Arbitrator Qualifications and Anti-Discrimination Laws: Insights from the Jivraj v. Hashwani UK Supreme Court Case for International Appointments?

Japanese Attorney at Law - Bengoshi L.L.

• 8 min read

Party autonomy—the freedom of contracting parties to shape their own dispute resolution process—is a cornerstone of international arbitration. A key manifestation of this principle is the ability of parties to choose their arbitrators, or at least the criteria for their selection. However, this autonomy can come into tension with fundamental public policies, including national and international norms against discrimination. What happens when an arbitration agreement specifies that arbitrators must possess certain characteristics, such as belonging to a particular religious community, and those requirements are challenged under anti-discrimination laws? The UK Supreme Court's landmark decision in Jivraj v. Hashwani ([2011] UKSC 40), delivered on July 27, 2011, grappled directly with this complex interplay, offering crucial insights for international appointments.

I. The Arbitration Agreement at the Heart of Jivraj v. Hashwani

The dispute in Jivraj v. Hashwani stemmed from a joint venture agreement entered into in 1981 between two Pakistani nationals, Mr. Nurdin Jivraj and Mr. Sadruddin Hashwani. The agreement, governed by English law with London as the seat of arbitration, contained a detailed arbitration clause. This clause stipulated a three-member arbitral tribunal. Each party was to appoint one arbitrator, and the third arbitrator, the presiding arbitrator, was to be the President of His Highness Aga Khan National Council for the United Kingdom.

The contentious part of the clause, and the focal point of the litigation, was a specific qualification requirement: all three arbitrators had to be "respected members of the Ismaili community" and persons holding high office or having been recognized within that community. The Ismaili community is a branch of Shia Islam.

When the joint venture was terminated in 1988, disputes arose concerning the distribution of assets. In 2008, Mr. Hashwani indicated his intention to commence arbitration and nominated a distinguished former judge as his arbitrator. However, this nominee was not a member of the Ismaili community. Mr. Jivraj challenged this appointment in the English courts, seeking a declaration that the nomination was invalid because it did not comply with the Ismaili community requirement in the arbitration clause.

Mr. Hashwani's primary defense was that the requirement for arbitrators to be from the Ismaili community was unenforceable because it constituted unlawful religious discrimination. He relied on the UK's Employment Equality (Religion or Belief) Regulations 2003 (the "Regulations"). These Regulations, which implemented an EC Directive, prohibited discrimination on grounds of religion or belief in the field of "employment and occupation."

The definition of "employment" under the Regulations was crucial. It covered "employment under a contract of service or of apprenticeship or a contract personally to do any work." The central legal questions that unfolded through the English courts were:

  1. Did the relationship between disputing parties and an arbitrator fall within this definition of "employment," thereby making the Regulations applicable to arbitrator appointments?
  2. If the Regulations did apply, could the Ismaili community requirement be justified under the "genuine occupational requirement" (GOR) exception provided in Article 7(3) of the Regulations? This exception permitted distinctions based on religion or belief if, by reason of the nature of the employment or the context in which it is carried out, having that particular religion or belief was a genuine and determining occupational requirement, and it was proportionate to apply that requirement in the particular case.
  3. If the religious qualification was indeed void under the Regulations, did this invalidate only that specific part of the qualification, or did it render the entire arbitration agreement unenforceable?

The High Court (at first instance) found that arbitrators were not "employed" for the purposes of the Regulations, and even if they were, the Ismaili requirement would qualify as a GOR. It also opined that if the requirement were void, the entire arbitration agreement would fail.

The Court of Appeal reversed this. It held that an arbitrator provides personal services under a contract and thus was covered by the definition of "employment." It further found that being Ismaili was not a GOR for arbitrating a commercial dispute under English law, as the primary requisites were legal knowledge and the ability to conduct proceedings fairly. Consequently, the Court of Appeal concluded that the religious qualification was void and, being a fundamental part of the agreed mechanism, rendered the entire arbitration agreement unenforceable. This decision caused significant alarm in the international arbitration community due to its potentially wide-ranging implications.

III. The UK Supreme Court's Landmark Decision

The case reached the UK Supreme Court, which unanimously overturned the Court of Appeal's decision, ultimately finding the Ismaili community requirement to be valid and enforceable. The Supreme Court's judgment, primarily delivered by Lord Clarke, provided a detailed analysis of the arbitrator's role and the scope of anti-discrimination legislation.

