Casting The Net

In the case of Sierra Fishing & Ors v Ali Zbeeb & Ors the High Court has taken the unusual step of removing an arbitrator under section 24 Arbitration Act 1996.

Commercial arbitration is a means of resolving business disputes between two or more parties outside a formal court system. After reviewing all of the evidence an arbitrator will make a final decision in the case which the parties are then bound by.

This case centred around Sierra Fishing (a Sierra Leonean seafood supply company) who had entered into a written contract for a loan agreement. A dispute arose between the parties and in August 2012 the defendants served a request for arbitration in London and confirmed that they had appointed Mr Ali Zbeeb as arbitrator.

In June 2014, Sierra Fishing objected to Mr Zbeeb acting as arbitrator. Mr Zbeeb rejected this argument stating that his appointment was valid and further, that they had lost the right to appeal his appointment (under section 73 Arbitration Act 1996) because they had already taken part in the arbitration process.

Sierra Fishing then submitted an application to remove Mr Zbeeb as arbitrator under section 24(1) Arbitration Act 1996. The High Court, following section 24 Arbitration Act and applying the common law test of bias – would a fair minded and informed observer conclude that there was a real possibility of bias – decided that Mr Zbeeb should be removed as arbitrator.

In finding that Mr Zbeeb was not impartial, the High Court considered four persuasive submissions as put forward by Sierra Fishing. These were:

  1. The legal and business connection between Dr Farran (the first defendant and chairman of a Lebanese bank) and the arbitrator – Mr Zbeeb had been engaged as legal Counsel by the bank where Dr Farran was chairman, and Mr Zbeeb’s father continued to act as legal counsel for both Dr Farran personally and the bank.
  1. The arbitrator’s involvement in the drafting of two relevant agreements – this agreement (the loan agreement) had included the clause that would allow Mr Zbeeb to have sole conduct of the arbitration.
  1. The connection between the arbitrator and the lawyers for the defendants – however the Judge found there was not enough evidence to support this submission.
  1. The arbitrator’s conduct of the arbitration – namely Mr Zbeeb’s refusal to postpone publishing his award pending the outcome of the Sierra Fishing’s challenge and the content and tone of Mr Zbeeb’s communications. The Judge confirmed that Mr Zbeeb’s tone made it appear to an outsider that he himself had taken up the battle on behalf of the defendants and therefore had not remained impartial.

The removal of an arbitrator is normally considered an extreme measure however referring to both the International Bar Associations Guidelines on Conflicts of Interests in International Arbitration (IBA) and the Arbitration Act 1996 the Judge deemed that the facts of this case were significant enough to show bias on the part of Mr Zbeeb, therefore the only fair outcome was to order his removal.

Picture of Luke Patel

Luke Patel

Luke Patel
Partner
Commercial Dispute Resolution Team  
0113 227 9316
LPatel@LawBlacks.com
@LukeLawBlacks

 

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