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Article 8 provides, 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 t... |
All arbitrators shall be respected members of the Ismaili community and holders of high office within the community. FAC |
(2) The arbitration shall take place in London and the arbitrators' award shall be final and binding on both parties. FAC |
The Ismaili community comprises Shia Imami Ismaili Muslims. FAC |
It is led by the Aga Khan, whose title is the hereditary title of the Imam of the Ismaili community. FAC |
The disputes FAC |
During the 1980s the joint venture came to comprise substantial business interests, first in Canada and later in the United States, Pakistan and the United Kingdom, with investments in properties, hotels and the oil industry. FAC |
By late 1988 Mr Jivraj and Mr Hashwani had agreed to part company. FAC |
On 30 October 1988 they entered into an agreement under which they appointed a three man conciliation panel (the panel) for the purpose of the division of the joint venture assets. FAC |
Each member of the panel was a respected member of the Ismaili community. FAC |
The panel operated between October 1988 and February 1990 and many of the assets were divided between the parties in accordance with its directions. FAC |
It was however unable to resolve all the issues between the parties. FAC |
The parties then agreed to submit the remaining issues to arbitration or conciliation by a single member of the Ismaili community, namely Mr Zaher Ahamed. FAC |
He issued a determination in December 1993, whereafter he had further exchanges with the parties until 1995, when he declared himself defeated. FAC |
The principal matters which remained in dispute were, on the one hand, a claim by Mr Hashwani that there remained a balance due to him and, on the other hand, a claim by Mr Jivraj that Mr Hashwani had failed to declare certain tax liabilities which left Mr Jivraj with a potential for secondary liability. FAC |
These matters remained in dispute for some years. FAC |
Then, on 31 July 2008, Messrs Zaiwalla & Co, acting on behalf of Mr Hashwani, wrote to Mr Jivraj asserting a claim for US$1,412,494, together with interest, compounded quarterly from 1994, making a total of US$4,403,817. FAC |
The letter gave notice that Mr Hashwani had appointed Sir Anthony Colman as an arbitrator under article 8 of the JVA and that, if Mr Jivraj failed to appoint an arbitrator within seven days, steps would be taken to appoint Sir Anthony as sole arbitrator. FAC |
The letter added that Mr Hashwani did not regard himself as bound by the provision that the arbitrators should be members of the Ismaili community because such a requirement would now amount to religious discrimination which would violate the Human Rights Act 1998 and therefore must be regarded as void. FAC |
It is common ground, on the one hand, that Sir Anthony Colman is not a member of the Ismaili community and, on the other hand, that he is a retired judge of the Commercial Court with substantial experience of the resolution of commercial disputes, both as a judge and as an arbitrator. FAC |
Mr Jivraj's response to the letter was to start proceedings in the Commercial Court seeking a declaration that the appointment of Sir Anthony was invalid because he is not a member of the Ismaili community. FAC |
Mr Hashwani subsequently issued an arbitration claim form seeking an order that Sir Anthony be appointed sole arbitrator pursuant to section 18(2) of the Arbitration Act 1996 (the 1996 Act). FAC |
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 Regulations. FAC |
The Regulations STA |
The Regulations were made in the exercise of powers conferred by the European Communities Act 1972 following the making of the Council Framework Directive 2000/78/EC of 27 November 2000 (OJ 2000 L303, p 16) (the Directive) which, by article 1, was itself made for the purpose of establishing: a general framework for com... |
The Regulations (as amended by section 77(2) of the Equality Act 2006) provide, so far as material, as follows: Interpretation 2 (3) In these Regulations references to employer, in their application to a person at any time seeking to employ another, include a person who has no employees at that time; employment means e... |
Exception for genuine occupational requirement 7 In relation to discrimination falling within regulation 3 (1) (discrimination on grounds of religion or belief) (a) regulation 6(1)(a) or (c) does not apply to any employment where paragraph (2) or (3) applies. STA |
(2) This paragraph applies where, having regard to the nature of the employment or the context in which it is carried out - (a) being of a particular religion or belief is a genuine and determining occupational requirement; (b) it is proportionate to apply that requirement in the particular case; and (c) either (i) the... |
(3) This paragraph applies where an employer has an ethos based on religion or belief and, having regard to that ethos and to the nature of the employment or the context in which it is carried out - (a) being of a particular religion or belief is a genuine occupational requirement for the job; (b) it is proportionate t... |
The Directive STA |
It is common ground that the Regulations must, so far as possible, be construed to give effect to the objective of the Directive which they were designed to implement: see eg Marleasing SA v La Comercial Internacional de Alimentacion SA (Case C-106/89) [1990] ECR I-4135 and Litster v Forth Dry Dock & Engineering Co Ltd... |
It is also common ground that, although the arbitration agreement was on any view lawful when it was made, it became subject to the provisions of the Regulations, insofar as they applied to it. Ratio |
The Directive provides, so far as material, as follows: Article 1 Purpose The purpose of this Directive is to lay down a general framework for combating discrimination on the grounds of religion or belief, disability, age or sexual orientation as regards employment and occupation, with a view to putting into effect in ... |
