ADR Reviewer

NOTES ON ALTERNATIVE DISPUTE RESOLUTION Kenneth & King Hizon (3A)

_____________________________________________

UNIVERSITY OF SANTO TOMAS Faculty of Civil Law A.Y. 2012-2013 First Semester

ALTERNATIVE DISPUTE RESOLUTION

Republic Act No. 9285 AN ACT TO INSTITUTIONALIZE THE USE OF AN ALTERNATIVE DISPUTE RESOLUTION SYSTEM IN THE PHILIPPINES AND TO ESTABLISH THE OFFICE FOR ALTERNATIVE DISPUTE RESOLUTION, AND FOR OTHER PURPOSES STRATE POLICY Q: What is the policy of the State in ADR? A: It is hereby declared the policy of the State to actively promote party autonomy in the resolution of disputes or the freedom of the party to make their own arrangements to resolve their disputes. Towards this end, the State shall encourage and actively promote the use of Alternative Dispute Resolution (ADR) as an important means to achieve speedy and impartial justice and declog court dockets.

Q: What if the parties into a contract stipulating therein that in the event of dispute arising from the same contract, they are going to refer the case to the RTC of Manila. Are they proper subjects of ADR? A: No. The dispute to be covered by the ADR must be resolved by an impartial third party who is neither a judge nor an agent of the government. If it is the court that resolves the dispute, such resolution is excluded in the ADR. Q: A and B entered into an agreement that in the event of dispute, they will resolve the controversy through arbitration. There was a breach of contract. Suppose the parties invoked their agreement, what will the court do? A:

Q: What is the Constitutional basis of ADR?

1. 2.

A:

3. ARTICLE XIII LABOR

The Court shall suspend the proceedings The court shall direct the parties to go to ADR on the basis of their contract or agreement After the proceedings in the ADR and after rendering of award, the arbitrator shall not refer the award to the court for the parties to comply

Q: What is the nature of proceedings under ADR? Section 3. XXX The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace.

NOTE: The employers and employees are encouraged to go ADR under the Constitution for the purpose of obtaining industrial peace. Q: What is the legal basis of ADR? Give the Civil Code provision. A: Art. 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. (1255a)

A: All proceedings under special proceedings. DEFINITION OF TERMS AND CONCEPTS Q: What is Alternative Dispute Resolution (ADR)? A: It means any process or procedure used to resolve a dispute or controversy, other than by adjudication of a presiding judge of a court or an officer of a government agency in which a neutral third party participates to assist in the resolution of issues, which includes arbitration, mediation, conciliation, early neutral evaluation, mini-trial, or any combination thereof. Q: Who is an ADR provider?

Facultad de Derecho Civil

1

UNIVERSITY OF SANTO TOMAS


A: It means institutions or persons accredited as mediator, conciliator, arbitrator, neutral evaluator, or any person exercising similar functions in any Alternative Dispute Resolution system.

_____________________________________________

A: Any information, relative to the subject of mediation or arbitration, expressly intended by the source not to be disclosed, or obtained under circumstances that would create a reasonable expectation on behalf of the source that the information shall not be disclosed.

NOTE: The parties are given the right to chose non-accredited individuals to act as mediator, conciliator, arbitrator, or neutral evaluator of their dispute.

Q: What is information?”

Q: Who is an ADR Practitioner?

A: It shall include:

A: It shall refer to individuals acting as mediator, conciliator, arbitrator or neutral evaluator.

in

the

phrase

“confidential

(1) communication, oral or written, made in a dispute resolution proceedings, including any memoranda, notes or work product of the neutral party or nonparty participant; (2) an oral or written statement made or which occurs during mediation or for purposes of considering, conducting, participating, initiating, continuing of reconvening mediation or retaining a mediator; and (3) Pleadings, motions manifestations, witness statements, reports filed or submitted in an arbitration or for expert evaluation.

Q: In what ways, ADR is implemented? A: 1. 2. 3. 4.

included

Arbitration Mediation or conciliation Mini-trial Early Neutral Evaluation

Q: What is arbitration? Q: What is Court-Annexed Mediation? A: Arbitration means a voluntary dispute resolution process in which one or more arbitrators, appointed in accordance with the agreement of the parties, or rules promulgated pursuant to ADR Act of 2004, resolve a dispute by rendering an award.

A: It means any mediation process conducted under the auspices of the court, after such court has acquired jurisdiction of the dispute. Q: What are the purposes of a court-annexed mediation?

Q: Who determines/chooses the particular way to be utilized in resolving a dispute through the ADR? A: The parties can implement the kind of dispute resolution that they would like to avail of.

A: 1. 2. 3. 4.

To unclog the docket of the court To shorten the proceedings To help in the evaluation of elements To bring the parties into a settlement

Q: Who is an arbitrator? Illustration: A: Arbitrator means the person appointed to render an award, alone or with others, in a dispute that is the subject of an arbitration agreement. Q: What is an award? A: It means any partial or final decision by an arbitrator in resolving the issue in a controversy. Q: When is arbitration considered as commercial? A: An arbitration is "commercial” if it covers matter arising from all relationships of a commercial nature, whether contractual or not.

Q: There is a court proceeding between A and B with regard the accounting claim of A to B. Can the court direct the parties to go to ADR in order to determine whether or not the particular amount being claimed by A is correct? A: In such case, the court may refer the parties. Since the court will have to determine the actual amount which the parties owe to each other, the court can direct the parties to go to mediation to an annex court. The judge in such case will be the judge of an annex court who is not the same judge with whom the case was first filed. The 2 courts in such case belongs to the same category or equal level. Q: What is Court-Referred Mediation?

Q: Give the rule as regards the confidentiality of information with regard to arbitration or mediation.

A: It means mediation ordered by a court to be conducted in accordance with the Agreement of the Parties when as


2



action is prematurely commenced in violation of such agreement.

_____________________________________________

A: (a) labor disputes covered by Presidential Decree No. 442, otherwise known as the Labor Code of the Philippines, as amended and its Implementing Rules and Regulations; (b) the civil status of persons; (c) the validity of a marriage; (d) any ground for legal separation; (e) the jurisdiction of courts; (f) future legitime; (g) criminal liability; and (h) those which by law cannot be compromised. (i) Adoption (added by Atty. Palacios)

Q: What is Early Neutral Evaluation? A: It means an ADR process wherein parties and their lawyers are brought together in an early in a pre-trial phase to present summaries of their cases and receive a nonbinding assessment by an experienced, neutral person, with expertise in the subject in the substance of the dispute. Q: What is Mediation? A: It means a voluntary process in which a mediator, selected by the disputing parties, facilitates communication and negotiation, and assist the parties in reaching a voluntary agreement regarding a dispute.

MEDIATION

Q: Who is a Mediator?

CONDIDENTIALITY OF INFORMATION

A: It means a person who conducts mediation. Q: What is Mini-Trial? A: It means a structured dispute resolution method in which the merits of a case are argued before a panel comprising senior decision makers with or without the presence of a neutral third person after which the parties seek a negotiated settlement.

Information obtained through mediation shall be privileged and confidential. A party, a mediator, or a nonparty participant may refuse to disclose and may prevent any other person from disclosing a mediation communication. GENERAL RULE (Section 9) Information obtained through mediation proceedings shall be subject to the following principles and guidelines:

Q: What is the difference between mini-trial and early neutral evaluation?

(a) Information obtained through mediation shall be privileged and confidential. (b) A party, a mediator, or a nonparty participant may refuse to disclose and may prevent any other person from disclosing a mediation communication.

A: MINI-TRIAL There is a decision and from that decision the parties are compelled to go a mediated agreement. It will result in the termination of the mediation, hence, binding.

EARLY NEUTRAL EVALUATION The resolution is merely an advice; the parties may take such resolution or not, hence, not binding

Q: May the modes of discovery under the rules of court be availed of to obtain information disclosed in mediation proceedings? A: (c) Confidential Information shall not be subject to discovery and shall be inadmissible if any adversarial proceeding, whether judicial or quasijudicial, However, evidence or information that is otherwise admissible or subject to discovery does not become inadmissible or protected from discovery solely by reason of its use in a mediation.

Q: Who is a non-party participant? A: It means a person other than a party or mediator, who participates in a mediation proceeding as a witness, resource person or expert. EXCEPTION TO THE APPLICATION OF THE ADR LAW Q: What are the cases not covered by ADR? A: The following cases are not covered by ADR?

Q: Who are the parties covered by the confidentiality rule? A: (d) In such an adversarial proceeding, the following persons involved or previously involved in a


3



mediation may not be compelled to disclose confidential information obtained during mediation: (1) (2) (3) (4) (5)

the parties to the dispute; the mediator or mediators; the counsel for the parties; the nonparty participants; any persons hired or engaged in connection with the mediation as secretary, stenographer, clerk or assistant; and (6) any other person who obtains or possesses confidential information by reason of his/her profession. Q: There is an on-going mediation proceedings, as a consequence of that proceedings, a party filed a case in court which involve the same issue, same parties that is the subject of mediation. Then the parties subpoenaed the mediator as a witness to testify about the mediation proceedings, can the mediator testify?

_____________________________________________

presentation of evidence that is privileged. Suppose the court did not sustain the objection, and allow the mediator to continue his testimony, what will be the aggrieved party’s recourse? A: The court may allow the party the right to respond and repudiate whatever testimony that was given by the mediator (right to rebut or counter-testimony). He may also file an action for damages. EXCEPTIONS (a) There is no privilege against disclosure under Section 9 if mediation communication is: a. b.

c. A: No d. Q: Can the mediator voluntarily testify? A: No, because such situation will violate the rules on confidentiality

e.

Q: Can this privilege arising from the confidentiality of information in mediation proceedings be waived? A: Yes. A privilege arising from the confidentiality of information may be waived in a record, or orally during a proceeding by the mediator and the mediation parties. A privilege arising from the confidentiality of information may likewise be waived by a nonparty participant if the information is provided by such nonparty participant.

XPN to the XPN: This exception does not apply where a child protection matter is referred to mediation by a court or a public agency participates in the child protection mediation; f.

Q: What is the consequence of disclosure of such confidential information by the parties covered by the rule? g. A: A person who discloses confidential information shall be precluded from asserting the privilege to bar disclosure of the rest of the information necessary to a complete understanding of the previously disclosed information. If a person suffers loss or damages in a judicial proceeding against the person who made the disclosure. A person who discloses or makes a representation about a mediation is precluded from asserting the privilege to the extent that the communication prejudices another person in the proceeding and it is necessary for the person prejudiced to respond to the representation of disclosure. Q: The rule is that if a party has been prejudiced in that situation, the recourse will be an objection as to the

in an agreement evidenced by a record authenticated by all parties to the agreement; available to the public or that is made during a session of a mediation which is open, or is required by law to be open, to the public; a threat or statement of a plan to inflict bodily injury or commit a crime of violence; internationally used to plan a crime, attempt to commit, or commit a crime, or conceal an ongoing crime or criminal activity; sought or offered to prove or disprove abuse, neglect, abandonment, or exploitation in a proceeding in which a public agency is protecting the interest of an individual protected by law;

sought or offered to prove or disprove a claim or complaint of professional misconduct or malpractice filed against mediator in a proceeding; or sought or offered to prove or disprove a claim of complaint of professional misconduct of malpractice filed against a party, nonparty participant, or representative of a party based on conduct occurring during a mediation.

(b) There is no privilege if a court or administrative agency, finds, after a hearing in camera, that the party seeking discovery of the proponent of the evidence has shown that the evidence is not otherwise available, that there is a need for the evidence that substantially outweighs the interest in protecting confidentiality, and the mediation communication is sought or offered in: a.

a court proceeding involving a crime or felony; or


4



b.

a proceeding to prove a claim or defense that under the law is sufficient to reform or avoid a liability on a contract arising out of the mediation.

NOTE: A mediator may not be compelled to provide evidence of a mediation communication or testify in such proceeding. CONFLICT OF INTEREST Mediator's Disclosure and Conflict of Interest Q: What is the obligation of the Mediator before accepting a mediation? A: Before accepting a mediation, an individual who is requested to serve as a mediator shall: 1)

2)

make an inquiry that is reasonable under the circumstances to determinate whether there are any known facts that a reasonable individual would consider likely to affect the impartiality of the mediator, including a financial or personal interest in the outcome of the mediation and any existing or past relationship with a party or foreseeable participant in the mediation; and disclosure to the mediation parties any such fact known or learned as soon as is practical before accepting a mediation.

Q: Can the mediator be asked to disclose his/her qualifications? A: Yes. At the request of a mediation party, an individual who is requested to serve as mediator shall disclose his/her qualifications to mediate a dispute. Q: Suppose that the proposed mediator did not disclose any of the matters that he is supposed to disclose, and as a consequence of that, he was appointed as a mediator, immediately the parties knew such failure to disclose in the middle of the mediation proceedings, what can the party do? A: The party can remove the mediator and substitute another one. Failure of the party to remove the mediator means there is a waiver. Q: Can the parties ask the mediator to establish his qualification? A: At the request of a mediation party, an individual who is requested to serve as mediator shall disclose his/her qualifications to mediate a dispute.

