ALTERNATIVE DISPUTE RESOLUTION (ADR)
Arthur P. Autea

OVERVIEW
This law is covers both domestic and
international arbitration. It provides that
international commercial arbitration in the
Philippines shall be governed by the rules on
the law of international commercial arbitration.
History of ADR

1950 – Civil Code

1953 – Domestic Arbitration Law (DAR)
This law is merely a law on domestic
arbitration. (Autea)
The remedies available to the parties will
depend whether the arbitration is domestic or
international. Also, the enforcement of he
outcome of the arbitration is different. (Autea)
2004 – Alternative Dispute Resolution Act
(ADRA)

2009 – Special ADR Rules (SAR)
This covered the gaps found in DAR and
ADRA.
Concept of ADR

1976 – UNCITRAL Arbitration Rule
"ALTERNATIVE DISPUTE RESOLUTION System"
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, as defined in this Act, 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. (Sec. 3(a),
ADRA)

1985 – UNCITRAL Model Law (Model Law)
Examples of ADR
The Philippines follow the 1985 version of the
Model Law; not its updated version. (Autea)
"ARBITRATION" See Arbitration in General.

1958 – New York Convention
This convention is about the recognition and
enforcement of foreign arbitration. For
contracting parties, they are bound by foreign
arbitral awards rendered in any of the foreign
states. (Autea)
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Arbitration is always consensual. Parties cannot
be forced into arbitration but once a contract is
signed the parties are bound by it because
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“obligations arising from contracts have the force of
law between the contracting parties.” However, although the law provides such, this must still be
invoked. (Autea)
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. (Sec. 3(n), ADRA)
Also, arbitration is confidential unless there is a
waiver of parties. (Autea)
"MINI-TRIAL" 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. (Sec. 3(u), ADRA)
It must be noted that the award of an arbitrator is
binding on the parties. (Autea)
"MEDIATION" 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. (Sec. 3(q), ADRA)
Unlike arbitration, the resolution of the mediator is
not binding on the parites. However, there is such a
thing called “mediated settlement agreement” which necessarily becomes binding on the parites.
(Autea)
Party Autonomy
Party autonomy is “the freedom of the party to
make their own arrangements to resolve their
disputes.” (Sec. 2, ADRA) It is the freedom of the
parties to determine the rules/laws governing the
mode of resolving their dispute. (Autea)
This is what distinguishes
conventional litigation. (Autea)
arbitration
from
Arbitration vs. Litigation
The term "mediation' shall include conciliation.
(Sec. 7, ADRA)
"MEDIATION-ARBITRATION" or Med-Arb is a step
dispute resolution process involving both mediation
and arbitration. (Sec. 3(t), ADRA)
ARBITRATION
private & confidential
parties
may
select
arbitrator, unless the
parties fail to agree
"EARLY NEUTRAL EVALUATION" means an
ADR process wherein parties and their lawyers are
brought together early in a pre-trial phase to
What is important is that
the parties were given
the opportunity to agree
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LITIGATION
public
parties cannot agree on
the presiding officer
because the judge is
raffled
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Arthur P. Autea
on
the
arbitrator.
(Autea)
parties can select the
governing law that will
determine
their
substantive rights
procedure depends on
the agreement
formal offer of evidence
is generally submitted
at the beginning
venue depends on the
agreement
Philippine law governs
unless there a choice of
law stipulation in the
contract
Rule of Court applies
formal offer of evidence
is only submitted at the
end
as a rule, Rules of
Court determine the
venue but it may also
depend
on
the
agreement
submission
to
the submission
to
the
process is consensual
process
is
not
consensual
Claimant v. Respondent Plaintiff v. Defendant /
Petitioner
v.
Respondent
Arbitrator
Judge
Stenographer
Court Reporter
Award / Final Award / Judgment
/
Final
Interim Award
Judgment / Interlocutory
Order
their official duties, unless there is a clear showing
of bad faith, malice or gross negligence.] (Sec. 5,
ADRA; Sec. 38(1), Administrative Code)
An arbitrator has the same status as a RTC Judge.
(Autea)
Flowchart of Arbitration
Arbitration Agreement
Dispute
Commencement of Arbitration
Selection of Arbitrators
Conduct of Arbitration Proceedigs
Preliminary Conference
Submission of Statements
Presentation of Witnesses
Nature of Liability of ADR Providers and
Practitioners
Submission of Memorandum
The ADR providers and practitioners [shall not be
civilly liable for acts done in the performance of
Arbitral Award
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Ways to be Bound to Arbtration
1) sign a document with an arbitration clause
international,
Law will apply.
Model have their own rules
that the parties can
adopt.
2) join an organization with its own rules saying
that any dispute is to be resolved through
arbitration
3) step into the shoes of a predecessor who was
bound to arbitration
4) agree to be a surety
Ad Hoc vs. Institutional Arbitration
AD HOC
INSTITUTIONAL
Parties will stipulate the Parties will submit the
rules governing the dispute to an institution
arbitration proceedings. which
has
predetermined
rules
governing
the
arbitration proceedings.
Arbitration is deemed Arbitration is deemed
commenced
upon commenced
upon
service of demand for notice of the institution
arbitration.
to the respondent of the
claimant’s request for arbitration
with
the
institution.
For
domestic In
default
of
the
arbitration, the DAL and agreement
of
the
SAR will apply; for parties,
institutions
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ARBITRATION AGREEMENT IS A CONTRACT
Arbitration
Agreement
Submission
The elements of arbitration, as enumerated by Sec.
3(a) of the ADRA, are:
SUBMISSION
AGREEMENT
An agreement to submit
the
dispute
to
arbitration.
1) one or more arbitrators;
2) appointed in accordance with:
a) the agreement of the parties; or
b) rules promulgated pursuant to ADRA; and
3) resolution of dispute by rendering an award.
(Autea)
The parties may enter
into this at any time,
even after pre-trial.
“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. An
arbitration agreement may be in the form or an
arbitration clause in a contract or in the form of a
separate agreement. (Art. 7(1), Model Law)
Agreement
ARBITRATION
AGREEMENT
An
agreement
that
determines the rights,
obligations, procedure
and rules. It may be in a
separate agreement or
may be a clause in a
contract.
A party may invoke this
at any time before pretrial, after which, both
parties must invoke it.
This comes before the
dispute.
vs.
The dispute comes
before this agreement
to arbitrate.
The distinction lies in the time when the dispute
arises or when the agreement was made. (Autea)
Arbitration in General
"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 this Act,
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resolve a dispute by rendering an award. (Sec.
3(d), ADRA)
This definition combines the concept of arbitration
agreement and submission agreement. (Autea)
Obligations arising from contracts have the force of
law between the contracting parties and should be
complied with in good faith. (Art. 1159, CC)
The principle in this provision is known as the
principle of autonomy of will. It dictates that the
parties can stipulate anything, provided that the
terms of the contract are not contrary to law, public
policy, or pubic order. (Autea)
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ALTERNATIVE DISPUTE RESOLUTION (ADR)
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Maria Luisa Park vs. Almendras (2009)
The agreement to submit all disputes to arbitration
is a contract. As such, the arbitration agreement
binds the parties thereto, as well as their assigns
and heirs.
Mere exchange of correspondence will not suffice
much less satisfy the requirement of arbitration.
Arbitration being the mode of settlement between
the parties expressly provided for in their by-laws,
the same should be respected. Unless an
arbitration agreement is such as absolutely to close
the doors of the courts against the parties, the
courts should look with favor upon such amicable
arrangements.
Commentary: In this case, neither of the parties
invoked the arbitration clause. As mentioned
earlier, the arbitration clause must be invoked
before the parties are bound to go through the
arbitration process. More importantly, the arbitration
clause should not be invoked to dismiss the case;
instead, it should be invoked to go into the
arbitration process. The proper remedy in this case
should have been a motion for suspension of the
case. (Autea)
It must be noted that the fact that a judgment has
been rendered is not a bar to proceed to arbitration.
(Autea)
Exclusions from ADR
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The following matter cannot be the subject of
commercial arbitration:
1)
2)
3)
4)
5)
6)
7)
8)
labor disputes;
civil status of persons;
validity of marriage;
any ground for legal separation;
jurisdiction of courts;
future legitime;
criminal liability; and
those which by law cannot be compromised.
(Sec. 6, ADRA)
Rescission/Resolution
The injured party may choose between the
fulfillment and the rescission of the obligation, with
the payment of damages in either case. He may
also seek rescission, even after he has chosen
fulfillment, if the latter should become impossible.
(Art. 1191, CC)
Korea Technologies Co., Ltd. v. Lerma (2008)
Being bound to the contract of arbitration, a party
may not unilaterally rescind or terminate the
contract for whatever cause without first resorting to
arbitration.
Commentary: Pursuant to this case, if a contract
contains an arbitration clause, a party can only
rescind the contract through the arbitration process.
