6
Putting the Principle of Severability

in the Dock: An Analysis in the Context
of Choice of Law for Arbitration andJurisdiction Agreements
Koji Takahashi

A. Introduction
My first encounter with Professor Briggs was through his book, Civil Jurisdiction
and Judgments (1993),1 the first of many in his name. I was at that time writing a
PhD thesis in London and the book was among the very few materials shedding
useful light on the niche area of my research. Much excited, I approached him witha list of queries. The generosity and hospitality with which he received my visit in
Oxford are still vivid in my memory.
Years later, after I had returned to my home country, Japan, I invited Professor
Briggs to give seminars at my university. Writing in an article subsequently pub­lished from my university’s law journal, he explained the ambitious goal of his trip
as follows:2

It is sometimes said of the common law conflict of laws that it lacks a fundamental
theory, or that it develops pragmatically rather than in developing in accordancewith a grand scheme. It did not generate jurists of the stature of Savigny; it did not
produce treatises of abstract theory. The purpose of my coming to Japan is to ex­
plain how wrong and misconceived this criticism is. My intention is to lay before
you an account of certain aspects of the English conflict of laws, and to seek toshow you the really profound theory which explains it all.

1 Adrian Briggs and Peter Rees, Norton Rose on Civil Jurisdiction and Judgments (1st edn, Lloyd’s ofLondon Press 1993).
2 Adrian Briggs, ‘Distinctive Aspects of the Conflict of Laws in Common Law System: Autonomy
and Agreement in the Conflict of Laws’ (2005) 57-3
[Doshisha Law Review] 21 [3].
Koji Takahashi, Putting the Principle of Severability in the Dock: An Analysis in the Context of Choice of Law forArbitration

and Jurisdiction Agreements In: A Conflict of Laws Companion. Edited by: Andrew Dickinson and Edwin Peel,

Oxford University Press. © Koji Takahashi 2021. DOI: 10.1093/oso/9780198868958.003.0006

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PUTTING THE PRINCIPLE OF SEVERABILITY IN THE DOCK

Anyone curious to find out how Professor Briggs successfully accomplishedthis task should consult the article. He recalled the experience as a ‘challenge forall concerned’ in the preface of his book, Agreements on Jurisdiction and Choiceof Law.3 One of the distinguishing features of the book is its thorough discussionof damages for breach of jurisdiction agreements. It is in fact a topic I specificallyrequested him to address in his seminars in Japan as the granting of that remedy
was to my mind characteristic of the common law approach. Inspired by his ana­
lysis, I myself managed to write a set of articles on the same topic.4 In theoreticalterms, the remedy of damages brings to light the substantive character of juris­
diction agreements of which attention is usually centred on the procedural char­acter.5 The appreciation of the substantive character of such dispute resolutionagreements further stimulated me to write an article, ‘Autonomy of Arbitration
Agreements and Choice-of-Court Agreements: Re-evaluation in Choice-of-Law
Context’.6 It was written in Japanese, using primarily Japanese materials and caused
some heated debate in Japan. This essay will examine the same topic, using mater­
ials drawn primarily from the common law and European law.

B. Purpose and Structure of This Essay
The principle of severability (or separability) is a principle widely accepted in thelegislation and case law on arbitration agreements and jurisdiction agreements(hereafter ‘arbitration and jurisdiction agreements’ for short).7 It signifies thatthese agreements should be treated as being severable from the contract in which
they are contained (hereinafter ‘matrix contract’).

3 Adrian Briggs, Agreements on Jurisdiction and Choice of Law (OUP 2008) (hereafter Briggs,
Agreements).
4 Koji Takahashi, ‘Damages for Breach of a Choice-of-Court Agreement’ (2008) 10 Yearbookof Private International Law 57; and Koji Takahashi, ‘Damages for Breach of a Choice-of-Court
Agreement: Remaining Issues’ (2009) 11 Yearbook of Private International Law 73.
5 See further Edwin Peel’s essay in this collection (ch 12).
6(2012)
147-3
255.
7 With respect to arbitration agreements, see eg Art 21(2) of the Arbitration Rules of the United
Nations Commission on International Trade Law (UNGA Res 31/98 (15 December 1976) UN Doc
A/31/98), Art 16 of the Model Law on International Commercial Arbitration of the United Nations
Commission on International Trade Law (UNGA Res 40/72 and 61/33 (11 December 1985, as amended
4 December 2006) UN Doc A/40/17, annex I and A/61/17, annex I) (hereafter UNCITRAL Model Law),s 1040 of the German Code of Civil Procedure (ZPO) and s 7 of the English Arbitration Act 1996; also
Fiona Trust & Holding Corporation v Privalov [2007] UKHL 40, [2007] 4 All ER 951 [17], [18] (here­
after Fiona Trust). With respect to jurisdiction agreements, see eg Art 3(d) of the Hague Convention
on Choice of Court Agreements (2005) (hereafter Hague Choice of Court Convention) and Art 25(5)of the Regulation (EU) No 1215/2012 of the European Parhament and of the Council of 12 December
2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial mat­ters [2012] OJ L351/1 (hereafter Recast Brussels I Regulation); also Benincasa v Dentalkit Sri Case
C-269/95 [1997] ECR1-3767 and Deutsche Bank AG v Asia Pacific Broadband Wireless Communications
Inc [2008] EWCA Civ 1091, [2009] 2 All ER (Comm) 129 [24].

SUBSTANTIVE LAW SPHERE141

The principle of severability also has the potential of influencing the choiceof law analysis for determining the law applicable to arbitration and jurisdiction
agreements. While this essay will accept that this principle is useful and defensible
in the sphere of substantive law (Section C), it will challenge the assumption, often
formed on the basis of this principle, that arbitration and jurisdiction agreements
should be treated as a distinct contract severed from the matrix contract for thesake of determining their governing law8 (Section D). This essay will, however, ac­
cept that arbitration and jurisdiction agreements are, like any other terms in thesame matrix contract, subject to the choice of law technique known as dtyegage(splitting), though it will be suggested that the possibility of involuntary depe^age
should be circumscribed (Section E). After the summing up of the preferred choiceof law approach based on the preceding analysis (Section F), an illustration will
be given to show how it will operate in different scenarios in comparison with arival approach (Section G). After giving an analysis to English cases on arbitrationagreements (Section H), the essay will conclude by examining the compatibility ofthe preferred approach with existing instruments (Section I).

C. Substantive Law Sphere
In this section, we will observe how the principle of severability operates in thesphere of substantive law before proceeding to the next section where we willconsider whether this principle should be extended to the sphere of choice of law
analysis.
The principle of severability, that arbitration and jurisdiction agreements shouldbe treated as being severable from the matrix contract, means in the sphere of sub­stantive law that these agreements can only be found invalid on grounds which
relate directly to them and not merely as a consequence of the invalidity of thematrix contract. This proposition is accepted in many jurisdictions9 and adopted
by various instruments. The UNCITRAL Model Law, for example, provides, A de­cision by the arbitral tribunal that the contract is null and void shall not entail ipso
jure the invalidity of the arbitration clause’ (Art 16(1)). The Hague Choice of Court
Convention also provides, ‘The validity of the exclusive choice of court agreement
cannot be contested solely on the ground that the contract is not valid’ (Art 3(d)).
The Recast Brussels I Regulation contains essentially the same provision (Art25(5)).

8 This essay will not address the relevance of an arbitration or jurisdiction agreement to the deter­
mination of the law applicable to the matrix contract. For this question, see eg Compagnie dArmement
Maritime SA v Compagnie Tunisienne de Navigation SA [ 1971 ] AC 572.
9 In England, see eg Fiona Trust (n 7).

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PUTTING THE PRINCIPLE OF SEVERABILITY IN THE DOCKThe principle of severability is useful since a challenge to the jurisdiction of anarbitral tribunal or, as the case may be, the court chosen by a jurisdiction agree­
ment often takes the form of an allegation that the matrix contract is invalid forfraud, mistake, misrepresentation, duress, or the like.10 In the event that the tri­
bunal or, as the case may be, the chosen court comes to accept that the matrix con­tract is indeed invalid, it would lose its competence if the validity of the arbitrationagreement or, as the case may be, jurisdiction agreement (hereafter ‘arbitration(or jurisdiction) agreement’) automatically followed that of the matrix contract.
However, by virtue of the principle of severability, it is open for the tribunal (or the
chosen court) to form the view that the arbitration (or jurisdiction) agreement isvalidly concluded and proceed on that basis to hear the disputes consequent upon
the finding of invalidity of the matrix contract. In many instances, the parties to anarbitration (or jurisdiction) agreement intend to have such issues resolved in theirchosen forum. They may make it plain by stating along the lines that ‘any disputes
arising in connection with this contract, including any issues consequent upon thefinding of invalidity of this contract, shall be referred to arbitration’. Such an agree­
ment can be given effect thanks to the principle of severability.
The principle of severability is defensible as it leaves open for the tribunal (or the
chosen court) to come to the conclusion that the given arbitration (or jurisdiction)agreement is invalid on the same ground that renders the matrix contract invalid.
In Fiona Trust, a leading case which confirmed the severability of arbitration agree­ments in English law, Lord Hoffmann acknowledged11 that an arbitration agree­
ment might be hit by the same ground of invalidity as the matrix contract where,
for example, a forged signature was used or the agent who concluded the contract
lacked any authority to contract on the principal’s behalf. This is unsurprising sincean arbitration agreement is usually negotiated at the same time as other terms in thesame contract and included in the same signed document. In Harbour Assurance
Ltd v Kansa General International Insurance Ltd,12 a case predating Fiona Trust inwhich the principle of severability was established for the first time in English law,
Hoffmann LJ acknowledged13 that the cases of non est factum and mistake as tothe identity of the other contracting party were examples of cases in which a claimthat no matrix contract came into existence would necessarily entail a denial that
there was any agreement to arbitrate. It follows that in terms of outcomes, arbitra­tion and jurisdiction agreements are not always ‘severed’ from the matrix contract
but are only ‘severable’.14 While the word ‘autonomy’ is sometimes used to denote

10 BCY v BCZ [2016] SGHC249 [61] (Steven Chong J) (hereafter BCY).
11 Fiona Trust (n 7) [17]. Lord Hope made the same point at [34] and [35].
12 [1993] QB 701 (CA) (hereafter Harbour Assurance).
13 Ibid 723.
14 Adrian Briggs, Private International Law in English Courts (OUP 2014) [14.37] (hereafter Briggs,
Private International Law in English Courts').