_____________________________________________

A: The parties on their agreement. NOTE: The law does not require that a mediator shall have special qualifications by background or profession unless the special qualifications of a mediator are required in the mediation agreement or by the mediation parties. PARTICIPATION OF A LAWYER IN MEDIATION Q: May a party ask the assistance of a lawyer in mediation proceedings? A: Yes. A party may designate a lawyer or any other person to provide assistance in the mediation. Q: May a party be legally represented by a foreign lawyer in mediation proceedings? A: (Please refer to International Commercial Arbitration regarding legal representation by a party) PLACE OF MEDIATION Q: Where should the Mediation be held? A: The parties are free to agree on the place of mediation. Failing such agreement, the place of mediation shall be any place convenient and appropriate to all parties. ENFORCEMENT OF MEDIATED SETTLEMENT AGREEMENT Q: How is a mediated settlement agreement prepared? A: A settlement agreement following successful mediation shall be prepared by the parties with the assistance of their respective counsel, if any, and by the mediator. Q: Who are required to sign the agreement? A: The parties and their respective counsels, if any, shall sign the settlement agreement. The mediator shall certify that he/she explained the contents of the settlement agreement to the parties in a language known to them. Deposit of the Settlement Agreement Q: Where should the settlement be deposited? A: If the parties so desire, they may deposit such settlement agreement with the appropriate Clerk of a Regional Trial Court of the place where one of the parties resides. Q: How should the agreement be enforced?

Q: Who should determine the qualifications of the mediator?


5



A: Where there is a need to enforce the settlement agreement, a petition may be filed by any of the parties with the same court, in which case, the court shall proceed summarily to hear the petition, in accordance with such rules of procedure as may be promulgated by the Supreme Court. Settlement agreement to be treated as an arbitral award and the mediator acting as arbitrator Q: Can the settlement agreement be treated as an arbitral award? How? A: The parties may agree in the settlement agreement that the mediator shall become a sole arbitrator for the dispute and shall treat the settlement agreement as an arbitral award which shall be subject to enforcement under Republic Act No. 876, otherwise known as the Arbitration Law.

ARBITRATION

_____________________________________________

MEDIATION

ARBITRATION As to function Does not render an award The arbitrator acts as an outbut only arranges the facts to of-court judge and settles the be negotiated so that the dispute extra-judicially. parties can come to a He makes a determination of compromise agreement. the facts to resolve a dispute He assists the parties in independently of the actual reaching a mutually result desired by the parties. agreeable settlement of their dispute through direct negotiations. As to resolution There is only mediation There is an arbitral award settlement. As a rule a mediator cannot make an award but the mediation settlement can be an award provided that it is reduced into writing signed by the parties and their counsel and the mediator.

Q: What are the elements of arbitration? A: The elements or arbitration are: a. The parties have mutually agreed to submit their dispute to selected persons whose determination is to be accepted as a substitute for the judgment of a court; b. There is an actual dispute or matter in controversy; and c. The dispute or matter in controversy is capable of being referred to arbitration. Q: How may the consent of the parties to arbitrate their dispute be expressed? A: The parties may SUBMIT to arbitration any controversy existing between them at the time of the submission and which may be the subject of an action. Also, the parties to any contract may in such CONTRACT agree to settle by arbitration a controversy thereafter arising between them. Q: Distinguish an arbitrator from a mediator.

Failure to comply with such mediation settlement will give the right to the parties to go to court for the enforcement of that mediation settlement. Appointment of ADR Practitioners Appointed by the court Appointed by the parties if there is an agreement that only one arbitrator shall settle their dispute. But in case where the parties agrees to appoint each arbitrator of their own choice, then the 2 appointed arbitrator will appoint a 3rd arbitrator As to number of ADR practitioners Only 1 1-3 arbitrators As to intervention of court There is no need for There is a need for the court confirmation of court to confirm the arbitral award

A: An arbitrator acts as an out of court judge and settles disputes extra-judicially. A mediator does not render an award but only arranges the facts to be negotiated so parties can come to a compromise agreement. Q: Distinguish arbitration from mediation. A:


6



_____________________________________________

INTERNATIONAL COMMERCIAL ARBITRATION Adoption of the Model Law on International Commercial Arbitration

any other quasi-judicial body whether or not such appearance is in relation to the arbitration in which he appears.

Q: What is the governing law with regard to International Commercial Arbitration?

CONFIDENTIALITY OF ARBITRATION PROCEEDINGS (Applicable also in Domestic Arbitration)

A: International commercial arbitration shall be governed by the Model Law on International Commercial Arbitration (the "Model Law") adopted by the United Nations Commission on International Trade Law on June 21, 1985.

Q: What is covered by the confidentiality rule in arbitration proceedings? May the records of arbitration proceedings be published? A:

COMMERCIAL ARBITRATION Q: When is an arbitration considered as commercial?

GR: The arbitration proceedings, including the records, evidence and the arbitral award, shall be considered confidential and shall not be published.

A: An arbitration is "commercial" if it covers matters arising from all relationships of a commercial nature, whether contractual or not.

XPN: (1) with the consent of the parties, or (2) for the limited purpose of disclosing to the court of relevant documents in cases where resort to the court is allowed herein.

Q: What are the matters or transactions considered as commercial? A: Relationships of a transactions include: a.

any trade transaction for the supply or exchange of goods or services; b. distribution agreements; c. construction of works; d. commercial representation or agency; e. factoring; f. leasing, consulting; g. engineering; h. licensing; i. investment; j. financing; k. banking; l. insurance; m. joint venture and other forms of industrial or business cooperation; n. carriage of goods or passengers by air, sea, rail or road. LEGAL REPRESENTATION IN INTERNATIONAL ARBITRATION (Applicable also in Domestic Arbitration)

Q: Can the court in which the action or the appeal is pending issue a protective order or prohibit disclosure or information? A: Yes. The court in which the action or the appeal is pending may issue a protective order to prevent or prohibit disclosure of documents or information containing secret processes, developments, research and other information where it is shown that the applicant shall be materially prejudiced by an authorized disclosure thereof. REFERRAL TO ARBITRATION (Applicable also in Domestic Arbitration) Q: When should the court refer the parties to arbitration? A: A court before which an action is brought in a matter which is the subject matter of an arbitration agreement shall: a. b.

Q: Give the rule with regard to the representation of a party in international (as well as in mediation and domestic) arbitration? May an alien represent a party in international arbitration conducted in the Philippines? A: Yes. In international arbitration conducted in the Philippines, a party may be presented by any person of his choice. Provided, that such representative, unless admitted to the practice of law in the Philippines, shall not be authorized to appear as counsel in any Philippine court, or

If at least one party so requests not later that the pre-trial conference; or Upon the request of both parties thereafter

refer the parties to arbitration unless it finds that the arbitration agreement is: a. b. c.

null and void; inoperative; or incapable of being performed

Q: May the courts dismiss the action for arbitration motu proprio?


7



A: Yes, as a general rule, a court before which an action is brought in a matter which si the subject of an arbitration agreement shall, if a party so requests, refer the parties to arbitration. However, courts may dismiss an action for arbitration motu proprio if it finds that the arbitration agreement is null and voud, inoperative or incapable of being performed. CONSTITUTION OF THE ARBITRAL TRIBUNAL Q: When is the arbitral tribunal deemed constituted? A: The arbitral tribunal is deemed constituted when the sole arbitrator or the third arbitrator who has been nominated, has accepted the nomination and written communication of said nomination and acceptance has been received by the party making request. GRANT OF INTERIM MEASURE OF PROTECTION (Applicable also in Domestic Arbitration) Q: May the parties request for interim measure of protection in arbitral proceedings? Where should the request for interim measure of protection be made? A: It is not incompatible with an arbitration agreement for a party to request: a.

b.

Before constitution of the tribunal, from a Court an interim measure of protection and for the Court to grant such measure. After constitution of the arbitral tribunal and during arbitral proceedings, a request for an interim measure of protection or modification thereof, may be made with the arbitral tribunal or to the extent that the arbitral tribunal has no power to act or is unable to act effectively, the request may be made with the Court.

Q: In what instances may an interim measure of protection be allowed? A: An interim measure of protection may be granted if necessary: i. ii. iii. iv.

to prevent irreparable loss or injury: to provide security for the performance of any obligation; to produce or preserve any evidence; or to compel any other appropriate act or omission.

Q: How should the application for interim or provisional relief be made? What is the form of such application?

_____________________________________________

A: Interim or provisional relief is requested by written application transmitted by reasonable means to the Court or arbitral tribunal as the case may be. Q: What should be stated in the application? A: It shall state the following facts: a. b. c. d. e.

the party against whom the relief is sought; describing in appropriate detail the precise relief; the party against whom the relief is requested; the grounds for the relief; and evidence supporting the request.

NOTE: The order shall be binding upon the parties. Q: What is the effect if a party does not comply with the order for interim or provisional relief? A: A party who does not comply with the order shall be liable for all damages resulting from noncompliance, including all expenses, and reasonable attorney's fees, paid in obtaining the order's judicial enforcement. Q: What are the interim measures of protection available to the parties in an arbitration proceeding? A: Such interim measures may include but shall not be limited to: a. b. c.

preliminary injuction directed against a party; appointment of receivers or detention; preservation, inspection of property that is the subject of the dispute in arbitration. PLACE OF ARBITRATION

Q: Where should the arbitration be conducted? A: The parties are free to agree on the place of arbitration. Failing such agreement: a. The place of arbitration shall be in Metro Manila, unless the arbitral tribunal, having regard to the circumstances of the case, including the convenience of the parties shall decide on a different place of arbitration. b. The arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts, or the parties, or for inspection of goods, other property or documents. LANGUAGE OF THE ARBITRATION Q: What is the language to be used in arbitration proceedings?


8



_____________________________________________

e. A: The parties are free to agree on the language or languages to be used in the arbitral proceedings. Failing such agreement: a. b.

the language to be used shall be English in international arbitration; and English or Filipino for domestic arbitration, unless the arbitral tribunal shall determine a different or another language or languages to be used in the proceedings.

This agreement or determination, unless otherwise specified therein, shall apply to any written statement by a party, any hearing and any award, decision or other communication by the arbitral tribunal. The arbitral tribunal may order that any documentary evidence shall be accompanied by a translation into the language or languages agreed upon by the parties.

DOMESTIC ARBITRATION Q: What is the law governing domestic arbitration? A: Domestic arbitration shall continue to be governed by Republic Act No. 876, otherwise known as "The Arbitration Law.

ARBITRATION OF CONSTRUCTION DISPUTES Q: What is the law governing arbitration of construction disputes? A: The arbitration of construction disputes shall be governed by Executive Order No. 1008, otherwise known as the Constitution Industry Arbitration Law. Q: What is the coverage of EO No. 1008? A: Construction disputes which fall within the original and exclusive jurisdiction of the Construction Industry Arbitration Commission (the "Commission") shall include those between or among parties to, or who are otherwise bound by, an arbitration agreement, directly or by reference whether such parties are: a. b. c. d.

project owner contractor subcontractor quantity surveyor

bondsman or issuer of an insurance policy in a construction project.

Q: May an arbitrator act as mediator and a mediator act as arbitrator? A: Yes. By written agreement of the parties to a dispute, an arbitrator may act as mediator and a mediator may act as arbitrator. The parties may also agree in writing that, following a successful mediation, the mediator shall issue the settlement agreement in the form of an arbitral award. Q: Under what instances can a foreign arbitrator or coarbitrator be appointed? A: The Construction Industry Arbitration Commission (CIAC) shall promulgate rules to allow for the appointment of a foreign arbitrator or coarbitrator or chairman of a tribunal a person who has not been previously accredited by CIAC: Provided, That: (a) the dispute is a construction dispute in which one party is an international party (b) the person to be appointed agreed to abide by the arbitration rules and policies of CIAC; (c) he/she is either coarbitrator upon the nomination of the international party; or he/she is the common choice of the two CIAC-accredited arbitrators first appointed one of whom was nominated by the international party; and (d) the foreign arbitrator shall be of different nationality from the international party. Q: What is the effect if the dispute is filed in the RTC? A: A regional trial court which a construction dispute is filed shall, upon becoming aware, not later than the pretrial conference, that the parties had entered into an arbitration to be conducted by the CIAC, unless both parties, assisted by their respective counsel, shall submit to the regional trial court a written agreement exclusive for the Court, rather than the CIAC, to resolve the dispute. Foreign Arbitral Award Not Foreign Judgment A foreign arbitral award when confirmed by a court of a foreign country, shall be recognized and enforced as a foreign arbitral award and not a judgment of a foreign court. A foreign arbitral award, when confirmed by the regional trial court, shall be enforced as a foreign arbitral award and not as a judgment of a foreign court. A foreign arbitral award, when confirmed by the regional trial court, shall be enforced in the same manner as final and executory decisions of courts of law of the Philippines.


9



_____________________________________________

thereafter clause).

Appeal from Court Decisions on Arbitral Awards A decision of the regional trial court confirming, vacating, setting aside, modifying or correcting an arbitral award may be appealed to the Court of Appeals in accordance with the rules of procedure to be promulgated by the Supreme Court. Q: Where should the recognition and enforcement of an arbitration agreement or for vacation, setting aside, correction or modification of an arbitral award should be made? A: It shall be filled with the regional trial court: (a) where arbitration proceedings are conducted; (b) where the asset to be attached or levied upon, or the act to be enjoined is located; (c) where any of the parties to the dispute resides or has his place of business; or (d) in the National Judicial Capital Region, at the option of the applicant. Q: When should the notice of proceeding to parties be made? A: In a special proceeding for recognition and enforcement of an arbitral award, the Court shall send notice to the parties at their address of record in the arbitration, or if any party cannot be served notice at such address, at such party's last known address. The notice shall be sent at least fifteen (15) days before the date set for the initial hearing of the application.

