Finals Adr

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ALTERNATIVE DISPUTE RESOLUTION (ADR)Arthur P. Autea

APB (Alvaera & Esguerra) DLSU LAW1

OVERVIEW

History of ADR

1950 Civil Code

1953 Domestic Arbitration Law (DAR)

This law is merely a law on domesticarbitration. (Autea)

The remedies available to the parties willdepend whether the arbitration is domestic or

international. Also, the enforcement of heoutcome of the arbitration is different. (Autea)

1958 New York Convention

This convention is about the recognition andenforcement of foreign arbitration. Forcontracting parties, they are bound by foreignarbitral awards rendered in any of the foreignstates. (Autea)

1976 UNCITRAL Arbitration Rule

1985 UNCITRAL Model Law (Model Law)

The Philippines follow the 1985 version of theModel Law; not its updated version. (Autea)

2004 Alternative Dispute Resolution Act(ADRA)

This law is covers both domestic andinternational arbitration. It provides thatinternational commercial arbitration in thePhilippines shall be governed by the rules onthe law of international commercial arbitration.

2009 Special ADR Rules (SAR)

This covered the gaps found in DAR andADRA.

Concept of ADR

"ALTERNATIVE DISPUTE RESOLUTION System"means any process or procedure used to resolve adispute or controversy, other than by adjudicationof a presiding judge of a court or an officer of agovernment agency, as defined in this Act, in whicha neutral third party participates to assist in theresolution of issues, which includes arbitration,mediation, conciliation, early neutral evaluation,mini-trial, or any combination thereof. (Sec. 3(a),

ADRA)

Examples of ADR

"ARBITRATION" See Arbitration in General.

Arbitration is always consensual. Parties cannotbe forced into arbitration but once a contract issigned the parties are bound by it because


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Lex Societas (Alvaera & Esguerra) DLSU LAW2

obligations arising from contracts have the force oflaw between the contracting parties. However,although the law provides such, this must still be

invoked. (Autea)

Also, arbitration is confidential unless there is awaiver of parties. (Autea)

It must be noted that the award of an arbitrator isbinding on the parties. (Autea)

"MEDIATION" means a voluntary process in whicha mediator, selected by the disputing parties,

facilitates communication and negotiation, andassist the parties in reaching a voluntary agreementregarding a dispute. (Sec. 3(q), ADRA)

Unlike arbitration, the resolution of the mediator isnot binding on the parites. However, there is such athing called mediated settlement agreement whichnecessarily becomes binding on the parites.(Autea)

The term "mediation' shall include conciliation.

(Sec. 7, ADRA)

"MEDIATION-ARBITRATION" or Med-Arb is a stepdispute resolution process involving both mediationand arbitration. (Sec. 3(t), ADRA)

"EARLY NEUTRAL EVALUATION" means anADR process wherein parties and their lawyers arebrought together early in a pre-trial phase to

present summaries of their cases and receive anonbinding assessment by an experienced, neutralperson, with expertise in the subject in the

substance of the dispute. (Sec. 3(n), ADRA)

"MINI-TRIAL" means a structured disputeresolution method in which the merits of a case areargued before a panel comprising senior decisionmakers with or without the presence of a neutralthird person after which the parties seek anegotiated settlement. (Sec. 3(u), ADRA)

Party Autonomy

Party autonomy is the freedom of the party tomake their own arrangements to resolve theirdisputes. (Sec. 2, ADRA) It is the freedom of theparties to determine the rules/laws governing themode of resolving their dispute. (Autea)

This is what distinguishes arbitration fromconventional litigation. (Autea)

Arbitration vs. Litigation

ARBITRATION LITIGATIONprivate & confidential public

parties may selectarbitrator, unless theparties fail to agree

What is important is thatthe parties were giventhe opportunity to agree

parties cannot agree onthe presiding officerbecause the judge israffled


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on the arbitrator.(Autea)

parties can select the

governing law that willdetermine theirsubstantive rights

Philippine law governs

unless there a choice oflaw stipulation in thecontract

procedure depends onthe agreement

Rule of Court applies

formal offer of evidenceis generally submittedat the beginning

formal offer of evidenceis only submitted at theend

venue depends on theagreement

as a rule, Rules ofCourt determine thevenue but it may also

depend on theagreement

submission to theprocess is consensual

submission to theprocess is notconsensual

Claimant v. Respondent Plaintiff v. Defendant /Petitioner v.Respondent

Arbitrator Judge

Stenographer Court Reporter

Award / Final Award /

Interim Award

Judgment / Final

Judgment / InterlocutoryOrder

Nature of Liability of ADR Providers andPractitioners

The ADR providers and practitioners [shall not becivilly liable for acts done in the performance of

their official duties, unless there is a clear showingof 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

Arbitral Award

Submission of Memorandum

Presentation of Witnesses

Submission of Statements

Preliminary Conference

Conduct of Arbitration Proceedigs

Selection of Arbitrators

Commencement of Arbitration

Dispute

Arbitration Agreement


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Ways to be Bound to Arbtration

1) sign a document with an arbitration clause

2) join an organization with its own rules sayingthat any dispute is to be resolved througharbitration

3) step into the shoes of a predecessor who wasbound to arbitration

4) agree to be a surety

Ad Hoc vs. Institutional Arbitration

AD HOC INSTITUTIONAL

Parties will stipulate therules governing thearbitration proceedings.

Parties will submit thedispute to an institutionwhich haspredetermined rulesgoverning thearbitration proceedings.

Arbitration is deemedcommenced upon

service of demand forarbitration.

Arbitration is deemedcommenced upon

notice of the institutionto the respondent of theclaimants request forarbitration with theinstitution.

For domesticarbitration, the DAL andSAR will apply; for

In default of theagreement of theparties, institutions

international, ModelLaw will apply.

have their own rulesthat the parties canadopt.


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Lex Societas (Alvaera & Esguerra) DLSU LAW 5

ARBITRATION AGREEMENT IS A CONTRACT

Arbitration Agreement vs. SubmissionAgreement

ARBITRATIONAGREEMENT

SUBMISSIONAGREEMENT

An agreement thatdetermines the rights,obligations, procedureand rules. It may be in aseparate agreement ormay be a clause in a

contract.

An agreement to submitthe dispute toarbitration.

A party may invoke thisat any time before pre-trial, after which, bothparties must invoke it.

The parties may enterinto this at any time,even after pre-trial.

This comes before thedispute.

The dispute comesbefore this agreementto arbitrate.

The distinction lies in the time when the disputearises or when the agreement was made. (Autea)

Arbitration in General

"ARBITRATION" means a voluntary disputeresolution process in which one or more arbitrators,appointed in accordance with the agreement of theparties, or rules promulgated pursuant to this Act,

resolve a dispute by rendering an award. (Sec.3(d), ADRA)

The elements of arbitration, as enumerated by Sec.3(a) of the ADRA, are:

1) one or more arbitrators;2) appointed in accordance with:

a) the agreement of the parties; orb) rules promulgated pursuant to ADRA; and

3) resolution of dispute by rendering an award.(Autea)

ARBITRATION AGREEMENT is an agreement

by the parties to submit to arbitration all or certaindisputes which have arisen or which may arisebetween them in respect of a defined legalrelationship, whether contractual or not. Anarbitration agreement may be in the form or anarbitration clause in a contract or in the form of aseparate agreement. (Art. 7(1), Model Law)

This definition combines the concept of arbitrationagreement and submission agreement. (Autea)

Obligations arising from contracts have the force oflaw between the contracting parties and should becomplied with in good faith. (Art. 1159, CC)

The principle in this provision is known as theprinciple of autonomy of will. It dictates that theparties can stipulate anything, provided that theterms of the contract are not contrary to law, publicpolicy, or pubic order. (Autea)


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Maria Luisa Park vs. Almendras (2009)

The agreement to submit all disputes to arbitrationis a contract. As such, the arbitration agreementbinds the parties thereto, as well as their assignsand heirs.

Mere exchange of correspondence will not sufficemuch less satisfy the requirement of arbitration.Arbitration being the mode of settlement betweenthe parties expressly provided for in their by-laws,the same should be respected. Unless anarbitration agreement is such as absolutely to close

the doors of the courts against the parties, thecourts should look with favor upon such amicablearrangements.

