1. Arbitration agreement
| Pages | 44-82 |
| Author | Emilia Onyema |
1
Arbitration agreement
The arbitration agreement is the basis of any consensual arbitration, so that
there cannot be an arbitral reference in the absence of a valid and
enforceable arbitration agreement.1 The whole realm of arbitration
commences with the existence of such an arbitration agreement. In effect if
there is no consent to arbitrate, there is nothing for the arbitral reference to
stand on.2 This state of affairs will result in the nullity of the arbitral
proceeding and any arbitral award made pursuant to it, but will not nullify
the arbitrator’s contract or the contract between the disputing parties and the
arbitration institution.3
The arbitration agreement may be in the form of a clause in the main
contract evidencing the transaction between the parties or as a separate
submission agreement.4 Arbitration clauses evidence the intention of the
parties to submit future disputes arising out of the underlying main contract
to resolution by means of arbitration, while the submission agreement is a
separate document evidencing the intention of the parties to submit existing
disputes that have arisen over a defined legal relationship to resolution by
means of arbitration. Thus both forms of arbitration agreement have the
same primary purpose – that of resolving disputes by means of arbitration.5
This chapter gives an introductory discourse on aspects of the arbitration
agreement relevant to matters affecting the arbitrator’s contract and the
disputing parties’ contract with the arbitration institution.
This chapter examines: (1) the legal nature of the arbitration agreement;
(2) the requirements for a valid arbitration agreement under selected
arbitration laws and rules; (3) the doctrine of separability or autonomy of
the arbitration agreement; (4) the law applicable to the arbitration
agreement; (5) the termination of the arbitration agreement; (6) the two
primary forms of arbitration references; and (7) the relationship between the
arbitration agreement and the arbitrator’s contract and the contract between
the institution and the disputing parties.
1 Legal nature of the arbitration agreement
The arbitration agreement is a contract in which the parties exchange
promises with the legal intention to be bound to the performance of those
promises. Thus parties to the arbitration agreement must possess legal
capacity to conclude such a contract. This sub-section examines: (1.1) the
parties to the arbitration agreement and their legal capacity to contract, (1.2)
the agreement to arbitrate, (1.3) the intention of the parties to conclude legal
relations, and (1.4) the nature of the promise contained in the arbitration
agreement.
1.1 Parties and their capacity to contract
Parties to the arbitration agreement are the main disputants in the arbitral
reference and also are the same parties to the underlying or main transaction
from which the dispute evolves. The disputing parties are therefore the
physical persons or legal entities that are empowered by their personal laws
or the law of the place of their incorporation to opt out of litigation into the
private dispute resolution mechanism of arbitration in the settlement of their
underlying dispute.6 It is these parties that trigger the whole arbitral process
by taking the first step of entering into a valid and enforceable arbitration
agreement pursuant to a ‘defined legal relationship, contractual or not’,
quoting the New York Convention.7 Since the arbitration agreement is a
contract, the disputing parties must have capacity to conclude a contract, to
sue and be sued.8 The parties must not only have legal capacity to enter into
the arbitration agreement but must also have legal capacity to conclude the
arbitrator’s contract and all other collateral contracts relevant to the
international arbitral reference. This sub-section examines: (1.1.1) the
nature of the parties to the arbitration agreement, and (1.1.2) their capacity
to contract.
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