DOCTRINE OF SEPARABILITY

Presented by: Hina Shahid

National College of Business Administration And Economics

Doctrine of Separabilty of Arbitration Agreement-

Autonomy of the arbitration from the main contract

The doctrine of separability recognizes the arbitration clause in a main contract as a separate contract, independent and distinct from the main contract

The essence of the doctrine is that the validity of an arbitration clause is not bound to that of the main contract

The illegality or termination of the main contract does not effect the jurisdiction of an arbitration tribunal based on an arbitration clause contained in that contract

The obligation to resolve all disputes by arbitration continues even if the main contract is expired or vitiated

Significance

1)Separability protects the integrity of the agreement to arbitrate and plays an important role in ensuring that the parties intention to submit disputes is not easily defeated and in this way it also protects the jurisdiction of the arbitration tribunal

2)Accordingly the arbitrator has jurisdiction to rule on any complaint relating to the existence or the validity of the main contract provided there are no grounds for declaring the arbitration agreement itself invalid.

Recognition of Doctrine by First Arbitral institution

The first arbitral institution which recognized the doctrine of separabilty of the arbitration agreement was the ICC in 1955

Article 6(4) “ Arbitral tribunal shall continue to

have jurisdiction to determine the respective rights of the parties and to adjudicate their claims and pleas even though the contract itself may be non-existence or null and void”

UNCITRAL Arbitration Rules,1976

Article 22(2) “ An arbitration clause which forms

part of the contract and which provides for arbitration under these rules shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause

Section 1040(1) ZPO,German Law

“ The arbitral tribunal may rule on its own jurisdiction and in this connection on the existence or validity of the arbitration agreement . For that purpose , an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract”

Consequences of the Separability doctrine

Direct Consequences Indirect Consequences

Direct Consequences

The Arbitration agreement is unaffected by the status of the main contract

The arbitration agreement may be governed by the law different from governing the main contract

Indirect Consequences

Arbitrators have the power to rule on their own

jurisdiction

Combination of principle of validity and the rejection

of the choice of law

Arbitration clause may survive termination of

expiry of the main contract

Invalidity of the parties' main contract may not

deprive an arbitral award of validity

Sojuznefte export V Joc Oil Ltd 1990

The main contract embodying the arbitration agreement did not contain the mandatory signature of the parties. Russian Court found that the arbitration agreement was valid as it was a separate agreement and did not require the signatures of the parties for its formal validity.

Landmark decision on the development of the Doctrine Prima

Paint V Flood & Conklin(1976)

“ Except where the parties otherwise intend, arbitration clause as a matter of federal law are ‘separable’ from the main contract in which they are embedded and where no claim is made that fraud was directed to the arbitration clause itself, a broad arbitration clause will be held to encompass arbitration of the claim that the contract itself was induced by fraud”