REPUBLIC ACT NO. 876 AN ACT TO AUTHORIZE THE MAKING OF ARBITRATION AND SUBMISSION AGREEMENTS, TO PROVIDE FOR THE APPOINTMENT OF ARBITRATORS AND THE PROCEDURE FOR ARBITRATION IN CIVIL CONTROVERSIES, AND FOR OTHER PURPOSES

arising

between

them

(arbitration

Q: Distinguish arbitration clause from submission clause. A: ARBITRATION CLAUSE A clause in the contract which says that in event of a future dispute between the parties, such dispute shall be submitted to arbitration. When the contract is brought to court, a party may request the court to suspend the proceedings and bring it to arbitration and the award of arbitrator would then be brought to court for recognition and execution

SUBMISSION CLAUSE It is an agreement in writing and subscribed by the parties, and entered into if they already have a present dispute and there is no arbitration clause in their contract. Such admission for arbitration is deemed a consent of the parties to the jurisdiction of the RTC of the province or city where any of the parties reside, to enforce such contract or submission.

NOTE: Such submission or contract shall be valid, enforceable and irrevocable, save upon such grounds as exist at law for the revocation of any contract. Q: What are the advantages of arbitration? A: 1.

2. 3. 4. 5. 6. 7.

The availability of experts on technical matters involved in a dispute. There is an expert determination of the questions of fact involved. Speedier process of arbitration in resolving a case Less expenses on the part of the parties Trade contracts or relationship between the parties are not ruptured by arbitration Privacy is attained in arbitration Filial or friendly atmosphere Flexibility of proceedings—arbitral proceedings are not bound by the strict rules of evidence

Persons and matters subject to arbitration Q: What is the form of arbitration agreement? Q: Under what instances may the party submit to arbitration? A: Two or more persons or parties may submit to the arbitration of one or more arbitrators: a.

b.

Any controversy existing between them at the time of the submission and which may be the subject of an action (submission clause); or The parties to any contract may in such contract agree to settle by arbitration a controversy

A: A contract to arbitrate a controversy thereafter arising between the parties, as well as a submission to arbitrate an existing controversy shall be in writing and subscribed by the party sought to be charged, or by his lawful agent. Q: How should the arbitration be instituted? A: An arbitration shall be instituted by: Submission of future controversy


10



a)

_____________________________________________

In the case of a contract to arbitrate future controversies by the service by either party upon the other of a demand for arbitration in accordance with the contract.

Submission of an existing controversy c)

Q: What should the demand set forth? A: Such demand shall be set forth: 1. 2. 3.

the nature of the controversy; the amount involved, if any; and the relief sought, together with a true copy of the contract providing for arbitration.

NOTE: The demand shall be served upon any party either in person or by registered mail. Appointment of Arbitrator Single Arbitrator In the event that the contract between the parties provides for the appointment of a single arbitrator, the demand shall be set forth a specific time within which the parties shall agree upon such arbitrator. Three arbitrators If the contract between the parties provides for the appointment of three arbitrators, one to be selected by each party, the demand shall: 1. 2.

3.

name the arbitrator appointed by the party making the demand and; shall require that the party upon whom the demand is made shall within fifteen days after receipt thereof advise in writing the party making such demand of the name of the person appointed by the second party; such notice shall require that the two arbitrators so appointed must agree upon the third arbitrator within ten days from the date of such notice.

Hearing by Court Q: In case of failure, neglect or refusal of another to comply with the said agreement, what can the aggrieved party do? A: He may petition the court for an order directing that such arbitration proceed in the manner provided for in such agreement. NOTE: Five days notice in writing of the hearing of such application shall be served either personally or by registered mail upon the party in default. If the finding be that no agreement in writing providing for arbitration was made, or that there is no default in the proceeding thereunder, the proceeding shall be dismissed. If the finding be that a written provision for arbitration was made and there is a default in proceeding thereunder, an order shall be made summarily directing the parties to proceed with the arbitration in accordance with the terms thereof. Stay of civil action Q: What is the effect to the court proceeding if any suit or proceeding is brought upon an issue arising out of an agreement providing for the arbitration thereof? A: In such case, the court in which such suit or proceeding is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration, shall stay the action or proceeding until an arbitration has been had in accordance with the terms of the agreement.

Q: If a party defaults in answering the demand, what is the remedy of the aggrieved party? A:

by the filing with the Clerk of the Court of First Instance having jurisdiction, of the submission agreement, setting forth the nature of the controversy, and the amount involved, if any. Such submission may be filed by any party and shall be duly executed by both parties.

Appointment of arbitrators Q: How should the appointment of arbitrators be made?

b) In the event that one party defaults in answering the demand, the aggrieved party may file with the Clerk of the Court of First Instance having jurisdiction over the parties, a copy of the demand for arbitration under the contract to arbitrate, with a notice that the original demand was sent by registered mail or delivered in person to the party against whom the claim is asserted.

A: 1.

in accordance with the method of naming or appointing the arbitrators/s described in the contract for arbitration or in the submission contract;


11



2.

_____________________________________________

but if no method be provided therein the Court of First Instance shall designate an arbitrator or arbitrators.

a. b. c. d.

Q: Under what circumstances can the CFI appoint an arbitrator or arbitrators? e. A: a)

If the parties to the contract or submission are unable to agree upon a single arbitrator; or b) If an arbitrator appointed by the parties is unwilling or unable to serve, and his successor has not been appointed in the manner in which he was appointed; or c) If either party to the contract fails or refuses to name his arbitrator within fifteen days after receipt of the demand for arbitration; or d) If the arbitrators appointed by each party to the contract, or appointed by one party to the contract and by the proper Court, shall fail to agree upon or to select the third arbitrator. NOTE: The court shall, in its discretion appoint one or three arbitrators, according to the importance of the controversy involved in any of the preceding cases in which the agreement is silent as to the number of arbitrators.

must be of legal age; in full-enjoyment of his civil rights; and know how to read and write. No person appointed to served as an arbitrator shall be related by blood or marriage within the sixth degree to either party to the controversy. No person shall serve as an arbitrator in any proceeding if he has or has had financial, fiduciary or other interest in the controversy or cause to be decided or in the result of the proceeding, or has any personal bias, which might prejudice the right of any party to a fair and impartial award.

NOTE: No party shall select as an arbitrator any person to act as his champion or to advocate his cause. Q: According to Dr. Palacios, what are the qualities to consider in appointing an arbitrator? A: 1. 2. 3. 4. 5.

Persuasiveness, ability to convey ideas, knowledge; Ability to fully adopt the position of his party; Ability to convince other party to accept their position; Party should be fully convinced that his arbitrator works for him/her; and Sense of equity, fairness, and justice

Q: Can the arbitrators appointed decline? How should the vacancy be filled?

Discovery of any circumstances that may disqualify the arbitrator

A: Arbitrators appointed under this section shall either accept or decline their appointments within seven days of the receipt of their appointments. In case of declination or the failure of an arbitrator or arbitrators to duly accept their appointments the parties or the court, as the case may be, shall proceed to appoint a substitute or substitutes for the arbitrator or arbitrators who decline or failed to accept his or their appointments.

If, after appointment but before or during hearing, a person appointed to serve as an arbitrator shall discover:

Appointment of additional arbitrators Where a submission or contract provides that two or more arbitrators therein designated or to be thereafter appointed by the parties, may select or appoint a person as an additional arbitrator, the selection or appointment must be in writing. Such additional arbitrator must sit with the original arbitrators upon the hearing.

a. b.

any circumstances likely to create a presumption of bias, or which he believes might disqualify him as an impartial arbitrator

the arbitrator shall immediately disclose such information to the parties. Thereafter the parties may agree in writing: a. b.

to waive the presumptive disqualifying circumstances; or to declare the office of such arbitrator vacant. Any such vacancy shall be filled in the same manner as the original appointment was made. Challenge of arbitrators

Qualifications of arbitrators Q: What are the qualifications of the arbitrators to be appointed? A: Any person appointed to serve as an arbitrator:

Q: Under what reasons may the arbitrators be challenged (vis-à-vis their qualification)? When may the appointment of the arbitrators be challenged? A: An arbitrator maybe be challenged only if circumstances exist that give rise to justifiable doubts as to his impartiality


12



or independence or if he does not possess qualifications agreed to by the parties. A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made.

_____________________________________________

a.

b.

within five days after appointment if the parties to the controversy reside within the same city or province, or within fifteen days after appointment if the parties reside in different provinces,

The arbitrators may be challenged only for the reasons mentioned above which may have arisen after the arbitration agreement or were unknown at the time of arbitration.

set a time and place for the hearing of the matters submitted to them, and must cause notice thereof to be given to each of the parties.

Q: Where should the challenge be made? Should it be with the arbitral tribunal or with the RTC?

Q: Can the hearing be postponed or adjourned?

A: The challenge shall be made before them. If they do not yield to the challenge, the challenging party may renew the challenge before the Court of First Instance of the province or city in which the challenged arbitrator, or, any of them, if there be more than one, resides. Q: What is the effect of the challenging incident to the arbitral proceedings? A: While the challenging incident is discussed before the court, the hearing or arbitration shall be suspended, and it shall be continued immediately after the court has delivered an order on the challenging incident. Q: What is the consequence of the arbitrator’s nonperformance of his functions? A: His mandate terminates. The parties may request for his termination.

A: Yes. The hearing can be postponed or adjourned by the arbitrators only by agreement of the parties; otherwise, adjournment may be ordered by the arbitrators upon their own motion only at the hearing and for good and sufficient cause. NOTE: No adjournment shall extend the hearing beyond the day fixed in the submission or contract for rendering the award, unless the time so fixed is extended by the written agreement of the parties to the submission or contract or their attorneys, or unless the parties have continued with the arbitration without objection to such adjournment. Q: What is the effect of the absence of any party to the hearing? A: The hearing may proceed in the absence of any party who, after due notice, fails to be present at such hearing or fails to obtain an adjournment thereof. Q: Can an award be made solely on default of a party?

Q: Distinguish de facto from de jure arbitrator. A: DE JURE A person who took over the arbitration proceedings as arbitrator without an express consent of the parties.

DE FACTO one who is legally appointed by the parties

If without objection by the parties, the actions of the de facto arbitrator will be sustained but if the parties objected to it, his action will be withdrawn

A: No. An award shall not be made solely on the default of a party. The arbitrators shall require the other party to submit such evidence as they may require for making an award. Q: Who can represent a party to arbitration? A: No one other than a party to said arbitration, or a person in the regular employ of such party duly authorized in writing by said party, or a practicing attorney-at-law, shall be permitted by the arbitrators to represent before him or them any party to the arbitration. NOTE: Any party desiring to be represented by counsel shall notify the other party or parties of such intention at least five days prior to the hearing.

Procedure by the arbitrators Q: Who can attend the arbitration proceedings? Subject to the terms of the submission or contract, if any are specified therein, are arbitrators selected as prescribed herein must:

A: Persons having a direct interest in the controversy which is the subject of arbitration shall have the right to attend any hearing; but the attendance of any other person shall be at the discretion of the arbitrators.


13



_____________________________________________

Powers of an arbitrator Q:

What

are

the

powers

of

an

arbitrator?

A: The following are the powers of arbitrators: a. b.

c. d.

e. f. g.

To require any person to attend a hearing as a witness; To subpoena witnesses and documents when the relevancy of the testimony and the materiality thereof has been demonstrated; To require the retirement of any witness during the testimony of any other witness; To take measures to safeguard and/or conserve any matter which is the subject of the dispute in arbitration; To render a fair, reasonable and impartial award; To accept pleadings; and To admit evidence

NOTE: All of the arbitrators appointed in any controversy must attend all the hearings in that matter and hear all the allegations and proofs of the parties; but an award by the majority of them is valid unless the concurrence of all of them is expressly required in the submission or contract to arbitrate. Hearing by the arbitrators Arbitrators may, at the commencement of the hearing, ask both parties for brief statements of the issues in controversy and/or an agreed statement of facts. Thereafter the parties may offer such evidence as they desire, and shall produce such additional evidence as the arbitrators shall require or deem necessary to an understanding and determination of the dispute. Q: In hearing the parties and admitting their evidence, is the tribunal bound by the Rules of Evidence? A: The arbitrators shall be the sole judge of the relevancy and materiality of the evidence offered or produced, and shall not be bound to conform to the Rules of Court pertaining to evidence. Arbitrators shall receive as exhibits in evidence any document which the parties may wish to submit and the exhibits shall be properly identified at the time of submission.

NOTE: The arbitrators may make an ocular inspection of any matter or premises which are in dispute, but such inspection shall be made only in the presence of all parties to the arbitration, unless any party who shall have received notice thereof fails to appear, in which event such inspection shall be made in the absence of such party. Time for rendering award Unless the parties shall have stipulated by written agreement the time within which the arbitrators must render their award, the written award of the arbitrators shall be rendered within thirty days after the closing of the hearings or if the oral hearings shall have been waived, within thirty days after the arbitrators shall have declared such proceedings in lieu of hearing closed. This period may be extended by mutual consent of the parties. Form and contents of award Q: What should be the form and contents of an arbitral award? A: The arbitral award shall be made in writing and shall be signed by the arbitrator or arbitrators. In arbitral proceedings with more than one arbitrator, the signatures of the majority of all members of the arbitral tribunal shall suffice, provided that the reason for any omitted signature is stated. The award shall state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given. The award shall state its date and the place or arbitration. After the award is made, a copy signed by the arbitrators shall be delivered to each party. NOTE: In the event that the parties to an arbitration have, during the course of such arbitration, settled their dispute, they may request of the arbitrators that such settlement be embodied in an award which shall be signed by the arbitrators. Q: Can the arbitrator act as a mediator in an arbitration proceeding? A: No. No arbitrator shall act as a mediator in any proceeding in which he is acting as arbitrator. Accordingly, unlike a mediator, arbitrators have the power and authority to render an arbitral award. Q: How may an arbitral award be confirmed?

