Arb:jtrati~pD.Unde.

r the Alternative'

'. '. , . .... . . . ~

Resohrtion Act of 2064t ~y ,

~~jaJ,11en4!e f:l e:c~.o~':· B. Arroyo *

-n 2,004., pong re,ss ,enacted Republic Act No.9!285, knCwn as

. th~ A1tematNe Displite R.eflf)luticri .A.ctof 2004 ('New L.fJV!I') .. Tine' NeW" . Law 'c~me &lye.er:s afWr thl1l! pas.S8g!Sl Of ttl e ceu nt ry' ,s. frrs t· art:Htrati en law, Republic ~ -tl .. '~, known.ils, ih'e Arb~tretlon LiIW"f'Old ~), and almOst 4~iY~~~ : ,~n tal th ~~mntimFo. ~he

-c···· A-il t;l ~~ , ~rE!fgn

itmb rds. The'New Law is oertalnly

·iI waleoroe,development'snd ,perhaps nat colncid.entel~ arJIives at. a time ·whe·n the c;ountry's eci:inomY is movin9fol\Ya."rd ·once again. 'lie. N"ew law pri:!\!'ides·I:\'1. mOl:em~emartd.~fi'a~fo.r th.edev;ek:lpm~6f i;ln-a~matlyeidi$pi.Jte,: 'rGS,cllutlon ~y.srem. Thee opjec;~ive Of the. Ne,VtI Law is t,?··lmt~ltI,JU"OnBlize .and· '18inc;:ouragB . the use of the e~t.€Jrn alti'\le

, (nodes:- ofdlspute res:ollltJon. .

. The 'New Law c:.overs the var!.ous mode:;:of ~Itemative dispute· resoiu:lion. na meJY,·a n:r.aJJG-' Ge~·G<i~I,I:a{1 .. ! me: .Iauo rRl~ ... aJ ..... n:d a~~mRFaI ~' ThiS ~e.!per wtn limit fts dlscrJHi'on to this 'reGent slgnifican~t developments'!n t~~rnElld' Q'f aroitrat!crt.

Ejl3'CtJyr~iiG S§Q1:a(uFeS

The New Law d,eclaresthat the' "provisions on ~ciSig:fl. •. n, Re.R1J ,',' 194:, k,nOW'I'"I as the' ,,Electr::oniC CorrU"I'Ier-ce Act 'eECommerce Act~) j . shall BPP.~Y·. to arb~b<atiB$:aod;o.t~.r.:W~~.l~~~~t..e. reSQIL;j*iO~ps;~j~s, 1 This ls to be'

• uu.rl!l:iGi! An'oyc 1!;".~ Ii I,LI!·lI;tl~i1. ·plnner in Q I.!lsutrlbi n-g. T"Oorr~ili He, Ii 111 so 'takin;. up] his m,"st~rs [ IT ... Ecol'l·c<m.f'~~ 4 t HI e A 1~f1eQ'· de :MaTIfiil UJI'i.\iersily.' Ht~ c"mt'l:] address is. 1..~1l~r1c:e..·a1:TQ~Dii~~met ,com.

I"R.:.A, No, 9285, C~, 'I, Sbk- 4'.

·e~pe,Gted CO ns tde rl n gtha't"8 I iii rge iilT:. ~:sc't:b-:- 211" on-ag eeme 'r t number of oommsrcili!ll hansactions: are .a~tbo~_~ ]~:t1o~ a;' camJOCl8. now be!ng'condiuded eI9C,1ron~'c9lUy, iI1e' :as.'· ." . ~a ,~:.I!Ld:bij..stJ~'

provlslons·on EJet1ronlc Sign~res ~€IIlIk ru'bfl:r:aoo' rcee ,"

:to s;afeguard If:u;i; integrittamQ'li;!jiability Prior tei,p:assagEi ·ofthe New Law .. of:sIe.ottonlc: amt.cs.:.a~~aws-A01Ml..1he, 'a:n ar~itrBnon ag·reeme·n~ Gould' D;e: p~teJ.(lr;aulliel'JtitatillQ$~. defei.afe"d by1m p~~e:~iR.g9r'1oinrng either ·d~tl.ThB~ New Law 'rec:cgl'llizes as p~.ElIilritiffQr .defendant' a ~~soo who the need :to kelP p~ Wit,h the faplTd was not a p,ar1y tQ the- arbitratIon mlii!rc.h, of ~c:hnologY'and' at the SiaJme' ,agr'eOO1ent. ~rII _~!Js '. Balit.

:tlmetoiguard 8gEljnsthud. ' . vs~~~~~o.

1W53~.-· . ....' . S: the Supreme'Oourtruled .H"1~l A submission to arbitration Is -, ~ ~uch. th.e. A:greeme'nt, contaIning the stl~ l.IIaU6n on arb flrinl·o n, blnQIil the

p8rtr'!il!;i:U1iF,.U."~to,·a._ " :!,il

acrl e\' . ."~, '

. The 'case ,irrvolved an owner of a vast ~tfoflarid \Mio erit.ereQ i!'!tl;l~~f~' p_~g:we~,t with·.s·re·elly company whereby the' latter wOUld render and provide cOn~tNdion- services . on thefOrmer's]ancl. ·Subs!;lquent.ly;tM owr"e~ ,exa~uteCl 'a special poWer af aUomey'rn favor of. the-reeiltycompany to manage'and...sen'~g I!i!!nd~"'h,e r.ea~ty

