The Court also pointed out that the “powerful economic factors that argue for the continuation of arbitration provisions,” as well as the desire to respect the choice of the parties and provide a one-stop dispute settlement procedure, apply to this case as they do to any other arbitration dispute. The court even went so far as to say that even if a public policy rule could be overturned by the parties` authorization to arbitrate, this had to be weighed against the compelling economic reasons for maintaining arbitration clauses, unless it was clear that this would nullify the policy of the specific rule of illegality. Similarly, the assumption of an obligation contained in the underlying agreement does not affect the arbitration agreement, and a settlement concerning matters arising out of the main contract does not terminate or cancel the arbitration clause. As a general rule, if the parties enter into two separate contracts and only one contract contains an arbitration clause, the parties cannot be obliged to settle disputes arising out of the contract that do not require arbitration. However, in certain circumstances, the courts will extend the arbitration provisions of a contract to a separate contract, and the parties may be required to settle disputes arising from both agreements, as the two agreements are read together as a single contract. Peter Mavrick has successfully represented clients in palm beach, broward and Miami-Dade commercial litigation and related arbitration. A well-formulated arbitration clause or provision is required to appoint an arbitrator who has expertise in the area of the dispute and who assists in resolving the dispute amicably under the law. The standard clause may be amended to take account of the requirements of national law and any other specific requirements of the parties. In particular, the parties should always request binding arbitration. For example, for parties wishing to have ICC arbitration in mainland China, it is advisable to include in their arbitration clause an explicit reference to the ICC International Court of Arbitration.
The other benefits are the same as those of the arbitration agreement, such as a faster process and limited costs of the procedure. Although arbitration limits the cost and expense of a case or litigation like what a court requires, but sometimes the fees of the arbitrators you hire are huge, if you want the best who has expertise in the field, then you have to pay a high amount for it. The English High Court in Beijing Jianlong Heavy Industry Group v Golden Ocean Group Limited & Ors1 recently addressed the issue of the severability of arbitration agreements and the circumstances in which public policy factors that invalidate the underlying contract may also challenge an arbitration clause. The rule stems from harbour Insurance2 and was subsequently enshrined in section 7 of the Arbitration Act 1996. The practical effect of the rule is that the unenforceability of the underlying agreement does not automatically render unenforceable an arbitration agreement contained therein. Without this rule, an arbitral tribunal would still be precluded from negotiating disputes that raise a question about the validity or existence of the contract containing the arbitration agreement. The parties can also specify in the arbitration clause: as a result, the doctrine in France has evolved, the French courts having abandoned the exception of “extraordinary circumstances”. In this regard, French courts generally consider the arbitration agreement to be an independent agreement, regardless of the foreign law applicable to the underlying contract or the arbitration agreement itself.
For the above reasons, the principle of severability shows that the arbitration agreement and the underlying agreement have different characteristics; the arbitration agreement is independent of the law and is not affected if the main contract is ineffective. The defendants argued that this went too far and that Foster/Driscoll had not established a general rule to that effect. Instead, they argued that the court should apply the principle of severability set out in Harbour Insurance and consider whether the policy of the rule that invalidates the main contract also invalidates the arbitration agreement. The court held that the arbitration agreements were binding and that the rule in foster v Driscoll was not applicable for the following reasons: the rules of the arbitration clauses can be modified according to the needs of the parties and also according to the nature of the disputes arising from the contract. Section 7 of the English Arbitration Act 1996 provides that, unless otherwise agreed, the arbitration clause shall not be considered invalid because the underlying contract has become invalid. In France, the French Court of Cassation in the classic Gosset judgment (Cass. 1st civ., 7. May 1963) declared that the arbitration agreement in international arbitration has full autonomy over the substantive contract. The Bill encouraged institutional arbitration to settle disputes and made India a centre for the Alternative Dispute Settlement Mechanism (ADR). The draft law also included provisions on national and international arbitration and laws governing the conduct of conciliation proceedings.
As a result of these efforts by the Government of India to promote arbitration and international trade, New Delhi has become the International Arbitration Centre. The Supreme Court referred to the essential elements of an arbitration agreement – arbitral tribunals generally accept the doctrine of severability without reference to a national law, but as a general principle of international arbitration. Today, the doctrine of divisibility is so acceptable worldwide that it is considered the cornerstone of international arbitration, regardless of the law applicable to the proceeding or case. The Court of Appeal reversed the decision, stating that “no serious allegation could be made that the Tremarco agreement contains by reference the Firestone guarantee and its arbitration provision.” Tremarco Indus., Inc. above. The Tremarco Agreement does not state that the agreement between the Owner and Tremarco is “subject” to the Firestone Warranty. It simply states that Tremarco agrees to “grant” a Firestone warranty. The tremarco contract contained no word indicating, even remotely, the intention that the landowner and Tremarco agree to be bound by the Firestone warranty and its arbitration provision. In its pro-arbitration finding, the Court reaffirmed the strength of the “powerful commercial factors” that argue in favour of maintaining an arbitration agreement. Signing an arbitration agreement can limit the costs of litigation and resolve disputes more quickly, but it can deprive you of many rights and you may not be comfortable with certain conditions. Here are some of the disadvantages of an arbitration agreement – The U.S. Federal Arbitral Act does not specifically address the issue of the severability of arbitration agreements.
==References=====External links===The courts have applied the doctrine of severability in various cases and have established consistent case law on the autonomous nature of the arbitration clause (see, . B Prima Paint Corp v Flood & Conklin Mfg Co, 388 U.S. 395, 87 p. Ct. 1801 (1967)). The impact of the severability of arbitration agreements on choice of law should also be analysed; that is, if the law applicable to the underlying agreement automatically differs from the law applicable to the arbitration agreement due to its severability. In other words, does the choice of law applicable to the main contract also apply to the arbitration agreement? All matters of a civil nature relating to present or future disputes or disputes, but not a dispute relating to an illegal transaction, may be referred to the court. An arbitration agreement can only refer a dispute to arbitration if it exists. Thus, for the Beijing Jianlong Court, the question arose as to whether the arbitration agreements were directly and unequivocally accused by the illegality of the underlying guarantees, so that the policy of the rule that renders the contract unenforceable would be nullified by the possibility of arbitrating the parties. Nani Palkhivala Arbitration Center, Bombay Chamber of Commerce and Industry, IIAM, etc. Therefore, any dispute or difference between the parties arising out of or in connection with the Contract will be resolved by arbitration, but in accordance with the rules of all arbitration institutions. The award is binding on both parties.
The clause may be amended or modified according to the needs of the parties. Phoenix Motor Co. v. Desert Diamond Players Club, Inc. included four agreements for the purchase of new motor vehicles. The purchase contracts contained an arbitration clause, but also stipulated that “before or at the time of delivery of the motor vehicle to which the order relates, the buyer must execute the other forms of agreements or documents required in the terms of payment indicated on the front of this order”. Phoenix Motor Co. . . .
