The Doctrine of Separability Under Arbitration
The Doctrine of Separability has been recognised by almost all the arbitral institutions and has been included in international rules related to arbitration. An arbitration agreement can be either in the form of an arbitration clause in a contract or the form of a separate agreement. Inclusion of an arbitration clause in the contract is a commonly used practice in India, as well as in the world. The most common and the beneficial point of having an arbitration clause in a contract is that in case of dispute an arbitrator is required to be appointed as per mentioned in the clause which helps in settlement of dispute instead of going to the court. Now what doctrine of separability provides is that in case of any dispute, the arbitrator is appointed as per the clause, has the power to separate the arbitration clause from the underlying contract. This principle is also followed by the Indian Arbitration and Conciliation Act,1996 and the same principle allows the Arbitral Tribunal to rule over its jurisdiction, this involves ruling on any object concerning the validity and the independence of the Arbitration clause. Thus what the doctrine state is that the Arbitration clause is separate of the contract and any change in the contract that leads to the invalidity of the contract will not render the Arbitration clause void, an arbitration clause have an independent existence.
An arbitration clause in a contract shall be treated as an agreement independent and separate of a contract, also the decision of the Tribunal on the validity of a contract i.e. null or void shall not have any impact on the validity of the arbitration clause. This principle of separability in the arbitration is considered both interesting and useful in theory and practice. The said principle has been widely accepted by international commercial arbitration. Thus, the crux of the principle is that the arbitration clause contained in the contract will remain valid even though the contract has been declared null and void.
The theory has been widely recognised but the same can provide a huge range of conflict in terms of the law, when applied in international arbitration. This can be explained with the help of an example, suppose there is a contract with has been entered by the individuals of two different nations, the said contract contains the arbitration clause and also provides that in case of dispute the arbitrator would be appointed from a different country. Thus, as per the situation the doctrine of separability give competence to the appointed arbitrator to adjudicate upon the issue, but if the contract is declared illegal as per the law of the country of one of the party, then as per the principle the arbitrator has the authority to adjudicate upon the matter, but this will give rise serious dissatisfaction among other law of the land.
The doctrine has been accepted by the arbitral institutions and the international rules of arbitration. The doctrine was even having its status in the English Arbitration Act,1698 under which the arbitration clause is treated independently of the contract. Traces of same can be found in UNCITRAL Rules, Article 23(1), which also states that an arbitration clause mentioned in a contract shall be treated separately from the terms of the contract as well as the status of the contract. The UNCITRAL Model Law also provides the principle of separability under Article16(1). Similarly, LCIA Rules under Article 23(2), ICC 1955 Arbitration Rules and ICC Amendment Rule,2012 under Article 6(8) provides the provisions of the said doctrine, Section 7 of English Arbitration Act,1996, Section 16 of Indian Arbitration Act,1996, Section 19 of the Arbitration Law of the People's Republic of China. Section 178(3) of Swiss PIL (Swiss Federal Statute on Private International Law) all embodies the doctrine of separability. The same approach has been adopted by the arbitration legislation across the world.