The recent Court of Appeal decision in Nurdin Jivraj v Sadruddin Hashwani held that arbitrators are "employees" for the purposes of the Employment Equality (Religion or Belief) Regulations 2003 and thus any arbitration clause which offends these Regulations will be void.

In that case the arbitration agreement provided that the arbitrators should be "respected members of the Ismaili community and holders of high office within the community." This was held to be discriminatory on grounds of religious belief because the belief was not "a genuine and determining occupational requirement" and as the offending words could not be excised without making a fundamental change in the nature of the arbitration agreement, the whole clause was void.

The likely consequence of this decision is that all elements of discrimination law will apply to arbitration provisions such that where an arbitration clause provides for arbitrators to be drawn from particular religious or ethnic backgrounds, or places other restrictions (for example gender) on the arbitrators to be appointed, the clause risks being struck down.

It may also create difficulties for clauses which refer to the rules of the leading arbitration institutions such as the ICC and the LCIA. Their rules provide that a sole arbitrator or the chairman of a three person tribunal should not be of the same nationality as either of the parties to the dispute. Circumstances may arise where this amounts to discrimination under English law.

Comment

Parties to a dispute can sometimes be surprised, when they dust down their paperwork, that it is subject to an arbitration clause. Circumstances frequently arise where one of the parties would in fact prefer the courts as a forum. The Court of Appeal decision in Nurdin Jivraj v Sadruddin Hashwani may assist such parties to escape the arbitration clause. Conversely, litigants need to be aware of the possible challenge to arbitration clauses in cases where it is important to them that the matter be dealt with by an arbitral tribunal.

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