CHAPTER 5

INTERNATIONAL COMMERCIAL ARBITRATION UNDER

THE ADR ACT OF 2004 AND ITS IMPLEMENTING RULES
AND REGULATIONS

Report by (Group 5):

Imperial, Via Rhidda G. (2019-0710)
Laroya, Celyna Angelica M. (2017-0040)
Suba, Paul Joshua T. (2019-0716)

Submitted to:
Atty. David L. Ballesteros
(Professor)
Introduction
The Alternative Dispute Resolution (ADR) Act of 2004’s international
commercial arbitration, conducted in accordance with Philippine law, shall be governed
by the Model Law on International Commercial Arbitration (Model Law) which was
adopted by the United Nations Commission on International Trade Law (UNCITRAL)
on June 21, 1985.1

Salient Features of ADR Act of 2004 that Apply and Incorporate the
UNCITRAL Model Law
1. The Regional Trial Court (RTC) must refer to arbitration in proper cases;
2. Foreign arbitral awards must be confirmed by the RTC;
3. The RTC has jurisdiction to review foreign arbitral awards;
4. Grounds for judicial review in domestic and foreign arbitral awards; and
5. The RTC decision of an assailed foreign arbitral award is appealable. 2

International Commercial Arbitration (ICA)

Arbitration is international if any of the following instances occur: 3
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. One of the following places is situated outside the Philippines in which the
parties have their places of business:
1. The place of arbitration if determined in, or 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. The parties have expressly agreed that the subject matter of the arbitration
agreement relates to more than one country.

1
Sec. 19, Republic Act No. 9285: An Act to Institutionalize the Use of and Alternative Dispute Resolution System in
the Philippines and to Establish the Office for Alternative Dispute Resolution, and for Other Purposes. (hereinafter
ADR Act of 2004)
2
Korea Technologies Co., Ltd. v. Lerma, G.R. No. 143581, 7 January 2008
3
Art. 1.6, C(8), ADR Act of 2004’s Implementing Rules and Regulations (hereinafter IRR)
 Arbitration is “commercial” if it covers matters arising from all relationships of a
commercial nature, whether contractual or not. Such as:
1. Any trade transaction for the supply or exchange of goods or services;
2. Distribution agreements;
3. Construction of works;
4. Commercial representation or agency;
5. Factoring;
6. Leasing;
7. Consulting;
8. Engineering;
9. Licensing;
10. Investment;
11. Financing;
12. Banking;
13. Insurance;
14. Joint venture and other forms of industrial or business cooperation;
15. Carriage of goods or passengers by air, sea, rail or road.4
An international commercial arbitration with the Philippines as its seat is
governed by the ADR Act and its IRR even if the place of arbitration is outside the
Philippines. On the other hand, an international commercial arbitration whose seat is
outside the Philippines is a foreign arbitration even if the place of arbitration is in the
Philippines. The ADR Act and its IRR govern only the aspect of recognition and
enforcement of a foreign arbitral award.5

Coverage of IRR Provisions on ICA

The provisions of Chapter 4 of the ADR Act’s IRR, dealing with international
commercial arbitration, are applicable only when:
1. Its subject to any agreement in force between the Philippines and other state
or states;
2. The place or seat of arbitration is the Philippines and in default of any
agreement of the parties on the applicable rules; and
3. Provided, the dispute is not prohibited by Philippine law to be submitted for
arbitration or are not covered by other Philippine laws already providing for
arbitration.6

4
Sec. 21, ADR Act of 2004
5
Robeniol, G. (2020). Alternative Dispute Resolution (3rd Ed.), p. 70
6
Art. 4.1, IRR
 Note however, that the rules of procedure for international commercial
arbitration provided for under the ADR Act or its IRR may also be applied for
international commercial arbitration conducted outside the Philippines if they are
adopted as the rules of procedure by the parties in the exercise of their privileges of
party-autonomy and self-determination.7
From the foregoing, the ADR Act and its IRR are default rules which come into
force in the absence or in default of applicable provisions contained in:
1. An agreement in force between the Philippines and other state or states; and
2. An agreement between the parties on the applicable rules.
It is to be noted that party autonomy and self-determination is still adhered to,
hence the default nature of the ADR Act and its IRR.

