The big story in England over the past few months concerns
the Court of Appeal decision in Jivraj -v- Hashwani 
EWCA Civ 712.
Mr Jivraj and Mr Hashwani had entered into a joint venture
agreement which provided for any disputes to be referred to
arbitration in London. The clause specified that the three
arbitrators appointed were to be "respected members of the
Ismaili community". Mr Hashwani sought to appoint an
arbitrator who was not Ismaili (Sir Anthony Colman), and Mr Jivraj
challenged this by application to the courts. The Court of Appeal
had to decide whether the requirement for Ismaili arbitrators fell
foul of UK anti-discrimination legislation.
First, the Court of Appeal had to decide whether an arbitrator was
an "employee" for the purposes of the legislation. The Court
focused on the contractual nature of an arbitrator's appointment,
and considered the nature of the arbitrator's role (akin to that of
a judge) irrelevant. The Court decided that as arbitrators work
under a contract of service they are employees, and therefore
entitled to protection under UK anti-discrimination legislation.
The Court decided that the requirement that arbitrators be members
of the Ismaili community fell foul of the legislation. It also
considered that it was not possible to sever the offending words,
since the parties' agreement that arbitrators be members of the
Ismaili community was an integral part of the agreement to
arbitrate. Consequently, the arbitration agreement was invalid.
The wider implications
It is unusual to include religious qualifications in a commercial
arbitration agreement and so, on its face, the case appears limited
to its facts. However, as "employees", arbitrators are now entitled
to protection against all types of discrimination, including that
based on religion or race. In the Equality Act 2010 (which
consolidates all existing anti-discriminatory legislation as of 1
October 2010) (Act) the definition of "race" includes nationality.
This means that any provisions in an arbitration agreement which
restrict the appointment of an arbitrator on the basis of
nationality are potentially discriminatory and unlawful under the
Act. This also applies to other provisions that might be
discriminatory under the Act, such as a requirement that an
arbitrator have a certain amount of experience (potentially age
discrimination). If the offending provisions cannot be severed, the
whole arbitration agreement could be considered void.
How does that affect institutional clauses?
The rules of certain arbitration institutions, including the LCIA
and ICC, contain provisions on the nationality of an arbitrator. It
is arguable that they are not unlawful under the Act because they
are included to ensure impartiality and neutrality, the
cornerstones of international arbitration and one of the main
reasons for choosing it. However, other institutions have achieved
this without including restrictions as to nationality (such as the
SIAC). It would be surprising if the English courts considered
internationally recognised institutional clauses invalid. It is
understood that the case will be appealed to the Supreme Court.
Is the decision confined to England or does it have wider
implications in the EU?
Some commentators have suggested that the decision could impact on
institutional clauses where the seat is in Europe as UK
anti-discrimination legislation is based on EU anti-discrimination
law. This will depend on how each Member State interprets EU
anti-discrimination law and so local law advice will need to be
What can clients do to protect themselves?
Until definitive guidance is given by the Supreme Court, we are
recommending that clients negotiating arbitration agreements with
London as its seat:
- avoid including requirements as to age, nationality or
qualifications to practise in a particular jurisdiction; and
- amend institutional clauses to clearly exclude any provisions in
the rules which relate to requirements as to nationality of the
If you are currently negotiating such an agreement, we would be
happy to discuss this further with you.
Impact of the decision on other types of dispute
Where experts, adjudicators and mediators are appointed under a
contract, it is likely that they will also be regarded as
"employees" and as such, entitled to protection under the Act.
Expert determination and adjudication clauses commonly specify that
the expert or adjudicator appointed satisfy particular
requirements. These are usually technical requirements considered
essential for performance of the role of expert or adjudicator,
e.g. appointment of an accountant to act as expert in a valuation
dispute. Provided they are not discriminatory, such requirements
will fall outside the Act. However, any requirements as to
nationality, age, religion or other protected ground could be
regarded as discriminatory and the validity of the clause
challenged. On that basis, we recommend that any requirements as to
nationality or age be removed from such clauses.
We understand that the parties are appealing to the Supreme Court
and that the LCIA and ICC are considering seeking permission to
make submissions. Hopefully, the Supreme Court will clarify the
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of all developments in the law and practice, or to cover all
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