Ex Parte Communication between party-appointed arbitrator and counsel
March 27, 2017
The world of arbitration never ceases to throw up surprises. The latest is a report that an extremely experienced arbitrator who (as party-appointee) wrote mid-arbitration to his party appointee’s counsel stating:
- That both party appointees were upset by the conduct of the chair;
- Highly negative views about the chair; and
- That he was to meet the chair and would encourage him to resign.
Admittedly, the email was headed “HIGHLY CONFIDENTIAL: NOT TO BE USED IN THE ARBITRATION” and was said to be justified because it was about the “selection” of the chair. Further the receiving counsel agreed to respect that confidence.
That party went on to lose in the arbitration and became the award debtor. It challenged the award on various grounds – all of which failed. It had, however, asked, that in the event that it prevailed in the challenge, the award be set aside rather than be remitted. This was on the basis that internal conflict on the tribunal meant that remission would be inappropriate and in support of that conflict disclosed the arbitrator’s email – but not the reply agreeing to respect confidence. Different counsel represented the party in the arbitration and in the challenge.
The party-appointed arbitrator complained that his confidence had not been respected and produced counsel’s email agreeing to respect the confidence.
Although, having dismissed the challenge, the Judge did not need to consider the set aside/remission point, she did say:
- She would have been very reluctant to set aside rather than remit as the tribunal appeared to have functioned properly for some 2-years after the email;
- She was astonished that the email was sent at all. Where arbitrators are nominated and/or appointed by the parties it is inevitable that there will be some correspondence to which the other party will not be privy.
- “But once the tribunal is appointed …[it is] wholly inappropriate for one arbitrator to communicate with the party that appointed him without notice to the other members of the tribunal and the other party.”
- “Where there is a three person tribunal, …, the ability of each party to appoint an arbitrator is intended to bring balance to the tribunal and give the parties confidence in the balance and fairness of the tribunal. The party-appointed arbitrators patently do not represent the party that appointed them and they are under a duty, as individual arbitrators and as a tribunal, to act fairly and impartially. Any communication by one arbitrator with one party which concerns the arbitration may give rise to concerns that that arbitrator is not acting fairly or impartially for the simple reason that it creates the impression of a close relationship between the arbitrator and the party and raises the spectre of other such communications. Requiring the communication to be kept confidential does not remedy the problem: if anything, it highlights the arbitrator's awareness that this is communication he should not be having. Whether in any individual case there is the appearance of bias will, of course, turn on its particular facts but I have no doubt that such communications between one arbitrator and one party should be avoided.”
The Judge was, of course, absolutely correct and the judgement reflects international practice. The party-appointed arbitrator had put counsel in an extremely difficult position: whether the email should have been disclosed immediately on receipt – risking disrupting the reference – or not, risking later challenge. Whatever difficulties the tribunal had they should have been sorted out behind closed doors (the Judge recognised that it might have created a “somewhat awkward working environment”) and if they could not be resolved there should have been a joint, rather than unilateral, communication.
The case is Symbion Power LLC v Venco Imtiaz Construction Company  EWHC 348 (TCC). For the puerile the arbitrators are not named in the case report but, as with most things, the identities can be found by some digging on the internet!