Rules of Interpretation
1. Interpretation of the ADR Act – The court interpreting the ADR Act and its IRR
shall have due regard to the policy of the law favoring arbitration. 8
2. Interpretation of the Model Law – Regard should be given to the fact that the
Model Law is of international origin and there is a need for uniformity in its
interpretation.9
3. Interpretation of the IRR.
a. The same policies on the interpretation of the ADR Act and Model Law are
applicable.
b. Party autonomy should be promoted in the resolution of the dispute.
c. The freedom of the parties to determine certain issues includes the right to
authorize a third party, including an institution, to make that determination.
d. A reference to an agreement of the parties includes any arbitration rules
referred to in that agreement.
e. The rules applicable to claims are equally applicable to counterclaims, and
those applicable to defenses are equally applicable to defenses against
counterclaims.10

Rules on Receipt of Written Communications in ICA

7
Robeniol, supra note 5, p. 71
8
Sec. 25, ADR Act of 2004
9
Sec. 20, ADR Act of 2004
10
Art. 4.2, IRR
 Written communications, electronic or otherwise, are important in international
commercial arbitration since the parties and the arbitrators participating herein are
usually of different nationalities and located in different countries.
The governing rules on the receipt of communications in international
commercial arbitration are those provided for by the parties in their arbitration
agreement. In default of such rules, communication is deemed received:
1. If it is delivered to the addressee personally or at his place of business, habitual
residence or mailing address; or
2. If none of these can be found after making a reasonable inquiry, a written
communication is deemed to have been received if it is sent to the addressee’s
last known place of business, habitual residence or mailing address by registered
letter or any other means which provides a record of the attempt to deliver it.11
Under the IRR, written communication is deemed received on the day it is
“delivered” and not on the day the mail is posted with the post office. 12 These rules
would not be applicable, however, to communications in court proceedings, which shall
be governed by the Rules of Court.13

Waiver of the Right to Object in ICA

Arbitration v. Mediation

Arbitration Mediation
Merit or evidence based Not merit or evidence based so it is not
procedurally driven.
The rules on waiver apply to waivers of The rules on waiver are limited to
confidentiality and privilege, as well as waivers of confidentiality and privilege.
non-compliance with the rules or
requirements.
Objections to non-compliance with the rules or any requirement under the
arbitration agreement must be raised without undue delay or within the time
prescribed therefor, failing which, the right to object is deemed waived. 14 Hence, the
doctrine of estoppel is applicable.

Confidentiality in ICA

11
Art. 4.3(i), IRR
12
Art. 4.3(ii), IRR
13
Art. 4.3(b), IRR.
14
Art. 4.4, IRR
 The proceedings, records, evidence, and arbitral award in an international
commercial arbitration are confidential and shall not be disclosed, except:
1. With the consent of the parties; or
2. For the limited purpose of disclosing to the court relevant documents in cases
where resort to the court is allowed.
The protection is available as long as the information is related to or connected
with the dispute under arbitration.15
The court may issue protective orders to prevent or prohibit the disclosure of
documents or information containing secret processes, developments, research and
other information where it is evident that the applicant shall be materially prejudiced. 16

Due Process in ICA

The parties shall be treated with equality and each party shall be given a full
opportunity of presenting his/her case.17

Place or Venue of ICA

The place of venue of arbitration in an international commercial arbitration shall
be that determined by the parties. In default thereof, the default place of arbitration
shall be in Metro Manila, unless the arbitral tribunal decides on a different place of
arbitration taking into consideration the circumstances of the case.18

Commencement of ICA Proceedings

The date of commencement of international commercial arbitration is to be
determined by the parties. In default thereof, the default date of commencement of
arbitration is the date on which a request for that dispute to be referred to arbitration is
received by the respondent.19

Language Used in ICA

15
Federal Express Corp. v. Airfreight 2100, Inc., G.R. No. 216600, November 21, 2016
16
Sec. 23, ADR Act of 2004; Art. 4.41, IRR
17
Art. 4.18, IRR
18
Sec. 30, ADR Act of 2004; Art. 4.20(a), IRR
19
Art. 4.21, IRR
 The parties shall determine the language or languages to be used during the
proceedings, including that for any written statement, hearing, award, decision or other
communication by the arbitral tribunal. In default thereof, English shall be used. 20

Applicable Law in ICA

Law Applicable to the Dispute v. Law Applicable to the Arbitral Proceeding 21

Law Applicable to the Dispute Law Applicable to the Arbitral

Proceeding
The substantive law under which the The law which will govern the arbitral
rights and obligations of the parties will proceedings and vest jurisdiction on the
be determined. arbitrator or arbitral tribunal.

Example: In an ICA where the parties whose principal places of business is outside the
Philippines have chosen Philippine law as the governing law and the Philippines as the
seat of arbitration, the law applicable to the dispute is Philippine law (the Civil Code for
instance), and the law applicable to the arbitral proceeding is also Philippine law (ADR
Act and its IRR).22
The parties in an international commercial arbitration can agree on the governing
law that will be applied to the resolution of their dispute, which is generally refers to
substantive law.23

Substantive Law v. Conflict of Laws (Private International Law) 24

Substantive Law Conflict of Laws

The law or legal system applicable to the Part of the municipal law of a state which
complete resolution of the dispute. directs courts and administrative
agencies, when confronted with a legal
problem involving a foreign element,
whether or not they should apply a
foreign law or foreign laws.