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the same principle,15 the expression ‘severability’ better captures this nuance.16 It
should, however, be noted that in terms of analytical methodology, these agree­ments are treated as being severed from the matrix contract since only the grounds
for invalidity which relate directly to them may be taken into account.
The principle of severability should not be confused with its twin principle,
Kompetenz-Kompetenz, which allows an arbitral tribunal to rule on its own com­
petence. It is a principle just as widely accepted. The UNCITRAL Model Law, forexample, provides that ‘ [t]he arbitral tribunal may rule on its own jurisdiction, in­cluding any objections with respect to the existence or validity of the arbitrationagreement’ (Art 16(1)). In contrast to the principle of severability which operates
in the sphere of substantive law, the principle of Kompetenz-Kompetenz operates
in the sphere of procedural law.17 Since a tribunal derives its competence solely
from an arbitration agreement,18 it ought in theory to have no power to rule on
the validity of the agreement. The Kompetenz-Kompetenz principle is a con­venient fiction since an arbitral process could otherwise be sabotaged too easily bya spurious claim that the arbitration agreement is invalid. The fiction is defensible
as the arbitral tribunal’s ruling on its own competence is only provisional: while thetribunal has the initial competence to rule on its own competence, the final deter­
mination is reserved with a State court. The UNCITRAL Model Law, for example,
provides that if a tribunal rules that it has jurisdiction, any party may request the
local court to decide the matter (Art 16(3)).

D. Extension to the Sphere of Choice of Law Analysis?
Let us now come to the core question of this essay. If, as observed in Section C,
the principle of severability is useful and defensible in the sphere of substantive
law, should it also guide the choice of law analysis? To borrow a line from one
author,19 should we assume that ‘there are two separate contracts ... for which
an applicable law must be selected, ie, the arbitration agreement and the sub­stantive or main contract’?

15 Emmanuel Gaillard and John Savage (eds), Fouchard Gaillard Goldman on International
Commercial Arbitration (Kluwer Law International 1999) [389] (hereafter Fouchard Gaillard Goldman)notes that it is the accepted terminology in continental Europe.
16 Pierre Mayer, ‘The Limits of Severability of the Arbitration Clause’ (1999) 9ICCA Congress Series
261 (hereafter Mayer, ‘The Limits of Severability’).
17 Jan Paulsson, The Idea ofArbitration (OUP 2013) [3.1(c)]. For a further comparison between thesetwo principles, see Fouchard Gaillard Goldman (n 15) [416].
18 A State court, by contrast, does not need the principle of Kompetenz-Kompetenz to rule on its
competence since a jurisdiction agreement is not die only source of its competence. That a court iscompetent to examine its bases of jurisdiction including an agreement on its jurisdiction is, therefore,
beyond question.
19 Julian David Mathew Lew, ‘The Law Applicable to the Form and Substance of the Arbitration
Clause’ (1999) 9 ICCA Congress Series 114,136.

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PUTTING THE PRINCIPLE OF SEVERABILITY IN THE DOCK

It is suggested that for the purpose of choice of law analysis, arbitration andjurisdiction agreements should not be treated as a distinct contract severedfrom the matrix contract save in exceptional cases where the given arbitration(or jurisdiction) agreement is concluded as a free-standing agreement. Thissuggestion rests on the following grounds.
First, since these agreements are usually negotiated and accepted as a vital partof the matrix contract, the parties would expect them to be treated in the same way
as the other terms of the same contract.
Secondly, these agreements are not the only terms in a contract which are sev­
erable from the rest of the contract. Substantive terms may also survive the findingof invalidity of other terms of the same matrix contract. Yet, no suggestion is madethat such terms should be treated as a distinct contract severed from the matrix
contract for the purpose of choice of law analysis.
Thirdly, it is a matter for the governing law of an arbitration (or jurisdiction)agreement to determine, in the course of evaluating its validity, whether the
principle of severability is accepted in the sphere of substantive law. It would
accordingly be wrong to start from the assumption that arbitration and jurisdic­
tion agreements are a priori, severed from the matrix contract when embarking
on the choice of law analysis.
Fourthly, whether the principle of severability should be a guiding principle de­pends on the purpose for which it is invoked. It is not anomalous to reject it in thecontext of choice of law analysis and then apply the governing law which, in thesphere of substantive law, endorses it.
Fifthly, the procedural character of arbitration and jurisdiction agreements does
not warrant referring their validity to a law different from that which governs thematrix contract.
Finally, the proposition that arbitration and jurisdiction agreements should betreated as a distinct contract could not be ultimately sustained unless we could satis­
factorily answer the difficult question of what generally constitutes a single contract
for choice of law purposes. This question does not confront us if we argue for the op­
posite proposition supported by this essay since it should be sufficient to show that
there are no good reasons to sever arbitration and jurisdiction agreements from thematrix contract.
These grounds will be elaborated in turn in the remainder of this section.
Parenthetically, it should be noted that the mere mentioning of ‘the law gov­
erning an arbitration (or jurisdiction) agreement’ does not imply an admissionthat such an agreement should be treated as a distinct contract since that ex­pression leaves open the question of how that law should be determined.

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1. Expectation of the parties
Sometimes called "midnight clauses’,20 arbitration and jurisdiction agreements areoften negotiated as a vital part of the matrix contract and accepted without add­
itional formality. The method of dispute resolution is an important element of therights and obligations negotiated in a contract. Severability would be far from theminds of the ordinary parties engaged in negotiation. They would expect these
agreements to be treated in the same way as the other terms in the same contract.21
Could the same be said if the given arbitration (or jurisdiction) agreement isconcluded at a time or place different from the contract it relates to? A compromis, apost-dispute arbitration agreement, is a typical example of such an agreement. But
a clause compromissoire, a pre-dispute arbitration agreement, could also be con­cluded at a time or place different from the contract it relates to. The temporal or
spatial difference does not, however, detract from the fact that the arbitration (orjurisdiction) agreement is related to the specific contract in respect of which it isconcluded.22 It is, therefore, possible to view it as forming part of that contract. It is
no different from the situation where substantive terms are separately negotiated.
Take, for example, a term on the place of delivery of goods concluded after the con­tract of sale to which it relates. That term will no doubt be treated as forming part ofthe sale contract for the purpose of choice of law analysis.
It is a different story if the given arbitration (or jurisdiction) agreement is con­cluded as a free-standing agreement. Consider a jurisdiction agreement whichreads, "Should any dispute arise between the parties, irrespective of whether it arises
in connection with this contract, each party may submit it to the courts of State X’.
Such an agreement does not specify the disputes which it purports to cover. While
it is rare to encounter a free-standing arbitration (or jurisdiction) agreement like
this, it is not unknown.23 Since there is no specific contract with which it is asso­
ciated, a free-standing arbitration (or jurisdiction) agreement can only be treatedas a distinct contract for the purpose of choice of law analysis. At the end of theday, however, such agreements may not be given effect. The UNCITRAL Model
Law, for example, only gives effect to an agreement to arbitrate disputes arising"in respect of a defined legal relationship’ (Options I and II of Art 7). The Recast
Brussels I Regulation likewise only gives effect to a jurisdiction agreement for dis­putes arising in connection with ‘a particular legal relationship’ (Art 25(1)).

20 See BCY(n 10) [61] (per Steven Chong J).
21 Edwin Peel, ‘The Proper Law of an Arbitration Agreement’ (2020) 136 LQR 534,539.
22 Arbitration and jurisdiction agreements concluded solely for non-contractual disputes are outside
the purview of this essay since they do not raise the question whether they should be treated as being
severed from the matrix contract.
23 eg a jurisdiction agreement featured in the case of the Tokyo District Court’s judgment on 15
February 2016 (available on Westlaw Japan at 2016WLJPCA02156001).

146

PUTTING THE PRINCIPLE OF SEVERABILITY IN THE DOCKThe expression ‘free-standing arbitration (or jurisdiction) agreement’ is often
used in a broader sense. In a Singapore case, BCY v BCZ,24 Chong J noted that there
were two types of free-standing arbitration agreements: the first type was an arbi­
tration agreement related to several contracts constituting a highly complex trans­
action and the second type was a post-dispute arbitration agreement.25 The judge
considered that an arbitration agreement of either type was free-standing because
it was ‘not intended to be a term of any other contract’. On that basis, the judge
concluded that there was ‘no question of any express choice of governing law of amain contract to govern the arbitration agreement’. As discussed, however, an arbi­
tration agreement of the second type does relate to a specific contract, albeit on an
ex postfacto basis. An agreement of the first type, too, is associated with a specificcontract, namely each of the constituent contracts. It is, therefore, suggested thatan agreement of these types should also be treated as forming part of the contracts
to which it relates for the purpose of choice of law analysis.26

2. Severability of substantive terms
Though the principle of severability has particular significance for arbitration andjurisdiction agreements, severability is not unique to them. A contract may con­tain a clause known as a ‘severability clause’ which reads something like ‘If any
term of this contract is found to be invalid or unenforceable, the remaining terms
shall remain valid and enforceable, unless the invalid or unenforceable term is es­
sential to either party’. Even without such a clause, some terms in a contract may
remain valid and enforceable even if other terms in the same contract are foundto be invalid or unenforceable. Thus, under the Consumer Rights Act 2015, wherean unfair term of a consumer contract is not binding on the consumer, the con­tract continues, so far as practicable, to have effect in every other respect (s 67).
More generally, in the English case law, where illegality renders part of a contract
unenforceable, the remainder of the contract may be enforceable 27 In Tillman v
Egon Zehnder Ltd, a leading case concerning restraint of trade, the Supreme Court
observed that ‘[wjhere part of a contract is unenforceable, the enforceability of theremainder represents an issue which arises far more widely than in contracts of
employment’.28

24 BCY(n 10) [66].
25 An agreement of the second type is also considered to be free-standing in Briggs, Private
International Law in English Courts (n 14) [14.42].
26 If it is feared that this might create complexity, the parties to a complex transaction should be vigi­
lant to avoid the fragmentation of the governing law of the constituent contracts or care to make, bymeans ofvoluntary depegage, a specific choice oflaw for the arbitration agreement. As regards voluntary
depegage, see discussions below at Section E.
27 Jack Beatson, Andrew Burrows, and John Cartwright, Ansons Law ofContract (OUP 2020) 423.
28 [2019] UKSC 32, [2020] AC 154 [54] (Lord Wilson).

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Despite the severability of substantive terms, no suggestion is made that suchterms should be treated as a distinct contract severed from the matrix contract
for the purpose of choice of law analysis. It is true that these terms may, by virtueof depegage, be referred to a law different from that governs the matrix contract.
However, as will be explored in the following Section E, splitting up terms withina contract by means of depegage is not the same, in terms of a choice of law meth­odology, as treating a term as a distinct contract severed from the matrix contract.

