COFELY LTD v BINGHAM
COFELY LTD v BINGHAM
The arbitrator should be removed as arbitrator from the arbitration between the contractor and the claims consultant pursuant to section 24(1)(a) of the Arbitration Act 1996 for apparent bias
Hamblen J held that there was force in the contractor’s following grounds for its removal application which cumulatively raised the real possibility of apparent bias, namely (i) The arbitrator’s response to the contractor’s requests for further information as to the nature and extent of his professional relationship with the claims consultant (ii) The arbitrator’s defensive approach to providing the requested information and his hostile stance to its position at the meeting called by him to determine whether the tribunal was properly constituted (iii) The information now available as to the nature and extent of the arbitrator’s professional relationship with the claims consultant and (iv) The aggressive and unapologetic nature of the arbitrator’s witness statement showing that he had taken sides in its application.
As to the arbitrator’s professional relationship with the claims consultant: (i) The evidence of most significance was that over the last three years 18% of the arbitrator’s appointments and 25% of his income as arbitrator or adjudicator derived from cases involving the claims consultant (ii) The arbitrator’s attitude to this, as he made clear at the hearing and as he maintained in his witness statement, was that this was irrelevant as all these appointments were made by an appointing body rather than the claims consultant directly (iii) On this logic even if all his income derived from cases involving the claims consultant, there would still be no cause for concern (iv) The CIArb acceptance of nomination form calls for disclosure of "any involvement, however remote" with either party over the last five years (v) Acting as arbitrator or adjudicator in cases in which the claims consultant was a party or a representative of a party was a form of involvement (vi) The evidence showed that even though the claims consultant did not appoint an arbitrator or adjudicator directly, it was able to influence and did influence such appointments positively by putting forward the name of its chosen appointee either on his/her own or with others or more indirectly by identifying required characteristics that would only be shared by a small pool of people and negatively by putting forward a list of those potential appointees it did not wish to be appointed who were said to be inappropriate.
Legal commentators have noted that this decision is as applicable to adjudication as to arbitration, particularly in the light of the decision of Ramsey J in Eurocom v Siemens (2014) which was cited by Hamblen J.
THE FULL TEXT OF THE JUDGMENT OF HAMBLEN J
- The Claimant ("Cofely") seeks an order that the First Defendant ("Mr Bingham") be removed as arbitrator from an ongoing arbitration between the Claimant and the Second Defendant ("Knowles") pursuant to section 24(1)(a) of the Arbitration Act 1996 ("the Act"), on the grounds that circumstances exist that give rise to justifiable doubts as to his impartiality. Those doubts about his impartiality are alleged to involve apparent bias, not actual bias.
- The Defendants dispute the existence of such circumstances and question whether Cofely has lost the right to raise this objection under section 73 of the Act.
The background facts
- Cofely is a major construction company.
- Knowles is a well known firm of claims consultants in the construction field.
- Mr Bingham is a very experienced arbitrator and adjudicator in construction disputes. He worked in the construction business for a number of years before selling his business in 1988 so as to concentrate on his arbitration career. He is a qualified barrister and has practised from 3, Paper Buildings since 1991-2.
- Cofely East London Energy Limited (a company related to Cofely) entered into a contract with Stratford City Developments Limited and the Olympic Delivery Authority (the "Employers") to design, build, maintain and operate district energy services to the Olympic Park and Westfield Shopping Centre in Stratford, London (the "Concession Agreement").
- Various disputes arose between the parties under the Concession Agreement and Cofely appointed Knowles to advise upon and then progress its claims arising under it for an extension of the time (the "Time Claim") and associated additional costs caused by the delay in completion of the works (the "Money Claim").
- Knowles was initially appointed by Cofely pursuant to a written agreement dated 19 August 2010 ("the Appointment") and Knowles was subsequently paid £1,187,082 by Cofely on a time basis pursuant to the Appointment to prepare the Time Claim and Money Claim on Cofely's behalf.
- Cofely, however, became concerned about the escalating costs and delay in Knowles pursuing the Time Claim and Money Claim and new terms of remuneration were therefore discussed between the parties.
- This culminated in the conclusion of a success fee agreement dated 26 October 2011 (the "Success Fee Agreement"), pursuant to which Knowles was entitled to payment of certain sums and, potentially, a success fee on the occurrence of certain events (set out at sub-headings entitled "AGREEMENT" Nos 1-6).
- An adjudication was thereafter commenced by Knowles on behalf of Cofely against the Employers in relation to the Time Claim ("the Adjudication") but, prior to the conclusion of the Adjudication, Cofely says that it became concerned about the advice being provided by Knowles and the approach being taken in the Adjudication. It therefore entered into direct settlement negotiations with the Employers and reached a settlement of the Time Claim, the Money Claim and other issues that had arisen under the Concession Agreement.
- Knowles then alleged that in settling their claims without the involvement of Knowles, Cofely had acted in breach of various provisions of the Success Fee Agreement and claimed at least £3.5 million was payable as fees by Cofely.
The Arbitration proceedings
- The arbitration agreement in the Success Fee Agreement provided that:
"The Success Fee Agreement and any dispute or claim of whatever nature arising out of or under or relating to this Success Fee Agreement shall be governed by English law and is to be and hereby is referred to arbitration pursuant to the Arbitration Act 1996. Such arbitration shall commence on the giving of notice and on the application by either of the parties to the Chartered Institute of Arbitrators or the Royal Institution of Chartered Surveyors for the appointment of an arbitrator".
- On 21 January 2013, Knowles gave notice of arbitration to Cofely and applied to the Chartered Institute of Arbitrators ("CIArb") for the appointment of an arbitrator. It was stated that it was preferable that the arbitrator had both quantity surveying ("QS") and delay analysis experience and the appointment of Mr Bingham was sought.
- On 30 January 2013, Cofely's solicitors, Stephenson Harwood ("SH"), wrote to the CIArb stating that it did not agree to the appointment of Mr Bingham, explaining that whilst it was agreed that the arbitrator should have legal experience it was not considered that experience in QS or construction delay was needed. It was proposed that Ms Krista Lee, a barrister at Keating Chambers, be appointed.
- On 4 February 2013, the CIArb confirmed the appointment of Mr Bingham as arbitrator.
