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The Doctrine of Separability and the Interaction between the Main Agreement and the Arbitration Clause

11.9.2019, Maisteritutkielma

The basis for an arbitral proceeding is usually an arbitration agreement. In most situations, the arbitration agreement is included as an arbitration clause in the main agreement. Even if the arbitration clause seems to be a part of the main agreement, it has in accordance with the doctrine of separability to be regarded as a separate agreement from the main agreement. Without the doctrine of separability, the arbitral tribunal would lose its competence by ruling the main agreement, of which the arbitration clause would be a part invalid, terminated or non-existent. Consequently, the alleged invalidity of the main agreement does not automatically affect the arbitration clause and a separate assessment of the validity of the arbitration clause has to be done.

The doctrine of separability has been justified with both the intent of the parties to solve all disputes regarding the main agreement by arbitration and with efficiency arguments, as for instance protection of the competence of the arbitral tribunal. In most jurisdictions, the doctrine of separability is accepted, but the exact scope and applicability of the doctrine varies from one jurisdiction to another.

This thesis aims to determine the scope of the doctrine of separability and in addition, to create general rules for assessing the scope of the doctrine. The thesis aspires to clarify the legal state regarding the scope and applicability of the doctrine of separability in Finland. However, there is not much case law and legal doctrine concerning the doctrine of separability in Finland. Therefore, in addition to the legal dogmatic method, also a comparative method is used. The comparison is done with both international arbitration practice and as a Nordic comparison, focusing mainly on Sweden. The doctrine has been more thoroughly studied in both Sweden and internationally than in Finland. By clarifying the scope of the doctrine of separability, many conflicts regarding the competence of the arbitral tribunal could be avoided.

The thesis is structured to first assess specific situations of applicability of the doctrine of separability and then assess if any general rules for the scope and applicability of the doctrine can be made. Regarding the specific situations of applicability, the doctrine is in Finland applied for at least separating the arbitration clause from a main agreement that is allegedly invalid or terminated. When it comes to a main agreement alleged to be non-existent, there is no consensus regarding if the doctrine should be applied. In the thesis, I have argued that the doctrine of separability should be applied even if the main agreement is allegedly non-existent. Otherwise, for instance a concluded arbitration clause in a draft agreement would be regarded as non-existent, if the main agreement is not concluded.

When it comes to the applicability of the doctrine of separability to choice of law clauses in the main agreement, Finnish doctrine seems to have taken the standpoint that a separate assessment of the law applicable to the arbitration clause has to be done. Consequently, a choice of law clause in the main agreement does not automatically reach to the arbitration clause. However according to Finnish case law and literature, the doctrine of separability cannot reach to the interpretation and adjustment of arbitration clauses. In accordance with general contract law principles, arbitration clauses have to be interpreted and adjusted in the light of the main agreement.

The second part of the research regards if any general rules can be applied to determine the scope and applicability of the doctrine of separability. I suggest that the doctrine of separability should be applied to all situations where the main agreement and the arbitration clause interconnects. The arbitration clause is a procedural agreement that is auxiliary to the substantive main agreement and thus has certain tasks and features that have to be protected by evaluating the arbitration clause separately. The doctrine of separability is a tool for contractual construction, which enables the courts and tribunals to give proper effect to the arbitration clause and the will of the parties. It does in no other way prevent the interaction between the agreements. When separately assessing and interpreting the arbitration clause, the general contract law rules determine the outcome of the assessment.

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