3. Dependence on the applicable law
While the principle of severability has come to be accepted widely, it does not ne­
cessarily mean that every legal system has embraced it. English law, for instance,
had long been reluctant to do so29 until the Court of Appeal accepted it in 1993 in
Harbour Assurance.30 Whether the principle of severability is accepted depends,
therefore, on its governing law.31
What, then, is the governing law of the principle of severability? As we haveseen in the preceding Section C, this principle concerns the question whether thevalidity of an arbitration (or jurisdiction) agreement could only be challenged on
the grounds which directly relate to that agreement and not merely on the groundthat the matrix contract is invalid. This question arises in the course of addressing
whether the given arbitration (or jurisdiction) agreement is validly concluded, aquestion which is answered by the law applicable to the agreement in question. It
follows that the governing law of the principle of severability is the law applicableto the arbitration (or jurisdiction) agreement in question. This suggestion is con­sistent with the English Arbitration Act 1996: its provision on severability (s 7) ap­
plies where English law is applicable to the arbitration agreement even if the seat of
the arbitration is outside England (s 2(5)).
One author argues that both the severability principle and the KompetenzKompetenz principle should be subject to the law of the country of the arbitralseat, reasoning that both principles address the kind of allocation-of-authority
questions and pertain directly to the arbitral process.32 It does make sense that
the Kompetenz-Kompetenz principle, being a principle of procedural law, should
29 See eg Overseas Union Insurance v AA Mutual International Insurance [1988] 2 Lloyd’s Rep 63,66,
in which Evans J cited an earlier case as establishing the rule that ‘arbitrators can never have jurisdiction
to decide whether there was or was not a valid contract under which, if it exists, that jurisdiction arises’
and commented that ‘This rule owes as much to logic as it does to authority’ The quoted rule appears toreject both the principle of Kompetenz-Kompetenz and the principle of severability.
30 Harbour Assurance (n 12).
31 Briggs, Agreements (n 3) [3.10]; Trevor Hartley and Masato Dogauchi, ‘Explanatory Report on
the 2005 Hague Convention on Choice of Court Agreements’ (2007) [115] (hereafter Hartley andDogauchi, ‘Explanatory Report’).
32 George Bermann, International Arbitration and Private International Law (The Hague Academy ofInternational Law 2017) [135] and [137] (hereafter Bermann, International Arbitration).

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PUTTING THE PRINCIPLE OF SEVERABILITY IN THE DOCK

be subject to the curial law of arbitration, which is normally the law of the seat.33
A distinction should, however, be made with the principle of severability which, as
noted in the preceding Section C, operates in the sphere of substantive law.
Another author argues that in order to decide whether an arbitration agreement
is severed from the matrix contract in a given case, a preferable course is to ascer­tain the parties’ intent rather than conducting an analysis through the prism of
the governing law.34 There is a lot of sense in this argument as many legal systems
will in any event look to the parties’ intent. If, however, there is no common intent
between the parties, a solution could only be found in the applicable law. Where,
for example, the matrix contract is procured by bribe and found to be invalid forillegality, it will not always be possible to ascertain the parties’ common intent as
to whether an arbitration (or jurisdiction) agreement contained in that contract
should also be rendered invalid for the same reason.

4. Purpose specificity
Whether the principle of severability should be a guiding principle depends on the
purpose for which it is invoked. This proposition seems widely accepted by various
instruments and in the case law.
Some instruments which enshrine the principle of severability use words like‘independent’ and ‘distinct’ to describe the relationships between an arbitration(or jurisdiction) agreement and the matrix contract. The UNCITRAL Model Law,for example, provides that ‘an arbitration clause which forms part of a contract
shall be treated as an agreement independent of the other terms of the contract’(Art 16(1) (emphasis added)). The English Arbitration Act 1996 provides that‘an arbitration agreement which forms or was intended to form part of anotheragreement... shall... be treated as a distinct agreement’ (s 7 (emphasis added)).
And the Hague Choice of Court Convention provides that ‘an exclusive choiceof court agreement that forms part of a contract shall be treated as an agreement
independent of the other terms of the contract’ (Art 3(d) (emphasis added)). The
Recast Brussels I Regulation contains a similar provision (Art 25(5)). These words
may strengthen the impression that an arbitration (or jurisdiction) agreement issevered from the matrix contract.
A closer reading, however, reveals the drafters’ intention to qualify the operationof the principle of severability. In the UNCITRAL Model Law, Art 16(1) begins
with an endorsement of the principle of Kompetenz-Kompetenz by providing that

33 Dallal v Bank Mellat [1986] 1 All ER 239,252 (‘The curial law is normally, but not necessarily, thelaw of the place where the arbitration proceedings are held’).
34 Mayer, ‘The Limits of Severability’ (n 16) 267. The author accepts that in theory, there is a merit in
identifying the governing law.

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an arbitral tribunal may rule on its own jurisdiction even where the existence orvalidity of the arbitration agreement is called into question. It then continues that‘For that purpose’, the arbitration agreement must be treated as independent. The
same words ‘for that purpose’ appear in s 7 of the English Arbitration Act 1996. It is
no coincidence. The Departmental Advisory Committee which prepared the draft
stated in its report:35[W]e have redrafted [what is now s 7] in order to follow the relevant part of Art 16of the UNCITRAL Model Law more closely, and to make clear that the doctrineof separability is confined to the effect of invalidity etc of the main contract on thearbitration agreement, rather than being, as it was in the July 1995 draft, a free­standingprinciple.
It is, accordingly, possible to say that these instruments do not purport to ex­
tend the principle of severability to the sphere of choice of law analysis. The inten­tion of the drafters of the Hague Choice of Court Convention is less clear. But theprovision quoted above is immediately followed by the sentence which reads, ‘The
validity of the exclusive choice of court agreement cannot be contested solely on
the ground that the contract is not valid’. And it would be possible to interpret thissentence as qualifying the context in which to treat a jurisdiction agreement as in­dependent. The same maybe said of the Recast Brussels I Regulation.
The proposition that the principle of severability is not an all-purpose prin­ciple is also accepted in the case law. In Harbour Assurance, Hoffmann LJ acknow­
ledged that an arbitration agreement might form part of the matrix contract forsome purposes and might constitute a separate agreement for other purposes.36
For instance, where an assignment is made under a contract, Colman J held in West
Tankers Inc v RAS Riunione Adriatica di Sicurta SpA37 38
that the duty to submit toarbitration is an ‘inseparable’ component of the subject matter assigned. Similarly,
the Court of Justice of the European Union held in Cartel Damage Claims (CDC)
Hydrogen Peroxide v Evonik Degussa3S that where a party not privy to the originalcontract had succeeded to an original contracting party’s rights and obligations,that third party could nevertheless be bound by a jurisdiction clause to which it
had not agreed.
Since the principle of severability is purpose-specific, it is not anomalous to re­ject it in the context of choice of law analysis and then apply the governing law

35 The Departmental Advisory Committee on Arbitration, ‘Report on the Arbitration Bill’(1996) [44].
36 Harbour Assurance (n 12) 722.
37 [2005] EWHC 454, [2005] 2 All ER (Comm) 240 [33]. Also Sea Master Shipping Inc v Arab Bank
Ltd [2018] EWHC 1902 (Comm), [2018] Bus LR1798 [28].
38 Case C-352/13 [2015] ECLI:EU:C:2015:335 [65], citing its own judgment in Coreck Maritime
GmbH v Handelsveem BVCase C-387/98 [2000] ECR1-9337.

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PUTTING THE PRINCIPLE OF SEVERABILITY IN THE DOCK

which, in the sphere of substantive law, endorses it. Thus, even if an arbitration (orjurisdiction) agreement is considered to be subject to the same law that governs thematrix contract, that law may see the validity of the agreement unaffected by thefactor invalidating the matrix contract.
Many authors accept that the principle of severability should not be extended
to the sphere of choice of law analysis.39 One author40 agrees that this principle ispurpose-specific but draws a distinction within the sphere of choice of law ana­
lysis depending on the way the jurisdiction of an arbitral tribunal is challenged. In
cases where the respondent contends that the dispute falls outside the scope of thearbitration agreement, he considers that the principle of severability is inapplic­able, with the result that an express choice of law for the matrix contract consti­
tutes a choice of law for the arbitration agreement. Where, on the other hand, therespondent contends that there is no valid, existent, or effective arbitration agree­
ment, he considers that the principle of severability is applicable, resulting in the
opposite outcome. As the author himself admits, these are absurd results since therespondent would be able to influence how the governing law of an arbitrationagreement is determined by the vagaries of jurisdictional challenges. A better ap­
proach would be to reject the extension of the principle of severability to the sphereof choice of law analysis altogether, irrespective of the way in which jurisdiction ischallenged.

5. The dual character of arbitration andjurisdiction agreements
The procedural character of arbitration and jurisdiction agreements is some­times cited as a ground for giving them a special treatment in the choice of law
analysis. For example, the Rome I Regulation41 excludes these agreements from its
scope of application (Art l(2)(e)). It inherited this position from its predecessor,
the Rome Convention,42 which similarly excluded these agreements from its
scope (Art l(2)(d)). According to the Report of Professors Giuliano and Lagardeon the Convention,43 the exclusion was based in part on the view that the matter

39 See eg Ian Glick and Niranjan Venkatesan, ‘Choosing the Law Governing the Arbitration
Agreement’ in Neil Kaplan and Michael Moser (eds), Jurisdiction, Admissibility and Choice of Law inInternational Arbitration (Kluwer Law International 2018) 131 [9.02] (hereafter Glick and Venkatesan,‘Choosing the Law’) and Briggs, Private International Law in English Courts (n 14) [14.37].
40 Blake Primrose, ‘Separability and stage one of the Sulamerica inquiry’ (2017) 33 Arbitration
International 139.
41 Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on
the law applicable to contractual obligations (Rome I) [2008] OJ LI77/6 (hereafter Rome I Regulation).
42 Rome Convention on the law applicable to contractual obligations (1980) (consolidated version[1998] OJ C27/34) (hereafter Rome Convention).
43 Mario Giuliano and Paul Lagarde, ‘Report on the Convention on the law applicable to contractual
obligations’ [1980] OJ C282/11 (hereafter Giuliano and Lagarde Report).

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151

lay within the sphere of procedure. Procedure was excluded from the scope of theConvention (Art l(2)(h)) and is likewise under the Regulation (Art 1(3)).44 As will
be discussed later in this essay (Section I), the exclusion of arbitration and jurisdic­
tion agreements from the scope of these instruments does not preclude the possi­
bility for the courts of Member States to treat these agreements as forming part ofthe matrix contract for the purpose of choice of law analysis.
There is no doubt that arbitration and jurisdiction agreements have proceduralcharacter since they concern the method of dispute resolution and hence possess
procedural dimensions. The fact that an agreement has a procedural character,however, does not warrant the assumption that each and every issue pertaining to
it is a procedural issue since the agreement also has substantive dimensions. As put
by one author:45[A] choice-of-court agreement has a hybrid nature. On the one hand, it is a
private-law contract: to this extent it falls under the law of contract; on the other
hand, it has procedural (jurisdictional) consequences: to this extent, it falls under
the law of procedure. In order to be valid, it must comply with the normal require­ments for a private-law contract. If it is not valid as a contract, it can have no jur­
isdictional effects. However, once it is decided that it is valid, we then move fromthe law of contract to that of procedure to determine what its effects are...

