Clause for concern?

Arbitrators are not employees for the purpose of anti-discrimination legislation, the Supreme Court has unanimously ruled.

In Jivraj v Hashwani [2011] UKSC 40, the justices found that an arbitration clause specifying that arbitrators be of a particular religion, was neither discriminatory nor void. The clause, in a business agreement between Mr Hashwani and Mr Jivraj, provided that each of three arbitrators must be a respected member of the Ismaili Muslim community.

Hashwani nominated Sir Anthony Colman, a former High Court judge, as arbitrator. Jivraj objected, on the grounds Sir Anthony is Jewish. Hashwani argued that the clause had become unlawful because it discriminated on grounds of religion under the Employment Equality (Religion or Belief) Regulations 2003 (SI 2003/1660).

Overturning the Court of Appeal decision, the justices held that an arbitrator is not an employee but an independent provider of services with a duty of impartiality to both sides of a dispute, and therefore the regulations did not apply.

Sarosh Zaiwalla, senior partner at Zaiwalla & Co, who is acting for Hashwani, said: “It is disappointing that in today’s age the Supreme Court did not take a more enlightened approach to ensure that it would discourage any form of discrimination on grounds of race, religion or sex in the appointment of arbitrators.”

Other lawyers, and arbitrators, have expressed relief at the decision. Following the Court of Appeal’s decision last year, thousands of international businesses made sure their arbitration clauses did not stipulate the religion or nationality of the arbitrator.

Tony Marks, director of legal services at the Chartered Institute of Arbitrators, said: “This will come as a relief to the arbitration profession.”

Adrian Lifely, head of international arbitration at Osborne Clarke, said: “It resolves the uncertainty caused by last year’s surprising judgment.

“As an arbitration centre, London is worth millions of pounds to the UK economy. What makes it attractive to users of arbitration is the ability to arbitrate with minimal interference from the UK courts and for users to freely select the tribunal that will determine their disputes.”