ICC turns to A&O as arbitration selection wrangle intensifies

The International Chamber of Commerce (ICC) has instructed Allen & Overy (A&O) to intervene in a bid to overturn a Court of Appeal (CoA) ruling that found the selection process for appointing arbitrators in commercial disputes breached UK equality laws.

In June the CoA handed down its ruling in the Jivraj v Hashwani dispute, ruling that an arbitration clause that enabled the disputing parties to determine the religious characteristics of the appointed arbitrator breached the UK Equality Regulations (2003).

It was the first time the arbitration appointment process had been tested through the High Court.

Arbitrators said the ­ruling would call into question numerous existing ­arbitration agreements and appointments, as well as affecting the drafting of arbitration clauses in the future.

The original case focused on a £1.5m dispute over a joint venture agreement for investment in real estate projects worldwide.

An arbitration agreement between the parties ­stipulated that arbitrators overseeing any dispute between them were to be “respected members of the Ismaili community and holders of high office within the community”. Ismailism is a branch of the Shia denomination of Islam.

When Sadruddin Hashwani launched his claim against former business partner Nurdin Jivraj, he applied to the Commercial Court to have Sir Anthony Colman appointed as an arbitrator. Zaiwalla & Co name partner Sarosh ­Zaiwalla instructed Fountain Court Chambers’ Michael Brindle QC for Hashwani.

In response, Jivraj applied to the Commercial Court for a declaration that the appointment was invalid as Colman was not a member of the Ismaili community.

Hill Dickinson partner Jonathan Berkson instructed One Essex Court’s Rhodri Davis QC to act for Jivraj.

Firing back, Hashwani applied to have Colman appointed as sole arbitrator on the basis that the ­arbitration agreement was void under the Employment Equality (Religion and Belief) Regulations.

The CoA found that ­arbitrators are effectively employees and therefore obliged to comply with ­discrimination legislation, and so the arbitration agreement was ruled to be void.

The ICC now intends to intervene in the appeal bid to the Supreme Court, fearing the ruling could have far-reaching implications for arbitration appointments.

A&O partner Richard Smith has instructed Essex Court Chambers’ Andrew Hochhauser QC in the ­challenge.