. compJlnysubdWlfjedth!3 tand ,end 'sold' th a SUD dMdea pert (on s to seve reI bpyel'S, Yeal',s lmer; th'!lI hal,s 'of: e

o~n-$r fl 1'0 : ... ~ a 1'1 I:Ir

- :c;ta .. ,,> , . a· .-ti" frO < f

~~ce, oa~tcotri;t~. .IntQrpretario(f of (he New Law: an.~a.JJnt~~ ~~eRgi' r

. ,. thl t:rI-~·~.o I;I~::;. The,

marly companY'fOetI a motloo to dismiss the': (lOmpI3~nt" oh n,e ground lhi;lfthe: heirs failed to subnilt the1rgrievance.to arbitra~ion as reqvked under Article Vt of, the Ci'w'ner-COl"ltri;'lctorAgreement

The' S.upr~.rm~' C'pur_t u ph,sld th

j. "i~o~f~ h . - .

............

The N£.w La:w:pfQvides 0:, m. a r:~~,W$.(Nlet~ 4ln fi J!ll',;.fcti~lelr~uF1:ew~rk ftl,,· the·:tl~veIoJl11t.e!i.t of . tl~'f, :.q;ltcr'!a#ve di~pute

t:eSfi-/U#OIt .$,stem~ Th~(}bject(ve .oJthe . . N'?.w-La'tt' 'Is tli ins"titutionaii%e and

. "" '.

cl,leour.age' the useof tlie 'f'fl:iern(!tiTtle m(Jd~$ of' dispute 'r~soll!tion;

lspute

_;_ -, ~H~j,.-s of A\lgus:te Sal.~:"'/: L~:pe.l'~l REilt)'. .c a'lH1fflliofi. (l.Il:. N a. r3S~ 62. l ~ Dt-C(;Jn~er '1999'," . .

-

"_ ' __ .b &azo& __ . 4PW.4 _ - .;!iii..."

arUelas - - -- . arbitr·aUlm un.dBr,:.t_ho.;i~~I_B~nati~BF~dIID~,~~~·

I _ _ :_ • .:",.' •• ' ••• , , .......• r ••••...... ~ •• _'. ,

reasontng:' s_ 1jI.1.)If!r&......ef:B:not ":aSSi'gAs" as contemplated und'er: 0. I~ l1ey could no. ,O!ill e~m!lJlell eet to - on-mil €!mse!\I'es:Jocm:bi~tion. If!;tt aU, or -!lration could la:k.e pll\ace only between "the heirs and the rea'ity oompSnly. Howe'{er,lhe Supreme Court found! it lm prac~leal to have, 01'1 the one hand, arb iilraliiol'l proceed:ings against the 'really company and, ()fI Ule ,other hand. court proceedings against the lot buyers. In the Supreme Court's opihifln, the best solution was-~·ma'fle:it1!e::GtlDrt hea.·._.~ti:1W9S~P~ .. - ..•. realty ~y . . e.:tL~l1s, liIus:

"'The petf'IJoneri" conren1il'€lnis , . - W~rit. For wIlbtrB_sciUioo. as a genefi:;11 ru:1~e~ ifis an amitlCable Issue" they imp~eaded in the suit fOf fMelsswn IfiQ'"1'eSlpor:rdel1l' at

bu~~are...-n.sl_1b8[ p:aate8'to th~meflt Qf;lll- daitei!s &_i .. '1150 hats. OonlSequeJI'It,y. •.. erig1rit to arbitratess provided ijn .Articrrs' VI of the Agreemen~, was

neveLv:este.dl ·n..r:esjlonder,rt iot lI;Iy~,

Respondent Lapoerell Rea1ty. as a co n tra eUn 91 p ali~:Y ~o th e :Agreement, has, the right 00' COO"Ipe~ petitionersto,first arbiiilnllle before seekingl jl:ldic:la~ mlief. Ii-Iowever, to iSplitthe proceed lings into :am'itration for re5lPom::lent Laperal ReaHy and U'i~d for tie· respondent lo~ b u yer~s. tU" ~o h o~d trma!~ilil abeya!rlce Ipend~li!g €IlibUlCilth:J'1l between petU.ioners, and respon:denrt laperal Realty, would in effect result in mu:ltiplicity of ~uits" d u!pl i eiteus p n:u::e diU feln d unnecessary delay. Olill 'Itle OIJler han~ IlJIIUJ.e inc:th o~tof justicit '·tffi!L~tl ·e8r;s;.the

. ,a!iJ!li 1'15t1 Un_ell"!

r t .-i!t1 -dj1!dAcBtes

pe.tihoners' rights asa.,g2linst theirs in i s_nrg, 1fIf:! camp ste ~mg:"

FOUiIi year.s ;laha1f, in A:I},an l!'S. ~lnIemational'AiF 'Terminals Co., 1m;;.. - (G. R. No. 150001, S May' 210(3), a 1'1;1'91"1 profire :case Involving a mu Itf~!)iH iOIl ,peso govemmernllProJect. tt~e issue ,of '(he e'l'ect of third partin, on arbifradon agreements again ~recl itS head.

o n9 J U'ly 1 99] ,- U'we P:h jill pp i:r:lB!

