Agora: Thoughts on Fiona Trust: The Doctrine of Separability and Consent to Arbitrate

Abstract

If confirmation was needed, the decision of the House of Lords in Premium Nafta Products Ltd v. Fili Shipping Co. Ltd 1 confirms that as a matter of English law an agreement to arbitrate is separable from the remainder of a contract in which it sits. Although in principle the doctrine of separability has been accepted in England, as it has been in most major jurisdictions, its outer limits and consequences still require some refinement. One question that requires further attention is whether the doctrine of separability extends to situations in which no main agreement was ever even purportedly concluded and one party nonetheless commences arbitral proceedings. The issue arises because in the Arbitration Rules of the London Court of International Arbitration and of the International Chamber of Commerce, in the English Arbitration Act 1996, and in French case law, the validity of the arbitration agreement is said not to be affected by a finding that the main agreement is ‘non-existent’. It is one thing to say that when a signed contract containing an arbitration agreement is later held to have always been void, that the arbitration agreement survives. It is a step further to say that if the parties never even purported to conclude the main agreement, that an arbitration clause contained in a document to which the parties never agreed nonetheless takes effect for disputes arising between those parties. This situation may arise in practice where, for example, parties pursue contractual negotiations involving a draft contract, and perhaps a signed offer, which contains an arbitration clause, but agreement was not ultimately reached. The purpose of this note is to consider what role, if any, the doctrine of separability has if one party seeks to commence arbitral proceedings in such a case. This is not the first time that …