JURIS A.
MAGLINTE
ARBITRATION IN GENERAL
OUT LINE
• Concept of Arbitration
• Kinds of Arbitration
• Policy on Arbitration
• Objectives of Arbitration
• Arbitrator
• Arbitration Agreement
• Doctrine of Separability
• Due Process in Arbitral Proceeding
• Judicial Review and Court Intervention
• Interim Measures in Arbitration
CONCEPT OF ARBITRATION
Arbitration is a voluntary dispute resolution process in which one or
more arbitrators, appointed in accordance with the agreement of
the parties or rules promulgated pursuant to the ADR Act, resolve a
dispute by rendering an award.
An arrangement for taking and abiding by the judgment of selected persons
in some disputed matter, instead of carrying it to established tribunals of
justice and is intended to avoid formalities, the delay, the expense and
vexation of ordinary litigation
(Uniwide Sales Realty vs. Titan-Ikeda Construction 511 SCRA 335, 2006)
As to the role of evidence and merits of the case, arbitration is a merit
/evidence based form of ADR.
CONCEPT OF ARBITRATION
A completed arbitral proceeding is concluded by an
arbitral award constituting the partial or final
decision by an arbitrator in resolving the issue in a
controversy.
The arbitral award may come in the form of an
award on agreed terms, consent award, or award
based on compromise if the parties settled their
dispute amicably.
KINDS OF ARBITRTION
Voluntary Arbitration – involves the reference of a dispute to an
impartial body, the members of which are chosen by the parties themselves,
which parties freely consent in advance to abide by the arbitral award issued
after the proceedings where both parties had the opportunity to be heard.
Compulsory Arbitration – process of settlement of disputes by a government
agency which has the authority to investigate and to make an award which is
binding on all parties and as a mode of arbitration where the parties are
compelled to accept the resolution of their dispute through arbitration by a
3rd party.
KINDS OF ARBITRTION
Domestic – 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. Primarily governed by RA 876 and provisions of the ADR act.
International – if any of the following instances occur.
i. Parties’ places of business, which at the time of the arbitration, is in different states.
ii. Place of arbitration provided in the arbitration agreement and in which the parties have
their places of business, is outside the Philippines.
iii. Place where a substantial part of the obligation is to be performed or the place with
which the subject matte of the dispute is most closely connected, and in which the parties
have their places of business, is outside the Philippines
iv. The parties have expressly agree that the subject matter of the arbitration agreement
relates to more than one country.
KINDS OF ARBITRTION
International Commercial Arbitration– if it covers matters arising from all relationships of a
commercial nature, whether contractual or not.
KINDS OF ARBITRTION
Foreign – its seat is outside the Philippines even if the place of arbitration is in the Philippines.
Therefore, an inter-national commercial arbitration whose seat is outside the Philippines is a
foreign arbitration.
This is true even if the place of arbitration is in the Philippines as long as the seat of arbitration is
not the Philippines. The ADR Act and its IRR govern the recognition and enforcement of foreign
arbitral awards.
POLICY ON ARBITRATION
Being an inexpensive, speedy and amicable method of settling disputes
arbitration – along with mediation, conciliation and negotiation – is encouraged by
SC. Aside from unclogging judicial dockets, arbitration also hastens the resolution
of disputes, especially of the commercial kind.
It is thus regarded as the “wave of the future” in international civil and commercial
disputes. Brushing aside a contractual agreement calling for arbitration between
the parties would be a step backward.
(Korea Technologies Ltd. Vs. Lerma 542 SCRA 1, 2008)
OBJECTIVE OF
ARBITRATION
The basic objective of arbitration is to provide a speedy and
inexpensive method of settling disputes by allowing the parties to
avoid formalities, delay, expense and aggravation which
commonly accompany ordinary litigation, especially litigation
which goes through the hierarchy of courts.
ARBITRATORS
An arbitrator (or an arbitral tribunal composed of two (2) or more
arbitrators). – person/s appointed to render an award, alone or
with others, in a dispute that is the subject of an arbitration
agreement.
He must be of legal age, with full civil rights, and able to read and
write.
ARBITRATORS
An arbitrator should be distinguished from anarbiter who is bound
by rules of law and equity in rendering an award, unlike an
arbitrator who may use his own discretion in the performance of
his functions.
The Labor Arbiters of the Arbitration Branch of the National Labor
Relations Commission are examples of arbiters.
ARBITRATION
An arbitration agreement is the agreement by the parties to submit to
arbitration all or certain disputes which have arisen or which may arise
AGREEMENT
between them in respect of a defined legal relationship.
The SC explained the contractual nature of an arbitration agreement in
the case ORMOC SUGARCANE PLANTERS’ ASSOCIATION VS. CA (596
SCRA 630, 2009) an agreement to arbitrate is a contract, the relation of
the parties is contractual and the rights and liabilities of the parties are
controlled by the law of contracts. It should have the essential elements
of a contract.
In an agreement to arbitrate some specific thing, and an agreement to
abide by the award, either in express language or by implication.
ARBITRATION
AGREEMENT
There are two modes of submitting dispute or controversy to arbitration
depending on the existence or pendency of the dispute or controversy
to be submitted for resolution, namely:
a. agreement to submit to arbitration ;and
b. a submission agreement.
Arbitration agreement is a formal contract; its validity is dependent on
the contract being executed in a particular form. An arbitration
agreement shall be in writing and subscribed by the parties charged or
by his lawful agent.
ARBITRATION
AGREEMENT
An arbitration agreement may be included in the container contract
in which case, it is referred to as an arbitration clause or a
compromissoire or may be constituted in a separate contract.