It is, therefore, unhelpful to pin a procedural label on arbitration and jurisdic­
tion agreements. For the purpose of determining applicable laws, a better approach
would be to consider which issues are procedural and which are substantive. Only
the issues which directly implicate the resources of the forum State in the adminis­
tration ofjustice should be characterised as procedural and be submitted to the lex
fori (the law of the forum) in accordance with the maxim forum regit processum'(the law of the forum governs procedure). Other issues should be characterised
as substantive and be submitted to the lex causae (the governing law of the agree­ment) as ascertained by the normal choice of law analysis.
In fact, arbitration and jurisdiction agreements are not the only agreements pos­sessing both procedural and substantive characters. Other agreements, such as ananti-suit agreement (ie an agreement not to sue), an agreement to discontinue anaction, an agreement to desist from executing a judgment, an agreement to ab­stain from disputing particular facts, and an agreement to refrain from adducing

44 When consulted on a draft text of the Regulation, the European Economic and Social Committee
also observed that the exclusion of arbitration and jurisdiction agreements was based on the same rea­soning as the exclusion of procedure: Opinion of the European Economic and Social Committee on the
Proposal for a Regulation on the law applicable to contractual obligations (Rome I) [2006] OJ C318/58[3.1.4].
45 Trevor Hartley, Choice-of-court Agreements under the European and International Instruments(OUP 2013) [7.01].

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PUTTING THE PRINCIPLE OF SEVERABILITY IN THE DOCK

particular evidence, possess the dual characters. It may, therefore, be said generallythat with respect to any agreement, the appropriate question to ask is which, if any,are procedural issues and which are substantive issues.46
Among the issues pertaining to arbitration and jurisdiction agreements, theireffects of conferring or depriving jurisdiction are obviously procedural issues andshould accordingly be subject to the lex fori (the law of the forum where a suit isbrought pursuant to or, as the case may be, regardless of an arbitration (or jurisdic­tion) agreement). The formation, validity, and interpretation of these agreements,on the other hand, have less direct implications for the resource of the forum Stateand should, therefore, be regarded as substantive issues, in view also of the fact thatthey do not pertain uniquely to arbitration and jurisdiction agreements but can berelevant to any contract. These issues should accordingly be submitted to the lexcausae.
As a side note, a distinction should also be made between the curial law of ar­bitration and the law applicable to arbitration agreements.47 The curial law of ar­bitration means the law applicable to arbitral proceedings, which may hardly bedescribed as an aspect of arbitration agreements. It governs both the tribunal’s
conduct of arbitral proceedings and the national court’s supervision, support,
and control of arbitral proceedings.48 There is a broad consensus that the curial
law is normally the law of the country where the arbitration is seated.49
While reference to the lexfori or the law of the seat would automatically severarbitration and jurisdiction agreements from the matrix contract, reference tothe lex causae would not. It may, therefore, be concluded that the proceduralcharacter of these agreements is not a sufficient reason for treating them as a
distinct contract severed from the matrix contract for the purpose of choice oflaw analysis.

6. Question of what generally constitutes a single contract for the
choice of law purposes
If we were to argue for the proposition that arbitration and jurisdiction agree­ments should be treated as a distinct contract, we would be confronted with46 For further analysis, see Koji Takahashi, ‘Law Applicable to Choice-of-Court Agreements’ (2015)
58 Japanese Yearbook of International Law 384,391-4.
47 cf Enka Insaat Ve Sanayi AS v OOO Insurance Company Chubb [2020] EWCA Civ 574, [2020] 3
All ER 577 (hereafter Enka (CA)). The Court of Appeal’s decision and reasoning in this case will be dis­cussed in Section H below. Work on this essay was completed before the UK Supreme Court delivered
its own ruling in the case ([2020] UKSC 38) in October 2020. That ruling is addressed separately in
Section K (Postscript) below.
48 Gary Born, International Commercial Arbitration (2nd edn, Kluwer Law International 2014) 1531
(hereafter Born, International Commercial Arbitration).
49 Ibid 1604.

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153

the question of what generally constitutes a single contract for choice of law
purposes. That proposition could not be ultimately sustained unless we could
satisfactorily answer this question, which is theoretically difficult. Where, forexample, an agreement for the sale of goods and an agreement for the provisionof services are concluded in the course of the same transaction and their terms
are set out in the same document, do they constitute a single contract or two
distinct contracts? The Rome I Regulation sets forth a rule for determining thegoverning law of a contract containing multiple elements such as those of sale ofgoods and the provision of services (Art 4(2)). The Regulation would not, how­ever, exclude the treatment of those elements as two distinct contracts especially
if in the circumstances one may be performed independently of the other. Thisis apparent from the listing of these two categories of contracts in sub-paras(a) and (b) of Art 4(1).
If one argues, as this essay does, for the opposite proposition, namely that ar­bitration and jurisdiction agreements should be treated as forming part of thematrix contract, it is unnecessary to answer the question what generally con­stitutes a single contract for the choice of law purpose. Since arbitration andjurisdiction agreements are, save those concluded as a free-standing agreement,
related to a specific contract, it suffices to show that there is no good reason totreat them as a distinct contract. This much has been attempted throughout thissection.

E. Possibility of Depefage
In the last section (Section D), it has been suggested that arbitration and juris­
diction agreements should be treated, for the purpose of choice of law analysis,
as forming part of the matrix contract. This means submitting these terms to the
choice of law analysis in the same way as other terms of the same matrix contract. It
follows that to the extent the applicable choice of law rules employ the technique of
depegage, it is possible for an arbitration (or jurisdiction) agreement to be referred
to a law different from that which governs the matrix contract.50 But splitting up
terms within a contract by means of depegage is not the same as treating a term as
a distinct contract in terms of choice of law methodology. In this section, we will
first explain the difference and then consider to what extent depegage should beembraced in principle.

50 See also Glick and Venkatesan, ‘Choosing the Law’ (n 39) [9.02].

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PUTTING THE PRINCIPLE OF SEVERABILITY IN THE DOCK

1. Depegage distinguished from treating a term as a
distinct contract
The word severability’ is sometimes used to indicate that parts of a contract are
severable for the sake of depegage. The Rome Convention, for example, provided
that a severable part of the contract which has a closer connection with anothercountry may by way of exception be governed by the law of that other country’(Art 4(1)).51 It should be noted, however, that splitting up terms within a contractby means of depegage is not the same as treating a term of a contract as a distinct
contract severed from the matrix contract. The question of what constitutes a con­tract logically precedes the question of whether the splitting up of terms within acontract for choice of law purposes is permissible.
For an illustration of the point, consider a typical scenario where the parties
make no specific choice of law for an arbitration (or jurisdiction) agreement. If
the agreement is treated as a distinct contract severed from the matrix contract, its
governing law would have to be ascertained independently of the matrix contract
and the possibility of depegage would not arise for consideration. If, on the other
hand, the agreement is treated as forming part of the matrix contract, it would
be governed by the same law as the latter, subject to the possibility of involuntary
depegage with all its limitations as suggested below.

2. Voluntary and involuntary depegage
There are two types of depegage: voluntary and involuntary. Voluntary depegage
allows the parties to a contract to choose the law applicable to a part or parts
only of the contract. It is in the form of either a partial choice of law or multiple
choices of law.52 Involuntary depegage (or objective depegage) allows the court toapply different laws to different parts of a contract.
Voluntary depegage is widely accepted. The Rome I Regulation, for example,
provides that1 [b]y their choice the parties can select the law applicable to thewhole or to part only of the contract’ (Art 3(1)). Involuntary depegage is lesswidely accepted. The possibility existed under the Rome Convention, whichcontained a provision permitting involuntary depegage (Art 4(1), quoted abovein Section E.l). But the Giuliano and Lagarde Report on the Convention statesthat ‘the court must have recourse to severance as seldom as possible’.53 Citing
this Report, the European Court of Justice took a strict stance to involuntary
51 Giuliano and Lagarde Report (n 43) 17 also makes mention of‘the question whether severability(dtyegage) was to be allowed’.
52 See Art 2(2) (a) and (b) of the Hague Principles on Choice of Law in International Commercial
Contracts (2015) (hereafter Hague Choice of Law Principles).
53 Giuliano and Lagarde Report (n 43) 23.

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155

depegage, holding in one case54 that ‘the possibility of separating a contract into
a number of parts in order to make it subject to a number of laws runs counterto the objectives of the Convention’, by which the Court meant raising thelevel of legal certainty. The Rome I Regulation did not inherit from the Rome
Convention the provision permitting involuntary depegage.
Voluntary dtpegage makes sense as a logical extension of the party autonomy,a principle which enjoys near-universal acceptance in the field of contract law.
It should, therefore, be possible, by means of voluntary depegage, to refer an ar­bitration (or jurisdiction) agreement to a law different from that which governs
the matrix contract.
Then, what about involuntary depegage? Should it be accepted at all and in whatcircumstances? The main objection to involuntary depegage is its unpredictability.
It is all very well to say that a severable part of a contract may be referred to a law
different from that which governs the contract. But it is not clear when it shouldor must be so referred. The test under the Rome Convention of‘a severable part ofthe contract’ having ‘a closer connection with another country’ (Art 4(1)) was too
general and too vague. It is suggested in principle that the court should only be al­
lowed to resort to involuntary depegage if the applicable choice of law rules provide
in clear language what specific terms are referred, separately from the remainderof the matrix contract, to what laws. Thus, the applicable choice of law rules may
provide that an arbitration agreement should be subject to the law of the country of
the arbitral seat or that a jurisdiction agreement should be subject to the law of thecountry of the chosen court. Only if there is such a clear and specific provision in
the applicable choice of law rules, should the court be allowed to resort to involun­tary depegage to refer an arbitration (or jurisdiction) agreement to a law different
from that which governs the matrix contract.
It is suggested that there should be a further limitation to the operation of invol­
untary depegage-. the court should only be allowed to resort to it where the parties
have made no choice of law for the matrix contract. Where the parties have chosena law to govern the matrix contract, it appears hardly defensible to refer a part of
it to a different law by means of involuntary depegage. The Rome Convention, too,
only permitted involuntary depegage where the parties made no choice of law for
the matrix contract

54 Intercontainer Interfrigo v Balkenende Oosthuizen andMIC Operations Case C-133/08 [2009] ECR
1-9687 [43]—[47].

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PUTTING THE PRINCIPLE OF SEVERABILITY IN THE DOCK

F. Preferred Choice of Law Approach
From the foregoing analysis, it is suggested that the following choice of law ap­
proach should be adopted to ascertain the governing law of arbitration and juris­
diction agreements.
Arbitration and jurisdiction agreements should not be treated as a distinct
contract severed from the matrix contract. The principle of severability, which isuseful and defensible in the sphere of substantive law, should not be extended tothe sphere of choice of law analysis. These agreements should be treated as forming
part of the matrix contract.
It should, however, be accepted that arbitration and jurisdiction agreements
may, by virtue of depegage, be referred to a law different from that which gov­
erns the matrix contract. Accordingly, the parties should be allowed to make aspecific choice of law for such agreements by means of voluntary depegage. The
court, on the other hand, should be allowed to resort to involuntary depegage
only where the parties have not made a choice of law for the matrix contract andonly if the applicable choice of law rules contain a clear and specific provision
for such agreements.

