The doctrine of separability
treats an agreement to arbitrate contained within
a contract as an independent agreement that is deemed to be separable from the
main contract.To put it simply, as per the doctrine of separability,where a
dispute arises concerning the initial validity or continued existence of a
contract, the arbitration clause embedded in the main contract is seen to be
autonomous, and separate.
The doctrine preserves the validity and enforceability
of the arbitration clause of a contract, even when the primary contract is found
to be invalid and unenforceable, providing autonomy to the arbitration clause.
The UNCITRAL Model law on International Commercial Arbitration, 1985,under
Article 16, integrates the doctrine of separability as an arbitration clause
which forms part of a contract shall be treated as an agreement independent of
the other terms of the contract.
The arbitral tribunal may rule on
its own jurisdiction, including any objections with respect to 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. A decision by the arbitral tribunal that the
contract is null and void shall not entail ipso jure the invalidity of the
It provides that an arbitral tribunal's determination
that a contract is void does not immediately render the arbitration provision unenforceable.The same principle is manifested in Section 7 of the Arbitration
Act, 1996 of England, Singapore's approach to separability provisions and
Section 16(1) of India's Arbitration and Conciliation Act, 1996, which are
further discussed below.
The United Kingdom views separability as reflecting the presumed intention of
the parties that their preferred method of resolving dispute remain effective.
Arbitration agreement is seen as distinct
. Section 7 of the English
Arbitration Act, 1996, deals with the Separability of Arbitration agreement.
Doctrine was first recognised in England, through the landmark judgement in Heyman v. Darwins
, which laid down the principle of separability of arbitration agreement,
and was later incorporated in the Arbitration Act of 1996, based on UNCITRAL
Model Law through legislation.
In Fiona Trust & Holding Corp v. Privalov
, the House of Lords held
Unless otherwise agreed by the parties an arbitration agreement which
forms or was intendedto form part of another agreement … shall not be regarded
as invalid, non-existent or ineffective because that other agreement is invalid,
or did not come into existence or has become ineffective, and it shall for that
purpose be treated as a distinct agreement.
The House of Lords stated that the
arbitration agreement must be treated as a distinct agreement and can be void or
voidable only on grounds which relate directly to the arbitration agreement; the
invalidity or rescission of the main contract does not necessarily entail the
invalidity or rescission of the arbitration agreement.
The primary agreement and
the arbitration agreement may both be declared illegal for the same reason in
rare situations. For example, if a signature on a contract including an
arbitration clause is forged, the arbitration clause is null and void. This is
because the signature to the arbitration agreement as a "separate agreement" was
forged, not because the primary agreement is unlawful.
However, in other
circumstances if an agent is accused of exceeding his power by entering into
the primary agreement on conditions that were not authorised or for improper
reasons, the arbitration agreement is not always under dispute.
of the arbitration agreement as a separate agreement is not jeopardised by the
assertion that a party might cancel an agreement because it was persuaded by
bribery. To conclude, it was held the principle of separability enacted in
section 7 means that the invalidity or rescission of the main contract does
notnecessarily entail the invalidity or rescission of the arbitration agreement.
The arbitration agreement must be treated as a"distinct agreement" and can be
void or voidable only on grounds which relate directly to the arbitration
The Sulamérica Cia Nacional de Seguros SA v EnesaEngenharia SA
, observed that
the only purpose of the doctrine of separability is to give legal effect to the
parties' intention of resolving disputes through arbitration and not to insulate
the arbitration agreement from the substantive contract for all purposes.
Accordingly, it was held that an express choice of law governing the substantive
contract is a strong indication of the parties' intention in relation to the
agreement to arbitrate. The principle of separability of arbitration agreements
from the contracts in which they sit which means that disputes arising out of
the contract are submitted to arbitration even where the existence of the
contract itself is challenged, was re-emphasised.
House of Lords re-emphasised
the principle of separability of arbitration agreements from the contracts in
which they sit which means that disputes arising out of the contract are
submitted to arbitration even where the existence of the contract itself is
In Soleimany v. Soleimany
, the Court of Appeal reversed the High Court's
decision to enforce an arbitral award (rendered by the Beth Din in England under
Jewish law) which enforced a contract to smuggle carpets out of Iran. 'In our
view, an enforcement judge, if there is prima facie evidence from one side that
the award is based on an illegal contract, should enquire further to some
The judge has to decide whether it is proper to give full faith and
credit to the arbitrator's award. Only if he decides at the preliminary stage
that he should not take that course does he need to embark on a more elaborate
enquiry into the issue of illegality.'
The court declined to enforce an award
relating to a dispute arising out of an illegal contract to smuggle carpet out
of Iran holding that 'where the making of the contract will itself be an illegal
act... the court would be driven nolensvolens to hold that the arbitration was
itself void'. It was also specified that the enforcement court must see whether
there is prima facie evidence that the award is based on an illegal contract.
