Aldcroft v The International Cotton Association Ltd

The claimant, a full-time ICA arbitrator, challenged the ICA's "3 and 8 rule" in its Arbitrators' Code of Conduct as an unreasonable restraint of trade. The rule limited repeat appointments by the same party to three per calendar year (the "3 rule") and limited an arbitrator to eight active first-tier ICA cases at one time (the "8 rule").

The court held that the ICA introduced the rule to address legitimate concerns about perceived arbitrator partiality arising from repeat appointments and about delay caused by a small number of arbitrators carrying many concurrent cases. The judge found those aims legitimate and that the means adopted fell within the range of reasonable responses open to an association of members. The court concluded that (i) the contractual framework incorporated the Code of Conduct into the arbitration bargain, (ii) the doctrine of restraint of trade did not operate to invalidate the rule in the circumstances, and (iii) even if the doctrine applied, the 3 and 8 rule was a proportionate measure to protect the ICA's legitimate objectives. The claimant's application was therefore dismissed.

The claimant, Arthur Aldcroft, a long-standing and at times full-time arbitrator under the International Cotton Association's (ICA) arbitration scheme, sought declarations and injunctive relief that the ICA's "3 and 8 rule" was void as an unreasonable restraint of trade and sought consequential relief stopping an internal disciplinary process based on alleged breach of that rule.

Background and parties:

• The ICA is a membership association whose byelaws and rules govern a substantial proportion of international raw cotton trade disputes. Its arbitration scheme includes a Code of Conduct binding arbitrators who accept appointments.
• Mr Aldcroft earned his living primarily as an ICA arbitrator and said the rule substantially diminished his ability to earn from ICA arbitrations.

Nature of the claim / relief sought:

• An injunction (permanent and mandatory) preventing the ICA from pursuing an internal complaint against Mr Aldcroft for allegedly breaching the 3 rule and a declaration that the 3 and 8 rule was void as an unreasonable restraint of trade.

Issues for decision:

• Whether the doctrine of restraint of trade applies to the ICA rules (and thus to the Code of Conduct as incorporated into the arbitration bargain).
• If applicable, whether the 3 and 8 rule was an unreasonable restraint of trade — specifically whether it served a legitimate objective and, if so, whether it was reasonable between the parties and in the public interest.

Evidence and factual findings:

• The court reviewed documentary records and witness evidence tracing the genesis of the rule through ICA committees and working groups. The 3 rule was intended to address perceptions of pro-merchant bias caused by repeat appointments; the 8 rule was intended to address delay attributable to arbitrators with excessive concurrent caseloads.
• The ICA had considered alternative measures (disclosure, institutional appointment, pools of chairs) and implemented a package of reforms, including the Pool of Chairmen and the Code amendment reducing repeat appointments to three per year and limiting active first-tier cases to eight.

Reasoning:

• The judge concluded that arbitrators who accept appointment are contractually bound to comply with the Code of Conduct and that parties choosing ICA arbitration accept that framework.
• The court applied established principles on restraint of trade, recognising judicial deference to rules adopted by member associations unless they fall outside a range of reasonable responses to legitimate objectives. The ICA's objectives—preserving confidence in impartiality and promoting expedition—were legitimate.
• The measures chosen (3 and 8) were within the spectrum of reasonable responses given competing considerations including party autonomy, practicality of administration, and the ICA's governance structure. The judge rejected submissions that less intrusive measures (eg disclosure) rendered the rules unreasonable.

Result: The claim was dismissed. The court found no basis to invalidate the 3 and 8 rule as an unlawful restraint of trade, and held the ICA had acted within the range of reasonable options to protect its legitimate objectives.

Claim dismissed. The court found that the ICA adopted the 3 and 8 rule to pursue legitimate objectives (promoting perceived impartiality and reducing delay) and that the rule, as incorporated into the arbitration bargain, fell within the range of reasonable measures an association could adopt; accordingly the rule was not an unlawful restraint of trade and the claimant’s remedies were refused.