Separability Of The Arbitration Agreement

This practical reference considers the doctrine of dissociability according to the law of England and Wales (England and English are all used as abbreviations). This practice note should be read in conjunction with the practical note: the separability of arbitration agreements in international arbitration proceedings, which considers doctrine from an international perspective. In addition, the English Arbitration Act, strongly influenced by the model law, also adopted a similar provision on doctrinal dissociation. Section 7 of the same States, For the above reasons, the principle of dissociatability establishes that the arbitration agreement and the underlying agreement have different qualities; the arbitration agreement is legally autonomous and is not affected if the main contract becomes invalidated. At THE NIOC v Crescent Petroleum, the treaty was governed by Iranian law and provided for an ad hoc arbitration procedure. The parties had not secured the seat of arbitration, but when Crescent commenced proceedings against the National Iranian Oil Company (“NIOC”) for breach of contract, both parties agreed to withdraw the arbitration in London. Arbitration is an alternative method of dispute resolution, based on the agreement of the parties, which is often preferred to national judicial systems for the resolution of disputes arising from international trade relations. Disputes may be brought to arbitration if the parties have voluntarily entered into an arbitration agreement. As long as the subject matter of the dispute is arbitrated, the parties may decide to settle the dispute through arbitration. Analysis of doctrine in relation to the determination of the law of the arbitration agreement According to the principle of separation, the invalidity of the underlying agreement will not affect the compromise clause; similarly, the invalidity of the compromise clause will not invalidate the underlying agreement. In other words, the requirements for the validity of the arbitration agreement may differ from those sought for the validity of the underlying agreement.

Under Turkish law, for example, a representative may enter into a share purchase agreement on behalf of the client, which does not require the agent to do so. However, the same agent needs a special authority to enter into an arbitration agreement on behalf of the same client. In this case, the provisions of the share purchase contract concluded by the agent are valid, with the exception of the compromise clause, in the absence of a specific power1. Separability thus ensures that, if one party asserts that the other is in total violation, the contract is not destroyed for all purposes. Instead, it survives to measure the rights arising from the infringement, and the compromise clause survives to determine the nature of their tally.

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