Govemmem ,awa~d h:dhe Philippine '~ntemafio nal Air Term ina~s Co" lne, ("P~ATGO") the projoot to constr.uct, ~e"'ellop,and operate the Ninoy Aquino

·'ln1eniiaNon~Alrport (NA!!A) Intematfonal IPassell~r Term rna'i IU(INAIA 11FT III) un,deJa b:uil'dl-opeora~:e,-.and-traln sfer sn<;IfI!.gement

On 12 J1u! y 1997, the Phn]ppine Govemment and P~ATCO sig!'1ecl the "Concession Agreementror the 6u ild~ Opera~TransferAm3nQement,of'lhe N,jlno!y Aq uino ~nterm aUolll.d Airrp~o:r~ P.ass.elilgelr Telll"min!sl 1.I1'~ (1:9~U Con C'BS:SJO n Agreemen~:). The Governm:eni granted P~AlICO ~.h'e franch ise to operate and maintain tne said term inal du ringltn,e eeneession period and to collect the Mes, lrerntals and mher chmges :inacoomaooe, w.iI!'I1 Ule rates orsd1.edlulesstipul~ted il1l the ~997 C oncass'lon .Ag ream ant. The Agreement provided that the concession ,per~od sham befor twenty.flVe (25) years oemmenolngfrorm HIe in-:!:iJerv~oo dB~e, and: may bel mfll8Wed, at 'llIla optlon oftne (j4lUII'emment fur a period 001 exceedingl twenty~rrve (25) years,. At 1he end of the oom:::esskm period" PIATOO shalltmnsfer the development facil!ity to ',tM

'Government, . .

On Novemlbetr 26.1996, t'h.e GOlv'emmem~ and I?iIATCO signed an Am 8111,ded andl IRestakld Cofitcessi'on Agreement (AACA),. SubsequenUy; title Govemment and P'~ATCO signed tlree SL..!pp~emen:ts to .the AReA. {The 1991 c.oflcesston .Agreement, AReA., and Su p phllmen tss hall hereafter be collectively refSl"I!'ed: to as (h,8! !PlATeD Conhlcts:.~)1

Some years, later. varr.ous :persons filed 'Petitions roJ protl!lbltlon under Rtlle 65 ,of the 1997 Rules of Owi:1 ProoedlJ re seeking ~o prohlblt th.e GO'IiiIemm:eIilUrom imptemendng the PIAfOOI Contracts.

Th,epetitlol'llefS in.AIM OOIfIsisted at. (1 ) the valiiouiS, seJVioe providers hav:b1g separ:atecol1i@l1!ssion ,(;oorI'iilGts ¥ll'!itih 1he Man ila !!ntemational Arrport Auflority (MIIAA) and lc,ontinuing service .agmemen,ts. with Ymlousint:emat[looa] :airl ines to, pro~~d:e :nn-fUgflt eaten og, Ipassenger Iloocting, ramp and groomd ~s:up'po'rt', aill'erafl: I1"Isintsfla:nceand IP rov~8~O ns, c airgo hand ling! a n d warehou;slng and olherseNlces; (:2) the emp:tGyees of these service prl!),vi(iers:; (3) :la:oor lllniCfEls MIASCOR Workers Un i,on - Nation all Laibor Un i'OIll;Jnd Ph iii pp i ne A~lillnes E l1'I!pi:ay88 S Association; and (41)' members 'oflhe House of Representatives, c~zens and taxpayer.s.

ThueNfoo- ~rs.'emp-1~ and

UWlI01l1;S, ra:ise.G '~. rg)tlment:::tR;at:;!!he p~T:ee Gon.b:acllS;(:OOtam:stipulatklfls which-di,re~~veBB ntlm"erous, provisiooS"OFt:I'Ie €;oi'iiUfijIllOn, specific provis:oos of U'le eumd-Ope~Transter law and its tm ~iewrentllilg R~.de5 and Regulations.,:In poEtIc p:olicy-

On the other hand, the members, 0<1 Ihe: IHO!JS8 of Representatives 6fgued '1ti!.aI: the G,Qvernm snt ob Iwg'sUons :~" the P U\ Te'O Co,ntracts wh ich com pet Qlo,ve rn m €I r:l t ex pend lilture wit~o u t appropriatfon is a ttlctarlrnE!R rl! their pr,er~atil.tes as egls.latar&, fflI'l1ml¥ te ~e nmoomrlollbe£ell'lS'litutim'l'Ula {,{lljo r'l'ifMeJ"sh,anJIrI&:pa:f:d~ otthe=trees'l:ll'Y exceJ).:l:iI! : un;~llce:oOf 8rrapproJl#iatibn

miEld~bJ~a!w.· .

DII,n1ng th.€! pendemcy oHh:e petitions.

