04 Apr Equality and Non-Discrimination in International Arbitration: Recent Developments in the English Context
Recent years have seen an increase in initiatives designed to improve equality and diversity in international arbitral proceedings. Unfortunately, statistics on diversity in arbitral appointments remain dismal, with women comprising only 21% of appointees in international arbitrations in 2019 and arbitrators with Western European nationalities remaining grossly overrepresented. Such trends have come under increasing scrutiny in the context of both international commercial arbitrations and investor-State disputes, with many commentators, arbitral institutions, and States expressing concern that a lack of diversity may undermine the legitimacy of the arbitral process and contribute to declining use of these mechanisms.
In England, a notable development on this topic came in November 2021 when the Law Commission announced its intention to review the Arbitration Act 1996, the principal legislation governing both domestic and international arbitration. At a recent conference celebrating the 25th anniversary of the Arbitration Act, the Law Commission’s review was a central topic. Several speakers proposed possible areas for reform, with common criticisms surrounding issues of confidentiality, emergency arbitrators, and the availability of appeals on points of law. One of the most interesting proposals floated was the insertion of a new provision into the Act prohibiting discrimination in the appointment of arbitrators, with a view to increasing overall diversity (particularly gender diversity). It was suggested that such a provision might take the form of an express prohibition preventing parties from discriminating based on protected characteristics under the Equality Act 2010, the United Kingdom’s primary anti-discrimination law.
While amendments designed to increase diversity in arbitration should be welcomed, the wording, function, and consequences of any anti-discrimination provision governing arbitral appointments merit careful consideration. Such an examination is particularly germane given the novelty of the proposed obligation, which would have no equivalent in other major arbitral jurisdictions (see, for instance, the UNCITRAL Model Law, Singapore Arbitration Act, Swedish Arbitration Act, and Chapter 12 of the Swiss Federal Act on Private International Law). This post explores some of those issues, both with a specific view to the English context and a broader view of equality and non-discrimination obligations under international human rights law.
The Equality Act 2010 and Beyond
As previously noted, one possible option for a non-discrimination provision would be to prohibit parties from discriminating in arbitral appointments based on protected characteristics under the Equality Act 2010. However, the Equality Act arguably has three limitations as concerns international arbitration. First, it is a domestic piece of legislation which applies in a finite list of domestic contexts (i.e. employment, provision of services, education etc.). In an arbitration between foreign parties under foreign law which is exclusively seated in England, there is no reason why this legislation should or would necessarily be applicable. Indeed, this appeared to be one of the policy rationales underpinning the case of Jivraj, in which the Supreme Court held that a statutory instrument prohibiting religious discrimination did not apply to arbitral appointments because the relationship between parties and arbitrators is not one of a contract of employment. Imposing obligations under the Equality Act would also seem to starkly contrast with the opt in/opt out ethos of the Arbitration Act 1996, in which parties may choose to opt out from all but certain mandatory provisions under English law.
Second, the Equality Act contains a closed list of protected characteristics; namely, age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, and sexual orientation. This list has at least two arguable shortcomings. First, having been drafted more than a decade ago, its language is beginning to show its age. Note, for instance, the unfortunate “gender reassignment [or] sex” – more modern language could take the form, for instance, of gender “identity or expression”. Second, the Act lacks a catch-all category to provide flexibility for future developments, language which is common to many international human rights treaties. Take the International Covenant on Civil and Political Rights, for instance, which prohibits discrimination on “any ground such as” various characteristics, including “language” and “property, birth or other status”. Similar language is found in various regional human rights treaties including the European Convention on Human Rights, the Arab Charter on Human Rights, the African Charter on Human and Peoples’ Rights, and the American Convention on Human Rights (“or any other social condition”).
