CHAPTER 4.

ARBITRATION IN GENERAL
2. International Arbitration if the
following instance occur:

Arbitration, defined A voluntary a. The parties places of

dispute resolution process in which one or business, which at the time of
more arbitrators, appointed in accordance the conclusion of the
with the agreement of the parties or rules arbitration agreement, is in
promulgated pursuant to the ADR Act, different states;
resolve a dispute by rendering an award.
b. The place of arbitration
provided in the arbitration
agreement and in which the
Arbitration vs. Mediation parties have their places of
business, is outside the
Philippines;

In the former, it is the arbitrator that c. The place where a substantial

decides the dispute and renders an part of the obligation is to be
arbitral award to conclude the arbitral performed or the place with
proceeding, while in the latter, it is the which the subject matter of
parties themselves who enter into and the dispute is most closely
execute a mediated settlement agreement connected, and in which the
to conclude the mediation proceeding. parties have their places of
business, is outside the
Philippines;

Kinds of Arbitration d. The parties have expressly

agreed that the subject matter
of the arbitration agreement
related to more than one
1. Voluntary it involves the reference country.
of a dispute to an impartial body,
the members of which are chosen by 3. International Commercial Arbitration
the parties themselves, which if it covers matters arising from all
parties freely consent in advance to relationships of a commercial
abide by the arbitral award issued nature, whether contractual or not.
after the proceedings where both
parties had the opportunity to be 4. Foreign Arbitration if its seat
heard. outside the Philippines even if the
place of arbitration is n the
2. Compulsory the process of Philippines. Therefore, an
settlement of disputes by a international commercial arbitration
government agency which has the whose seat is outside the Philippines
authority to investigate and to make is a foreign arbitration.
an award which is binding on all
parties, and as a mode or arbitration
where the parties are compelled to
accept the resolution of their dispute Policy on Arbitration:
through arbitration by a third party.

In the case of Korea Technologies., Ltd v.

Classification of Arbitration Based on Lerma, the Supreme Court reiterated that:
the Seat of Arbitration and the
Presence of Foreign Elements

1. Domestic Arbitration if it is not

international in character.
Being an inexpensive, speedy, and c. Lawful object.
amicable method of settling disputes
along with mediation, conciliation and
negotiation is encouraged by the
Supreme Court. xxx A. Two Modes of Submitting a
Dispute or Controversy to
Arbitration, namely:

Objectives of Arbitration

a. An agreement to submit to
arbitration an agreement to
The basic objective of arbitration is to submit to arbitration some
provide a speedy and inexpensive method future dispute usually
of settling disputes by allowing the parties stipulated upon in a civil
to avoid the formalities, delay, expense, contract between the parties;
and aggravation which commonly
accompany ordinary litigation, especially b. A submission agreement an
litigation which goes through the hierarchy agreement to submit an
of courts. existing matter of difference
to arbitrators.

Arbitrator the person appointed to

render an award, alone or with others, in a B. Formal Requirements of an
dispute that is the subject of an arbitration Agreement to Arbitrate:
agreement.
a. It must be in writing; and
b. It must be subscribed by the
parties of their
Arbitrator vs. Arbiter representatives.

C. Arbitration Clause an arbitration

agreement may be included in the
Arbiter is bound by rules of law and equity container contract and must be
in rendering an award while arbitrator may liberally construed consistent with
use his own discretion in the performance the policy of encouraging alternative
of his functions. dispute resolution method.

Arbitration Agreement Doctrine of Separability

The agreement of the parties to submit to Enunciates that an arbitration agreement

arbitration all or certain disputes which is independent of the main contract even
have arisen or which may arise between if it is contained in an arbitration clause.
them in respect of a defined legal The arbitration agreement or clause is to
relationship, whether contractual or not. be treated as a separate agreement such
that, even if the validity of the main
contract is challenged, the arbitration
agreement or clause remains valid and
Arbitration is contractual in nature. Hence, enforceable.
it shall embody the element of a valid
contract, namely:

Due Process in Arbitral Proceedings

a. Consent of the parties freely given;

b. The cause or consideration;
Principles of administrative due process 2004 AND ITS IRR
equally apply to arbitral proceedings.