- Knowles served its Particulars of Claim on 2 April 2013 and at the same time made an application for a Partial Award in relation to the Time claim and Money Claim pursuant to section 47(2) (a) (b) of the Act.
- Knowles requested that the Arbitration should proceed in two parts: the first dealing with claims made by Knowles which related to defined sums payable under the Success Fee Agreement and the second dealing with Knowles's alleged entitlement to a success fee based on the outcome of the settlement negotiated between Cofely and the Employers.
- This application was acknowledged by Mr Bingham the next day and on 17 April 2013 Mr Bingham requested that Cofely indicate its position in relation to Knowles' application.
- Cofely served its Defence on 23 April 2013 and a hearing was held on 19 July 2013.
- On 21 August 2013, Mr Bingham made a Partial Award entitled "Arbitrator's Decision No 1", finding in favour of Knowles on its claims in relation to defined sums and directing Cofely to pay Knowles £1,000,000 plus interest. No challenge was made to the Partial Award and the sum awarded was duly paid by Cofely.
- The parties then tried to agree how the referral would proceed but were unable to do so because of a difference of opinion as to how any entitlement under AGREEMENT SIX of the Appointment (in relation to a success fee) should be approached.
- On 11 November 2013, Cofely made its own application for Partial Awards under section 47 of the Act regarding the approach to be taken in connection with AGREEMENT SIX. The application sought a decision on the following issue:
"Whether, on a proper construction of Agreement Six, the sum which is due to the Claimant (if any) is:
(a) The actual value of the Knowles Money Claim within the Deed of Settlement; or
(b) Some other sum and, if so, what."
- It is said that the purpose of this application was to avoid the need for an extensive (hypothetical) factual analysis of the likely outcome of the Time Claim and the Money Claim in the adjudication against the Employers as part of a consideration of whether the settlement with the Employers was reasonable.
- Mr Bingham acknowledged receipt of this application by email dated 9 November 2013 in which he stated he would "read in and revert".
- Thereafter there was a period of inactivity. Mr Bingham did not revert, nor did Cofely chase him to do so.
- On 9 April 2014, Mr Bingham responded to the proposed application by issuing "Arbitrator's Memo No. 1 About AGREEMENT SIX" containing his "observations" on the correct approach to be taken to the outstanding claims of Knowles and concluding that "the Arbitrator in short ought to investigate the £23 million claim", but stating that "This is not a Direction or Decision" and "Comment invited".
- On 6 June 2014, SH wrote to Mr Bingham regarding the memorandum, stating that Mr Bingham had not addressed Cofely's section 47 application and providing various comments on Mr Bingham's memorandum.
- On 4 July 2014, Mr Bingham acknowledged receipt of SH's letter and asked for comments from Knowles.
- Thereafter there was a further period of inactivity in the arbitration.
- On 24 December 2014, Knowles made an application to Mr Bingham for Cofely to disclose certain documents referred to in the Settlement Deed between the Employers and Cofely. Mr Bingham responded by email almost immediately.
- On 22 January 2015, Cofely enquired of Knowles as to when it would be responding to its section 47 application.
- On 18 February 2015, Cofely wrote to Knowles requesting information in relation to its dealings with Mr Bingham in light of the decision of Mr Justice Ramsey in Eurocom Ltd v Siemens Plc  EWHC 3710 (TCC) BLR in which judgment had been delivered on 7 November 2014. The Eurocom case concerned a summary judgment application made by Eurocom against Siemens in respect of an adjudication decision made by Mr Bingham. The application failed on the grounds that Siemens had real prospects of successfully defending the claim on the basis that the adjudicator had no jurisdiction because of a fraudulent misrepresentation allegedly made by Mr Giles of Knowles in applying for the appointment of an adjudicator on Eurocom's behalf.
- The outline facts were that Mr Giles made an application to the Royal Institution of Chartered Surveyors ("RICS") for the appointment of an adjudicator and requesting that one of three nominees be appointed, one of whom was Mr Bingham. In the application form Mr Giles stated that numerous other named candidates had a conflict of interest and were therefore unable to act. Mr Justice Ramsey held at  that there was a "very strong prima faciecase that Mr Giles deliberately or recklessly answered the question as to whether there were conflicts of interest so as to exclude adjudicators who he did not want to be appointed".
- The judgment records at  the evidence of Mr Giles as being that he had a general practice of excluding candidates in this manner:
"On the same page of the application form there is a box headed 'Are there any adjudicators who would have a conflict of interest in this case?'. I largely use this box as a means of stating to which adjudicators, based on past experience, I would not send a referral document: in effect a pre-emptive rejection list. This saves time and money that would otherwise be expended in allowing notices of adjudication to lapse and replying for alternative adjudicators. In the instances where there is a conflict I obviously say why."
- In its letter of 18 February 2015 Cofely explained that it had concerns arising out of the Eurocomcase and Mr Bingham's conduct of the referral to that time, and asked six questions seeking further information concerning the nature and extent of the professional relationship between Knowles and Mr Bingham. This was the first time that Cofely had raised any concern about the prior conduct of the reference.
- On 27 February 2015, Knowles wrote to SH answering five of the questions contained in SH's letter dated 18 February 2015.
- On 11 March 2015, SH replied to this response and posed further questions in light of the responses provided by Knowles in that letter.
- On the same day SH also wrote to Mr Bingham for the first time requesting related information. The letter enclosed SH's letter dated 18 February 2015 to Knowles and included the following specific requests:
1 "How many times in the last 3 years have you acted as adjudicator or arbitrator in disputes where Knowles represented, or was itself, the claimant/referring party?
2 Please would you break your answer in 1 down so as to clarify how many of the above relate to:
2.1 appointments first made in the last 3 years; and
2.2 appointments made more than 3 years ago in respect of matters which are ongoing or have been decided in the last 3 years.
3 How many times have you made an award or decision in favour of the claimant/referring party (either in whole or in part) in the adjudications and arbitrations referred to above?
4 What proportion of your professional income as a barrister/adjudicator/arbitrator was accounted for from the referrals covered by requests 1 and 2 above for each of the 3 years in question?