Q: Who shall take possession or custody of the evidence submitted by the parties? A: All exhibits shall remain in the custody of the Clerk of Court during the course of the arbitration and shall be returned to the parties at the time the award is made.

A: At any time within one month after the award is made, any party to the controversy which was arbitrated may apply to the court having jurisdiction, as provided in section twentyeight, for an order confirming the award. The court must grant such order unless the award is vacated, modified or


14



corrected, as prescribed herein. Notice of such motion must be served upon the adverse party or his attorney. A domestic arbitral award shall be enforced in the same manner as final and executory decisions of the RTC. Vacating an award Q: What are the grounds for vacating award? A: In any one of the following cases, the court must make an order vacating the award upon the petition of any party to the controversy when such party proves affirmatively that in the arbitration proceedings: a. b. c.

d.

e.

The award was procured by corruption, fraud, or other undue means; or That there was evident partiality or corruption in the arbitrators or any of them; That the arbitrators were guilty of misconduct in refusing to postpone the hearing upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; that one or more of the arbitrators was disqualified to act as such under section nine hereof, and wilfully refrained from disclosing such disqualifications or of any other misbehavior by which the rights of any party have been materially prejudiced; That the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final and definite award upon the subject matter submitted to them was not made. Modifying or correcting an award

Q: What are the grounds for modifying or correcting an award? A: In any one of the following cases, the court must make an order modifying or correcting the award, upon the application of any party to the controversy which was arbitrated: a.

b.

c.

Where there was an evident miscalculation of figures, or an evident mistake in the description of any person, thing or property referred to in the award; or Where the arbitrators have awarded upon a matter not submitted to them, not affecting the merits of the decision upon the matter submitted; or Where the award is imperfect in a matter of form not affecting the merits of the controversy, and if it had been a commissioner's report, the defect could have been amended or disregarded by the court.

_____________________________________________

confirming, modifying, correcting, or vacating an award, shall at the time that such motion is filed with the court for the entry of judgment thereon also file the following papers with the Clerk of Court; (a) The submission, or contract to arbitrate; the appointment of the arbitrator or arbitrators; and each written extension of the time, if any, within which to make the award. (b) A verified of the award. (c) Each notice, affidavit, or other paper used upon the application to confirm, modify, correct or vacate such award, and a copy of each of the court upon such application. Appeal An appeal may be taken from an order made in a proceeding under this Act, or from a judgment entered upon an award through certiorari proceedings, but such appeals shall be limited to questions of law. Q: What are the remedies of the aggrieved party against an arbitral award? A: Under Article 2044 of the New Civil Code, the validity of any stipulation on the finality of the arbitrators’ award or decision is recognized. However, where the conditions described in Articles 2038, 2039, and 2040 applicable to both compromises and arbitrations are obtaining, the arbitrators’ award may be annulled or rescinded. Consequently, the decision of the Arbitration Committee is subject to judicial review. The proper recourse of the petitioner from the denial of its motion for reconsideration by the Arbitration Committee is to file either: a. a motion to vacate the arbitral award with the RTC; b. a petition for review with the Court of Appeals under Rule 43 of the Rules of Court; or c. a petition for certiorari under Rule 65 of the Rules of Court. The RTC will only have jurisdiction over an arbitral award in cases of motions to vacate the same. Otherwise, as elucidated herein, the Court of Appeals retains jurisdiction in petitions for review or in petitions for certiorari (Insular Savings Bank vs. Far East Bank and Trust Company, 492 SCRA 145, 22 June 2006).

Section 28. Papers to accompany motion to confirm, modify, correct, or vacate award. - The party moving for an order


15



UNCITRAL Model Law on International Commercial Arbitration Q: What is commercial arbitration? A: It covers matters arising from all relationships of a commercial nature, whether contractual or not. Relationships of a commercial nature include, but are not limited to, the following transactions: any trade transaction for the supply or exchange of goods or services; distribution agreement; commercial representation or agency; factoring; leasing; construction of works; consulting; engineering; licensing; investment; financing; banking; insurance; exploitation agreement or concession; joint venture and other forms of industrial or business cooperation; carriage of goods or passengers by air, sea, rail or road. Q: When may the appointment of an arbitrator be challenged? (see Sect. 11 of R.A. 876) A: When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or independence. An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall without delay disclose any such circumstances to the parties unless they have already been informed of them by him. An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to his impartiality or independence, or if he does not possess qualifications agreed to by the parties. A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made (Article 12 of UNCITRAL). Q: What is the form and contents of an arbitral award under the Model Law (see Sec. 20 of R.A. 876)? A: The award shall be made in writing and shall be signed by the arbitrator or arbitrators. In arbitral proceedings with more than one arbitrator, the signatures of the majority of all members of the arbitral tribunal shall suffice, provided that the reason for any omitted signature is stated. The award shall state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given. The award shall state its date and the place of arbitration. The award shall be deemed to have been made at that place. After the award is made, a copy signed by the arbitrators shall be delivered to each party (Article 31 of the Model Law). Q: Can a foreign award be enforced in the Philippines under the Rules of Court on the recognition and enforcement judgment?

_____________________________________________

A: No. foreign arbitral awards are not like foreign court judgments. They may be enforced under Sec. 44 of R.A 9285: A foreign arbitral award when confirmed by a court of a foreign country, shall be recognized and enforced as a foreign arbitral award and not a judgment of a foreign court. A foreign arbitral award, when confirmed by the regional trial court, shall be enforced as a foreign arbitral award and not as a judgment of a foreign court. A foreign arbitral award, when confirmed by the regional trial court, shall be enforced in the same manner as final and executory decisions of courts of law of the Philippines. NOTE: If the recognition and enforcement of foreign awards not covered by the New York Convention, courts, may, on the grounds of comity and reciprocity, recognize and enforce a non-convention award as a convention award. Q: What is the nature of the action for recognition and enforcement of a foreign award? Where should it be filed? A: Proceedings for recognition and enforcement of an arbitration agreement or for vacation, setting aside, correction or modification of an arbitral award, and any application with a court for arbitration assistance and supervision shall be deemed as special proceedings and shall be filled with the regional trial court (i) where arbitration proceedings are conducted; (ii) where the asset to be attached or levied upon, or the act to be enjoined is located; (iii) where any of the parties to the dispute resides or has his place of business; or (iv) in the National Judicial Capital Region, at the option of the applicant (Section 47 of R.A. 9285). Grounds for refusing recognition or enforcement Q: When may a foreign award be refused recognition and enforcement in our jurisdiction? A: 1.

At the request of the party against whom it is invoked, if that party furnishes to the competent court where recognition or enforcement is sought proof that:

a.

a party to the arbitration agreement referred to in article 7 was under some incapacity; or the said 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; or the party against whom the award is invoked was not given proper notice of the appointment of an

b.


16



c.

d.

arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, that award was made; or

2.

If the court finds that:

a.

the subject-matter of the dispute is not capable of settlement by arbitration under the law of this State; or the recognition or enforcement of the award would be contrary to the public policy of this State (Article 36 of UNCITRAL Law).

b.

_____________________________________________

WHEREAS, among the implementing agencies of the CIAP is the Philippine Domestic Construction Board (PDCB) which is specifically authorized by Presidential Decree No. 1746 to "adjudicate and settle claims and disputes in the implementation of public and private construction contracts and for this purpose, formulate and adopt the necessary rules and regulations subject to the approval of the President";

Policy of the state Sec. 1. Title. This Executive Order shall be known as the "Construction Industry Arbitration Law". Q: What is the policy of the law regarding the Philippine construction industry? A: Sec. 2. Declaration of Policy. It is hereby declared to be the policy of the State to encourage the early and expeditious settlement of disputes in the Philippine construction industry. Creation of the Construction Industry Arbitration Commission (CIAC) Q: Which body has administrative supervision of the CIAC? A: The CIAC shall be under the administrative supervision of the Philippine Domestic Construction Board (PDCB).

EXECUTIVE ORDER NO. 1008 CREATING AN ARBITRATION MACHINERY IN THE CONSTRUCTION INDUSTRY OF THE PHILIPPINES February 4, 1985 WHEREAS, the construction industry provides employment to a large segment of the national labor force and is a leading contributor to the gross national product;

Sec. 3. Creation. There is hereby established in the CIAP a body to be known as the Construction Industry Arbitration Commission (CIAC). The CIAC shall be under the administrative supervision of the Philippine Domestic Construction Board (PDCB). Jurisdiction of the CIAC

WHEREAS, it is of vital necessity that continued growth towards national goals shall not be hindered by problems arising from, or connected with, the construction industry;

Q: State the jurisdiction of the CIAC.

WHEREAS, there is a need to establish an arbitral machinery to settle to such disputes expeditiously in order to maintain and promote a healthy partnership between the government and the private sector in the furtherance of national development goals;

Sec. 4. Jurisdiction. The CIAC shall have original and exclusive jurisdiction over disputes arising from, or connected with, contracts entered into by parties involved in construction in the Philippines:

WHEREAS, Presidential Decree No. 1746 created the Construction Industry Authority of the Philippine (CIAP) to exercise centralized authority for the optimum development of the construction industry and to enhance the growth of the local construction industry;

A:

a. b. c. d. e.

whether the dispute arises before or after the completion of the contract, or after the abandonment or breach thereof. These disputes may involve government or private contracts


17



_____________________________________________

Q: What is the requisite for the CIAC to acquire jurisdiction?

4) To direct its officers and employees to perform such functions as may be assigned to them from time to time.

A: For the Board to acquire jurisdiction, the parties to a dispute must agree to submit the same to voluntary arbitration. Q: What matters may be covered by the jurisdiction of the CIAC?

Compensation Q: How are the members of the CIAC compensated? A:

A: The jurisdiction of the CIAC may include but is not limited to: a. violation of specifications for materials and workmanship; b. violation of the terms of agreement; c. interpretation and/or application of contractual time and delays; d. maintenance and defects; e. payment, default of employer or contractor and changes in contract cost. Q: What matter is excluded from the coverage? A: Excluded from the coverage of this law are disputes arising from employer-employee relationships which shall continue to be covered by the Labor Code of the Philippines. Composition and functions of the CIAC Q: Discuss the composition of the CIAC? A:

Sec. 7. Compensation of the Commission. The members of 1 the Commission shall receive such per diems [per day] and allowances as may be fixed by the CIAP from time to time. Term of office Q: What is the term of office of the members of the CIAC? A: Sec. 8. Term. The term of office of the members of the Commission shall be six (6) years; provided, however, that of the Commission members first appointed, the chairman shall hold office for six years; the other member for four (4) years; and the third for two (2) years. Q: What is the rule in case of vacancy? A: The appointment to any vacancy in the Commission shall only be for the unexpired portion of the term of the predecessor.

Sec. 5. Composition of the Board. The Commission shall consist of:

Quorum, deliberations Q: What constitutes quorum?

a. b.

a Chairman and two (2) members, all to be appointed by the CIAP Board upon recommendation by the members of the PDCB.

A: The presence of a majority of the members of the Commission shall constitute a quorum for the transaction of business (Sec. 9).

Q: What are the functions of the CIAC?

Q: How are the deliberations of the Commission be arrived?

A:

A: The decisions of the Commission shall be arrived at by majority vote (Sec. 10).

Sec. 6. Functions of the Commission. The Commission shall perform, among others that may be conferred by law, the following functions:

Secretariat Q: What is the function of the CIAC Secretariat?

1) To formulate and adopt an arbitration program for the construction industry; 2) To enunciate policies and prescribe rules and procedures for construction arbitration; 3) To supervise the arbitration program, and exercise such authority related thereto as regards the appointment, replacement or challenging of arbitrators; and

A: Sec. 11. Secretariat. The Commission shall have a Secretariat to be headed by an Executive Director who shall be responsible for: 1

a specific amount of money that an organization gives an individual per day to cover living and traveling expenses in connection with work done away from home


18



a. b. c. d.

receiving requests for arbitration, and other pleadings, for notifying the parties thereto; and, for fixing and receiving filing fees, deposits, costs of arbitration, administrative charges, and fees. It shall be the duty of the Executive Director to notify the parties of the awards made by the arbitrators.

NOTE: The Secretariat shall have among others a Publication and a Training Division.

_____________________________________________

Q: What is the effect if the CIAC decides to appoint an arbitral tribunal? A: If the CIAC decides to appoint an Arbitral Tribunal, each party may nominate one (1) arbitrator from the list of arbitrators accredited by the CIAC for appointment and for confirmation. The third arbitrator who is acceptable to both parties confirmed in writing shall be appointed by the CIAC and shall preside over the Tribunal (Sec. 14). Qualities of arbitrator; non-permanent employment

Q: Who shall have the authority to appoint?

Q: What are the qualities that an arbitrator shall possess?

A:

A: Arbitration shall be men of distinction in whom the business sector and the government can have confidence (Sec. 14).

Sec. 12. Authority to appoint. The Commission is hereby authorized to appoint the Executive Director, the consultants, the arbitrators, as well as personnel and staff. Authority to collect fees Q: Does CIAC have the authority to collect fees? A: Yes. The Commission is empowered to: a. determine and collect fees, deposits, costs of arbitration, as well as administrative and other charges as may be necessary in the performance of its functions and responsibilities. b. The CIAC is also authorized to use its receipts and deposits of funds to finance its operations subject to the approval of the PDCB, the provisions of any law to the contrary notwithstanding (Sec. 13).

