The story is a lesson for all arbitrators and judges. Save & Prosper is the landlord of the Homebase shed. It was time for a rent review. The lease provided for arbitration in the event of a quarrel. They did quarrel and called upon the RICS to appoint the arbitrator. Ordinarily, the RICS asks a potential arbitrator to consider conflicts of interest. It has a questionnaire that is returned to the appointing body. The questionnaire searches for any involvement of the person or their firm with the parties to the arbitration: is there a “relevant connection”? It stops short of inquiring into connections with companies associated with actual parties. The court says this is a dangerous limitation, since this very area of connection trapped the eventual arbitrator – Clarke.
He is a salaried partner in a firm that does work for Sainsbury’s Developments Ltd, but this was about Homebase Ltd. Since his firm had no work on for Homebase, he felt there was no conflict of interest. He recognised a connection of sorts, but said that such a distant relationship provided no real danger of bias. After all, the two companies in the Sainsbury’s group have different functions, different property teams and different head offices.
Trouble is, there is a bit of a campaign going on in the courts at the moment. Parties are likely to turn nasty if there is any sign of partiality or perceived connection, and one or two judges have had the spotlight turned on them. That said, if an arbitrator has their nest feathered by one side, it doesn’t count for anything if they can still be even-handed. The real test is what the unconnected but reasonable observer would make of the connections. When the judge weighed up all the circumstances, he couldn’t criticise Clarke personally, but still removed him as arbitrator. The judge stood as the reasonable bystander and felt it appeared too generous to say that Homebase and Sainsbury’s were wholly disassociated. There was, he thought, a reasonable risk of bias. Notice how the judge didn’t have to say bias was probable or likely; there only has to be a mere suspicion. So if I buy my grass seed from Homebase and buy my sugar from Sainsbury’s, am I biased towards them or they to me? Tesco, here I come.
If an arbitrator has their nest feathered by one side, it doesn’t count for anything if they can still be even-handed
The second case that turned the spotlight on to personalities is Anglo vs Winther Browne. It, too, is a fashionable line of attack, this time on the expert witness. The two people who appeared for Winther Browne were seriously criticised for their “confrontational approach”. They are experts from a firm called FMC. Oddly enough, the same firm caught it in the neck in another case two years ago called Gretton vs British Millerain.
FMC has two parts: Consult, which specialises in technical problem-solving, and Resolve, which is about claiming and pursuing and winning. It mail-shots clients and says that it has handled more than 600 claims and “never lost a case”. Actually Dr Salmon, the particular expert in question, has only ever given evidence in court on two occasions. It also is clear that Dr Salmon recognises a difference between being an expert and being a negotiator. Snag is, the judgment gives the impression that he couldn’t quite identify when he was supposed to be the hard-nosed negotiator and when the impartial expert, required to help the court.
The judge said: “It is normally inappropriate for the same expert to undertake both roles. In this case it is clear that Dr Salmon was unable to distinguish between them … I find that Dr Salmon failed to conduct himself in the manner expected of an expert witness.” It was revealed that an expert report prepared for the court was actually a “negotiation tool” never intended for this use because it relied on unrealistic and inflated assumptions.
Postscript
Tony Bingham is a barrister and arbitrator specialising in construction. You can write to him at 3 Paper Buildings, Temple, London EC4 7EY, or e-mail him on info@tonybingham.co.uk.