On the other hand, if the contract does not contain
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an arbitration clause, a party can unilaterally
rescind the contract under Article 1191. (Autea)
DISTINCTION BETWEEN DOMESTIC AND
INTERNATIONAL/FOREIGN ARBITRATION
DOMESTIC
FOREIGN
Arbitration
where
the Arbitration
where
the
agreed place of arbitration agreed place of arbitration
is WITHIN the Philippines.
is OUTSIDE the Philippines.
(Rule 1.11, SAR)
Award may be vacated by a Award cannot be set aside
court.
by a court.
DOMESTIC
INTERNATIONAL
Arbitration that is not An
arbitration
is
international as defined in international if:
Article (3) of the Model Law.
(Sec. 32, ADRA)
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
b)
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One of the following
places
is
situated
outside the State in
which the parties have
their
places
of
business:
1) The
place
of
arbitration
if
determined in, or
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pursuant to, the
arbitration
agreement;
2) 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
c)
To set aside a domestic
(non-intenational)
award,
the period to vacate the
award is within thirty (30)
days from the date of
service
upon
the
applicant, the award is
subject to confirmation by
the court.
The
parties
have
expressly agreed that
the subject matter of
the
arbitration
agreement relates to
more than one country.
(Art. 1(3), Model Law)
To set aside a domestic
international award, the
period to set it aside in not
later
than
three
(3)
months from the date the
applicant received the
award, otherwise the court
shall recognize and enforce
it.
parties involved and (3) obligation involved. The remedies
available to the parties will depend on the kind of
arbitration. (Autea)
Illustration: PLDT (PH) and Globe (PH) had a dispute for
arbitration, and the place of arbitration is also in the
Philippines, it will be considered as a domestic arbitration.
However, if the seat of arbitration is in a country other than
the Philippines, it will be considered as a foreign arbitration
pursuant to Rule 1.11 of the Special ADR Rules. If the
same parties had a dispute involving an obligation that is to
be performed outside of the Philippines, regardless of the
seat of arbitration, it will be considered as an international
arbitration, pursuant to Art. 1(3) of the UNCITRAL Model
Law.
In another scenario, if PLDT and AT&T (US) had a dispute
and the seat of arbitration is in the Philippines, it will be
considered as an international arbitration. Although this will
be an international arbitration, it is not a foreign arbitration
because the seat of arbitration remains in the Philippines.
If the same parties had a dispute and the place of
arbitration is outside of the Philippines, then it will be an
international and foreign arbitration.
If two international entities, SingTel (SG) and AT&T (US)
had a dispute and the place of arbitration is set in another
country other than the Philippines, it will be a purely foreign
arbitration in the point of view of Philippine laws.
To determine whether the arbitration is domestic,
international or foreign, the (1) place of arbitration, (2)
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FORMAL REQUISITES
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.
(Sec. 4, DAR)
The arbitration agreement shall be in writing. It is in writing
if:
a) it is contained in a document signed by the
parties;
b) 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;
c) it is contained in an exchange of statements of
claim and defense in which the existence of an
agreement is alleged by one party and not denied
by the other; or
The requirement that an arbitration agreement be in writing
is met by an electronic communication if the information
contained therein is accessible so as to be useable for
subsequent reference. (Art. 7(4), Model Law)
BF Corporation v. Court of Appeals (1998)
The formal requirements of an agreement to arbitrate are
the following: (a) it must be in writing and (b) it must be
subscribed by the parties or their representatives. To
“subscribe” means to write underneath, as one’s name;; to sign at the end of a document. That word may sometimes
be construed to mean to give consent to or to attest.
The Court finds that these requisites were complied with in
the contract in question. The Articles of Agreement, which
incorporates all the other contracts and agreements
between the parties, was signed by representatives of both
parties and duly notarized. The failure of the private
respondent’s representative to initial to ‘Condition of Contract’ would therefor not affect the compliance with the formal requirements for arbitration agreements because
that particular portion of the covenants between the parties
was included by reference in the Articles of Agreement.
It is conceivable to have an arbitration agreement
although there is no physical evidence, such as in
this instance. (Autea)
d) it is contained in a document containing an
arbitration clause and that document is referred to
in a contract, provided that the reference is made to
make the clause part of the contract. (Art. 7, Model
Law)
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PRINCIPLE OF SEPARABILITY
The principle of separability of the arbitration clause,
which means that said clause shall be treated as an
agreement independent of the other terms of the contract
of which it forms part. A decision that the contract is null
and void shall not entail ipso jure the invalidity of the
arbitration clause. (Rule 2.2(B), SAR; Art. 16, Model Law)
arbitration and that is exactly the situation that the
separability doctrine sought to avoid. Thus, we find that
even the party who has repudiated the main contract is not
prevented from enforcing its arbitration clause. (Cargill vs.
San Fernando, 2011)
Gonzales v. Climax Mining (2007)
The doctrine of separability enunciates that an arbitration
agreement is independent of the main contract. The
arbitration agreement is to be treated as a separate
agreement and the arbitration agreement does not
automatically terminate when the contract of which it is part
comes to an end. The separability of the arbitration
agreement is especially agreement to the determination of
whether the invalidity of the main contract also nullifies the
arbitration clause. Indeed, the doctrine denotes that the
invalidity of the main contract does not affect the validity of
the arbitration agreement. Irrespective of the fact that the
main contract is invalid, the arbitration clause/agreement
still remains valid and enforceable.
Commentary: Applying the Gonzales ruling, an arbitration
agreement which forms part of the main contract shall not
be regarded as invalid or non-existent just because the
main contract is invalid or did not come into existence,
since the arbitration agreement shall be treated as a
separate agreement independent of the main contract. To
reiterate a contrary ruling would suggest that a party's
mere repudiation of the main contract is sufficient to avoid
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COMMENCEMENT OF ARBITRATION
The beginning of arbitration is the agreement and service
of the demand to the other party commences arbitration.
(Autea)
An arbitration shall be instituted by:
(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. Such demand shall be set forth 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. The demand shall be served upon any party
either in person or by registered mail. 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. If the contract between the parties provides for
the appointment of three arbitrators, one to be selected by
each party, the demand shall 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.
(b) In the event that one party defaults in answering the
demand, the aggrieved party may file with the Clerk of the
© Lex Societas (Alvaera & Esguerra)
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. Such demand shall
set forth the nature of the controversy, the amount
involved, if any, and the relief sought, and shall be
accompanied by a true copy of the contract providing for
arbitration.
(c) In the case of the submission of an existing
controversy by the filing with the Clerk of the [Regional
Trial Court] 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.
(d) In the event that one party neglects, fails or refuses to
arbitrate under a submission agreement, the aggrieved
party shall follow the procedure prescribed in
subparagraphs (a) and (b) of this section. (Sec. 5, DAR)
Under Sec. 5 of DAR, adhoc arbitration is commenced by
a demand for arbitration which contains the following:
1) amount involved (if any);
2) relief sought;
3) nature of controversy;
4) appointment of arbitrator (nominee); and
5) attachments (i.e. true copy of the contract with
arbitration agreement). (Autea)
A party aggrieved by the failure, neglect or refusal of
another to perform under an agreement in writing providing
for arbitration may petition the court for an order directing
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that such arbitration proceed in the manner provided for in
such agreement. 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. The court shall
hear the parties, and upon being satisfied that the making
of the agreement or such failure to comply therewith is not
in issue, shall make an order directing the parties to
proceed to arbitration in accordance with the terms of the
agreement. If the making of the agreement or default be in
issue the court shall proceed to summarily hear such
issue. 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.
The court shall decide all motions, petitions or applications
filed under the provisions of this Act, within ten days after
such motions, petitions, or applications have been heard
by it. (Sec. 6, DAR)
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. (Art.
21, Model Law)
© Lex Societas (Alvaera & Esguerra)
JUDICIAL RELIEF BEFORE AND AFTER
COMMENCEMENT OF ARBITRATION
The judicial relief provided in Rule 3, whether resorted to
before or after commencement of arbitration, shall apply
only when the place of arbitration is in the Philippines.
(Rule 3.1, SAR)
See and use the Flowchart of Arbitration guide in
determining the available judicial relief.
BEFORE
COMMENCEMENT
Any party to an arbitration
agreement may petition the
appropriate
court
to
determine any question
concerning the existence,
validity and enforceability of
such arbitration agreement.
(Rule 3.1, SAR)
AFTER
COMMENCEMENT
Any party to arbitration may
petition the appropriate
court for judicial relief from
the ruling of the arbitral
tribunal on a preliminary
question
upholding
or
declining its jurisdiction.
Should the ruling of the
arbitral tribunal declining its
jurisdiction be reversed by
the court, the parties shall
be free to replace the
arbitrators or any one of
them in accordance with the
rules that were applicable
for the appointment of
arbitrator sought to be
replaced. (Rule 3.12, SAR)
The ruling of the trial court The
principle
of
is only prima facie, meaning competence-competence
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arbitration
can
still
commence.
The petition for judicial
determination
of
the
existence, validity and/or
enforceability
of
an
arbitration agreement may
be filed at any time prior to
the
commencement
of
arbitration.
applies.
