Jivraj v Hashwani (Rev 2)

The Court of Appeal held that an arbitration clause requiring that arbitrators be members of the Ismaili community fell within the scope of the Employment Equality (Religion and Belief) Regulations 2003 and thereby offended regulation 6(1). The court concluded that the appointment of an arbitrator is the provision of personal services and therefore falls within the definition of "employment" in the Regulations. The exception for a genuine occupational requirement in regulation 7(3) did not apply because the arbitrators were required to decide disputes in accordance with English law rather than on a community-specific ethos. The requirement that arbitrators be Ismaili was not severable from the remainder of the arbitration clause, so clause 8(1) was held void in its entirety. The appeal was allowed in part: the court set aside the judge's first declaration but affirmed the declaration that the nomination of Sir Anthony Colman as an arbitrator was invalid.

Background and parties: In 1981 Mr Nurdin Jivraj and Mr Sadruddin Hashwani entered into a joint venture agreement containing Article 8, which required that arbitrators be respected members of the Ismaili community. After the venture was wound up, Mr Hashwani appointed Sir Anthony Colman as arbitrator in 2008 and claimed sums against Mr Jivraj. Mr Jivraj sought a declaration that the appointment was invalid on the ground that Sir Anthony was not Ismaili. Mr Hashwani applied under section 18(2) of the Arbitration Act 1996 to have Sir Anthony appointed and argued that the religious requirement was unlawful under the Employment Equality (Religion and Belief) Regulations 2003.

Nature of the claim / relief sought:

• Declaration that the appointment of Sir Anthony Colman was invalid;
• Order for appointment of Sir Anthony under s.18(2) Arbitration Act 1996 (pursued by Mr Hashwani).

Issues framed:

1. Whether arbitrators fall within the scope of the Regulations (whether an arbitrator's engagement is "employment");
2. If so, whether the clause was saved by regulation 7(3) as a genuine occupational requirement;
3. Whether the requirement that arbitrators be Ismaili could be severed from the arbitration clause.

Procedural posture: The question came on appeal from David Steel J in the Commercial Court ([2009] EWHC 1364 (Comm)). Steel J had held the Regulations did not apply to arbitrators and, in any event, that regulation 7 applied; he granted a declaration that the appointment of Sir Anthony was invalid and dismissed Mr Hashwani's claim. Permission to appeal was later granted by the Court of Appeal on three specified issues.

Court's reasoning and conclusion: The court construed the Directive (Council Directive 2000/78/EC) and the Regulations purposively, concluding they are intended to combat discrimination in access to economic activity and the provision of services. The appointment of an arbitrator is typically supported by a contract personally to do work and therefore falls within the Regulations' definition of "employment". Regulation 6(1) accordingly covered the requirement in Article 8(1) to restrict arbitrator appointments to Ismailis. The exception in regulation 7(3) failed because the arbitrator's task under clause 8 was to decide disputes according to English law, not to apply a community-specific ethos or moral code; membership of the Ismaili community was not shown to be necessary for the arbitrator's functions. As the religious requirement was integral to the parties' bargain about the composition of the tribunal, it could not be severed without producing an agreement substantially different from that originally intended. The arbitration clause was therefore void in its entirety. The court allowed the appeal in part, set aside the first declaration of the judge, but affirmed the declaration that Sir Anthony's nomination was invalid.

Wider context: The judgment emphasises that agreements restricting access to provision of personal services on religious grounds fall within domestic legislation implementing the Directive and that exceptions for occupational requirements are to be narrowly construed where the duties do not require the particular religious ethos.

The appeal was allowed in part. The court held that the requirement in the arbitration clause that arbitrators be members of the Ismaili community fell within the Employment Equality (Religion and Belief) Regulations 2003 and contravened regulation 6(1). Regulation 7(3) did not apply because the arbitrators were required to decide disputes in accordance with English law rather than by reference to a community-specific ethos. The religious requirement could not be severed and clause 8(1) was void in its entirety. The court set aside the judge's first declaration but affirmed the declaration that the nomination of Sir Anthony Colman as arbitrator was invalid.

Appeal from the High Court of Justice, Queen's Bench Division (Commercial Court), David Steel J, [2009] EWHC 1364 (Comm). The judge granted a declaration that the appointment of Sir Anthony Colman was invalid and dismissed Mr Hashwani's claim. The judge refused permission to appeal; the Court of Appeal later granted permission limited to three issues and heard the appeal on 2 March 2010.