Arbitration clauses must be liberally construed consistent with the
policy of encouraging alternative dispute resolution methods.
Provided such clause is susceptible of an interpretation that covers the
asserted dispute, an order to arbitrate should be granted. Any doubt
should be resolved in favor of arbitration.”
Also known as DOCTRINE OF SEVERABILITY, enunciates that an
arbitration agreement is independent of the main contract even
if it is contained in an arbitration clause.
This is to be treated as a separate agreement such that even the
validity of the main contract is challenged, the arbitration
agreement or clause remains valid and enforceable.
DOCTRINE OF
SEPARABILITY
In Gonzales v. Climax Mining Ltd. (G.R. Nos.
161957 and 167994), the Supreme Court
explained the doctrine as follows:
“The separability of the arbitration agreement
is especially significant to the determination of
whether the invalidity of the main contract also
nullifies the arbitration clause. In- deed, the
doctrine denotes that the invalidity of the main
contract, also referred to as the ‘container’ con-
tract, does not affect the validity of the DOCTRINE OF
arbitration agreement. Irrespective of the fact
that the main con- tract is invalid, the
arbitration clause/agreement still remains valid
SEPARABILITY
and enforceable.”
In Cargill Philippines, Inc. v. San Fernando Regala
Trading, Inc.,” the doctrine of separability was further
explained in the following manner:
“x x x [A]n arbitration agreement which forms part of
the main contract shall not be regarded as invalid or
non-existent just because the main contract is invalid
or did not come into existence, since the arbitration
agreement shall be treated as a separate agreement
in- dependent of the main contract. To reiterate a
contrary ruling would suggest that a party’s mere
repudiation of the main contract is sufficient to avoid
arbitration and that is exactly the situation that the
separability doctrine sought to avoid. Thus, we find
that even the party who has repudiated the main DOCTRINE OF
contract is not prevented from enforcing its
arbitration clause.” SEPARABILITY
Also, in Koppel, Inc. v. Makati Rotary Club Foundation, Inc.,
supra., the legal implications of the doctrine of separability was
explained as follows:
“Under the doctrine of separability, an arbitration agreement is
considered as independent of the main contract. Being a
separate contract in itself, the arbitration agreement may thus
be invoked regardless of the possible nullity or invalidity of the
main contract.
Once again instructive is Cargill, wherein this Court held that, as
a further consequence of the doctrine of separability, even the
very party who repudiates the main con- tract may invoke its
arbitration clause.””
DOCTRINE OF
SEPARABILITY
DUE PROCESS IN ARBITRAL
PROCEEDINGS
In line with the principle that ADR providers and
practitioners, including arbitrators, act in quasi-
judicial capacity and that they are quasi-judicial
agencies or instrumentalities, the principles of
administrative due process equally apply to
arbitral proceedings.
JUDICIAL REVIEW & COURT
INTERVENTION
The decisions of an arbitral tribunal are subject to judicial review. The inclusion of an
arbitration clause in a contract does not ipso facto divest the courts to pass upon the findings
of arbitral bodies.
In case of ABS-CBN BROADCASTING CORP. VS WINS JAPAN LTD (544 SCRA 308, 2009)
enumerated the judicial remedies an aggrieved party to an arbitral award may take, namely:
1. A petition in the proper RTC to issue an order to vacate the award on the grounds
provided in Section 24 of RA876;
2. A petition for review in the CA under Rule 43 of ROC on questions of fact, of law or
mixed questions of fact and law;
3. A petition for certiorari under Rule 65 of ROC should the arbitrator have acted without
or in excess of his jurisdiction or with grave abuse of discretion amounting to lack or
excess of jurisdiction.
In domestic arbitration, if the arbitral tribunal decides to defer such ruling until the rendition of
the arbitral award, none of the parties can seek judicial relief from the deferment.
JUDICIAL REVIEW & COURT
INTERVENTION
Arbitration and court action are not incompatible. They may proceed at the same time
and independently of each other. They may even complement each other.
Under the ADR Act and IRR, the court is directed to refer to arbitration those who are
parties to the arbitration agreement and proceed with the court action as to those who
are not bound by such arbitration agreement.
The declaration under the law that a decision of the appointing authority or arbitrator or
arbitral tribunal for that matter is immediately executory and not subject to appeal or
motion for reconsideration does not foreclose the possibility of judicial review. The
remedy of the aggrieved party under the situation is to avail of a petition for certiorari
under Rule 65 of ROC.
INTERIM MEASURES IN
ARBITRATION
Complementation between the arbitration and court action is best
exemplified in the area of interim measures. Interim measures,
otherwise referred to in the ADR Act as “interim measure of protection”
or “provisional reliefs” are ancillary remedies intended for the protection
of the subject matter of the disputes.
As a rule, interim measures are applied with and secured from the
arbitral tribunal. However, there are instances when the arbitral tribunal
cannot grant the interim measures such as when the arbitral tribunal is
not yet constituted, or when the arbitral tribunal already constituted has
no power to act or is unable to act effectively.
INTERIM MEASURES IN
ARBITRATION
A provisional remedy under the ROC cannot exist without a principal
cause of action. However, this principle is not true for interim measure
under the ADR Act and IRR.
A court cannot refuse to grant, implement or enforce a petition for
interim measure on the sole ground that the petition is merely an
ancillary relief and the principal action is pending with the arbitral
tribunal.
REFERENCE
ROBENIOL, G. T. (2020). ALTERNATIVE DISPUTE
RESOLUTION.
R.A. 9285 – ADR Act of 2004
RA 876- The Arbitration Law
