Arbtiration

Section 1:

1. Effect of decree?

2. Who decides validity of container contract?

3. Who decides validity of arbitration agreement?

a. Where an arbitration clause is written into a contract, it is not usually accompanied by an express stipulation as to the law which governs that clause. Typically, the validity of an arbitration clause may be determined either (i) by the law chosen by the parties as applicable to the lcuase; or (ii) by the law governing the main contract (which may, of course, be the same thing); or (iii) by the law of the seat of arbitration. Where there is no express choice of law the arbitral tribunal must determine the intention of the parties. However, where there is a choice of law by the parties, as to either the arbitration clause by itself or the contract as a whole, the parties’ choice of law should be respected. Thus, in this case, since the contract called for Latina law to apply, the parties’ decision should be upheld and Latina law should apply.

4. What is doctrine of Separability?

a. The concept of separability of the arbitration clause means that the arbitration clause in a contract is considered to be separate from the main contract of which it forms part and, as such, survives the termination of that contract. It would be most convenient if a breach of a contract or a claim that the contract was voidable was sufficient to terminate the arbitration clause as well; this is one of the situations in which the arbitration clause is most needed.

b. Separability thus ensures that if, for example, one party claims that there has been a total breach of contract by the other, the contract is not destroyed for all purposes. Instead, it survives for the purpose of measuring the claims arising out of the breach, and the arbitration clause survives for determining the mode of their settlement. The purpose of the contract may have failed, but the arbitration clause is not one of the purposes of the contract. In the Prima Paint case, the United States Supreme Court recognized the separability of the arbitration clause and modern laws on arbitration confirm the concept. In short, if the tribunal is toe decide on its own jurisdiction, it must first assume that jurisdiction. This is what the doctrine of separability allows it to do. The doctrine, in many ways, is a convenient and pragmatic fiction. If the arbitral tribunal decides that the clause is not a valid agreement to arbitrate then the basis for its authority disappears. In reality, if the clause is not an enforceable agreement to arbitrate, that authority was never there. Nevertheless, because of its obvious practical advantages, this doctrine is widely accepted both by arbitration rules and in national laws.

c. But a decision that the arbitration clause is legally separate from the main contract does not answer the larger question: if a challenge to the jurisdiction of the arbitral tribunal is made, by whom