G. Illustrations of the Contrasting Approaches
This section will illustrate how the preferred approach, summarised in the lastsection (Section F), will operate in different scenarios. In the course of analysis,comparison will be made with the rival approach, that is, the approach of treating
arbitration and jurisdiction agreements as a distinct contract severed from the ma­trix contract.
At its most basic level, the difference between the contrasting approaches
lies in whether the governing law of the matrix contract, in and of itself, con­stitutes the governing law of the arbitration (or jurisdiction) agreement con­tained therein. The question is answered affirmatively if we follow the preferredapproach of treating arbitration and jurisdiction agreements as forming partof the matrix contract, whereas it is answered negatively if we follow the rival
approach.
The following analysis will illustrate these contrasting approaches more fully
with the implications of depegage. It will examine (1) the cases where the parties
have made, expressly or impliedly, a choice of law for the matrix contract, and(2) the cases where the parties have made no choice of law for the matrix con­tract. But before embarking on the analysis, it is necessary to set out the analyt­
ical premise regarding the applicable choice of law rules.

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157

1. Analytical premise
The analysis in this section will illustrate the operation of the contrasting ap­
proaches based on a certain premise with respect to the applicable choice of law
rules. Rather than proceeding on the basis of any concrete example of choice of law
rules, this section will, with a view to retaining a wider relevance, base its analysis
on hypothetical choice of law rules sharing the following traits with the conven­tional and mainstream choice of law rules.
First, it is presupposed that the applicable choice of law rules for contracts ingeneral consist of (i) a rule giving effect to the parties’ express choice of law, if any;(ii) in the absence of any express choice, a rule giving effect to the parties’ implied
choice of law, if any; and (iii) in the absence of any choice, a rule specifying thegoverning law by objective connecting factors. This set of rules reflects the near­
universal acceptance of party autonomy as the primary choice of law principle forcontracts. It is also consistent with the common law choice of law rules for con­tracts55 and the Rome I Regulation.
Secondly, it is presupposed that the rule giving effect to the parties’ implied
choice of law (rule (ii) above) may only be triggered if the choice is actually madeat the time the parties concluded the contract. It does not give effect to a fictional
choice, namely a choice which the parties did not actually make but would havemade if they had addressed their minds to the choice of law issue at the time of
the conclusion of the contract. This presupposition should be supported since
confounding an implied choice with a fictional choice would make rule (ii) an ob­
jective rule in all but name, leading to the confusion of rules (ii) and (iii). Properly
confined to an actual choice, rule (ii) would only be different from rule (i) on the
point of whether the choice is expressed or tacit. It would be safe to say that thispresupposition is widely supported and consistent with the common law56 and theRome I Regulation57 as well as the Hague Choice of Law Principles.58
Thirdly, it is presupposed that the applicable choice oflaw rules for contracts also
guide the determination of the law applicable to arbitration and jurisdiction agree­ments. Comparatively, this is the mainstream methodology,59 though there are, on

55 Lord Collins of Mapesbury and others (eds), Dicey, Morris & Collins: The Conflict of Laws (15thedn, Sweet & Maxwell 2012) [32-006].
56 Ibid [32-007], though it is also observed that ‘before the objective close connection test became
fully established, the test of inferred intention was in truth an objective test designed not to elicit actual
intention but to impute an intention which had not been formed’.
57 Giuliano and Lagarde Report (n 43) 17 stated that the courts were not permitted ‘to infer a choiceof law that the parties might have made where they had no clear intention of making a choice’.
58 Hague Choice of Law Principles (n 52). Its official commentary states at [4.6] that ‘the choice must
be a real one although not expressly stated in the contract.... A presumed intention imputed to the par­ties does not suffice’.
59 As is the case in England and Singapore, as observed in BNA v BNB [2019] SGCA 84 [45] (Steven
Chong JA). The English case law applies the common law choice of law rules, rather than the rules of theRome I Regulation (See Art l(2)(e)).

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PUTTING THE PRINCIPLE OF SEVERABILITY IN THE DOCK

the other hand, States adopting special rules for such agreements. Switzerland, forexample, has special choice of law rules for arbitration agreements, with its Federal
Act on Private International Law setting forth alternative connecting factors (Art
178.2).60 The Civil Code of Quebec does likewise (Art 3121).61 The French courts,
for their part, apply a substantive rule of international arbitration (regie materielle
du droit international de l’arbitrage), instead of engaging in the normal choice oflaw analysis, to assess the validity of arbitration agreements.62 The evaluation ofsuch approaches is beyond the scope and purpose of this essay.

2. Where there is a choice of law for the matrix contract(a) Preferred approach
Where the parties have made, expressly or impliedly, a choice of law for the matrix
contract, if we follow the preferred approach of treating an arbitration (or jurisdic­tion) agreement as forming part of the matrix contract, the choice of law for thematrix contract, in and of itself, constitutes the choice of law for the arbitration (orjurisdiction) agreement. This conclusion is subject to the possibility of voluntary
depegage: the parties may choose a separate law for the arbitration (or jurisdiction)agreement.
An express choice of a separate law is, however, hardly ever made in practice.63
This is because the parties do not usually address their minds to the law applicable
to arbitration and jurisdiction agreements when they conclude the matrix con­tract.64 It is, therefore, unlikely for the parties to resort to voluntary depegage bymeans of an express choice.
What is commonly done in an arbitration agreement is to specify the seat ofarbitration.65 The seat is sometimes specified in a country other than the country
whose law is chosen as the governing law of the matrix contract. Since voluntary
depegage may be implemented by way of an implied choice, this begs the question
whether it is possible to elicit an intention to choose the law of the seat as the gov­
erning law of the arbitration agreement. The choice of an arbitral seat is generally
made to anchor the arbitration in a trusted jurisdiction supportive of arbitration.

60 It reads, ‘Die Schiedsvereinbarung ist im Obrigen giiltig, wenn sie dem von den Parteien
gewahlten, dem auf die Streitsache, insbesondere dem auf den Hauptvertrag anwendbaren oder dem
schweizerischen Recht entspricht’
61 It reads, ‘En l’absence de designation par les parties, la convention d’arbitrage est regie par la loi
applicable au contrat principal ou, si cette loi a pour effet d’invalider la convention, par la loi de l’fitat ou
l’arbitrage se deroule’
62 Judgment of the French Cour de cassation in Municipalite de Khoms El Mergeb v Societe Dalico[1994] lRevArbU6.
63 Born, International Commercial Arbitration (n 48) 580.
64 Bermann, International Arbitration (n 32) [164].
65 Born, International Commercial Arbitration (n 48) 497.

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159

It is, therefore, a reliable indicator of the parties’ intention to choose the curial lawof arbitration. But it is not a good indicator of their intention to choose the law
governing the validity of their agreement to arbitrate.66 Similarly, sometimes a jur­
isdiction agreement specifies the courts in a country other than the country whose
law is chosen for the matrix contract. The choice of courts is a reliable indicator of
the parties’ intention to submit to the procedural rules of the chosen forum but is
not a good indicator of their intention to choose the law governing the validity of
their jurisdiction agreement. As noted above, the parties do not usually address
their minds to the law applicable to arbitration and jurisdiction agreements when
they conclude the matrix contract. As an implied choice may only be founded onan actual intention, it may be concluded that the parties to an arbitration (or jur­
isdiction) agreement are unlikely to make, by means of voluntary depefage, an im­
plied choice of law for the agreement.
It is true that when the parties make a choice of law for the matrix contract,they are just as unlikely to have an actual intention to extend the coverage ofthe law to an arbitration (or jurisdiction) agreement contained therein. For thatreason, one author observes that the application of the law governing the ma­trix contract to the arbitration agreement would be no less arbitrary than theapplication of the law of the seat 67 However, on the proposition that an arbitra­tion (or jurisdiction) agreement should be treated as forming part of the matrix
contract, it is a matter of course that a choice of law made by the parties for thematrix contract constitutes the choice of law for the arbitration (or jurisdiction)agreement.
Where the applicable choice of law rules contain rules for the protection of pre­sumptively weaker parties, the approach of treating an arbitration (or jurisdiction)agreement as forming part of the matrix contract would be helpful for such parties.
Suppose that a consumer wishes to challenge the validity of an arbitration (or jur­
isdiction) agreement contained in a contract he has concluded with a professional
trader. If the applicable choice of law rules allow the consumer to rely on the man­datory rules of the law of the country where he has his habitual residence,68 he may
do so not only to challenge the validity of the matrix contract but also to challenge
the validity of the arbitration (or jurisdiction) agreement69 because, under this66 Briggs, Private International Law in English Courts (n 14) [14.41 ].
67 Jonathan Hill, ‘The law governing an arbitration clause’ (University of Bristol Law School Blog)<https://legalresearch.blogs.bris.ac.uk/2017/03/the-law-governing-an-arbitration-clause > accessed 23
August 2020. For a similar view, see Fouchard Gaillard Goldman (n 15) [425].
68 eg Art 6(2) of the Rome I Regulation.
69 A consumer mayinvoke such rules as Art 3(1) and Annex l(q) ofthe Council Directive 93/ 13/EECof 5 April 1993 on Unfair Terms in Consumer Contracts [1993] OJ L95/29. This is extra ammunitionin the armoury of a consumer, who may in addition be able to rely on the law of the forum if there are
any rules denying effect to an arbitration agreement, such as s 91 (1) of the English Arbitration Act 1996
(which is applicable ‘whatever the law applicable to the arbitration agreement’ (s 89(3))).