The petition may be filed
within thirty (30) days after
having received notice of
that ruling by the arbitral
tribunal. (Rule 3.13, SAR)
Despite the pendency of the
petition provided herein,
arbitral proceedings may
nevertheless
be
commenced and continue to
the rendition of an award,
while the issue is pending
before the court. (Rule 3.3,
SAR)
Before Commencement of Arbitration
In resolving the petition, the court must exercise
judicial restraint in accordance with the policy set
forth in Rule 2.4, deferring to the competence or
jurisdiction of the arbitral tribunal to rule on its
competence or jurisdiction. (Rule 3.8, SAR)
A prima facie determination by the court upholding
the existence, validity or enforceability of an
arbitration agreement shall not be subject to a
motion for reconsideration, appeal or certiorari.
© Lex Societas (Alvaera & Esguerra)
Such prima facie determination will not, however,
prejudice the right of any party to raise the issue of
the existence, validity and enforceability of the
arbitration agreement before the arbitral tribunal or
the court in an action to vacate or set aside the
arbitral award. In the latter case, the court’s review of the arbitral tribunal’s ruling upholding the existence, validity or enforceability of the arbitration
agreement shall no longer be limited to a mere
prima facie determination of such issue or issues as
prescribed in this Rule, but shall be a full review of
such issue or issues with due regard, however, to
the standard for review for arbitral awards
prescribed in these Special ADR Rules. (Rule 3.11,
SAR)
After Commencement of Arbitration
The court shall not enjoin the arbitration
proceedings during the pendency of the petition.
Judicial recourse to the court shall not prevent the
arbitral tribunal from continuing the proceedings
and rendering its award. (Rule 3.18(B), SAR)
The aggrieved party may file a motion for
reconsideration of the order of the court. The
decision of the court shall, however, not be subject
to appeal. The ruling of the court affirming the
arbitral tribunal’s jurisdiction shall not be subject to a petition for certiorari. The ruling of the court that
the arbitral tribunal has no jurisdiction may be the
subject of a petition for certiorari. (Rule 3.19, SAR)
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If the arbitral tribunal renders a final arbitral award
and the Court has not rendered a decision on the
petition from the arbitral tribunal’s preliminary ruling affirming its jurisdiction, that petition shall become
ipso facto moot and academic and shall be
dismissed by the Regional Trial Court. The
dismissal shall be without prejudice to the right of
the aggrieved party to raise the same issue in a
timely petition to vacate or set aside the award.
(Rule 3.21, SAR)
ARBITRATORS
Appointment of Arbitrators
The court shall act as Appointing Authority only in
the following instances:
a) Where any of the parties in an institutional
arbitration failed or refused to appoint an
arbitrator or when the parties have failed to
reach an agreement on the sole arbitrator (in an
arbitration before a sole arbitrator) or when the
two designated arbitrators have failed to reach
an agreement on the third or presiding arbitrator
(in an arbitration before a panel of three
arbitrators), and the institution under whose
rules arbitration is to be conducted fails or is
unable to perform its duty as appointing
authority within a reasonable time from receipt
of the request for appointment;
b) In all instances where arbitration is ad hoc
and the parties failed to provide a method for
appointing or replacing an arbitrator, or
substitute arbitrator, or the method agreed upon
is ineffective, and the National President of the
Integrated Bar of the Philippines (IBP) or his
duly authorized representative fails or refuses to
act within such period as may be allowed under
the pertinent rules of the IBP or within such
period as may be agreed upon by the parties,
or in the absence thereof, within thirty (30) days
from receipt of such request for appointment;
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c) Where the parties agreed that their dispute shall
be resolved by three arbitrators but no method
of appointing those arbitrators has been agreed
upon, each party shall appoint one arbitrator
and the two arbitrators thus appointed shall
appoint a third arbitrator. If a party fails to
appoint his arbitrator within thirty (30) 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 a reasonable time from
their appointment, the appointment shall be
made by the Appointing Authority. If the latter
fails or refuses to act or appoint an arbitrator
within a reasonable time from receipt of the
request to do so, any party or the appointed
arbitrator/s may request the court to appoint an
arbitrator or the third arbitrator as the case may
be. (Rule 6.1, SAR)
In appointing an arbitration, the first step is to check
the agreement for the number of arbitrators,
qualifications of each and other terms. The next
step is to determine whether the arbitration is ad
hoc or institutional. If it is institutional, the
appointing authority will only step in if the parties
failed to agree on who to appoint as arbitrator(s).
The appointing authority is whoever is designated
in the contract. If it is institutional, the default
appointing authority is the IBP President. (Autea)
The third instance is distinguished from the first two
because the only thing that is clear in the third
instance is that there is an appointing authority but
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it is unclear if the arbitration is institutional or
adhoc. This is under the assumption that the
appointing authority agreed to be one. (Autea)
Only when all three instances should fail will the
court step in. (Autea)
At any time after the petition is filed and before the
court makes an appointment, it shall also dismiss
the petition upon being informed that the Appointing
Authority has already made the appointment. (Rule
6.7, SAR)
If the court appoints an arbitrator, the order
appointing an arbitrator shall be immediately
executory and shall not be the subject of a motion
for reconsideration, appeal or certiorari. An order of
the court denying the petition for appointment of an
arbitrator may, however, be the subject of a motion
for reconsideration, appeal or certiorari. (Rule 6.9,
SAR)
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 [Regional Trial
Court] shall designate an arbitrator or arbitrators.
The [Regional Trial Court] 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
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(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. (Sec. 8, DAL)
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. (Sec. 9, DAL)
© Lex Societas (Alvaera & Esguerra)
Any person appointed to serve as an arbitrator
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.
No party shall select as an arbitrator any person to
act as his champion or to advocate his cause.
If, after appointment but before or during hearing, a
person appointed to serve as an arbitrator shall
discover 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) to waive the presumptive disqualifying
circumstances; or
(b) to declare the office of such arbitrator vacant.
Any such vacancy shall be filled in the same
manner as the original appointment was made.
(Sec. 10, DAL)
The universal requirement is that an arbitrator must
always be impartial and independent. (Autea)
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Qualifications and disqualifications are grounds to
challenge an arbitrator. It msut be noted that an
arbitrator will only be disqualified if he did not
disclose
his
disqualification.
(Autea)
See
Challenge of Arbitrator.
No arbitrator shall act as a mediator in any
proceeding in which he is acting as arbitrator; and
all negotiations towards settlement of the dispute
must take place without the presence of the
arbitrators.
The arbitrators shall have the power to decide only
those matters which have been submitted to them.
The terms of the award shall be confined to such
disputes.
The arbitrators shall have the power to assess in
their award the expenses of any party against
another party, when such assessment shall be
deemed necessary. (Sec. 20, DAL)
"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
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arbitration, the default appointment of an arbitrator
shall be made by the National President of the
Integrated Bar of the Philippines (IBP) or his duly
authorized representative. (Sec. 26, ADRA)
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. (Sec. 27, ADRA)
Challenge of Arbitrators
The counterpart concept of a challenge is a motion
to inhibit/disqualification or motion for requsal
because in a challenge the party is asking an
arbitrator to step down. Compared to a formal
motion filed in court, a challenge is just a simple
letter. (Autea)
Assuming the contract is silent, if you challenge an
arbitrator and the challenged arbitrator contests the
challenge, the tribunal (if not sole arbitrator) will
have to rule on the challenge. If the tribunal rejects
the challenge, the next step is to go to the
appointing authority. If unfavorable, then you go to
court. (Autea)
When an arbitrator is challenged before the arbitral
tribunal under the procedure agreed upon by the
parties or under the procedure provided for in
Article 13 (2) of the Model Law and the challenge is
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not successful, the aggrieved party may request the
Appointing Authority to rule on the challenge, and it
is only when such Appointing Authority fails or
refuses to act on the challenge within such period
as may be allowed under the applicable rule or in
the absence thereof, within thirty (30) days from
receipt of the request, that the aggrieved party may
renew the challenge in court. (Rule 7.2, SAR)
After hearing, the court shall remove the challenged
arbitrator if it finds merit in the petition; otherwise, it
shall dismiss the petition.
The court shall allow the challenged arbitrator who
subsequently agrees to accept the challenge to
withdraw as arbitrator.
The court shall accept the challenge and remove
the arbitrator in the following cases:
The court will decide the challenge on the basis of
the evidence submitted by the parties in the
following instances:
a. The other arbitrators in the arbitral tribunal
agree to the removal of the challenged
arbitrator; and
b. If the challenged arbitrator fails or refuses to
submit his comment on the petition or the brief
of legal arguments as directed by the court, or
in such comment or brief of legal arguments, he
fails to object to his removal following the
challenge. (Rule 7.7, SAR)
Any clause giving one of the parties power to
choose more arbitrators than the other is void and
of no effect. (Art. 2045, CC)
See Sec. 10 of DAL.
a. The party or parties who named and appointed
the challenged arbitrator agree to the challenge
and withdraw the appointment.
b. The other arbitrators in the arbitral tribunal
agree to the removal of the challenged
arbitrator; and
c. The challenged arbitrator fails or refuses to
submit his comment on the petition or the brief
of legal arguments as directed by the court, or
in such comment or legal brief, he fails to object
to his removal following the challenge.
