Document Type

Article

Publication Date

2002

Abstract

The doctrine of separability provides that an arbitration clause is “separable” from the contract containing it and thus may survive a successful challenge to the validity of the contract. The doctrine of competence-competence provides that arbitrators have jurisdiction to decide challenges to the arbitration agreements upon which their own jurisdiction is based. These two doctrines have appropriately been called the conceptual cornerstones of international arbitration as an autonomous and effective form of international dispute resolution. The doctrines, taken together, ensure that the parties’ intent to arbitrate any disputes that arise out of their international contractual relationship is effectuated without undue court interference, notwithstanding a party’s challenge to the validity of the parties’ contract or the arbitration clause it contains.

While U.S. courts have applied these doctrines to, and thus required arbitration of, claims that an existing contract containing an arbitration clause is “voidable,” most courts have declined to apply the doctrines to, and have thus themselves decided, claims that the underlying contract never came into existence or is otherwise “void.” The reason given for this limitation on application of the doctrines: ex nihilo nihil fit (from nothing nothing comes). In the words of one court, “something can be severed only from something else that exists. How can the Court ‘sever’ an arbitration clause from a non-existent [contract]?”

The thesis of this article is that the courts’ void/voidable distinction does not provide a principled or practical basis on which to limit the separability and competence-competence doctrines, and that those doctrines can and should apply to, and require arbitration of, many if not most claims that challenge the existence of the underlying contract. The article also proposes an alternative approach for determining whether and how to apply the doctrines to a claim that the parties’ contract and/or its arbitration clause is non-existent or otherwise void that is more consistent with the premises and purposes of the doctrines as well as with the contractual origin and juridical function of international arbitration.

Part I of the article presents an overview of the doctrines of separability and competence-competence, their theoretical and practical rationales, and their sources and origins in U.S. law. Part II critically examines the courts’ refusal to apply the doctrines to claims that the underlying contract never came into existence or is void ab initio. Part III suggests an alternate approach for determining whether and how to apply the separability and competence-competence doctrines to challenges to the existence of the contract and its arbitration clause.

Disciplines

Dispute Resolution and Arbitration | International Law | Law

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