Religious Norms Affecting the Constitution of an Arbitral Tribunal

The primary feature that makes arbitration so appealing to the business community is the ability to choose the arbitrators to decide a dispute; a right that arbitrating parties prefer to hold on to.^[933] The ability to choose one’s arbitrator and the chance for a fast and effective dispute resolution, however, can be affected by religious influences.

The definition of an arbitrator under Islamic and modern arbitration

Under Shari’a law, all private arrangements mutually agreed between the parties are enforceable, as long as they are not contrary to Islamic norms.^[934] The Qur’an acknowledges and encourages the settlement of disputes through arbitration, but the rules created during the 7^th-8^th centuries were limited to existing disputes, to be submitted to “a given person or persons already known and appreciated by the parties as being in possession of a high degree of integrity”.^[935] This leaves no room for the choice of arbitrators through a third person or appointing authority, as often practiced in modern arbitration.^[936] In addition, the followers of the Maliki school of thought, for example, perceive arbitrators to be agents appointed by and working for the parties to the dispute, while followers of the Hanafi school consider arbitrators in some aspects as similar to agents; a perception still present in the arbitral jurisprudence,^[937] even though in direct contradiction with the “fundamental principle in international arbitration that every arbitrator must be and remain independent and impartial of the parties and the dispute”.^[938] Even schools that do not follow fundamentalist Islamic rules, dictate that the arbitrator’s appointment — based on personal knowledge and trust — can be unilaterally revoked at any time, simply for a loss in confidence.^[939] The procedure practiced under Islamic law appears in this sense a hybrid combination of arbitration and conciliation, in which the arbitrator(s) consult both parties in private, in order to reach a mutually satisfactory solution.

Although these practices did make sense in the times they were created, their rigid application today by fundamentalist Islamic lawyers conflicts with universal arbitration principles and practices. The consequences of disregarding arbitration principles may easily jeopardise the recognition of the dispute resolution process itself as arbitration, potentially depriving it of the legal recognition a proper arbitration would have ensured.

Arbitrators’ qualifications in Islamic tribunals and their presence in a modern arbitration environment

The four major schools of Islamic Jurisprudence^[940] agree that there are no limitations applicable to the number of arbitrators to be appointed in order to constitute the arbitral tribunal.^{[941] [942] According to the Medjella2 however, an arbitrator has to be a male Muslim of age who is wise, free and fair.[943] Some schools of Islamic jurisprudence[944] believe that the religious affiliation requirement must be applied strictly, as it is based on a Qur’anic rule.[945] The reluctance to accept non-Muslim arbitrators even in cases involving a non-Muslim party, rather “imposing a mandatory condition, that the arbitrator should be of Islamic faith, since a non­Muslim could not exercise authority (Walaya) over a Muslim”,[946] was previously a strict requirement when arbitrating in Saudi Arabia, where the condition relating to faith and knowledge of Islamic law and local customs and traditions was even incorporated in the Arbitration Regulation.[947] However, parties sought to avoid use of this law. Being perceived as difficult and inefficient in resolving commercial disputes,[948] this law was used infrequently. As a result, Saudi Arabia amended its Arbitration Law recently through the New Arbitration Law 1433H (2012G), joining the global trend of legal harmonisation based on the UNCITRAL Model Law on International Commercial Arbitration (the Model Law).[949]}

Although the enactment of the New Arbitration Law makes significant improvements to reduce the difficulties and inefficiencies experienced under the Old Arbitration Law, it is important to note that the benefits of the Model Law will not be experienced in its entirety, as Saudi Arabia has not incorporated the Model Law verbatim, but only used it as a starting point to make some improvements.^[950] The New Arbitration Law is meant to be accompanied by Implementing Regulations to explain in detail how the new law is to be implemented, but these are yet to be released.^[951]

Although the strict application of Shari’a law only allows males to be Muslim judges, the question of whether a non-Muslim or a female can be appointed in modern arbitration is not settled in contemporary jurisprudence^[952] and is yet to be resolved by Caliphs.

Non-religious arbitral tribunals affected by Islamic norms

In jurisdictions that do not impose any religion-based limitations to the composition of an arbitral tribunal, appointments can be based on preferences that range from professional qualifications to nationality.^[960] Despite commercial disputes being decided on law, equity and/or business considerations, arbitral decision-making also has a strong component of personal trust vested in the members of the tribunal appointed to adjudicate the dispute.

Accordingly, arbitration involving Islamic issues is not exclusive to religious systems, but is a heavily debated subject in European countries as well, its effects being also recognised in non-religious legal systems.^[961] Due to concerns raised by English courts not accepting Shari’a law,^[962] a Commission, established by the French financial organisation Paris Europlace to research the potential difficulties that Islamic finance may incur in France, published a Proposal.^[963] While dealing mostly with substance-related issues, it also touches upon the procedural aspects of Islamic finance, particularly addressing the doubts of jurisdiction of a Muslim over a non-Muslim and of a woman over a man.^[964] The Commission, recognising the principle of party autonomy in arbitration, stated that both the gender and the religious requirements are based on other teachings than the Qur’an itself, and as such, are not to be rigidly followed. While this clarification serves as a much needed bridge over the differences between western arbitration legislation and religious dogma, reality shows that even appointments in modern arbitration can and often do reflect the same old principles, manifested as personal preferences.

Current practices tend to depart from the old beliefs^[965] and adopt the “view according to which the relevance of the Islamic legal traditions is limited to these few basic aspects not subject to any possible controversy or difference of opinion”^[966] — a perception that allows the application of modern arbitration practices and rules without finding them contradictory with mandatory rules of the Qur’an.