The court shall decide the challenge on the basis of
evidence submitted by the parties.
© Lex Societas (Alvaera & Esguerra)
The arbitrators may be challenged only for the
reasons mentioned in the 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. While the challenging
incident is discussed before the court, the hearing
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or arbitration shall be suspended, and it shall be
continued immediately after the court has delivered
an order on the challenging incident.
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. (Sec. 11,
DAL)
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. (Art.
12, Model Law)
The parties are free to agree on a procedure for
challenging an arbitrator, subject to the provisions
of paragraph (3) of this article.
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
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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.
If a challenge under any procedure agreed upon by
the parties or under the procedure of paragraph (2)
of this article is not successful, 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. (Art. 13, Model
Law)
Oil and Natural Gas Commission vs. Court of
Appeals (1998)
The private respondent bewails the presumed bias
on the part of the arbitrator who was a former
employee of the petitioner. This point deserves
scant consideration in view of the following
stipulation in the contract: “It will be no objection to
any such appointment than the arbitrator so
appointed is a Commission employer (sic) than he
had to deal with the matter to which the supply or
contract relates and that in the course of his duties
as Commission’s employee he had expressed views on all or any of the matter in dispute or
difference.”
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that arbitrator. (Rule 8.2, SAR)
Commentary: If Philippine laws were applied
instead of Indian Law, the contract would be void
pursuant to Article 2045 of the Civil Code.
The challenged arbitrator will be replaced in the
same manner on how he was initially appointed.
(Autea)
Termination of Mandate of Arbitrators
As distinguished from a challenge, which is a
remedy if the arbitrator is not qualified or is
disqualified, termination of mandate is the remedy if
the arbitrator can no longer perform his function.
Nonetheless, termination of mandate has the same
procedure in a challenge. (Autea)
Any of the parties to an arbitration may request for
the termination of the mandate of an arbitrator
where an arbitrator becomes de jure or de facto
unable to perform his function or for other reasons
fails to act without undue delay and that arbitrator,
upon request of any party, fails or refuses to
withdraw from his office. (Rule 8.1, SAR)
If an arbitrator refuses to withdraw from his office,
and subsequently, the Appointing Authority fails or
refuses to decide on the termination of the mandate
of that arbitrator within such period as may be
allowed under the applicable rule or, in the absence
thereof, within thirty (30) days from the time the
request is brought before him, any party may file
with the court a petition to terminate the mandate of
© Lex Societas (Alvaera & Esguerra)
After hearing, if the court finds merit in the petition,
it shall terminate the mandate of the arbitrator who
refuses to withdraw from his office; otherwise, it
shall dismiss the petition. (Rule 8.6, SAR)
Where the mandate of an arbitrator is terminated,
or he withdraws from office for any other reason, or
because of his mandate is revoked by agreement
of the parties or is terminated for any other reason,
a substitute arbitrator shall be appointed according
to the rules that were applicable to the appointment
of the arbitrator being replaced. (Rule 8.8, SAR)
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.
If, under this article or article 13(2), an arbitrator
withdraws from his office or a party agrees to the
termination of the mandate of an arbitrator, this
does not imply acceptance of the validity of any
ground referred to in this article or article 12(2).
(Art. 14, Model Law)
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ARBITRAL TRIBUNAL AND ARBITRATION
PROCEEDINGS
Competence-Competence Principle
The counterpart of this principle in conventional
litigation is when the court would dismiss the case
based on the ground of lack of jurisdiction. The
jurisdiction of the arbitral tribunal is defined in the
arbitration agreement. Thus, it shall be the arbitral
tribunal who can determine whether or not the
arbitration agreement is existent or valid. (Autea)
The arbitral tribunal may rule on its own jurisdiction,
including any objections with respect to the
existence or validity of the arbitration agreement.
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. (Art. 16, Model Law)
Principle of competence-competence means that
the arbitral tribunal may initially rule on its own
jurisdiction, including any objections with respect to
the existence or validity of the arbitration
agreement or any condition precedent to the filing
of a request for arbitration. (2.2(B), SAR)
A plea that the arbitral tribunal does not have
jurisdiction shall be raised not later than the
submission of the statement of defense. 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. 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.
The arbitral tribunal shall be accorded the first
opportunity or competence to rule on the issue of
whether or not it has the competence or jurisdiction
to decide a dispute submitted to it for decision,
including any objection with respect to the
existence or validity of the arbitration agreement.
When a court is asked to rule upon issue/s affecting
the competence or jurisdiction of an arbitral tribunal
in a dispute brought before it, either before or after
the arbitral tribunal is constituted, the court must
exercise judicial restraint and defer to the
competence or jurisdiction of the arbitral tribunal by
allowing the arbitral tribunal the first opportunity to
rule upon such issues.
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
Where the court is asked to make a determination
of whether the arbitration agreement is null and
void, inoperative or incapable of being performed,
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under this policy of judicial restraint, the court must
make no more than a prima facie determination of
that issue.
Unless the court, pursuant to such prima facie
determination, concludes that the arbitration
agreement is null and void, inoperative or incapable
of being performed, the court must suspend the
action before it and refer the parties to arbitration
pursuant to the arbitration agreement. (Rule 2.4,
SAR)
The policy behind competence-competence is
judicial restraint. Even if there has been no
constituted arbitration yet, the court can prima facie
rule on the jurisdiction of the arbitration tribunal.
This ruling is prima facie because the arbitration
tribunal can still reverse it. (Autea)
Where the arbitral tribunal defers its ruling on
preliminary question regarding its jurisdiction until
its final award, the aggrieved party cannot seek
judicial relief to question the deferral and must
await the final arbitral award before seeking
appropriate judicial recourse.
A ruling by the arbitral tribunal deferring resolution
on the issue of its jurisdiction until final award, shall
not be subject to a motion for reconsideration,
appeal or a petition for certiorari. (Rule 3.20, SAR)
Arbitration Proceedings
© Lex Societas (Alvaera & Esguerra)
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. (Sec. 22, ADRA)
“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 institution under whose
rules the arbitration is agreed to be conducted.
Where the parties 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 IBP
or his duly authorized representative.(Sec. 26,
ADRA)
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.
(Sec. 27, ADRA)
The parties are free to agree on the place of
arbitration. Failing such agreement, the place of
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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.
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. 30, ADRA)
The parties are free to agree on the language or
languages to be used in the arbitral proceedings.
Failing such agreement, the language to be used
shall be in 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 or determined in accordance
with par. 1 of this section. (Sec. 31, ADRA)
© Lex Societas (Alvaera & Esguerra)
The parties shall be treated with equality and each
party shall be given a full opportunity of presenting
his case. (Art. 18, Model Law)
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 the 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. (Sec. 19, Model Law)
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.
Notwithstanding the provisions of paragraph (1) of
this article, 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 parties,
or for inspection of goods, other property or
documents. (Art. 20, Model Law)
Within the period of time agreed by the parties or
determined by the arbitral tribunal, the claimant
shall state the facts supporting his claim the points
at issue and the relief or remedy sought, and the
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respondent shall state his defense in respect of
these particulars, unless the parties have otherwise
agreed as to the required elements of such
statements. 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.
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. (Art. 23, Model Law)
Subject to any contrary agreement by the parties,
the arbitral tribunal shall decide whether 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. 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.
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
© Lex Societas (Alvaera & Esguerra)
tribunal may rely in making its decision shall be
communicated to the parties. (Art. 24, Model Law)
Unless otherwise agreed by the parties, if, without
showing sufficient cause:
a) the claimant fails to communicate his statement
of claim in accordance with article 23(l), the
arbitral tribunal shall terminate the proceedings;
b) the respondent fails to communicate his
statement of defense in accordance with article
23(l), the arbitral tribunal shall continue the
proceedings without treating such failure in itself
as an admission of the claimant’s allegations;;
c) 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. (Art.
25, Model Law)
Unless otherwise agreed by the parties, the arbitral
tribunal:
a) may appoint one or more experts to report to it
on specific issues to be determined by the
arbitral tribunal;
b) may require a party to give the expert any
relevant information to produce, or to provide
access to, any relevant documents, goods or
other property for his inspection.
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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. (Art. 26, Model Law)
Before hearing any testimony, arbitrators must be
sworn, by any officer authorized by law to
administer an oath, faithfully and fairly to hear and
examine the matters in controversy and to make a
just award according to the best of their ability and
understanding. Arbitrators shall have the power to
administer the oaths to all witnesses requiring them
to tell the whole truth and nothing but the truth in
any testimony which they may give in any
arbitration hearing. This oath shall be required of
every witness before any of his testimony is heard.
(Sec. 13, DAL)
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. 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
© Lex Societas (Alvaera & Esguerra)
to submit and the exhibits shall be properly
identified at the time of submission. 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. 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 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. (Sec. 15, DAL)
At the close of the hearings, the arbitrators shall
specifically inquire of all parties whether they have
any further proof or witnesses to present, upon the
receipt of a negative reply from all parties, the
arbitrators shall declare the hearing closed unless
the parties have signified an intention to file briefs.
