The doctrine of separability or autonomy of the arbitration agreement affects the relationship between the arbitration clause and the underlying main contract. This doctrine is described as ‘of central significance in international commercial arbitration’ by Gary Born.
The arbitration clause is an arbitration agreement contained as a clause or term in the same document evidencing the terms of the main contract on the underlying transaction. The value or importance of the arbitration agreement is not diminished just because it is contained as a clause in the main contract. It can be quite difficult to conceptualize a clause in a contract as a separate contract or agreement with its own separate or independent legal existence. However, that is exactly what the arbitration clause is. It is this fact that is asserted by the legal fiction which has now crystallized into the doctrine or principle of separability or autonomy or independence of the arbitration agreement.
One legal consequence of the doctrine of separability or autonomy of the arbitration clause is the possibility of two different proper laws or rules governing any international commercial contract containing an arbitration clause: one law or set of rules govern the underlying main contract and the other law or set of rules govern the arbitration agreement. The arbitration agreement may therefore remain valid even though the underlying main contract has become non- existent, invalid, illegal or terminated and vice versa.
However, where the same legal issue that invalidates the underlying main contract equally affects the arbitration agreement or clause, the same shall also invalidate the arbitration clause.
Other factors that have similar invalidating effects on the arbitration agreement include fraud, mistake, misrepresentation and duress in procuring the arbitration agreement.
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