Hashwani v Jivraj

The Supreme Court allowed the appeal and held that an arbitration clause requiring arbitrators to be respected members of the Ismaili community did not become void under the Employment Equality (Religion or Belief) Regulations 2003. The court concluded that (i) the appointment of arbitrators is not 'employment under a contract personally to do any work' within regulation 2(3) when analysed in the light of the Court of Justice's jurisprudence (notably Allonby and Lawrie-Blum); and (ii) even if the Regulations applied the criterion in regulation 7(3) could, on the facts, justify a genuine occupational requirement. The court emphasised the arbitrator's independent, quasi-judicial role under the Arbitration Act 1996 and the need to interpret the Regulations consistently with the Directive 2000/78/EC.

Background and facts.

The parties, former joint venturers, had agreed an English-law governed joint venture agreement containing an arbitration clause requiring three arbitrators each to be "respected members of the Ismaili community". After long-running disputes, one party appointed a non-Ismaili arbitrator and the other challenged the appointment. Proceedings were brought in the Commercial Court and pursued on appeal to the Court of Appeal and the Supreme Court.

Nature of the application.

• The central question was whether the requirement that arbitrators be members of a particular religion (Ismaili) became unlawful from 2 December 2003 under the Employment Equality (Religion or Belief) Regulations 2003 because it amounted to discrimination in determining to whom employment should be offered.

Issues framed by the Supreme Court.

1. Whether an arbitrator's appointment falls within the definition of "employment" in regulation 2(3) (a contract personally to do any work) and whether the appointor thereby becomes an "employer" for the purposes of regulation 6(1).
2. If the Regulations applied, whether the requirement that arbitrators be Ismaili amounted to a legitimate and justified genuine occupational requirement under regulation 7(3).
3. If unlawful, whether the discriminatory provision was severable or whether the arbitration clause as a whole was void.

Court's reasoning and disposition.

The court analysed the relevant EU authority (including Lawrie-Blum, Kurz and Allonby) and concluded that the correct approach distinguishes genuinely subordinate employment from independent providers of services. An arbitrator performs an independent, quasi-judicial adjudicatory function, exercising procedural and substantive independence under the Arbitration Act 1996; the relationship is not one of subordination to the appointing parties and therefore does not fall within the Regulations' definition of "employment". The court also considered, as an alternative, the regulation 7(3) genuine occupational requirement defence and concluded that, even if the Regulations had applied, the requirement could be legitimate and justified in all the circumstances on the judge's factual findings about the Ismaili community's ethos and its institutional dispute-resolution arrangements. On that basis the Supreme Court allowed the appeal.

Appeal allowed. The Supreme Court held that appointments of arbitrators are not "employment under a contract personally to do any work" for the purposes of the Employment Equality (Religion or Belief) Regulations 2003 because arbitrators are independent, quasi-judicial adjudicators not under the direction or control of the appointing parties. Alternatively, if the Regulations applied, the requirement that arbitrators be members of the Ismaili community could be objectively justified as a genuine occupational requirement under regulation 7(3).

First instance: Commercial Court, David Steel J, [2009] EWHC 1364 (Comm) (applications decided 26 June 2009). Court of Appeal: [2010] EWCA Civ 712, [2010] ICR 1435 (judgment 22 June 2010) (held the clause unlawful). Supreme Court: appeal allowed [2011] UKSC 40 (judgment 27 July 2011).