Appointing Authority in ICA

The appointing authority in an ICA is:
20
Sec. 31, ADR Act of 2004; Art. 4.22, IRR
21
Mabuhay Holdings Corp. v. Sembcorp Logistics Limited, G.R. No. 212734, December 5, 2018
22
Robeniol, supra note 5, p. 77
23
Ibid.
24
Ibid, p. 78
 1. The person or institution named in the arbitration agreement; or
2. The regular arbitration institution under whose rules the arbitration is agreed to
be conducted, authorized to make the default appointment of arbitrators or the
sole arbitrator.25

In addition, the appointing authority in an ICA has the following functions:

1. Take the necessary measures to appoint an arbitrator in case any party, or the
arbitrators already appointed, or any third party fails to perform any function
necessary for the appointment of the arbitrator.26
2. Decide on the challenge against an arbitrator if the arbitral tribunal rejects the
challenge.27
3. Consider the qualifications of an arbitrator, the necessity of ensuring impartiality
and independence of the arbitrator, and the advisability of appointing an
arbitrator who is of a nationality different from those of the parties. 28
Unless the parties have agreed to a different procedure, they shall be deemed to
have agreed to the procedure under such institutional arbitration rules for the selection
and appointment of arbitrators.29 The default appointment of an arbitrator shall be
made by the National President of the Integrated Bar of the Philippines (IBP) or his duly
designated representative.30

Arbitrators and Arbitral Tribunals in ICA

The parties are free to choose the number of their arbitrators 31 and the procedure
for their appointment.32 In default of the foregoing, the default number of arbitrators is
three (3). As for the procedure for the appointment of arbitrators, the default
proceeding would be as follows:33
1. In an arbitration with three (3) arbitrators, each party shall appoint one
arbitrator, and both appointed arbitrators shall appoint the third arbitrator,
failing which, the appointment shall be made by the appointing authority.
2. In an arbitration with a sole arbitrator, the arbitrator shall be appointed, upon the
request of a party, by the appointing authority.
Where, under an appointment procedure agreed upon by the parties,
25
Art. 4.11(c), IRR
26
Art. 4.11(d), IRR
27
Art. 4.12(c), IRR
28
Art. 4.11(e), IRR
29
Sec. 26, ADR Act of 2004
30
Ibid.
31
Art. 4.10, IRR
32
Art. 4.11(b), IRR
33
Art. 4.11(c), IRR
 1. A party fails to act as required under such procedure, or
2. The parties, or two arbitrators, are unable to reach an agreement expected of
them under such procedure, or
3. A third party, including an institution, fails to perform any function entrusted to
it under such procedure, any party may request the appointing authority to take
the necessary measure to appoint an arbitrator, unless the agreement on the
appointment procedure provides other means for securing the appointment. 34
The decision on this matter shall be immediately executory and shall not be
subject to a motion for reconsideration or appeal.35
The appointing authority shall consider the following factors in the appointment
of arbitrators:
1. Qualifications required by the agreement of the parties;
2. Considerations as are likely to secure the appointment of an independent and
impartial arbitrator; and
3. In the case of sole or third arbitrators, the advisability of appointing an
arbitrator of a nationality other than those of the parties.36
If any party is not satisfied with the appointment of any, some or all of the
arbitrators, he may file a petition in court challenging the appointment/s. 37
The arbitral tribunal is deemed constituted when the sole arbitrator or the last
member of the panel of arbitrators who has been nominated has accepted his
nomination and written communication of said nomination and acceptance has been
received by the party making the request.38

Grounds for Challenge of an Arbitrator in ICA

A person appointed as arbitrator has the duty to disclose any circumstance likely
to raise doubts about his impartiality or independence. 39
An arbitrator may be challenged only if circumstances exist that give rise to a
justifiable doubt as to his:
1. Impartiality or independence; or
2. Possession of the qualifications agreed upon by the parties. 40

34
Art. 4.11(d), IRR
35
Robeniol, supra note 5, p. 80
36
Art. 4.11(e), IRR
37
Art. 4.11, IRR
38
Sec. 28(a), ADR Act of 2004
39
Art. 4.12, IRR
40
Ibid
 The nationality of an arbitrator is not a ground for challenge, except if the parties
specified it as a qualification.41
A party who appointed an arbitrator is estopped from challenging such an
appointment. However, estoppel does not apply where the act of appointing was
performed without the knowledge, actual or constructive, of actual facts, 42 and except
for reasons which the appointing party became aware of after the appointment was
made.43

Procedure for the Challenge in ICA

In international commercial arbitration, the procedure for the challenge against
an arbitrator is that agreed upon by the parties. In default thereof: 44
1. The challenging party shall send a written statement of the reasons for the
challenge to the arbitral tribunal within fifteen (15) days after becoming
aware of the constitution of the arbitral tribunal or after becoming aware of
the circumstance constituting the ground for the challenge. Thereafter, the
arbitral tribunal shall decide the challenge.
2. If the challenge before the arbitral tribunal is not successful, the challenging
party may request the appointing authority within thirty (30) days from
notice of the decision rejecting the challenge, to decide the challenge, which
decision shall be immediately executory, and not be subject to a motion for
reconsideration or appeal.
The aggrieved party by a decision rendered in accordance with the
aforementioned procedure may file a petition in court questioning the decision as
prescribed by the Special Rules of Court on Alternative Dispute Resolution.
After a successful challenge, the appointment of the substitute arbitrator shall be
governed by the same rules applicable to the appointment of the replaced arbitrator. 45

