English Supreme Court Champions Party Autonomy In Arbitration

The often-cited list of advantages of arbitration includes economy, speed, procedural flexibility, the ability to choose arbitrators, the neutrality of the process and cross border enforcement of awards. While parties with experience of international arbitration might doubt some of these claims, the ability to choose your own arbitrator and rely on the neutrality of the process are unquestionably among the most important and popular attributes of arbitration that inspire confidence in its users.

In a seminal decision very recently published in the case of Jivraj v Hashwani [2011] UKSC 40, the English Supreme Court (formerly the House of Lords) dismissed a challenge to the parties' hitherto undoubted right to determine the composition of their arbitral tribunal, and reaffirmed its support for the "breadth of discretion left to the parties and the arbitrator to structure the process for resolution of" their disputes in arbitration.

Background

The case arose from a lengthy dispute between two former partners, who in 1981 entered an agreement which contained an arbitration clause stating that any disputes between them would be resolved by an arbitral tribunal comprising of "respected members of the Ismaili community and holders of high office within the community". However, in 2008 Hashwani, one of the parties to the contract, sought through his lawyers to appoint a respected retired English Judge who was not a member of the Ismaili community. That party claimed that the provision requiring the arbitrators to be members of the Ismaili community was void under the Employment Equality (Religion or Belief) Regulations 2003 (the "Regulations"), because it constituted unlawful discrimination on the grounds of religion in respect of the employment of arbitrators.

If this argument was correct, the consequences for the practice of international arbitration in England and across Europe could have been far reaching. In particular, arbitration clauses incorporating institutional arbitration rules (such as the ICC or LCIA) stipulating that a sole arbitrator, or chairman of a tribunal, should not have the same nationality as any of the parties to the arbitration, could have been rendered void. This could have resulted in a crisis of confidence in international arbitration, because parties want to ensure the neutrality of the process and because they want the right to appoint arbitrators who possess the right cultural and legal background for their case.

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