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SENSE AND SEPARABILITY
Published online by Cambridge University Press: 28 April 2023
Abstract
This article explores the doctrine of separability, as understood in particular in the English legal tradition. It does so by reference to the decisions in Sulamérica Cia Nacional de Seguros SA and others v Enesa Engelharia SA and others and ENKA İnşaat ve Sanayi A.Ş. v OOO ‘Insurance Company Chubb’ & Ors that explore the relevance of the concept when determining the law applicable to the arbitration agreement. These decisions largely treat the doctrine as irrelevant to the determination of the law governing the arbitration agreement. They do so because of the way in which English law views separability as tied inimically to the concept of enforcement of the arbitration agreement. This is unsurprising given the content of section 7 of the Arbitration Act 1996 and the position of the doctrine of separability as a legal fiction that must be restricted to its defined purpose. Viewed against the potential reform of the Arbitration Act 1996, the author asks whether a broader view of separability can be adopted. The author's view is that there are cogent and compelling reasons for adopting a broader view, that would promote certainty and consistency in a way that is not best served by the current approach.
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- Copyright © The Author(s), 2023. Published by Cambridge University Press on behalf of the British Institute of International and Comparative Law
References
1 Arbitration Act 1996 <https://www.legislation.gov.uk/ukpga/1996/23/contents>.
2 ENKA İnşaat ve Sanayi A.Ş. v OOO ‘Insurance Company Chubb’ & Ors [2020] UKSC 38, [2020] 1 WLR 4117 (ENKA SC).
3 ENKA İnşaat ve Sanayi A.Ş. v OOO ‘Insurance Company Chubb’ & Ors [2020] EWCA Civ 574, [2020] 3 All ER 577 (ENKA CA).
4 Sulamérica Cia Nacional de Seguros SA and others v Enesa Engelharia SA and others [2012] EWCA Civ 638, [2013] 1 WLR 102 (Sulamérica CA).
5 ibid, para 25.
6 ibid, para 26.
7 ibid, paras 27–28.
8 ibid, para 30.
9 ibid, para 29.
10 ibid, para 26.
11 The words ‘the effect of which’ are important: an anti-suit injunction is a remedy that acts in personam and seeks to hold a party to their contractual bargain. This generally has the effect of putting the infringing proceedings to an end because a breach of the anti-suit injunction, with a penal notice attached to it, will be treated by the English Court as a contempt of court. Importantly, however, the injunction is not directed at the foreign court: comity would not permit such an approach to be taken.
12 ENKA İnşaat ve Sanayi A.Ş. v OOO ‘Insurance Company Chubb’ & Ors [2019] EWHC 3568 (Comm), [2020] 1 Lloyd's Rep 71, para 89.
13 ibid, para 47.
14 ibid, para 63.
15 ENKA CA (n 3) para 89.
16 ibid.
17 ibid, para 90.
18 ibid, para 105.
19 ibid, para 92.
20 ibid.
21 ibid, para 94.
22 ibid.
23 ibid.
24 ibid, para 95.
25 ibid, paras 96–99.
26 ibid, para 100.
27 ENKA SC (n 2) paras 43–52.
28 ibid, para 53.
29 ibid, para 61.
30 ibid.
31 Sulamérica CA (n 4) para 26.
32 ENKA SC (n 2) paras 62–63.
33 ibid, para 171.
34 ibid, para 257.
35 ibid, para 232.
36 ibid, para 233.
37 JG Wetter, ‘Salient Features of Swedish Arbitration Clauses’ (1983) YBArbInstSCC 33, 35.
38 Fuller, LL, Legal Fictions (Stanford University Press 1967) 7Google Scholar, quoting from Vaihinger, H, Die Philsophie des Als Ob (4th edn, Aischines Verlag 1920) 130Google Scholar.
39 ibid 9.
40 ibid.
41 Wetter (n 37) 35.
42 Heyman v Darwins Ltd [1942] AC 356.
43 ibid 377.
44 Paul Smith Ltd. v H & S International Holding Inc. [1991] 2 Lloyd's Rep 127, 130, col 2.
45 ibid.
46 Harbour Assurance Co. (U.K.) Ltd. v Kansa General Insurance Co. Ltd. [1993] QB 701 (Harbour).
47 ENKA SC (n 2) para 233.
48 1996 Act (n 1) section 7.