Q: Are the arbitrators permanently employed by the CIAC? A: They shall not be permanently employed with the CIAC. Instead, they shall render services only when called to arbitrate. For each dispute they settle, they shall be given fees (Sec. 14). Appointment of experts (Sec. 15) Q: When can the CIAC appoint experts? A: The services of technical or legal experts may be utilized in the settlement of disputes if requested by: a. any of the parties or b. by the Arbitral Tribunal c. both of the parties (Sec. 15)

Arbitrators (Sec. 14) Q: How many arbitrators are required to settle a dispute? A: Arbitrators. A sole arbitrator or three arbitrators may settle a dispute (Sec. 14). Q: What is the effect if the parties agree that the dispute shall be settled by a sole arbitrator? A: Where the parties agree that the dispute shall be settled by a sole arbitrator, they may, by agreement, nominate him from the list of arbitrators accredited by the CIAC for appointment and confirmation (Sec. 14). Q: What if they failed to agree as to the arbitrator? A: If the parties fail to agree as to the arbitrator, the CIAC taking into consideration the complexities and intricacies of the dispute/s has the option to appoint a single arbitrator or an Arbitral Tribunal (Sec. 14).

Q: Is there a need to confirm the appointment of the experts? A: If the request for an expert is done by either or by both of the parties, it is necessary that the appointment of the expert be confirmed by the Arbitral Tribunal (Sec. 15). Expenses Q: Who shall shoulder the expenses for the services of an expert? A: Whenever the parties request for the services of an expert, they shall equally shoulder the expert's fees and expenses, half of which shall be deposited with the Secretariat before the expert renders service. When only one party makes the request, it shall deposit the whole amount required (Sec. 15). Arbitration expenses (Sec. 16) Q: What are included in the arbitration expenses?


19



A: Arbitration expenses shall include: 1. filing fee; 2. administrative charges, 3. arbitrator's fees; 4. fee and expenses of the expert, and 5. others which may be imposed by the CIAC (Sec. 16).

_____________________________________________

Q: When should the CIAC make a report? A: The Commission shall within three (3) months after the end of the fiscal year, submit its annual report to the CIAP. It shall, likewise, submit such periodic reports as it may be required from time to time.

Q: How are the administrative charges and the arbitrator’s fees shall be computed? A: The administrative charges and the arbitrator's fees shall be computed on the basis of percentage of the sum in dispute to be fixed in accordance with the Table of Administrative Charges and Arbitrator's Fees (Sec. 16). Deposit to cover arbitration expenses (Sec. 17) Q: What should be the amount of the deposit?

Finality of the awards (Sec. 19) Q: What is the nature of an arbitral award made by the CIAC? A: GR: The arbitral award shall be binding upon the parties. It shall be final and inappealable XPN: Except on questions of law which shall be appealable to the Supreme Court.

A: Execution and enforcement of awards Sec. 17. Deposit to Cover Arbitration Expenses. The CIAC shall be authorized to fix the amount to be deposited which must be equivalent to the expected arbitration expenses. Xxx Q: To whom shall the deposit be paid?

Sec. 20. Execution and Enforcement of Awards. As soon as a decision, order to award has become final and executory, the Arbitral Tribunal or the single arbitrator with the occurrence of the CIAC shall:

A: The deposit shall be paid to the Secretariat.

a. b.

motu propio, or on motion of any interested party

Q: When should the deposit be made? A: Before arbitration proceedings shall commence.

issue a writ of execution requiring any sheriff or other proper officer to execute said decision, order or award.

Q: Who shall make the payment? A: Payment shall either be: a. shared equally by the parties or b. paid by any of them.

Rule-making power (Sec. 21) Sec. 21. Rule-Making Power. The CIAC shall formulate and adopt necessary rules and procedures for construction arbitration.

Failure to pay; effect Q: What if one party fails to contribute his share in the deposit? A: If one party fails to contribute his share in the deposit, the other party must pay in full.

Republic Act No. 9285 Alternative Dispute Resolution Act of 2004 CHAPTER 6 - ARBITRATION OF CONSTRUCTION DISPUTES Q: What law governs the arbitration concerning the construction disputes?

Q: What if both parties fail to tender the required deposit? A: A: If both parties fail to tender the required deposit, the case shall be considered dismissed but the parties shall still be liable to pay one half (1/2) of the agreed administrative charge.

SEC. 34. Arbitration of Construction Disputes: Governing Law. - The arbitration of construction disputes shall be governed by Executive Order No. 1008, otherwise known as the Constitution Industry Arbitration Law.

Reports by the CIAC (Sec. 18)


20



Q: Who has jurisdiction over the construction disputes?

_____________________________________________

A: Provided, That:

A: Construction disputes shall fall within the original and exclusive jurisdiction of the Construction Industry Arbitration Commission (Sec. 35).

1.

Coverage of the law

3.

2.

Q: Under Sec. 35, discuss the coverage of the law? A: It shall include those between or among parties to, or who are otherwise bound by, an arbitration agreement, directly or by reference whether such parties are project owner, contractor, subcontractor, quantity surveyor, bondsman or issuer of an insurance policy in a construction project. Q: Who has jurisdiction in case the construction dispute is one of a commercial nature? A: The Commission shall continue to exercise original and exclusive jurisdiction over construction disputes although the arbitration is "commercial" pursuant to Section 21 of this Act. SEC. 21. Commercial Arbitration. - An arbitration is "commercial" if it covers matters arising from all relationships of a commercial nature, whether contractual or not. Relationships of a transactions: any trade transaction for the supply or exchange of goods or services; distribution agreements; construction of works; commercial representation or agency; factoring; leasing, consulting; engineering; licensing; investment; financing; banking; insurance; joint venture and other forms of industrial or business cooperation; carriage of goods or passengers by air, sea, rail or road.

Q: How are arbitrators chosen? A: SEC. 36. Authority to Act as Mediator or Arbitrator. - By written agreement of the parties to a dispute, an arbitrator may act as mediator and a mediator may act as arbitrator. xxx Q: May the parties agree that the settlement be in the form of an arbitral award? A: The parties may also agree in writing that, following a successful mediation, the mediator shall issue the settlement agreement in the form of an arbitral award (Sec. 36). Appointment of foreign arbitrator SEC. 37. Appointment of Foreign Arbitrator. - The Construction Industry Arbitration Commission (CIAC) shall promulgate rules to allow for the appointment of a foreign arbitrator or co-arbitrator or chairman of a tribunal a person who has not been previously accredited by CIAC. Q: What are the requisites to allow the appointment of a foreign arbitrator or co-arbitrator or chairman of a tribunal?

4.

the dispute is a construction dispute in which one party is an international party the person to be appointed agreed to abide by the arbitration rules and policies of CIAC; he/she is either coarbitrator upon the nomination of the international party; or he/she is the common choice of the two CIAC-accredited arbitrators first appointed one of whom was nominated by the international party; and the foreign arbitrator shall be of different nationality from the international party. Other applicable provisions

SEC. 38. Applicability to Construction Arbitration. - The provisions of Sections 17 (d) of Chapter 2, and Section 28 and 29 of this Act shall apply to arbitration of construction disputes covered by this Chapter. SEC. 17. Enforcement of Mediated Settlement Agreement. - The mediation shall be guided by the following operative principles: (d) The parties may agree in the settlement agreement that the mediator shall become a sole arbitrator for the dispute and shall treat the settlement agreement as an arbitral award which shall be subject to enforcement under Republic Act No. 876, otherwise known as the Arbitration Law, notwithstanding the provisions of Executive Order No. 1008 for mediated dispute outside of the CIAC. SEC. 28. Grant of Interim Measure of Protection. – a. It is not incompatible with an arbitration agreement for a party to request, before constitution of the tribunal, from a Court an interim measure of protection and for the Court to grant such measure. After constitution of the arbitral tribunal and during arbitral proceedings, a request for an interim measure of protection or modification thereof, may be made with the arbitral tribunal or to the extent that the arbitral tribunal has no power to act or is unable to act effectively, the request may be made with the Court. The arbitral tribunal is deemed constituted when the sole arbitrator or the third arbitrator who has been nominated, has accepted the nomination and written communication of said nomination and acceptance has been received by the party making request. b. The following rules on interim or provisional relief shall be observed: 1. Any party may request that provision relief be granted against the adverse party: 2. Such relief may be granted: (i) to prevent irreparable loss or injury: (ii) to provide security for the performance of any obligation; (iii) to produce or preserve any evidence; or (iv) to compel any other appropriate act or omission. 3. The order granting provisional relief may be conditioned upon the provision of security or any act or omission specified in the order. 4. Interim or provisional relief is requested by written application transmitted by reasonable means to the Court or arbitral tribunal as the case may be and the party against whom the relief is sought, describing in appropriate detail the precise relief, the party against whom the relief is requested, the grounds for the relief, and evidence supporting the request.


21


NOTES ON ALTERNATIVE DISPUTE RESOLUTION Kenneth & King Hizon (3A) 5. 6.

7.

The order shall be binding upon the parties. Either party may apply with the Court for assistance in Implementing or enforcing an interim measure ordered by an arbitral tribunal. A party who does not comply with the order shall be liable for all damages resulting from noncompliance, including all expenses, and reasonable attorney's fees, paid in obtaining the order's judicial enforcement.

SEC. 29. Further Authority for Arbitrator to Grant Interim Measure of Protection. - Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order any party to take such interim measures of protection as the arbitral tribunal may consider necessary in respect of the subject matter of the dispute following the rules in Section 28, paragraph 2. Such interim measures may include but shall not be limited to preliminary injuction directed against a party, appointment of receivers or detention, preservation, inspection of property that is the subject of the dispute in arbitration. Either party may apply with the Court for assistance in implementing or enforcing an interim measures ordered by an arbitral tribunal.

Duty of the court to dismiss (Sec. 39) Q: What is the duty of the court in case a construction dispute has been filed before it? A: A regional trial court which a construction dispute is filed shall, upon becoming aware, not later than the pretrial conference, that the parties had entered into an arbitration to be conducted by the CIAC, unless both parties, assisted by their respective counsel, shall submit to the regional trial court a written agreement exclusive for the Court, rather than the CIAC, to resolve the dispute.

CHAPTER 7 - JUDICIAL REVIEW OF ARBITRAL AWARDS A. DOMESTIC AWARDS SEC. 40. Confirmation of Award. - The confirmation of a domestic arbitral award shall be governed by Section 23 of R.A. 876.

_____________________________________________

A: A CIAC arbitral award need not be confirmed by the regional trial court to be executory as provided under E.O. No. 1008. Vacation of award SEC. 41. Vacation Award. - A party to a domestic arbitration may question the arbitral award with the appropriate regional trial court in accordance with the rules of procedure to be promulgated by the Supreme Court only on those grounds enumerated in Section 25 of Republic Act No. 876. Any other ground raised against a domestic arbitral award shall be disregarded by the regional trial court. Q: Under Sec. 25 of RA 876, what are the grounds for the modification of the award? A: In any one of the following cases, the court must make an order modifying or correcting the award, upon the application of any party to the controversy which was arbitrated: 1. Where there was an evident miscalculation of figures, or an evident mistake in the description of any person, thing or property referred to in the award; or 2. Where the arbitrators have awarded upon a matter not submitted to them, not affecting the merits of the decision upon the matter submitted; or 3. Where the award is imperfect in a matter of form not affecting the merits of the controversy, and if it had been a commissioner's report, the defect could have been amended or disregarded by the court. 4. The order may modify and correct the award so as to effect the intent thereof and promote justice between the parties.

Confirmation of award Q: What is the effect of a confirmed domestic arbitral award? A: A domestic arbitral award when confirmed shall be enforced in the same manner as final and executory decisions of the Regional Trial Court. Q: What court has jurisdiction to confirm the award? A: The confirmation of a domestic award shall be made by the regional trial court in accordance with the Rules of Procedure to be promulgated by the Supreme Court.

B. FOREIGN ARBITRAL AWARDS Recognition and enforcement Q: What will govern the recognition and enforcement of arbitral awards? A: The New York Convention shall govern the recognition and enforcement of arbitral awards covered by the said Convention (Sec. 42, Application of the New York Convention).

Q: Should the CIAC arbitral award be confirmed to be executory?


22



_____________________________________________

Q: Where should the recognition and enforcement of such arbitral award be made?

Q: May the court recognize enforce a non-convention award as a convention award?

A: The recognition and enforcement of such arbitral awards shall be filled with regional trial court in accordance with the rules of procedure to be promulgated by the Supreme Court.

A: The Court may, grounds of: a. comity and b. reciprocity, recognize and enforce a non-convention award as a convention award.

Requirements Foreign arbitral award not a foreign judgment (Sec. 44) Q: What are the requirements for the application of the enforcement of the award?

Q:What is the effect when a foreign arbitral award is confirmed by a court of foreign country?

A: 1.

2.

the party relying on the award or applying for its enforcement shall file with the court the original or authenticated copy of the award and the arbitration agreement

NOTE: If the award or agreement is not made in any of the official languages, the party shall supply a duly certified translation thereof into any of such languages.

A: A foreign arbitral award when confirmed by a court of a foreign country, shall be recognized and enforced as a foreign arbitral award and not a judgment of a foreign court. Q: How can a foreign arbitral award confirmed by the regional trial court be enforced? A: It shall be enforced in the same manner as final and executory decisions of courts of law of the Philippines. Rejection of a foreign arbitral award (Sec. 45)

3.

The applicant shall establish that the country in which foreign arbitration award was made is a party to the New York Convention.

Q: What if the application is for the rejection or suspension of the enforcement of the award? A: If the application for rejection or suspension of enforcement of an award has been made, the regional trial court may, if it considers it proper, vacate its decision and may also, on the application of the party claiming recognition or enforcement of the award, order the party to provide appropriate security. Recognition and Enforcement of Foreign Arbitral Awards Not Covered by the New York Convention Q: What is the rule regarding the recognition and enforcement of foreign arbitral awards not covered by the New York Convention?

