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Appointment of Arbitrators - Freedom of Choice v Equality Regulations

13 September 2011 #Dispute Resolution


Introduction

One of the many advantages of arbitration over court proceedings is the flexibility of the process. The parties are able to agree most aspects of the conduct of the arbitration to suit their needs and the nature of the dispute. For example, parties can agree the venue of the hearings, the language of the hearings and how evidence is presented to suit their particular requirements. 

Selection of an Arbitrator

One particular attraction of arbitration for clients is that the parties can select the individual(s) who will decide their dispute.

Where the arbitration tribunal is composed of a sole arbitrator, the arbitrators can either be selected by agreement between the parties or, if the parties cannot agree, the arbitration agreement will usually contain a mechanism for the arbitrator to be appointed. This will usually be that the arbitrator is appointed by an independent body, such as an arbitration institution whose rules govern the arbitration agreement , or by the national Court at the seat of the arbitration.

If the tribunal is to be composed of two or more arbitrators, the parties are usually free to select one arbitrator themselves. Their choice is still subject to scrutiny and so parties cannot appoint anyone to the role. An arbitrator`s appointment can be challenged by either party on several grounds  including:

  • that the appointee is not independent and/or impartial ;
  • the appointee fails to properly conduct the arbitration proceedings; or
  • the appointee does not possess the qualifications required by the arbitration agreement .

Criteria Imposed by the Parties

The last ground refers to the parties` right to impose their own criteria on who should be appointed to resolve their disputes. Such agreements will usually be in the arbitration agreement and may be general criteria, such as the arbitrator has to be a "commercial man" or an expert in shipping law, or the agreement may require the arbitrator to be a member of a particular profession, such as a lawyer or surveyor, or be a member of a particular trade body. Alternatively, the agreement can require the arbitrator to be part of a specific cultural group or of a particular religion. Both the parties and appointing authorities  are bound by these criteria unless the parties agree otherwise.

The Supreme Court recently gave its full support to the parties` right to impose such requirements for the appointment of arbitrators in its decision in Jivraj v Hashwani. In this case, the parties had agreed that all three arbitrators must be "respected members of the Ismaili community"; Ismaili being a branch of Shia Islam. [Each party was free to appoint one of the arbitrators]. Mr Hashwani`s appointee did not fit this criteria, so the other party, Mr Jivraj applied for the appointment to be set aside. Mr Haswani defended the appointment on the basis that such criteria contravened s.6 Employment Equality (Religion or Belief) Regulations 2003 that prohibit an employer from using religion to discriminate between who should be offered or refused employment. The Supreme Court unanimously rejected the argument because it was held that an arbitrator is not an employee of the appointing party and the appointment is not therefore subject to the abovementioned Regulations.

Notes

  1. See for example ICC Rules Art.8.3&4 and LCIA Rules Art7.2. 
  2. See for example s.24 EAA 1996 
  3. The exact wording depends on the rules governing the arbitration. 
  4. Arbitration awards can be also set aside for the same reasons. 
  5. Including the Court potentially; see for example s.19 EAA 1996
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Chris Tayton

Chris Tayton
Partner

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