PIAT(~O infonnecllhe Supreme Court th at, it h adcommenc,ecl ,arb itration pr,oo(!!ed'ings before U:i B Interna'oill1al Chrumber of COl1'llmer:cB'. Il"ItemaOonal Court of Arbitra:tiol1' . ICC by rmn il, iUL.-ques LU b.Hra t,l o[ll1b the $e~ratarlat af the 1.0" EigaxtlSit tt!'131 Gov,ernmen of trm Rep~JllIlc Q1 ~h,e, Philipp~n~porsuant ,oSictir;Jm 1.0.0:2 mtheARCA.

negilte thecommel1lcemetlt 'of the arbitration proceedingsbefo:re the ICC, the Supreme Court ell bane rl!Jl1ethe!ess proceeded to consider and r€solve~he case. Ttie Sl.!IlPrleme Courtt~;eld, among oMle.rs, mat the arblflra,tioni1lgreem.ent Itletweentllie Fhmppine GoY:emment ami iPlATCOdid not bind petitioners, who wefe not parties to the AR.CA, and that: ltIe ~CCwas; not in a' position b) resoJve the multipJe issues involving the non-

part]es., th us.: -

KL,egal Effec'G. of the Commencema.nt

of Arbitration Prnceed~ngs by PtATCO

to submit to arbitration proceedings. A' speedy and decisive resolution of all the critical issues in the present controversy, including those raised by petitioners, cannot be made before an arbitral tribunal. The object of arbitration is precisely to allow an expeditious determination of a dispute. This objective would not be met if this Court were to allow the parties to settle the cases by arbitration as there are certain issues involving non-parties to the PIATCO Contracts which the arbitral tribunal will not be equipped to resolve."

The New Law has superseded the ruling in Heirs of Sa/as. Private parties can no longer avoid their contractual obligation to submit a dispute to arbitration by the mere circumstance or expedient of joining a third party The court is r;,)@W. gJJll~1¥-.t5eunWtQ ffi€f€ Io arbit~~al1iesWm6 ate'IDO~Dd by! tbe arbitration agreement. As to those parties wno are noLbounQ:L@;r: t,he arbitration agreement, the €:j~i a'etion may proceed 'se~rcll:Efttely §arl'lst them. Whether the same can be said of disputes involving government contracts is another matter, especially if constitutional and "public policy" issues are involved.

Foreign4 and Domestic Arbitration

Unlike the Old Law, the New Law provides f~al s¥§@rn Qf ar:ej~natief!, i.e., International Commercial Arbitration

The New Law has superseded the ruling in Heirs of Salas. Private partiescan no longer avoid their contractual obligation to submit a dispute to arbitration by the mere circumstance or expedient of joining a

third party.

It is established that petitioners in the present cases who have presented legitimate interests in the resolution of the controversy are not parties to the PIATCO Contracts. Accord i ng Iy, they cannot be bound by the arbitration clause provided for in the ARCA and hence, cannot be compelled

81't@ ~01!)11t!Sti€ Aroitrati n. Arbitration is considered "international" if itfalls within . tMe €left itio of inter;r;r'atiO'F'laI arbitr.at~@1'l under Mi(1Jle 1T~ e n Cl1iMt;.Nll el Law:s In addition, the New Law defines

'TIle words "foreign" and "international" are used interchangeably.

'!LA. No. 9285, Ch. 4, Sec. 19

Confidentialit',

There was no provision on confidentiality under the Old Law. At most, the Old Law merely provided that only persons having a direct interest in the arbitration shall have the right to attend the hearinqs." In contrast, the New Law expressly declares arbitration proceedings, including ·the records,

''R.A. No. 9285, Ch. 1. Sec. 3(p). 'R.A. No. 9285, Ch 4, Sec. 21.

'R.A. No.928S. Ch. 4, Sec. 2 I provides:

"Relationships of a commercial nature include, but are not limited to, the following transactions: any trade transaction for the supply or exchange of goods or services; distribution agreements; construction of works; commercial representation or agency; factoring; leasing; consulting; engineering; licensing; investment; financing; banking; insurance; joint venture and other forms of industrial or business cooperation; carriage of goods or passengers by air, sea, rail or road."

·R.A. No. 9285, Ch. 5, Sec. 32. '"R.A. No. 9285, Ch. 4, Sec. 19 "R.A. No. 9285, Ch. S, Sec. 32. "R.A. No. 876, Sec. 12.

4 The Lawyers Review/March 31,2007

irliolBB - - _ - . a.rbitr8,lili1l-.DndBr::·.tbB.·'8.itQrQ~i¥.JI/iI~Q.~··:·,

.: ..._ ", ... . " .. _.,~, _"l-~. .... ~ ;';"( ..... ~-'_~.._..,.~. . ... .

evid en ce, and arb itra I a. W,~ rid. to O€l confidential .. 'I ~ 'fnis rl!€!W pnJvislo,ri now a news bu S~f1 essrn ento quietly settle thel r comm erda I tI is pu tes and to shiel d fromoompetirors their trade secrets and str~Legies ,

oS ubstem five' ClaimB,~t:@m t'he Court

Qualifications of;JnA.rbitrator '

Tile! New l.aw provides th.at, un less otherwise ag!reed by the pa rtle is, lhe a r.llllr:'atQ!I':4:Qit~ll€ of, an,£,: Ilati:®nalitv_'~ The Old Law was snent on th is po~nt W!til th is ella rmcation. th e pawties now neve a IsrQ'er pool of.arbitl"at0f8 to choose rrorn,

In addit~Ori, under the Old Law, the til i n9 w~lh ttl e coulrt~Qf a::cl'ialfengE('"~ th e..;_~4J @Hf i c~ tJG fleS 'O'fi=ra ra:...-a{~'i tram r aWGml'lti~y'::s 1;J~~er:l.e e.~~htta~~iI[atiQn p~~ed lrl,g,s, '6 lin contrast un cer the New L1ilw, the arbitral tribunal, fnduding the c:halilel1ged ;ll rbit!"~lor" may, du nrig the pendency of the ell aUen ge bef-ore the C (I u rts ,00 R,t i r'l.tJr~ m~· @'i"bitrnt i on p.k..Ge:ee,di~9 at1 d ma.ke--::ar:;pt":l'W;afi:l_ t{ Ag~ in, the purpose of the New Law is to ~llow (he ~Jei~tft!l'l~prtOOeedill~1ll't0 m®v;e alongu quickly and smoothly as poasible ,free from ttl e deli<.3YS that ::;J·ffl ic1 the COLJrt-s.