International Commercial Arbitration

Judicial Review and Court already defined.
Intervention

Coverage of IRR Provisions of ICA

Three types of judicial intervention in
arbitration:

1. Applicable only to international

commercial arbitration
a. Judicial Assistance in Arbitration;
b. Judicial Review of Arbitral Awards;
c. Judicial Review of Court Decision in
ADR Related Cases 2. The rules of procedure for
international commercial arbitration
provided for under the ADR act or its
IRR may also be applied for
Judicial Remedies international commercial arbitration
outside the Philippines if they are
adopted as rules of procedure by the
parties in the exercise of their
a. A petition in the proper RTC to issue privileged of party autonomy and
an order to vacate the award on the self determination
grounds provided for in Section 24
of RA 876;

b. A petition for review in the CA under

Rule 43 of the Rules of Court on
questions of fact, of law, or mixed Default Rules
questions of fact and law; and

c. A petition for certiorari under Rule

65 of the Rules of Court should the Governed by the provisions of the IRR
arbitrator have acted without or in which are applicable only in the absence
excess of lack or excess of of or in default contained in the following:
jurisdiction.

1. an agreement in force between the

Interim Measures in Arbitration Philippines and other states; and,

2. an agreement between the parties

on the applicable rules.
1. Allows the application of a party to a
judicial authority for interim
conservatory;
Rules of Interpretation
2. Allows filing of provisional interim
measures with regular courts
whenever the arbitral tribunal has
no power to act effectively. 1. Interpretation of the ADR act it
shall have due regard to the policy
of law favouring arbitration

CHAPTER 5: INTERNATIONAL COMMERCIAL 2. Interpretation of the Model Law

ARBITRATION UNDER THE ADR ACT OF regard should be given to the fact
 that the Model Law is of arbitration agreement.
international origin and there is a
need for uniformity of its
interpretation. Hence, concepts and
principles under the Model Law Default Rules, where communication
should be understood in the light of is deemed received:
their international usage rather than
their ordinary domestic or local
usage.
1. Delivered to the address personally
3. Interpretation of the IRR or at his place of business, habitual
residence or mailing address; or
a. The same policy on the
interpretation of the ADR Act
and Model Law are applicable.
2. If there is none, delivery by
b. Party autonomy should be registered letter or any other means
promoted in the resolution of which provide a record or attempt to
the dispute. deliver to last known place of
business, habitual residence or
c. The freedom of the parties mailing address.
to determine certain issues
includes the right to authorize
a third party, including an
institution, to make that Waiver of the Rights to Object in ICA
determination.

d. A reference to an
agreement of the parties Arbitration is different from mediation in
includes any arbitration rules that the latter is not merit or evidence
referred to in that agreement. based and therefore not procedurally
driven. Hence, the ADR Act and IRR
e. And, the rules applicable to limited the application of the rules on
claims and counter claims waiver in mediation proceedings to
are equally applicable to waivers of confidentiality an privilege only.
counterclaims, and those
applicable to defences are
equally applicable to defences
against counterclaims. On the other hand, in the case of
international commercial arbitration, the
IRR expanded the application of the rules
on waiver to include non-compliance with
Rules of Receipt of Written the rules or requirements.
Communication in ICA

Limitations
The subject matter of the dispute may be
located in different stage

1. ADR act and its IRR is limited to the

application of rules on the waiver in
Rules communication is deemed the mediation proceedings to wavier
received of confidentiality and privilege only.

