Supreme court rules on arbitration

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The UK supreme court has ruled after a much anticipated declaration that arbitrators are not ’employees’ for purposes of UK anti-discrimination legislation.

On 22 June 2010, in Jivraj v. Hashwani, the Court of Appeal applied UK anti-discrimination legislation to invalidate an arbitration agreement which stipulated that only members of a certain religious group could act as arbitrator.

As in the case of Mr Jivraj and Mr Hashwani, Neil Newing, associate at international law firm comments:

“To a huge collective sigh of relief amongst the arbitration community, the Supreme Court has today ruled that arbitrators are not employees for the purposes of discrimination legislation.

In overturning the controversial decision of the Court of Appeal, the Supreme Court has prevented a large number of institutional and ad hoc arbitration clauses which contain express or implicit restrictions on the eligibility of persons to be appointed as arbitrator from being vulnerable to challenge.

Although the arbitration clause in this case is unusual, the ramifications of the Court of Appeal decision were potentially extensive.
The Regulations have been subsumed since October 2010 into the Equality Act 2010, which consolidates all the English discrimination regulations.

The 2010 Act adopts the same definition of employment as in the Regulations and the concern was that if an arbitrator was an employee for these purposes, any express or implicit restriction on eligibility on grounds of, for example, nationality or ethnicity, would be discriminatory.’’

The decision last year had raised concerns about the validity of many standard arbitration clauses including those in existing contracts. The Supreme Court decision lays those concerns to rest.

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