<center><span class="news-text_italic-underline">Aiteo Eastern E & P Company Limited v Shell Western Supply and Trading Limited & Others [2024] EWHC 1993 (Comm)</span></center>
The recent <span class="news-text_italic-underline">Aiteo v Shell</span> case has brought arbitrators’ disclosure duties and apparent bias to the forefront of arbitration discourse. This case involved Aiteo Eastern E & P Company Ltd (“<span class="news-text_medium">Aiteo</span>”), an African energy firm, challenging four partial arbitration awards under section 68 of the <span class="news-text_italic-underline">Arbitration Act 1996</span> (“<span class="news-text_medium">AA 1996</span>”). Aiteo’s key allegation centered around the appreance of bias due to undisclosed professional relationships between one of the tribunal members, Rt Hon Dame Elizabeth Gloster DBE (“<span class="news-text_medium">DEG</span>”), and Freshfields Bruckhaus Deringer LLP (“<span class="news-text_medium">Freshfields</span>”), the law firm representing Shell Western Supply and Trading Limited (“<span class="news-text_medium">Shell</span>”) and other Lenders.
In 2014, Aiteo obtained US$2bn in funding through two facility agreements: an Offshore Facility Agreement with Shell (governed by English law) and an Onshore Facility Agreement with Nigerian lenders (the "<span class="news-text_medium">Lenders</span>") (governed by Nigerian law). Both agreements included arbitration clauses under ICC Rules, with London as the seat. Disputes arose in 2020 over Aiteo’s alleged failure to meet payment obligations, leading to separate arbitration proceedings against Shell and the Nigerian lenders. DEG was nominated as an arbitrator by Shell in the Offshore Arbitration and by the Lenders in the Onshore Arbitration.
The court focused on whether a fair-minded and informed observer would perceive a real possibility of bias due to DEG’s undisclosed connections with Freshfields. Aiteo argued that multiple undisclosed or delayed disclosures of appointments and advisory roles created an appearance of bias. The court acknowledged the relevance of the IBA Guidelines on Conflicts of Interest in International Arbitration and the ICC Rules in assessing bias.
Ultimately, the judge found a cumulative picture of apparent bias due to the following factors:
While DEG’s professional engagements themselves did not constitute misconduct, the cumulative lack of disclosure was deemed significant. The court partially upheld Aiteo’s challenge, remitting one of the four awards for reconsideration while dismissing the challenges to the other three awards.
This judgment reinforces the principle of transparency in arbitrator disclosures and the need for diligence in avoiding any appearance of bias. Even minor engagements can cumulatively impact the perception of impartiality, requiring arbitrators to remain proactive and meticulous in disclosures. The ruling aligns with the landmark <span class="news-text_italic-underline">Halliburton Co v Chubb [2020] UKSC 48</span> decision, underscoring the importance of impartiality and disclosure in English-seated arbitrations.
Practitioners are advised to approach arbitrator selection with heightened attention to disclosure obligations. It is essential to independently verify all potential conflicts and raise full and frank disclosures at the outset. Arbitrators must also proactively manage their disclosures, overseeing administrative matters to ensure compliance. This case serves as a warning that a failure in transparency may lead to a finding of serious irregularity under Section 69 of AA 1996.
In light of the <span class="news-text_italic-underline">Aiteo</span> case, repeat appointments and the cumulative effect of minor engagements should be approached with caution. Arbitration institutions are reminded that their decisions, while administrative, do not create res judicata or issue estoppel under English law. The case serves as a reminder that fairness and impartiality are the cornerstones of arbitration, safeguarded by strict adherence to disclosure obligations.