Article 2 Concept of discrimination (1) For the purposes of this Directive, the 'principle of equal treatment' shall mean that there shall be no direct or indirect discrimination whatsoever on any of the grounds referred to in article 1. STA |
Article 3 Scope (1) Within the limits of the areas of competence conferred on the Community, this Directive shall apply to all persons, as regards both the public and private sectors, including public bodies, in relation to- (a) conditions for access to employment, to self-employment or to occupation, including selecti... |
As Moore-Bick LJ, giving the judgment of the Court of Appeal, observed at para 8, the Directive is concerned with discrimination on the grounds of religion or belief, disability, age and sexual orientation. Ratio |
It is therefore much wider in its scope than the Regulations, which are concerned only with discrimination on the grounds of religion or belief. Ratio |
The explanation lies in the fact that the United Kingdom had already introduced legislation dealing with discrimination on most of the other grounds covered by the Directive in connection with employment and occupation. Ratio |
Discrimination on the grounds of sex was rendered unlawful by the Sex Discrimination Act 1975 (the SDA 1975), discrimination on the grounds of race by the Race Relations Acts 1968 and 1976, discrimination on the grounds of disability by the Disability Discrimination Act 1995. Ratio |
Legislation dealing with discrimination on the grounds of age, sexual orientation and religion or belief was still required to ensure compliance with the Directive. Ratio |
The Regulations deal with discrimination on the grounds of religion or belief. Ratio |
The Employment Equality (Sexual Orientation) Regulations 2003 (SI 2003/1661) provided for discrimination on the grounds of sexual orientation, and discrimination on the grounds of age was subsequently covered by the Employment Equality (Age) Regulations 2006. Ratio |
Again as observed by the Court of Appeal (at para 9), the form of the Regulations follows closely that of the earlier legislation, in particular in defining "employment" as including a contract personally to do work of any kind. Ratio |
Moreover, the language of regulation 6 is identical to, or differs in no significant respect from, that used in the other legislation dealing with discrimination. Ratio |
It follows that the Regulations must be understood as complementing all the other legislation prohibiting discrimination. Ratio |
This uniformity of the law relating to the areas in which discrimination is forbidden has now been reinforced by the Equality Act 2010 (the EA), which applies to all of the cases protected by the earlier legislation. Ratio |
The EA is, among other things, an Act to reform and harmonise equality law and restate the greater part of the enactments relating to discrimination. Ratio |
The Regulations were amongst those enactments restated by the EA. Ratio |
They were revoked by section 211 and Schedule 27, Part 2. Ratio |
The revocation took effect on 1 October 2010. Ratio |
The current law is therefore as stated in the Act rather than the Regulations. Ratio |
It was not however suggested in the course of the argument that any of the issues in this appeal is affected by the revocation of the Regulations. Ratio |
First instance RLC |
Both parties applications were determined by David Steel J (the judge) on 26 June 2009: see [2009] EWHC 1364 (Comm), [2010] 1 All ER 302. FAC |
In the meantime on 11 March 2009, which was before the applications were heard, the solicitors for Mr Jivraj wrote an open letter to the solicitors for Mr Hashwani offering him the option of pursuing his claim in the High Court on the basis that Mr Jivraj would not seek a stay on the basis of the arbitration clause. FA... |
Mr Hashwani did not accept the offer. FAC |
It was submitted before the judge on behalf of Mr Hashwani that the term requiring arbitrators to be members of the Ismaili community was invalid by reason of one or more of the following: the Regulations, the Human Rights Act 1998 (the HRA), or public policy at common law. ARG |
The judge held (i) that the term did not constitute unlawful discrimination on any of those bases and, specifically, that arbitrators were not employed within the meaning of the Regulations; (ii) that if, nonetheless, appointment of arbitrators fell within the scope of the Regulations, it was demonstrated that one of t... |
The judge ordered Mr Hashwani to pay Mr Jivrajs costs and refused Mr Hashwanis application for permission to appeal. RLC |
ii) RLC |
The Court of Appeal RLC |
On 7 October 2009 Sir Richard Buxton granted permission to appeal limited to the issues on the Regulations and on severance. FAC |
Permission was refused on the HRA and public policy issues. FAC |
The issues in the Court of Appeal were therefore these: i) Are arbitrators persons who are under a contract to do work so as to fall within the Regulations and, if so, do parties who make an arbitration agreement specifying religious qualifications for eligible arbitrators thereby make an arrangement for the purpose of... |
The unanimous judgment of the Court of Appeal, which comprised Moore- Bick and Aikens LJJ and Sir Richard Buxton, was handed down on 22 June 2010: see [2010] EWCA Civ 712, [2010] ICR 1435. RLC |
The Court of Appeal reached a different conclusion from the judge on the principal points. RLC |
It held that the appointment of an arbitrator involved a contract for the provision of services which constituted a contract personally to do any work, and therefore satisfied the definition of employment in regulation 2(3). RLC |
