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Arbitration and Doctrine of Separability | Best Legal Advisor in Kolkata

The term “separability” refers to the capacity to become or cause separation. Separability is a legal principle that permits an arbitration provision or other agreement to be taken into consideration independently of the underlying contract in which it is contained. An argument that a contract’s arbitration clause must be terminated because the agreement is void cannot be used to invalidate an arbitration clause or agreement. According to this doctrine, this form of claim is inadmissible. The arbitration provision is completely counterproductive. This philosophy defends a contract’s arbitration clause or another arrangement. It should therefore be regarded as distinct and legitimate. The best legal advisor in Kolkata would advise you to include an arbitration clause in your contract.

Arbitration provision

One must be familiar with the meaning of an arbitration provision and agreement in order to comprehend this philosophy. Similar to an agreement, an arbitration clause states that the parties will arbitrate any disputes that arise. The arbitrators’ appointment, the arbitration’s location, and seat, and other pertinent information are all included. Section 7 of the Arbitration and Conciliation Act of 1996 defines an arbitration agreement.

 

The significance of the arbitration provision

In order to resolve the disputes between the parties, the arbitration agreement is essential. It functions as the building block for arbitration. It demonstrates that the parties consented to have their dispute arbitrated. Without this understanding between the parties, arbitration cannot take place. Both parties must concur in order to come to an agreement. An arbitration agreement cannot be made without consent. Consent, therefore, plays a crucial part. Without an arbitration agreement, no arbitration can take place.

There are two types of arbitration agreements. As follows:

 

  • existing conflict
  • Future conflict

A submission agreement, often known as a “submission agreement,” refers to a pre-existing disagreement.

The most popular type of arbitration is for future disputes. This is known as an arbitration clause because the parties include a clause in their contract indicating that any dispute arising out of it must be addressed through arbitration. The best legal advisor in Kolkata would advise you to include an arbitration clause in your contract.

 

The doctrine of separability about a contract or arbitration clause

Typically, when there is a dispute over the legality of a contract that contains an arbitration clause, a claim is made that the arbitration clause cannot be carried out because the contract is voidable. In this situation, it is still determined who should make the decision. Which comes first, the arbitrator or a court with appropriate jurisdiction?

Previously, any disagreement against the contract’s legality was resolved by the courts, not the arbitrator, and the arbitration clause was regarded as an integral part of the agreement in which it was written.

In the current perspective, the arbitration clause is seen apart from the main contract, and if any party contests the legality of the main contract, the arbitrator will resolve the dispute rather than the appropriate court. This means that every disagreement resulting from the contract, including questions about its legality, will be settled by the arbitrator. However, if there is no arbitration clause in the contract, there cannot be legal arbitration because the arbitration clause itself will contain the arbitration agreement. As a result, it needs to be treated separately and won’t be affected by whether the primary contract is still valid. The best legal advisor in Kolkata would advise you to include an arbitration clause in your contract.

 

UNCITRAL model legislation

The idea of separability is included in Article 16 of the United Nations Commission on International Trade Law (UNCITRAL) model law on international commercial arbitration (1). This article asserts:

The arbitral tribunal has the authority to decide on its own jurisdiction and to settle disputes, including any challenges to the agreement’s legality or disagreements resulting from the arbitration agreement. However, if an arbitration clause is included in a contract, it will be evaluated separately and as a separate agreement.

 

The arbitration provision will not be rendered invalid if the arbitral tribunal rules that a contract containing an arbitration clause is void and unenforceable.

1975 ICC Arbitration and Conciliation Rules

Under the heading “impact of the agreement to arbitrate,” Article 8(4) of the ICC regulations explicitly mentions the theory of separability. This article asserts:

 

The arbitrator’s authority to decide a particular dispute through arbitration does not end just because someone claims that a contract is invalid. He will still have the authority to decide the parties’ rights and to judge the pleas and claims even if the contract as a whole is void.

This page covers a broad range of topics. It stipulated that an arbitration clause in a contract could be separated in order to determine its legality.

Unfortunately, because of this doctrine’s profound influence, its limited application is ignored by practitioners. Arbitration practitioners and academics frequently employ it to broadly distinguish the arbitration agreement from the carrier agreement outside of its specific setting. This has allowed habitual litigants to stall or delay the settlement of disputes. As a result, parties are forced to incur increasing costs, and frivolous cases also overwhelm the courts. The best legal advisor in Kolkata would advise you to include an arbitration clause in your contract.

Following legislations from all around the world treat the arbitration clause as separable:

  • The English Arbitration Act, 1698,
  • Article 23 (1) UNCITRAL Rules,
  • Article 23.1 present in DIFC-LCIA Arbitration Centre Rules
  • Section 7 present in the English Arbitration Act, 1996
  • Section 16 present in Indian Arbitration Act, 1996,
  • Section 19 present in Arbitration Law of the People’s Republic of China.
  • Section 178(3) present in Swiss PIL (Swiss Federal Statute on Private International Law)
  • Article 6 of Federal Law number 6 of 2018 of United Arab Emirates (UAE Arbitration Law)

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