The judge at the heart of tech giant Uber’s legal battle to operate in London has stepped aside to avoid any perceived conflict of interest.

Emma Arbuthnot, the chief magistrate whose judgment reinstated Uber’s London licence after it was judged not a “fit and proper” private car hire operator, has withdrawn from hearing further appeals by the company after an Observer investigation raised questions into links between her husband’s work and the company.

Lady Arbuthnot, who is married to senior Tory Lord Arbuthnot, approved a probationary 15-month licence for Uber to operate in the capital in June. Her ruling was a lifeline for the company, which in September had been told that Transport for London would not renew its licence. However, after the Observer highlighted her husband’s work for a strategy firm that has advised one of Uber’s largest investors, a spokesman for the judiciary confirmed that Arbuthnot would not hear Uber-related cases in the future. “The chief magistrate had been due to hear a licensing appeal by Uber in Brighton at a date yet to be fixed,” the spokesman said.

Emma Arbuthnot, senior district judge (chief magistrate), based at Westminster magistrates court. Photograph: Euan Cherry/Photoshot

“However, as soon as this link was pointed out to her, she assigned the case to a fellow judge. It is essential that judges not only are, but are seen to be, absolutely impartial.” The spokesman said it was the first time that such a connection had been brought to the chief magistrate’s attention.

Lord Arbuthnot, a former Tory MP for Wanstead and Woodford, and then North East Hampshire, and chair of the defence select committee, was nominated for a peerage by David Cameron in 2015. He was until 31 December last year, three weeks after the start of Uber’s London appeal, a director of SC Strategy Ltd. Little is known about the private intelligence company, founded by Lord Carlile, the former independent reviewer of terrorism legislation, and Sir John Scarlett, the head of MI6 between 2004 and 2009. It has no website and eschews publicity.

One of its few known clients has been the Qatar Investment Authority (QIA), the giant sovereign wealth fund that invests billions around the world.

In December 2014, in a story that was not denied at the time by the QIA and was picked up globally by other media outlets, the Wall Street Journal reported that the fund was one of the main investors to have participated in a $1.2bn financing round for Uber.

Although Arbuthnot stood down as a director of SC Strategy at the end of last year, his parliamentary website states that he remains a senior consultant to the firm, a remunerated position. Mick Rix, national officer with the GMB union which contested Uber’s London licence, said it had not known of the links between Lady Arbuthnot’s husband, SC Strategy and one of Uber’s largest shareholders.

“GMB is surprised by the suggested connection between magistrate Arbuthnot’s husband and Uber,” Rix said. “Any matter which may be perceived as a conflict of interest is required to be drawn to the attention of the parties involved in any litigation at the outset.”

The spokesman for the judiciary said the chief magistrate and her husband had been unaware that the QIA was an investor in Uber or had any links to it. The spokesman added: “The judiciary will have to consider whether the new information could be seen to change the perception of absolute impartiality.” Magistrates are bound by the Judicial Code of Conduct. It acknowledges that even the appearance of a possible conflict of interest may disqualify them. It ensures that a judge will be mindful of such possible conflicts and can draw relevant matters to the attention of the parties in the case. It states: “The question whether an appearance of bias or possible conflict of interest is sufficient to disqualify an officeholder from hearing a case is the subject of Strasbourg, English and Welsh and Commonwealth jurisprudence.”