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PUTTING THE PRINCIPLE OF SEVERABILITY IN THE DOCK

approach, the arbitration (or jurisdiction) agreement would be subject to the samelaw that governs the matrix contract.70(b) Rival approach
Where the parties have made, expressly or impliedly, a choice of law for the matrix
contract, ifwe follow the rival approach, that is, the approach oftreating an arbitra­tion (or jurisdiction) agreement as a distinct contract severed from the matrix con­tract, the choice of law for the matrix contract does not, in and of itself, constitute a
choice of law for the arbitration (or jurisdiction) agreement. This is so even where,
as is often the case, the choice of law clause uses all-embracing language purporting
to cover all terms in the matrix contract, unless there is a specific indication thatthe arbitration (or jurisdiction) agreement is also covered.71
Treated as a distinct contract, an arbitration (or jurisdiction) agreement is sub­ject to the law chosen by the parties, if any. In practice, though, hardly ever do they
make an actual choice of law specifically for these agreements. This is because, as
noted earlier, very rarely do the parties address their minds to the law applicable tothese agreements when they conclude the matrix contract.
In the absence of choice of law by the parties, the governing law will have to be
determined by objective connecting factors. The connecting factors adopted by thegeneral choice of law rules for contracts may be either too vague or ill-suited to be
used to designate the governing law of an arbitration (or jurisdiction) agreement. It
would, therefore, be useful for the applicable choice of law rules to set out specificconnecting factors for such agreements. This, however, leaves a difficult questionof what the appropriate connecting factors are. It might be thought that an arbi­
tration agreement should be subject to the law of the country of the arbitral seator that a jurisdiction agreement should be subject to the law of the country of thechosen court. But these connecting factors are not entirely persuasive since at issue
here is the validity of the agreement rather than the procedure of arbitration (orlitigation).72
Where the applicable choice of law rules contain rules for the protection of pre­sumptively weaker parties, the approach of treating an arbitration (or jurisdiction)agreement as a distinct contract would not be helpful for such parties. Supposethat a consumer wishes to challenge the validity of an arbitration (or jurisdiction)agreement contained in a contract he has concluded with a professional trader. If

70 As the Rome I Regulation excludes arbitration and jurisdiction agreements from its scope of appli­
cation (Art 1 (2)(e)), Art 6(2) is only applicable to the matrix contract. The exclusion from the scope does
not, however, preclude the possibility for the courts of Member States to deem these agreements to be
subject to the same law that applies to the matrix contract (see the discussion of this point in Section I).
71 As in the case of Kabab-JI SAL v Kout Food [2020] EWCA Civ 6, [2020] 1 Lloyd’s Rep 269. Flaux LJ
held, ‘Governing law clauses do not necessarily cover the arbitration agreement. This one does becauseof the correct construction of the terms’ [62].
72 Briggs, Private International Law in English Courts (n 14) [14.40].

ILLUSTRATIONS OF THE CONTRASTING APPROACHES

161

the choice of law rules allow the consumer to rely on the mandatory rules of the lawof the country where he has his habitual residence,73 he may do so to challenge thevalidity of the matrix contract but may not do so to challenge the validity of the ar­bitration (or jurisdiction) agreement because the governing law of the arbitration(or jurisdiction) agreement would, under this approach, have to be determined
separately. Moreover, arbitration and jurisdiction agreements, treated as a distinct
contract, may not qualify as a consumer contract since their procedural purposes
do not easily square with the substantive considerations on which the definition ofa consumer contract depends.74

3. Where there is no choice of law for thematrix contract
Having examined the scenario where the parties have made a choice of law for thematrix contract, let us now turn to the scenario where the parties have made no
choice. In that scenario, the governing law of the matrix contract is determined by
objective connecting factors.
If we follow the rival approach, that is, the approach of treating an arbitra­tion (or jurisdiction) agreement as a distinct contract severed from the matrix
contract, the law governing the matrix contract does not constitute the gov­
erning law of the arbitration (or jurisdiction) agreement. One consequence isthat where the applicable choice of law rules contain rules for the protection ofpresumptively weaker parties,75 the law specified by such rules may not be relied
upon by such parties to challenge the validity of the arbitration (or jurisdiction)agreement. Under this approach, in order to find out what is the governing lawof an arbitration (or jurisdiction) agreement, a separate analysis is necessary. As
noted earlier, rarely in practice do the parties make an actual choice, expressedor implied, of law specifically for an arbitration (or jurisdiction) agreement. It
makes it necessary to rely in virtually all cases on the objective connecting fac­
tors. As also noted earlier, the objective connecting factors adopted by the gen­eral choice of law rules for contracts may be either too vague or ill-suited to be
used to designate the governing law of an arbitration (or jurisdiction) agree­
ment. It would, therefore, be useful for the applicable choice of law rules to set
out specific connecting factors for such agreements. This, however, leaves a dif­ficult question of what the appropriate connecting factors are.

73 eg Art 6(2) of the Rome I Regulation.
74 The definition of a consumer contract under the Rome I Regulation, for example, depends onwhether it is concluded by a natural person for a purpose outside his trade or profession with anotherparty acting in the exercise of his trade or profession (Art 6(1)).
75 eg Art 6( 1) of the Rome I Regulation.

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If, on the other hand, we follow the preferred approach, that is, the approachof treating an arbitration (or jurisdiction) agreement as forming part of the ma­trix contract, the law governing the latter, ascertained by objective connecting
factors including those under any protective rules for the presumptively weaker
parties, would in and of itself constitute the governing law of the arbitration (orjurisdiction) agreement. This conclusion is subject to the possibility of volun­tary and involuntary depegage. In practice, it is unlikely for the parties to resort
to voluntary depegage by means of either an express or implied choice. This isbecause, as noted earlier, they rarely address their minds to the law governing an
arbitration (or jurisdiction) agreement when they conclude the matrix contract.
As noted earlier in a different context, the court should only be allowed to resort
to involuntary depegage where the applicable choice of law rules contain a clear
and specific provision for an arbitration (or jurisdiction) agreement.

4. Observation
The above illustration has revealed some drawbacks of the approach of treating ar­bitration and jurisdiction agreements as a distinct contract severed from the matrix
contract. That approach makes it necessary to tackle the difficult question of what theobjective connecting factors should be for determining the governing law of these
agreements. That approach is also not helpful for presumptively weaker parties as it
does not allow them to rely on the law specified by the protective choice of law rules
in challenging the arbitration and jurisdiction agreements. The preferred approachof rejecting severance excels in simplicity while, combined with the possibility of vol­untary depegage, allowing for necessary flexibility. It is also conducive to appropriate
results, including the protection of presumptively weaker parties. These advantages
offer further support to the preferred approach along with its theoretical underpin­nings examined in an earlier Section (Section D).

H. Analysis of English Cases on Arbitration
Agreements
In this Section, we will examine some English cases on the law applicable to arbitrationagreements to see which approach—the preferred approach or the rival approach—isfavoured. The English authorities contain a number of irreconcilable decisions andstatements.
Although the Supreme Court’s decision is expected shortly, the most recent
ruling at the time of writing is the Court of Appeal’s decision in Enka.76 Writing
76 Enka (CA) (n 47). The Supreme Court delivered its ruling in the case on 9 October 2020 (see thepostscript in Section K below).

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163

for the court, Popplewell LJ held that the governing law of the matrix contract
was generally not applicable to the arbitration agreement contained therein. His
Lordship relied on the principle of severability to insulate the arbitration agree­
ment for choice of law purposes.77 His decision accordingly lends support to therival approach. Based on the observation that the law applicable to an arbitrationagreement is more closely connected with the curial law than with the law gov­
erning the matrix contract,78 his Lordship asked rhetorically, where the parties
have chosen ‘the curial law of the arbitration agreement’, why the governing lawof the matrix contract should have anything to say about ‘the closely related aspectof the very same arbitration agreement’.79 But the expression ‘the curial law of thearbitration agreement’ strikes one as odd. The curial law of arbitration means thelaw applicable to arbitral proceedings, which may hardly be described as a closely
related aspect of an arbitration agreement. His Lordship considered that there wasan overlap between the curial law and the law applicable to arbitration agreements
in terms of their scope. In his reasoning, ‘the scope of the curial law is not limited tothe exercise of purely procedural powers’ but ‘involves the curial court determining
aspects of the substantive rights of the parties under their arbitration agreement byreference to the curial law’.80 Though it is certainly true that the curial law affects
the right to pursue arbitration in many ways, this reasoning merely confirms thatthe curial law is applicable not only to the tribunal’s conduct but also to the na­
tional court’s supervision, support, and control of arbitral proceedings. It does notseem to entail that there is an overlap of the scope of the curial law with that of thelaw applicable to arbitration agreements. It should also be noted that his Lordship’s
reasoning appears to presuppose that an implied choice of law may be made on a
fictional basis. This is indicated by his statement that ‘there is a strong presump­tion that the parties have impliedly chosen the curial law’ as the law applicable toarbitration agreements and that this presumption could only be displaced ‘where
there are powerful countervailing factors’.81 Such a presumption would be unten­
able if we take the position that an implied choice of law may only be ascertainedby eliciting an actual intention rather than by imputing a fictional intention. As wehave seen in Section G.l, confounding an implied choice with a fictional choice isdifficult to defend in principle.
Prior to Enka, the leading English case was Sulamtrica CIA Nacional De Seguros
SA v Enesa Engenharia SA.82 In this case, Moore-Bick LJ acknowledged that theconcept of severability did not insulate an arbitration agreement from the matrix
contract for all purposes. Yet, for the purpose of ascertaining the governing law of77 Ibid [92] and [94].
78 Ibid [99].
79 Ibid [94].
80 Ibid [96].
81 Ibid [105]. See also [100],
82 [2012] EWCA Civ638, [2013] 1 WLR102 [26]-[32].

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PUTTING THE PRINCIPLE OF SEVERABILITY IN THE DOCKan arbitration agreement, his Lordship effectively treated the agreement as being
severed from the matrix contract. This is indicated by his apparent acceptance of
the appellants’ concession that the express choice of law for the matrix contract
did not amount to an express choice of law for the arbitration agreement.83 His
Lordship proceeded, after finding that the parties had made no choice of law for
the arbitration agreement, to consider the law with which the agreement had theclosest and most real connection.84 Had the arbitration agreement been treated as
forming part of the matrix contract, it would not have been necessary to do so; itshould rather have been sufficient to say that the arbitration agreement was subject
to the law chosen for the matrix contract. It was in a narrower context of ascer­
taining an implied choice of law for the arbitration agreement that his Lordshiprefused to insulate the arbitration agreement from the matrix contract. He took‘the assumption that, in the absence of any indication to the contrary, the par­ties intended the whole of their relationship to be governed by the same systemof law’.85 Taken as a whole, the choice of law approach followed by this decision
may be described as a half-hearted rejection of the principle of severability (or alukewarm embracement of it, if viewed from the opposite end). The result is a lackof clarity: whether the said assumption ‘the parties intended the whole of their re­lationship to be governed by the same system of law’ may be maintained is notclear where the parties made no choice of law for the matrix contract or where they
made a choice only impliedly.
In C v D,86 a case which predated Sulamerica, Longmore LJ took an unwavering
stance in favour of treating an arbitration agreement as severed from the matrix
contract. His Lordship held in obiter that ‘ [i] t is necessary to distinguish between
the proper law of the underlying insurance contract... and the arbitration agree­
ment which is ... a separable and separate agreement’87 and that ‘an agreement toarbitrate will normally have a closer and more real connection with the place where
the parties have chosen to arbitrate than with the place of the law of the underlying
contract’.88 These remarks clearly support the rival approach. His Lordship’s dicta
was later explained by the Master of the Rolls in Sulamerica as resulting from ‘thegrowing awareness of the importance of the principle that an arbitration agree­
ment is separable from, in some ways almost juridically independent of, the under­
lying contract of which it physically is part’.89
In earlier cases, it is possible to find remarks in support of treating an arbitra­tion agreement as forming part of the matrix contract. Thus, in Sumitomo Heavy

83 Ibid [27].
84 Ibid [32].
85 Ibid [11], [26]—[27].
86 [2007] EWCA Civ 1282, [2008] 1 Lloyd’s Rep 239.
87 Ibid [22].
88 Ibid [26].
89 Ibid [55].