5 What proportion of your professional income as a barrister/adjudicator/arbitrator was accounted for from the referrals covered by request 3 above for each of the 3 years in question?
6 What, if anything, have you done during this Arbitration to satisfy yourself that there is no information that you should disclose to Cofely which could reasonably be interpreted (on an objective basis) as undermining your apparent impartiality?"
- On 12 March 2015, Mr Bingham emailed Knowles and SH acknowledging SH's letter and making observations on the Eurocomcase, but failing to answer any of the questions or to indicate whether or not he would do so in due course.
- On 17 March 2015, Mr Thwaite of SH sent an email commenting on Mr Bingham's observations on the Eurocomcase, explaining why it appeared significant in the current case and asking Mr Bingham to answer the questions previously asked of him "so that Cofely may be reassured about the position".
- In an email dated 19 March 2015 Mr Bingham replied to Mr Thwaite stating that in the last three years he had been appointed as adjudicator/arbitrator a total of 137 times and asking what "you say is wrong" in light of this and Knowles' answers in its 27 February 2015 letter.
- On 23 March 2015, Mr Thwaite emailed Mr Bingham asking him to confirm that (i) the number of Knowles related appointments suggested by Knowles in the past three years (25) was correct, and (ii) he was prepared to answer the question as to what proportion of his income had come from these appointments.
- Mr Bingham did not respond directly to these specific queries or the original 6 questions.
- On 30 March 2015, Mr Bingham sent the parties an email dated 30 March 2015 stating that "the clip of correspondence beginning 18thFebruary Cofely-Knowles raises an issue of whether the tribunal is properly constituted" and directing that there be a meeting in relation to this matter.
- Mr Bingham then sent an email dated 31 March 2015 to Mr Thwaite asking "I ponder what are you driving at. Is it anything in particular" in relation to question 6 from the 11 March 2015 letter (regarding what Mr Bingham had done to satisfy himself that there was no relevant information to disclose).
- Mr Bingham chased an answer to the above question in a further email dated 2 April 2015 stating "what are you driving at please; or (forgive the vernacular) so what?"
- In an email dated 2 April 2015 Mr Thwaite sought to explain the purpose of the questions posed in the letter dated 11 March 2015 and, in particular, the relevance of the question regarding the proportion of Mr Bingham's income derived from the 25 apparent Knowles appointments in the past three years. The email stated as follows:
"The purpose of the questions raised in our letter of 11 March was to reassure Cofely that there are no previously undisclosed circumstances that might give rise to justifiable doubts as to your independence and impartiality.
As a matter of general law an arbitrator has a duty prior to appointment and throughout the duration of the appointment to consider whether there are any relevant circumstances about the arbitrator's relationship with the parties that should be disclosed.
We are told that you have been appointed 25 times in 3 years in matters involving Knowles either as referring party or acting for the referring party. Based on the information you have given us, this amounts to almost one fifth of your total appointments during the same period. We have asked what proportion of your income as barrister/adjudicator/arbitrator relates to these appointments. The relevance of this information is that, were a significant proportion of your income to derive from appointments by (or at the request of) Knowles, it could raise justifiable doubts about your independence and impartiality in a matter where Knowles is itself the claimant party. Certainly, given the number of appointments, it is information which we believe you should have considered whether to disclose prior to, or during, your appointment in this arbitration. "
- On 17 April 2015, the hearing called for by Mr Bingham took place at the offices of Knowles.
- The night before the hearing Knowles served a skeleton argument and Mr Bingham indicated that this would be a hearing at which a ruling would be made. I shall address that hearing in more detail later in the judgment.
- It is Cofely's case that the approach and the tone of the interventions by Mr Bingham were aggressive and pointed and that they indicated, at the very least, an impatience at the questioning of facts potentially relevant to his apparent impartiality and hostility toward Cofely for raising the matter.
- After the meeting SH wrote to Knowles on 21 April 2015 requesting that answers be provided to the outstanding questions canvassed at the hearing.
- In response, on 24 April 2015 Knowles provided SH with answers to the outstanding questions raised in the letter dated 11 March 2015.
- On 30 April 2015, Mr Bingham issued his "Arbitrator's Ruling" as to whether the tribunal was 'properly constituted' – concluding that it was and that he had no conflict of interest.
- Cofely stresses that (i) neither of the parties had requested a ruling on either of these issues, and (ii) as part of his reasoning Mr Bingham appeared to adopt Knowles's figure for the number of relevant appointments (25) (and all of the other relevant information provided by Knowles) without undertaking his own independent investigation.
- In a letter dated 15 May 2015 SH wrote to Knowles seeking an answer to question 5 of its earlier letter dated 18 February 2015. It was explained that without it being answered Cofely would not know the extent to which 'the Eurocomcase practice' of deliberately excluding certain potential individuals as tribunal had been deployed so as to make the chance of Mr Bingham's appointment increase.
- By email dated 26 May 2015 Knowles copied in Mr Bingham to the requests for further information. On 28 May 2015 Knowles emailed Mr Bingham to ask him to answer certain parts of the questions put to Knowles in the SH letter dated 15 May 2015.
- In an email on 5 June 2015 to Mr Bingham, Knowles then revised the questions put to Mr Bingham regarding his income from the 25 'Knowles' appointments and the total 137 appointments in the previous three years. Knowles asked Mr Bingham to provide specific total figures as to his income over the past three years and the amount of fees he had earned from appointments involving Knowles. This request went beyond the level of information requested by Cofely. On the same day Mr Bingham responded by email to both parties providing the information sought, namely £1,146,939 and £284,593.75 respectively.
- On 3 July 2015, Knowles wrote to SH to provide some further outstanding information relating to when they had excluded other candidates in requests for appointments where Mr Bingham had ended up being appointed. Knowles stated that this had occurred 16 out of the 25 times he had been appointed without being named specifically.
- On 8 July 2015, SH wrote to Mr Bingham asking him to recuse himself – to which there has been no response from Mr Bingham.
- On 22 July 2015, the present application was issued.
The hearing of 17 April 2015
- The tone of the hearing is reflected in the full transcript but it can be illustrated by citing some excerpts from it.