Commentary: In this case, neither of the partiesinvoked the arbitration clause. As mentionedearlier, the arbitration clause must be invokedbefore the parties are bound to go through thearbitration process. More importantly, the arbitrationclause should not be invoked to dismiss the case;instead, it should be invoked to go into the

arbitration process. The proper remedy in this caseshould have been a motion for suspension of thecase. (Autea)

It must be noted that the fact that a judgment hasbeen rendered is not a bar to proceed to arbitration.(Autea)

Exclusions from ADR

The following matter cannot be the subject ofcommercial arbitration:

1) labor disputes;2) civil status of persons;3) validity of marriage;4) any ground for legal separation;5) jurisdiction of courts;6) future legitime;7) criminal liability; and8) those which by law cannot be compromised.

(Sec. 6, ADRA)

Rescission/Resolution

The injured party may choose between thefulfillment and the rescission of the obligation, withthe payment of damages in either case. He mayalso seek rescission, even after he has chosenfulfillment, if the latter should become impossible.(Art. 1191, CC)

Korea Technologies Co., Ltd. v. Lerma (2008)

Being bound to the contract of arbitration, a partymay not unilaterally rescind or terminate thecontract for whatever cause without first resorting toarbitration.

Commentary: Pursuant to this case, if a contractcontains an arbitration clause, a party can onlyrescind 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 unilaterallyrescind the contract under Article 1191. (Autea) DISTINCTION BETWEEN DOMESTIC AND

INTERNATIONAL/FOREIGN ARBITRATION

DOMESTIC FOREIGN

Arbitration where theagreed place of arbitrationis WITHIN the Philippines.

Arbitration where theagreed place of arbitrationis OUTSIDE the Philippines.(Rule 1.11, SAR)

Award may be vacated by acourt.

Award cannot be set asideby a court.

DOMESTIC INTERNATIONAL

Arbitration that is not

international as defined inArticle (3) of the Model Law.(Sec. 32, ADRA)

An arbitration is

international if:

a) The parties to anarbitration agreementhave, at the time of theconclusion of thatagreement, their placesof business in differentStates; or

b) One of the following

places is situatedoutside the State inwhich the parties havetheir places ofbusiness:1) The place of

arbitration ifdetermined in, or


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pursuant to, thearbitrationagreement;

2) Any place where asubstantial part ofthe obligations ofthe commercialrelationship is to beperformed or theplace with whichthe subject-matterof the dispute ismost closelyconnected; or

c) The parties haveexpressly agreed thatthe subject matter ofthe arbitrationagreement relates tomore than one country.(Art. 1(3), Model Law)

To set aside a domestic(non-intenational) award,the period to vacate the

award is within thirty (30)days from the date ofservice upon theapplicant, the award issubject to confirmation bythe court.

To set aside a domesticinternational award, theperiod to set it aside in not

later than three (3)months from the date theapplicant received theaward, otherwise the courtshall recognize and enforceit.

To determine whether the arbitration is domestic,international or foreign, the (1) place of arbitration, (2)

parties involved and (3) obligation involved. The remediesavailable to the parties will depend on the kind ofarbitration. (Autea)

I l lustrat ion:PLDT (PH) and Globe (PH) had a dispute forarbitration, and the place of arbitration is also in thePhilippines, it will be considered as a domestic arbitration.However, if the seat of arbitration is in a country other thanthe Philippines, it will be considered as a foreign arbitrationpursuant to Rule 1.11 of the Special ADR Rules. If thesame parties had a dispute involving an obligation that is tobe performed outside of the Philippines, regardless of theseat of arbitration, it will be considered as an internationalarbitration, pursuant to Art. 1(3) of the UNCITRAL Model

Law.

In another scenario, if PLDT and AT&T (US) had a disputeand the seat of arbitration is in the Philippines, it will beconsidered as an international arbitration. Although this willbe an international arbitration, it is not a foreign arbitrationbecause the seat of arbitration remains in the Philippines.If the same parties had a dispute and the place ofarbitration is outside of the Philippines, then it will be aninternational and foreign arbitration.

If two international entities, SingTel (SG) and AT&T (US)had a dispute and the place of arbitration is set in anothercountry other than the Philippines, it will be a purely foreignarbitration in the point of view of Philippine laws.


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FORMAL REQUISITES

A contract to arbitrate a controversy thereafter arisingbetween the parties, as well as a submission to arbitratean existing controversy shall be in writing and subscribedby the party sought to be charged, or by his lawful agent.(Sec. 4, DAR)

The arbitration agreement shall be in writing. It is in writingif:

a) it is contained in a document signed by theparties;

b) its content is recorded in any form, whether or notthe arbitration agreement or contract has beenconcluded orally, by conduct, or by other means;

c) it is contained in an exchange of statements ofclaim and defense in which the existence of anagreement is alleged by one party and not deniedby the other; or

It is conceivable to have an arbitration agreement

although there is no physical evidence, such as inthis instance. (Autea)

d) it is contained in a document containing anarbitration clause and that document is referred toin a contract, provided that the reference is made tomake the clause part of the contract. (Art. 7, ModelLaw)

The requirement that an arbitration agreement be in writingis met by an electronic communication if the informationcontained 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 arethe following: (a) it must be in writing and (b) it must besubscribed by the parties or their representatives. Tosubscribe means to write underneath, as ones name; tosign at the end of a document. That word may sometimesbe construed to mean to give consent to or to attest.

The Court finds that these requisites were complied with inthe contract in question. The Articles of Agreement, whichincorporates all the other contracts and agreementsbetween the parties, was signed by representatives of bothparties and duly notarized. The failure of the privaterespondents representative to initial to Condition ofContract would therefor not affect the compliance with theformal requirements for arbitration agreements becausethat particular portion of the covenants between the partieswas included by reference in the Articles of Agreement.


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PRINCIPLE OF SEPARABILITY

The principle of separability of the arbitration clause,which means that said clause shall be treated as anagreement independent of the other terms of the contractof which it forms part. A decision that the contract is nulland void shall not entail ipso jure the invalidity of thearbitration clause. (Rule 2.2(B), SAR; Art. 16, Model Law)

Gonzales v. Climax Mining (2007)

The doctrine of separability enunciates that an arbitrationagreement is independent of the main contract. Thearbitration agreement is to be treated as a separateagreement and the arbitration agreement does notautomatically terminate when the contract of which it is partcomes to an end. The separability of the arbitrationagreement is especially agreement to the determination ofwhether the invalidity of the main contract also nullifies thearbitration clause. Indeed, the doctrine denotes that theinvalidity of the main contract does not affect the validity ofthe arbitration agreement. Irrespective of the fact that themain contract is invalid, the arbitration clause/agreementstill remains valid and enforceable.

Commentary: Applying the Gonzales ruling, an arbitrationagreement which forms part of the main contract shall notbe regarded as invalid or non-existent just because themain contract is invalid or did not come into existence,since the arbitration agreement shall be treated as aseparate agreement independent of the main contract. Toreiterate a contrary ruling would suggest that a party'smere repudiation of the main contract is sufficient to avoid

arbitration and that is exactly the situation that theseparability doctrine sought to avoid. Thus, we find thateven the party who has repudiated the main contract is notprevented from enforcing its arbitration clause. (Cargill vs.San Fernando, 2011)


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COMMENCEMENT OF ARBITRATION

The beginning of arbitration is the agreement and serviceof the demand to the other party commences arbitration.(Autea)

An arbitration shall be instituted by:

(a) In the case of a contract to arbitrate futurecontroversies by the service by either party upon theother of a demand for arbitration in accordance with thecontract. Such demand shall be set forth the nature of thecontroversy, the amount involved, if any, and the reliefsought, together with a true copy of the contract providingfor arbitration. The demand shall be served upon any partyeither in person or by registered mail. In the event that thecontract between the parties provides for the appointmentof a single arbitrator, the demand shall be set forth aspecific time within which the parties shall agree upon sucharbitrator. If the contract between the parties provides forthe appointment of three arbitrators, one to be selected byeach party, the demand shall name the arbitratorappointed by the party making the demand; and shallrequire that the party upon whom the demand is madeshall within fifteen days after receipt thereof advise inwriting the party making such demand of the name of theperson appointed by the second party; such notice shallrequire that the two arbitrators so appointed must agreeupon the third arbitrator within ten days from the date ofsuch notice.

