Jivraj v Hashwani

JurisdictionEngland & Wales
CourtCourt of Appeal
JudgeMoore-Bick,Aikens L JJ,Sir Richard Buxton
Judgment Date22 Jun 2010

Court of Appeal (Civil Division).

Moore-Bick and Aikens L JJ and Sir Richard Buxton.

Jivraj
and
Hashwani

Michael Brindle QC and Brian Dye (instructed by Zaiwalla & Co) for Mr Hashwani.

Rhodri Davies QC and Schona Jolly (instructed by Hill Dickinson LLP) for Mr Jivraj.

The following cases were referred to in the judgment:

Brennan v JH Dewhurst LtdICR [1984] ICR 52.

Centrum voor Gelijkheid van Kansen en voor Racismebestrijding v Firma Feryn NVECAS (Case C-54/07) [2008] ECR I-5187; [2008] ICR 1390.

Department for Constitutional Affairs v O'BrienUNK [2008] EWCA Civ 1448.

Kelly v Northern Ireland Housing ExecutiveELR [1999] 1 AC 428.

Knight v A-GICR [1979] ICR 194.

Litster v Forth Dry Dock & Engineering Co LtdELR [1990] 1 AC 546.

Lord Chancellor v CokerICR [2002] ICR 321.

Marleasing SA v La Comercial Internationale de Alimentacion SAECAS (Case C-106/89) [1990] ECR I-4135.

Marshall v NM Financial Management LtdWLR [1995] 1 WLR 1461; [1997] 1 WLR 1527 (CA).

Norjarl K/S A/S v Hyundai Heavy Industries Co LtdUNK [1991] 1 Ll Rep 524.

Perceval-Price v Department of Economic DevelopmentUNK [2000] IRLR 380.

Percy v Church of Scotland Board of National MissionUNK [2005] UKHL 73; [2006] IRLR 195.

Von Hoffmann v Finanzamt TrierECAS (Case C-145/96) [1997] ECR I-4857; [1998] 1 CMLR 99.

Arbitration — Arbitrator — Equal treatment — Employment — Religious discrimination — Joint venture agreement containing arbitration clause providing for arbitrators to be members of Ismaili community — Non-Ismaili nominated as arbitrator — Requirement for arbitrators to be members of Ismaili community void — Arbitrators appointment usually arose out of contract — Being member of Ismaili community not genuine occupational requirement for appointment — Requirement could not be severed and arbitration clause fell in its entirety — Employment Equality (Religion and Belief) Regulations 2003 — Council Directive 2000/78 establishing a general framework for equal treatment in employment and occupation.

This was an appeal against a declaration that the nomination of an arbitrator was invalid.

The parties (J and H) had entered into a joint venture agreement for investment in real estate. Article 8 of the contract provided for disputes to be referred to three arbitrators in London, all of whom were to be respected members of the Ismaili community.

In 1988 the parties decided to terminate their venture, but certain matters remained unresolved. The matter then fell into abeyance until July 2008 when solicitors acting for H wrote to J putting forward a claim for £1,412,494, together with interest compounded quarterly from 31 May 1994, and notifying him of the appointment of an arbitrator under art. 8 of the agreement. They called on J to appoint an arbitrator within seven days.

J's response was to start proceedings seeking a declaration that the appointment was invalid because the arbitrator was not a member of the Ismaili community. H then issued an arbitration claim form seeking an order for the arbitrator to be appointed sole arbitrator pursuant to s. 18(2) of the Arbitration Act 1996. The application was made on the basis that the requirement that the arbitrators be members of the Ismaili community, although lawful when the agreement was made, had been rendered unlawful and was void because it contravened the Employment Equality (Religion and Belief) Regulations 2003 which were made to give effect to Council Directive 2000/78.

The judge held that the Regulations did not apply to arbitrators because they were not employees and that there was nothing in the Human Rights Act or public policy that rendered the requirement that the arbitrators should be members of the Ismaili community void or unenforceable. He therefore granted a declaration that the arbitrator's appointment was invalid and dismissed H's claim.

The issues on appeal were whether the requirement for the arbitrators to be members of the Ismaili community fell within reg. 6 of the Regulations; if so whether the requirement fell within the exception in reg. 7 as a genuine occupational requirement; and whether the requirement could be severed from the rest of the arbitration clause.