General Rule: Receipt of 2. IRR expands the application of the

communications in the international rules on waiver to include non-
commercial arbitration are those compliance with the rules or
provided for by the parties in their requirements.
Doctrine of Estoppel a. Consent of the Parties

b. Limited purpose of disclosing

to the court relevant
Objectives to non-compliance with the documents in cases where
rules or any requirements under the resort to the court is allowed.
arbitration agreement must be raised
without undue delay or within the time
prescribed therefore, failing which, the Due Process in ICA
right to object is deemed waived.

IRR mandates that the parties shall be

Under this doctrine, a admission or treated equally and shall be given full
representation cannot be denied or opportunity to present their evidence even
disproved as against the person relying on if he does not actually avail of such
it. opportunity.

Estoppel in pais Place of ICA

Happens when one, by his acts, The place or venue of arbitration shall be
representation, or admissions, or by his that determined by the parties.
own silicon when he ought to speak out,
intentionally or culpable negligence,
induces another to believe certain facts to
exist and such belief in a manner that he Default place shall be in Metro Manila,
will be prejudiced if the former is unless the arbitral tribunal decides on a
permitted to deny the existence of such different place of arbitration taking into
facts. consideration the circumstances of the
case.

Under these circumstances, the existence

of the facts in issue cannot be denied or Commencement of ICA proceedings
disproved as against the party relying on
it.

The date of commencement is to be

determined by the parties.
Confidentiality in ICA

The default date of commencement is the

A. General Rule date on which a request for that dispute to
be referred to arbitration is received by
the respondent.

In the case of mediation,

proceedings, records, evidence, and
arbitral awards are confidential and Language in ICA
shall not be disclosed.

Parties shall determine the language

B. Exceptions: during the proceedings.
 2. Decide on the challenge
Default English against an arbitrator if the
arbitral tribunal rejects the
challenge.

Applicable Law in ICA 3. Consider the qualifications of

an arbitrator, the necessity of
ensuring impartiality and
independence of the
The party can agree on the governing law arbitrator, and the advisability
that will be applied to the resolution of of appointing an arbitrator
their dispute. The governing law generally who is of a nationality
refers to substantive law. different from those of the
parties.

A. Substantive Law
In an Ad Hoc arbitration, unless a
different procedure has been agreed
by the parties, the default
A law or legal system applicable to appointment of an arbitrator shall be
complete resolution of dispute. made by the National President of
the Integrated bar of the Philippines
or his duly designated
representative.
B. Conflicts of Law/Private
International Law

Arbitrators and Arbitral Tribunal in

ICA
Part of municipal law or state which
directs courts and administrative
agencies, when confronted with a
legal problem involving a foreign The parties are free to determine the
element, where they should apply a number of their arbitrators and the
foreign law. procedure for their appointment. The
default number of arbitrators is three.

Appointing Authority in ICA

A. Default Procedure

The person or institution named in the

arbitration agreement. 1. 3 arbiter each party shall
appoint one

2. Sole arbiter shall be appointed

A. Functions by the parties

The decision of the appointing

1. Take necessary measurements authority on this matter shall be
to appoint an arbitrator in immediately executory and shall not
case any party, or the be subject to a motion for
arbitrators already appointed, reconsideration or appeal.
or any third party fails to
perform any function
necessary for the appointment
of the arbitrator. B. Factors in Appointing
 Arbitrators termination.

1. Qualifications required by the If the controversy remains, any

agreement of the parties; party may request the appointing
authority to decide on the
2. Considerations as are likely to termination of the arbitrator, which
secure the appointment of an decision shall be immediately
independent and impartial executory, and not be subject to a
arbitrator; and motion for reconsideration or
appeal.
3. In case of sole or third
arbitrators, the advisability of
appointing an arbitrator of a
nationality other than those of The appointment of the substitute
the parties. This is intended to arbitrator shall be governed by the
avoid bias that may arise from same rules applicable in the
so-called hometown decisions. appointment of the replaced
arbitrator.