Q: How can a party oppose the application for recognition and enforcement of the arbitral award? A: A party to a foreign arbitration proceeding may oppose an application for recognition and enforcement of the arbitral award in accordance with the procedural rules to be promulgated by the Supreme Court only on those grounds enumerated under Article V of the New York Convention. Any other ground raised shall be disregarded by the regional trial court. Q: Under the Article V of the New York Convention, what are the grounds that can be raised for the opposition? A: 1. Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:

A: a. SEC. 43. Recognition and Enforcement of Foreign Arbitral Awards Not Covered by the New York Convention. - The recognition and enforcement of foreign arbitral awards not covered by the New York Convention shall be done in accordance with procedural rules to be promulgated by the Supreme Court. The Court may, grounds of comity and reciprocity, recognize and enforce a nonconvention award as a convention award.

b.

The parties to the agreement referred to in article II were, under the law applicable to them, under some incapacity, or the said 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; or The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or


23



c.

d.

e.

The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or The award has not yet become binding, on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

_____________________________________________

for vacation, setting aside, correction or modification of an arbitral award? A: Proceedings for recognition and enforcement of an arbitration agreement or for vacation, setting aside, correction or modification of an arbitral award, and any application with a court for arbitration assistance and supervision shall be deemed as special proceedings. Q: Where should the same be filed? A: It shall be filled with the regional trial court: a. b. c. d.

2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that: a.

b.

The subject matter of the difference is not capable of settlement by arbitration under the law of that country; or The recognition or enforcement of the award would be contrary to the public policy of that country.

Appeal from court on decisions on arbitral awards SEC. 46. Appeal from Court Decisions on Arbitral Awards. - A decision of the regional trial court: a. confirming, b. vacating, c. setting aside, d. modifying or correcting an arbitral award may be appealed to the Court of Appeals in accordance with the rules of procedure to be promulgated by the Supreme Court. Q: What is required from the party who appeals from the judgment of the court confirming an arbitral award? A: The losing party who appeals from the judgment of the court confirming an arbitral award shall required by the appealant court to post counterbond executed in favor of the prevailing party equal to the amount of the award in accordance with the rules to be promulgated by the Supreme Court (Sec. 46). Venue and jurisdiction (Sec. 47) Q: What is the character of the proceedings for the recognition and enforcement of an arbitration agreement or

where arbitration proceedings are conducted; where the asset to be attached or levied upon, or the act to be enjoined is located; where any of the parties to the dispute resides or has his place of business; or in the National Judicial Capital Region, at the option of the applicant. Notice of proceeding to parties (Sec. 48)

SEC. 48. Notice of Proceeding to Parties. - In a special proceeding for recognition and enforcement of an arbitral award, the Court shall send notice to the parties at their address of record in the arbitration, or if any party cannot be served notice at such address, at such party's last known address. The notice shall be sent at least fifteen (15) days before the date set for the initial hearing of the application.

CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS Article I Q: State the application or scope of this convention? A: This Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought, and arising out of differences between persons, whether physical or legal. It shall also apply to arbitral awards not considered as domestic awards in the State where their recognition and enforcement are sought. Q: What do you mean by arbitral awards under the Convention? A: It shall include not only awards made by arbitrators appointed for each case but also those made by permanent arbitral bodies to which the parties have submitted.


24



NOTE: When signing, ratifying or acceding to this Convention, or notifying extension under article X hereof, any State may on the basis of reciprocity declare that it will apply the Convention to the recognition and enforcement of awards made only in the territory of another Contracting State. It may also declare that it will apply the Convention only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the national law of the State making such declaration. Article II Each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration. Q: What does agreement in writing mean? A: The term "agreement in writing" shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams. Q: When can the court refer the parties to arbitration? A: The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is: 1. 2. 3.

null and void, inoperative or incapable of being performed.

_____________________________________________

A: (a) The duly authenticated original award or a duly certified copy thereof; (b) The original agreement referred to in article II or a duly certified copy thereof. NOTE: If the said award or agreement is not made in an official language of the country in which the award is relied upon, the party applying for recognition and enforcement of the award shall produce a translation of these documents into such language. The translation shall be certified by an official or sworn translator or by a diplomatic or consular agent. Article V Q: Under what instances can the recognition and enforcement of the award be refused? A: Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that: (a) The parties to the agreement referred to in article II were, under the law applicable to them, under some incapacity, or the said 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; or

Article III

(b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or

Each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the following articles. There shall not be imposed substantially more onerous conditions or higher fees or charges on the recognition or enforcement of arbitral awards to which this Convention applies than are imposed on the recognition or enforcement of domestic arbitral awards.

(c) The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or

Article IV

(d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

Q: To obtain the recognition and enforcement mentioned in the preceding article, what should the party applying for recognition and enforcement, at the time of the application, shall supply:


25



(e) The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made. 2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that:

_____________________________________________

DEFINITIONS AND RULES OF INTERPRETATION (Article 2) Q: What is arbitration? A: It means any arbitration whether or not administered by a permanent arbitral institution. Q: What is arbitral tribunal?

(a) The subject matter of the difference is not capable of settlement by arbitration under the law of that country; or

A: It means the sole arbitrator or a panel of arbitrators.

(b) The recognition or enforcement of the award would be contrary to the public policy of that country.

A:

Q: What is the rule of interpretation with regard to this law?

1.

UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION

2.

GENERAL PROVISIONS (Article 1)

In the interpretation of this Law, regard is to be had to its international origin and to the need to promote uniformity in its application and the observance of good faith; Questions concerning matters governed by this Law which are not expressly settled in it are to be settled in conformity with the general principles on which this Law is based.

Q: When is arbitration considered as international?

Q: What are the factors to be considered?

A: Arbitration is international if:

A:

a.

the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in different States; or one of the following places is situated outside the State in which the parties have their places of business:

b.

i. ii.

c.

the place of arbitration if determined in, or pursuant to, the arbitration agreement; any place where a substantial part of the obligations of the commercial relationship is to be performed or the place with which the subject-matter of the dispute is most closely connected; or The parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country.

Q: Where is the place of business if the party has more than one place of business?

1. 2. 3.

International origin; Uniformity in application; and Observance of good faith. ARBITRATION AGREEMENT (Article 7)

Q: What is an arbitration agreement? A: It is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. Q: What is the form of such agreement? A: It must be in writing. Q: When is an agreement considered written?

A: It is that which has the closest relationship to the arbitration agreement. Q: What if the party has no place of business? A: If a party does not have a place of business, reference is to be made to his habitual residence.

A: An arbitration agreement is in writing if its content is recorded in any form, whether or not the arbitration agreement or contract has been concluded orally, by conduct, or by other means. Arbitration Agreement


26



“Arbitration agreement” is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

_____________________________________________

A: 1.

Q: When can a court acquire jurisdiction over the case? When can it refer the parties to arbitration? A: A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting his fist statement on the substance of the dispute, refers the parties to arbitration. Q: Under what instances can the court set aside the agreement?

2.

The parties are free to determine the number of arbitrators. Failing such determination, the number of arbitrators shall be three.

Q: What is the disqualification in the appointment of arbitrators? A: No person shall be precluded by reason of his nationality from acting as an arbitrator, unless otherwise agreed by the parties (Article 11). NOTE: The parties are free to agree on the procedure of appointing the arbitrator or arbitrators.

A: If the Court finds that the agreement is: Q: What are the rules in the appointment of arbitrators? 1. 2. 3.

Null and void; Inoperative; or incapable of being performed (Article 8).

A: Appointment of 3 arbitrators (Article 11)

Q: Pending the determination of such issue, may the arbitration proceedings commenced or continued? A: Where an action referred to in paragraph (1) of this article has been brought, arbitral proceedings may nevertheless be commenced or continued, and an award may be made, while the issue is pending before the court. R.A. No. 876

In an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two arbitrators thus appointed shall appoint the third arbitrator; if a party fails to appoint the arbitrator within thirty days of receipt of a request to do so from the other party, or if the two arbitrators fail to agree on the third arbitrator within thirty days of their appointment, the appointment shall be made, upon request of a party, by the court or other authority specified in article 6;

NOTE: In our arbitration law, the court proceedings are suspended: Section 7. Stay of civil action. - If any suit or proceeding be brought upon an issue arising out of an agreement providing for the arbitration thereof, the court in which such suit or proceeding is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration, shall stay the action or proceeding until an arbitration has been had in accordance with the terms of the agreement: Provided, That the applicant, for the stay is not in default in proceeding with such arbitration. Interim measures by court It is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a court an interim measure of protection and for a court to grant such measure (Article 9). COMPOSITION OF ARBITRAL TRIBUNAL (Article 10) Q: What are the rules regarding the number of arbitrators?

Appointment of sole arbitrator (Article 11) In an arbitration with a sole arbitrator, if the parties are unable to agree on the arbitrator, he shall be appointed, upon request of a party, by the court or other authority specified in article 6. Q: Under what instances may a party request a court or other authority to take the necessary measure? A: (a) a party fails to act as required under such procedure, or (b) the parties, or two arbitrators, are unable to reach an agreement expected of them under such procedure, or (c) a third party, including an institution, fails to perform any function entrusted to it under such procedure. Q: Is the court decision subject to appeal?


27



A: No. Q: What are the considerations in the appointment of arbitrators? A: The court or other authority, in appointing an arbitrator, shall have due regard to any qualifications required of the arbitrator by the agreement of the parties and to such considerations as are likely to secure the appointment of an independent and impartial arbitrator and, in the case of a sole or third arbitrator, shall take into account as well the advisability of appointing an arbitrator of a nationality other than those of the parties.

_____________________________________________

independence. An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall without delay disclose any such circumstances to the parties unless they have already been informed of them by him. (2) An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to his impartiality or independence, or if he does not possess qualifications agreed to by the parties. A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made. Challenge Procedure (Article 13)

R.A. No. 876 Section 8. Appointment of arbitrators. - If, in the contract for arbitration or in the submission described in section two, provision is made for a method of naming or appointing an arbitrator or arbitrators, such method shall be followed; but if no method be provided therein the Court of First Instance shall designate an arbitrator or arbitrators. The Court of First Instance shall appoint an arbitrator or arbitrators, as the case may be, in the following instances: (a) If the parties to the contract or submission are unable to agree upon a single arbitrator; or (b) If an arbitrator appointed by the parties is unwilling or unable to serve, and his successor has not been appointed in the manner in which he was appointed; or (c) If either party to the contract fails or refuses to name his arbitrator within fifteen days after receipt of the demand for arbitration; or (d) If the arbitrators appointed by each party to the contract, or appointed by one party to the contract and by the proper Court, shall fail to agree upon or to select the third arbitrator. (e) The court shall, in its discretion appoint one or three arbitrators, according to the importance of the controversy involved in any of the preceding cases in which the agreement is silent as to the number of arbitrators. (f) Arbitrators appointed under this section shall either accept or decline their appointments within seven days of the receipt of their appointments. In case of declination or the failure of an arbitrator or arbitrators to duly accept their appointments the parties or the court, as the case may be, shall proceed to appoint a substitute or substitutes for the arbitrator or arbitrators who decline or failed to accept his or their appointments.

Grounds for challenge (Article 12) Q: What are the grounds for challenge of arbitrators?

The parties are free to agree on a procedure for challenging an arbitrator. Q: What is the procedure to be applied in case he parties fail to agree on the procedure? A: Failing such agreement, a party who intends to challenge an arbitrator shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstance referred to in article 12(2), send a written statement of the reasons for the challenge to the arbitral tribunal. Unless the challenged arbitrator withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge. Q: Which body has jurisdiction over the issue? A: The arbitral tribunal shall rule on the challenge. Q: What if the challenge was unsuccessful? A: The challenging party may request, within thirty days after having received notice of the decision rejecting the challenge, the court or other authority specified in article 6 to decide on the challenge, which decision shall be subject to no appeal; while such a request is pending, the arbitral tribunal, including the challenged arbitrator, may continue the arbitral proceedings and make an award. Q: What is the effect of the challenge on the proceedings? Should the arbitration proceedings be suspended? A: No, the proceedings shall proceed and can make an award (Article 13 (3)).

A: R.A. No. 876 (1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or

Section 11. Challenge of arbitrators. - The arbitrators may be challenged only for the reasons mentioned in the


28



preceding section which may have arisen after the arbitration agreement or were unknown at the time of arbitration. The challenge shall be made before them. If they do not yield to the challenge, the challenging party may renew the challenge before the Court of First Instance of the province or city in which the challenged arbitrator, or, any of them, if there be more than one, resides. Q: Under our Arbitration Law, what is the effect of the challenge on the arbitration proceedings? A: While the challenging incident is discussed before the court, the hearing or arbitration shall be suspended, and it shall be continued immediately after the court has delivered an order on the challenging incident. Failure or impossibility to act (Art. 14) If an arbitrator becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay, his mandate terminates if he withdraws from his office or if the parties agree on the termination. Otherwise, if a controversy remains concerning any of these grounds, any party may request the court or other authority specified in article 6 to decide on the termination of the mandate, which decision shall be subject to no appeal. Q: Does the withdrawal from office of the arbitrator or if the parties agree to terminate his/her mandate, mean acceptance of the validity of the ground? A: No. Appointment of substitute arbitrator (Article 15) Q: How is the substitute arbitrator to be appointed? A: Where the mandate of an arbitrator terminates under article 13 or 14 or because of his withdrawal from office for any other reason or because of the revocation of his mandate by agreement of the parties or in any other case of termination of his mandate, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced.