I~R, i\, No, :92 S 5, Cn,~, Seen. I·Mocl~l Ur\V, ArL ~,

I~MQd~1 !=.lIw. An. J W).

!ORA Nt). 87'0, S~L·.I L IIMod~ll~w, M'!, LH3),

16rmriro/Conserv.iiliory

Measures .

Th e New law has e xpa n d ed ithe powers of the arb itra.torsand better defined the rele:of.;OOLili'tS:~A the is~ 9I1d-enfQreeiil'l!l!!1ltof li1tercimi"OOnsefVilo:ry

~ei11f:!!~ _

The (lilly power expressly conferred

an the arbitmtors under !!he Old Law was tAl;!~ ~tlwe~ t~,;i!E;sl;le" s ub-l1Q~f'@s. 18 l'his power was ''witoot!Jt prej ll~ioo tfJ~e:rigIMs of .any· pal$.l' to petltio.r,'i tile G:Q!I;I,t t(;l t~ ke me.as!1Jr;_esta·s.a.f§l:9bia~~· a:.n~/Efr !.':otJS'€'.f!!to€: any..matt:e· wbi.€'~ ts tt-J:e~$-~bjecl:;:f!lf~t.1e d~sp~rte ~f1"affiitratriOr!,"H The Olla Law did not :say W!m_en a Pt81\'1Y. ,OO111.1d file a peJrtiQ!! .. J0:kc~n8ervatGiOIme.aSl!]~~;s ~T wha_t l}lp-e of cO['l:se~t@:EY me<fsu~ pafly....r;QId~d 03IlI!!Y for. The duty of defli!ling these piil~r.ameteni, mJ' _Qitr.re OOHlfts_ UrrfortllJlrJlEtely, tne COllJ rts did not have mucn eppcrtun ity tc snape j urispru.dence for the r-eaSQinHl,at flat too marry I~Ugoanls have resorted to arbitroation,

On c:I of the fi rstcases to tackle the iss ue of the powi3lr of courts to gra nt con'se rvatery measure,:_S; rr~ Jlil;e.ot ar:.~t:~6J:f;r;e· LA ~1[91f: in 'Henne

. Ba~.£~Wl1g$'..800 lJtlstc~6~_ Gflurb:.Gf:iApp.ft.'a1s. ~o There ~ 8ifh~lr the d~spu.te hat:ll boon subm itted to ~rb~tmtion and pending ~I:s reso!utlon, the plaintiff ~jled in COllrl: an <il.ction for sum of mon ey and damages witll praye;r klr pr-e~iminary attachm ent, The other pa rty rn oved to dilsmiss the oompla~nt On tne ground that the c:omp~ainl "seeks to enforce ZiJll arb itra! award wh iCill as yet dog'S not ex~st'" Citfnlll S:e.etl~n 14 oUt:1e;:Qliirr;;aw, th e SuprEH:rI~~c§tnct::J,lI!lt:1eI0 ~he- (iml'fl'l o'~ the plaintrff to sp~l¥ifiertf:re !s~llOO'l()lf a prel imi n ary attaQhJl1er3.t~A:fLecth e arbnrs tiGlt1l ~Joc.e@dJi~9§ w-ereDrJ-g®ing.

Fililing ~ p th egaps ln ttl e 'old LaM!'" title New Lew now expres,sly de'c:lsr€ls H16t ~it is !lot, incompatibl€ witlll ali ar:blkaU€11i1 .B@ree(fr::u!l'lt t~r a ~::;Irtv tG rell'lw,e:sJ, hetor.ql e.oll1sti~t:l of ttre tr:it~,!J)a_aJ:Ar<G1'l\l a G0lfrtan-iK'ltel!irn m~S!tirB of I:IlOt~Citio(;H~fIic:j for tt;,e eeurt;;:tcHJriarllt sl!!tel'l rneasur,e,~21Thje New L;,;:iW' further supplemen!s the Old Law bry,st9t~ng that, after the con st ilu thJ n of tll,ea rb Hr:a I tribjUnal, a r,ilqU€!st. for an interim measu.re

~ijR.A Nifi~ 85'':0, S'~:, 1:,4, '~J;bkl,

iij~~-lcU4itl, k~ Q~""b$,~ "Fl.A- N~, %l85, Ch, 4, Se~. '28,

of protection "may be mad €- with the alrtHtralt1lbunal or to the extent that the arbitHl~ tribu rial has no power t.o aet oris un able to act effectively,l'I1€i.:.rnqH.estmay ~m'8d::e wjt' -me croCi rt, ~ Thus, Ii F1I addihan to 'th€ power Qflssuing subpoenas. U'"J€ N €eW Law [il)i;prIiH)S I y cOl'lie,l'Fhlp'@r'll'i e arbitral tritfu na~ ttia ~J;tweJl lQis:sJ.Je illiterim Itrea.sure-s ef !ll!'o~~I~OrI.These frilerf:m m!ll(ilsures m.ay include but shaH not be Hmrrt@d to "p)31 1m fi~:arlt inllJ nctio[J dlif@£:~t1jaga.i nst ;;J pia rt'y. appoin trn enl Qf receivers 'Q r d€!t€lnt~bn, pres~rvation. inspectiolli of Ulalis 1Il.e~sl'!J.bJecl Q.fllFfe (jisr;lute

Han.""': .

