No. XIII.2.4 - Kompetenz-Kompetenz; Separability of the arbitration clause

(a) The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement ("Kompetenz-Kompetenz").

(b) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence. A party is not precluded from raising such a plea by the fact that he has appointed, or participated in the appointment of, an arbitrator.

(c) The invalidity of the main contract does not automatically extend to the arbitration clause contained therein unless it is proven that the arbitration agreement itself is vitiated by fraud, or initial lack of consent (Principle of Separability).

1 It is generally acknowledged today that an international arbitral tribunal, just like any other tribunal, is authorized to decide on its own competence once constituted. This authority is based on the principle of Kompetenz-Kompetenz. According to this principle every tribunal which is called upon to decide a dispute, immaterial of whether its authority is based on a statute (domestic court), public international law (International Court of Justice) or an agreement of the parties (arbitral tribunal), is authorized to decide not only on the substantive questions presented to it but also on the preliminary issue of its own competence as the conditio sine qua non of its decision-making.

2 The application of the principle of Kompetenz-Kompetenz in international arbitration means that the arbitrators must have the authority to rule on the validity of the arbitration agreement from which they derive their authority to decide the dispute. It is neither illogical nor unlawful if a tribunal ultimately decides that the arbitration agreement on which its decision-making power is based is invalid. Rather, this result is a natural consequence of the strict application of the general principle of Kompetenz-Kompetenz in international commercial arbitration.

3 If the arbitral tribunal thinks that the contract which contains the arbitration clause is invalid, it can still rule on its own jurisdiction and has the authority to confirm or reject its competence to decide the dispute under the invalid contract. This follows from the notion of the ‘separability’ of the arbitration agreement from the main contract. Art. 16 (1) UNCITRAL Model Law expresses this principle in clear words and 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. The decision by the arbitral tribunal that the contract is null and void shall not entail ipso iure the invalidity of the arbitration clause’. This principle is also manifested in Sec. 1040 (1) German Arbitration Act, which is based on Art. 16 (1) UNCITRAL Model Law. Any challenge to the main agreement does not affect the arbitration agreement: the tribunal can still decide on the validity of the main contract. The doctrine of separability thus further strengthens the jurisdiction of the arbitrators

4 An exception to subsection (c) applies when the main contract is void ab initio, e.g. due to missing public permission, exertion of coercive powers or lack of authority to represent. It must be clear in such cases that there has never existed a valid contract between the parties.

Please cite as: "Commentary to Trans-Lex Principle ,"
Arbitral Awards
Ad Hoc-Award of January 14, 1982, Elf Aquitaine Iran (France) v. National Iranian Oil Company, YCA 1986, at 97, 102 et seq.
ICC Award No. 12290, Collection of ICC Arbitral Awards 2008-2011, at Page 831 et seq.
ICC Award No. 13774, YCA 2014, at page 141 et seq.
ICC Award No. 14470, Collection of ICC Arbitral Awards 2008-2011, at page 945 et seq.
ICC Award No. 5485, YCA 1989, at 156 et seq.
ICC Award No. 5943, Clunet 1996, at 1014 et seq.
Interim Award in ICC case No. 7929 of 1995, YCA 2000, p. 312
LIAMCO v. The Government of the Libyan Arab Republic, YCA 1981, at 89 et seq.
Arbitration Rules
Australian Centre for International Commercial Arbitration (ACICA) Arbitration Rules
Swiss Rules of International Arbitration 2006
UNCITRAL Arbitration Rules 1976
UNCITRAL Arbitration Rules 2010 (revised)
Court Decisions
BGE 59 I, 177
BGE 88 I, 105
BGHZ 53, 315
Buckeye Check Cashing v Cardegna, YCA 2006, 326 et seq. 
Fung Sang Trading Ltd. v. Kai Sun Sea Products & Food Co. Ltd., Supreme Court of Hong Kong, High Court, YCA 1992, at 289 et seq.
Harbour Assurance Co. Ltd. V. Kansa General International Insurance Co. Ltd., [1992] 1 Lloyd's L.Rep. 81
Harbour Assurance Co. Ltd. v. Kansa General International Insurance Co. Ltd., [1993] 1 Lloyd's Rep. 455
Paul Smith Ltd. v. H & S International Holding Co. Inc., [1991] 2 Lloyd‘s L.Rep., 127
Berger, Klaus Peter, International Economic Arbitration, Deventer, Boston 1993
Bishop, R. Doak, International Arbitration of Petroleum Disputes: The Development of a Lex Petrolea, YCA 1998, at 1131 et seq.
Delaume, Georges, Law And Practice of Transnational Contracts, New York, London, Rome 1988
Hascher, Dominique, note to ICC Award No.5943, Clunet 1996, at 1017 et seq.
Loquin, La réalité des usages du commerce international, RIDéco 1989, at 163 et seq.
Schlosser, Peter, Das Recht der internationalen privaten Schiedsgerichtsbarkeit, 2nd ed., Tübingen 1989
International Legislation
Convention on the Settlement of Investment Disputes between States and Nationals of other States (ICSID Convention)
UNCITRAL Model Law on International Commercial Arbitration
Model Laws
UNCITRAL Model Law on International Commercial Arbitration with Amendments, 2006
National Legislation
Austrian Arbiration Law 2006
Dutch Code of Civil Procedure
English Arbitration Act 1996
IPRG - Swiss International Private Law (Swiss PIL)
Scottish Arbitration Bill 2009
US Uniform Arbitration Act 2000
Zivilprozessordnung - German Code of Civil Procedure
TransLex Principle
Contract Clauses
1. Separability of Arbitration Clause
Pledge Agreement
Applicable Law and Dispute Resolution
The Parties shall strive to settle any dispute arising from the interpretation or performance through friendly consultation. In case no settlement can be reached through consultation, each Party can submit such matter to China International Economic and Trade Arbitration Commission ("CIETAC") for arbitration. The arbitration shall follow the then current rules of CIETAC, and the arbitration proceedings shall be conducted in Chinese and shall take place in Beijing. The arbitration award shall be final and binding upon the Parties. This article shall not be affected by the termination or elimination of this Agreement.
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