(b) In the event that one party defaults in answering thedemand, the aggrieved party may file with the Clerk of the

Court of First Instance having jurisdiction over the parties,a copy of the demand for arbitration under the contract toarbitrate, with a notice that the original demand was sentby registered mail or delivered in person to the partyagainst whom the claim is asserted. Such demand shallset forth the nature of the controversy, the amountinvolved, if any, and the relief sought, and shall beaccompanied by a true copy of the contract providing forarbitration.

(c) In the case of the submission of an existingcontroversy by the filing with the Clerk of the [RegionalTrial Court] having jurisdiction, of the submissionagreement, setting forth the nature of the controversy, andthe amount involved, if any. Such submission may be filedby any party and shall be duly executed by both parties.

(d) In the event that one party neglects, fails or refuses toarbitrate under a submission agreement, the aggrievedparty shall follow the procedure prescribed insubparagraphs (a) and (b) of this section. (Sec. 5, DAR)

Under Sec. 5 of DAR, adhoc arbitration is commenced bya demand for arbitration which contains the following:1) amount involved (if any);2) relief sought;3) nature of controversy;4) appointment of arbitrator (nominee); and5) attachments (i.e. true copy of the contract with

arbitration agreement). (Autea)

A party aggrieved by the failure, neglect or refusal ofanother to perform under an agreement in writing providingfor arbitration may petition the court for an order directing


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that such arbitration proceed in the manner provided for insuch agreement. Five days notice in writing of the hearingof such application shall be served either personally or byregistered mail upon the party in default. The court shallhear the parties, and upon being satisfied that the makingof the agreement or such failure to comply therewith is notin issue, shall make an order directing the parties toproceed to arbitration in accordance with the terms of theagreement. If the making of the agreement or default be inissue the court shall proceed to summarily hear suchissue. If the finding be that no agreement in writingproviding for arbitration was made, or that there is nodefault in the proceeding thereunder, the proceeding shallbe dismissed. If the finding be that a written provision forarbitration was made and there is a default in proceedingthereunder, an order shall be made summarily directing theparties to proceed with the arbitration in accordance withthe terms thereof.

The court shall decide all motions, petitions or applicationsfiled under the provisions of this Act, within ten days aftersuch motions, petitions, or applications have been heardby it. (Sec. 6, DAR)

Unless otherwise agreed by the parties, the arbitralproceedings in respect of a particular dispute commenceon the date on which a request for that dispute to bereferred to arbitration is received by the respondent. (Art.21, Model Law)

JUDICIAL RELIEF BEFORE AND AFTERCOMMENCEMENT OF ARBITRATION

The judicial relief provided in Rule 3, whether resorted tobefore or after commencement of arbitration, shall applyonly when the place of arbitration is in the Philippines.(Rule 3.1, SAR)

See and use the Flowchart of Arbitration guide indetermining the available judicial relief.

BEFORECOMMENCEMENT

AFTERCOMMENCEMENT

Any party to an arbitrationagreement may petition theappropriate court todetermine any questionconcerning the existence,validity and enforceability ofsuch arbitration agreement.(Rule 3.1, SAR)

Any party to arbitration maypetition the appropriatecourt for judicial relief fromthe ruling of the arbitraltribunal on a preliminaryquestion upholding ordeclining its jurisdiction.Should the ruling of thearbitral tribunal declining itsjurisdiction be reversed bythe court, the parties shall

be free to replace thearbitrators or any one ofthem in accordance with therules that were applicablefor the appointment ofarbitrator sought to bereplaced. (Rule 3.12, SAR)

The ruling of the trial courtis onlyprima facie, meaning

The principle ofcompetence-competence


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arbitration can stillcommence.

applies.

The petition for judicial

determination of theexistence, validity and/orenforceability of anarbitration agreement maybe filed at any time prior tothe commencement ofarbitration.

Despite the pendency of thepetition provided herein,arbitral proceedings may

nevertheless becommenced and continue tothe rendition of an award,while the issue is pendingbefore the court. (Rule 3.3,SAR)

The petition may be filed

within thirty (30) days afterhaving received notice ofthat ruling by the arbitraltribunal. (Rule 3.13, SAR)

Before Commencement of Arbitration

In resolving the petition, the court must exercisejudicial restraint in accordance with the policy set

forth in Rule 2.4, deferring to the competence orjurisdiction of the arbitral tribunal to rule on itscompetence or jurisdiction. (Rule 3.8, SAR)

A prima facie determination by the court upholdingthe existence, validity or enforceability of anarbitration agreement shall not be subject to amotion for reconsideration, appeal or certiorari.

Such prima facie determination will not, however,prejudice the right of any party to raise the issue ofthe existence, validity and enforceability of thearbitration agreement before the arbitral tribunal orthe court in an action to vacate or set aside thearbitral award. In the latter case, the courts reviewof the arbitral tribunals ruling upholding theexistence, validity or enforceability of the arbitrationagreement shall no longer be limited to a mereprima facie determination of such issue or issues asprescribed in this Rule, but shall be a full review ofsuch issue or issues with due regard, however, tothe standard for review for arbitral awardsprescribed in these Special ADR Rules. (Rule 3.11,SAR)

After Commencement of Arbitration

The court shall not enjoin the arbitrationproceedings during the pendency of the petition.

Judicial recourse to the court shall not prevent thearbitral tribunal from continuing the proceedingsand rendering its award. (Rule 3.18(B), SAR)

The aggrieved party may file a motion forreconsideration of the order of the court. Thedecision of the court shall, however, not be subjectto appeal. The ruling of the court affirming thearbitral tribunals jurisdiction shall not be subject toa petition for certiorari. The ruling of the court thatthe arbitral tribunal has no jurisdiction may be thesubject of a petition for certiorari. (Rule 3.19, SAR)


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If the arbitral tribunal renders a final arbitral awardand the Court has not rendered a decision on thepetition from the arbitral tribunals preliminary rulingaffirming its jurisdiction, that petition shall becomeipso facto moot and academic and shall bedismissed by the Regional Trial Court. Thedismissal shall be without prejudice to the right ofthe aggrieved party to raise the same issue in atimely petition to vacate or set aside the award.(Rule 3.21, SAR)

ARBITRATORS

Appointment of Arbitrators

The court shall act as Appointing Authority only inthe following instances:

a) Where any of the parties in an institutionalarbitration failed or refused to appoint anarbitrator or when the parties have failed toreach an agreement on the sole arbitrator (in anarbitration before a sole arbitrator) or when thetwo designated arbitrators have failed to reachan agreement on the third or presiding arbitrator(in an arbitration before a panel of threearbitrators), and the institution under whoserules arbitration is to be conducted fails or isunable to perform its duty as appointingauthority within a reasonable time from receiptof the request for appointment;

b) In all instances where arbitration is ad hocand the parties failed to provide a method forappointing or replacing an arbitrator, orsubstitute arbitrator, or the method agreed uponis ineffective, and the National President of theIntegrated Bar of the Philippines (IBP) or hisduly authorized representative fails or refuses toact within such period as may be allowed underthe pertinent rules of the IBP or within suchperiod as may be agreed upon by the parties,or in the absence thereof, within thirty (30) daysfrom receipt of such request for appointment;


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c) Where the parties agreed that their dispute shallbe resolved by three arbitrators but no methodof appointing those arbitrators has been agreedupon, each party shall appoint one arbitratorand the two arbitrators thus appointed shallappoint a third arbitrator. If a party fails toappoint his arbitrator within thirty (30) days ofreceipt of a request to do so from the otherparty, or if the two arbitrators fail to agree on thethird arbitrator within a reasonable time fromtheir appointment, the appointment shall bemade by the Appointing Authority. If the latterfails or refuses to act or appoint an arbitratorwithin a reasonable time from receipt of therequest to do so, any party or the appointedarbitrator/s may request the court to appoint anarbitrator or the third arbitrator as the case maybe. (Rule 6.1, SAR)

In appointing an arbitration, the first step is to checkthe agreement for the number of arbitrators,qualifications of each and other terms. The nextstep is to determine whether the arbitration is adhoc or institutional. If it is institutional, theappointing authority will only step in if the partiesfailed to agree on who to appoint as arbitrator(s).The appointing authority is whoever is designatedin the contract. If it is institutional, the defaultappointing authority is the IBP President. (Autea)

The third instance is distinguished from the first twobecause the only thing that is clear in the thirdinstance is that there is an appointing authority but

it is unclear if the arbitration is institutional oradhoc. This is under the assumption that theappointing authority agreed to be one. (Autea)

Only when all three instances should fail will thecourt step in. (Autea)

At any time after the petition is filed and before thecourt makes an appointment, it shall also dismissthe petition upon being informed that the AppointingAuthority has already made the appointment. (Rule6.7, SAR)

If the court appoints an arbitrator, the orderappointing an arbitrator shall be immediatelyexecutory and shall not be the subject of a motionfor reconsideration, appeal or certiorari. An order ofthe court denying the petition for appointment of anarbitrator may, however, be the subject of a motionfor reconsideration, appeal or certiorari. (Rule 6.9,SAR)

If, in the contract for arbitration or in the submissiondescribed in section two, provision is made for amethod of naming or appointing an arbitrator orarbitrators, such method shall be followed; but if nomethod be provided therein the [Regional TrialCourt] shall designate an arbitrator or arbitrators.