To summarise, United Kingdom views separability as reflecting the presumed
intention of the parties that their preferred method of resolving dispute remain
effective. Arbitration agreement seen as distinct
. In cases of void ab initio
contracts, it should be seen if the arbitration agreement by itself is void ab
initio.However, in case of illegal contracts, court will find arbitration
agreement within it invalid.
Singapore follows a limited separability in arbitration agreements. There are no
distinct statutory provisions, but this doctrine is drawn from Article 16
UNCITRAL model law. The separability doctrine in the country is seen as a tool
for execution of parties intention or expectation that the arbitration clause
should survive an agreement that has been invalidated by court. Here, the
doctrine does not imply that arbitration agreement is independent of the main
There are statutory provisions present in the country in the Singapore
Arbitration Act 2001, Part VI states Jurisdiction of Arbitral Tribunal. These
are provisions for separability of arbitration clause and competence of arbitral
tribunal to rule its own jurisdiction. When the jurisdiction is challenged
before an arbitral tribunal one of the most common grounds raised is that the
contract which incorporates the arbitration was never concluded. Before it was a
common practice to determine both the validity of arbitration agreement and
existence of binding contract together.
In the case of BCY and BCZ
, the defendant's case was a binding ICC
arbitration agreement which was concluded before the conclusion of SPA. In such
cases where arbitration clause was negotiated in the context of a contract such
an approach was found problematic from the perspective of both parties as well
There are decisions of the High Court of the country where the
law governing the arbitration agreement was implied from the main contract. The
court held that when the arbitration clause is a part of the main contract then
it is reasonable to presume that the entire relationship is governed by uniform
law if the intention differed they must have specified or entered into different
agreements. Further clarity is provided by Article 16 of the UNCITRAL Model Law
on International Commercial Arbitration.
In the recent years there have been judicial pronouncements which have provided
clarity with respect to doctrine of separability of arbitration agreements. The
court in the judgement of BNA v. BNB
, stated that the root cause behind
evolution of the doctrine of separability is the desire to give effect to the
arbitration agreement even if the substantive contract is ineffective.
refused to accept this as limitation of the doctrine following which it was held
that it is legitimate to presume that the parties want the arbitration clause to
survive. The only limitation the court stated was to only give 'reasonable
effect' to this intention. The judgment further discusses the reason why
doctrine of separability has a limited scope, being consistent with the ut res
magis principle it is there just to give effect to the intention of the parties
which is presumed that the arbitration clause should survive.
interpreted this doctrine and held that it has a limited scope it is broad
enough to operate and uphold the arbitration clause, which is integrated in an
agreement, but an operation of the substantive agreement could operate to
nullify the parties manifest intention to arbitrate their disputes.
In India, the statutory provision is present in Chapter IV of Arbitration and
Conciliation Act, 1996. There have been judicial pronouncements as cases
upholding the Doctrine of Separability as well as on Illegal Contracts and
Frauds. In the case of N.N Global Merchantile (P) Ltd. V. Indo Unique Flame
., the enforceability of Arbitration agreement embedded in Unstamped
Contract was discussed.
It was held that separability of arbitration agreement
from substantive contract in which it is embedded is well settled law.
Invalidity, ineffectiveness or termination of substantive commercial contract
does not effect the validity of the arbitration agreement. In the case of Today
Homes & Infrastructure (P) Ltd. V. Ludhiana Improvement Trust
, the two-judge
bench held that arbitration clause is not invalidated even if the main agreement
is declared void.
In the case of National Agricultural Coop. Marketing
Federation India Ltd. v. Gains Trading Ltd
., it was stated Even if the
performance of the contract comes to an end on account of repudiation,
frustration or breach of contract, the arbitration agreement would survive for
the purpose of resolution of disputes arising under or in connection with the
contract. Even in the case of fraud where the party appealed as the agreement
was illegal the award arising is also void on appeal the High Court held the
award as legal.
Approach of all the countries is loosely based on Article 16 of the UNCITRAL
Model law on International Commercial Arbitration, 1985. Arbitration agreement
is seen as distinct. In cases of void ab initio contracts, it should be seen
if the arbitration agreement by itself is void ab initio.
Singapore sees separability as a tool for execution of parties' intention or expectation that
the arbitration clause should survive an invalidated contract. Arbitration
agreement will survive invalidity, ineffectiveness, termination, repudiation,
breach or frustration of contract. Arbitration clause to be treated as an
independent agreement. All three, have certain exceptions that arise in special
Written By: Tishya Pandey
- UNCITRAL Model Law on International Commercial Arbitration, Art.16(1),
- 1942 AC 356
-  UKHL 40
-  WLR (D) 148
-  Q.B. 785
- Hyundai Merchant Marine Company Ltd v Americas Bulk Transport Ltd (2013)
EWHC 470 (Comm) at -.
- (2016) SGHC 249
-  SCGA 84
- N.N Global Merchantile (P) Ltd. V. Indo Unique Flame Ltd. 2021 SCC
OnLine SC 13
- 2014) 5 SCC 68
- (2007) 5 SCC 692
- Khardah Company Ltd. v. Raymon& Co. (India) Private Ltd. (1963) 3 SCR
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