49 Departmental Advisory Committee on Arbitration (DAC) Report on Arbitration Bill 1996, February 1996, para 44. Note that this represented a change of view on the part of the Committee, which had originally intended to specify that separability was a free-standing principle. For a discussion of this point, see Merkin, R and Flannery, L, Merkin and Flannery on the Arbitration Act 1996 (6th edn, Informa Law 2019) para 7.4CrossRefGoogle Scholar.
50 It is worth noting that, in a recent lecture, Lord Hoffmann (who is no stranger to English arbitration law, having given the leading judgment in the seminal case of Fiona Trust and Holding Corporation & Ors v Yuri Privalov & Ors [2007] UKHL 40) appeared to disagree with the focus that is placed on separability (at least now) as a creature of statute. More specifically, Lord Hoffmann is quoted as describing separability as ‘a doctrine of the common law’ and the 1996 Act as ‘not the whole story’: A Ross, ‘Lord Hoffmann Criticises Enka in Gaillard Lecture’ (Global Arbitration Review, 28 November 2022) <https://globalarbitrationreview.com/article/lord-hoffmann-criticises-enka-in-gaillard-lecture>. For this author, although separability may have its origins in the common law, it is difficult to see how it can be viewed as anything but statutory as things currently stand. The clear words ‘for that purpose’ in the Act (and, indeed, the views of the DAC) appear to have been intended to define the limits of the doctrine, and not to allow it to continue to be developed under the common law. It is for this reason that this author considers that statutory intervention is required, if separability is to be seen as something more than an aid to enforcement of the arbitration agreement.
51 In this respect, the author notes that the Law Commission of England and Wales is currently conducting a review of the 1996 Act (which would necessarily include section 7) to determine whether it should be reformed: Law Commission, ‘Law Commission to Review the Arbitration Act 1996’ (Law Commission: Reforming the Law, 30 November 2021) <https://www.lawcom.gov.uk/law-commission-to-review-the-arbitration-act-1996/>.
52 1996 Act (n 1) sections 89–91.
53 Unfair Arbitration Agreements (Specified Amount) Order 1999 <https://www.legislation.gov.uk/uksi/1999/2167/contents/made>.
54 Arbitration (Scotland) Act 2010 <https://www.legislation.gov.uk/asp/2010/1/contents>.
55 Arbitration (Scotland) Act 2010, ibid, section 5(1) headed ‘Separability’. Although the Scottish Act goes on to state that ‘[a]n arbitration agreement is not void, voidable or otherwise unenforceable only because the agreement of which it forms part is void, voidable or otherwise unenforceable’, this is contained in a separate subsection. There is no statement equivalent to that in section 7 of the 1996 Act that an arbitration agreement is only to be viewed as separate ‘for the purpose’ of enforcement of the clause.
56 LCIA Arbitration Rules 2020 <https://www.lcia.org/Dispute_Resolution_Services/lcia-arbitration-rules-2020.aspx> (LCIA Rules).
57 Indeed, it has been noted that this provision has ‘raised a few question marks and eyebrows’: M Scherer, L Richman and R Gerbay, Arbitrating under the 2020 LCIA Rules: A User's Guide (Kluwer Law International 2021) 227.
58 Ross (n 50).
59 LCIA Rules (n 56) art 16.2; Hong Kong International Arbitration Centre (HKIAC), ‘2018 Administered Arbitration Rules’ (2018) art 14.1 <https://www.hkiac.org/arbitration/rules-practice-notes/hkiac-administered-2018>.
60 Singapore International Arbitration Centre (SIAC), ‘SIAC Model Clause’ (12 January 2023) (<https://siac.org.sg/siac-model-clauses>); Swiss Arbitration, ‘Swiss Rules of International Arbitration (Swiss Rules): Model Arbitration Clause’ (<https://www.swissarbitration.org/wp-content/uploads/2021/06/Swiss-Rules-2021-Model-Arbitration-Clause-EN.pdf>).
61 DHL Project & Chartering Limited & Anor v Gemini Ocean Shipping Co Limited (Newcastle Express) [2022] EWCA Civ 1555.
62 ibid, para 62.
63 ibid, para 47.
64 Harbour Assurance Co. (U.K.) Ltd v Kansa General Insurance Co. Ltd [1992] 1 Lloyd's Rep 81, 86, col 2. Also see Harbour (n 46).
65 Fiona Trust and Holding Corporation & Ors v Yuri Privalov & Ors (n 50), [2007] 4 All ER 951.
66 ibid, para 17.
67 Newcastle Express (n 61) para 74.
68 ENKA SC (n 2).