Question

A decision by the arbitral tribunal that the contract is null and void shall

• A. Entail ipso jure the invalidity of the arbitration clause.
• B. Not entail ipso jure the invalidity of the arbitration clause.
• C. Entail defacto invalidity of the arbitration clause.
• D. None of the above

Hint:

Think of the arbitration clause as a lifeboat on a ship (the main contract). If the ship sinks (the contract is void), the lifeboat (the arbitration clause) can still float on its own to resolve the resulting disputes. This is the essence of the doctrine of separability.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
This question tests the "doctrine of separability" or "doctrine of severability" of an arbitration clause, a fundamental principle in arbitration law. This doctrine is enshrined in Section 16 of the Arbitration and Conciliation Act, 1996.
Step 2: Detailed Explanation:
Section 16(1) of the Act states that the arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement. For this purpose, it lays down two crucial principles:
(a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and
(b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure (by the law itself) the invalidity of the arbitration clause.
This means the arbitration clause is considered a separate, "mini-agreement" within the main contract. Even if the main contract is found to be invalid for reasons like fraud, misrepresentation, or illegality, the arbitration clause survives. This allows the arbitral tribunal to retain jurisdiction and decide the disputes arising out of that invalid contract, including claims for damages.
Therefore, a finding that the main contract is null and void does not automatically invalidate the arbitration clause.
Step 3: Final Answer:
According to the doctrine of separability under Section 16, a decision that the main contract is null and void does not automatically (ipso jure) invalidate the arbitration clause contained within it. Therefore, option (B) is the correct answer.