Procedure in Case the Arbitrator Fails to Act in ICA

If an arbitrator in an international commercial arbitration becomes de jure (by
law or right, as when an arbitrator is appointed to a government post prohibiting him
from exercising his profession) or de facto (by fact or circumstance, as when an

41
Mabuhay Holdings Corp. v. Sembcorp Logistics Limited, G.R. No. 212734, December 05, 2018
42
Equitable PCI Banking Corp. v. RCBC Capital Corp., 547 SCRA 858
43
Art. 4.12, IRR
44
Art. 4.13, IRR
45
Art. 4.15, IRR
arbitrator becomes mentally or physically incapacitated to discharge his functions)
unable to perform his functions or fails to act without undue delay, his mandate
terminates:
1. If he withdraws (the withdrawal of the arbitrator does not carry with it an
implied acceptance of the existence or veracity of the ground for the
termination), or
2. If the parties agree on the termination.46
The appointment of the substitute arbitrator shall be governed by the same rules
applicable to the appointment of the replaced arbitrator.47

Jurisdiction of Arbitral Tribunal in ICA

In an arbitral tribunal, it is the authority by virtue of which it can resolve
disputes in an arbitration proceeding by rendering an award thereon. 48

A. Jurisdiction Over the Subject Matter

The jurisdiction of an arbitral tribunal over the subject matter of the controversy
is conferred by law, so in this case it is the ADR Act of 2004. There are two (2) instances
when a court, quasi-judicial agency or arbitral tribunal acts without jurisdiction,
namely:
1. When it has no jurisdiction in the first place (lack of jurisdiction), or
2. When it goes beyond its jurisdiction which it had in the first place (excess of
jurisdiction).49

B. Lack of Jurisdiction
The jurisdiction of an arbitral tribunal includes the authority to rule on its own
jurisdiction.50
The arbitration agreement or arbitration clause is an independent and separate
agreement from the container agreement, and hence, the invalidity of the latter does not
automatically result in the nullity of the former. It is only in the event that the

46
Art. 4.14, IRR
47
Supra note 45
48
Robeniol, supra note 5, p.83
49
Ibid.
50
Art. 4.16(a), IRR
arbitration agreement or clause is itself void, inexistent or inoperative that the arbitral
tribunal’s jurisdiction may be questioned.51
The challenge against the jurisdiction of arbitral tribunals in an international
commercial arbitration should be raised not later than the submission of the statement
of defense in the answer or in a motion to dismiss; otherwise, the objection is deemed
waived.52 However, a party is not precluded from raising a jurisdictional challenge even
if he has participated in the appointment of an arbitrator or has himself appointed one. 53

C. Excess of Jurisdiction
When an arbitral tribunal exceeds its jurisdiction, a party may raise an objection
as soon as such a ground becomes apparent; otherwise, the objection will be deemed
waived unless the delay is justified.54

D. Judicial Review of Jurisdictional Issue

The arbitral award of an arbitral tribunal which does not have jurisdiction is null
and void ab initio unless there is a waiver of such a ground, however, petitions under
Rule 43 and Rule 65 of the Rules of Court are not available against the arbitral awards. 55
The arbitral tribunal whose acts are challenged for lack or excess of jurisdiction
may either:
1. Consider the challenge as a preliminary question or a threshold issue and
render a ruling thereon before conducting the arbitration, or
2. Defer the resolution thereof until the rendition of the arbitral award and the
resolution of the jurisdictional issue shall form part thereof 56 especially in
instances when the jurisdictional challenge does not appear to be indubitable.
If the arbitral tribunal renders a preliminary ruling on the jurisdictional issue, an
aggrieved party may elevate the ruling for review by the Regional Trial Court within

51
Gonzales v. Climax Mining Ltd., 512 SCRA 148, January 22, 2007; Koppel, Inc. v. Makati Rotary Club Foundation,
Inc., 705 SCRA 142, September 4, 2013
52
Art. 4.16(b), IRR
53
Ibid.
54
Ibid
55
Fruehauf Electronics Philippines Corp. v. Technology Electronics Assembly and Management Pacific Corp., G.R.
No. 204197, November 23, 2016
56
Art. 4.16(c), IRR
thirty (30) days from receipt of the ruling, and the decision of the court therein shall be
immediately executory and not be subject to a motion for reconsideration or appeal. 57
The arbitration proceedings may proceed despite the pendency of a judicial
action with the Regional Trial Court unless the court issues a temporary restraining
order or a writ of preliminary injunction enjoining the conduct of the international
commercial arbitration during the pendency of the court action or petition.58
If the arbitral tribunal defers the resolution of the jurisdictional issue which will
be resolved as part of the arbitral award but the order of deferment is not susceptible of
judicial relief.59 Once the arbitral award is issued, including the ruling on the
jurisdictional issue, it may be challenged in court in the same manner and procedure for
challenging an arbitral award, i.e., setting aside or vacating an arbitral award.60

