Aldcroft v The International Cotton Association Ltd

The rules of a professional or trade association may fall within the doctrine of restraint of trade. However, rules regulating members’ activities to advance legitimate organisational objectives will ordinarily be treated as a domestic matter. Judicial intervention is warranted only where the rule falls outside the range of decisions reasonably open to the association to achieve those objectives.

An arbitration institution may adopt reasonable limits on repeat appointments and concurrent arbitrations to address perceived impartiality and delay. The limits need not mirror the threshold for removing an arbitrator under the Arbitration Act 1996.

Mr Aldcroft earned his living as an arbitrator in cotton disputes conducted under the International Cotton Association’s rules. The ICA introduced a rule limiting repeat appointments from the same party to three in a calendar year and active first-tier appointments to eight.

He claimed that the rule was an unreasonable restraint of trade and sought declaratory and injunctive relief. The ICA argued that the doctrine did not apply and, alternatively, that the rule pursued legitimate objectives and was reasonable. The central issues were whether the doctrine applied and, if so, whether the limits were unreasonable.

1. Claim dismissed. Mr Aldcroft was not entitled to the declaratory or consequential relief sought.
2. The contractual framework required arbitrators accepting appointments to comply with the ICA’s Byelaws, Articles and Code of Conduct. Those obligations formed part of the arbitration arrangements between the arbitrating parties.
3. Being a professional arbitrator specialising in cotton disputes was capable of constituting a trade or profession. Restrictions on the claimant’s ability to act under ICA terms could therefore amount to a restraint of trade if the doctrine otherwise applied.
4. The rules of an association, professional body or co-operative are not automatically outside the doctrine. Nevertheless, rules properly adopted under the body’s governance arrangements and directed to legitimate organisational objectives will ordinarily be treated as a domestic matter. The court should intervene only where the rule falls outside the range of decisions reasonably open to the body.
5. The 3 rule pursued the legitimate objective of addressing and promoting confidence in arbitrator impartiality, including the perceived risk arising from repeat appointments. The 8 rule pursued the legitimate objective of reducing delay and promoting the efficient resolution of arbitrations.
6. The ICA was entitled to anticipate potential challenges and to adopt a preventative rule even though there had been no prior challenge based specifically on repeat appointments. It was also entitled to choose among several reasonable mechanisms, including limits stricter than the threshold for removing an arbitrator under Arbitration Act 1996, s.24.
7. Neither rule fell outside the range of reasonable options open to the ICA. The rules therefore remained enforceable, whether or not the full restraint-of-trade doctrine applied.
8. The claimant’s alternative arguments concerning disclosure, party autonomy, consolidated hearings, appeals and arbitrators’ workloads did not make either rule unreasonable. Consolidated or concurrent references could sensibly be treated as a single reference for the rule’s purposes.