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Industries Ltd v Oil & Natural Gas Commission,90 Potter J stated in obiter that ‘since
the arbitration agreement is part of the substance of the underlying contract’, theproper law of the latter would ‘usually be decisive’ as to the proper law of the former‘in the absence of an express contrary choice’. This statement echoes the preferredapproach.
As surveyed, the English case law shows a growing tendency in favour of therival approach. But the signal is by no means uniform. It is hoped that in the shortly
expected decision in Enka, the Supreme Court will see the sense of taking the pre­ferred approachI. Compatibility with Existing Instruments
This section will examine the compatibility of the preferred approach, as summed
up in Section F, with existing instruments. This exercise is important since theories
incompatible with established instruments risk being consigned to irrelevance. To
this end, the following analysis will first examine the Rome I Regulation, a choiceof law instrument for contracts generally. It will then turn to major international
instruments on arbitration and jurisdiction agreements, respectively.

1. Rome I Regulation
Under the Rome I Regulation, arbitration and jurisdiction agreements are ex­
cluded from its scope of application (Art l(2)(e)). At first sight, it might bethought that the preferred approach, that is, the approach of treating these
agreements as forming part of the matrix contract, is inconsistent with theRegulation.
The Regulation follows its predecessor, the Rome Convention, which simi­
larly excluded arbitration and jurisdiction agreements from its scope of ap­
plication (Art l(2)(d)). The background to the exclusion is explained in the
Giuliano and Lagarde Report for the Convention.91 With respect to jurisdiction
agreements, the Report refers to two opposing views: the view that ‘the matterlies within the sphere of procedure’ and the view that jurisdiction agreements
should be governed by the same law as the matrix contract. With respect to ar­
bitration agreements, the Report again juxtaposes the view that ‘severability
is accepted in principle ... and the arbitration clause is independent’ with theview that ‘an arbitration agreement does not differ from other agreements as

90 [1994] 1 Lloyd’s Rep 45,57.
91 Giuliano and Lagarde Report (n 43) 11-12.

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PUTTING THE PRINCIPLE OF SEVERABILITY IN THE DOCK

regards the contractual aspects’ The Report then mentions the adoption of the
proposal that ‘this matter should be studied separately’. The exclusion of arbitra­tion and jurisdiction agreements should, accordingly, not be taken as indicating
an approval of the proposition that they should be treated as a distinct contract
severed from the matrix contract. Rather, it should be taken as leaving the matterto each Contracting State due to the failure to reach a consensus. Accordingly,
it is open for the courts of each Member State to apply to arbitration and jur­
isdiction agreements the same law that governs the matrix contract as ascer­
tained by the rules of the Rome I Regulation,92 including protective rules forpresumptively weaker parties such as those contained in Art 6. Put differently,
the Regulation determines the governing law of the matrix contract which it isopen for the courts of each State to deem also applicable to arbitration and jur­
isdiction agreements.93 The possibility of treating these agreements as forming
part of the matrix contract in this way is not precluded by their exclusion fromthe scope of application of the Regulation. It may, therefore, be concluded thatthe preferred approach of treating arbitration and jurisdiction agreements asforming part of the matrix contract is compatible with the Rome I Regulation.

2. Instruments on arbitration agreements
The New York Convention94 provides that the recognition and enforcement of
a foreign arbitral award may be refused if an arbitration agreement is not valid‘under the law to which the parties have subjected it or, failing any indication
thereon, under the law of the country where the award was made’ (Art V(l)(a)).
The UNCITRAL Model Law provides for virtually the same choice of law rules
for two contexts, namely the context of annulment as well as the context of therecognition and enforcement of awards (Arts 34(2) (a) (i)95 and 36(l)(a)(i)).
These choice of law rules should, it is suggested, be applied both by national
courts and by arbitral tribunals and irrespective of the context in which theissue arises, be it before the commencement of an arbitration, during the course

92 For the same view in relation to arbitration agreements, see Adrian Briggs, The Conflict of Laws
(4th edn, OUP 2019) 199; and in relation to jurisdiction agreements, see Francisco Garcimartin,‘Prorogation of Jurisdiction in Andrew Dickinson and Eva Lein (eds), The Brussels I Regulation Recast(OUP 2015) [9.68] (hereafter Garcimartin, ‘Prorogation of Jurisdiction’)
93 It should be noted that this is not what the English courts are actually doing. The recent cases pro­ceed on the basis that the common law choice of law rules apply to determine the law applicable to arbi­
tration agreements.
94 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards(New York, 10 June 1958) (hereafter New York Convention).
95 It refers, failing any indication on the law to which the parties have subjected the arbitration agree­
ment, to ‘the law of this State’, which in the context of annulment points to the law of the country where
the award was made (See Art 1(2)).

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167

of an arbitration, or after the conclusion of an arbitration.96 Otherwise, the same
arbitration agreement may be found valid under one law in one context and in­valid under another law in another context. This could not only make the timeand money spent in arbitral proceedings wasteful but possibly also deprive theparties of the opportunity to resolve the dispute.
The following analysis will show that the preferred choice of law approach oftreating an arbitration as forming part of the matrix contract is compatible with
the Convention and the Model Law. We will look at the two expressions from theabove-quoted choice of law rules in turn: ‘the law to which the parties have sub­jected it’ and ‘the law of the country where the award was made’. Incidentally, it will
be recalled that the principle of severability enshrined elsewhere in the Model Law(Art 16(1)) operates, as seen in an earlier section (Section C), in the sphere of sub­stantive law.

(a) ‘The law to which the parties have subjected’ the arbitration agreement
The expression ‘the law to which the parties have subjected it’ may be interpreted
in two ways.
On one reading, this expression only refers to the law chosen specifically for thearbitration agreement.97 The law chosen for the matrix contract would not, on thisreading, constitute a choice of law for the arbitration agreement. This reading is
consistent with the approach of treating an arbitration agreement as a distinct con­tract severed from the matrix contract.
On another reading, this expression refers to either the law chosen for thematrix contract98 or the law specifically chosen for the arbitration agreement.
This reading is consistent with the preferred approach of treating an arbitrationagreement as forming part of the matrix contract while accepting the possibilityof voluntary depegage. It is suggested that this reading should be supported since
it is possible to interpret the follow-up phrase ‘failing any indication thereon’, byreading it with an emphasis on ‘any’, as referring to the cases where there is ab­
solutely no indication of a choice of law, not even in the guise of a choice of law
for the matrix contract.

96 For the same view, see eg Albert Jan van den Berg, The New York Arbitration Convention of
1958: Towards a Uniform Judicial Interpretation (Kluwer Law and Taxation 1981) 126 (hereafter van den
Berg, The New York Arbitration Convention)-, and Ardavan Arzandeh and Jonathan Hill, ‘Ascertaining
the Proper Law of an Arbitration Clause Under English Law’ (2009) 5 Journal of Private International
Law 425,426 (hereafter Arzandeh and Hill, ‘Ascertaining the Proper law’).
97 See eg Hans-Viggo von Hiilsen, Die Giiltigkeit von Internationalen Schiedsvereinbarungen (JSchweitzer Verlag 1973) 100; van den Berg, The New York Arbitration Convention (n 96) 293 (It is,however, admitted that the wording of the Convention is somewhat ambiguous); and Arzandeh
and Hill, ‘Ascertaining the Proper law’ (n 96) 441; Peter Schlosser, ‘Rechtswahlvereinbarung fur den
Hauptvertrag auch giiltig fur die Schiedsvereinbarung?’ [2020] 3 IPRax 222,224.
98 See apparently, Mayer ‘The Limits of Severability’ (n 16) 267.

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PUTTING THE PRINCIPLE OF SEVERABILITY IN THE DOCK(b) ‘The law of the country where the award was made’
The expression ‘the law of the country where the award was made’ refers to the lawof the country of the arbitral seat.
If we follow the approach of treating an arbitration agreement as a distinct con­tract severed from the matrix contract, this expression would be seen as simply
specifying, by an objective connecting factor, the law applicable to an arbitrationagreement.
On the other hand, if we follow the preferred approach, that is, the approachof treating an arbitration agreement as forming part of the matrix contract while
accepting, where the parties have made no choice of law for the matrix contract,
the limited possibility of involuntary depegage for an arbitration agreement, thisexpression would be seen as permitting the court to resort to involuntary depegage.
It has been suggested earlier that the court should only be permitted to refer an ar­bitration agreement to a law different from that which governs the matrix contract
where the applicable choice of law rules permit involuntary depegage for an arbitra­tion agreement in clear and specific terms. The choice of law rules of the New York
Convention and the UNCITRAL Model Law may be considered to be doing justthat by means of this expression.
(c) Protective choice of law rules
It has been seen earlier that the preferred choice of law approach would allow
presumptively weaker parties, such as consumers, to rely on the law ascertainedby the protective choice of law rules for the matrix contract in challenging thevalidity of an arbitration agreement. Is it possible to derive this result under the
New York Convention and the UNCITRAL Model Law?
The choice of law rules of the Convention and the Model Law should be seen
as representing the lex specialis for arbitration agreements which overrides thelex generalise the general choice of law rules for contracts such as those containedin the Rome I Regulation and the common law choice of law rules. Outside thescope of the lex specialise the lex generalis is applicable. Since the Convention and
the Model Law contain no special choice of law rules designed to protect presump­tively weaker parties to a contract, the general choice of law rules for contracts areapplicable to that extent. Suppose that a consumer has concluded a contract with aprofessional trader in which an arbitration agreement is contained. If the applicablegeneral choice of law rules for contracts allow the consumer to rely on the manda­
tory rules of the law of the country where he has his habitual residence (as under
Art 6(2) of the Rome I Regulation), he may do so not only to challenge the validityof the matrix contract but also to challenge the validity of the arbitration agree­
ment because, under the preferred approach, the arbitration agreement would be
subject to the same law that applies to the matrix contract. It should, therefore, bepossible to derive, under the Convention and the Model Law, the result mentioned
in the preceding paragraph.