Jurisdiction Over the Parties

The jurisdiction of an arbitral tribunal over the person of the parties is conferred
by the consent of the parties to submit to arbitration. This consent may be contained
either in:
1. An agreement to submit to arbitration some future dispute, usually stipulated
upon in a civil contract between the parties, and known as an agreement to
submit to arbitration (pre-causal consent), and
2. An agreement submitting an existing matter of difference to arbitrators when the
parties do not have an arbitration agreement or a contract with an arbitration
clause, termed the submission agreement (present causal consent).61

Interim Measures in ICA

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 (similar to preliminary injunction);
ii. to provide security for the performance of any obligation (similar to
preliminary attachment);
iii. to produce or preserve any evidence (similar to the modes of discovery);
or
iv. to compel any other appropriate act or omission.
57
Ibid
58
Robeniol, supra note 5, p. 86
59
Rules 3.1(A), 3.20, 19.1, 19.2, and 19.26, Special ADR Rules
60
Robeniol, supra note 5, p. 87
61
Ormoc Sugarcane Planters’ Association, Inc. v. Court of Appeals, 596 SCRA 630, August 24, 2009
 3. The order granting provisional relief may be conditioned upon the provision of
security or any act or omission specified in the order.
4. Interim or provisional relief is requested by written application transmitted by
reasonable means to the Court or arbitral tribunal as the case may be and the
party against whom the relief is sought, describing in appropriate detail the
precise relief, the party against whom the relief is requested, the grounds for the
relief, and evidence supporting the request.
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. 62
Note: An interim measure is a petition made either to a court of competent
jurisdiction or to an arbitral tribunal, whichever is appropriate for the temporary
protection of the rights and interest of a party pending the resolution of the dispute.
Such interim measures may include but shall not be limited to preliminary
injunction directed against a party, appointment of receivers or detention,
preservation and inspection of property that is the subject of the dispute in
arbitration.63

Legal Representation in ICA

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. 64

Rules of Procedure in ICA

The procedures in default of an agreement of the parties are as follows:
1. Statement of claims – Within the period agreed upon by the parties, the claimant
shall state the facts supporting his claim; the issues and relief or remedy sought
and shall be submit or refer to relevant documents. 65

62
Sec. 28(b), ADR Act of 2004
63
Sec. 29, ADR Act of 2004
64
Sec. 22, ADR Act of 2004
65
Art. 4.23(a), IRR
 2. Statement of defenses – In the same manner and period, the respondent shall
state his defenses.66
3. Default of the parties – Failure of the claimant or respondent to communicate
their statements of claims or defenses during the period or their failure to appear
at a hearing or to produce documentary evidence, results in the default of the
failing party. Default of the claimant for failure to communicate his statement of
claims results in termination of proceedings. Default of the respondent to
communicate his statement of defenses shall not terminate the proceedings and
instead, it shall proceed without such failure being considered as an admission of
claimant’s allegation. Failure of any party to appear during the hearings, or to
produce documents, amounts to a waiver and the arbitral tribunal shall render
an award on the basis of evidence submitted to it.67
4. Amendment of claims or defenses – parties may amend or supplement their
claims or defenses, as the case may be, unless the tribunal considers amendment
inappropriate.68
5. Hearings – The tribunal shall determine whether to hold oral hearings only, oral
arguments only, or just require the submission of documents during the
appropriate stages of arbitral proceedings. 69 In the conduct of the hearings, the
arbitral tribunal could avail of the following:
a. Court assistance in taking evidence70
b. Subpoena – The arbitral tribunal has the power to issue subpoena in order to
compel the attendance of witnesses (subpoena ad testificandum) and/or the
production of documents (subpoena duces tecum). However, it does not have
contempt powers so judicial intervention must be invoked by the aggrieved
party in the event that the other party should not heed the orders of the
arbitral tribunal.71
c. Expert – The arbitral tribunal may appoint experts to report to it on specific
issues, require the parties to provide the expert with relevant information
such as access to documents, and require the expert to participate in the
hearings.72 The expert sought by the tribunal is similar to an amicus curiae
(friend of the court) who provides assistance to the court, except the expert’s
field of specialization is not limited to legal matters.
6. Conclusion/Closure
a. By an award or settlement – When there is more than one (1) arbitrator, the
decision shall be made by a majority of the members, unless otherwise agreed