- At the hearing Mr Bingham aggressively questioned Cofely's counsel, Mr Moran QC, as to why Cofely had asked particular questions, for example, in relation to Cofely's question as to what proportion of Mr Bingham's income over the past three years related to appointments concerning Knowles. As the transcript records:
"MR BINGHAM It seems at the heart of this that I ought to ask, really, Mr Moran: if these 25 of 137 is a significant portion of your income, to what effect?
MR MORAN Well, I think today, as far as we are concerned, is just really an information gathering exercise.
MR BINGHAM For me To what effect, please?
MR MORAN Well, we have just asked some questions.
MR BINGHAM No, please tell me. Please answer my question.
What is the effect of these 25 of 137 being a, as you say, significant portion of your income. What is the effect?
MR MORAN What do you mean the effect?
MR BINGHAM Tell me what you are getting at.
MR MORAN We're not getting at.
MR MORAN We're not getting at anything.
MR BINGHAM I mean, I put it to you like this.
MR MORAN We are not making any applications. We haven't decided on any course of action. We just want to understand what the position is".
- Instead of dealing with Cofely's queries, Mr Bingham kept asking why Cofely had asked the questions it had raised. For example:
"MR BINGHAM I want to understand --- and I think Knowles wants to understand, I suspect --- what is it you are getting at.
MR MORAN What we're getting at, if you would, is we want an answer to the questions we have posed to you.
MR BINGHAM No, no. I want you to answer that question: why is it that this is troubling you?
MR MORAN Well, it's been explained, I think, in both the letter that we sent to you of 11 March.
MR BINGHAM No, it's not.
MR MORAN All right... Can I just --
MR BINGHAM I'm sorry, it's not enough. Can I put it in the vernacular? I want to put it like I did in the memo ---forgive the vernacular –so what?
MR MORAN I think you are perhaps jumping the gun because we're not, as far as we are concerned, here to decide, as it were, the consequences or whether or not it is a matter of fact the information we know amounts to a case of apparent bias or not. That's not where we are.Where we are is we just want, because of the reasons explained in the letters and the email, in particular, of 2 April, our client wants to know more about –
MR BINGHAM I want to know – please stop. I want to know why. I asked again. Would you please answer my question: so what?"
- In relation to the question as to how many times Mr Bingham had acted as arbitrator or adjudicator in cases involving Knowles over the past three years, having asked Mr Moran QC to take the information provided by Knowles as a fact, Mr Bingham then asked Mr Moran QC what the implication of that fact is, despite refusing to verify if that information was correct.
- Mr Moran QC attempted to explain to Mr Bingham that it is not possible to answer this question in isolation and that Cofely needed answers to all of its questions in order to be able to fully consider the position. However Mr Bingham would not accept this and continued to proceed as if he were cross-examining Mr Moran QC:
"MR BINGHAM Let's take it that it means, say – it's not unreasonable – we have 18.25 per cent of the income from 137 appointments.
MR MORAN Yes.
MR BINGHAM So what?
MR MORAN Well, if that were the answer, we would reflect on and consider then our position
MR BINGHAM Well, please reflect now. So what?
MR MORAN I'm not in a position to reflect.
MR BINGHAM Well, adjourn then. Shall we adjourn?
MR MORAN We need to have the information.
MR BINGHAM No, no, I'm narrowing it down here. Mr Moran, I want to know what the implications are. I'm asking you again. Will you please tell me? It is ever so straightforward, Assume, please, for the purposes of exploring this 18.25 per cent of those were overall appointments is the income. Assume that.
MR MORAN Well—
MR BINGHAM If it was 25 per cent, so?
MR MORAN Well, the answer to the question "So what?" will be the right answer will depend upon where we get to in terms of the answers to all of the question – you can't—
MR BINGHAM No, answer that one.
MR MORAN You can't answer it. You can't pick –
MR BINGHAM Help me, then: why?
MR MORAN You can't pick one issue in isolation and give a view on –
MR BINGHAM Yes, you are, sir. I want to know what this is all about. You are here, I have called the meeting, the hearing. I want to hear you on it.
MR MORAN Yes.
MR BINGHAM You have had ample time. Tell me: what it is all about?
MR MORAN What it's all about is we have asked the questions in the letter and we either want answers or an indication you won't answer.
MR BINGHAM I have given you a proposition. Base it on this: 18.25 per cent of income out of 137 appointments are these 25. Proceed on that basis. I ask you again: so what?
MR MORAN Well, that would – so what, if that were your answer, that would be one of the factors that would go into a consideration of whether – and there's no – at the moment there's no conclusion or view on this – whether or not we ought to take this further or not.
MR BINGHAM Okay. So you can't answer, or you're not willing to at the moment.
MR MORAN You can't just hypothesise on the basis of on piece of information as to what – and I haven't got instructions to give an answer. This is not what we are here for."
- This line of questioning continued in such a manner that eventually Mr Acton Davis QC, acting for Knowles, stepped in and asked if he could "mediate". Further discussion followed about Mr Bingham's approach of adopting answers given by Knowles as fact and refusing to verify them. Mr Bingham again confirmed that he would not answer the questions himself. Mr Acton Davis QC on behalf of Knowles once again stated that Knowles had answered the questions and that Knowles therefore had no issue with Mr Bingham confirming whether or not the answers given were correct, however Mr Bingham still refused to do so:
"MR MORAN … but I take it that you're adopting Knowles' answer on the number of appointments that you've been involved in over the years.
MR BINGHAM It's information which is their information, and I'm willing to – it is a matter for them to reveal information about their business and not a matter for me to reveal it in this arbitration
MR MORAN Well, if that means that you're not answering that question, then we will –
MR BINGHAM It means I can't reveal information about Knowles' affairs that don't concern Cofely and Knowles, and nor would I reveal it about Cofely and other matters that Cofely has been involved in, as I have already said.
MR MORAN But Knowles have given this information.
MR BINGHAM That's it then.
MR MORAN Yes, but if you're not going to, as it were agree to that –
MR ACTON DAVIS We have already answered that question. We have, therefore, already waived any confidentiality there is, and we therefore have no objection to you confirming that we are right, if we are right, or saying that we are wrong.
MR BINGHAM All right. Fine. I've got no comment at this stage".