_____________________________________________

Kompetenz Principle or Separability Principle Q: What is the effect of the decision of the arbitral tribunal regarding the contract on the arbitration clause? Does the invalidation of the contract ipso jure invalidate the arbitration clause? A: An arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. Q: When should the issue of jurisdiction be raised? A: A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defense. NOTE: 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. Q: When should the issue of the tribunal exceeding its scope be raised? A: A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. The arbitral tribunal may, in either case, admit a later plea if it considers the delay justified. NOTE: The arbitral tribunal may rule on a plea referred to in paragraph (2) of this article either as a preliminary question or in an award on the merits. If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within thirty days after having received notice of that ruling, the court specified in article 6 to decide the matter, which decision shall be subject to no appeal; while such a request is pending, the arbitral tribunal may continue the arbitral proceedings and make an award. INTERIM MEASURES AND PRELIMINARY ORDERS Power of arbitral tribunal to order interim measures (Article 17)

JURISDICTION OF ARBITRAL TRIBUNAL Q: Which body has jurisdiction over the competence of the tribunal vis-à-vis its jurisdiction? May the tribunal itself rule on its own jurisdiction? A: The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement.

Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, grant interim measures. Q: What is an interim measure? A: An interim measure is any temporary measure, whether in the form of an award or in another form, by which, at any time prior to the issuance of the award by which the dispute is finally decided, the arbitral tribunal orders a party to:


29



(a) Maintain or restore the status quo pending determination of the dispute; (b) Take action that would prevent, or refrain from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral process itself; (c) Provide a means of preserving assets out of which a subsequent award may be satisfied; or (d) Preserve evidence that may be relevant and material to the resolution of the dispute. R.A 9285

_____________________________________________

(a) Harm not adequately reparable by an award of damages is likely to result if the measure is not ordered, and such harm substantially outweighs the harm that is likely to result to the party against whom the measure is directed if the measure is granted; and (b) There is a reasonable possibility that the requesting party will succeed on the merits of the claim. The determination on this possibility shall not affect the discretion of the arbitral tribunal in making any subsequent determination. Applications for preliminary orders and conditions for granting preliminary orders (Article 17.B)

SEC. 28. Grant of Interim Measure of Protection. (a) It is not incompatible with an arbitration agreement for a party to request, before constitution of the tribunal, from a Court an interim measure of protection and for the Court to grant such measure. After constitution of the arbitral tribunal and during arbitral proceedings, a request for an interim measure of protection or modification thereof, may be made with the arbitral tribunal or to the extent that the arbitral tribunal has no power to act or is unable to act effectively, the request may be made with the Court. The arbitral tribunal is deemed constituted when the sole arbitrator or the third arbitrator who has been nominated, has accepted the nomination and written communication of said nomination and acceptance has been received by the party making request.

Unless otherwise agreed by the parties, a party may, without notice to any other party, make a request for an interim measure together with an application for a preliminary order directing a party not to frustrate the purpose of the interim measure requested. The arbitral tribunal may grant a preliminary order provided it considers that prior disclosure of the request for the interim measure to the party against whom it is directed risks frustrating the purpose of the measure.

(b) The following rules on interim or provisional relief shall be observed: (1) Any party may request that provision relief be granted against the adverse party: (2) Such relief may be granted: (i) to prevent irreparable loss or injury: (ii) to provide security for the performance of any obligation; (iii) to produce or preserve any evidence; or (iv) to compel any other appropriate act or omission. (3) The order granting provisional relief may be conditioned upon the provision of security or any act or omission specified in the order. (4) Interim or provisional relief is requested by written application transmitted by reasonable means to the Court or arbitral tribunal as the case may be and the party against whom the relief is sought, describing in appropriate detail the precise relief, the party against whom the relief is requested, the grounds for the relief, and evidence supporting the request.

Specific regime for preliminary orders (Article 17 C) Immediately after the arbitral tribunal has made a determination in respect of an application for a preliminary order, the arbitral tribunal shall give notice to all parties of the request for the interim measure, the application for the preliminary order, the preliminary order, if any, and all other communications, including by indicating the content of any oral communication, between any party and the arbitral tribunal in relation thereto. At the same time, the arbitral tribunal shall give an opportunity to any party against whom a preliminary order is directed to present its case at the earliest practicable time. The arbitral tribunal shall decide promptly on any objection to the preliminary order.

(5) The order shall be binding upon the parties. (6) Either party may apply with the Court for assistance in Implementing or enforcing an interim measure ordered by an arbitral tribunal.

Q: What is the termination period of the preliminary order?

Conditions for granting interim measures (Article 17. A)

A: A preliminary order shall expire after twenty days from the date on which it was issued by the arbitral tribunal. However, the arbitral tribunal may issue an interim measure adopting or modifying the preliminary order, after the party against whom the preliminary order is directed has been given notice and an opportunity to present its case.

Q: What are the conditions to be satisfied by the requesting party before the interim measure be granted?

Q: Is the preliminary order subject to enforcement by the court?

(7) A party who does not comply with the order shall be liable for all damages resulting from noncompliance, including all expenses, and reasonable attorney's fees, paid in obtaining the order's judicial enforcement.

A:


30



A: No, a preliminary order shall be binding on the parties but shall not be subject to enforcement by a court. Q: Does it constitute an award?

_____________________________________________

caused by the measure or the order to any party if the arbitral tribunal later determines that, in the circumstances, the measure or the order should not have been granted. The arbitral tribunal may award such costs and damages at any point during the proceedings.

A: No, such a preliminary order does not constitute an award. Recognition and enforcement of interim measures (Article 17 H)

Interim measures: Modification, suspension, termination (Article 17 D) Q: May the court or tribunal modify. Suspend or terminate an interim measure? A: The arbitral tribunal may modify, suspend or terminate an interim measure or a preliminary order it has granted, upon application of any party or, in exceptional circumstances and upon prior notice to the parties, on the arbitral tribunal’s own initiative. Provision of security (Article 17 E) Q: Is security required in case of provisional remedies?

Q: What is the rule regarding the Recognition and enforcement of interim measures? A: An interim measure issued by an arbitral tribunal shall be recognized as binding and, unless otherwise provided by the arbitral tribunal, enforced upon application to the competent court, irrespective of the country in which it was issued, subject to the provisions of article 17. NOTE: The party who is seeking or has obtained recognition or enforcement of an interim measure shall promptly inform the court of any termination, suspension or modification of that interim measure.

A: The arbitral tribunal may require the party requesting an interim measure to provide appropriate security in connection with the measure. The arbitral tribunal shall require the party applying for a preliminary order to provide security in connection with the order unless the arbitral tribunal considers it inappropriate or unnecessary to do so. Disclosure (Article 17 F)

Grounds for refusing recognition or enforcement (Article 17 I) Q: When may the recognition or enforcement of interim measure be refused? A: Recognition or enforcement of an interim measure may be refused only: a.

Q: What is the rule on disclosure of material changes on the circumstances for application of the provisional remedy?

At the request of the party against whom it is invoked if the court is satisfied that: 1.

A: The arbitral tribunal may require any party promptly to disclose any material change in the circumstances on the basis of which the measure was requested or granted.

2.

The party applying for a preliminary order shall disclose to the arbitral tribunal all circumstances that are likely to be relevant to the arbitral tribunal’s determination whether to grant or maintain the order, and such obligation shall continue until the party against whom the order has been requested has had an opportunity to present its case. Thereafter, paragraph (1) of this article shall apply.

3.

Costs and Damages (Article 17 G) Q: What if the other party suffers damages as a consequence of the provisional remedy? A: The party requesting an interim measure or applying for a preliminary order shall be liable for any costs and damages

b.

Such refusal is warranted on the grounds set forth in article 36(1)(a)(i), (ii), (iii) or (iv); or The arbitral tribunal’s decision with respect to the provision of security in connection with the interim measure issued by the arbitral tribunal has not been complied with; or The interim measure has been terminated or suspended by the arbitral tribunal or, where so empowered, by the court of the State in which the arbitration takes place or under the law of which that interim measure was granted; or

If the court finds that: 1.

he interim measure is incompatible with the powers conferred upon the court unless the court decides to reformulate the interim measure to the extent necessary to adapt it to its own powers and procedures for the purposes of enforcing that interim measure and without modifying its substance; or


31



2.

Any of the grounds set forth in article 36(1)(b)(i) or apply to the recognition and enforcement of the interim measure.

_____________________________________________

A: 1.

Q: May the court where the recognition or enforcement is sought make that determination or review of the substance of the interim measure?

2.

The parties are free to agree on the place of arbitration. Failing such agreement, the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties.

A: Any determination made by the court on any ground in paragraph (1) of this article shall be effective only for the purposes of the application to recognize and enforce the interim measure. The court where recognition or enforcement is sought shall not, in making that determination, undertake a review of the substance of the interim measure.

NOTE: The arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of goods, other property or documents.

Court-ordered interim measures

Commencement of arbitral proceedings (Article 21)

A court shall have the same power of issuing an interim measure in relation to arbitration proceedings, irrespective of whether their place is in the territory of this State, as it has in relation to proceedings in courts. The court shall exercise such power in accordance with its own procedures in consideration of the specific features of international arbitration.

Q: When does the arbitral proceeding commence? A: Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. Language of the proceedings (Article 22)

CONDUCT OF ARBITRAL PROCEEDINGS Q: What should be the language of the proceedings? Q: How should the parties be treated during the arbitral proceedings? A: The parties shall be treated with equality and each party shall be given a full opportunity of presenting his case (Art. 18). Q: What rules will govern the conduct of arbitral proceedings? A: Determination of rules of procedure (Article 19) 1.

2.

Subject to the provisions of this Law, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings. Failing such agreement, the arbitral tribunal may, subject to the provisions of this Law, conduct the arbitration in such manner as it considers appropriate. The power conferred upon the arbitral tribunal includes the power to determine the admissibility, relevance, materiality and weight of any evidence.

A: The parties are free to agree on the language or languages to be used in the arbitral proceedings. Failing such agreement, the arbitral tribunal shall determine the language or languages to be used in the proceedings. This agreement or determination, unless otherwise specified therein, shall apply to any written statement by a party, any hearing and any award, decision or other communication by the arbitral tribunal. NOTE: The arbitral tribunal may order that any documentary evidence shall be accompanied by a translation into the language or languages agreed upon by the parties or determined by the arbitral tribunal. Statements of claim and defense (Art. 23) Q: When should the claimant file his statement of claim? A: Within the period of time agreed by the parties or determined by the arbitral tribunal, the claimant shall state: 1. 2. 3.

the facts supporting his claim, the points at issue and the relief or remedy sought,

Place of arbitration (Article 20) Q: How about the respondent? Q: Where is the place of arbitration?


32



A: Within the period of time agreed by the parties or determined by the arbitral tribunal, the respondent shall: 1.

State his defense in respect of these particulars, unless the parties have otherwise agreed as to the required elements of such statements.

_____________________________________________

A: Unless otherwise agreed by the parties, if, without showing sufficient cause: 1.

Q: May the parties submit documents?

2.

A: The parties may submit with their statements all documents they consider to be relevant or may add a reference to the documents or other evidence they will submit.

3.

the claimant fails to communicate his statement of claim in accordance with article 23(1), the arbitral tribunal shall terminate the proceedings; the respondent fails to communicate his statement of defense in accordance with article 23(1), the arbitral tribunal shall continue the proceedings without treating such failure in itself as an admission of the claimant’s allegations; any party fails to appear at a hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the award on the evidence before it.

Q: May the parties amend or supplement his statement of claim or defense? A: Unless otherwise agreed by the parties, either party may amend or supplement his claim or defense during the course of the arbitral proceedings, unless the arbitral tribunal considers it inappropriate to allow such amendment having regard to the delay in making it.

Expert appointed by arbitral tribunal (Article 26) Q: May experts be appointed by the arbitral tribunal? A: Unless otherwise agreed by the parties, the arbitral tribunal:

Hearings and written proceedings (Article 24) a. Q: What should be the form of the hearings? A: Subject to any contrary agreement by the parties, the arbitral tribunal shall decide whether: a. b.

to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of documents and other materials.

NOTE: However, unless the parties have agreed that no hearings shall be held, the arbitral tribunal shall hold such hearings at an appropriate stage of the proceedings, if so requested by a party.

b.

may appoint one or more experts to report to it on specific c issues to be determined by the arbitral tribunal; may require a party to give the expert any relevant information or to produce, or to provide access to, any relevant documents, goods or other property for his inspection.

NOTE: Unless otherwise agreed by the parties, if a party so requests or if the arbitral tribunal considers it necessary, the expert shall, after delivery of his written or oral report, participate in a hearing where the parties have the opportunity to put questions to him and to present expert witnesses in order to testify on the points at issue. Court assistance in taking evidence (Article 27)

Q: What is the rule on notice? A: The parties shall be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the purposes of inspection of goods, other property or documents. All statements, documents or other information supplied to the arbitral tribunal by one party shall be communicated to the other party. Also any expert report or evidentiary document on which the arbitral tribunal may rely in making its decision shall be communicated to the parties. Default of a party (Article 25)

The arbitral tribunal or a party with the approval of the arbitral tribunal may request from a competent court of this State assistance in taking evidence. The court may execute the request within its competence and according to its rules on taking evidence. CHAPTER VI. MAKING OF AWARD AND TERMINATION OF PROCEEDINGS Rules applicable to substance of dispute Article 28) Q: What are the rules applicable to the substance of the case?

Q: When may a party be declared in default?


