The launch of LCAM
May 2020 saw the London Chamber of Commerce and Industry launch its independent dispute resolution service, the London Chamber of Arbitration and Mediation, or LCAM. LCAM’s aim is to provide fast, innovative and cost-effective mediation and arbitration services for businesses.
In June 2020, LCAM’s two sets of arbitration rules – the standard LCAM Arbitration Rules and the Expedited Arbitration Rules – came into effect. These give parties a choice of two different arbitration procedures which are modern in approach and geared towards cost-effectiveness, speed and efficiency, and strong institutional case management.
This month, LCAM published revised Arbitration Rules. These came into force on 1 June 2021 and, although the amendments are modest in scope, there are a number of features worth highlighting – in particular in relation to arbitrators’ duties to disclose circumstances which may compromise their independence or impartiality.
LCAM’s arbitration rules
The LCAM Arbitration Rules reflect progressive trends in arbitration. For example, they provide for the early dismissal of unmeritorious claims and defences, the consolidation of multiple proceedings, and joinder of third parties to the arbitration. They address contemporary challenges, such as restrictions on live hearings due to COVID-19, by providing for virtual hearings. And they promote expedition, with the tribunal required to issue its final award no later than six weeks after the arbitration is concluded.
LCAM’s Expedited Arbitration Rules offer an even more expedited and cost-effective procedure, available to parties no matter the value of their dispute. Novel features include provision for a six-month time-frame from commencement of the arbitration (and six weeks from closing submissions) for the sole arbitrator to issue his/her award – a far shorter period than the average 18-month lifespan of a commercial arbitration. They also dispense with oral merits hearings in favour of an award made on the documents alone. Other features designed to limit time and costs include strict word-limits and short time periods for parties to prepare their statements of case – ranging from 7 to 28 days – and there is a presumption against having a document production phase.
Both sets of rules also afford LCAM, through its Board, a hands-on case management role. For example, under the LCAM Rules, the Board has strong fact-finding powers – normally the preserve of the tribunal – as it may request that parties provide further details about their written submissions, failing which the Board may dismiss the claim or counterclaim.
Obligation on arbitrators to disclose potential conflicts of interest
An important feature of LCAM’s Arbitration Rules is their imposition on arbitrators of pre- and post-appointment disclosure obligations. Before the appointment, and while the arbitration is ongoing, an arbitrator must disclose any circumstances which may give rise to justifiable doubts as to his/her impartiality or independence in the eyes of the parties. The revised 2021 Arbitration Rules also impose an obligation on arbitrators to sign a declaration of impartiality and independence before being appointed (as well as on appointment).
These features provide parties arbitrating under the LCAM Arbitration Rules with needed clarity in the wake of the UK Supreme Court’s decision in Halliburton v Chubb. This decision has brought into question whether the customs and practices in different fields of arbitration (for example, insurance or commodities arbitrations) require arbitrators to disclose multiple, related appointments, or whether, in any particular field, there is an established practice of arbitrators taking on related appointments, so precluding the need for disclosure.
In the Halliburton v Chubb arbitration, the appointed chairman was later appointed in another arbitration arising out of the same facts and to which Chubb (but not Halliburton) was a party. The arbitrator did not go back to inform Halliburton of this later appointment by Chubb and when Halliburton found out, it attempted to have the arbitrator removed for apparent bias or impartiality.
The Supreme Court had to decide two principal issues on appeal: firstly, whether an arbitrator’s acceptance of an appointment in a second arbitration arising out of the same facts and involving only one of the parties to the first arbitration, could give rise to apparent bias; and secondly, whether an arbitrator could accept the later appointment without disclosing it.
On the first issue, the Supreme Court found that if an arbitrator accepted multiple, related appointments arising out of the same facts, this may give rise to apparent bias, since a party which was common to two arbitrations with the same arbitrator could potentially obtain a procedural advantage by having earlier visibility of the arbitrator’s reaction to evidence and arguments put forward in the arbitration heard first. However, the Court considered that whether there was apparent bias depended on the customs and practices of the particular field of the arbitrations in question.
On the second issue, the Supreme Court found that arbitrators have a legal duty to disclose facts and circumstances which would or might reasonably give rise to apparent bias, and this could include their acceptance of multiple, related arbitral appointments concerning the same matter with one common party. Again, however, the Court considered that whether an arbitrator was required to disclose such appointments depended on the customs and practices in the relevant field of the arbitrations in question.
The express imposition by the LCAM Arbitration Rules of a continuing duty of disclosure on arbitrators will provide parties with greater visibility as regards related appointments and potential conflicts of interest. This should help to avoid disputes about whether relevant customs and practices permit arbitrators to accept multiple, related appointments without disclosing them
Ben Hornan, Partner, Hogan Lovells and Katie Duval, Senior Associate, Hogan Lovells