Then the hearing shall be closed by the arbitrations
after the receipt of briefs and/or reply briefs.
Definite time limit for the filing of such briefs must
be fixed by the arbitrators at the close of the
hearing. Briefs may be filed by the parties within 15
days after the close of the oral hearings; the reply
briefs, if any, shall be filed within 5 days following
such 15-day period. (Sec. 16, DAL)
The hearing may be reopened by the arbitrators on
their own motion or upon the request of any party,
upon good cause, shown at any time before the
award is rendered. When hearings are thus
reopened the effective date for the closing of the
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hearings shall be the date of the closing of the
reopened hearing. (Sec. 17, DAL)
The parties to a submission or contract to arbitrate
may, by written agreement, submit their dispute to
arbitration by other than oral hearing. The parties
may submit an agreed statement of facts. They
may also submit their respective contentions to the
duly appointed arbitrators in writing; this shall
include a statement of facts, together with all
documentary proof. Parties may also submit a
written argument. Each party shall provide all other
parties to the dispute with a copy of writing to any
other party’s statements and proofs;; but if such party fails to do so within 7 days after receipt of
such statements and proofs, he shall be deemed to
have waived his right to reply. Upon the delivery to
the arbitrators of all statements and documents,
together with any reply statements, the arbitrators
shall declare the proceedings in lieu of hearing
closed. (Sec. 18, DAL)
Arbitration under a contract or submission shall be
deemed a special proceeding, of which the court
specified in the contract or submission, or if none
be specified, the Court of First Instance for the
province or city in which one of the parties resides
or is doing business, or in which the arbitration was
held, shall have jurisdiction. Any application to the
court, or a judge thereof, hereunder shall be made
in manner provided for the making and hearing of
motions, except as otherwise herein expressly
provided. (Sec. 22, DAL)
© Lex Societas (Alvaera & Esguerra)
Assistance in Taking Evidence
Arbitrators shall have the power to require any
person to attend a hearing as a witness. They shall
have the power to subpoena witnesses and
documents when the relevancy of the testimony
and the materiality thereof has been demonstrated
to the arbitrators. Arbitrators may also require the
retirement of any witness during the testimony of
any other witness. 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. The arbitrator or arbitrators shall have the
power at any time, before rendering the award,
without prejudice to the rights of any party to
petition the court to take measures to safeguard
and/or conserve any matter which is the subject of
the dispute in arbitration. (Sec. 14, DAL)
The arbitral tribunal or a party with the approval of
the arbitral tribunal may request from 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. (Art. 27, Model Law)
Any party to an arbitration, whether domestic or
foreign, may request the court to provide
assistance in taking evidence. (Rule 9.1, SAR)
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A party requiring assistance in the taking of
evidence may petition the court to direct any
person, including a representative of a corporation,
association, partnership or other entity (other than a
party to the ADR proceedings or its officers) found
in the Philippines, for any of the following:
a.
To comply with a subpoena ad testificandum
and/or subpoena duces tecum;
b. To appear as a witness before an officer for the
taking of his deposition upon oral examination
or by written interrogatories;
c. To allow the physical examination of the
condition of persons, or the inspection of things
or premises and, when appropriate, to allow
the recording and/or documentation of
condition of persons, things or premises (i.e.,
photographs, video and other means of
recording/documentation);
d. To allow the examination and copying of
documents; and
e. To perform any similar acts. (Rule 9.5, SAR)
If the evidence sought is not privileged, and is
material and relevant, the court shall grant the
assistance in taking evidence requested and shall
order petitioner to pay costs attendant to such
assistance. (Rule 9.8, SAR)
Confidentiality
Subject to the terms of the submission or contract,
if any are specified therein, are arbitrators selected
as prescribed herein must, within five days after
appointment if the parties to the controversy reside
© Lex Societas (Alvaera & Esguerra)
within the same city or province, or within fifteen
days after appointment if the parties reside in
different provinces, 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. 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. 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.
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. 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.
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. 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.
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The arbitrators shall arrange for the taking of a
stenographic record of the testimony when such a
record is requested by one or more parties, and
when payment of the cost thereof is assumed by
such party or parties.
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. (Sec. 12, DAL)
"CONFIDENTIAL INFORMATION" means 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. It shall include (1) communication, oral
or written, made in a dispute resolution
proceedings, including any memoranda, notes or
work product of the neutral party or non-party
participant, as defined in this Act; (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. (Sec. 3(h),
ADRA)
© Lex Societas (Alvaera & Esguerra)
The arbitration proceedings, including the records,
evidence and the arbitral award, shall be
considered confidential and shall not be published
except (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. 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. (Sec. 23, ADRA)
As a general rule, arbitration is confidential.
Exceptions to this rule is that (1) if the parties
expressly waive confidentiality, or (2) disclose to
the court who can intervene. Court intervention is
allowed in the following cases:
1)
2)
3)
4)
5)
application for interim measure;
appointment of arbitrator;
challenge of arbitrator;
vacate/modify the award;
enforce the award.
A party, counsel or witness who disclosed or who
was compelled to disclose information relative to
the subject of ADR under circumstances that would
create a reasonable expectation, on behalf of the
source, that the information shall be kept
confidential has the right to prevent such
information from being further disclosed without the
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express written consent of the source or the party
who made the disclosure. (Rule 10.1, SAR)
discovery solely by reason of its use therein. (Rule
10.8, SAR)
A party may request a protective order at anytime
there is a need to enforce the confidentiality of the
information obtained, or to be obtained, in ADR
proceedings.
If there is a pending court proceeding in which the
information obtained in an ADR proceeding is
required to be divulged or is being divulged, the
party seeking to enforce the confidentiality of the
information may file a motion with the court where
the proceedings are pending to enjoin the
confidential information from being divulged or to
suppress confidential information. (Rule 10.2, SAR)
A protective order may be granted only if it is
shown that the applicant would be materially
prejudiced by an unauthorized disclosure of the
information obtained, or to be obtained, during an
ADR proceeding. (Rule 10.4, SAR)
If the court finds the petition or motion meritorious,
it shall issue an order enjoining a person or persons
from divulging confidential information. In resolving
the petition or motion, the courts shall be guided by
the following principles applicable to all ADR
proceedings: Confidential information shall not be
subject to discovery and shall be inadmissible in
any adversarial proceeding, whether judicial or
quasi judicial. However, evidence or information
that is otherwise admissible or subject to discovery
does not become inadmissible or protected from
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REFERRAL TO ARBITRATION
arbitration unless it finds that the agreement is null and
void, inoperative or incapable of being performed.
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. (Sec. 7, DAL)
Where an action referred to in par. 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. (Art. 8, Model
Law)
A court before which an action is brought in a matter which
is the subject matter of an arbitration shall, 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 null and void, inoperative or incapable of
being performed. (Sec. 24, ADRA)
After the pre-trial conference, the court will only act upon
the request for referral if it is made with the agreement of
all parties to the case.
In interpreting the Act, the court shall have due regard to
the policy of the law in favor of arbitration. 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.
(Sec. 25, ADRA)
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 first statement
on the substance of the dispute, refer the parties to
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Where the arbitration agreement exists before the action
is filed—The request for referral shall be made not later
than the pre-trial conference.
Submission agreement—If there is no existing arbitration
agreement at the time the case is filed but the parties
subsequently enter into an arbitration agreement, they may
request the court to refer their dispute to arbitration at any
time during the proceedings. (Rule 4.2, SAR)
As a general rule, a request for arbitration is made not later
than the pre-trial conference. Exceptions to this rule are
the following:
1) if there is an arbitration clause, upon the request of
both parties; and
2) submission agreements. (Autea)
After hearing, the court shall stay the action and,
considering the statement of policy embodied in Rule 2.4,
above, refer the parties to arbitration if it finds prima facie,
based on the pleadings and supporting documents
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submitted by the parties, that there is an arbitration
agreement and that the subject-matter of the dispute is
capable of settlement or resolution by arbitration in
accordance with Section 6 of the ADR Act. Otherwise, the
court shall continue with the judicial proceedings. (Rule
4.5, SAR)
When a case is referred to arbitration, the proceedings are
merely suspended and not dismissed because there may
be other needs for the parties to make use of the role of
the court (e.g. interim measures, assistance in taking
evidence, appointment of arbitrators, challenging the
arbitrator, termination of mandate, etc.). (Autea)
An order referring the dispute to arbitration shall be
immediately executory and shall not be subject to a motion
for reconsideration, appeal or petition for certiorari.
An order denying the request to refer the dispute to
arbitration shall not be subject to an appeal, but may be
the subject of a motion for reconsideration and/or a petition
for certiorari. (Rule 4.6, SAR)
The court shall not decline to refer some or all of the
parties to arbitration for any of the following reasons:
a.
b.
c.