33



A: (1) The arbitral tribunal shall decide the dispute in accordance with such rules of law as are chosen by the parties as applicable to the substance of the dispute. Any designation of the law or legal system of a given State shall be construed, unless otherwise expressed, as directly referring to the substantive law of that State and not to its conflict of laws rules. (2) Failing any designation by the parties, the arbitral tribunal shall apply the law determined by the conflict of laws rules which it considers applicable. (3) The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorized it to do so. (4) In all cases, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction.

_____________________________________________

all members of the arbitral tribunal shall suffice, provided that the reason for any omitted signature is stated. Q: Should the reasons for the award be stated? A: The award shall state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given or the award is an award. Q: What else should be stated in the award? A: The award shall state its date and the place of arbitration. The award shall be deemed to have been made at that place. NOTE: After the award is made, a copy signed by the arbitrators in accordance with paragraph (1) of this article shall be delivered to each party. Termination of the proceedings (Article 32)

Decision-making by panel of arbitrators (Article 29) Q: When is the arbitral proceedings considered terminated? Q: How should the panel of arbitrators decide on the case? A: In arbitral proceedings with more than one arbitrator, any decision of the arbitral tribunal shall be made, unless otherwise agreed by the parties, by a majority of all its members. However, questions of procedure may be decided by a presiding arbitrator, if so authorized by the parties or all members of the arbitral tribunal.

A: The arbitral proceedings are terminated by the final award or by an order of the arbitral tribunal. Q: When should the arbitral tribunal issue an order for the termination of the arbitral proceedings? A: The arbitral tribunal shall issue an order for the termination of the arbitral proceedings when:

Settlement (Article 30) Q: In case the parties, during the arbitration proceedings settle the dispute, what is the effect of such settlement to the proceedings? A: If, during arbitral proceedings, the parties settle the dispute, the arbitral tribunal shall terminate the proceedings and, if requested by the parties and not objected to by the arbitral tribunal, record the settlement in the form of an arbitral award on agreed terms. Q: When should the arbitral tribunal render an award? A: An award on agreed terms shall be made in accordance with the provisions of article 31 and shall state that it is an award. Such an award has the same status and effect as any other award on the merits of the case.

(a) the claimant withdraws his claim, unless the respondent objects thereto and the arbitral tribunal recognizes a legitimate interest on his part in obtaining a final settlement of the dispute; (b) the parties agree on the termination of the proceedings; (c) the arbitral tribunal finds that the continuation of the proceedings has for any other reason become unnecessary or impossible. Correction and interpretation of award; additional award (Article 33) Q: When may the party request the arbitral tribunal to correct the award? A: Within thirty days of receipt of the award, unless another period of time has been agreed upon by the parties:

Form and contents of award (Article 31) a. Q: What should be the form of the award? A: The award shall be made in writing and shall be signed by the arbitrator or arbitrators. In arbitral proceedings with more than one arbitrator, the signatures of the majority of

A party, with notice to the other party, may request the arbitral tribunal to correct in the award any errors in computation, any clerical or typographical errors or any errors of similar nature;


34



b.

_____________________________________________

If so agreed by the parties, a party, with notice to the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award.

If the arbitral tribunal considers the request to be justified, it shall make the correction or give the interpretation within thirty days of receipt of the request. The interpretation shall form part of the award. Q: Can the arbitration tribunal correct the error on its own initiative? A: Yes, the arbitral tribunal may correct any error on its own initiative within thirty days of the date of the award. NOTE: Unless otherwise agreed by the parties, a party, with notice to the other party, may request, within thirty days of receipt of the award, the arbitral tribunal to make an additional award as to claims presented in the arbitral proceedings but omitted from the award. If the arbitral tribunal considers the request to be justified, it shall make the additional award within sixty days.

(iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Law from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Law; or b.

the court finds that: (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law of this State; or (ii) the award is in conflict with the public policy of this State.

NOTE: An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the award or, if a request had been made under article 33, from the date on which that request had been disposed of by the arbitral tribunal. Q: Can the court be given the opportunity to resume the arbitral proceedings?

CHAPTER VII. RECOURSE AGAINST AWARD Application for setting aside as exclusive recourse against arbitral award (Article 34) Q: Under what instance may an arbitral award be set aside? A: An arbitral award may be set aside by the court specified in article 6 only if the party making the application furnishes proof that: a.

A: The court, when asked to set aside an award, may, where appropriate and so requested by a party, suspend the setting aside proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal’s opinion will eliminate the grounds for setting aside. CHAPTER VIII. RECOGNITION AND ENFORCEMENT OF AWARDS

The party making the application furnishes proof that: Recognition and enforcement (Article 35) (i) a party to the arbitration agreement referred to in article 7 was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of this State; or (ii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iii) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside; or

(1) An arbitral award, irrespective of the country in which it was made, shall be recognized as binding and, upon application in writing to the competent court, shall be enforced subject to the provisions of this article and of article 36. (2) The party relying on an award or applying for its enforcement shall supply the original award or a copy thereof. If the award is not made in an official language of this State, the court may request the party to supply a translation thereof into such language. Grounds for refusing recognition or enforcement (Article 36) Q: When can the award be refused? A: Recognition or enforcement of an arbitral award, irrespective of the country in which it was made, may be refused only:


35



a.

at the request of the party against whom it is invoked, if that party furnishes to the competent court where recognition or enforcement is sought proof that:

b.

a party to the arbitration agreement referred to in article 7 was under some incapacity; or the said 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; or

c.

the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

d.

the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or

e.

f.

_____________________________________________

Republic Act No. 9285 AN ACT TO INSTITUTIONALIZE THE USE OF AN ALTERNATIVE DISPUTE RESOLUTION SYSTEM IN THE PHILIPPINES AND TO ESTABLISH THE OFFICE FOR ALTERNATIVE DISPUTE RESOLUTION, AND FOR OTHER PURPOSES "Alternative Dispute Resolution Act of 2004." CHAPTER 4 - INTERNATIONAL COMMERCIAL ARBITRATION SEC. 19. Adoption of the Model Law on International Commercial Arbitration International commercial arbitration shall be governed by the Model Law on International Commercial Arbitration (the "Model Law") adopted by the United Nations Commission on International Trade Law on June 21, 1985 (United Nations Document A/40/17) and recommended approved on December 11, 1985, copy of which is hereto attached as Appendix "A". SEC. 20. Interpretation of Model Law Q: How should the Model Law be interpreted? A: In interpreting the Model Law, regard shall be had to: a. b. c.

the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

d.

the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, that award was made; or

its international origin and to the need for uniformity in its interpretation and resort may be made to the travaux preparatories and the report of the Secretary General of the United Nations Commission on International Trade Law dated March 25, 1985 entitled, "International Commercial Arbitration: Analytical Commentary on Draft Trade identified by reference number A/CN. 9/264."

(b) if the court finds that: SEC. 21. Commercial Arbitration (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law of this State; or (ii) the recognition or enforcement of the award would be contrary to the public policy of this State.

Q: When is arbitration considered as commercial? A: An arbitration is "commercial" if it covers matters arising from all relationships of a commercial nature, whether contractual or not. Q: What are the relationships of a transaction covered? A: 1. 2. 3.

any trade transaction for the supply or exchange of goods or services; distribution agreements; construction of works; commercial representation or agency;


36



4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

factoring; leasing, consulting; engineering; licensing; investment; financing; banking; insurance; joint venture and other forms of industrial or business cooperation; carriage of goods or passengers by air, sea, rail or road

_____________________________________________

SEC. 24. Referral to Arbitration Q: When may the parties invoke the arbitration clause? A: A court before which an action is brought in a matter which is the subject matter of an arbitration agreement shall, a. b.

if at least one party so requests not later that the pre-trial conference, or upon the request of both parties thereafter, refer the parties to arbitration

Q: What are the instances where the court may refuse the invocation of the arbitration?

SEC. 22. Legal Representation in International Arbitration A: Q: What is the rule regarding the Legal Representation in International Arbitration? May a foreign lawyer be a representative? A: In international arbitration conducted in the Philippines, a party may be presented by any person of his choice. Provided, that such representative, unless admitted to the practice of law in the Philippines, shall not be authorized to appear as counsel in any Philippine court, or any other quasi-judicial body whether or not such appearance is in relation to the arbitration in which he appears.

1. 2. 3.

unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed.

SEC. 25. Interpretation of the Act Q: What is the rule in interpretation of this Act in connection with the policy of the law? A: In interpreting the Act, the court shall have due regard to the policy of the law in favor of arbitration.

SEC. 23. Confidential of Arbitration Proceedings Q: What is the rule in case of multiple parties? Q: May the arbitration proceedings be published? A: The arbitration proceedings, including the records, evidence and the arbitral award, shall be considered confidential and shall not be published

A: Where action is commenced by or against multiple parties, one or more of whom are parties who are bound by the arbitration agreement although the civil action may continue as to those who are not bound by such arbitration agreement.

Q: What are the exceptions? A: Except SEC. 26. Meaning of "Appointing Authority 1. 2.

with the consent of the parties, or for the limited purpose of disclosing to the court of relevant documents in cases where resort to the court is allowed herein. Provided, however, that the court in which the action or the appeal is pending may issue a protective order to prevent or prohibit disclosure of documents or information containing secret processes, developments, research and other information where it is shown that the applicant shall be materially prejudiced by an authorized disclosure thereof.

Q: Who is an appointing authority? A: "Appointing Authority" as used in the Model Law shall mean the person or institution named in the arbitration agreement as the appointing authority; or the regular arbitration arbitration institution under whose rules the arbitration is agreed to be conducted. Where the parties have agreed to submit their dispute to institutional arbitration rules, and unless they have agreed to a different procedure, they shall be deemed to have agreed to procedure under such arbitration rules for the selection and appointment of arbitrators. In ad hoc arbitration, the default appointment of an arbitrator shall be made by the National President of the


37



_____________________________________________

Integrated Bar of the Philippines (IBP) or his duly authorized representative.

Q: What is the form of the application for the interim measure?

SEC. 27. What Functions May be Performed by Appointing Authority

A: Interim or provisional relief is requested by written application transmitted by reasonable means to the Court or arbitral tribunal as the case may be and the party against whom the relief is sought, describing in appropriate detail the precise relief, the party against whom the relief is requested, the grounds for the relief, and evidence supporting the request.

The functions referred to in Articles 11(3), 11(4), 13(3) and 14(1) of the Model Law shall be performed by the Appointing Authority, unless the latter shall fail or refuse to act within thirty (30) days from receipt of the request in which case the applicant may renew the application with the Court.

Q: How is the interim measure enforced?

SEC. 28. Grant of Interim Measure of Protection

A: Either party may apply with the Court for assistance in Implementing or enforcing an interim measure ordered by an arbitral tribunal.

Q: May the court grant interim measures of protection in favor of one party? From whom shall it be applied?

Q: What if a party does not comply with the order?

A:

A: A party who does not comply with the order shall be liable for: a.

b.

It is not incompatible with an arbitration agreement for a party to request, before constitution of the tribunal, from a Court an interim measure of protection and for the Court to grant such measure. After constitution of the arbitral tribunal and during arbitral proceedings, a request for an interim measure of protection or modification thereof, may be made with the arbitral tribunal or to the extent that the arbitral tribunal has no power to act or is unable to act effectively, the request may be made with the Court.

Q: When is the arbitral tribunal deemed constituted? A: The arbitral tribunal is deemed constituted when the sole arbitrator or the third arbitrator who has been nominated, has accepted the nomination and written communication of said nomination and acceptance has been received by the party making request. Q: What are the purposes of the interim measures? A: Such relief may be granted: 1. 2. 3. 4.

to prevent irreparable loss or injury: to provide security for the performance of any obligation; to produce or preserve any evidence; or to compel any other appropriate act or omission.

NOTE: The order granting provisional relief may be conditioned upon the provision of security or any act or omission specified in the order.

a. b. c.

all damages resulting from noncompliance, including all expenses, and reasonable attorney's fees, paid in obtaining the order's judicial enforcement.

SEC. 29. Further Authority for Arbitrator to Grant Interim Measure of Protection NOTE: Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order any party to take such interim measures of protection as the arbitral tribunal may consider necessary in respect of the subject matter of the dispute following the rules in Section 28, paragraph 2. Such interim measures may include but shall not be limited to preliminary injuction directed against a party, appointment of receivers or detention, preservation, inspection of property that is the subject of the dispute in arbitration. Either party may apply with the Court for assistance in implementing or enforcing an interim measures ordered by an arbitral tribunal.

SEC. 30. Place of Arbitration Q: Where is the place of arbitration? A: GR: The parties are free to agree on the place of arbitration.


38



_____________________________________________

XPN: Failing such agreement, the place of arbitration shall be in Metro Manila, unless the arbitral tribunal, having regard to the circumstances of the case, including the convenience of the parties shall decide on a different place of arbitration. NOTE: The arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts, or the parties, or for inspection of goods, other property or documents.

SEC. 31. Language of the Arbitration Q: What is the rule as to the language of the arbitration? A: GR: The parties are free to agree on the language or languages to be used in the arbitral proceedings. XPN: Failing such agreement, the language to be used shall be English in international arbitration, and English or Filipino for domestic arbitration, unless the arbitral tribunal shall determine a different or another language or languages to be used in the proceedings. This agreement or determination, unless otherwise specified therein, shall apply to any written statement by a party, any hearing and any award, decision or other communication by the arbitral tribunal. NOTE: The arbitral tribunal may order that any documentary evidence shall be accompanied by a translation into the language or languages agreed upon by the parties or determined in accordance with paragraph 1 of this section.

REFERENCES    

UST Golden Notes 2008 Marx Notes: Alternative Dispute Resolution UNCTRAL New York Convention


39


ADR Reviewer

Recommend Documents