Justifiable doubts as to impartiality

Section 24 of the Arbitration Act 1996 permits a court to remove arbitrators where ‘circumstances exist that are give rise to justifiable doubts about [their] impartiality’. The power is to be exercised in exceptional circumstances only, and it is of little surprise that in ASM Shipping Ltd v Harris [2007] EWHC 1513 (Comm) Mr Justice Andrew Smith refused to exercise that power where the evidence of possible bias was flimsy in the extreme. This case arose from the long-running dispute between ASM and TTMI, which has featured on a number of occasions in the pages of the Lloyd’s Law Reports and of Arbitration Law Monthly in the past few months.

ASM Shipping: the facts

The background facts are too familiar to bear lengthy repetition, and a brief summary suffices. The underlying dispute arose out of a charterparty, and led to claims by the parties against each other. Arbitration was commenced by the charterers in March 2001, and two arbitrators were appointed. Those arbitrators made a first partial award in favour of the owners in respect of a freight claim in April 2002. At this point the arbitrators appointed a third arbitrator, DM, and the three proceeded to hear a claim by the charterers for damages for breach of the charterparty. Shortly before the hearing, the owners’ key witness recognised DM as having been involved in another case in which he had acted as counsel for the purposes of an application seeking disclosure of documents from the witness. The owners’ solicitors were informed, but no objection was taken to DM at that point. The issue first became live in a challenge by the owners under s68 of the Arbitration Act 1996, to a partial award made by the three arbitrators in December 2004 finding that the owners were liable for damages to be assessed. That challenge was dismissed by Mr Justice Morison ( ASM Shipping of India Ltd v TTMI Ltd of England [2006] 1 Lloyd’s Rep 375 on the ground that although DM ought to have recused himself given his previous contact with the owners’ witness, the owners had lost the right to object and the award was valid. DM chose to resign from the panel, but the remaining arbitrators continued in office. After a further dispute about costs ( ASM Shipping of India Ltd v TTMI Ltd of England [2006] 1 Lloyd’s Rep 401), an appeal against Morison J’s decision was dismissed by the Court of Appeal in October 2006, that case for the most part turning on whether the Court of Appeal could give permission to appeal against a decision by a judge under s68, even though such permission had been refused by the judge himself ( ASM Shipping of India Ltd v TTMI Ltd of England [2007] 1 Lloyd’s Rep 136).