Don't Panic! Sanity Prevails In Jivraj (But Was It Really Worth All That Fuss?)

Author:Mr Richard Power
Profession:Berwin Leighton Paisner LLP
 
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In Jivraj v Hashwani the Supreme Court held that arbitrators are not employees and are not subject to anti-discrimination legislation. But is the ability to specify an arbitrator's religion or nationality really fundamental to arbitration?

What has happened?

The Court of Appeal previously held that UK employment legislation applied to the appointment of an arbitrator, and hence prohibited a clause specifying the arbitrator's religion. As the Equality Act also prohibits employment discrimination on the grounds of race/nationality, by analogy such clauses would also be void. This would have been problematic since most major arbitration institutions' rules (including the ICC's and LCIA's) provide that where the parties to an arbitration are of different nationalities, the sole arbitrator/chairman will not be of the same nationality as either party.

Some EU states have not interpreted EU anti-race discrimination rules as applying to nationality, and none applied those rules to arbitrators; commentators feared therefore that London would be at a competitive disadvantage compared to other potential arbitral seats. Parties would go elsewhere, so as to be able to control their arbitrators' nationality. However, in July 2011 the Supreme Court overturned the Court of Appeal's decision.

Key points of the Supreme Court decision

The Supreme Court recognised that the relationship between the appointing parties and the arbitrator is unique; although the arbitrator is appointed and paid by the parties, he is not in a subordinate relationship with them. He is an independent, quasi-judicial adjudicator. Therefore, arbitrators are not "employees" for the purposes of the Equality Act.

Four of the five justices also commented as an aside that even if an arbitrator were an employee, it may be appropriate in some cases to stipulate that an arbitrator be of a particular religion or belief, in order to give the parties confidence in the arbitral process; hence the discrimination would be allowed as a "genuine occupational requirement".

The decision has been widely welcomed because it preserves the appointing parties' right to specify the characteristics of the arbitrator; and it removes the prospect of commonplace arbitration clauses being void where they require an arbitrator/tribunal chairman to be of a different nationality than the parties. Consequently, the UK will not be out of step with other potential arbitral seats, and the threat to London's position as a leading arbitral...

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