A. The Arbitrator's Status: Independent Adjudicator, Not an "Employee"

The Supreme Court decisively concluded that an arbitrator, when appointed pursuant to an arbitration agreement, does not enter into a "contract personally to do any work" in a manner that would bring them within the scope of "employment" under the anti-discrimination Regulations. Lord Clarke distinguished between:

  • Individuals who perform services under the direction of another (characteristic of an employment relationship).
  • Independent providers of services who are not in a relationship of subordination with those to whom the services are provided.

The Court placed arbitrators firmly in the latter category. Key aspects of its reasoning included:

  • Independence and Impartiality: An arbitrator's paramount duty is to act fairly and impartially as between the parties. They are not subject to the parties' directions in how they conduct the arbitration or reach their decision. Their function is quasi-judicial.
  • Nature of the "Contract": While an arbitrator's appointment involves a contract, it is a contract for the provision of adjudicatory services, distinct from a contract of employment or a contract for services where one party works for another in a subordinate capacity.
  • Unsuitability of Employment Law Concepts: Many provisions within the anti-discrimination Regulations (and employment law generally), such as those concerning vicarious liability of employers or employee benefits, are wholly inappropriate and unworkable if applied to the arbitrator-party relationship.
  • Party Autonomy in a Joint Undertaking: The appointment of an arbitrator is a joint undertaking by the parties to entrust dispute resolution to a chosen individual or tribunal, not an act of one party employing another.

Therefore, the Supreme Court held that the Regulations did not apply to the selection and appointment of arbitrators as envisaged in the arbitration agreement between Mr. Jivraj and Mr. Hashwani. This finding was sufficient to dispose of the appeal in Mr. Jivraj's favor.

B. The "Genuine Occupational Requirement" (GOR) – An Alternative Analysis (Obiter Dicta)

Although it was not strictly necessary for its decision (having found the Regulations inapplicable), the Supreme Court went on to consider whether, if the Regulations had applied, the requirement for arbitrators to be members of the Ismaili community could have been justified as a GOR.

Lord Clarke, again speaking for the Court, indicated that it would likely have qualified as a GOR. His reasoning emphasized:

  • The Importance of Party Autonomy in Arbitration: A key feature of arbitration is the ability of parties to choose a tribunal in which they have confidence. This includes choosing individuals who they believe will understand the context of their dispute, which might include shared cultural, religious, or ethical backgrounds, especially in disputes between members of a particular community.
  • Context of the Specific Dispute: In this case, both parties were members of the Ismaili community. The Supreme Court suggested it was legitimate for them to have agreed that their disputes should be resolved by arbitrators from within their own community, who they might perceive as better able to understand the dispute's nuances or to command greater confidence and respect from the parties.
  • Legitimate and Justified Requirement: The Court suggested that such a requirement, chosen by the parties themselves for their private dispute, could be seen as a genuine, legitimate, and justified means of ensuring their confidence in the arbitral process. This was a pointed rejection of the Court of Appeal's narrower view that only knowledge of English law and procedural fairness were relevant qualifications.

IV. Implications of the Jivraj Decision for International Arbitration

The Jivraj v. Hashwani decision was widely welcomed by the international arbitration community, as it allayed fears raised by the Court of Appeal's ruling. Its implications are significant:

A. Reinforcement of Party Autonomy:
The primary impact is the strong affirmation of party autonomy in selecting arbitrators. The Supreme Court recognized that parties should have considerable freedom to agree on the qualifications and characteristics of the individuals who will resolve their private disputes, even if those criteria might seem unusual or specific to a particular community or background.

B. Clarification of the Arbitrator's Legal Status:
The ruling provides important clarification that, at least under UK law interpreting EU-derived regulations, an arbitrator's role is fundamentally that of an independent adjudicator, not an employee of the parties. This distinction is crucial for shielding arbitrator appointments from the full rigors of employment-related anti-discrimination laws that are primarily designed to protect individuals in relationships of subordination.

