by: Habeeb Olayinka Lawal
An arbitration agreement is a contract between parties specifying how disputes will be resolved through arbitration. This agreement can take either of the following forms:
1. An arbitration clause embedded in a broader contract.
2. A separate arbitration agreement detailing the terms of the arbitration.
Regardless of its form, an arbitration agreement is treated as independent of the contract in which it is embedded or related. This principle is known as the “Doctrine of Separability.”
Under the doctrine, even if the main contract containing the arbitration clause is declared invalid, the arbitration agreement survives and remains enforceable. This ensures that disputes can still be resolved through arbitration, regardless of the status of the main contract. See Section 14(2) of the Arbitration and Mediation Act (AMA), 2023, and Section 19(2) of the Lagos State Arbitration Law, 2009.
These provisions affirm that arbitration clauses or agreements are distinct and autonomous, preserving the parties’ intent to arbitrate disputes irrespective of any issues affecting the validity of the main contract.
Why the Doctrine of Separability Matters
The doctrine upholds the efficacy of arbitration as a dispute resolution mechanism by:
1. Preventing one party from invalidating an arbitration agreement simply by disputing the underlying contract.
2. Ensuring that arbitration remains a viable option even when the main contract is challenged or terminated.
Limitations of the Doctrine
While the Doctrine of Separability is a cornerstone of arbitration, it does not apply in all cases. The doctrine cannot operate where:
1. No Arbitration Agreement Exists: If one party claims that they never agreed to arbitrate, the doctrine is inapplicable.
2. Fraudulent Inducement: If a party alleges that they were fraudulently induced into signing the arbitration agreement, the validity of the arbitration clause may be challenged.
In such situations, the question of whether an arbitration agreement exists or was validly formed must be resolved first before the doctrine can take effect.
Conclusion
The Doctrine of Separability safeguards the autonomy of arbitration agreements and reinforces arbitration as a reliable and efficient method of resolving disputes. However, its application is subject to the fundamental requirement that an arbitration agreement exists and was consensually entered into by the parties.
This nuanced approach ensures that arbitration remains a flexible and fair mechanism for dispute resolution while respecting the principles of contract formation.