The [Regional Trial Court] shall appoint anarbitrator or arbitrators, as the case may be, in thefollowing 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 isunwilling or unable to serve, and his successorhas not been appointed in the manner in whichhe was appointed; or

(c) If either party to the contract fails or refuses toname his arbitrator within fifteen days afterreceipt of the demand for arbitration; or

(d) If the arbitrators appointed by each party to thecontract, or appointed by one party to thecontract and by the proper Court, shall fail toagree upon or to select the third arbitrator.

(e) The court shall, in its discretion appoint one orthree arbitrators, according to the importance ofthe controversy involved in any of the precedingcases in which the agreement is silent as to thenumber of arbitrators.

(f) Arbitrators appointed under this section shalleither accept or decline their appointmentswithin seven days of the receipt of theirappointments. In case of declination or thefailure of an arbitrator or arbitrators to dulyaccept their appointments the parties or thecourt, as the case may be, shall proceed toappoint a substitute or substitutes for thearbitrator or arbitrators who decline or failed toaccept his or their appointments. (Sec. 8, DAL)

Where a submission or contract provides that twoor more arbitrators therein designated or to bethereafter appointed by the parties, may select orappoint a person as an additional arbitrator, theselection or appointment must be in writing. Suchadditional arbitrator must sit with the originalarbitrators upon the hearing. (Sec. 9, DAL)

Any person appointed to serve as an arbitratormust be of legal age, in full-enjoyment of his civilrights and know how to read and write. No personappointed to served as an arbitrator shall be relatedby blood or marriage within the sixth degree toeither party to the controversy. No person shallserve as an arbitrator in any proceeding if he has orhas had financial, fiduciary or other interest in thecontroversy or cause to be decided or in the resultof the proceeding, or has any personal bias, whichmight prejudice the right of any party to a fair andimpartial award.

No party shall select as an arbitrator any person toact as his champion or to advocate his cause.

If, after appointment but before or during hearing, aperson appointed to serve as an arbitrator shalldiscover any circumstances likely to create apresumption of bias, or which he believes mightdisqualify him as an impartial arbitrator, thearbitrator shall immediately disclose suchinformation to the parties. Thereafter the partiesmay 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 samemanner as the original appointment was made.(Sec. 10, DAL)

The universal requirement is that an arbitrator mustalways be impartial and independent. (Autea)


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Qualifications and disqualifications are grounds tochallenge an arbitrator. It msut be noted that anarbitrator will only be disqualified if he did notdisclose his disqualification. (Autea) SeeChallenge of Arbitrator.

No arbitrator shall act as a mediator in anyproceeding in which he is acting as arbitrator; andall negotiations towards settlement of the disputemust take place without the presence of thearbitrators.

The arbitrators shall have the power to decide onlythose matters which have been submitted to them.The terms of the award shall be confined to suchdisputes.

The arbitrators shall have the power to assess intheir award the expenses of any party againstanother party, when such assessment shall bedeemed necessary. (Sec. 20, DAL)

"Appointing Authority" as used in the Model Lawshall mean the person or institution named in thearbitration agreement as the appointing authority; orthe regular arbitration arbitration institution underwhose rules the arbitration is agreed to beconducted. Where the parties have agreed tosubmit their dispute to institutional arbitration rules,and unless they have agreed to a differentprocedure, they shall be deemed to have agreed toprocedure under such arbitration rules for theselection and appointment of arbitrators. In ad hoc

arbitration, the default appointment of an arbitratorshall be made by the National President of theIntegrated Bar of the Philippines (IBP) or his dulyauthorized representative. (Sec. 26, ADRA)

The functions referred to in Articles 11(3), 11(4),13(3) and 14(1) of the Model Law shall beperformed by the Appointing Authority, unlessthe latter shall fail or refuse to act within thirty(30) days from receipt of the request in whichcase the applicant may renew the applicationwith the Court. (Sec. 27, ADRA)

Challenge of Arbitrators

The counterpart concept of a challenge is a motionto inhibit/disqualification or motion for requsalbecause in a challenge the party is asking anarbitrator to step down. Compared to a formalmotion filed in court, a challenge is just a simpleletter. (Autea)

Assuming the contract is silent, if you challenge anarbitrator and the challenged arbitrator contests thechallenge, the tribunal (if not sole arbitrator) willhave to rule on the challenge. If the tribunal rejectsthe challenge, the next step is to go to theappointing authority. If unfavorable, then you go tocourt. (Autea)

When an arbitrator is challenged before the arbitraltribunal under the procedure agreed upon by theparties or under the procedure provided for inArticle 13 (2) of the Model Law and the challenge is


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not successful, the aggrieved party may request theAppointing Authority to rule on the challenge, and itis only when such Appointing Authority fails orrefuses to act on the challenge within such periodas may be allowed under the applicable rule or inthe absence thereof, within thirty (30) days fromreceipt of the request, that the aggrieved party mayrenew the challenge in court. (Rule 7.2, SAR)

After hearing, the court shall remove the challengedarbitrator if it finds merit in the petition; otherwise, itshall dismiss the petition.

The court shall allow the challenged arbitrator whosubsequently agrees to accept the challenge towithdraw as arbitrator.

The court shall accept the challenge and removethe arbitrator in the following cases:

a. The party or parties who named and appointedthe challenged arbitrator agree to the challengeand withdraw the appointment.

b. The other arbitrators in the arbitral tribunalagree to the removal of the challengedarbitrator; and

c. The challenged arbitrator fails or refuses tosubmit his comment on the petition or the briefof legal arguments as directed by the court, orin such comment or legal brief, he fails to objectto his removal following the challenge.

The court shall decide the challenge on the basis ofevidence submitted by the parties.

The court will decide the challenge on the basis ofthe evidence submitted by the parties in thefollowing instances:

a. The other arbitrators in the arbitral tribunalagree to the removal of the challengedarbitrator; and

b. If the challenged arbitrator fails or refuses tosubmit his comment on the petition or the briefof legal arguments as directed by the court, orin such comment or brief of legal arguments, hefails to object to his removal following thechallenge. (Rule 7.7, SAR)

Any clause giving one of the parties power tochoose more arbitrators than the other is void andof no effect. (Art. 2045, CC)

See Sec. 10 of DAL.

The arbitrators may be challenged only for thereasons mentioned in the preceding section whichmay have arisen after the arbitration agreement orwere unknown at the time of arbitration.

The challenge shall be made before them.

If they do not yield to the challenge, the challengingparty may renew the challenge before the Court ofFirst Instance of the province or city in which thechallenged arbitrator, or, any of them, if there bemore than one, resides. While the challengingincident is discussed before the court, the hearing


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or arbitration shall be suspended, and it shall becontinued immediately after the court has deliveredan order on the challenging incident.

When a person is approached in connection withhis possible appointment as an arbitrator, he shalldisclose any circumstances likely to give rise tojustifiable doubts as to his impartiality orindependence. An arbitrator, from the time of hisappointment and throughout the arbitralproceedings, shall without delay disclose any suchcircumstances to the parties unless they havealready been informed of them by him. (Sec. 11,DAL)

An arbitrator may be challenged only ifcircumstances exist that give rise to justifiabledoubts as to his impartiality or independence, or ifhe does not possess qualifications agreed to by theparties. A party may challenge an arbitratorappointed by him, or in whose appointment he hasparticipated, only for reasons of which he becomesaware after the appointment has been made. (Art.12, Model Law)

The parties are free to agree on a procedure forchallenging an arbitrator, subject to the provisionsof paragraph (3) of this article.

