The Supreme Court has handed down a landmark judgment today (27 July) confirming that arbitrators are not employees and therefore fall outside of UK equality laws.

The judgment, which overturns a Court of Appeal decision that arbitrators were employees for the purposes of the Employment Equality Regulations, confirms London's position as a leading centre for international arbitration.

It means that nationality restrictions, such as that specified in today's Jivraj v Hashwani ruling, can continue to be used in arbitration proceedings held in the UK because arbitrators are not subject to equality laws.

The case concerned a joint venture agreement signed in 1981, which included an arbitration clause requiring any dispute to be resolved before three arbitrators, each of which must be "a respected member of the [Muslim] Ismaili community".

Hashwani subsequently tried to appoint Sir Anthony Colman, a retired judge of the Commercial Court, as an arbitrator, with Jivraj arguing that this breached the terms of the agreement

The High Court found in favour of Jivraj on the grounds arbitrators fell outside the scope of the regulations as they were not employed, but the Court of Appeal reversed this decision.

Today's ruling upholds the original High Court judgment stating: "The Supreme Court unanimously allows the appeal on the ground that an arbitrator is not a person employed under a contract personally to do work within the meaning of the regulations, which do not therefore apply."

It continued: "In this case, the judge had correctly found that the Ismaili community had demonstrated an ethos, based on religion, for dispute resolution contained within that community."

Hill Dickinson commercial litigation partner Jonathan Berkson acted for Jivraj alongside One Essex Court's Rhodri Davies and Cloisters Chambers' Schona Jolly.

Zaiwalla & Co acted for Hashwani alongside Fountain Court's Michael Brindle QC and Essex Court Chambers' Brian Dye.

Linklaters, Allen & Overy (A&O) and Clifford Chance provided advice to the interveners, advising the London Court of International Arbitration, the International Chamber of Commerce and His Highness Prince Aga Khan Shia Imami Ismaili, International Conciliation and Arbitration Board, respectively.

A&O arbitration partner Richard Smith said: "The Court of Appeal decision in Jivraj v Hashwani created considerable concern. Arbitration agreements commonly contain restrictions on the nationality of arbitrators which are designed to ensure the neutrality of the process.

"By treating arbitrators as employees, such restrictions would have been discriminatory and the relevant arbitration agreements could have been struck down in their entirety. The Supreme Court's finding that arbitrators are not employees is very welcome and lays to rest the problems created by the earlier decision."

Joe Tirado, head of international arbitration at Norton Rose, commented: "Nationality restrictions have been used in international arbitration for many years. They are extremely popular with the parties and we are delighted that they will remain part of arbitrations in England."

Freshfields Bruckhaus Deringer dispute resolution partner Nigel Rawding said: "The decision brings the UK back into line with what we understand the likely position to be in other EU jurisdictions. In fact, the reaction to the judgment among the arbitration community, both in London and elsewhere, was that there was something incorrect or ill-fitting about characterising an arbitrator as an 'employee', given the necessary independence of the arbitrator from the parties.

"In that way, the decision helps to cement London's position as a centre of excellence for the resolution of international business disputes."