What a Contract Has Joined Together Let No Court Cast Asunder: Abolishing Separability and Codifying the Scope of the Provisions of Arbitration Agreements

Abstract

The doctrine of separability states that a contract containing an arbitration agreement is “separable” from the arbitration agreement such that the arbitration agreement is enforceable even if terms of the “container” contract would otherwise make the entire contract unenforceable. However, the federal circuits are split on how to apply this doctrine when terms of the arbitration agreement itself are unenforceable. Circuits that follow the Severance Approach sever unenforceable provisions from arbitration agreements and enforce the remainder of the arbitration agreement. Circuits that follow the Stand or Fall Together Approach void arbitration agreements with unenforceable provisions and enforce the container contract without the arbitration agreement.

This article argues that Congress should abolish the separability doctrine and amend the Federal Arbitration Act to render specific types of arbitration agreement provisions as void ab initio. Codifying certain types of provisions as void ab initio would make those types of provisions unenforceable as a matter of law. This proposal would reduce litigation over unenforceable provisions, create easily applicable rules for drafting arbitration agreements, settle expectations, and allow parties to a contract to utilize all contract defenses.