66
Ibid
67
Art. 4.25, IRR
68
Art. 4.23(b), IRR
69
Art. 4.24(a), IRR
70
Art. 4.27, IRR
71
Ibid
72
Art. 4.26, IRR
 by the parties.73 If during the arbitral proceedings, the parties settle their
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 an arbitral award on agreed terms.74
b. Termination – An order for termination of arbitration is issued when:
i. The claimant withdraws his claim, unless the respondent objects on the
basis of legitimate interest in obtaining a final settlement; or
ii. The parties agree to terminate proceedings; or
iii. The arbitral tribunal finds that the continuation of the proceedings has
become unnecessary or impossible.75
If the conclusion of the proceedings is by way of an award or settlement, the
arbitral tribunal’s mandate extends:
1. To correct and interpret the award; or
2. To set aside an exclusive recourse against the arbitral award; or
3. When reserved, to the quantification of costs and the determination of the
party liable or the division thereof.76
The arbitral award becomes final and executory after latest of:
1. The rendition of the arbitral award.
2. The hearing on the quantification of the costs and the determination of the
party liable or its division, provided there has been a reservation.77
3. The expiration of the periods for correction and interpretation of the award,
or for making an additional award (i.e., unless a different period is agreed
upon or extended by the arbitral tribunal, 30 days from receipt of the award if
initiated by a party, or 30 days from the date of the award if initiated by the
arbitral tribunal), without any party or the arbitral tribunal availing of the
said remedies.78
4. If the said remedies are availed of by the parties or the arbitral tribunal,
within the same periods stated above counted from the date of the receipt of
or issuance of the arbitral award.

Costs in ICA
1. Fees of the arbitral tribunal;

73
Art. 4.29, IRR
74
Art. 4.30, IRR
75
Art. 4.32, IRR
76
Robeniol, supra note 5, p. 92
77
Art. 4.32, IRR
78
Art. 4.33, IRR
 2. Travel and other expenses;
3. Cost of expert advise;
4. Travel and other expenses of witnesses;
5. Costs for legal representation and assistance; and
6. Fees and expenses of the appointing authority.79
The costs shall be borne by the unsuccessful party but it may be apportioned if it
is reasonable to do so.

Correction and Interpretation of ICA Award

Subject to any agreement of the parties on periods for amendment of the arbitral
award, or to the extended period that may be granted by the arbitral tribunal therefor,
an arbitral award may be amended by the arbitral tribunal in any of the following
manners:
1. Agreement of the parties – The arbitration agreement may provide for the
instances when an amendment of the arbitral award is allowed, premised on
the principle that the parties are free to determine the rules that will govern
their arbitral proceedings.
2. Quantification of the costs and the determination of the party liable, or the
division between the parties – Provided that a reservation for such hearing
and quantification has been made by the arbitral tribunal.
3. Correction of typographical and similar errors initiated by a party – A party
may ask the arbitral tribunal for the correction of the award within thirty (30)
days from receipt of the award, and with notice to the other party, for any
error in computation, clerical or typographical error. An error is
typographical or clerical in nature and therefore correctible even after the
decision has become executory, if the error is occasioned by a mistake in
copying or typing does not alter the substance of the decision and does not
affect or prejudice substantial rights.
4. Correction of typographical error initiated by the arbitral tribunal – Within
thirty (30) days from the date of the award, this may be done by the arbitral
tribunal motu proprio.
5. Interpretation of the award – Within the same period for the correction of
typographical errors initiated by a party, the parties may agree to request the
arbitral tribunal to give an interpretation of a specific point or part of the
award. If justified, the arbitral tribunal shall make the correction or give the
interpretation within thirty (30) days from receipt of the request, and the
interpretation or correction shall form part of the award.

79
Art. 4.46, IRR
 6. Additional award – Within thirty (30) days from receipt of the award, a
party, with notice to the other party, may request the arbitral tribunal to make
an additional award as to claims presented in the arbitral proceeding but
omitted in the award. If justified, the additional award shall be issued within
sixty (60) days from receipt of the request.80

Setting Aside an ICA Award

The award may be set aside through the courts, particularly the RTC provided:
1. The petitioner furnishes proof that there was:
a. Defect in the arbitration agreement – Either because a party was under
some incapacity or the agreement is not valid
b. Violation of due process
c. Lack or excess of jurisdiction on the part of arbitral tribunal - Subject to
the application of the DOCTRINE OF SEVERABILITY/SEPARABILITY
d. Violation of the arbitration agreement – The agreement of the parties must
be respected unless it is in conflict with a provision of the ADR Act from
which the parties cannot derogate, or, failing such agreement, was not in
accordance with the ADR Act
2. Or the court finds that:
a. The subject of the dispute is not capable of settlement under the laws of
the Republic of the Philippines
b. Award is in conflict with the public policy of the Philippines.81
The venue of setting aside proceedings, as well as for the recognition and
enforcement of awards and any application for assistance and supervision, except
appeal, shall be with the RTC where:
1. The arbitration took place;
2. The asset to be attached or levied upon, or the act to be enjoined is located;
3. Any of the parties to the dispute resides or has his place of business; or
4. In the NCR, at the option of the applicant.

