David Fraser reports on a recent test case which explored what should happen when there is a risk of arbitrator bias

The Court of Appeal has dismissed an appeal from the decision of Justice Longmore in a test case on bias in arbitration. Despite the efforts of AT&T, Clifford Chance, Cravath Swaine & Moore, Sir Sydney Kentridge QC and Toby Landau, in the case of AT&T Corporate & anor v Saudi Cable Company the UK courts have taken the view that the London Court of International Arbitration's president, Yves Fortier QC, cannot be removed as chairman of an International Chamber of Commerce (ICC) arbitration tribunal for failing to disclose that he was a non-executive director of AT&T's rival telecoms giant, Nortel of Canada.

AT&T complained that had it known of Fortier's link with Nortel it would never have accepted him as chairman. The respondent in the arbitration, Saudi Cable, backed by a formidable team, relied on the fact that the ICC saw no reason to remove the chairman and argued that there is no "real danger" of unconscious bias on Fortier's part. Actual or conscious bias is not alleged.

The arbitration began in 1995 and is therefore not subject to the Arbitration Act 1996. The application to the court was made by reference to Section 23 of the Arbitration Act 1950 under which the court may remove an arbitrator for misconduct. There is no equivalent provision in the 1996 act, but under Section 24 a party can apply to remove an arbitrator if circumstances exist that give rise to justifiable doubts about their impartiality. The Court of Appeal addressed the question of whether there was a "real danger" that Fortier was predisposed or prejudiced against AT&T because he was a non-executive director of Nortel. It is difficult to see any material difference between the test applied in this case and the definition of bias in Section 24. Moreover, the Court of Appeal endorsed the view that the test of bias for arbitrators is exactly the same test that is applied to judges sitting in courts of law.

The question now being asked is how the case affects London's attractiveness as an arbitration centre.

But it should not be harmful. The judicial attitude is pro-arbitration and the courts recognise the injustice of disrupting an arbitration process (and setting aside the three awards which have already been made in this matter) unless a compelling case of bias can be made.

David Fraser is head of arbitration at Baker & McKenzie.