- Similarly, in relation to Cofely's query that Mr Bingham confirm how many of those 25 appointments commenced in the past three years, Mr Bingham was dismissive and simply stated that Cofely had been given enough information and he was not prepared to go into that "level of detail":
"MR BINGHAM Take it that the 137 … appointments made more than three years ago in respect of matters which are ongoing. Take it that it's 137. That's not a question I'm willing to delve into at all. You can take that as the answer.
MR MORAN Sorry, take what as an answer?
MR BINGHAM That you have enough information as far as 2.1 and 2.2 is concerned. I don't intend to go into that sort of detail.
MR MORAN That question is referring to Knowles-related appointments.
MR BINGHAM Yes, I know, but the point we've driven it down to is: how much have you earned out of Knowles?
MR MORAN That's not what we're asking.
MR BINGHAM Yes, but I'm not willing to answer. Mr Acton Davis, this particular matter, I don't intend to answer that.
MR ACTON DAVIS I understand you to say that, sir. It's a matter for you.
MR BINGHAM Fine."
- Section 24(1)(a) of the Act provides as follows:
"(1) A party to arbitral proceedings may (upon notice to the other parties, to the arbitrator concerned and to any other arbitrator) apply to the court to remove an arbitrator on any of the following grounds—
(a) that circumstances exist that give rise to justifiable doubts as to his impartiality;"
- Section 33 of the Act provides:
"(1) the tribunal shall—
(a) act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting his case and dealing with that of his opponent, and
(b) adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined.
(2) The tribunal shall comply with that general duty in conducting the arbitral proceedings, in its decisions on matters of procedure and evidence and in the exercise of all other powers conferred on it."
- Section 73 of the Act provides:
"(1) If a party to arbitral proceedings takes part, or continues to take part, in the proceedings without making, either forthwith or within such time as is allowed by the arbitration agreement or the tribunal or by any provision of this Part, any objection—
(d) that there has been any other irregularity affecting the tribunal or the proceedings,
he may not raise that objection later, before the tribunal or the court, unless he shows that, at the time he took part or continued to take part in the proceedings, he did not know and could not with reasonable diligence have discovered the grounds for the objection"
- The law as set out in the main authorities relating to section 24 of the Act may be summarised as follows:
(1) The common law test for apparent bias is reflected in section 24 – see, for example, Laker Airways v FLS Aerospace  2 Lloyds Rep 45, per Rix J at ; A v B  2 Lloyds Rep 591 per Flaux J at -; Sierra Fishing Co & Others v Farran & Others  EWHC 140 (Comm),  Lloyds Law Reports per Popplewell J at ;
(2) The common law test under section 24 is whether "the fair minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased" - see Porter v Magill  AC 357 per Lord Hope at ; Helow v Secretary of State for the Home Department  UKHL 62,  1 WLR 2416, per Lord Hope at -;
(3) Such a fair minded and informed observer, although not a lawyer, is assumed to be in possession of all the facts which bear on the question and expected to be aware of the way in which the legal profession operates in practice - see Rustal v Gill & Dufus  1 Lloyd's Law Reports 14; Taylor v Lawrence  EWCA Civ 90,  QB 528; A v B  2 Lloyds Rep 591 per Flaux J at -.
(4) A "fair-minded" observer reserves judgment until he/she has seen and fully understood both sides of the argument: his/her approach must not be confused with that of the person who has brought the complaint, the assumptions made by the complainer are not to be attributed to the observer unless they can be justified objectively: A v B at  and Helow at -;
(5) An "informed" observer takes a balanced approached and appreciates that context forms an important part of the material to be considered: A v B at  and Helow per Lord Hope at .
- In the context of alleged apparent bias on the part of a Court, Lord Bingham explained the common law test as follows in Davidson v Scottish Ministers UKHL 34at :
"What disqualifies the judge is the presence of some factor which could prevent the bringing of an objective judgment to bear, which could distort the judge's judgment."
- The fact that an arbitrator is regularly appointed or nominated by the same party/legal representative may be relevant to the issue of apparent bias, particularly if it raises questions of material financial dependence – see A v B  2 Lloyds Rep 591 per Flaux J at ; Fileturn Ltd v Royal Garden Hotel TCC 1736,  BLR per Edwards-Stuart J at [20(7)].
- The tribunal's explanations as to his/her knowledge or appreciation of the relevant circumstances are also a factor which the fair minded observer may need to consider when reaching a view as to apparent bias – see, for example, In re Medicaments and Related Classes of Goods (No 2) 1 WLR 700and Woods Hardwick Ltd v Chiltern Air Conditioning Ltd  BLR 23. In this regard Cofely relies in particular on Paice v Harding  EWHC 661,  BLR 345, per Coulson J at - in which it was held that the explanations given by the adjudicator made apparent bias more rather than less likely having regard in particular to the "aggressive" and "unapologetic" terms in which they were expressed which suggested that he had concluded that something had gone wrong and that "attack was the best form of defence".
Institutional Rules and Guidelines
- Cofely relies upon a number of Rules and Guidelines as providing relevant guidance.
- Rule 3 of the CIArb Code of Professional and Ethical Conduct for Members (October 2000) states:
"Both before and throughout the dispute resolution process, a member shall disclose all interests, relationships and matters likely to affect the member's independence or impartiality or which might reasonably be perceived as likely to do so."
- Cofely contends that the disclosure obligation should be followed where there is any doubt as to the relevance of the information and the manner in which an arbitrator discharges this obligation can be relevant to the issue of apparent bias.
- Cofely further contends that the IBA Guidelines on Conflicts of Interest in International Arbitration provide relevant guidance showing what is considered to be accepted good arbitral practice generally. Cofely draws particular attention to General Standard 2 – Conflicts of Interest; General Standard 3 – Disclosure by the Arbitrator; 'Orange list' definition; Orange list 3.1.3; and Orange list 3.1.5.
- The explanations for General Standard 3 state at 3 (a) that "the arbitrator's duty to disclose … rests on the principle that the parties have an interest in being fully informed of any facts or circumstances that may be relevant in their view " and at 3 (c) "it is the purpose of disclosure to allow the parties to judge whether they agree with the evaluation of the arbitrator and, if they so wish, to explore the situation further …".
