Natural justice has two limbs. The first requires that both parties must have a reasonable opportunity to present their case, and the second requires that nobody may be a judge in their own cause. In other words, a party has a right to hear and respond to the case against it and the adjudicator must remain impartial. The second of these limbs is under discussion in this chapter.
In Healthcare at Home v The Common Services Agency [2014] UKSC, Lord Reed said: “The Clapham omnibus has many passengers. The most venerable is the reasonable man, who was born during the reign of Victoria but remains in vigorous health. Amongst the other passengers … the fair-minded and informed observer“. In the test for bias, this unwavering fictional character represents judicial impartiality and ought to be at the forefront of the adjudicator’s mind.
Actual Bias
Cases of actual bias ordinarily occur when a tribunal has a vested interest in the outcome of a case. The RICS Guidance Note Conflicts of Interest defines actual bias well: “Where the dispute resolver would have a direct (usually pecuniary) interest in the case, which would realistically be affected by its outcome. In such a case the presence of bias is taken for granted and results in automatic disqualification. A minor pecuniary interest (for example, a negligible shareholding, or the fact that the dispute resolver belongs to a large firm which has on occasion carried out work for one of the parties) will not usually count”.
Findings of actual bias on the part of a decision-maker are rare and the author is not aware of this issue arising from adjudication enforcement proceedings. This might be because the burden on proof is lower on an alleged apparent bias.
Apparent Bias
What is more common is apparent bias. This occurs when, as Lord Hope described in Porter v Magill [2001], “… the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased“, a lesser burden than the balance of probabilities.
Like jurisdictional issues, it might be helpful to consider bias in two distinct periods – threshold and internal.
‘Threshold’ Apparent Bias
Before the referral, the adjudicator must disclose any information she considers may affect her impartiality. If the invitation to adjudicate is through an ANB, there will be a series of questions designed to investigate any potential conflict of interest. Common examples of these conflicts of interest can be categorised as follows:
1) Public opinion – Apparent bias may arise when the decision-maker is required to adjudicate on a matter on which she has already expressed an opinion.
2) Commercial relationship – the courts will endeavour to distinguish such cases from simple acquaintanceship or general business contacts.
3) Shared agenda – if one of the parties and the adjudicator have a similar agenda say, actively supporting an advocacy group, the adjudicator should consider declining the appointment.
4) Naming of the same adjudicator – It is not advisable for a party to regularly appoint the same adjudicator. There is also a risk of perceived bias should a party regularly name the same adjudicator.
5) Personal friendships or hostility
6) Prior involvement in the project or in a separate dispute
The International Bar Association’s traffic light system provides a user-guide and advises when an involvement that could amount to a conflict of interest should be disclosed. An equivalent guide can also be accessed through the RICS Guidance Note ‘Conflicts of interest for members acting as dispute resolvers’ and is further discussed in the chapter C is for Conflicts of Interest.
‘Internal’ Apparent Bias
Once the adjudication commences on solid footing, the procedure must continue to evolve in compliance with the rules of natural justice. Some of these situations are discussed below:
1) Without Prejudice material – if the adjudicator is made aware of the amount of a without prejudice offer, due to the inevitable question mark whatever the outcome of the adjudication, it might be necessary to consider resignation. Furthermore, should the adjudicator incorrectly find evidence admissible, and that evidence influences the decision, that decision will be unenforceable (AZ v BY [2023]).
2) Descending into the arena – adjudicators must take care not to turn adjudication meetings into mini-arbitrations, and to interrupt and comment upon the evidence. This conduct is regarded as inappropriate and gives rise to allegations of bias.
3) Unilateral communications – To avoid the appearance of bias, the adjudicator should avoid direct conversations with one party in the absence of the other, either leading up to the appointment or thereafter. On receiving a call, the adjudicator should interrupt the caller at the outset and schedule a conference call. On receiving an email, the adjudicator should forward the communication to the other party before responding.
In Discain Project Services v Opecprime Development [2001] the adjudicator’s decision was challenged on the basis that there was a unilateral telephone conversation, even though the content of that conversation was subsequently communicated to the other party. The Judge refused to enforce the adjudicator’s decision holding that there was a serious risk of bias.
In Paice and Springall v Matthew Harding [2015] the court held that the telephone conversation related to the dispute 3 months prior to the adjudication, amounted to a breach of the rules of natural justice and remarked obiter that had the adjudicator disclosed the conversation during the adjudication, he would have exonerated himself at that point.
Discussion
The 2022 survey by King’s College London found alarming levels of perceived bias. 31% of respondents stated that adjudicators would rarely voluntarily disclose information giving rise to the appearance of bias and even more disconcerting, 40% suspected they fell victim to a biased adjudicator. Even though the survey generated several peculiar findings, these might seem to be founded. It might be expected that parties to a dispute will be entrenched in their positions and unwilling to accept that their assertions could be misplaced and, in such circumstances, it might be human nature to have suspicions.
With these survey results in mind, there is an argument for structural change and the implementation of further transparency. It may be advantageous to introduce a second mandatory disclosure stage of any potential conflicts of interest after the responding party has confirmed their participation.
Conclusion
Although the sentiment of bias from the survey is not supported by the Courts in enforcement proceedings, the perception is unhealthy and threatens to damage the legitimacy of adjudication as the only game in town in the final determination of disputes.
In Metamorphoses, Ovid tells the cautionary tale of Baucis and Philemon where all the town folk are washed away, in no small part, due to their prejudices. The protagonists are saved through their acts which embody impartiality. It might be said this allegory still holds true and the author opines that more than an appearance of impartiality, it is essential that the adjudicator embodies impartiality. Legal realists may have reservations, but the adjudicator must have the ability to ignore any prejudices and predilections and bring objective judgment on the issues in dispute.
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