Failing such agreement, a party who intends tochallenge an arbitrator shall, within fifteen daysafter becoming aware of the constitution of thearbitral tribunal or after becoming aware of anycircumstance referred to in article 12(2), send a

written statement of the reasons for the challengeto the arbitral tribunal. Unless the challengedarbitrator withdraws from his office or the otherparty agrees to the challenge, the arbitral tribunalshall decide on the challenge.

If a challenge under any procedure agreed upon bythe parties or under the procedure of paragraph (2)of this article is not successful, the challengingparty may request, within thirty days after havingreceived notice of the decision rejecting thechallenge, the court or other authority specified inarticle 6 to decide on the challenge, which decisionshall be subject to no appeal; while such a requestis pending, the arbitral tribunal, including thechallenged arbitrator, may continue the arbitralproceedings and make an award. (Art. 13, ModelLaw)

Oil and Natural Gas Commission vs. Court ofAppeals (1998)

The private respondent bewails the presumed biason the part of the arbitrator who was a formeremployee of the petitioner. This point deservesscant consideration in view of the followingstipulation in the contract: It will be no objection toany such appointment than the arbitrator soappointed is a Commission employer (sic) than hehad to deal with the matter to which the supply orcontract relates and that in the course of his dutiesas Commissions employee he had expressedviews on all or any of the matter in dispute ordifference.


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Commentary: If Philippine laws were appliedinstead of Indian Law, the contract would be voidpursuant to Article 2045 of the Civil Code.

The challenged arbitrator will be replaced in thesame manner on how he was initially appointed.(Autea)

Termination of Mandate of Arbitrators

As distinguished from a challenge, which is aremedy if the arbitrator is not qualified or isdisqualified, termination of mandate is the remedy ifthe arbitrator can no longer perform his function.Nonetheless, termination of mandate has the sameprocedure in a challenge. (Autea)

Any of the parties to an arbitration may request forthe termination of the mandate of an arbitratorwhere an arbitrator becomes de jure or de factounable to perform his function or for other reasonsfails to act without undue delay and that arbitrator,upon request of any party, fails or refuses towithdraw from his office. (Rule 8.1, SAR)

If an arbitrator refuses to withdraw from his office,and subsequently, the Appointing Authority fails orrefuses to decide on the termination of the mandateof that arbitrator within such period as may beallowed under the applicable rule or, in the absencethereof, within thirty (30) days from the time therequest is brought before him, any party may filewith the court a petition to terminate the mandate of

that arbitrator. (Rule 8.2, SAR)

After hearing, if the court finds merit in the petition,it shall terminate the mandate of the arbitrator whorefuses to withdraw from his office; otherwise, itshall dismiss the petition. (Rule 8.6, SAR)

Where the mandate of an arbitrator is terminated,or he withdraws from office for any other reason, orbecause of his mandate is revoked by agreementof the parties or is terminated for any other reason,a substitute arbitrator shall be appointed accordingto the rules that were applicable to the appointmentof the arbitrator being replaced. (Rule 8.8, SAR)

If an arbitrator becomes de jure or de facto unableto perform his functions or for other reasons fails toact without undue delay, his mandate terminates ifhe withdraws from his office or if the parties agreeon the termination. Otherwise, if a controversyremains concerning any of these grounds, anyparty may request the court or other authorityspecified in article 6 to decide on the termination ofthe mandate, which decision shall be subject to noappeal.

If, under this article or article 13(2), an arbitratorwithdraws from his office or a party agrees to thetermination of the mandate of an arbitrator, thisdoes not imply acceptance of the validity of anyground referred to in this article or article 12(2).(Art. 14, Model Law)


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ARBITRAL TRIBUNAL AND ARBITRATIONPROCEEDINGS

Competence-Competence Principle

The counterpart of this principle in conventionallitigation is when the court would dismiss the casebased on the ground of lack of jurisdiction. Thejurisdiction of the arbitral tribunal is defined in thearbitration agreement. Thus, it shall be the arbitraltribunal who can determine whether or not thearbitration agreement is existent or valid. (Autea)

The arbitral tribunal may rule on its own jurisdiction,including any objections with respect to theexistence or validity of the arbitration agreement.

A plea that the arbitral tribunal does not havejurisdiction shall be raised not later than thesubmission of the statement of defense. A party isnot precluded from raising such a plea by the factthat he has appointed, or participated in theappointment of, an arbitrator. A plea that the arbitraltribunal is exceeding the scope of its authority shallbe raised as soon as the matter alleged to bebeyond the scope of its authority is raised duringthe arbitral proceedings. The arbitral tribunal may,in either case, admit a later plea if it considers thedelay justified.

The arbitral tribunal may rule on a plea referred toin paragraph (2) of this article either as apreliminary question or in an award on the merits. If

the arbitral tribunal rules as a preliminary questionthat it has jurisdiction, any party may request, withinthirty days after having received notice of thatruling, the court specified in article 6 to decide thematter, which decision shall be subject to noappeal; while such a request is pending, the arbitraltribunal may continue the arbitral proceedings andmake an award. (Art. 16, Model Law)

Principle of competence-competence means thatthe arbitral tribunal may initially rule on its ownjurisdiction, including any objections with respect tothe existence or validity of the arbitrationagreement or any condition precedent to the filingof a request for arbitration. (2.2(B), SAR)

The arbitral tribunal shall be accorded the firstopportunity or competence to rule on the issue ofwhether or not it has the competence or jurisdictionto decide a dispute submitted to it for decision,including any objection with respect to theexistence or validity of the arbitration agreement.When a court is asked to rule upon issue/s affectingthe competence or jurisdiction of an arbitral tribunalin a dispute brought before it, either before or afterthe arbitral tribunal is constituted, the court mustexercise judicial restraint and defer to thecompetence or jurisdiction of the arbitral tribunal byallowing the arbitral tribunal the first opportunity torule upon such issues.

Where the court is asked to make a determinationof whether the arbitration agreement is null andvoid, inoperative or incapable of being performed,


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under this policy of judicial restraint, the court mustmake no more than a prima facie determination ofthat issue.

Unless the court, pursuant to such prima faciedetermination, concludes that the arbitrationagreement is null and void, inoperative or incapableof being performed, the court must suspend theaction before it and refer the parties to arbitrationpursuant to the arbitration agreement. (Rule 2.4,SAR)

The policy behind competence-competence isjudicial restraint. Even if there has been noconstituted arbitration yet, the court can prima facierule on the jurisdiction of the arbitration tribunal.This ruling is prima facie because the arbitrationtribunal can still reverse it. (Autea)

Where the arbitral tribunal defers its ruling onpreliminary question regarding its jurisdiction untilits final award, the aggrieved party cannot seekjudicial relief to question the deferral and mustawait the final arbitral award before seekingappropriate judicial recourse.

A ruling by the arbitral tribunal deferring resolutionon the issue of its jurisdiction until final award, shallnot be subject to a motion for reconsideration,appeal or a petition for certiorari. (Rule 3.20, SAR)

Arbitration Proceedings

In international arbitration conducted in thePhilippines, a party may be presented by anyperson of his choice. Provided that suchrepresentative, unless admitted to the practice oflaw in the Philippines, shall not be authorized toappear as counsel in any Philippine court, or anyother quasi-judicial body whether or not suchappearance is in relation to the arbitration in whichhe appears. (Sec. 22, ADRA)

Appointing Authority as used in the Model Lawshall mean the person or institution named in thearbitration agreement as the appointing authority;or the regular arbitration institution under whoserules the arbitration is agreed to be conducted.Where the parties have agreed to a differentprocedure, they shall be deemed to have agreed toprocedure under such arbitration rules for theselection and appointment of arbitrators. In ad hocarbitration, the default appointment of an arbitratorshall be made by the National President of the IBPor 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 beperformed by the appointing authority, unless thelatter shall fail or refuse to act within thirty (30) daysfrom receipt of the request in which case theapplicant may renew the application with the Court.(Sec. 27, ADRA)

The parties are free to agree on the place ofarbitration. Failing such agreement, the place of


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arbitration shall be in Metro Manila, unless thearbitral tribunal, having regard to the circumstancesof the case, including the convenience of theparties shall decide on a different place ofarbitration.

