PART 2: The separability principle in International Commercial Arbitration

B. ISSUE OF SEPARABILITY PRINCIPLE

Article 18.2(a)&(b) AA 2005 (ACT 646)

It is analogous to; 

Section 7 Arbitration Act 1996 UK

Article 16.1 Arbitration Act 1996 New Zealand

Generally remodelled or is a restatement after the parent provision 

Article 16 of the UNCITRAL Model Law

Again from his book, I learned the PRINCIPLE OF SEPARABILITY that;

  1. Separability is the an arbitration clause considered as an separate agreement, detached from the main contract, therefore treated as an agreement independent of other terms of the contract.
  2. If the arbitration clause lacks autonomy, then there is no reason why Arbitral Tribunal should follow rest of the contract. 
  3. If the arbitration clause is autonomous, it has a life on its own. Therefore, it has to be treated as an agreement and will not be affected by possible nullity of the contract to which it belongs. 
  4. The arbitration clause survives the demise of the main contract then constitutes the necessary agreement of the parties that any disputes between them should be referred to arbitration.
  5. Repudiation of a contract would not affect the effectiveness of the arbitration clause. 
  6. Contracts of plainly no effects; which are illegal and contrary to public policy are causes of the functionality of arbitration clause as a whole.
  7. The doctrine of separability required direct impeachment of the arb. agreement before it could be set aside.
  8. An arbitration clause can be only void, voidable only on the grounds that relate directly to the clause and not on the basis of the validity of contract.
  9. Courts have uniformly employed the prinicple in favour of arbitration, upholding the intent of the parties to arbitrate.
  10. Cases to be reviewed;
    • Susu Lembu Asli Marketing Sdn Bhd v Dutch Lady Milk Industries Bhd
    • DG Jewelry Inc et al v Cyberdiam Canada Ltd et al
    • Heyman v Darwins Ltd [1942] AC 346 at 374
    • Harbour Assurance Co (UK) Ltd v Kansa General International Insurance Co Ltd 
    • O'Callaghan  v Coral Racing Ltd
    • Fiona Trust & Holding Corp v Privalov [2007] 4 All ER 951 
    • Vee Networks Ltd v Econet Wireless International Ltd [2004] EWHC 2909
    • Downer Constructions (New Zealand) Ltd v Silverfield Developments Ltd [2008] 2 NZLR 591
    • Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192
    • Ahmed Al Naimi v Islamic Press Agency [2000] 1 Lloyd's Rep 522
    • Cecrop Co v Kinetic Sciences Inc [2001] BCSC 532 (CanLII)
    • New World Expedition Yachts LLC v PR Yacht Builders Ltd [2010] BCSC 1496
    • Fung Sang Trading Ltd v Kai Sun Sea Products and Food Co Ltd [1991] HKCFI 190

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