- The Orange List is "a non-exhaustive list of specific situation that, depending on the facts of a given case, may, in the eyes of the parties, give rise to doubts as to the arbitrator's impartiality or independence … with the consequence that the arbitrator has a duty to disclose such situations …" and contains the following provisions:
3.1.3 – "the arbitrator has, within the past three years, been appointed as an arbitrator on two or more occasions by one of the parties, or an affiliate of one of the parties";
3.1.5 – "the arbitrator currently serves, or has served within the past three years, as arbitrator in another arbitration involving one of the parties, or an affiliate of one of the parties".
- Cofely places particular reliance upon the CIArb form signed by Mr Bingham on his acceptance of his nomination. This included the statement that:
"To the best of my knowledge I am not aware of any involvements, interests, relationships or other matters which are likely to affect my independence or impartiality or which might reasonably be perceived as likely to do so. If I become aware, at any future stage of the dispute resolution process, of any interests, relationships or other matters which are likely to affect my independence or impartiality, or might reasonably be perceived as likely to do so, I will disclose those to the parties.."
- Mr Bingham also left blank the answer to the following question:
"If you are aware of any involvement, however remote, but in particular an involvement you or your firm has (or has had in the last five years) with either party to the dispute please disclose."
- In support of its application Cofely relies on two witness statements of Mr Thwaite of SH and the extensive exhibits thereto. In response to the application there is a witness statement from Mr Bingham and from Mr Rainsberry of Knowles together with exhibits. Both state that they adopt a neutral stance to the application since it is a matter for the Court and their concern is simply to ensure that the Court is fully informed. That position has been restated by their counsel in their submissions to the Court. Cofely disputes that either the evidence or the submissions are as neutral as claimed.
- Mr Bingham's witness statement includes the following explanations:
"56. Cofely replied to my Memo No.2 in their letter of 27 March 2015, expressing concern that I had not disclosed the information which they had obtained on enquiry at the time of my appointment in 2013. My reason was and remains that, at the time and even after further enquiry and debate with the parties, I could not see its relevance or that such information ought ever to have been the subject of disclosure by me before accepting the appointment upon nomination by the CIArb in February 2013.
- When there is assertive/challenging/perhaps even bullying behaviour aimed at the arbitrator or something that could fall within a Section 73 objection, my approach is to take the initiative where I can and immediately get the complainant and the other party to the table so that we can identify the issue, deal with the bullying and make a ruling which resolves the issue one way or the other. Section 73 of the Act calls for "forthwith" action by the objecting party…so too by the arbitrator.
- Although I could see no relevance to Cofely's requests for details of the number of times I had been appointed as arbitrator or adjudicator in cases where Knowles was either the party or a representative of a third party (substantially the latter), I set out below the relevant information and particulars….."
The grounds of the application under section 24(1)(a)
- Cofely relies upon seven grounds which are relied upon cumulatively as giving rise to the real possibility of bias. In addition it is submitted that grounds (3)(4)(5) and (6) are sufficient to question Mr Bingham's impartiality by themselves.
Ground (1) - The Eurocom case
- Cofely submits that an objective and fair minded observer would note the following as a result of this decision:
(1) Mr Bingham was clearly someone Knowles was keen to see appointed (even at the expense of making fraudulent misrepresentations to manipulate the appointment process);
(2) Knowles was also very keen to exclude (for inappropriate reasons) many other potential adjudicators from acting;
(3) Knowles indicated that this was its usual approach when seeking appointments via appointing bodies such as the RICS;
(4) One possible explanation for this approach was that Knowles (and its clients) were treated favourably by Mr Bingham on prior occasions and that it expected that he would do so again in the future. A possible reason for this was that Mr Bingham was predisposed to favour Knowles or its clients (perhaps by virtue of his familiarity with Knowles or the regularity in which he was appointed in relation to claims involving them as a party or client representative);
(5) Mr Bingham would have been aware from copies of the appointment forms that Knowles were in the habit of both (i) nominating individuals that it liked and (ii) excluding those that it did not;
Ground (2) - Response to Cofely's requests for information
- Having been put on notice of a possible inappropriate relationship between Mr Bingham and Knowles, Cofely submits that it quite reasonably sought further information as to the nature and extent of their professional relationship.
- Cofely contends, however, that the way that Mr Bingham responded to this justified questioning would lead the fair minded observer to have increased concern regarding the possibility that he was biased. In particular:
(1) Mr Bingham's response between February and April 2015 to SH's numerous requests for details relating to his previous work as tribunal in Knowles related cases was evasive, defensive and unjustified.
(2) The information requested in the letter 11 March 2015 (especially as to the number of referrals/appointments made involving Knowles and the proportion of his income derived from the same) was or might be considered as relevant to the independent objective observer considering the question of apparent bias, but at no stage did Mr Bingham indicate a serious attempt to consider, by reference to the appropriate guidance, whether this information should be volunteered or not.
(3) His willingness to volunteer or corroborate relevant information appeared to be led by the attitude of Knowles to these matters – most seriously in the timing of his decision to disclose information relating to his earnings (which appears to have been triggered by a request from Knowles).
Ground (3) - The hearing
- Cofely submits that Mr Bingham's defensive approach to providing the requested information and, in particular, the hostile stance taken to Cofely's position also demonstrates, by itself, reasonable grounds to suspect a real possibility of bias. In particular:
(1) The objective perception of a real risk of bias was exacerbated by (i) the calling of a hearing to ostensibly consider whether the tribunal had been properly appointed, (ii) the way the hearing was conducted and (iii) the way in which a 'ruling' was handed down purporting to deal with apparent bias.
(2) The fact that a 'hearing' was called in the first place and an (unrequested) 'ruling' provided demonstrates that Mr Bingham has descended into the arena on this topic in a wholly inappropriate way by seeking to press the parties into a conclusion that would justify his remaining as arbitrator, rather than providing the requested information to enable Cofely to then decide on the appropriate course of action.
(3) Mr Bingham's aggressive and dismissive demeanour and questioning of Cofely's counsel also demonstrated a lack of understanding of the need to be seen to be impartial and concerned to disclose potentially relevant information.
Ground (4) - The relevant relationship information
- Cofely submits that it is against this background that the information now available as to the nature and extent of Mr Bingham's professional relationship with Knowles has to be considered. It identifies the most relevant information to be as follows.