A perfect example of such an outcome is the landmark case of Hashwani v Jivraj,^[967] where the English Court of Appeal found an arbitration agreement void for breach of anti-discrimination principles. The agreement required arbitrators to be “respected members of the Ismaili community and holders of high office within the community” and for the chairman to be “the President of the HH Aga Khan National Council for the United Kingdom for the time being”.^[968] This requirement was found by the Court to go beyond the accepted practice of “arbitrators’ special characteristics”, since the arbitrators were asked to apply English law, for which no special religious qualification is required.^[969] Thus, the only exception permitted by the Regulation, namely that of a proportionate and genuine requirement of a job for a particular ethos or belief,^[970] was not applicable. Although this decision of the Court of Appeal has been overturned by the Supreme Court, the recognition of the importance of the parties’ right to determine the composition of an arbitral tribunal followed by the entire arbitral agreement being declared void precisely for the exercise of such choice^[971] raised serious pro-arbitration concerns. And while the apparent clash between the party autonomy arbitration principle and anti-discrimination principles were eventually solved by the Supreme Court,^[972] the concern still remains.

Despite the Supreme Court restoring — at least for a while — certainty by finding that “the requirement of an Ismaili arbitrator can be regarded as a genuine occupational requirement”,^[973] the Jivraj saga is far from reaching its end.

Judaic arbitral tribunals

Jewish arbitration also faces difficulties in finding its place in a modern arbitration environment. In Orthodox Judaism, a Beth Din^[978] consists of religious Jewish men, at least one of whom is widely knowledgeable in Jewish law and is capable of instructing the other members in any such matters applicable to the case being heard.^[979] Strict Jewish Law specifically prohibits women from serving as arbitrators,^[980] although in progressive communities women may serve on the Beth Din.^[981] A Beth Din usually consists of three judges^[982] with no formal requirement as to their qualifications,^[983] but the procedures of each Beth Din panel differ^[984] and the appointment of arbitrators depends on the rules of the Beth Din in a particular area. For example, the rules of the Beth Din of America require at least one arbitrator to be a rabbi, and up to two others to be religiously observant individuals with expertise relevant to the dispute.^[985]

Thus, similarly to strict Islamic rules, certain aspects of Jewish norms may appear discriminatory or in conflict with general arbitration principles. These concerns can undermine not only equality and fairness in arbitration, but also the reliability and uniform legal recognition of arbitration at a global level.^[986]

The wider implications of religious influences over arbitral tribunals

Even though “discriminatory” preferences may be within the acceptable norm when it comes to the freedom of appointing arbitrators, the Jivraj experience, reflecting a general conflict between religious norms and legal principles, brings up concerns that go beyond religious expectations of arbitrating parties. While it is unlikely that religious qualification requirements in appointing arbitrators will become prohibited, the chain of events in the Jivraj saga leaves the arbitration community with two secondary, but nevertheless important concerns that affect arbitration as a personalised justice mechanism. On one hand, as the lower Court observed, the “decision has a far wider significance than the present case”.^[987] In the unlikely event that religious qualification becomes unacceptable following the complaint at the EC, such decision would put all arbitration agreements that provide for arbitrators having specific religious characteristics at great risk, due to the Regulation’s retroactive effect.

In addition, the Jivraj case opens the door to other arbitrator characteristics (like nationality) also possibly being qualified as discriminatory. Nationality restrictions are regularly used in international arbitration to ensure neutrality and language skills of arbitrators. However, nationality in itself might not easily satisfy the “genuine occupational requirement” test, and a case similar to Jivraj v Hashwani on the nationality of arbitrators could reopen Pandora’s box, leading to a lengthy analysis of yet another arbitrator preference being permissible or not. Legislation regulating gender-based discrimination may also come into focus, whenever gender is an appointment criterion for parties whose religion provides for differential treatment between men and women. A Muslim party may wish to exclude female arbitrators from the composition of the tribunal, as they may feel uncomfortable (or even find it highly inappropriate) to let a woman decide and impose her decision over men. Such preferences, based on religious norms not having any legal manifestation, would most probably contradict either religion-based or gender-based discrimination regulations. This is a conflict that is now becoming imminent, with the English draft Mediation and Arbitration

Services (Equality) Bill^[988] directly targeting gender discrimination in arbitration.^[989]

While the authors of this chapter do not argue in favour of gender­based discrimination in any area of life, further limitations imposed upon the appointment of arbitrators would severely restrict party autonomy. Although values protected by anti-discriminatory regulations are undoubtedly important for any democratic society, this protection should not be enforced at the cost of another much valued principle of party autonomy in arbitration. If done so, preference to arbitrate in any country that has strong anti-discrimination legislation may decrease significantly among religious communities — not because any of these communities would favour discriminative agreements, but because the distinctive line between “acceptable” and “unacceptable” discrimination is very fine, and a strict interpretation of anti-discrimination regulations restricts certain manifestations of the freedom of religion.

Secondly, the Jivraj saga has severely impacted on the actual and perceived benefits of arbitration overall. As mentioned above,^[990] arbitration is the preferred method to achieve justice in the international business community due to its time and cost efficiency paired with maximum legal recognition. The Jivraj saga, however, impacts on the perception of arbitration being at least potentially fast by virtue of the duration of this case which is years away from being concluded. If a preliminary issue about the composition of the arbitral tribunal could not be finally solved in years^[991] with the underlying dispute itself yet to be resolved, then arbitration is not the time and cost efficient method one would prefer over litigation.