by：Chikashi Kaneko、Miracle Anne Rodriguez
Arbitration is a mode of dispute resolution under Republic Act No. 876 or the “Arbitration Law” and Republic Act No. 9285 or the “Alternative Dispute Resolution (ADR) Act”. It is a voluntary dispute resolution process in which one or more arbitrators, appointed in accordance with the agreement of the parties, or the applicable rules, resolve a dispute by rendering an award.
Arbitration and other ADR methods are favored over court actions, which usually take a much longer time to resolve. Unlike in court trials, the parties to arbitration are free to decide on the applicable substantive law, the arbitral institution or arbitrators ruling on the dispute, and the rules of procedure including the time table, among others. In addition, contrary to trials which are of public record, the parties enjoy confidentiality with respect to the proceedings. Furthermore, unless agreed upon by the parties, there is no minimum amount or other condition required to be met for the arbitration to proceed.
Mediation is another recognized ADR process which involves a mediator who facilitates the negotiation between disputing parties and assists them in reaching a voluntary agreement. Unlike arbitration, the mediator does not decide the case and the mediation proceedings may be closed even without the dispute being resolved or settled.
Arbitration may be domestic or international. Domestic arbitration is conducted pursuant to R.A. No. 876 while international commercial arbitration is governed by R.A. No. 9285, which adopted the 1985 UNCITRAL Model Law on International Commercial Arbitration (“Model Law”). An arbitral proceeding may be undertaken pursuant to either: (i) an arbitration agreement between the parties, or (ii) voluntary submission to arbitration by the parties to an existing dispute.
Controversies on the following matters are not subject to arbitration: (i) labour disputes, (ii) the civil status of persons, (iii) the validity of a marriage, (iv) any ground for legal separation, (v) the jurisdiction of courts, (vi) future legitime, (vii) criminal liability, (viii) those which by law cannot be compromised, and (ix) disputes referred to court-annexed mediation.
Arbitration Agreements
In domestic arbitration, the formal requirements of an arbitration agreement are that it must be in writing and subscribed by the party sought to be charged or by his lawful agent. In international commercial arbitration, arbitration agreements are likewise required to be in writing. An agreement is considered to be in writing if it is contained in a document signed by the parties or in an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement, or in an exchange of statements of claim and defense in which the existence of an agreement is alleged by one party and not denied by another. It may be in the form of an arbitration clause in the contract or in the form of a separate agreement.
A party to a pending action filed in violation of the arbitration agreement may request the court to refer the parties to arbitration. The request must be made before the pre-trial conference. After the pre-trial conference, the court will only act upon the request for referral if all parties agree to such referral. After conducting a hearing, the court shall stay the action and refer the parties to arbitration if it finds that there is an arbitration agreement and that the subject-matter of the dispute is capable of resolution by arbitration. Otherwise, the court shall continue with the judicial proceedings. Notably, arbitral proceedings may still be commenced or continued, and an award may be made thereon despite the pendency of the court action on the request for referral.
In the Philippines, the arbitration agreement is considered independent of the main contract, hence, the invalidity of the main contract does not affect the validity of the arbitration agreement. Under Philippine jurisprudence, any doubt is resolved in favor of arbitration and the courts are mandated to give effect to the arbitration clause as much as the terms of the agreement would allow.
Arbitration Institutions
Arbitration may be conducted through an institution or ad hoc. The following are arbitration institutions in the Philippines:
（a）Construction Industry Arbitration Commission (CIAC). – The CIAC has original and exclusive jurisdiction over disputes arising from, or connected with, construction contracts in the Philippines. These disputes may involve government or private contracts, but does not cover employer-employee relationships. For the CIAC to acquire jurisdiction, the parties to a dispute must agree to submit the same to voluntary arbitration.
（b）Philippine Dispute Resolution Center, Incorporated (PDRCI) is a non-profit organization established in 1996 out of the Arbitration Committee of the Philippine Chamber of Commerce and Industry. It administers arbitration and mediation in specialized fields such as maritime, banking, finance, insurance, securities, and intellectual property.
（c）Philippine International Center for Conflict Resolution (PICCR) is a non-profit institution established in 2019 which provides commercial arbitration and other ADR services and facilities for parties to disputes, and professional training, and accreditation for advocates and practitioners.
Arbitration fees vary, depending on the arbitration institution. Factors affecting the amount of fees include the sum in dispute, the complexity of the case, number of arbitrators, counterclaims and cross claims filed, requests for emergency relief, and the use of logistical and administrative services.
Enforcement and the Applicability of the New York Convention
The Philippines became a party to the New York Convention when it ratified the same on 06 July 1967. Upon ratification, the Philippines declared that the Convention will be applied only to awards made in the territory of another Contracting State and only to differences arising out of legal relationships which are considered as commercial. The recognition and enforcement of arbitral awards pursuant to the New York Convention are to be filled with appropriate regional trial court, in accordance with the Special ADR Rules.
