A study on separability and validity of arbitration agreement in international business contracts-with advices and suggestions for Korean merchants

Abstract

Purpose - The purpose of this paper is to provide Korean merchants and practitioners who are not English native speakers with the practical advices and suggestions in drafting arbitration agreements. Design/methodology/approach - The doctrine of separability of arbitration and the competence-competence principle are studied based on the rules of international conventions and internationally recognized arbitral institutes. In addition, the laws of two common law jurisdictions, which are the USA and the UK are discussed with the Korean arbitration law, which follows the civil law system. This study also includes analysis of cases in order to show application of these two principles to practice and to give practical advices and implications to practitioners. Findings - Most national legislatures and jurisdictions approve the doctrine of separability of arbitration agreement and the competence-competence principle under international commercial arbitration. When there is a dispute regarding the existence or the validity of arbitration agreement, it is determined based on the prima facie test without being affected by the main contract in which the arbitration agreement is inserted. In practice, however, there are many occasions where the arbitration agreements are void or inoperable because of its contents. Many practical advices and suggestions are provided. Originality/value - This paper analyzes arbitration agreements which are used in practice so that it provides many practical advices to practitioners in terms of legal effects of languages and linguistic use.