Held allowing the appeal in part:

1. The Directive and the Regulations were intended to apply to all forms of employment in the broadest sense, including the provision of services under any form of contract. Therefore the Regulations applied to the appointment of an arbitrator, because a person who appointed another to act in that capacity employed that person to provide a service. Employment was defined in the Regulations as including any contract personally to do any work and work in the context was apt to cover the provision of services of any kind. The precise nature of the relationship between the arbitrator and the parties to the dispute was irrelevant; all that mattered was that it arose out of a contract under which the arbitrator agreed to determine the dispute referred to him. Whatever the correct analysis of the nature of that relationship, it would be a very rare case in which it was not supported by a contract of some kind. (K/S Norjarl A/S v Hyundai Heavy Industries Co LtdUNK[1991] 1 Ll Rep 524and VonHoffmann v Finanzamt TrierECAS(Case C-145/96)[1997] ECR I-4857; [1998] 1 CMLR 99considered.)

2. The court rejected the submissions that reg. 6 had no application to the mere selection from among those offering their services to the market at large of a particular person to provide services of the kind required, and that the critical distinction for the purposes of reg. 6 was between those who were employed and those who were self-employed, arbitrators falling on the side of the self-employed. (Percy v Church of Scotland Board of National MissionUNK[2005] UKHL 73; [2006] IRLR 195andCentrum voor Gelijkheid van Kansen en voor Racismebestrijding v Firma Feryn NVECAS(Case C-54/07)[2008] ECR I-5187; [2008] ICR 1390considered.)

3. The selection of an arbitrator in accordance with art. 8 of the agreement fell within the scope of reg. 6(1)(a) and (1)(c). The word “arrangements” in para. (1)(a) had been construed widely. The appointment of a person to act as arbitrator created a contract between that person and both parties to the dispute and it followed that an arbitration agreement constituted “arrangements” made by both parties for the appointment of one or more arbitrators which, depending on its terms, might restrict the class of those to whom they were able to offer employment. Also, the language of reg. 6(1)(c) was apt to cover the case in which a person, on purely religious grounds, deliberately avoided offering the work in question to a person whom he believed was willing and able to do it. Accordingly, to comply with the terms of art. 8(1) would be to act contrary to reg. 6(1)(c) as well as (1)(a). (Brennan v JH Dewhurst LtdICR[1984] ICR 52considered.)

4. Membership of the Ismaili community was clearly not necessary for the discharge of the arbitrator's functions under the agreement and, therefore, the exception provided in reg. 7 for a genuine occupational requirement could not be relied on in this case.

5.It followed that the requirement in art. 8(1) of the contract offended against the Regulations and was void.

6. If the requirement for Ismaili arbitrators was struck out, it would render the agreement substantially different from that which had originally been intended. The choice of arbitrators from the Ismaili community was an integral part of the agreement to arbitrate and not one that could be disregarded as being of no real significance. Therefore art. 8 stood or fell as a whole and if the requirement was void, the remainder of the clause could not stand.

7. It followed that the arbitration clause was void in its entirety and thus that H's nomination of an arbitrator was invalid.

JUDGMENT

Moore-Bick LJ:

1. This is the judgment of the court to which all its members have contributed.

The issue in this case

2. The question that arises in this appeal is whether parties to an arbitration agreement in a commercial contract can stipulate that the tribunal is to be drawn from members of a particular religious group, in this case the Ismaili community. In January 1981 the appellant, Mr Sadruddin Hashwani, and the respondent, Mr Nurdin Jivraj, entered into a joint venture agreement for investment in real estate in various parts of the world, initially Canada and subsequently elsewhere. Article 8 of the contract provided, so far as material, as follows:

“(1) If any dispute difference or question shall at any time hereafter arise between the investors with respect to the construction of this agreement or concerning anything herein contained or arising out of this agreement or as to the rights liabilities or duties of the investors or either of them or arising out of (without limitation) any of the businesses or activities of the joint venture herein agreed the same (subject to sub-clause 8(5) below) shall be referred to three arbitrators (acting by a majority) one to be appointed by each party and the third arbitrator to be the President of the HH Aga Khan National Council for the United Kingdom for the time being. All arbitrators shall be respected members of the Ismaili community and holders of high office within the community.

(2) The arbitration shall take place in London and the arbitrators' award shall be final and binding on both parties.”

3. In 1988 the parties decided to terminate their venture. They appointed three members of the Ismaili community as a conciliation panel to assist them in dividing the assets, but certain matters remained unresolved and an attempt to resolve their remaining differences by means of an ad hoc arbitration came to nothing. The matter then fell into abeyance until July 2008 when solicitors acting for Mr Hashwani wrote to...

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1 cases
  • Hashwani v Jivraj
    • United Kingdom
    • Supreme Court
    • 27 July 2011
    ...(Religion or Belief) Regulations 2003 (SI 2003/1660). This was an appeal from a decision of the Court of Appeal ([2010] EWCA Civ 712; [2010] 1 CLC 1057) that the appointment of an arbitrator involved “employment” within the Employment Equality (Religion or Belief) Regulations 2003 (SI 2003/......

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