What Is the Independence of Arbitration Clauses

The independence of an arbitration clause means although the arbitration clause is a part of the master contract, it is independent of the master contract in nature and effect, and its effect has independent certainty and is not affected by the changes to, rescission, termination and invalidity of the master contract. It must be noted that the independence of an arbitration clause applies only to the arbitration clause in the contract, because the arbitration clause is one of the forms of the arbitration agreement, which itself is a contract. Hence, there is the issue of whether it is independent from the master contract.

With the development of arbitration practice, the independence of arbitration clauses has been accepted by the laws and arbitration rules of most countries in the world as a principle. Such a principle can prevent the parties from delaying dispute settlement procedures and enable disputes to be settled in a timely and efficient manner.

The principle of independence of an arbitration clause has been established in China’s legislation on international commercial arbitration and has been gradually consolidated in judicial practice. Article 19 of the Arbitration Law of the People’s Republic of China stipulates that, “An arbitration agreement shall exist independently. Any changes to, rescission, termination or invalidity of the contract shall not affect the validity of the arbitration agreement.” An arbitration tribunal has the right to rule on the validity of a contract. Article 57 of the Contract Law of the People’s Republic of China promulgated in 1999 stipulates that, “If a contract is null and void, revoked or terminated, it shall not affect the validity of the dispute settlement clause which is independently existing in the contract. ”

The independence of an arbitration clause is manifested in two aspects:

1. Independence in nature. Although arbitration clause is a part of the master contract, its nature is quite different from that of other clauses of the master contract. Specifically, the master contract is an agreement that stipulates the substantive rights and obligations of both parties, which is substantive in nature; while the arbitration agreement is an agreement on the parties’ choice of arbitration to settle their disputes, which is procedural in nature. Therefore, it is parallel to the master contract, and the two can be separated.

2. Independence in effect. In other words, although the arbitration clause is contained in the contract, its effect does not terminate as a result of the termination of the effect of other clauses of the contract. The arbitration clause itself has effective elements for independence. The reason why the effect of the arbitration clause is independent is that the arbitration agreement is the agreement on the parties’ choice of arbitration to settle their disputes, which appears as a relief means to settle the dispute arising from other clauses of the master contract. In other words, the arbitration agreement is a kind of clause about the outcome of the master contract, which may only play a role when the agreed arbitration matters arise. Therefore, it is not invalid due to the invalidation of the master contract, instead, it is implemented by satisfying the cessation conditions attached to it, and functions as a relief means and a dispute settlement procedure.