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169

3. Instruments on jurisdiction agreements
The Hague Choice of Court Convention grants jurisdiction to the courts of aContracting State designated in a jurisdiction agreement (Art 5(1)), requires thecourts of other Contracting States to suspend or dismiss proceedings (Art 6(a)),
and provides that a judgment given by a court of a Contracting State designatedin a jurisdiction agreement is recognised and enforced in other Contracting States(Art 8(1)). But it makes an exception where the jurisdiction agreement is null andvoid under the law of the State of the chosen court (Art 5(1), 6(a) and 9(a)), though
this exception does not apply in the context of the recognition and enforcementof a judgment where the chosen court has determined that the agreement is valid(Art 9(a)).
At first sight, the reference to the law of the State of the chosen court might beconsidered to be incompatible with the preferred approach of treating a jurisdic­
tion agreement as forming part of the matrix contract. But a closer examination
reveals that it is not. The Explanatory Report, by Professors Hartley and Dogauchi,
explains that the reference to the law of the State of the chosen court is meant to in­clude its choice of law rules." The Convention thus ensures that the same choice oflaw rules are applied to determine the law applicable to a given jurisdiction agree­
ment irrespective of the Contracting State in which the issue arises. The aim is toensure the same result among different fora. The Convention does not, however,seek to unify choice of law rules. It rather leaves each Contracting State to devise
its own rules. Consequently, it is open for the courts of each State to take the ap­
proach of treating a jurisdiction agreement as forming part of the matrix contract
for choice of law purposes. The preferred approach is, therefore, compatible with
the Convention. Incidentally, it will be recalled that the principle of severability
enshrined elsewhere in the Convention (Art 3(d)) operates, as seen in an earlier
section (Section C), in the sphere of substantive law.
The same may be said of the Recast Brussels I Regulation. The Regulation refers
the validity of a jurisdiction agreement to the law of the Member State designatedby the agreement (Art 25(1)). It explains in the Recital that the reference to thesaid law is meant to include the choice of law rules (Recital (20)). This recital was
introduced to align with the position of the Hague Choice of Court Convention.99
100
It may, therefore, be concluded that the preferred approach is compatible with theRegulation. It will be recalled, incidentally, that the principle of severability en­
shrined elsewhere in the Regulation (Art 25(5)) operates in the sphere of substan­tive law.

99 Hartley and Dogauchi, ‘Explanatory Report’ (n31) [125] and [149],
100 Garcimartin, ‘Prorogation of Jurisdiction (n 92) [9.62].

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PUTTING THE PRINCIPLE OF SEVERABILITY IN THE DOCK

J. Concluding Remarks
The discussion in this essay bears a heavy theoretical overtone but has a practicalsignificance. Take a typical scenario where the parties to a contract make a choiceof law for the contract but make no specific choice of law for an arbitration (orjurisdiction) agreement contained in it. Such scenarios raise the question whether
the arbitration (or jurisdiction) agreement is subject to the same law that governs
the matrix contract. As views are genuinely divided and the text of existing instru­
ments could accommodate both views, a principled approach to resolving thisquestion is called for.
A key to providing an answer by a principled approach is to consider whether
the principle of severability should be extended to the sphere of choice of law ana­
lysis. It is also important to reflect on the implications of depeyige, a choice of law
methodology for splitting up terms within a contract. This essay has suggested apreferred approach comprising these two major elements of consideration. It is
hoped that it will stimulate further debate in this field.

K. Postscript
After the final manuscript of this essay was submitted, the UK Supreme Court de­livered its judgment in Enka.101 The Court dismissed the appeal by a majority (3-2)
but renounced the Court of Appeal’s approach of determining the law applicable toarbitration agreements.102
There is significant common ground between the majority and the dissenting
judges in their reasoning on the latter issue. Most fundamentally, both refused to
invoke the principle of severability to treat the arbitration agreement as a distinct
contract severed from the matrix contract. Thus, the majority, led by Lord Hamblen
and Lord Leggatt (with whom Lord Kerr agreed), held that ‘the separability prin­ciple does not require that an arbitration agreement should be treated as a separate
agreement for the purpose of determining its governing law’.103 Similarly, the dis­senting judges, led by Lord Burrows (with whom Lord Sales agreed), held that the
purpose for which the principle of severability had been devised did ‘not extend
to working out the conflict of laws rules applicable to an arbitration agreement’
and that ‘in deciding on the proper law of the arbitration agreement, the arbitra­tion agreement should be regarded as part of the main contract’.104 These remarks

101 Enka Insaat Ve Sanayi AS v OOO Insurance Company Chubb [2020] UKSC 38 (hereafter Enka(SC)). The Court ofAppeal’s decision is discussed at Section H above.
102 Ibid [59]-[94].
103 Ibid [41]; also [61].
104 Ibid [233].

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171

strongly support the preferred approach suggested by this essay.105 A common
ground also exists between the majority and the dissent in their basic acceptanceof the possibility of depe^e,106 a position which again accords with the preferredapproach.107 Accordingly, both the majority and the dissent accept that the parties
may, if they so wish, refer an arbitration agreement to a law different from the gov­
erning law of the matrix contract.108
The majority and the dissentients differed, however, in their conclusions: themajority held that the arbitration agreement in this case was governed by the law of
the seat whereas the dissent held that it was governed by the governing law of thematrix contract. This disagreement stemmed primarily from their differing find­ings on whether the parties had made any choice of law for the matrix contract: themajority answered it in the negative but the dissentients’ construction of the con­tract led them to the opposite finding.109 Their disagreement in conclusion is also
attributable to differing perspectives on dep egage: while the dissentients stressed
the exceptional nature of it,110 the majority put a more positive gloss on it in rela­tion to arbitration agreements, noting that the difficulty which could entail fromapplying different laws to different parts of a contract would be alleviated by theprinciple of severability: in their view ‘[a]n arbitration clause may... more readily
than other clauses be governed by a different law’.111
Had the majority found, as did the dissenting judges, that the parties had madea choice of law for the matrix contract, it is clear that they would have come to thesame conclusion as the dissent, that the governing law of the matrix contract would
serve as the law applicable to the arbitration agreement.112 According to the dis­sentients, ‘it is natural, rational and realistic’ to regard the choice of law for the ma­trix contract as ‘encompassing, or carrying across to, the arbitration agreement’.113
Likewise, the majority held in obiter that a choice of law made by the parties for thematrix contract would constitute the choice of law for the arbitration agreement
both as a matter of principle114 and as a matter of interpretation of Article V(l)(a)of the New York Convention.115 The majority considered that the choice of a dif­ferent country as the seat of the arbitration would not be sufficient to displace this

105 As an aside, a jurisdiction agreement was held in obiter to be generally governed by the same law
as that governs the matrix contract by both the majority (ibid [53(v)J) and the dissentients (ibid [254]),
a view which also accords with the preferred approach.
106 For the majority’s view, see ibid [38], For the dissent’s view, see ibid [193 (iii)].
107 See Section E.l.
108 For the majority’s view, see esp Enka (SC) (n 101) [38]—[42], [170(iv)-(vi)j. For the dissentients’views, see ibid [193(iii)J, [231], [257(H)—(iv)]. See further text to nn 110-111.
109 Ibid [155] (majority) and [205] (dissent). These findings are not a point of concern of this essay.
110 Ibid [193] and [231].
111 Ibid [40]-[41].
112 Ibid [46], [53]—[54], [129], [170(iv)-(v)].
113 Ibid [228].
114 Ibid [53]—[54].
115 Ibid [129].

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PUTTING THE PRINCIPLE OF SEVERABILITY IN THE DOCK

conclusion.116 The views of both the dissenting judges and the majority are con­sistent with the suggestion of this essay that where the parties have made a choiceof law for the matrix contract, the court should not be allowed to resort to involun­tary dtyegage to refer an arbitration agreement to a different law.117
Had the dissenting judges found, as did the majority, that the parties had madeno choice of law for the matrix contract, they would still have differed with the ma­
jority in their conclusions: the majority concluded that the arbitration agreement
was governed by the law of the seat whereas the dissent would have concluded that
it was governed by the governing law of the matrix contract. Their disagreement inconclusion may be explained by their differing perspectives on depegage. The ma­
jority considered the law of the seat to be the law with which the arbitration agree­
ment was most closely connected.118 Given their rejection of the submission thatan arbitration agreement should be treated as a separate contract, this reasoning,
read in context, appears to rest on involuntary depegage. The dissenting judges, on
the other hand, held in obiter that the governing law of the matrix contract^ even
if it had not been chosen by the parties, would also govern the arbitration agree­
ment.119 They would not allow the court to resort to involuntary depegage. The
views of both the majority and the dissent—though disagreeing with each otherin conclusion—are compatible with the suggestion of this essay120 that the courts
should be allowed to resort to involuntary depegage where the parties have madeno choice of law for the matrix contract only if the applicable choice of law rules
clearly provide what specific terms are referred, separately from the remainder ofthe matrix contract, to what laws. The majority apparently saw such choice of law
rules in Article V(l)(a) of the New York Convention while the dissenting judges
did not.121 Thus, the majority prayed in aid that provision as a compelling reason
for referring an arbitration agreement to the law of the seat where the parties had
made no choice of law for the matrix contract.122 The dissent, on the other hand,
did not read the same provision as prescribing a mandatory choice of law rule sep­arately referring an arbitration agreement to the law of the seat.123
From the foregoing analysis, it would be safe to conclude that the preferred ap­
proach suggested by this essay has found substantial favour with both sides of theSupreme Court in Enka.124 The clarity of the Court’s analysis would have been

116 Ibid [46], (170(v)].
117 Section E.2.
118 Enka (SC) (n 101) esp [ 120]—[ 122] and [ 170(viii)].
119 Ibid [256] and [260] (Lord Burrows); also ibid, [288], [292] (Lord Sales).
120 Section E.2. and Section I.2.(b).
121 Compare Enka (SC) (n 101) [125]—[141] (Lords Hamblen and Leggatt) with ibid [250]—[253](Lord Burrows) and [289]-[291] (Lord Sales).
122 Ibid [125].
123 Ibid [251]—[253] and [260].
124 The Court also gave consideration to other issues falling outside the scope of this essay, including
the common law’s so called ‘validation principle’ (ibid [95]-[109] (Lords Hamblen and Leggatt), [198],[251], [257(iv)] (Lord Burrows), [266], [276]-[279], [284]-[285], [291] (Lord Sales)).

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aided if, as attempted in this essay, a clearer presentation had been made of the twotier scheme of analysis consisting, first, of the consideration whether an arbitrationagreement should, by virtue of the principle of severability, be treated as a distinct
contract severed from the matrix contract for choice of law purposes and, second,of the consideration whether an arbitration agreement should be split within thematrix contract by means of depegage. The clarity of the Court’s analysis would
also have been aided if, adopting the approach of this essay, a conscious distinction
had been drawn between voluntary and involuntary depegage with the use of these
expressions.