Eithelr party may app~ly w~th. the Court fo r a.s:sis,tan r;:.~iF i m8;!;em e.flrUn Q 0 r enforcing ~n int:eJ'im measur-e ordered by e dooJtt~l:t!.'iRlI1! naiL

Confirma:tion ofDo.mestic . A r/JI trt!, $ Aw~'r?J

A dornestlc arb~tral award is!['l!Jt'self!" el!{_gGuI~r'y" In Qrder to convert the demesne arbitral award into an eftf{:meea~le il.ildQment.~he will ning party has to file wi~h ttJie <€OlJrts a ;:fll=l9!titiorior G®nfirmatij€lR @f-ti'te:arri:lltral aw.a:rd~t~ i r1I 40 !iJ:a'51S fmm tBGei f!'lt mf': the a milral swart;!, The court shou!ld, as.a martte.r of ee!W'SEl', @~ant tIi1, . r!letitiwm, U nless ttl ere ~~~~foua~s tGl~..me'lhe~ward.

The Old Law, which centinues to govem dam es~ic arbiitrations 1 pm\l~ldes thal' domestic arb,jtra~ awards may be vacsted only on ttl e fbllQwingg row nds, thus:

"Sactlen .24, Ground;:!; for lIacating an award. - ~!lar1y oJ me foUowin Q cases I' the COl! rt rnu st rna ke an order vacating ~h~ award upon tn,a: p®-litionof any party to the contr·ovl~,f.sy when s.u en party proves affirrnat i very til a t un the aribitFailion proceed ing8.:

{a)The: award was proclIred by e.QIl.\!!~Il.., fr-a.'iIJQ, ~ oltIer i:;!:rclCl Qe· mear:lSj' or

(bHhat there was e~hje:r'Jt

~ a]lt)[ 0 r co R A~n tA,£!

8tr:O:L_Qf$ or af1~y,: ;Qr

(c)Tha:t tM arbitr,ato~s w€:re g:i.JI iH:y ,of m lscon duct in re~lJslirlg to postpone the hearin.g upon slJrfi<;:;ient (;,;H,Jlse' shown. or in refLlS~nQl to h€l'ar Bvid€lil>OO pertinent and material' to the Gontroversy;

DdL&~~~"'_"' " __ "' __ "' _ _"_"'-"' __ "_""_"'· .. Lz ... ·¥.& m···_""'=,,", __ ~_: a~"''"''''. .._:"""'_~

that one or more of the arbitrators was disqualified to act as such under section nine hereof, and willfully refrained from disclosing such disqualifications or of any other misbehavior by which the rights of any party have been materially prejudiced; or

(d) That the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final and definite award upon the subject matter submitted to them was not made.

x x X."23

a. Foreign Arbltra] Awards vis-avis Foreign Judgments

there was

b. Foreign f\rbitra! .Awards vis-avis Domostlc Arbitral Awards

fiecofjn#ion and Enforcement Section V of the New York

Or Foreiqn l~.rbitraJ Awanj Convention, which i idelillti:eaH@;Il\~I@:le

~<i!f: 1'iIF:..M~g:1 ~!llW, provi~ th.il'lt the recognition or enforcement of an arbitral award, irrespective of the country in which it was made, maty;b;e ~e'f.IJ~~e:d 0':11'1 on ~l<1l1r.f&U0w,i~rg @~ \!Jl'1ds:

"( 1 ) Recognition or enforcement of an arbitral award, irrespective of the country in which it was made, may be refused only:

(a)atdlile rEe~lIeS tlir.@.;fi)::arty

against who~ lo~ed, if that party furnishes to theCompetent court where recognition or enforcement is sought proof that:

(i) a party to th e arbitration agreement referred to in article 7

'lR.A. No. 876, Sec. 24.

':R.A. No. 9285, Ch. 7. Sec 44. "RuJe 39, Sec. 48.

matters submitted to arbitration may be recognized and enforced; or

(iv) the composition of the arbitral tribunal or the arbitral procedu r~z!1){121'0,t.:in_ac.l1i.(i):pd:a-~ce witli tb@ ;;r@:r:~:®~ent GlJ .tne-gJarties or, failing such agreement, was not in accord~~.bJ;tb~1~f' the country where the arbitration took place; or

(v) th e award has not yet b~oTcl4g:bJ:irn:dircrig en ttiil~ parties or has been set aside or suspended by a court of the country in which, or under the law of which, that award was made; or

(b)if the.court finds that:

(i) tlill~Qj:WrjreGt-1'F1 atte-F'"'0f he d i Sfl bl he:.i~$ ,.m e t e;a p .• rtD{e=;o f settj€.!IHilHt-i:J::;iar:ei:t[ati6n under the law of this State; or

(ii) the recognition or enforcement of the award would be contrary to the public policy of this State.''20

The grounds specified under Article V of the New York Convention for opposing a foreign arbitral award are not much different from the grounds for opposing a domestic arbitral award.

Section V(1 )(a)(ii) of the New York Convention is similar to Section 24(c) of R.A. No. 876.

