Consideration of the Separability Act for Arbitration Clauses

1.      Introduction

Arbitration agreements have created two forms in accordance with the 1958 New York Convention for Recognition and Enforcement (NYC) and Turkish Code of International Arbitration, Law no: 4686. Those are arbitration agreements and arbitration clauses. Both of those ones have to provide procedural rules due to have validity. Under Turkish law, Turkish Code of International Arbitration, Law no: 4686 regulated written-contract requirements in Article 4/2, But also, NYC include horizonal provisions about relevant requirements.

At the implementation of international arbitration law, Arbitration clauses are more common than arbitration agreements when the side of litigation starts legal relationships (especially creating a contract)[1].

Furthermore, this procedural requirements interpretate with widely. For instance, electronic arbitration agreements is valid[2] under to the Turkish Law in the Code of International Arbitration, Law No: 4686 Article 4/2. Arbitration clauses write in contract with article or articles when the side of contracts creates a main contract between them.

However, what if the main contract doesn’t valid due to inappropriate relevant legal regulations, for instance it may be illegal due to inappropriate procedural rules, how is the arbitration clause’s validity consider.

Is it valid, on the other definition “is the arbitration clause’s valid linked with the main contract’s validity”?

2.      What Is “The Separability Act” and Why Is It Necessarily

In the relevant situation, we exactly consider the presumption of the separability act. The extent of this presumption is especially debating invalid main contracts which include a valid arbitration clause. According to this presumption, an arbitration agreement can be separate from the main contract.[3]

This act is regulated to UNCITRAL Model Code and ICC Arbitration Rules and it has a implementation of many arbitration jurisdictions.[4]

Under Turkish Law, the separability act is regulated in Turkish Code of International Arbitration, Law No: 4686, Article 7, Section H-1 and Turkish Code of Civil Procedure Article 412/4. Considering the relevant article, the separability act’s linking with the competence-competence principle can be understood.

According to the competence-competence principle, arbitrators can consider and give a decision about their authorizes for resumes and complete related jurisdiction. Separability act is exactly linked this principle.

However, if the sides want to appropriate arbitration clause, they have to create this clause with appropriate to the law, in contrast this clause will not be valid. Due to the fact that, sides take care of procedural rules while they prepared an arbitration clause.

If consider to another law system, this doctrine can be observed domestic law and international conventions. [5]For instance, Code of England Arbitration Act Section 7 regulates this act. But also, Swiss International private Law Article 178, Section 4.

Separability act exactly necessarily due to some reasons for validity of arbitration clause. What if arbitration clause considers with main contract, dispute has to solve with litigation way by a state court. Actually, under Turkish Law, cancelled Code of Civil Procedure Law No: 1068 (HUMK) Article 519 was accepted for uniting the arbitration clause and main contract. The defendant alleged to invalidity of the arbitration clause which is in the main contract against the plaintiff and froze the arbitration jurisdiction. Because of this status, a plaintiff has to open a sue detect to the validity of arbitration clause in state court.[6]

In my view, it is inappropriate to the spirit and purpose of International Arbitration.

On the other hand, the main purpose of arbitration jurisdiction is resolution to resolve disputes in the fastest way and solve them by expert arbitrators in accordance to the quality of dispute topics.[7] Due to the fact that, it was changed with Code of International Arbitration Law No: 4686. Thanks to this change, the separability act and structure of the arbitration procedure can be protected by possible jurisdictions.

It is really appropriate for the spirit of international arbitration procedure.[8] Because origin of International Arbitration is international commercial relationships and “lex mercatoria” codes. And main purpose of those rules is resolving those disputes rapidly, with less cost. But also, thanks to arbitration, decision-maker is a expert of relevant commercial topic and it has more flexible procedural opportunities.

In commercial relationships (commerce-investment) arbitration has wide-range implementation area. Many businesses preference is exactly arbitration with their legal relationships.

3.      Conclusion

As we discussed, the separability act is tremendously important for the fate of arbitration clause. Thanks to this presumption, arbitration jurisdiction is not invalid and the procedure is not spending the sides of the dispute.

In conclusion, another one has to open a sue in state courts due to the detection of the validity of the arbitration clause and the jurisdiction’s resolution time increasing because of the relevant case. It is exactly more appropriate to the spirit of International Arbitration and many arbitration institutes.

That’s why, international conventions and state codes regulate separability act with their provisions for adapt their rules with this presumption.