Arbitrators Not Employees for the Purposes of Equality Legislation

Posted: 15th August 2011

The Supreme Court has overturned the controversial decision of the Court of Appeal in Jivraj v Hashwani and ruled that arbitrators are not employees for the purposes of the Employment Equality (Religion or Belief) Regulations 2003 (now superseded by the Equality Act 2010).Hotel pool
The case concerned a joint venture agreement (JVA) entered into by two Pakistani businessmen. This contained a clause to the effect that, in the event of a dispute between them on which they were unable to reach agreement, the dispute should be resolved by arbitration before three arbitrators, each of whom should be a respected member of the Ismaili community. When the venture failed and the two men were involved in a dispute, Mr Hashwani wished to appoint an arbitrator who was not a member of the Ismaili community. He claimed that the requirement laid down in the JVA was in breach of the Regulations. Mr Jivraj argued that the appointment was a breach of the arbitration agreement.
The High Court ruled that arbitrators fall outside the scope of the Regulations as they are not employees for the purposes of anti-discrimination legislation. This decision was reversed by the Court of Appeal, however, which held that the arbitration clause was void. This judgment caused alarm as its effect could have been to nullify many existing arbitration agreements that contain restrictions as to nationality that are aimed at preserving neutrality in the arbitration process.
The Supreme Court has now overturned the Court of Appeal’s decision. In the Court’s view, arbitrators are not employees and so are not subject to the Regulations. Rather, they are ‘independent providers of services who are not in a relationship of subordination with the person who receives the services’.