U;New York Convention, Art. 5

,6 The Lawyers Review/March 31,2007 , <,

Section V(1 )(a)(iii) of the New York grounds enumerated under Article V of Convention is similarto Section 24(d) of the New York Convention." This is

R.A. No. 876. nothing new considering that, as

Whjl~ . ew mentioned earlier, the Philippines

Law exprti§IH1ates ,t,bai,GI:fl:QIWl.estic acceded tGllt - . ~~

arbitral.GQM§l¥bmp.yTRf;¥!l~~@~he ~. What is new is thl(",~e

grOl.1Iil@JfjJ@!¥l"iW11;I!5~' ·fllT@j~e Law s declaration t .: Ill' I!;J .. ~

in~~' i9i.bJJi~f.6ml ~~g~nt th m: -'a il

is '~I~ (Section V(1 )(a)(ii) of the New oft :riiJ"i@~tGl ~\i" ing

York Convention), the authority of the a f~ . ·m .. lll· - ; IDare

courts to inquire UP jijl<talj]d;!~~ is ~'@I. ded." As discussed earlier, this ~~ion. Since a arbitration is categorical declaration is intended to a creature of contract, the ~acity o(f}emove all doubt as to the role of courts the parties and the validtW of the in arbitration: Courts are not given the agreement may be theJegitimate subject power to s~Qru1 gU8sH9HI2@litEstms of judicial inquiry. and to substit.w,t*=t.IilM§ei&-j@·@::Nilf'2~lile

As for the ground specified under arb.W:ato[S~ljH;"rs. .

Section V(1 )(a)(iv) of the New York The ~ew Law has left it to the Convention, the issue is one of Philippine Supreme Court to draft the compliance with the arbitration pR@t>:etFlurtmLJjIlt!~.flStli!:e gjd f agreement. Again, there is no question _~~~f@;i]liG'll~S. Whatever rules that the courts have the authority to the Supreme Court comes up with, said declar~ invalid an arbitration proc.eed!n,§;),,{ules must abide by A~icle III o~ tffec'New

that did 141' ,.. , ". ~ork Convention, which provides that

a@'~nt. "There shall n' " 'tl'S'ed

On the issue of the subject matter of sutAAt@©j~WI~fnQr:@"'Al·~;. [(i)~~s thedispute, Section V(1)(b)(i) of the New o~ ~1Il1Z."@[ffi ~e York Convention provides that the rec~j,j,!.i.wl.@:;%!r.t.@ft,"llEW~~w~'Mi1'@;'rtj!'a1

rec=I~:t\U!f~~::r:=gn aW.~¥MA;iOO;&~i~m_f,\lt!~ ~!es

arbllt'b'l1l. __ €lE...._...;a_~f,I.J-~_Lhe th : _I [Ijl i '§f1110 or

"subjectmatterofadispute is not capable er-ll t)'1'1'1~ -I 'Ial

of.s@ttl@Ri!:eJlj!¥;@M@!mtwiHtion under the law Q/clIM!k@@iJ.!l!Jtry." While this ground is not specifically mentioned as a ground for vacating domestic arbitral awards, the New Law declares that the following matters may not be the subject of da~~i~'e~n, to wit, (a) ~I~r disputes; (b) thooii:.:iij,§~Qt @.8r.,5;9:[1s; (c) the vali<@j.t .~riage; (d) i!l.Y ground for le!!l~~ration; (e) the jurisdiction of courts; (f) future legitime; (g) criminal liability; and (h) those which by law caf'1~tc®reB@®i¥i,~\Ili,jj.fliiiiised.27

Finally, Section V(1 )(b)(ii) of the New York Convention provides that a foreign arbitral award ~ if "the

recognition· r, f~F6ftliif.l@J"~ ~ •. d

would be contra~IILW ~f ~t i~e." This ground for vacating an arbitral award is not specifically mentioned under R.A. No. 876. but there is little doubt that Philippine courts will not hesitate to vacate an arbitral award

that is contrary to public policy. The New Law provides tl11'gl, "ln

The New Law declares that a party to interpreting the Model law, regard shall

a foreign arbitral proceeding may oppose _. . .. __ ....

the recognition and enforcement of a foreign arbitral award only on those

c'R.A. No. 9285, <:h. I, Sec 6.

Is There Any Difference Between ;1 Foreign Arbitral Award and Domestic Arbitral Aw~rd?

Given that many of the provisions of the Model Law have been incorporated into the Old Law29 and that the New York Convention obliges Contracting States not to impose substantially more onerous conditions on the recognition and enforcement of foreign arbitral awards than are Imposed on the recognition and enforcement of domestic arbitral awards, does there remain any significant difference between the rules that govern international commercial arbitration and domestic arbitration?

ZSR.A. 9285, Ch. 4, Sec. 45,

"Arts. 8, 10,11, 12, 13. 14,18, 19,29,30,

31, and 32 of the Model Law were incorporated into the Old Law.

Article XII, Section 14 of the 1987 Constitution limits the practice of all professions in the Philippines, including the legal profession, to Filipino citizens, save in cases prescribed by law. There is no question that appearing before and participating in arbitration proceedings

)IlR.A. No. 9285, Ch. 4, Sec. 20.