Not all of the disputes subject of the civil action may
be referred to arbitration;
Not all of the parties to the civil action are bound by
the arbitration agreement and referral to arbitration
would result in multiplicity of suits;
The issues raised in the civil action could be speedily
and efficiently resolved in its entirety by the court
rather than in arbitration;
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d.
e.
Referral to arbitration does not appear to be the most
prudent action; or
The stay of the action would prejudice the rights of the
parties to the civil action who are not bound by the
arbitration agreement.
The court may, however, issue an order directing the
inclusion in arbitration of those parties who are not bound
by the arbitration agreement but who agree to such
inclusion provided those originally bound by it do not object
to their inclusion. (Rule 4.7, SAR)
As a general rule, it is not ministerial on the part of the
court to grant a motion to suspend proceedings, unless it
finds the arbtration agreement null and void, inoperative or
incapable of being performed. The benchmarks for
determining if the dispute is arbitrable are the Exclusions
provided by ADRA. (Autea)
Despite the pendency of the action referred to in Rule 4.1,
above, arbitral proceedings may nevertheless be
commenced or continued, and an award may be made,
while the action is pending before the court. (Rule 4.8,
SAR)
Fiesta World Mall Corporation v. Linberg Philippines
(2006)
Where a party has already filed a complaint with the trial
court without prior recourse to arbitration, the proper
procedure to enable an arbitration panel to resolve the
parties’ dispute pursuant to their contract is for the trial court to stay the proceedings. After the arbitration
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proceeding has been pursued and completed, then the trial
court may confirm the award made by the arbitration panel.
Commentary: This case illustrates the discretionary nature
on the part of the judge to determine whether or not the
dispute should be referred to arbitration. The judge
determines whether a dispute falls under the arbitration
clause or the non-arbitrable clause. Once it has been
determined that the case is arbitrable, the court no longer
has discretion whether to refer the dispute to arbitration or
not.
Del Monte Corporation-USA v. Court of Appeals (2001)
The object of arbitration is to allow the expeditious
determination of a dispute. Where the issue before the
court could not be speedily and efficiently resolved in its
entirety if simultaneous arbitration proceedings and trial, or
suspension of trial pending arbitration, is allowed, the court
should hear and adjudicate the case in a single and
complete proceeding.
INTERIM MEASURES OF PROTECTION
The counterpart concept of interim measures in
convetional litigation are provisional remedies. A party in
arbitration is like a party in litigation. If one thinks the other
party is trying to dissipate or conceal his assets in fraud of
the plaintiff in order to frustrate a potential future judgment,
specific provisional remedies under the Rules of Court
shall be applicable. (Autea)
Instead of going to the tribunal, the party who would like to
avail of interim measures may go to the court. Under Sec.
14 of DAL, it is up to the party where to ask for interim
measures. (Autea)
The arbitrator or arbitrators shall have the power at any
time, before rendering the award, without prejudice to the
rights of any party to petition the court to take measures to
safeguard and/or conserve any matter which is the subject
of the dispute in arbitration. (Sec. 14, DAL)
Under this law, both the tribunal and the court have the
power to grant interim measures. It is up to the party to
choose. What is not allowed is that asking both the tribunal
and the court to grant interim measures which would
constitute forum shopping. (Autea)
Sec. 28 of ADRA provides the considerations needed
before the interim measures may be granted. (Autea)
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
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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.
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
© Lex Societas (Alvaera & Esguerra)
whom the relief is requested, the grounds for the relief,
and evidence supporting the request.
(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.
(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.
(Sec. 28, ADRA)
Before the constitution of the arbitral tribunal, interim relief
may be sought from courts. Once the tribunal has been
constituted, interim relief may be sought from the arbitral
tribunal. Unless the arbitral tribunal no longer has the
power to act or is unable to act effectively, the request may
be made with the court. Under the ADRA, the interim
measure granted by the court may also be modified by the
arbitral tribunal. (Autea)
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. (Art. 9, Model Law)
Unless otherwise agreed by the parties, the arbitral tribunal
may, at the request of a party, order any party to take such
interim measure of protection as the arbitral tribunal may
consider necessary in respect of the subject-matter of the
dispute. The arbitral tribunal may require any party to
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provide appropriate security in connection with such
measure. (Art. 17, Model Law)
A petition for an interim measure of protection may be
made (a) before arbitration is commenced, (b) after
arbitration is commenced, but before the constitution of the
arbitral tribunal, or (c) after the constitution of the arbitral
tribunal and at any time during arbitral proceedings but, at
this stage, only to the extent that the arbitral tribunal has
no power to act or is unable to act effectively. (Rule 5.2,
SAR)
The following grounds, while not limiting the reasons for
the court to grant an interim measure of protection, indicate
the nature of the reasons that the court shall consider in
granting the relief:
e.
The court shall not deny an application for assistance in
implementing or enforcing an interim measure of protection
ordered by an arbitral tribunal on any or all of the following
grounds:
a.
b.
c.
a.
b.
c.
d.
The need to prevent irreparable loss or injury;
The need to provide security for the performance of
any obligation;
The need to produce or preserve evidence; or
The need to compel any other appropriate act or
omission. (Rule 5.4, SAR)
The following, among others, are the interim measures of
protection that a court may grant:
a.
b.
c.
d.
Preliminary injunction directed against a party to
arbitration;
Preliminary
attachment
against
property
or
garnishment of funds in the custody of a bank or a
third person;
Appointment of a receiver;
Detention, preservation, delivery or inspection of
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property; or,
Assistance in the enforcement of an interim measure
of protection granted by the arbitral tribunal, which the
latter cannot enforce effectively. (Rule 5.6, SAR)
The arbitral tribunal granted the interim relief ex parte;
or
The party opposing the application found new material
evidence, which the arbitral tribunal had not
considered in granting in the application, and which, if
considered, may produce a different result; or
The measure of protection ordered by the arbitral
tribunal amends, revokes, modifies or is inconsistent
with an earlier measure of protection issued by the
court.
If it finds that there is sufficient merit in the opposition to
the application based on letter (b) above, the court shall
refer the matter back to the arbitral tribunal for appropriate
determination. (Rule 5.11, SAR)
Any court order granting or denying interim measure/s of
protection is issued without prejudice to subsequent grant,
modification, amendment, revision or revocation by the
arbitral tribunal as may be warranted.
An interim measure of protection issued by the arbitral
tribunal shall, upon its issuance, be deemed to have ipso
jure modified, amended, revised or revoked an interim
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measure of protection previously issued by the court to the
extent that it is inconsistent with the subsequent interim
measure of protection issued by the arbitral tribunal. (Rule
5.13, SAR)
Any question involving a conflict or inconsistency between
an interim measure of protection issued by the court and
by the arbitral tribunal shall be immediately referred by the
court to the arbitral tribunal which shall have the authority
to decide such question. (Rule 5.14, SAR)
The court shall defer action on any pending petition for an
interim measure of protection filed by a party to an
arbitration agreement arising from or in connection with a
dispute thereunder upon being informed that an arbitral
tribunal has been constituted pursuant to such agreement.
The court may act upon such petition only if it is
established by the petitioner that the arbitral tribunal has
no power to act on any such interim measure of protection
or is unable to act thereon effectively. (Rule 5.15, SAR)
Finally, under the SAR, the power of the arbitral tribunal to
modify interim measures granted by the court may then be
amended, modified, or revoked by the arbitral tribunal.
Hence, there was a dilution of power of the court to grant
interim relief once an arbitral tribunal has been constituted.
(Autea)
ARBITRAL AWARD
An agreement to refer a dispute to arbitration shall mean
that the arbitral award shall be final and binding.
Consequently, a party to an arbitration is precluded from
filing an appeal or a petition for certiorari questioning the
merits of an arbitral award. (Rule 19.7, SAR)
Although the SAR gives the losing party the remedy to
prevent enforcement of the arbitral award, it must be noted
that the grounds to vacate, set aside or refuse recognition
are not on the merits of the arbitration. (Autea)
When parties resort to court regarding arbitral awards, the
procedure followed by the court is not summary. (Autea)
In all kinds of arbitration, there is a presumption of
enforcement. (Autea) An arbitral award shall enjoy the
presumption that it was made and released in due course
of arbitration and is subject to confirmation by the court.
(Rule 11.9, SAR) Unless a ground to vacate, set aside or
refuse recognition an arbitral award is fully established, the
court shall confirm the award. (Autea)
When an award is vacated, the court cannot substitute its
own judgment. Instead, the court must remand the case to
the same arbitrators or a different set of arbitrators. (Autea)
Domestic Arbitral Award
Any stipulation that the arbitrators’ award or decision shall be final, is valid, without prejudice to
Articles 2038, 2039, and 2040. (Art. 2044, CC)
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Confirmation of the arbitral award by the court is
not essential to the validity of the award because of
Art. 2044 of the Civil Code. It does not go into the
validity of the award and is only necessary for the
enforcement of the award. Thus, an arbitral award,
once confirmed by the court, becomes executory.
