Originally from American Review of International Arbitration - ARIA

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I. INTRODUCTION
The doctrine of “separability” or “severability,” is, in its basic form, a
relatively straightforward and uncontroversial one. It is premised on the idea that
an arbitration clause can be severed from the underlying contract in which it is
embedded if no independent challenge is directed at the arbitration provision
itself. The doctrine is designed to ensure that questions relating to the validity of
the underlying contract do not call into doubt the parties’ intention to arbitrate
disputes. With very few exceptions, the doctrine of severability has been applied
in the United States only in cases where the underlying contract satisfies all the
necessary elements of contract formation, but is subject to rescission on the basis,
for example, of fraud, duress or unconscionability. Where it is contended that the
contract containing the arbitration provision never came into existence due to
some deficiency in contract formation, American courts have generally refused to
apply the doctrine, reasoning that a valid arbitration provision cannot be severed
from a “contract” that never came into legal existence. In other words, U.S. law
has subscribed to the paraphrased Shakespearean adage, “Nothing comes of
nothing.”
This article will argue that something can indeed “come of nothing” in that a
valid and severable arbitration provision can be contained within a contract that
never legally materialized. It posits that the current view of separability in
American jurisprudence is overly narrow and incompatible with the fundamental
purpose of the doctrine. The article commences with an overview of the leading
case on separability in the United States and proceeds to document ensuing
jurisprudential developments. It then examines common doctrinal misconceptions
regarding separability and lays out the test to be applied in determining whether
an arbitration provision should be severed from the contract in which it is
contained. The article subsequently explores international views on separability,
which are codified primarily in institutional arbitral rules. Next, it provides a