UK: An Arbitrator Is An Employee Within The Meaning Of The Employment Equality (Religion And Belief) Regulations 2003

Last Updated: 26 October 2010

By Kartik Mittal, Zaiwalla & Co. Solicitors1

Introduction

The society that we live in is changing rapidly. The United Kingdom has witnessed a major influx of people from difference cultures, religions and beliefs in the past few decades. This has made our society more cosmopolitan and more complex. This makes it necessary for the state to have laws which ensure that people live together peacefully, within the norms of society, and at the same time learns to respect each other's religions, values, morals, traditions and cultures.

The two conflicting rights associated with this change are:

  1. 'The Right to Equality.' This includes within its ambit equality in relation to employment. A corresponding duty which arises out of this Right is a duty not to discriminate on the basis of religion or belief; and
  2. An Individual's right to Freedom of Religion and Belief.

Both of these rights have been recognised under the United Nation's principle document on Human Rights, The Universal Declaration of Human Rights 1948.2

Since these rights necessarily overlap, it is sometimes necessary for Lawmakers to tailor them according to the needs of society. This article addresses a recent attempt by the Court of Appeal to do just that, in the case of Jivraj –v-Hashwani.

Jivraj –v-Hashwani [2010] EWCA Civ 712

This is a landmark judgement in which my firm is representing Mr. Sadruddin Hashwani in his claim against Mr. Nurdin Jivraj. The Court of Appeal in this case has harmonised the rights discussed above, while deciding the question of whether or not an Arbitrator comes within the ambit of the Employment Equality (Religion and Belief) Regulations 2003.

Facts

A commercial dispute arose between the parties in relation to a Joint Venture Agreement which they had entered into. The Joint Venture agreement contained an Arbitration Clause which provided for the appointment of a three-member Arbitration Tribunal to adjudicate any disputes between the parties. The Arbitration Clause provided that all members of the Tribunal shall be respected members of the Ismaili community and holders of high office within that community.3

In 2008, Mr. Hashwani commenced arbitration proceedings through our firm against Mr. Jivraj under the abovementioned arbitration agreement, and appointed Sir Anthony Colman as his nominated Arbitrator. Mr. Jivraj contended that this appointment was invalid as Sir Anthony Coleman was not a member of the Ismaili Community. He issued an application in the High Court of Justice seeking a declaration that his appointment was invalid.

Issues

Mr. Jivraj succeeded in his argument before the High Court, and Mr Hashwani appealed to the Court of Appeal .The Court of Appeal, giving limited permission to Appeal, heard arguments to determine the following issues:

  1. Does this Arbitration Agreement, discriminating as it does against non-Ismaili Arbitrators, come within the ambit of Regulation 6 of Employment Equality (Religion and Belief) Regulations 2003?
  2. If the Arbitration Agreement does discriminate against non Ismaili arbitrators, can such discrimination be justified under Regulation 7 of the Employment Equality (Religion and Belief) Regulations 2003?
  3. If the provision providing for the appointment of Ismaili arbitrators in the arbitration agreement is held to be discriminatory under points 1 and 2 above, will this render the whole arbitration agreement invalid or can the discriminatory provision be severed from the arbitration agreement?

Judgement

LJ Moore- Bick, LJ Aikens and Sir Richard Buxton hearing this Appeal held that:

  1. The Employment Equality (Religion and Belief) Regulation 2003 applies to Arbitrators, as they are employees within the meaning of Regulation 3 by virtue of having entered personally into a contract to do work.4
  2. An Arbitration agreement constitutes an arrangement within the meaning of Regulation 6 (1) (a) and hence any discrimination sought to be made by such an arrangement is unlawful under the Regulations.5
  3. The Arbitration agreement in question requires the parties to refuse or not to offer employment to non members of the Ismaili community. This is unlawful under Regulation 6 (1) (c) of the Employment Equality (Religion and Belief) Regulation 2003.6
  4. The exception contained in Regulation 7 (3) of Employment Equality (Religion and Belief) Regulation 2003 does not apply to the present case, as it cannot be said that it was essential for the arbitrators to be members of the Ismaili community for them to adjudicate this commercial dispute between the parties. The job expected by the arbitrators did not require them to be members a particular community.7
  5. The whole of the arbitration agreement is void. The intention of the parties to arbitrate cannot be severed from the discriminatory provision that the arbitrators should be members of the Ismaili community as this would amount to re-writing the arbitration agreement.8

