The court’s power to make appointments to an arbitral tribunal and the limitations it faces under the Arbitration Act 1996 were recently considered in the case of Guidant LLC v Swiss Re International SE and another [2016] EWHC 1201 (Comm).
Background facts
The claimant, Guidant LLC, entered into three almost identical insurance policies with Markel (Bermuda), Swiss Re International (UK branch), and Swiss Re International SE respectively. The insurance polices included an arbitration clause providing for an arbitral tribunal of three arbitrators. Each party had the right to appoint an arbitrator and the third arbitrator, the Chair, would be appointed by the two party appointed arbitrators.
In the ensuing arbitration proceedings between the claimant and each of the above named insurers, the claimant appointed the same arbitrator and the insurers each appointed different arbitrators. In the Markel (Bermuda) arbitration, Mr Michael Collins QC was chosen as third arbitrator. The claimant’s appointed arbitrator argued for Mr Collins to be appointed in all three of the arbitrations; a request that was resisted by both Swiss Re International (UK branch) and Swiss Re International SE.
The claimant subsequently applied to the court for an order under section 18(3)(d) of the Arbitration Act 1996, which permits the court to make appointments to arbitral tribunals in the case of disagreement and/or a failure in the appointment process.
The factors considered
The claimant argued that Mr Collins should be appointed as the Chair in each of the three arbitrations for three reasons:
- consistency between each decision and to reduce the risk of irreconcilable or inconsistent findings;
- reduction of costs and delay in having fewer number of arbitrators; and
- possibility of co-ordination between each of the arbitrations.
The defendants objected to this and argued that it could lead to a concern that Mr Collins would be influenced by arguments heard in the Markel (Bermuda) arbitration, to which the defendants were not privy and over which the defendants could exercise no control.
The decision
The court acknowledged that the defendants had a “legitimate concern” that Mr Collins may be influenced by the Markel (Bermuda) arbitration, especially in light of the fact that consistency across each decision was one of the claimant’s reasons to appoint Mr Collins in each of the proceedings. The court noted that Mr Collins may form views in the Markel (Bermuda) arbitration that would be carried over into the defendants’ proceedings, and the defendants would have no knowledge of the facts on which these views were based and no opportunity to be heard on these points.
Whilst the court agreed with the claimant that the appointment of a common arbitrator would not lead to an inference of apparent bias, it ruled in favour of the defendants on the grounds that they were “reasonably entitled to object” for the reasons set out above.
The court also considered the defendants’ request to have different arbitrators appointed in each of the arbitrations they were involved in. The court refused this request, on the grounds that the “legitimate concerns” related to the Markel (Bermuda) arbitration did not apply where no third party is involved.
The significance
In its decision the court made clear that in arbitration, more so than in litigation, “considerations of party choice, privacy and confidentiality are relevant and important”. The court stated that if this had been litigation it would have been more likely to rule that the three claims be heard together for efficiency and to ensure consistency.
The court distinguished this case from Abu Dhabi v Eastern Bechtel Corporation [1982] 2 Lloyds Rep 425, in which Lord Denning ruled that the same arbitrator should be appointed in two separate but related arbitrations to avoid “the risk of inconsistent decisions” and ordered a single hearing of the common issues. The same ruling could not be made in the current case, as under the Arbitration Act 1996 the court no longer has the power to consolidate or co-ordinate arbitration proceedings without the consent of the parties.
The case demonstrates the balancing exercise undertaken by the court when making an order under s18(3)(d). The court will be concerned to ensure that the principle of party autonomy in arbitration is balanced against taking a pragmatic approach in the face of the “reality” before the court.
