Yes, an arbitration clause can generally survive the termination of the main contract. This is due to the principle of separability, which treats the arbitration clause as an independent agreement from the main contract. Even if the main contract is deemed void, terminated, or otherwise ends, the arbitration clause can still be enforced to resolve disputes arising from the contract.
Yes, an arbitration clause can survive the termination of the main contract, and this principle is well-recognized in Indian and international arbitration law. An arbitration clause is treated as a separable or independent agreement within the main contract, meaning that even if the contract is terminated, rescinded, or declared void, the agreement to arbitrate disputes can still remain valid and enforceable.
This doctrine of severability or separability has been upheld by Indian courts, particularly in the case of Enercon (India) Ltd. v. Enercon GmbH & Ors. (2014), where the Supreme Court affirmed that an arbitration clause survives the termination of the underlying contract. Similarly, under Section 16 of the Arbitration and Conciliation Act, 1996, the arbitral tribunal has the competence to rule on its own jurisdiction, including objections to the existence or validity of the arbitration agreement, independently of the main contract.
Therefore, unless the arbitration clause itself is specifically invalidated or the parties have clearly agreed to revoke it, it continues to govern disputes arising from or relating to the contract, including those concerning its termination. This ensures that disputes can still be resolved through arbitration even if the primary contractual obligations no longer exist.
1. Doctrine of Separability
Under the doctrine of separability, an arbitration clause is treated as an independent agreement within the main contract. This means that even if the main contract is declared void, terminated, or discharged, the arbitration clause can still be valid and enforceable to resolve disputes arising under the contract.
2. Legal Framework in India
Section 16(1)(a) of the Arbitration and Conciliation Act, 1996 recognizes the competence-competence principle and the separability of the arbitration agreement.
It states that an arbitration clause is not invalid merely because the main contract is found to be invalid.
3. Judicial Precedents
In National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED) v. Gains Trading Ltd. (2007), the Supreme Court held that the arbitration agreement survives the termination of the main contract if the dispute relates to obligations arising during its subsistence.
In Reva Electric Car Company Pvt. Ltd. v. Green Mobil (2009), it was observed that disputes arising from termination or breach of contract are still governed by the arbitration clause, unless expressly excluded.
4. Exceptions
If the parties explicitly agree that the arbitration clause will also terminate along with the main contract, it will not survive.
If the dispute is unrelated to the terms or performance of the contract (e.g., fraud in the formation), the arbitration clause may not apply.
Conclusion
The arbitration clause generally survives the termination of the main contract due to the doctrine of separability. It continues to govern disputes that arise out of, or in connection with, the terminated agreement—unless the clause is specifically revoked or invalidated by the parties. Thus, arbitration remains a valid and binding method of dispute resolution even after contractual termination.
Yes, an arbitration clause can survive the termination of the main contract. Courts in India, including the Supreme Court, have held that the **arbitration clause is a separate and independent agreement** (the doctrine of separability). This means even if the main contract is terminated, rescinded, or declared void, the arbitration clause can still be invoked to resolve disputes arising from or relating to that contract.
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