(Autea)
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. (Sec. 19, DAL)
The award must be made in writing and signed and
acknowledged by a majority of the arbitrators, if
more than one; and by the sole arbitrator, if there is
only one. Each party shall be furnished with a copy
of the award. The arbitrators in their award may
grant any remedy or relief which they deem just
and equitable and within the scope of the
agreement of the parties, which shall include, but
not be limited to, the specific performance of a
contract.
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
© Lex Societas (Alvaera & Esguerra)
shall be signed by the arbitrators. No arbitrator shall
act as a mediator in any proceeding in which he is
acting as arbitrator; and all negotiations towards
settlement of the dispute must take place without
the presence of the arbitrators.
The arbitrators shall have the power to decide only
those matters which have been submitted to them.
The terms of the award shall be confined to such
disputes.
The arbitrators shall have the power to assess in
their award the expenses of any party against
another party, when such assessment shall be
deemed necessary. (Sec. 20, DAL)
Where an award is vacated, the court, in its
discretion, may direct a new hearing either before
the same arbitrators or before a new arbitrator or
arbitrators to be chosen in the manner provided in
the submission or contract for the selection of the
original arbitrator or arbitrators, and any provision
limiting the time in which the arbitrators may make
a decision shall be deemed applicable to the new
arbitration and to commence from the date of the
court's order.
Where the court vacates an award, costs, not
exceeding fifty pesos and disbursements may be
awarded to the prevailing party and the payment
thereof may be enforced in like manner as the
payment of costs upon the motion in an action.
(Sec. 24, DAL)
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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) 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
(b) Where the arbitrators have awarded upon a
matter not submitted to them, not affecting the
merits of the decision upon the matter
submitted; or
(c) 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.
The order may modify and correct the award so as
to effect the intent thereof and promote justice
between the parties. (Sec. 25, DAL)
Notice of a motion to vacate, modify or correct the
award must be served upon the adverse party or
his counsel within thirty days after award is filed or
delivered, as prescribed by law for the service upon
an attorney in an action. (Sec. 26, DAL)
Upon the granting of an order confirming, modifying
or correcting an award, judgment may be entered in
conformity therewith in the court wherein said
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application was filed. Costs of the application and
the proceedings subsequent thereto may be
awarded by the court in its discretion. If awarded,
the amount thereof must be included in the
judgment. (Sec. 27, DAL)
The party moving for an order 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.
The judgment shall be docketed as if it were
rendered in an action.
The judgment so entered shall have the same force
and effect in all respects, as, and be subject to all
the provisions relating to, a judgment in an action;
and it may be enforced as if it had been rendered in
the court in which it is entered. (Sec. 28, DAL)
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A domestic arbitral award when confirmed shall be
enforced in the same manner as final and
executory decisions of the Regional Trial Court.
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.
A CIAC arbitral award need not be confirmed by the
regional trial court to be executory as provided
under E.O. No. 1008. (Sec. 40, ADRA)
Asset Privatization Trust v. Court of Appeals
(1998)
As a rule, the award of an arbitrator cannot be set
aside for mere errors of judgment either as to the
law or as to the facts. Courts are without power to
amend or overrule merely because of disagreement
with matters of law or facts determined by the
arbitrators. They will not review the findings of law
and fact contained in an award, and will not
undertake to substitute their judgment for that of the
arbitrators, since any other rule would make an
award the commencement, not the end, of
litigation. Errors of law and fact, or an erroneous
decision of matters submitted to the judgment of
the arbitrators, are insufficient to invalidate an
award fairly and honestly made. Judicial review of
an arbitration is, thus, more limited than judicial
review of a trial.
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Nonetheless, the arbitrators’ awards is not absolute and without exceptions. The arbitrators cannot
resolve issues beyond the scope of the submission
agreement. The parties to such an agreement are
bound by the arbitrators’ award only to the extent and in the manner prescribed by the contract and
only if the award is rendered in conformity thereto.
Thus, Sections 24 and 25 of the Arbitration Law
provide grounds for vacating, rescinding or
modifying an arbitration award. Where the
conditions described in Articles 2038, 2039 and
2040 of the Civil Code applicable to compromises
and arbitration are attendant, the arbitration award
may also be annulled.
Commentary: When a court dismisses a case, it
loses its jurisdiction.
It must be remembered that a petition (not a
motion) is filed when the court has no jurisdiction.
Thus, when the court suspended the proceedings
for arbitration, the proper pleading to file is a motion
because the court did not lose its jurisdiction.
(Autea)
International Commercial Arbitral Award
Model Law, Article 28. Rules applicable to
substance of dispute. (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
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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.
Model Law, Article 29. Decision-making by panel of
arbitrators. 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.
Model Law, Article 30. Settlement. (1) 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.
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(2) 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.
Model Law, Article 31. Form and contents of award.
(1) The award shall be made in writing and shall be
signed by the arbitrator or arbitrators. In arbitrator
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.
(2) 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
on agreed terms under article 30.
(3) The award shall state its date and the place of
arbitration as determined in accordance with article
20 (1). The award shall be deemed to have been
made at that place.
(4) 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.
Model Law, Article 32. Termination of proceedings.
(1) The arbitral proceedings are terminated by the
final award or by an order of the arbitral tribunal in
accordance with paragraph (2) of this article.
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(2) The arbitral tribunal shall issue an order for the
termination of the arbitral proceedings when:
arbitral tribunal to give an interpretation of a
specific point or part of the award.
(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;
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.
(b) the parties agree on the termination of the
proceedings;
(2) The arbitral tribunal may correct any error of the
type referred to in paragraph (1) (a) of this article
on its own initiative within thirty days of the day of
the award.
(c) the arbitral tribunal finds that the
continuation of the proceedings has for any
other reason become unnecessary or
impossible.
3. The mandate of the arbitral tribunal terminates
with the termination of the arbitral proceedings,
subject to the provisions of articles 33 and 34 (4).
Model Law, Article 33. Correction of interpretation
of award; additional award. (1) Within thirty days of
receipt of the award, unless another period of time
has been agreed upon by the parties:
(a) a party, with notice to the other party, may
request the arbitral tribunal to correct in the
award any errord in computation, any clerical or
typographical errors or any errors of similar
nature;
(b) if so agreed by the parties, a party, with
notice to the other party, may request the
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(3) 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.
(4) The arbitral tribunal may extend, if necessary,
the period of time within which it shall make a
correction, interpretation or an additional award
under paragraph (1) or (3) of this article.
(5) The provisions of article 31 shall apply to a
correction or interpretation of the award or to an
additional award.
Model Law, Article 34. Application for setting aside
as exclusive recourse against arbitral award. (1)
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Recourse to a court against an arbitral award may
be made only by an application for setting aside in
accordance with paragraphs (2) and (3) of this
article.
(2) An arbitral award may be set aside by the court
specified in article 6 only if:
(a) the party making the application furnishes
proof that:
(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
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matters not submitted to arbitration may be
set aside; or
(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.
(3) 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 that 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.
(4) 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
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arbitral proceedings or to take such other action as
in the arbitral tribunal's opinion will eliminate the
grounds for setting aside.
Model Law Article 35. Recognition and
enforcement. (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 duly authenticated
original award or a duly certified copy thereof, and
the original arbitration agreement referred to in
article 7 or a duly certified copy thereof. If the
award or agreement is not made in an official
language of this State, the party shall supply a duly
certified translation thereof into such language.
Model Law, Article 36. Grounds for refusing
recognition or enforcement. (1) Recognition or
enforcement of an arbitral award, irrespective of the
country in which it was made, may be refused only:
(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:
(i) a party to the arbitration agreement
referred to in article 7 was under some
incapacity; or the said agreement is not
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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
(ii) the party against whom the award is
invoked was not given proper notice of the
appointment of an arbitrator or of the
arbitrator 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 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
(iv) 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
(v) the award has not yet become binding
on the parties or has been set aside or
suspended by a court of the country in
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which, or under the law of which, that award
was made; or
(b) if 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 recognition or enforcement of the
award would be contrary to the public policy
of this State.
(2) If an application for setting aside or suspension
of an award has been made to a court referred to in
paragraph (1) (a) (v) of this article, the court where
recognition or enforcement is sought may, if it
considers it proper, adjourn its decision and may
also, on the application of the party claiming
recognition or enforcement of the award, order the
other party to provide appropriate security.
Foreign Arbitral Award
The New York Convention shall govern the
recognition and enforcement of arbitral awards
covered by the said Convention.
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. Said
procedural rules shall provide that the party relying
on the award or applying for its enforcement shall
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file with the court the original or authenticated copy
of the award and the arbitration agreement. 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.
The applicant shall establish that the country in
which foreign arbitration award was made is a party
to the New York Convention.
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. (Sec. 42, ADRA)
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. (Sec. 43, ADRA)
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
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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. (Sec. 44, ADRA)
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. (Sec. 45, ADRA)
Tuna Processing v. Philippine Kingford (2012)
In the enforcement of a foreign arbitral award, the
rule that bars foreign corporations not licensed to
do business in the Philippines from maintaining a
suit in our courts is not available to the losing party.