Finally, on a practical note, while many English lawyers may be familiar with the Equality Act, this will not be the case for many (if not most) international lawyers. A reference to “protected characteristics” would thus require international arbitration practitioners to familiarize themselves with yet another lengthy and complex piece of domestic legislation, rivalled only by the Arbitration Act 1996 itself. This would surely do no favours in terms of increasing diversity across the arbitral process, nor for the popularity of England as an arbitral seat.
Of course, from an English perspective, the rationale for expressly referring to the Equality Act 2010 is clear. An express reference to the Act would allude to and thus signal an overturning of the Supreme Court’s decision in Jivraj. The direct incorporation of terms from the Equality Act 2010 is also likely to be less controversial from a legislative perspective. But these considerations may not be so obvious to international users of the system. So, if such a clause is to be added, why not develop a sui generis provision drawing inspiration from diverse regional and international sources? Why not review, for instance, equality and non-discrimination provisions from other jurisdictions and international treaties? The ultimate goal should surely be to enshrine an obligation that is robust, progressive, and globally minded.
Notwithstanding specific issues of drafting, the substance of an anti-discrimination clause applicable to arbitral appointments presents several other issues. One would be the formulation of any exceptions. In particular, the clause would need to expressly permit discrimination in certain circumstances – for instance, in the relatively common scenario of parties requiring a sole arbitrator or presiding chair to be a national of a neutral third-party country (see e.g. Article 6.1 of the LCIA Rules). The facts of Jivraj provide another interesting example, where two Ismaili parties preferred all their arbitrators to be from the Ismaili community. The precise scope of such exceptions presents many difficulties. If too narrow, they would risk undermining party autonomy by preventing parties from choosing arbitrators based on important national, cultural, or religious considerations. If too broad, they would risk cannibalizing the anti-discrimination clause itself, by allowing parties to justify any discrimination on the basis of seemingly legitimate preferences.
The Law Commission’s current proposal attempts to straddle these two poles, by suggesting that discrimination could be permitted where selection is based upon an “occupational requirement” such as nationality. This formulation is deliberately non-exhaustive, likely based on the assumption that English courts would clarify the scope of an “occupational requirement” on a case-by-case basis. However, the role of case law in developing such exceptions warrants some pause – one may query whether domestic courts are best placed to decide how and when foreign parties may discriminate, particularly in cases which raise complex issues of cultural relativism. One can also easily foresee situations in which selection criteria might be legitimately important to parties, such as for cultural or religious considerations, but would be difficult to characterize as required or necessary to perform the occupation of an arbitrator.
Another difficult question is whom the obligation would be owed to, by whom it would be owed, and what the consequences would be for breach. Current proposals appear to envisage that parties would owe a legal duty not to discriminate when selecting arbitrators, and enforcing this duty would fall to the English courts. However, the remedy available in such cases remains unclear. Could parties apply to set aside an award because of discrimination in the appointment process, as under Section 68? Or could English courts intervene to remove arbitrators at an early stage, as under Section 24, and direct the parties to appoint a more diverse tribunal? Such sanctions might risk gamesmanship by creative litigators, proving ammunition to challenge appointments or awards based on any deficits in the constitution of the tribunal. But in the absence of sanctions, what would be the point of adding an anti-discrimination provision? Finally, one may query whether this is an obligation which should solely be imposed on parties. What about the role, for instance, of appointing institutions or party-appointed arbitrators jointly selecting a chair?
While initiatives to increase diversity in arbitration should be welcomed, there remain many difficult questions about how a prohibition against discrimination in arbitral appointments could be operationalized. In this author’s view, there is a risk that such a clause may simply enshrine formal equality through the language of existing legislation with little consideration of, or even at the cost of, achieving substantive equality and diversity in arbitral appointments. For that reason, any proposed amendments must fully explore the possible implications and effects of such an obligation: not only for domestic, but also international arbitrations; and not only for current arbitrations, but also the arbitrations of the next 25 years. In the meantime, readers interested in these topics should keep an eye on England for forthcoming proposals. The Law Commission has signalled its intention to publish a consultation paper on the issue sometime in late 2022.