(1) In the past three years Mr Bingham has acted as arbitrator or adjudicator 25 times in cases involving Knowles as a party or the representative of a party;
(2) Of these 25 appointments, 22 related to cases where Knowles acted for the claimant / referring party and Knowles itself was the claimant / referring party in 3 cases.
(3) Mr Bingham has been appointed as arbitrator or adjudicator a total of 137 times in the past 3 years and therefore 18% of Mr Bingham's appointments involve Knowles either as claimant/referring party or acting for the claimant/referring party.
(4) According to Knowles, of those 25 appointments: in one, Mr Bingham was already the Tribunal in a case arising out of the same contract and Knowles told the relevant nominating body that this was the case; in three Knowles suggested a list of three names including Mr Bingham, which includes the Eurocom Case; in two Knowles specifically requested that Mr Bingham be appointed (including the arbitration which is the subject of these proceedings); in the remaining 19 cases, Mr Bingham was nominated by the relevant nominating body.
(5) In all 25 of the cases where Mr Bingham was appointed by a nominating body, Knowles has admitted that it requested that the candidate be both a "QS and barrister" and in most cases a QS and practising barrister.
(6) This approach significantly reduces the pool of possible candidates and increases the likelihood of Mr Bingham being appointed. By way of example, in the case of the RICS, which has 109 possible candidates, only 5 are both practising barristers and quantity surveyors and so this qualification reduces the pool to just 4% of the total number of candidates.
(7) On 16 out of the 25 occasions when Mr Bingham has been nominated the exclusion of others has been sought and so all of these may have been the subject of behaviour of the kind undertaken in the Eurocom case.
(8) In 18 of those 25 cases Mr Bingham found in favour of Knowles or Knowles' client (72%).
(9) 25% of Mr Bingham's total income as adjudicator/arbitrator in the past three years has come from the 25 appointments involving Knowles.
- Cofely submits that taken by itself or in combination with the other matters referred to above, a fair minded observer would conclude that Mr Bingham has or has an appearance of a significant financial dependence and/or interest in continuing to be appointed in cases involving Knowles and that therefore he may be unconsciously influenced to find in favour of Knowles as a result and/or not to fall out of favour with them.
Ground (5) - Mr Bingham's witness statement
- Cofely submits that Mr Bingham's statement in these proceedings makes the possibility of apparent bias more, rather than less, likely. In particular:
(1) Rather than stay neutral, Mr Bingham has seen fit to make positive statements in opposition to Cofely's application (regarding the relevance of the information that was sought/provided, the behaviour aimed at him and possible application of section 73 of the Act).
(2) Mr Bingham has wholly inappropriately suggested that Cofely's requests for information amounted to aggressive and/or bullying behaviour.
(3) This response illustrates a complete failure (even now) of Mr Bingham to appreciate (at the very least) the possible relevance of the information that was sought and his obligation to err on the side of caution in relation to the disclosure of such matters. It also shows that Mr Bingham has descended inappropriately into the arena of the dispute. In essence, his statement is aggressive and unapologetic.
(4) Mr Bingham appears to have interpreted a process whereby Cofely reasonably sought information regarding, in particular, the proportion of his earnings derived from Knowles related referrals, as an unwarranted attack on him – rather than a justified attempt to obtain a full picture of the extent to his recent professional relationship with Knowles.
(5) On any view Mr Bingham has taken sides in this application.
Ground (6) - Unilateral communications with Knowles
- Cofely submits that Mr Bingham appears to have been engaging in inappropriate unilateral communications with Knowles. For example, his statement suggests that he received the letter sent by SH to Knowles on 22 February 2015 in spite of the fact that it was not sent to him by SH at that time.
Ground (7) - General conduct of the Referral.
- Cofely submits that in the period prior to February 2015 it is notable that:
(1) Mr Bingham responded in strikingly different ways to the parties' respective section 47 applications; and
(2) Mr Bingham made no effort to progress Cofely's section 47 application at all – contrary to his obligations under section 33 of the Act – or even respond to Cofely's requests to progress it.
- Knowles' stated position was one of neutrality but it draws attention to the following points in particular:
(1) The world of construction professionals is relatively small and it is inevitable that Mr Bingham will have had exposure to Knowles and vice versa
(2) Cofely has itself been involved in adjudications by Mr Bingham.
(3) Mr Bingham has never advised or acted as counsel for Knowles.
(4) Knowles completes its applications on a case by case basis and it sets out the qualifications it considers appropriate to the case in hand.
(5) Whilst disclosure was called for under the Acceptance of Nomination and the guidance provided by the Orange List, non-disclosure does not in itself give rise to justifiable doubts as to impartiality.
(6) The Eurocom case was factually very different.
(7) Whilst it might be fair to say that there was an element of aggression in Mr Bingham's exchanges with Cofely and its counsel this can be seen as being no more than professional pride being hurt by what were perceived to be unwarranted allegations.
- Mr Bingham's position was also one of neutrality. He draws attention to the following points in particular:
(1) Some of the facts relating to the relationship between Mr Bingham and Knowles is knowledge only recently acquired.
(2) Mr Bingham was not accusing Cofely of bullying tactics. His reference to bullying referred to a general concern to the ADR community rather than this case.
(3) Mr Bingham is known to be forthright and decisive.
(4) Whilst legitimate and reasonable enquiries and concerns of a concerned party should be addressed, there is a line beyond which such inquiries are unnecessary and intrusive.
(5) Knowles is a substantial organisation which regularly appoints arbitrators and adjudicators. None of the appointments identified over the last three years involve Knowles appointing Mr Bingham directly.
(6) Cofely has sought his appointment by specific reference to his name in the past.
- The following findings are made viewing the facts as a fair minded and informed observer having regard to the guidance provided by the authorities referred to above and the evidence and submissions of Mr Bingham and Knowles.
- I do not consider that find that Grounds (6) and (7) provide any basis for concluding that there was a real possibility of bias, whether considered individually or together with the other grounds relied upon.
- In relation to Ground (6), on further investigation by Mr Bingham and Knowles' solicitors it has been established that SH's letter was not in fact received by Mr Bingham until it was sent to him by SH as an attachment to their 11 March 2015 letter. Even if it had been, I would not regard the forwarding of that (single) communication as any indication of apparent bias.
