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The Separability Doctrine

The separability doctrine, also called the severability doctrine, states that an arbitration clause

is separable from the main contract underlying it, and can thereby survive any successful challenge to

the latter. This doctrine has been incorporated into numerous international arbitration conventions and

institutional rules, as well as national arbitration laws, including but not limited to: 1961 European

Convention on International Commercial Arbitration, Art. V(3); 1998 ICC Arbitration Rules, Art.

6(4); UNCITRAL Arbitration Rules (as revised in 2010), Art. 23(1); 2009 AAA International

Arbitration Rules, Art. 15(2); 1998 LCIA Arbitration Rules, Art. 23.1; 1985 UNCITRAL Model Law

on International Commercial Arbitration, Art. 16(1); 1996 English Arbitration Act, section 7; German

Code of Civil Procedure (Zivilprozessordnung), section 1040; 1987 Swiss Law on Private

International Law, Art. 178(3); Lithuanian Law on Arbitration, Art. 19(1); 1958 New York

Convention, Art. II(3). Some of these may be said to have included the doctrine by implication, such

as the last two examples given.

I will explore the separability doctrine by examining (I) its origin and rationales; (II) its

corollaries; and (III) any remaining ambiguities surrounding it.

I. Origin and rationales of the separability doctrine

The separability doctrine was first established in the UK in the case of Heyman v Darwins (1942),

where it was clarified that an arbitration clause is separate or autonomous from the main contract. For

the sake of interest, the equivalent seminal case in the US is Prima Paint Corp. v Flood & Conklin

Mfg. Co. (1967), where the 1925 Federal Arbitration Act was interpreted to require any challenge to

the enforceability of an underlying contract to be heard first by an arbitrator, not a court, unless the

claim is that the arbitration clause itself is unenforceable.

There are several rationales for this. Firstly, the parties’ agreement to arbitrate is simply taken

to be analytically separate, distinct and independent from their agreement in the underlying contract in

the sense that the former concerns the procedural issue of the dispute resolution while the latter is

about substantive question of the parties’ rights under it. Secondly, the doctrine is consistent with the

parties’ implied or express intent to arbitrate any and all disputes that arise between them. Thirdly, the

doctrine ensures that parties cannot escape or avoid arbitration by simply challenging the main

contract.

II. Corollaries of the separability doctrine

From the idea that the arbitration clause is separable from the main contract and thus able to survive

the latter’s demise flow a number of key implications. First of all, it has to be understood that “demise”

in this instance may be of two types. Firstly, it might mean the natural expiration or termination of the

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main contract, so long as the claims in question arise from conduct made during the term of the

contract, or during the term of specific provisions that survived it.

Secondly, and somewhat more significantly, “demise” might also refer to the invalidity of the

main contract which comes about for whatever reason (such as fraud or duress). In other words, the

invalidity of the main contract does not necessarily render the arbitration clause invalid as well. This

was decided in the English case Harbour Assurance Co v Kansa (1993), where the separability

doctrine was extended such that the arbitration clause survived any invalidity of the main contract. In

that case it was articulated that the total breach of a contract by one party “does not abrogate the

contract, though it may not relieve the injured party of the duty of further fulfilling the obligations

which he has by the contract undertaken to the repudiating party. The contract is not put out of

existence, though all further performance of the obligations undertaken by each party in favour of the

other party may cease. It survives for the purpose of measuring the claims arising out of the breach,

and the arbitration clause survives for determining the mode of their settlement. The purposes of the

contract have failed, but the arbitration clause is not one of the purposes of the contract.”1 The

necessary consequence of this is that a challenge to the main contract will not deprive the arbitral

tribunal of its jurisdiction to hear the parties’ dispute concerning the main contract’s validity. Hence,

in the US case Buckeye Check Cashing Inc. v Cardegna (2006), it was decided that when it comes to

voidable contracts, the arbitrator will rule on all issues including the legality of the contract unless the

arbitration clause itself is challenged. It is also interesting to note that in the US, the severability

doctrine is not only to allow the authority of the arbitrators to survive the invalidity of the contract; it

also goes so far as to allow the arbitrators to decide on threshold questions, which distinguishes the

separability doctrine as it is known in the US from the rest of the world.

Another corollary of the separability doctrine is also that the law governing the arbitration

agreement may be different from that governing the main contract. This can be reinforced in the

arbitration agreement itself through the adoption or incorporation by the parties of institutional rules

that include the separation doctrine. The doctrine would then be implicitly recognised by the parties

themselves.

III. Remaining ambiguities concerning the separability doctrine

However, there remain a few ambiguities regarding the separability doctrine. One big question

surrounding it is whether it applies to potentially void contracts--ought a dispute as to whether a

contract is void (ie whether any binding contract exists in the first place) be sent to arbitration? In the

US, the answer appears to be “no” according to such cases as First Options v Kaplan (1995) and

1 E.Lee, Encyclopedia of Arbitration Law, 1984, Lloyd’s of London Press LTD, London, p.3-3: Per Lord

MacMillan in Heyman v. Darwing Ltd.[1942] A.C. 356.

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Granite Rock Co. v International Brotherhood of Teamsters (2010). However, the English courts have

left this question unanswered.

Another question that has not been fully addressed is also what happens when an essential

element of the arbitration agreement like applicable law is contingent on details specified in the main

contract. The separability doctrine allows for the law governing the arbitration agreement to differ

from that governing the main contract, but the situation becomes less clear in the situation where the

law governing the arbitration agreement is not specified. In such a case, should this law be the law of

the arbitral seat, or the law of the underlying contract? This was the question that cropped up in the

case of SulamErica Cia Nacional De Seguros SA v Enesa Engenharia SA (2012).

Conclusion

From the above, it is evident that the separability doctrine has become an established and widely-

recognised principle over time. It tells us that the jurisdiction of the arbitrators in such cases can be

questioned essentially only if the challenge is directly specifically and explicitly to the arbitration

clause. The doctrine has been developed through case law which defines its boundaries. However,

ambiguities still remain over it and only time can tell us how these doubts will subsequently be

resolved.

Bibliography

Sklenyte, Aiste. “International Arbitration: the Doctrine of Separability and Competence-Competence

Principle.” The Aarhus School of Business, 2003. http://pure.au.dk/portal-asb-

student/files/2372/000126197-126197.pdf

Smit, Robert H. “Separability and Competence-Competence in International Arbitration: Ex Nihilo

Nihil Fit? Or Can Something Indeed Come From Nothing?” Paper presented at the spring meeting

for the American Bar Association, Section of International Law and Practice, Washington, D.C.,

May 7-10, 2003.

http://www.stblaw.com/google_file.cfm?TrackedFile=6B46113B5E8CBB828FBA7101C4A829F1

439B10&TrackedFolder=585C1D235281AED9B6A07D5F9F9478AB5A90188899

Wikipedia. http://www.wikipedia.org/