Meaning
Board members who have not personally executed a contract or arbitration agreement may still be affected by its terms through their role in the company. Disputes involving non-signatory directors often center on whether they can be compelled to join an arbitration or held liable for corporate breaches. This issue tests the boundaries of the corporate veil and the reach of contractual obligations.
Agency Link
Actions taken by an individual on behalf of the firm are generally attributed to the entity itself. Because non-signatory directors act as agents, they are usually protected from personal liability under the contract. However, allegations of fraud or tortious interference can bring their personal conduct under the scrutiny of a tribunal.
Liability Gap
Contracts typically only bind the parties that signed them.
Jurisdiction Reach
Tribunals sometimes use the group of companies doctrine or veil-piercing theories to extend their authority to individuals. Since non-signatory directors are often the ones making the decisions that lead to a dispute, claimants may try to name them as respondents to gain an advantage. The success of such a move depends on the specific arbitration law of the seat and the language of the clause.
This legal tension requires clear separation between personal actions and corporate duties.
