ECIJA, NORMAN JOYE A

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Arbitral Autonomy Principle

Arbitration is fast gaining acceptance as a means of settling contractual disputes. This

is especially true in international commercial transactions where there is some mistrust in the
judicial systems of the countries to which the contracting parties are nationals. The parties
often choose arbitration as a neutral forum to decide disputes between them. But what if the
contract containing the arbitral clause is challenged as invalid? What if one of the contracting
parties assert that he was induced by fraud to enter into the contract? What if one of the
contracting parties assert that the other made willful misrepresentations without which he
would not have entered into the contract? Will a dispute arising from said contract be referred
to arbitration pursuant to the arbitral clause? Or, can the parties disregard the arbitral clause
and let the courts decide the dispute since the contract is anyway alleged to be invalid?

This is where the autonomy or severability principle in arbitration law comes in. Under
this principle, an arbitral clause contained in a contract is considered separate and distinct
from the main contract. The legal significance of this principle is that even if a party
challenges the contract as invalid, the alleged invalidity of the contract is still a question for
the arbitrator, not the court, to decide. In other words, the alleged invalidity of the contract
does not adversely affect the arbitral clause such that the contracting parties must still submit
the validity of the contract to arbitration. A party cannot remove the validity of the contract
from the jurisdiction of the arbitrator by the mere expedient of claiming that the contract
containing the arbitral clause is invalid.

The article presents us the case of Agan v. PIATCO which deals with international
commercial arbitration. On this case, it contradicted the principle of arbitral autonomy. The
court held that since the pricipal contract is void, the arbitral agreement is also void. One of
the issues that I can pinpoint is the contradition of the Supreme Court decision from the other
jurisprudence which upheld the arbitral autonomy principle. Because of this decision, the
court lessened the reliability of arbitration. It made arbitration as an inferior trier of facts than
the court. Hence, the resolutions of arbitration is not reliable and must took upon with
reservations. Personally, I do not agree with the decision of the court. The basis of its decision
is the “transcendental importance doctrine”.The court should have decided in concurrence
with the US jurisprudence. I also agree with the authors opinion when he said that because of
the decision, the court is essentially saying that arbitral tribunal is incapable of reaching a
credible decision. The court manifestly expressed its distrust towards arbitral proceedings.

Because of the inconsistency of court decisions, it tainted the legal system. The court
should not make decisions which in the long run would just revert its decision. I believe that
one of the attributes that the court should posses in the consistency of its decision. The
autonomy principle has been used and it’s being upheld as a valid doctrine. In the case, I
believe that this principle should have been given more weight. As a result of the court’s
decision, the court strengthened its powers and widened its scope as a judicial administrator.