INTERNATIONAL ARBITRATION: ARBITRATORS: An Introduction to UK-wide

Ethical Reflections on Aiteo Eastern [2024] in the light of P&ID [2023]

The case of The Federal Republic of Nigeria v Process & Industrial Developments Limited [2023] EWHC 2638 (Comm) (“P&ID”) was heard in 2023. Possessed of an almost legendary reputation, it is a truly remarkable but unusual case in which (amongst other things) the conduct of the legal representatives of the claimant (as well as others) was intensely scrutinised by the Commercial Court and severely criticised. Such were the court’s findings, and such was its concern, that the court referred the barrister and solicitor in question to their respective regulatory bodies.

In 2024, the same Commercial Court (different judge) was asked to consider the conduct of an arbitrator. In Aiteo Eastern E & P Company Limited v Shell Western Supply and Trading and Others [2024] EWHC 1993 (Comm) (“Aiteo”), Jacobs J considered whether the arbitrator’s failure to disclose three particulars of her relationship with an international law firm gave rise to a serious irregularity pertaining to four partial awards she had written. He decided that it had in one of the four.

To be very clear – there is no moral equivalence between the conduct of the legal representatives in P&ID and the conduct of the arbitrator in Aiteo. None must be implied or inferred. Moreover, there was no allegation of actual bias in Aiteo, but an assertion of apparent bias (to which the Halliburton test was properly applied) brought about by a failure to make timely disclosure.

However, interesting points reveal themselves when both cases are put side by side. What follows are a few of them.

First, P&ID subsequently gave rise to extensive, often expressed, concern both within the international arbitration community and without that somehow international arbitration worldwide was systemically broken, vulnerable to abuse, even corruptible. The solution must be yet more soft law and regulation or even greater state control, it was said. Critics may feel fortified by, and tempted to pray in aid, Aiteo to support a similar contention that the whole arbitration system worldwide has yet again been shown too vulnerable to be sustainable and, somehow, requires fixing. This time, however, arbitral tribunals are shown (up) to be the problem.

Such criticism is (or would be) misconceived. The inductive sleight of hand which asserts that it is valid to base such general propositions that international arbitration is failing on two unusual and particular cases is a fine example of the fallacy of composition.

Second, contrary to what might be argued, international arbitration, properly supported by experienced and knowledgeable state courts, evidently – demonstrably – works. Both The Republic of Nigeria and Aiteo Eastern sought, and obtained, relief from the court under Section 68 of the Arbitration Act 1996. There is nothing novel in the possibility that there may be serious irregularity affecting the tribunal. The possibility (not the inevitability) of serious irregularity was known and anticipated 30 years ago by the drafters of Section 68. The suggestion that such serious irregularity is new, and demands novel measures to tackle it now, would be irrational and wrong-headed.

Third, by the same token, cases such as P&ID and Aiteo are statistically unusual when set within the broader context of the thousands of arbitrations that are commenced every year worldwide. Of course, worldwide data is incomplete on this statistical argument, but nevertheless, the overall point remains sound. These cases are the exceptions to the rule, not the rule.

Fourth, a theme common to both cases is one of disclosure (or lack of it), albeit of very different kinds. Knowles J observed that it was the disclosure of highly relevant documents when the awards were being challenged in court that has [586] “enabled the truth to be reached in this case”. He did not accept that those documents would have been disclosed even if the Arbitral Tribunal had ordered disclosure [567]. Aiteo was about an arbitrator’s failure to make relevant disclosures, not of documents, but some particulars of her relationship with a law firm which gave rise, it was alleged (and was found), to an appearance of bias under the Halliburton test. In that case, Jacobs J observed [188] that “the full picture emerged” of the arbitrator’s relationship over time as the full extent of the relationship came to light.

The claimant’s (and, it was held, its lawyers’) dishonest failure to disclose documents during the arbitration in P&ID, and the arbitrator’s failure, mistakenly, to disclose particulars of her relationship in Aiteo, though categorically different, nevertheless speak to the same underlying ethic which is highly sensitive and valued in all arbitration. It is independence, that most chimerical of qualities, (and for arbitrators, its sister, impartiality).

Notwithstanding the well-known, qualified British position on the value and usefulness of the independence of arbitrators, for as long as independence is held with the reverence it is throughout the world, its shifting appearance and character will continue to taunt and test tribunals and practitioners alike.

The independence of solicitors and counsel from their clients’ and their own interests (connected closely, for solicitors, to the regulatory principle of integrity), and the independence of an arbitrator from the arbitrating parties and from anything that might lead to an appearance of partiality, have a shared root. It is the preservation and maintenance of fairness in the arbitration process. Without that, we would all agree, we are lost.

P&ID and Aiteo are highly instructive from several ethical perspectives. They capture, in a way, the spirit of our current arbitration age. However, let’s not get carried away.