Time for Filing the Petition for Setting Aside

80
Art. 4.33, IRR
81
Art. 4.34, IRR
 Must be filed within three (3) months from the date on which the party making
that application received the award, or from the date which a request for correction,
interpretation or additional award has been disposed of by the arbitral tribunal. 82

Recognition and Enforcement of ICA and Foreign Arbitral Awards

Definitions
1. Recognition - It is the means by which a Philippine court gives legal
acknowledgement to a foreign arbitral award and confers upon it the capability
to be enforced under the Philippine law through legal processes.
2. Confirmation - It is the judicial affirmation of a domestic arbitral award.
3. Enforcement - It means the execution and implementation of the foreign arbitral
award through Philippine legal processes.
4. Foreign Arbital Award
a. Special Rules of Court on Alternative Dispute Resolution definition - It is one
made in a country other than the Philippines.
b. Accurate definition - It is one rendered in an arbitration whose seat is outside
the Philippines.

Domestic Arbitral Award vs. Foreign Arbitral Award

Domestic Arbitral Award Foreign Arbitral Award

As to confirmation or recognition

While not requiring recognition, Must go through process of

domestic arbitral awards have to go recognition in order to be entitled to
through the process of “confirmation” enforcement in the Philippines.
prior to their implementation
Note: There is no need for Philippine courts to give arbitral awards
rendered in a domestic arbitration legal recognition under Philippine law
apart from mere confirmation.83 To reiterate, it is domestic arbitration if the
components of parties’ places of business, place of arbitration, place of
performance of a substantial part of the obligation, and place where the
subject matter of the dispute is most closely connected, are ALL located in
the Philippines.84 IF ONE ELEMENT IS OF A FOREIGN NATURE, IT IS
ALREADY FOREIGN OR INTERNATIONAL ARBITRATION.

82
Art. 4.34(c), IRR
83
Robeniol, supra note 5, p. 99
84
Ibid, p. 48
 Philippine International Commercial Arbitration Award v. Foreign
Arbitral Award
Philippine ICA Award Foreign Arbitral Award

As to seat
An international commercial arbitration It is foreign if its seat is outside the
with the Philippines as its seat is Philippines even if the place of arbitration
governed by the ADR Act and its IRR, is in the Philippines. Therefore, an ICA
even if the place of arbitration is outside whose seat is outside the Philippines is a
the Philippines. foreign arbitration.
Note: The SEAT is NOT the venue or the law of the parties’ contract. It is a legal
construct which governs the procedural aspects and the supervision of the
arbitration. The SEAT is also where the final arbitral award will be rendered.

As to recognition
The Supreme Court, in enacting the Special Rules of Court on ADR, categorically
used the term “recognition” rather than “confirmation.” Moreover, the grounds for
the recognition of a convention award and as-in convention award are practically the
same as the grounds for the recognition or setting aside of Philippine ICA Awards. 85

As to susceptibility of vacation or setting aside by a Philippine court

Yes No, it can only be recognized or refused

recognition.
Note: Once recognition is accorded by a Philippine court to a foreign judgment, in
effect, it is the decision, order or writ of the Philippine court that is being enforced. In
the same manner, an ICA award or a foreign arbitral award when extended
recognition by the RTC shall be enforced in the same manner as final and executory
decisions of courts of law of the Philippines.86

Jurisdiction, Venue, and Nature of Proceedings

Jurisdiction over proceedings for the recognition and enforcement of ICA and
foreign arbitral awards, vacating or setting aside an ICA award, and any application
with a court for arbitration assistance, is vested by the ADR act on the RTC. 87 The venue
of the proceedings shall be:
1. Where the arbitration proceedings are conducted;

85
Ibid, p. 100
86
Robeniol, supra note 5, p. 100
87
Art. 4.38, IRR
 2. Where the asset to be attached or levied upon, or the act to be enjoined is
located;
3. Where any of the parties to the dispute resides or his place of business; or
4. In the NCR at the option of the applicant.88
Except for the appeal, the foregoing proceedings shall be deemed as special
proceedings. They shall also be summary in nature, 89 i.e., hearings shall be conducted
principally on the basis of the affidavits of the parties and their witnesses.

