Jivraj v Hashwani

An arbitrator appointed to determine a dispute is an independent adjudicator, not a person employed under a contract personally to do work. The relevant inquiry is whether the person performs services for and under the direction of another for remuneration, rather than independently providing services without a relationship of subordination.

Accordingly, the selection and appointment of arbitrators did not fall within the employment provisions of the Employment Equality (Religion or Belief) Regulations 2003. The stipulated religious qualification for arbitrators was therefore valid. Alternatively, the majority held that the requirement could have been a genuine, legitimate and justified occupational requirement in the religious and arbitral context.

Under a joint venture agreement governed by English law, disputes were to be determined by three arbitrators who were respected members of the Ismaili community and holders of high office within it. When a dispute arose, Mr Hashwani appointed a retired Commercial Court judge who was not an Ismaili.

The Commercial Court held that arbitrators were not employed within the Employment Equality (Religion or Belief) Regulations 2003 and upheld the religious qualification: [2009] EWHC 1364 (Comm). The Court of Appeal reversed that conclusion, holding the requirement unlawful and inseverable: [2010] EWCA Civ 712. The Supreme Court considered whether an arbitrator was engaged in employment under the Regulations and, if so, whether the religious requirement was a genuine occupational requirement.

Appeal allowed. Lord Clarke gave the leading judgment, with which Lord Phillips, Lord Walker and Lord Dyson agreed. Lord Mance agreed with the decisive conclusion on employment.

1. The expression “employment under … a contract personally to do any work” in regulation 2(3) required more than a contract for personal services. Construed consistently with the Directive, it distinguished an employed person who performs services for and under another’s direction for remuneration from an independent provider of services who lacks a relationship of subordination. The inquiry was fact-sensitive and the domestic “dominant purpose” formulation was not a complete test.

2. An arbitrator did not meet that definition. Although appointed under a contract, paid fees and required to act personally, an arbitrator must decide independently and impartially. The parties do not direct the arbitrator’s adjudicative work. The arbitrator’s statutory powers and duties under the Arbitration Act 1996 reinforced that conclusion. The Regulations therefore did not apply to the selection, engagement or appointment of arbitrators, and article 8 of the agreement was not invalid.

3. Lord Clarke further held, on an alternative basis, that regulation 7(3) required an objectively genuine, legitimate and justified occupational requirement, although not the stricter essential requirement under regulation 7(2). On the findings about the Ismaili community’s religious ethos and its tradition of internal dispute resolution, the Ismaili qualification was legitimate and justified; it would also have been proportionate. This alternative conclusion made severance and costs immaterial.

4. Lord Mance agreed that the Regulations did not apply. He cautioned that, where a genuine employment relationship did exist, a faith-based organisation engaging an employed English lawyer would be unlikely to justify excluding all persons outside its religion or faith.

• United Kingdom Supreme Court: allowed the appeal and restored the conclusion that the arbitral religious qualification was not invalid under the Regulations: [2011] UKSC 40.
• Court of Appeal: allowed the appeal from the Commercial Court, holding that arbitrators were within the Regulations and that the qualification was unlawful and inseverable: [2010] EWCA Civ 712.
• Commercial Court: held that arbitrators were not employed within the Regulations and dismissed the challenge to the qualification: [2009] EWHC 1364 (Comm).