When a party enters into a contract containing a
foreign arbitration clause and submits itself to
arbitration, it becomes bound by the contract,
arbitration and the result of the arbitration,
conceding thereby the capacity of the other party to
[1] enter into the contract, [2] participate in the
arbitration and [3] cause the implementation of the
result.
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how to enforce
award
period of filing
how to
correct/modify
award
how to prevent
enforcement
period of filing1
grounds to
prevent
enforcement
DOMESTIC
petition to confirm
INTERNATIONAL
petition to recognize and enforce
FOREIGN
petition to recognize or enforce
At any time after the lapse of 30
days from receipt by the petitioner
of the arbitral award.
At any time from receipt of the award.
If a timely petition to set aside an arbitral award is filed, the opposing
party must file therein and in opposition thereto the petition for
recognition and enforcement of the same award within the period for
filing an opposition.
Petition to modify or correct.
See Sec. 25, DAL for grounds.
A petition to correct an arbitral
award may be included as part of
a petition to confirm the arbitral
award or as a petition to confirm
that award.
petition to vacate
petition to set aside
petition to refuse recognition
Not later than 30 days from the
receipt of the arbitral award.
Within 3 months from the time the
petitioner receives a copy thereof.
Within 3 months from the time the
petitioner receives a copy thereof.
1. A party to the arbitration
agreement was under some
incapacity; or the said
agreement is not valid under
2. Evident partiality in the arbitral
the law to which the parties
tribunal;
have subjected it or, failing any
1. A party to the arbitration
agreement was under some
incapacity; or the said
agreement is not valid under
the law to which the parties
have subjected it or, failing any
1. Award was procured through
corruption, fraud or undue
means
1
Belated filing of the petition to confirm will not give a new period for the losing party to file a petition to vacate. In other
words, if a petiton to confirm is filed but the period to file a petition to vacate has already lapsed, the subsequent filing of the
former will not renew the latter. (Autea)
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3. Arbitral tribunal was guilty of
misconduct or misbehaviour
that has materially prejudiced
the rights of any party.
4.
5.
6.
7.
indication thereof, under the
law of the country where the
award was made; or
indication thereof, under the
law of the country where the
award was made; or
2. The party making the
2. The party making the
application was not given
application was not given
Disqualification of one or more
proper notice of the
proper notice of the
arbitrators.
appointment of an arbitrator or
appointment of an arbitrator or
of the arbitral proceedings or
of the arbitral proceedings or
Tribunal exceeded its powers;
was otherwise unable to
was otherwise unable to
present his case; or
present his case; or
No arbitration agreement; or
3. The award deals with a dispute 3. The award deals with a dispute
Party to arbitration is judicially
not contemplated by or not
not contemplated by or not
declared to be incompetent.
falling within the terms of the
falling within the terms of the
submission to arbitration, or
submission to arbitration, or
contains decisions on matters
contains decisions on matters
beyond the scope of the
beyond the scope of the
submission to arbitration;
submission to arbitration;
provided that, if the decisions
provided that, if the decisions
on matters submitted to
on matters submitted to
arbitration can be separated
arbitration can be separated
from those not so submitted,
from those not so submitted,
only that part of the award
only that part of the award
which contains decisions on
which contains decisions on
matters not submitted to
matters not submitted to
arbitration may be set aside; or
arbitration may be set aside; or
4. The composition of the arbitral 4. The composition of the arbitral
tribunal or the arbitral
tribunal or the arbitral
procedure was not in
procedure was not in
accordance with the agreement
accordance with the
of the parties or, failing such
agreement of the parties or,
agreement, was not in
failing such agreement, was
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accordance with the law of the
country where arbitration took
place; or
not in accordance with the law
of the country where arbitration
took place; or
5. The subject-matter of the
5. The award has not yet
dispute is not capable of
become binding on the
settlement or resolution by
parties or has been set aside
arbitration under Philippine law;
or suspended by a court of
or
the country in which that
award was made;2 or
6. The recognition or enforcement
of the award would be contrary 6. The subject-matter of or
to public policy.
resolution by arbitration under
Philippine law; or
7. The recognition or enforcement
of the award would be contrary
to public policy.
2
This paragraph is exclusive to foreign arbitral awards. (Autea)
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What comes out in mediation is generally confidential.
Matters that come out in mediation cannot be subject to
discovery measures and are inadmissible in any
proceedings. (Autea)
(d) In such an adversarial proceeding, the following
persons involved or previously involved in a mediation may
not be compelled to disclose confidential information
obtained during mediation:
(1) the parties to the dispute;
(2) the mediator or mediators;
(3) the counsel for the parties;
(4) the nonparty participants;
(5) 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.
Information obtained through mediation proceedings shall
be subject to the following principles and guidelines:
(e) The protections of this Act shall continue to apply even
of a mediator is found to have failed to act impartially.
(a) Information obtained through mediation shall be
privileged and confidential.
(f) A mediator may not be called to testify to provide
information gathered in mediation. A mediator who is
wrongfully subpoenaed shall be reimbursed the full cost of
his attorney's fees and related expenses. (Sec. 9, ADRA)
MEDIATION
The provisions of this Chapter shall cover voluntary
mediation, whether ad hoc or institutional, other than courtannexed. The term "mediation' shall include conciliation.
(Sec. 7, ADRA)
Confidentiality
(b) A party, a mediator, or a nonparty participant may
refuse to disclose and may prevent any other person from
disclosing a mediation communication.
(c) Confidential Information shall not be subject to
discovery and shall be inadmissible if any adversarial
proceeding, whether judicial or quasi-judicial, 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.
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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.
A person who discloses confidential information shall be
precluded from asserting the privilege under Section 9 of
this Chapter to bar disclosure of the rest of the information
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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 preclude from asserting the privilege under
Section 9, 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. (Sec. 10, ADRA)
(a) There is no privilege against disclosure under
Section 9 if mediation communication is:
(1) in an agreement evidenced by a record
authenticated by all parties to the agreement;
(2) 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;
(3) a threat or statement of a plan to inflict bodily
injury or commit a crime of violence;
(4) internationally used to plan a crime, attempt to
commit, or commit a crime, or conceal an
ongoing crime or criminal activity;
(5) 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; but this exception does not apply where
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a child protection matter is referred to
mediation by a court or a public agency
participates in the child protection mediation;
(6) sought or offered to prove or disprove a claim
or complaint of professional misconduct or
malpractice filed against mediator in a
proceeding; or
(7) 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 under Section 9 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:
(1) a court proceeding involving a crime or felony;
or
(2) 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.
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(c) A mediator may not be compelled to provide
evidence of a mediation communication or testify in
such proceeding.
(d) If a mediation communication is not privileged
under an exception in subsection (a) or (b), only the
portion of the communication necessary for the
application of the exception for nondisclosure may
be admitted. The admission of particular evidence
for the limited purpose of an exception does not
render that evidence, or any other mediation
communication, admissible for any other purpose.
(Sec. 11, ADRA)
Mediated Settlement Agreement
The mediation shall be guided by the following
operative principles:
(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. The parties and their respective
counsels shall endeavor to make the terms and
condition thereof complete and make adequate
provisions for the contingency of breach to avoid
conflicting interpretations of the agreement.
(b) 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.
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(c) 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. 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.
(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. 17, ADRA)
A mediated settlement agreement (MSA) is a
product of a successful mediation. To enforce the
MSA The parties may (1) deposit this with the court
or (2) convert this to an arbitral award so that, in the
event of breach, it would be enforced as if there
was an arbitral award. In the latter case, there is no
need to deposit the MSA in court. (Autea)
Rule 15 of SAR apply to private mediation and
court-referred mediation. Court-annexed mediation
is governed by circulars of the SC. (Autea)
Any party to a mediation that is not court-annexed
may deposit with the court the written settlement
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agreement, which resulted from that mediation.
(Rule 15.1, SAR)
- END OF REVIEWER -
At any time after an agreement is reached, the
written settlement agreement may be deposited.
(Rule 15.2, SAR)
Any of the parties to a mediated settlement
agreement, which was deposited with the Clerk of
Court of the Regional Trial Court, may, upon
breach thereof, file a verified petition with the same
court to enforce said agreement. (Rule 15.5, SAR)
After a summary hearing, if the court finds that the
agreement is a valid mediated settlement
agreement, that there is no merit in any of the
affirmative or negative defenses raised, and the
respondent has breached that agreement, in whole
or in part, the court shall order the enforcement
thereof; otherwise, it shall dismiss the petition.
(Rule 5.18, SAR)
Court-Annexed vs. Court-Referred
"COURT-ANNEXED MEDIATION" means any
mediation process conducted under the auspices of
the court, after such court has acquired jurisdiction
of the dispute. (Sec. 3(l), ADRA)
"COURT-REFERRED
MEDIATION"
means
mediation ordered by a court to be conducted in
accordance with the Agreement of the Parties when
as action is prematurely commenced in violation of
such agreement. (Sec. 3(m), ADRA)
© Lex Societas (Alvaera & Esguerra)
DLSU LAW
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