- In relation to Ground (7), I do not consider that there was anything untoward in Mr Bingham's conduct of the section 47 applications. Knowles' application was an application for an immediate money award for sums which it said were indisputably due. Whether or not that was so turned on a short point of construction. One would expect such an application to be progressed reasonably promptly, as it was.
- Cofely's own application was not for any monetary award but for directions as to the issues to be tried, which is more of a case management matter. Having made the application Cofely did nothing to pursue it for many months. The next step was Mr Bingham himself taking the initiative and issuing his Memo no. 1 on 9 April 2014. This invited the parties to comment. Nothing was heard from either party until SH's letter of 6 June 2014. There was then a further period of inactivity until early the following year when Cofely began its requests for further information. No complaint was made about any failure to progress the section 47 application until that time. Whilst Mr Bingham could have been more pro-active in dealing with the application, if Cofely had any concern about this it could and should have taken action itself and/or raised that concern. It did neither.
- I do, however, consider that Grounds (1) to (5) raise concerns of apparent bias.
- The starting point is the relationship between Mr Bingham and Knowles as now disclosed by the evidence. This is set out in detail in paragraph 91 above, but of most significance it that it shows that over the last three years 18% of Mr Bingham's appointments and 25% of his income as arbitrator/adjudicator derives from cases involving Knowles.
- Mr Bingham's attitude to this, as made clear at the hearing and as maintained in his statement, is that this is irrelevant as all these appointments were made by an appointing body rather than Knowles directly. On this logic even if all his income derived from cases involving Knowles there would still be no cause for concern.
- It is to be noted, moreover, that the CIArb acceptance of nomination form calls for disclosure of "any involvement, however remote," with either party over the last five years. Acting as arbitrator/adjudicator in cases in which Knowles is a party or a representative of a party is a form of involvement.
- Further, the evidence shows that even though Knowles does not appoint an arbitrator/adjudicator directly, it is able to influence and does influence such appointments, both positively and negatively. It does so positively by putting forward the name of its chosen appointee either on his/her own or with others. It also does so more indirectly by identifying required characteristics that will only be shared by a small pool of people. It does so negatively by putting forward a list of those potential appointees that it does not wish to be appointed and who are said to be inappropriate. These practices would be apparent from the appointment forms which, as was common ground, would have been forwarded to Mr Bingham. Their significance is highlighted by the Eurocom case which provides a striking example of Knowles steering the appointment process towards its desired appointees, and doing so as a matter of general practice.
- The existence of Knowles' appointment "blacklist" is itself a matter of significance. It means that the arbitrator/adjudicator's conduct of the reference may lead to him/her falling out of favour and being placed on that list and thereby effectively excluded from further appointments involving Knowles. That is going to be important for anyone whose appointments and income are dependent on Knowles related cases to a material extent, as is the case for Mr Bingham.
- It is right to observe that only 3 of the 25 cases (including the present case) involve Knowles as a party. However, that would be sufficient to trigger disclosure under both the acceptance of nomination form and under the Orange List guidance. In any event, it is self-evident that, in many cases in which Knowles acts as claims consultant for the referring party, it is likely to have a significant say both in who should be put forward as arbitrator/adjudicator, either expressly or impliedly by reference to narrow qualification requirements, and also in who should be sought to be excluded.
- The concerns raised by the relationship evidence are heightened by Mr Bingham's response to Cofely's inquiries and application. In the light of the Eurocom case it was reasonable for Cofely to inquire into the nature of the relationship between Mr Bingham and Knowles. They did so in courteous terms and sought answers to questions which Knowles considered it appropriate to answer. Mr Bingham's essential response, however, involved avoiding addressing the requests and instead giving the appearance of seeking to foreclose further inquiry by demonstrating their irrelevance and, moreover, doing so in an aggressive manner.
- Whilst it was reasonable for Mr Bingham to call for a meeting to seek to address the concerns raised by Cofely, the meeting instead became a means by which Mr Bingham would arrive at a "ruling" on apparent bias. Neither party, however, was seeking such a "ruling", nor was it an appropriate matter for him to be making a "ruling" upon. As was made clear, all Cofely was seeking was further information in order to decide what position to adopt in relation to the concerns it had raised. There was as yet no question of Mr Bingham being asked to recuse himself and inquiries were still at the information gathering stage. Mr Bingham gave the impression that he was seeking to pre-empt that process by pressurising Cofely into acknowledging that there was no issue to be explored.
- Of further concern is the manner in which this was done at the hearing. Excerpts of the transcript have been set out above. They illustrate how Mr Bingham was effectively cross examining Cofely's counsel and doing so aggressively and in a hostile manner. Although counsel had explained that all that was being sought at this stage was information and that Cofely was not yet in a position to state what it ultimate stance was to be, Mr Bingham continually pressed him to state its position and sought to demonstrate at the hearing and through his "ruling" that there were no grounds for concern. I agree with Cofely that Mr Bingham was thereby descending into the arena in an inappropriate manner.
- These concerns are further heightened by Mr Bingham's witness statement. This shows that even now Mr Bingham does not recognise the relevance of the relationship information or the need for any disclosure. There is also no hint that Mr Bingham regards his conduct of the April 2015 hearing as in any way inappropriate. This lack of awareness demonstrates a lack of objectivity and an increased risk of unconscious bias.
- In addition the statement does suggest that Mr Bingham regarded and regards Cofely's requests for information as "assertive, challenging, perhaps even bullying behaviour". This is consistent with his own assertive response at the time. However, the reality is that in general Cofely's inquiries were reasonably made and expressed, particularly in so far as they sought a general statement as to the proportion of appointments and income derived from Knowles related cases over the last three years. Mr Bingham appears, however, to have considered Cofely's inquiries to amount to an unwarranted attack on him and in turn to have seen attack as the best form of defence – this involved descending into the arena.
- For all these reasons I consider that there is force in Grounds (1) to (5) relied upon by Cofely and that considered cumulatively they do raise the real possibility of apparent bias.
- Where there is actual or apparent bias there is also substantial injustice and there is no need for this to be additional