Grounds for Refusing Recognition and Procedure for Recognition and

Procedure for Recognition of Convention and As-in Conventions
Awards
Definitions
1. A convention award is a foreign arbitral award made in a state, which is a party
to the New York Convention.90 Its recognition and enforcement shall be
governed by the New York convention91 as implemented by the IRR.
2. A non-convention award is a foreign arbitral award rendered in a state which is
not a party to the New York convention. 92 It cannot be recognized or enforced
under ADR Act but it may be deemed as a presumptive evidence of a right as
between the parties in accordance with Section 48, Rule 39 of the Rules of Civil
Procedure, as amended.
3. An as-in convention award is one which is rendered in a state which is not a
party to the New York convention but which, by reason of comity and
reciprocity, may be recognized and enforced as if it is a convention award. 93

Grounds for Refusing Recognition

The grounds for refusing recognition to convention awards and as-in convention
awards are similar to the grounds for the setting aside of an arbitral award in an

88
Ibid
89
Art. 4.42, IRR
90
Art. 4.36(A), IRR
91
Art. 4.35(b)(i), IRR
92
Art. 4.36(B), IRR
93
Robeniol, supra note 5, p. 102
international commercial arbitration.94 The rationale for this is because ICA awards,
convention awards, and as-in convention awards all have foreign elements. The
grounds are as follows:
1. Defect in the arbitration agreement.
2. Violation of due process.
3. Lack or excess of jurisdiction on the part of the arbitral tribunal.
4. Violation of the arbitration agreement.
5. Defect in the award.
Or if the court finds that:
a. The subject of the dispute is not capable of settlement under the laws of the
Philippines; or
b. The award is in conflict with the public policy of the Philippines.
Note: In the case of as-in convention awards, the applicant shall additionally present
proof of comity and reciprocity between the Philippines and the non-convention state
where the arbitral award was rendered.95
Other grounds shall be disregarded by the court. 96 The Supreme Court ruled in
Tuna Processing, Inc. v. Philippine Kingford, Inc. 97 that a foreign corporation not
licensed to do business in the Philippines, and which is generally prohibited by the
Corporation Code of the Philippines from filing a suit in the Philippines, 98 has legal
capacity to sue under the provisions of the ADR Act of 2004, to wit:
When a party enters into a contract containing a foreign arbitration clause
and, as in this case, in fact submits itself to arbitration, it becomes bound by the
contract, by the arbitration and by the result of arbitration, conceding thereby the
capacity of the other party to enter into the contract, participate in the arbitration
and cause the implementation of the result.
Clearly, on the matter of capacity to sue, a foreign arbitral award should
be respected not because it is favored over domestic laws and procedures, but
because Republic Act No. 9285 has certainly erased any conflict of law question.

Procedure for Recognition of Convention and As-in Convention Awards

The procedure for the recognition and enforcement of convention and as-in
convention awards are as follows:
94
Art. 4.35, IRR
95
Robeniol, supra note 5, p. 105
96
Art. 4.36, IRR
97
G.R. No. 185582, February 29, 2012
98
Sec. 133, Corporation Code of the Philippines
 1. Filing of application – The party relying upon an award or applying for its
enforcement shall file with the RTC the original or duly authenticated copy of
the award and the original arbitration agreement. 99
2. Recognition – Once confirmed by recognition, the foreign arbitral award shall
be enforced in the same manner as final and executory decisions of the courts
of law of the Philippines.100
3. Consolidation/concurrent hearings – The parties and tribunal may agree on:
(i) the consolidation of proceedings, or (ii) the conduct of concurrent hearings
with other related arbitration proceedings.101
4. Rejection/suspension – The RTC, upon application for rejection or
suspension of the enforcement of the award, may vacate or suspend the
enforcement of the court decision to recognize the arbitral award and may
also, order the party seeking rejection or suspension to provide appropriate
security,102 like a bond for example. In the case of an as-in convention award,
the court may also remit the award to the arbitral tribunal if the objections
raised may be cured or rectified.103
5. Appeals – The decision of the RTC recognizing, enforcing, vacating or setting
aside an arbitral tribunal award may be appealed to the CA in accordance
with the Special Rules on ADR, which shall require the appealing party to
post a counter-bond in favor of the prevailing party in the amount of the
award.104 The right to appeal may be validly waived by the agreement or
stipulation of the parties (i.e. an agreement that the award shall be final and
cannot be appealed) without prejudice to judicial review by certiorari under
Rule 65 of the Rules of Court.

Legal Effects of Non-Convention Awards

Non-convention awards, unless they qualify to be as-in convention awards, are
not entitled to recognition or enforcement under the ADR Act. They may be given legal
effect in the Philippines on the basis of Section 48, Rule 39 of the Rules of Civil
Procedure, as amended.105 A non-convention award which does not qualify as an as-in
convention award is either “conclusive upon the title to a thing” or at best, is a
“presumptive evidence of a right,” provided there is no want of jurisdiction, no want of
notice, no collusion, no fraud and no clear mistake of fact or law.106
99
Art. 4.35(c), IRR
100
Art. 4.35(e), IRR
101
Art. 4.45, IRR
102
Art. 4.35(f), IRR
103
Art. 4.36(c), IRR
104
Art. 4.37, IRR
105
Robeniol, supra note 5, p. 108
106
Ibid