The arbitral tribunal may, unless otherwise agreedby the parties, meet at any place it considersappropriate for consultation among its members, forhearing witnesses, experts, or the parties, or forinspection of goods, other property or documents.(Sec. 30, ADRA)

The parties are free to agree on the language orlanguages to be used in the arbitral proceedings.Failing such agreement, the language to be usedshall be in English in international arbitration, andEnglish or Filipino for domestic arbitration, unlessthe arbitral tribunal shall determine a different oranother language or languages to be used in theproceedings. This agreement or determination,unless otherwise specified therein, shall apply toany written statement by a party, any hearing andany award, decision or other communication by thearbitral tribunal.

The arbitral tribunal may order that anydocumentary evidence shall be accompanied by atranslation into the language or languages agreedupon by the parties or determined in accordancewith par. 1 of this section. (Sec. 31, ADRA)

The parties shall be treated with equality and eachparty shall be given a full opportunity of presentinghis case. (Art. 18, Model Law)

Subject to the provisions of this Law, the parties arefree to agree on the procedure to be followed bythe arbitral tribunal in conducting the proceedings.

Failing such agreement, the arbitral tribunal maysubject to the provisions of the Law, conduct thearbitration in such manner as it considersappropriate. The power conferred upon the arbitraltribunal includes the power to determine theadmissibility, relevance, materiality and weight ofany evidence. (Sec. 19, Model Law)

The parties are free to agree on the place ofarbitration. Failing such agreement, the place ofarbitration shall be determined by the arbitraltribunal having regard to the circumstances of thecase, including the convenience of the parties.

Notwithstanding the provisions of paragraph (1) ofthis article, the arbitral tribunal may unlessotherwise agreed by the parties, meet at any placeit considers appropriate for consultation among itsmembers, for hearing witnesses, experts or parties,or for inspection of goods, other property ordocuments. (Art. 20, Model Law)

Within the period of time agreed by the parties ordetermined by the arbitral tribunal, the claimantshall state the facts supporting his claim the pointsat issue and the relief or remedy sought, and the


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respondent shall state his defense in respect ofthese particulars, unless the parties have otherwiseagreed as to the required elements of suchstatements. The parties may submit with theirstatements all documents they consider to berelevant or may add a reference to the documentsor other evidence they will submit.

Unless otherwise agreed by the parties, either partymay amend or supplement his claim or defenseduring the course of the arbitral proceedings,unless the arbitral tribunal considers it inappropriateto allow such amendment having regard to thedelay in making it. (Art. 23, Model Law)

Subject to any contrary agreement by the parties,the arbitral tribunal shall decide whether to hold oralhearings for the presentation of evidence or for oralargument, or whether the proceedings shall beconducted on the basis of documents and othermaterials. However, unless the parties have agreedthat no hearings shall be held, the arbitral tribunalshall hold such hearings at an appropriate stage ofthe proceedings, if so requested by a party.

The parties shall be given sufficient advance noticeof any hearing and of any meeting of the arbitraltribunal for the purposes of inspection of goods,other property or documents.

All statements, documents or other informationsupplied to the arbitral tribunal by one party shall becommunicated to the other party. Also any expertreport or evidentiary document on which the arbitral

tribunal may rely in making its decision shall becommunicated to the parties. (Art. 24, Model Law)

Unless otherwise agreed by the parties, if, withoutshowing sufficient cause:

a) the claimant fails to communicate his statementof claim in accordance with article 23(l), thearbitral tribunal shall terminate the proceedings;

b) the respondent fails to communicate hisstatement of defense in accordance with article23(l), the arbitral tribunal shall continue theproceedings without treating such failure in itselfas an admission of the claimants allegations;

c) any party fails to appear at a hearing or toproduce documentary evidence, the arbitraltribunal may continue the proceedings andmake the award on the evidence before it. (Art.25, Model Law)

Unless otherwise agreed by the parties, the arbitraltribunal:

a) may appoint one or more experts to report to iton specific issues to be determined by thearbitral tribunal;

b) may require a party to give the expert anyrelevant information to produce, or to provideaccess to, any relevant documents, goods orother property for his inspection.


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Unless otherwise agreed by the parties, if a partyso requests or if the arbitral tribunal considers itnecessary, the expert shall, after delivery of hiswritten or oral report, participate in a hearing where

the parties have the opportunity to put questions tohim and to present expert witnesses in order totestify on the points at issue. (Art. 26, Model Law)

Before hearing any testimony, arbitrators must besworn, by any officer authorized by law toadminister an oath, faithfully and fairly to hear andexamine the matters in controversy and to make ajust award according to the best of their ability andunderstanding. Arbitrators shall have the power toadminister the oaths to all witnesses requiring them

to tell the whole truth and nothing but the truth inany testimony which they may give in anyarbitration hearing. This oath shall be required ofevery witness before any of his testimony is heard.(Sec. 13, DAL)

Arbitrators may, at the commencement of thehearing, ask both parties for brief statements of theissues in controversy and/or an agreed statementof facts. Thereafter the parties may offer suchevidence as they desire, and shall produce such

additional evidence as the arbitrators shall requireor deem necessary to an understanding anddetermination of the dispute. The arbitrators shallbe the sole judge of the relevancy and materiality ofthe evidence offered or produced, and shall not bebound to conform to the Rules of Court pertainingto evidence. Arbitrators shall receive as exhibits inevidence any document which the parties may wish

to submit and the exhibits shall be properlyidentified at the time of submission. All exhibitsshall remain in the custody of the Clerk of Courtduring the course of the arbitration and shall be

returned to the parties at the time the award ismade. The arbitrators may make an ocularinspection of any matter or premises which are indispute, but such inspection shall be made only inthe presence of all parties to the arbitration to thearbitration, unless any party who shall havereceived notice thereof fails to appear, in whichevent such inspection shall be made in the absenceof such party. (Sec. 15, DAL)

At the close of the hearings, the arbitrators shall

specifically inquire of all parties whether they haveany further proof or witnesses to present, upon thereceipt of a negative reply from all parties, thearbitrators shall declare the hearing closed unlessthe parties have signified an intention to file briefs.Then the hearing shall be closed by the arbitrationsafter the receipt of briefs and/or reply briefs.Definite time limit for the filing of such briefs mustbe fixed by the arbitrators at the close of thehearing. Briefs may be filed by the parties within 15days after the close of the oral hearings; the reply

briefs, if any, shall be filed within 5 days followingsuch 15-day period. (Sec. 16, DAL)

The hearing may be reopened by the arbitrators ontheir own motion or upon the request of any party,upon good cause, shown at any time before theaward is rendered. When hearings are thusreopened the effective date for the closing of the


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hearings shall be the date of the closing of thereopened hearing. (Sec. 17, DAL)

The parties to a submission or contract to arbitrate

may, by written agreement, submit their dispute toarbitration by other than oral hearing. The partiesmay submit an agreed statement of facts. Theymay also submit their respective contentions to theduly appointed arbitrators in writing; this shallinclude a statement of facts, together with alldocumentary proof. Parties may also submit awritten argument. Each party shall provide all otherparties to the dispute with a copy of writing to anyother partys statements and proofs; but if suchparty fails to do so within 7 days after receipt of

such statements and proofs, he shall be deemed tohave waived his right to reply. Upon the delivery tothe arbitrators of all statements and documents,together with any reply statements, the arbitratorsshall declare the proceedings in lieu of hearingclosed. (Sec. 18, DAL)

Arbitration under a contract or submission shall bedeemed a special proceeding, of which the courtspecified in the contract or submission, or if nonebe specified, the Court of First Instance for the

province or city in which one of the parties residesor is doing business, or in which the arbitration washeld, shall have jurisdiction. Any application to thecourt, or a judge thereof, hereunder shall be madein manner provided for the making and hearing ofmotions, except as otherwise herein expresslyprovided. (Sec. 22, DAL)

Assistance in Taking Evidence

Arbitrators shall have the power to require anyperson to attend a hearing as a witness. They shall

have the power to subpoena witnesses anddocuments when the relevancy of the testimonyand the materiality thereof has been demonstratedto the arbitrators. Arbitrators may also require theretirement of any witness during the testimony ofany other witness. All of the arbitrators appointed inany controversy must attend all the hearings in thatmatter and hear all the allegations and proofs of theparties; but an award by the majority of them isvalid unless the concurrence of all of them isexpressly required in the submission or contract to

arbitrate. The arbitrator or arbitrators shall have thepower at any time, before rendering the award,without prejudice to the rights of any party topetition the court to take measures to safeguardand/or conserve any matter which is the subject ofthe dispute in arbitration. (Sec. 14, DAL)