C. Scope of Permissible Arbitrator Qualifications:
While Jivraj specifically dealt with a religious qualification, its reasoning suggests a broader acceptance of party-agreed qualifications, provided they are relevant to the parties' confidence in the tribunal and the specific nature of their dispute. The obiter discussion on GOR implies that qualifications relating to nationality (e.g., a neutral third-country national as presiding arbitrator), specific professional expertise, or even shared cultural background could be defensible if genuinely chosen by the parties for legitimate reasons connected to their dispute resolution preferences.

D. International Repercussions and the Limits of Anti-Discrimination Norms:
The UK Regulations stemmed from an EC Directive, so the Jivraj decision had persuasive authority across the European Union and beyond, in jurisdictions with similar anti-discrimination frameworks. It signaled that a careful balance must be struck between broad anti-discrimination principles and the specialized context of international arbitration, where party choice and confidence in the tribunal are paramount. However, it's important to note that Jivraj does not grant carte blanche. The decision turned on the interpretation of "employment." A differently worded anti-discrimination statute, or one covering a broader range of contractual relationships for services, might lead to a different outcome in another jurisdiction.

E. The Unwavering Primacy of Impartiality and Independence:
It is crucial to understand that Jivraj does not diminish the fundamental requirements that arbitrators must be, and remain, impartial and independent. Party-agreed qualifications cannot override these core duties. Any qualification or selection process that demonstrably leads to a biased or dependent tribunal would still be open to challenge, likely under the lex arbitri (law of the seat of arbitration) or at the enforcement stage, based on violations of procedural fairness or public policy.

V. Practical Considerations for Drafting Arbitrator Qualification Clauses Post-Jivraj

While Jivraj provides significant comfort regarding party autonomy, drafting clauses that specify particular arbitrator qualifications still requires careful consideration:

  1. Justification and Relevance: If specifying qualifications beyond general legal or technical expertise (e.g., nationality, specific affiliations), parties should have a clear and rational basis for such requirements, related to the nature of their potential disputes and their desire for a trusted decision-making process. While not necessarily for inclusion in the clause, understanding this rationale can be important if the clause is ever challenged.
  2. Practicality of Appointment: Overly restrictive or niche qualifications can make it extremely difficult, or even impossible, to find suitable individuals willing and able to act. This can lead to delays or the failure of the appointment mechanism.
  3. Risk of Challenge: Despite Jivraj, highly unusual or seemingly discriminatory qualifications could still invite challenges, either at the seat of arbitration (if different from the UK) or at the enforcement stage in various jurisdictions, under local public policy grounds.
  4. Impact on Diversity: The arbitration community is increasingly focused on promoting diversity (gender, ethnicity, geographical origin, etc.) among arbitrators. While party autonomy is respected, clauses that unnecessarily narrow the pool of potential arbitrators based on protected characteristics should be used thoughtfully and only where genuinely justified by the specific circumstances of the parties and their dispute.
  5. The Law of the Seat: The Jivraj decision is an interpretation of UK law. If the seat of arbitration is elsewhere, the local anti-discrimination laws and public policy must be considered. What is permissible in London might not be in New York, Paris, or Tokyo if the local laws are framed differently.
  6. Institutional Rules: Most institutional rules grant the institution power to appoint arbitrators if the parties' chosen mechanism fails or if an appointed arbitrator is successfully challenged. These rules invariably require arbitrators to be impartial and independent. Any party-agreed qualifications will operate within this institutional framework.

Conclusion

The UK Supreme Court's decision in Jivraj v. Hashwani is a significant judgment that robustly upholds the principle of party autonomy in international arbitration, particularly concerning the selection of arbitrators. By concluding that arbitrators are not "employees" for the purposes of the UK's employment equality regulations, the Court shielded consensual arbitrator qualification requirements from a potentially disruptive application of anti-discrimination law. The obiter comments on "genuine occupational requirement" further signaled a respect for parties' choices when those choices are aimed at fostering confidence in the arbitral process tailored to their specific needs.

For U.S. companies and international businesses globally, Jivraj provides reassurance that they can, within limits, define the characteristics of the tribunal they entrust with resolving their disputes. However, this freedom must be exercised responsibly. Arbitrator qualification clauses should be drafted with clarity, practicality, and an awareness that they must not compromise the overriding principles of arbitrator impartiality, independence, and fundamental procedural fairness, nor offend the mandatory public policies of the relevant jurisdictions.