact with a party, of course, should always rule out an appointment being accepted, but what should the position be where an adjudicator receives multiple appointments in disputes that involve one of the parties in the instant case? This is just the sort of situation that can arise where one party habitually (or at least regularly) seeks the appointment of a particular adjudicator (or even names them in its contracts), or where an adjudicator accepts appointment in a series of adjudications based upon the same project (such as in adjudications involving different subcontractors proceeding against the same contractor).
There is no authoritative published guidance as to what the proposed adjudicator’s approach to disclosure should be, though nominating bodies do give something of a lead. For example, a leading ANB requires potential appointees to respond to the following questions:
Have you made appropriate enquiries, and are satisfied that you have no current involvements that would give rise to a real or perceived conflict of interest?
Have you made appropriate enquiries, and are satisfied that there are no involvements within the past five years that would give rise to a real or perceived conflict of interest?
Can you confirm that you are not currently acting as a dispute resolver in another matter that would conflict with this appointment?
Please confirm if you are currently seized with or have acted as an adjudicator in any other matter involving the same contract and parties?
Three of those questions mention current involvements, whilst the second of them requires consideration of the past five years, though no guidance is given as to what an “involvement” might amount to. Of course, it is quite right that the adjudicator should decide for him/herself how to answer those questions, and the responses will obviously be considered in the decision to appoint or not.
It is the last question that demands an objective answer, though no timescale is mentioned. And it is this issue that was considered in the recent case.
The IBA Guidelines provide useful guidance on conflicts of interest, stating:
Clause 2(c) – “Doubts(about independence or impartiality) are justifiable if a reasonable third party, having knowledge of the relevant facts and circumstances, would reach the conclusion that there is a likelihood that the arbitrator may be influenced by factor other than the merits of the case as presented by the parties in reaching his or her decision.”
That guidance would seem to equally apply to adjudicators or any other non-court tribunal members.
As regards disclosure, the Guidelines advise that any doubts as to whether certain facts or circumstances should be disclosed should be resolved in favour of disclosure.
The Orange List, in summary, includes the following advice.
Disclosure should be made (the orange list) where (amongst other things):
- The arbitrator has, within the past three years, been appointed as arbitrator on two or more occasions by one of the parties or by an affiliate of one of the parties.
- The arbitrator’s law firm has, within the past three years, acted for or against one of the parties in an unrelated matter.
- The arbitrator currently serves, or has served as arbitrator in another arbitration on a related issue involving one of the parties.
- The arbitrator has, within the past three years, been appointed on more than three occasions by the same counsel, or the same law firm.
It is easy to state that the adjudicator should be robust in declining possible appointment where anything approaching a matter in the IBA Guidelines Red List is present, but the potential adjudicator should always err on the side of caution and decline rather than accept where there exists even a modicum of uncertainty in relation to Orange List issues.
It is the Orange List matters that cause the greatest potential problems, however, where the facts or circumstances may not be cut and dried.
The recent international arbitration case mentioned earlier has brought the subject of disclosure into focus again. It is rare that such a case brings any resonance for adjudication, but the case of Halliburton Co – v – Chubb  is one such.
The facts of the dispute are only marginally relevant and likely to be of little interest to the construction adjudicator. The case concerned an insurance dispute in which the chair of the arbitration tribunal failed to disclose appointments subsequent to the instant case, which involved at least one of the parties in that case.
The arbitration award was challenged in the High Court, in London, and the principal ground for challenge was an allegation against the arbitrator of a failure to disclose material information concerning arbitral appointments involving one of the parties. It seems that the arbitrator had received a number of previous appointments in which Chubb had been a party, and he disclosed those matters to the parties. However, he had failed to disclose that, after the commencement of the instant arbitration, he had received subsequent appointments in two unrelated arbitrations in which Chubb was still involved.
The case bears similarities with the earlier case of Cofely Ltd – v – Anthony Bingham . That, too, was an arbitration case, although of greater relevance to UK adjudicators because the dispute concerned construction.
In both cases, the appointed arbitrator had previously received numerous appointments (as tribunal) in disputes where the representatives of one party in the instant case had featured. It might be observed here that, in the relatively closed world of non-court dispute resolution (particularly in specialist fields), such a scenario is not at all uncommon. Further, the more adjudication is used, the more likely it is that an appointee will have acted previously in a case (or more) in which one of the parties participated or in which the representatives will have been encountered before.
Interestingly, the results in the two cases referred to above, were diametrically different. In Cofely, the Award was not enforced; in Haliburton, is was not overturned, though the arbitrator was criticised by the Court.
In Cofely, the arbitrator confirmed that he received 18% of his appointments, and 25% of his income from cases involving the second defendants (Knowles), who were the representatives of one of the parties. Those facts, or the circumstances leading to them, had not been disclosed to the parties and the court found that there existed a real possibility of apparent bias on the part of the arbitrator, which established a valid ground for the removal of the arbitrator.
In Halliburton, the arbitrator disclosed the previous cases, but failed to mention the subsequent appointments. It might be suggested that it is not uncommon in adjudication for an adjudicator to accept appointment in a parallel but unconnected case with one common party, and not disclose that. In considering the case, the Court of Appeal drew a distinction between circumstances that might justify an inference of apparent bias, and the concern that might be felt by a party.
The Court also concluded that non-disclosure, of itself, would not justify an inference of apparent bias; there would need to be more (“something of substance”) to support such a conclusion. It might be suggested that such a thing might include deliberate misleading or obfuscation.
The present position as regards adjudicators, reading in to these two arbitration cases might be said to be that disclosure is expected of all material facts and circumstances existing at the time of appointment, but that (according to Halliburton) subsequent appointment involving one of the parties need not be disclosed unless there is “something of substance” that would justify an inference of apparent bias.
As noted earlier, nominating bodies take seriously their role of ensuring appropriate appointments are made of properly qualified, capable, experienced and knowledgeable individuals, and it can be accepted that the problems outlined here are most easily avoided by the involvement, at least, of an independent body (ANB) in the selection of the tribunal.
But perhaps more might be done by ANBs themselves, to ensure that the parties are fully informed, upon nomination, of the disclosure to the ANB by the potential tribunal member. Nominating bodies might include in their questionnaires to would-be appointees, requests that include the divulging of the number of appointments (in all dispute-resolution fields) undertaken where each party has featured. All tribunal practitioners keep records of the cases they have been involved in, and it would be a simple matter to enumerate (and even date) the relevant cases.
That, of course, would not necessarily overcome the dilemma often faced by the adjudicator as to what to disclose to the parties and what not to. That remains firmly within the responsibility of the nominee.
At the end of the day, it remains for reach potential appointee to decide whether to accept an appointment or not, and whether a connection is disclosable or not, but the transparency brought about by the parties being informed of these matters should advance the cause of confidence in the process of adjudication being improved.
The advice of the IBA bears repeating: if in doubt, disclose!
 International Bar Association Guidelines on Conflicts of Interest (2014)
 Halliburton Co – v – Chubb Bermuda Insurance and Others  EWCA Civ 817
 Cofely Ltd –v – Anthony Bingham and another  EWHC 240
By Mark Entwistle, International Arbitrator, Adjudicator, Mediator, Construction Lawyer