The arbitral tribunal or a party with the approval ofthe arbitral tribunal may request from competentcourt of this State assistance in taking evidence.The court may execute the request within its

competence and according to its rules on takingevidence. (Art. 27, Model Law)

Any party to an arbitration, whether domestic orforeign, may request the court to provideassistance in taking evidence. (Rule 9.1, SAR)


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A party requiring assistance in the taking ofevidence may petition the court to direct anyperson, including a representative of a corporation,association, partnership or other entity (other than a

party to the ADR proceedings or its officers) foundin the Philippines, for any of the following:

a. To comply with a subpoena ad testificandumand/or subpoena duces tecum;

b. To appear as a witness before an officer for thetaking of his deposition upon oral examinationor by written interrogatories;

c. To allow the physical examination of thecondition of persons, or the inspection of thingsor premises and, when appropriate, to allow

the recording and/or documentation ofcondition of persons, things or premises (i.e.,photographs, video and other means ofrecording/documentation);

d. To allow the examination and copying ofdocuments; and

e. To perform any similar acts. (Rule 9.5, SAR)If the evidence sought is not privileged, and ismaterial and relevant, the court shall grant theassistance in taking evidence requested and shallorder 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 selectedas prescribed herein must, within five days afterappointment if the parties to the controversy reside

within the same city or province, or within fifteendays after appointment if the parties reside indifferent provinces, set a time and place for thehearing of the matters submitted to them, and must

cause notice thereof to be given to each of theparties. The hearing can be postponed oradjourned by the arbitrators only by agreement ofthe parties; otherwise, adjournment may be orderedby the arbitrators upon their own motion only at thehearing and for good and sufficient cause. Noadjournment shall extend the hearing beyond theday fixed in the submission or contract forrendering the award, unless the time so fixed isextended by the written agreement of the parties tothe submission or contract or their attorneys, or

unless the parties have continued with thearbitration without objection to such adjournment.

The hearing may proceed in the absence of anyparty who, after due notice, fails to be present atsuch hearing or fails to obtain an adjournmentthereof. An award shall not be made solely on thedefault of a party. The arbitrators shall require theother party to submit such evidence as they mayrequire for making an award.

No one other than a party to said arbitration, or aperson in the regular employ of such party dulyauthorized in writing by said party, or a practicingattorney-at-law, shall be permitted by the arbitratorsto represent before him or them any party to thearbitration. Any party desiring to be represented bycounsel shall notify the other party or parties ofsuch intention at least five days prior to the hearing.


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The arbitrators shall arrange for the taking of astenographic record of the testimony when such arecord is requested by one or more parties, and

when payment of the cost thereof is assumed bysuch party or parties.

Persons having a direct interest in the controversywhich is the subject of arbitration shall have theright to attend any hearing; but the attendance ofany other person shall be at the discretion of thearbitrators. (Sec. 12, DAL)

"CONFIDENTIAL INFORMATION" means anyinformation, relative to the subject of mediation or

arbitration, expressly intended by the source not tobe disclosed, or obtained under circumstances thatwould create a reasonable expectation on behalf ofthe source that the information shall not bedisclosed. It shall include (1) communication, oralor written, made in a dispute resolutionproceedings, including any memoranda, notes orwork product of the neutral party or non-partyparticipant, as defined in this Act; (2) an oral orwritten statement made or which occurs duringmediation or for purposes of considering,

conducting, participating, initiating, continuing ofreconvening mediation or retaining a mediator; and(3) pleadings, motions manifestations, witnessstatements, reports filed or submitted in anarbitration or for expert evaluation. (Sec. 3(h),ADRA)

The arbitration proceedings, including the records,evidence and the arbitral award, shall beconsidered confidential and shall not be publishedexcept (1) with the consent of the parties, or (2) for

the limited purpose of disclosing to the court ofrelevant documents in cases where resort to thecourt is allowed herein. Provided, however, that thecourt in which the action or the appeal is pendingmay issue a protective order to prevent or prohibitdisclosure of documents or information containingsecret processes, developments, research andother information where it is shown that theapplicant shall be materially prejudiced by anauthorized disclosure thereof. (Sec. 23, ADRA)

As a general rule, arbitration is confidential.Exceptions to this rule is that (1) if the partiesexpressly waive confidentiality, or (2) disclose tothe court who can intervene. Court intervention isallowed in the following cases:

1) application for interim measure;2) appointment of arbitrator;3) challenge of arbitrator;4) vacate/modify the award;5) enforce the award.

A party, counsel or witness who disclosed or whowas compelled to disclose information relative tothe subject of ADR under circumstances that wouldcreate a reasonable expectation, on behalf of thesource, that the information shall be keptconfidential has the right to prevent suchinformation from being further disclosed without the


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express written consent of the source or the partywho made the disclosure. (Rule 10.1, SAR)

A party may request a protective order at anytime

there is a need to enforce the confidentiality of theinformation obtained, or to be obtained, in ADRproceedings.

If there is a pending court proceeding in which theinformation obtained in an ADR proceeding isrequired to be divulged or is being divulged, theparty seeking to enforce the confidentiality of theinformation may file a motion with the court wherethe proceedings are pending to enjoin theconfidential information from being divulged or to

suppress confidential information. (Rule 10.2, SAR)

A protective order may be granted only if it isshown that the applicant would be materiallyprejudiced by an unauthorized disclosure of theinformation obtained, or to be obtained, during anADR proceeding. (Rule 10.4, SAR)

If the court finds the petition or motion meritorious,it shall issue an order enjoining a person or personsfrom divulging confidential information. In resolving

the petition or motion, the courts shall be guided bythe following principles applicable to all ADRproceedings: Confidential information shall not besubject to discovery and shall be inadmissible inany adversarial proceeding, whether judicial orquasi judicial. However, evidence or informationthat is otherwise admissible or subject to discoverydoes not become inadmissible or protected from

discovery solely by reason of its use therein. (Rule10.8, SAR)


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REFERRAL TO ARBITRATION

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, uponbeing satisfied that the issue involved in such suit orproceeding is referable to arbitration, shall stay the actionor proceeding until an arbitration has been had inaccordance with the terms of the agreement: Providedthatthe applicant, for the stay is not in default in proceedingwith such arbitration. (Sec. 7, DAL)

A court before which an action is brought in a matter whichis the subject matter of an arbitration shall, if at least one

party so requests not later that the pre-trial conference, orupon the request of both parties thereafter, refer theparties to arbitration unless it finds that the arbitrationagreement is null and void, inoperative or incapable ofbeing performed. (Sec. 24, ADRA)

In interpreting the Act, the court shall have due regard tothe policy of the law in favor of arbitration. Where action iscommenced by or against multiple parties, one or more ofwhom are parties who are bound by the arbitrationagreement 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 whichis the subject of an arbitration agreement shall, if a party sorequests not later than when submitting his first statementon the substance of the dispute, refer the parties to

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

Where an action referred to in par. 1 of this article has

been brought, arbitral proceedings may nevertheless becommenced or continued, and an award may be made,while the issue is pending before the court. (Art. 8, ModelLaw)

Where the arbitration agreement exists before the actionis filedThe request for referral shall be made not laterthan the pre-trial conference.

After the pre-trial conference, the court will only act uponthe request for referral if it is made with the agreement of

all parties to the case.

Submission agreementIf there is no existing arbitrationagreement at the time the case is filed but the partiessubsequently enter into an arbitration agreement, they mayrequest the court to refer their dispute to arbitration at anytime during the proceedings. (Rule 4.2, SAR)

As a general rule, a request for arbitration is made not laterthan the pre-trial conference. Exceptions to this rule arethe following:

1) if there is an arbitration clause, upon the request ofboth 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 arbitrationagreement and that the subject-matter of the dispute iscapable of settlement or resolution by arbitration inaccordance with Section 6 of the ADR Act. Otherwise, the

court shall continue with the judicial proceedings. (Rule4.5, SAR)

When a case is referred to arbitration, the proceedings aremerely suspended and not dismissed because there maybe other needs for the parties to make use of the role ofthe court (e.g. interim measures, assistance in takingevidence, appointment of arbitrators, challenging thearbitrator, termination of mandate, etc.). (Autea)

An order referring the dispute to arbitration shall be

immediately executory and shall not be subject to a motionfor reconsideration, appeal or petition for certiorari.

