Religion and Arbitrators under English Law

Many Russian and CIS businessmen incorporate clauses in commercial contracts providing for LCIA arbitration in London. Often such contracts also include requirements for nationality and other qualifications of arbitrators of their choice. But how far is it possible to go under English law in specifying their requirements? The UK Supreme Court ruling in Hashwani v Jivraj is relevant to clarify this issue.

The English Supreme Court, on 6 & 7 April 2011, heard an appeal relating to an international arbitration agreement which has brought about worldwide interest in the issues involved.

What had happened in this case is that the English Appeal Court had ruled that a contract term specifying that an arbitrator should belong to a particular religion is contrary to employment anti-discrimination law and is therefore void. The case also involves the application of European Union Directive Principals which form part of the law of all EU countries.

Arbitration bodies, including the International Chamber of Commerce (ICC) and the LCIA, have made applications to intervene in the appeal to the Supreme Court because they fear that the judgment may void many existing arbitration agreements which provide for the appointment of arbitrators on the basis of nationality, religion or belief, age, race, sex and sexual orientation.


The dispute involves two international businessmen who had entered into a joint venture agreement to invest in buying and managing a chain of hotels in Canada. Both men were members of the Shia Ismaili Muslim community. The disagreement arose after the termination of a joint venture agreement, which contained an arbitration clause stating that the arbitration would be governed by English law and that the arbitrator had to be an Ismaili Muslim.
Having failed to settle the matter within the Ismaili community, one of the businessmen, Sadruddin Hashwani, appointed a former English High Court judge, Sir Anthony Coleman, as his arbitrator. The other party, Nurdin Jivraj, objected because Sir Anthony was not Ismaili Muslim but Jewish.

Court of Appeal

In July 2010 the English Court of Appeal found that arbitrators were ‘employees’ of the parties and therefore subject to Employment Equality (Religion or Belief) Regulations 2003, which prohibit discrimination in employment on grounds of religion or belief. The term specifying the religion of the arbitrator was therefore void as it discriminated on religious grounds.

The possible implications of this judgment are being debated by practitioners in the field of international arbitration. Why? The Court of Appeal determined three main points.

Firstly, an arbitration agreement cannot specify that the arbitrator must belong to a particular religion. Secondly, that an arbitrator is an employee of the parties. Thirdly, that an arbitration agreement that provides for the arbitrator to belong to a particular religion is void.

The Court of Appeal also determined that the doctrine of severance applied to the arbitration agreement. This is a principle of law which means that if the deletion of a contract term renders the meaning of the remaining clause as substantially different from what the parties intended, then the whole clause would be void.

Both the ICC and the LCIA have rules that provide for the appointment of an arbitrator on the basis of nationality to ensure the independence and impartiality of arbitrators. They say that these provisions could be deemed discriminatory because of the Court of Appeal judgment.

Religious institutions that provide arbitration services for their community members, such as the Beth Din of the Jewish community, also fear that the days of their arbitration services will be numbered.

Their fears however are misplaced because the Equality Act provides for exceptions to discrimination in the case of ‘occupational requirements’. For example, parties are open to enter into an arbitration agreement making it clear in the agreement that the Jewish community rules would apply. However, there is no question of Ismaili law being applied in this case. Mr Jivraj is trying to plead that it is an ‘occupational requirement’ for an Ismaili to apply English law to the dispute in question. The judgment is therefore unlikely to have any impact on the religious community arbitrations so long as the arbitration agreement does not provide that a national law will apply.

Similarly, fears of the arbitration institutions are unjustified because the Equality Act provides for exceptions in the case of occupational requirements if the discrimination is a proportionate means of achieving a legitimate purpose. Therefore, where an institution’s rules say that, for example, an arbitrator shall not belong to the nationality of either of the parties that would surely be deemed as a legitimate aim to promote.

However, there are occasions when parties might want their dispute to be decided under the principals of English law but for the sake of speed and cost, would prefer a religious community panel to decide the. We shall have to wait for the Supreme Court to clarify matters in this respect. It is clear that English law has nothing to do with religion and therefore it will be interesting to see if this judgment opens up scope for claims of religious discrimination in commercial contracts worldwide.

The Supreme Court Judgment will decide an impotant issue of principle whether in today’s modern and enlightened world, an international agreement can include a term which requires parties to restrict their choice of arbitrators from a personal particular religion or for that matter, sex or race.

Sarosh Zaiwalla

Mr Zaiwalla is the senior partner of Zaiwalla & Co Solicitors, London and is acting for Mr Hashwani in Hashwani v Jivraj. He is a former member of the International Court of Arbitration of the ICC in Paris and a practising international arbitrator. He has been involved in over 1000 international commercial and maritime arbitrations.

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