Memorandum

TO: The ADR Lecturer

FROM: Law Student
RE: The Heyman v Darwins Limited Case -
DATE: March 15, 2019

Question Presented
Is an arbitration clause in a contract between or among parties separate from the main contract?
Short Answer
An arbitration clause contained in a written contract does survive the termination of the contract.
Statement of Facts
Agency contract between plaintiffs and defendants whereby plaintiffs were appointed sole selling
agents for defendants’ products over wider range of territories. Notification was made by
defendants that proposed that they would retain certain commissions due to plaintiffs on the ground
that plaintiffs were acting contrary to contract terms. Plaintiffs issued writ claiming damages for
breach and for commissions due. The defendants applied to have the proceedings stayed pursuant
to Section 4 of Arbitration Act, 1889, which provides that “if any dispute shall arise between the
parties hereto in respect of this agreement or any of the provisions herein contained or anything
arising hereout the same shall be referred for arbitration in accordance with the provisions of the
Arbitration Act, 1889, or any then subsisting statutory modification thereof”. The defendants were
granted the stay in order that the issue might be dealt with under the arbitration clause.

Discussion
By treating arbitration clauses as distinct from the main contract, separability rescues many
arbitration agreements from collapsing just because they are contained in contracts the validity of
which is questioned. The case of Heyman v Darwins1 decided that while an accepted repudiation
or frustration might bring the contract to an end, in the sense of discharging the parties from further
performance of their primary obligations, it does not affect the enforceability of an arbitration

1
[1942]
clause. The House of Lords arrived at the decision by looking at the purpose of the rule that
accepted repudiation or frustration discharges the parties from further obligations and asking
whether the arbitration clause should for this purpose be regarded as imposing an obligation.

On the other hand, it certainly did. However, in the context of the repudiation or frustration rules,
there was no reason to treat the obligation to submit to arbitration as discharged, and such a
conclusion would have severely reduced the value of the clause.

The doctrine of separability was established in English law by Heyman v Darwins. By this
doctrine, an arbitration agreement contained in a written contract may survive the termination of
the contract, as the arbitration clause constitutes a separate and distinct agreement and must be
considered independently from the main contract. This concept means that the validity of the
arbitration clause is not dependent on the validity of the other part of the contract in which it is
contained. As long as the arbitration contract itself was validly entered into by the concerned
parties and couched broadly enough to cover noncontractural disputes, an arbitrator may declare a
contract invalid but still retain jurisdiction to adjudicate upon a dispute as to the consequences of
the invalidity.

The principle of separability has gained acceptance in the English courts and the landmark decision
in Harbour Assurance2 confirms that the separability of the arbitration clause is part of the
common law.

2
Harbour Assurance Co. Ltd v Kansa General International Insurance Co. Ltd [1993]
Cases

Harbour Assurance Co. Ltd v Kansa General International Insurance Co. Ltd [1993]

Heyman v Darwins Ltd [1942]