An order denying the request to refer the dispute toarbitration shall not be subject to an appeal, but may bethe subject of a motion for reconsideration and/or a petitionfor certiorari. (Rule 4.6, SAR)

The court shall not decline to refer some or all of theparties to arbitration for any of the following reasons:

a. Not all of the disputes subject of the civil action maybe referred to arbitration;

b. Not all of the parties to the civil action are bound bythe arbitration agreement and referral to arbitrationwould result in multiplicity of suits;

c. The issues raised in the civil action could be speedilyand efficiently resolved in its entirety by the courtrather than in arbitration;

d. Referral to arbitration does not appear to be the mostprudent action; or

e. The stay of the action would prejudice the rights of theparties to the civil action who are not bound by the

arbitration agreement.

The court may, however, issue an order directing theinclusion in arbitration of those parties who are not boundby the arbitration agreement but who agree to suchinclusion provided those originally bound by it do not objectto their inclusion. (Rule 4.7, SAR)

As a general rule, it is not ministerial on the part of thecourt to grant a motion to suspend proceedings, unless itfinds the arbtration agreement null and void, inoperative or

incapable of being performed. The benchmarks fordetermining if the dispute is arbitrable are the Exclusionsprovided by ADRA. (Autea)

Despite the pendency of the action referred to in Rule 4.1,above, arbitral proceedings may nevertheless becommenced 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 trialcourt without prior recourse to arbitration, the properprocedure to enable an arbitration panel to resolve theparties dispute pursuant to their contract is for the trialcourt to stay the proceedings. After the arbitration


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proceeding has been pursued and completed, then the trialcourt 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 thedispute should be referred to arbitration. The judgedetermines whether a dispute falls under the arbitrationclause or the non-arbitrable clause. Once it has beendetermined that the case is arbitrable, the court no longerhas discretion whether to refer the dispute to arbitration ornot.

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 thecourt could not be speedily and efficiently resolved in itsentirety if simultaneous arbitration proceedings and trial, orsuspension of trial pending arbitration, is allowed, the courtshould hear and adjudicate the case in a single andcomplete proceeding.

INTERIM MEASURES OF PROTECTION

The counterpart concept of interim measures in

convetional litigation are provisional remedies. A party inarbitration is like a party in litigation. If one thinks the otherparty is trying to dissipate or conceal his assets in fraud ofthe plaintiff in order to frustrate a potential future judgment,specific provisional remedies under the Rules of Courtshall be applicable. (Autea)

Instead of going to the tribunal, the party who would like toavail of interim measures may go to the court. Under Sec.14 of DAL, it is up to the party where to ask for interimmeasures. (Autea)

The arbitrator or arbitrators shall have the power at anytime, before rendering the award, without prejudice to therights of any party to petition the court to take measures tosafeguard and/or conserve any matter which is the subjectof the dispute in arbitration. (Sec. 14, DAL)

Under this law, both the tribunal and the court have thepower to grant interim measures. It is up to the party tochoose. What is not allowed is that asking both the tribunaland the court to grant interim measures which would

constitute forum shopping. (Autea)

Sec. 28 of ADRA provides the considerations neededbefore the interim measures may be granted. (Autea)

It is not incompatible with an arbitration agreement for aparty to request, before constitution of the tribunal, from aCourt an interim measure of protection and for the Court to


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grant such measure. After constitution of the arbitraltribunal and during arbitral proceedings, a request for aninterim measure of protection or modification thereof, maybe made with the arbitral tribunal or to the extent that the

arbitral tribunal has no power to act or is unable to acteffectively, the request may be made with the Court. Thearbitral tribunal is deemed constituted when the solearbitrator or the third arbitrator who has been nominated,has accepted the nomination and written communication ofsaid nomination and acceptance has been received by theparty making request.

The following rules on interim or provisional relief shall beobserved:

1) Any party may request that provision relief be grantedagainst the adverse party.

2) Such relief may be granted:(i) to prevent irreparable loss or injury:(ii) to provide security for the performance of anyobligation;(iii) to produce or preserve any evidence; or(iv) to compel any other appropriate act or omission.

(3) The order granting provisional relief may beconditioned upon the provision of security or any act or

omission specified in the order.

(4) Interim or provisional relief is requested by writtenapplication transmitted by reasonable means to theCourt or arbitral tribunal as the case may be and theparty against whom the relief is sought, describing inappropriate 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 inImplementing or enforcing an interim measure orderedby an arbitral tribunal.

(7) A party who does not comply with the order shall beliable 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 beenconstituted, interim relief may be sought from the arbitraltribunal. Unless the arbitral tribunal no longer has thepower to act or is unable to act effectively, the request maybe made with the court. Under the ADRA, the interimmeasure granted by the court may also be modified by thearbitral tribunal. (Autea)

It is not incompatible with an arbitration agreement for aparty to request, before or during arbitral proceedings, froma 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 tribunalmay, at the request of a party, order any party to take suchinterim measure of protection as the arbitral tribunal mayconsider necessary in respect of the subject-matter of thedispute. The arbitral tribunal may require any party to


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provide appropriate security in connection with suchmeasure. (Art. 17, Model Law)

A petition for an interim measure of protection may be

made (a) before arbitration is commenced, (b) afterarbitration is commenced, but before the constitution of thearbitral tribunal, or (c) after the constitution of the arbitraltribunal and at any time during arbitral proceedings but, atthis stage, only to the extent that the arbitral tribunal hasno power to act or is unable to act effectively. (Rule 5.2,SAR)

The following grounds, while not limiting the reasons forthe court to grant an interim measure of protection, indicatethe nature of the reasons that the court shall consider in

granting the relief:

a. The need to prevent irreparable loss or injury;b. The need to provide security for the performance of

any obligation;c. The need to produce or preserve evidence; ord. The need to compel any other appropriate act or

omission. (Rule 5.4, SAR)

The following, among others, are the interim measures ofprotection that a court may grant:

a. Preliminary injunction directed against a party toarbitration;

b. Preliminary attachment against property orgarnishment of funds in the custody of a bank or athird person;

c. Appointment of a receiver;d. Detention, preservation, delivery or inspection of

property; or,e. Assistance in the enforcement of an interim measure

of protection granted by the arbitral tribunal, which thelatter cannot enforce effectively. (Rule 5.6, SAR)

The court shall not deny an application for assistance inimplementing or enforcing an interim measure of protectionordered by an arbitral tribunal on any or all of the followinggrounds:

a. The arbitral tribunal granted the interim relief ex parte;or

b. The party opposing the application found new materialevidence, which the arbitral tribunal had notconsidered in granting in the application, and which, if

considered, may produce a different result; orc. The measure of protection ordered by the arbitral

tribunal amends, revokes, modifies or is inconsistentwith an earlier measure of protection issued by thecourt.

If it finds that there is sufficient merit in the opposition tothe application based on letter (b) above, the court shallrefer the matter back to the arbitral tribunal for appropriatedetermination. (Rule 5.11, SAR)

Any court order granting or denying interim measure/s ofprotection is issued without prejudice to subsequent grant,modification, amendment, revision or revocation by thearbitral tribunal as may be warranted.

An interim measure of protection issued by the arbitraltribunal shall, upon its issuance, be deemed to have ipsojure modified, amended, revised or revoked an interim


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measure of protection previously issued by the court to theextent that it is inconsistent with the subsequent interimmeasure of protection issued by the arbitral tribunal. (Rule5.13, SAR)

Any question involving a conflict or inconsistency betweenan interim measure of protection issued by the court andby the arbitral tribunal shall be immediately referred by thecourt to the arbitral tribunal which shall have the authorityto decide such question. (Rule 5.14, SAR)

The court shall defer action on any pending petition for aninterim measure of protection filed by a party to anarbitration agreement arising from or in connection with adispute 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 isestablished by the petitioner that the arbitral tribunal hasno power to act on any such interim measure of protectionor is unable to act thereon effectively. (Rule 5.15, SAR)

Finally, under the SAR, the power of the arbitral tribunal tomodify interim measures granted by the court may then beamended, modified, or revoked by the arbitral tribunal.Hence, there was a dilution of power

Finals Adr

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