It followed that the appointor was an employer within the meaning of regulation 6(1) and that the restriction of eligibility for appointment as an arbitrator to members of the Ismaili community constituted unlawful discrimination on religious grounds, both in making arrangements for the purpose of determining to whom h... |
The Court of Appeal further held that being a member of the Ismaili community was not a genuine occupational requirement for the job within the meaning of the exception in regulation 7(3). RLC |
It is submitted on behalf of Mr Jivraj that both those conclusions were wrong. ARG |
Finally the Court of Appeal held that, although there would be no difficulty in operating the agreement if the offending requirement was struck out, so doing would render the agreement substantially different from that originally intended, the term was void in its entirety under paragraph 1(1) of Schedule 4 to the Regu... |
It is submitted on behalf of Mr Hashwani that both the judge and the Court of Appeal were wrong on this point, which I will call the severance issue. ARG |
A further point arises out of the Court of Appeals order on costs if its judgment is upheld on each of the above points. Ratio |
Employment Ratio |
The reasoning of the Court of Appeal was straightforward: see paras 15-17. Ratio |
In short the Court of Appeal drew attention to the wide terms of articles 1 and 3 of the Directive. Ratio |
In particular it noted at para 15 that the recitals to the Directive and the structure and language of article 3(1) as a whole indicate that it is concerned with discrimination affecting access to the means of economic activity, whether through employment, self-employment or some other basis of occupation, access to vo... |
The Court of Appeal then said at para 16: The paradigm case of appointing an arbitrator involves obtaining the services of a particular person to determine a dispute in accordance with the agreement between the parties and the rules of law, including those to be found in the legislation governing arbitration. Ratio |
In that respect it is no different from instructing a solicitor to deal with a particular piece of legal business, such as drafting a will, or consulting a doctor about a particular ailment or an accountant about a tax return. Ratio |
Since an arbitrator (or any professional person) contracts to do work personally, the provision of his services falls within the definition of employment, and it follows that his appointor must be an employer within the meaning of regulation 6(1) Ratio |
In paras 16 and 17 it placed reliance on three cases. Ratio |
It relied upon von Hoffmann v Finanzamt Trier (Case C-145/96) [1997] All ER (EC) 852 as showing that arbitrators had been treated as providing services for VAT purposes. Ratio |
It also referred to domestic regulations relating to goods and services. Ratio |
It further derived support from Kelly v Northern Ireland Housing Executive [1999] 1 AC 428 and from Percy v Board of National Mission of the Church of Scotland [2005] UKHL 73, [2006] 2 AC 28. Ratio |
It recognised that those cases were addressing slightly different points but concluded that they illustrate the width of the expression a contract personally to do any work in the various discrimination statutes. Ratio |
It concluded thus in para 17: They confirm our view that the expression is apt to encompass the position of a person who provides services as an arbitrator, and why we think the judge was wrong to hold that the nature of the arbitrator's function takes his appointment outside the scope of the 2003 Regulations. Ratio |
Moreover, a contract of that kind, once made, is a contract of employment within the meaning of the 2003 Regulations. Ratio |
It follows, therefore, that for the purposes of the 2003 Regulations a person who has entered into a contract under which he is to obtain such services is an employer and the person engaged to provide them is an employee. Ratio |
The critical question under this head is whether the Court of Appeal was correct to form a different view from the judge on this point. Ratio |
In my opinion it was not. Ratio |
As the Court of Appeal correctly observed at para 15, the meaning of article 3 of the Directive has not been considered by the Court of Justice, and is to be interpreted in the light of the recitals and given its natural meaning consistent with the EC Treaty and the existing case law of the court. Ratio |
It is common ground, at any rate in this class of case, that there is a contract between the parties and the arbitrator or arbitrators appointed under a contract and that his or their services are rendered pursuant to that contract. Ratio |
It is not suggested that such a contract provides for employment under a contract of service or of apprenticeship. Ratio |
The question is whether it provides for employment under a contract personally to do any work. Ratio |
There is in my opinion some significance in the fact that the definition does not simply refer to a contract to do work but to employment under such a contract. Ratio |
I would answer the question in the negative on the ground that the role of an arbitrator is not naturally described as employment under a contract personally to do work. Ratio |
That is because his role is not naturally described as one of employment at all. Ratio |
I appreciate that there is an element of circularity in that approach but the definition is of employment and this approach is consistent with the decided cases. Ratio |
Given the provenance of the Regulations, it is appropriate to consider first the decisions of the Court of Justice. PRE |
The most important of these is perhaps Allonby v Accrington and Rossendale College (Case C-256/01) [2004] ICR 1328, where the Court of Justice followed the principles laid down in Lawrie-Blum v Land Baden-Wurttemberg (Case C-66/85) [1987] ICR 483 and in Kurz v Land Baden-Wurttemberg (Case C-188/00) [2002] ECR I-10691. ... |
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