International Arbitration: Jivraj Overturned - Arbitrators Are Not Employees

The UK Supreme Court has unanimously allowed the appeal in Jivraj v Hashwani, finding that arbitrators are not employees within the meaning of UK anti-discrimination legislation. Accordingly, an arbitration clause requiring arbitrators to be chosen from a particular religious community is neither discriminatory nor void. This decision is important in commercial arbitrations where parties make specific provision for arbitrators' nationality.

Background

The parties entered into a joint venture agreement that contained an arbitration clause providing for three arbitrators, each of whom was required to be a respected member of the Ismaili community (the Requirement). Mr Hashwani, believing that the Requirement had become an unlawful arrangement to discriminate on grounds of religion following the implementation of the Employment Equality (Religion or Belief) Regulations 2003 (the Regulations) appointed a non-Ismaili arbitrator. Mr Jivraj commenced proceedings for a declaration that the appointment of a non-Ismaili arbitrator was void as a breach of the Requirement and Mr Hashwani sought confirmation of the appointment of his arbitrator. This is an important case because it affected not only religious arbitrations, but also the issue of arbitrators' nationality. Many arbitration institutions require that the nationality of the sole arbitrator or chairman cannot be the same nationality as any of the parties. Nationality was not a protected characteristic under the Regulations, but is protected under the Equality Act 2010, which came into force on 1 October 2010 and superseded the Regulations. Accordingly, the nationality requirement in the institutions' rules may have been discriminatory.

Issues

The three main issues for decision by the Supreme Court were:

whether arbitrators were employees for the purposes of the Regulations and, therefore, whether the Requirement was discriminatory; if so, whether religious belief was a "genuine occupational requirement" in the circumstances, so as to provide a defence to the discrimination issue; and if this defence was not available, whether the court could sever the Requirement so as to leave the arbitration clause standing or whether the entire arbitration clause was void. Decision

The Supreme Court, preferring the reasoning of the first instance judge to that of the Court of Appeal, held that an arbitrator was not an employee within the meaning of the Regulations. An arbitrator fell outside the definition...