Impact of this Judgement on Future Arbitrations

Status of Arbitrator

The status of an arbitrator has been subject of debate for decades. This is best described in Merkin's Arbitration Law, 2004 which states that:

'It is not possible to classify the status of arbitrators as either fully contractual or fully statutory and it has indeed been said [by Mustill and Boyd] that the appointment of an arbitrator is not like anything else at all'

Following this judgement, the nature of an Arbitrator's status will be viewed as more akin to contractual rather than statutory, i.e. an arbitrator is an employee of the parties and therefore subject to national legislation intended to protect employees from discrimination in the workplace.

Our day to day choices of services

The Court of Appeal has given a wide interpretation to the term 'employment' under the Employment Equality (Religion and Belief) Regulation 2003. This will impact the everyday choices that we make while engaging any services, including those such as a carpenter or an electrician.9 This is because 'employment' is to be construed to include any Contract to personally provide services. As a result of this decision, even when engaging everyday services, such as that of a carpenter or electrician who contracts independently, it will be unlawful to discriminate, on the basis of their religion, against any individuals whose services you seek to engage.

Affect on Arbitrations governed by religious Institutions or bodies

It was argued on behalf of Mr. Jivraj that, if the court was to hold the Arbitration agreement invalid, it would curtail the freedom of members of a particular religion or community to have their disputes resolved within the community. The Court, having drawn a balance between an individual's right to freedom of religion and their right not to be discriminated against, stated as follows:

'If the arbitration clause had empowered the tribunal to act 'ex aequo et bono' it might have been possible to show that only an Ismaili could be expected to apply the moral principles and understanding of justice and fairness that are generally recognised within that community as applicable between its members, but the arbitrators' function under clause 8 is to determine the dispute between the parties in accordance with the principles of English law. That requires some knowledge of the law itself, including the provisions of the Arbitration Act 1996, and an ability to conduct the proceedings fairly in accordance with the rules of natural justice, but it does not call for any particular ethos'10

The position following this judgement seems to be that the parties are free to have their disputes adjudicated by their respective religious/community Arbitration institutions/individuals, even though it may amount to discrimination, if it can be shown that while adjudicating the dispute the institution/individual would be applying certain morals, principles or ethos which are only accustomed to the religion/community and would require adjudication by such institution/individual. In essence they would have to show that the nature of the job requires a person with such expertise as to justify discrimination. In cases such as this however, if a dispute is of a purely commercial nature, then discrimination shall not be allowed as it would come within the ambit of the Employment Equality (Religion and Belief) Regulations 2003.

Effect on current arbitration rules

Certain commentators have discussed how this judgment may impact on ICC and LCIA rules in that an arbitrator should not be of the same nationality as the parties in order to ensure independence. The issue of nationality falls within the term of race and not religion/belief and therefore falls under different legislation. In my view this discrimination would fall under the exception that discrimination is only illegal if it is without lawful cause. Since the intention of the ICC or any other arbitration rules is to maintain independence and to ensure an unbiased arbitration, then such discrimination would be lawful.

Conclusion

The decision of the Court of Appeal is in consonance with the spirit of the Equality Act 2010. This legislation goes a step further in reinforcing the fact that the United Kingdom is a front-runner on the question of ensuring equality, fairness and justice in its society.

Footnotes

1. We acknowledge the contribution of Ms. Emily Golmohamad.

2. Article 7 and 18 of the Universal Declaration of Human Rights 1948

3. Clause 8 of the Joint Venture Agreement dated 29th January 1981

4. Para 17 of the Judgement, Jivraj –v- Hashwani [2010] EWCA Civ 712

5. Para 23 of the Judgement, Jivraj –v- Hashwani [2010] EWCA Civ 712

6. Para 24 of the Judgement, Jivraj –v- Hashwani [2010] EWCA Civ 712

7. Para 29 of the Judgement, Jivraj –v- Hashwani [2010] EWCA Civ 712

8. Para 32 of the Judgement, Jivraj –v- Hashwani [2010] EWCA Civ 712

9. Para 19 of the Judgement, Jivraj –v- Hashwani [2010] EWCA Civ 712

10. Para 29 of the Judgement, Jivraj-v- Hashwani [2010] EWCA Civ 712

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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