Newcastle United FC Fail in Attempt to Remove Arbitrator to Hear Dispute Over Proposed Takeover
Newcastle United FC failed in its recent UK proceedings to remove an arbitrator who was appointed to hear a dispute over its proposed takeover due to alleged bias

Newcastle United Football Club (Newcastle) recently applied to remove the chair of the arbitration panel due to consider the Premier League's rejection of a proposed takeover of the club. The English High Court (Court) ruled that Michael Beloff QC could continue in his role, as Newcastle's allegation of bias did not meet the "reasonable bystander" test.

Background

Newcastle is currently in a dispute with the Premier League about a proposed takeover of the club by the Public Investment Fund, a Saudi Arabian sovereign wealth fund. The Premier League decided that the fund was controlled by the government of the Kingdom of Saudi Arabia (Saudi Arabia) and therefore Saudi Arabia would be a director subject to the Premier League's Owners and Directors Test. Newcastle contested this decision and referred it to arbitration.

In accordance with the UK Arbitration Act 1996, each party nominated an arbitrator. Beloff was then nominated for appointment by the two arbitrators to chair a three-person arbitration panel. Beloff provided a statement of impartiality confirming there were no grounds that cast 'justifiable doubt' over his impartiality in the role. Neither party objected to his appointment at the time. 

Newcastle subsequently discovered that, Beloff was involved in twelve arbitrations with the Premier League in the previous three years. The Premier League had nominated Beloff as arbitrator in three of those arbitrations. Newcastle also discovered that Beloff had advised the Premier League about potential amendments to its arbitration rules over two years prior to his appointment. Newcastle invited Beloff to recuse himself from the arbitration on the basis that it would have objected to his appointment had it been aware of these facts at the time.

The Test

Newcastle applied to remove Beloff on the grounds that "a fair-minded and informed observer would conclude that there was a real possibility the arbitrator was biased". This test was laid down in the recent UK Supreme Court case of Halliburton Company v Chubb Bermuda Insurance [2020] UKSC 48, an approach which is broadly similar to the Irish test for bias set out in Bula v Tara Mines (No.6) [2000] 4 I.R. 41.

The Court held that if Beloff's previous advice to the Premier League was "concerned with the very issue that arises in this arbitration, then a reasonable bystander might have thought there was a possibility of bias". The Court held that this was not the case here, so there was no real risk of bias. The Court noted that the longer the gap between being instructed to advise a client and the appointment of an arbitrator, the less likely that the relationship would cause the fair-minded observer to conclude that there was a real possibility of bias. The Court concluded that there was no real risk of bias and dismissed Newcastle's application. 

The Irish Position

While the Newcastle decision or Haliburton are not binding in Ireland, they are useful illustrations of the high threshold a claimant must overcome to remove an arbitrator. Ireland's Arbitration Act 2010 adopts the United Nations Commission on International Trade Law's (UNCITRAL) 'Model Law'. Article 12 of the Model Law imposes a mandatory duty on an arbitrator to disclose conflicts of interest.

"When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or independence….. An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to his impartiality or independence, or if he does not possess qualifications agreed to by the parties."

The test in Ireland for assessing bias is an objective one.  As set out in Bula the question is "whether a reasonable person in the circumstances would have a reasonable apprehension that the applicants would not have a fair hearing". In Bord na Móna v Sisk [1990] 1 IR 85, it was suggested that the appointment of an arbitrator would be contaminated because of bias when a "right minded person with full knowledge of the facts would have been lead to conclude there was a real likelihood of bias." 

Conclusion

The test for removing an arbitrator due to alleged bias has a similar application in Ireland and the UK. Parties to an arbitration should be mindful that this is a difficult test to satisfy. Parties should ensure that an arbitrator discloses all potential conflicts of interest at the outset and complies with Article 12 of the Model Law.

 

Contributed by Patrick Murphy & Stephen Dawson

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Craig Sowman Partner

Derek Hegarty Partner

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