C. Grounds for challenging an

Arbitrator in ICA Jurisdiction of Arbitral Tribunal in ICA

1. Impartiality or independence; Jurisdiction is the right to act whether or

the power to and authority to hear and
2. Possession of the qualifications determine cause.
agreed upon by the parties.

A. Jurisdiction over subject matter

D. Procedure for the challenge in
ICA

Subject matter of the controversy is

conferred by law.
Default procedure:

1. Sending of written agreement 15 Two Instances

days after becoming aware of the
constitution of arbitral tribunal

2. The parties may request the Lack of jurisdiction

appointing authority within 30
days to challenge tribunals Excess of jurisdiction

E. Procedure in case the Arbitrator

fails to act in ICA
Jurisdictional review of
If an arbitrator becomes de jure or Jurisdictional Issue
de facto unable to perform his
functions or fails to act without
undue delay, his mandate
terminates: The decision of a court or quasi-
judicial agency without jurisdiction
1. If he withdraws; or over the subject matter is null and
2. If the parties agree on the void ab ignition. In the same
 manner, the arbitral award of Interim Measures in ICA
arbitral tribunal which does not have
jurisdiction is also null and void ab
initio unless there is a waiver of the
absence of jurisdiction. 1. Request shall be in writing
transmitted by reasonable means

2. Relieve may be granted to prevent

The arbitral tribunal whose acts are irreparable loss, security, preserve
challenged for lack or excess of evidence, compel
jurisdiction may either:

Legal Representation in ICA

1. Consider the challenge as a
preliminary question or a
threshold issue and render a
ruling thereon before A person may be represented by any
conducting the arbitration; or, person of his choice

2. Defer the resolution thereof

until the rendition of the
arbitral award and the Determination of Rules of Procedure
resolution of the jurisdictional
issues shall form part thereof
especially in instances when
the jurisdictional challenge 1. Statement of claims
does not appear to be 2. Statement of Defence
indubitable. 3. Default of the parties
4. Amendment of claims or defences
5. Hearings (1) court assistance in
taking evidence (2) subpoena (3)
B. Jurisdiction over the parties expert
6. Conclusion / closure

The jurisdiction of an arbitral

tribunal over the person of the Requisites for an Arbitral Award to be
parties in an arbitration is conferred Final
by the consent of the parties to
submit to arbitration.

1. Rendition of the arbitral award

2. Hearing on the qualification
This consent may be contained 3. Expiration of the periods
either in an agreement to submit to
arbitration (for pre-causal consent)
which is entered into at the time of
the execution of an arbitration Cost in ICA
agreement or a contract which
includes an arbitration clause or in a
submission agreement (for present
causal consent) between parties 1. Fees on arbitral tribunal
who do not have an arbitration 2. Travel
agreement or a contract with an 3. Cost of expert advice
arbitration but who nonetheless 4. Travel and other expenses of witness
agree to submit an existing dispute 5. Cost for legal representation
or controversy to arbitration. 6. Fees and expenses of appointing
authority
Correction and Interpretation of ICA 3. Residence or place of business
award 4. NCR

1. Quantification of the cause and the D. Time for filing the petition for
determination of the party liable Setting Aside
therefore or the division between
the parties
2. Correction of typographical and
similar errors initiated by a parties 1. 3 mos
3. Interpretation of the awards 2. 90 days
4. Correction of typographical error
initiated by the Arbitral Tribunal
5. Additional award

Recognition and Enforcement of

Setting Aside an ICA AWARD Foreign Arbitral Awards

A. Requirements Recognition

1. Default in the arbitration Means by which a Philippine courts give

agreement legal acknowledgment to a foreign arbitral
2. Violation of due process award
3. Lack or excess of jurisdiction on
the part of the arbitral award
4. Violation of the arbitration
agreement Confirmation

B. Venue RTC. Judicial affirmation of a domestic arbitral

award

C. Requirements
Enforcement

1. Place of arbitration
2. Assessed, reviewed or Execution and implementation
enjoinment is located