The Lawyers Review/March 31,2007 7

.. ,

in the Philippines, con$il_$ilj9_1@IS~ lawry,1iI tl;;l@vRi'ti:h_es. The New Law now creates a narrow exception to the constitutional prohibition by providing that, ifan~~~, as~-m:mt'i~)~I~r~fii~l't\1~el Law, a pa~fi[1l>!_rlf£f§tij~Jlt~~y p~~i'iDice". This implies that a party may engage the services of a for~!JjClg~:r=:m I ew.r~i¥t~i n intewatj!i:l@@!lr§I@hOO_q~jngs.

However, the appearance and participation of the foreign counsel shall be limited to tmi1f.fit~timl®lli<lilnilooiill~ttmn ~~,q~. The privilege of appearing before Philippine courts or any other quasi-judicial body remains reserved to Filipino lawyers." Thus, while a foreign lawyer can appear and participate in it1ilt@£l%iti~f,i-l{ijjk®'gID'ktl@t;jm!iF"I~);mmw_ji!Jgll1timI~n m--~~es, any application for interim measures, B-V"~.ilfi::rfil3eIG!\tj!@liIcto theilllimli;litai~~on, or the fi ling and prosecution of petition s for

rec(J~l'liI: ,- . ~,', "'a'" erel

arbhtlial,awi;lJi€l~J.l@;·ii1·~@l)'£~al

~el, .

Ottice tor lah£JffTNJdive Dispute Resolution

Apart from laying down a more modern framework for an alternative dispute resolution system, the New Law has also created an Office for Alternative

"R.A. No. 9285, Ch. 4, Sec. 22.

Dispute Resolution ("Office"). The Office is tasked to "promote, develop and expand the LIse of AQR._irdhe-flF~vate

The New Law now creates a narrow exception to the constitutional prohibition by providing that; if an arbitration is "international JJ9 as defined under Article 1(3) of the lvlodel Law~ a

party may be represented

baJ Hn,-t"tr ""JJ'"",€'nw. ",,{.' i!~;." ;Ji_}lJ :;y:;.!flv .... ·~;/.JJ.~~';;./IJ )..'-"U'!J!J, V:1! !1ffJ-0

choic .... ,-; :"J7f"k "'''':e.'1 im it1l1;;P'""I t;!{(!, 0;. A;::: " {, ns» g~ Itp' ~A::d

that a pf.vrty may eingage the services of III foreign lawyer to represent him

_', in international

,,';-, )~1.:"

arbitration proceedings,

and public sectors" and "assist the government to monitor, study and evaluate the use by the public and the private sector of ADR, and recommend to Congress needful statutory changes

to develop, strengthen and improveADR practices in accordance with world standards."32 The creation of the Office is proof that the Philippines is taking seriously the promotion and development of arbitration,

Conclusion

The ability of the courts to deliver swift justice continues to be severely hampered by the sheer volume of cases that annually find their way to already overburdened court dockets, Arbitration offers a Mr.t·i~1 SJaI.wti@®.t® J!lj]fw::t~1 logjam. First, arbitration giv~r.ts rnuch-neeaed is)W;§Iltdx~ '~lIly diverting cases away from them and to arbitration. Reducing the flow of cases to the courts gives the courts more time to attend to their backlog, Second, arbitNMsi@;mci~~!$:iDm'S more~~~s f~

Despite the~f arbitration, it has, for some reason, been slow in developing in the Philippines. This slow development is arguably attributable, in large part, to the fact that arbitration law has been nearly staqnant since the passage of R.A. No, 876 more than 50 years ago. It is expected that the recent enactment of RA No, 9285 will finally thrust arbitration to a more prominent role in our justice system .•

)2R.A. No. 9285, Ch. 8, Sec. 49.

List of Sf: Deeislon/Resclntlen January 2007 from page 17

88, 162090

Sps, Howard T. Co Chien ·lst Puno, C,J.

and Susan Y. Co Chien D

vs. Sta. Lucia Realty and Development, Inc" et a1.

89. 162871

93. 167347

94, 166888

Norsk Hydro (Phils.), Inc., 2nd Quisurnbing, J.

et al. vs. Benjamin S. D

Rosales, Jr,

Banco Filipino Savings 2nd C-Morales, J. 95. 167472

and Mortgage Bank vs. D

Han, Arnalik P. Espinoza,

Jr., et al. 96.168296

. 90. 162922

91. 165001

New Frontier Sugar 3rd A-Martinez,l

Corporation vs. RTC, D en. 168882

Branch 39, Iloilo City, et aI.

Chuayuco Steel Manufac- 2nd C-Morales,1.
turing Corporation, et al D
vs. Buklod ng Manggagawa
sa Chuayuco etc.
First Women Credit 2nd C-Morales,l
Corporation, et a1. vs. D
Hon. Rommel 0_ Baybay,
et al.
Civil Service Commission ill S·Gutierrez, J.
vs, Engr. Ali P. Darangina D
Felornino V. Villagracia vs. EB Puno, C.l.
COMELEC, et a1. D
Intestate Estate of the 2nd C-Morales, 1.
late Nimfa Siam, etc, VS. D
PNB
Capitol Wireless, Inc. YS, 2nd C-Morales, J.
Carlos Antonio Balagot D-
.~~~ 92, 165665 The Han. Alberto Romulo, EB

v-, et a1. vs. The Hon. Judge D

~ Eduardo B, Peralta, et a1.

~~~-----------------------=--~.~,~.~--=---~--------~~-=-----------=--~~--~~

'lf~."1:h;Lawyers Review/March 31,2007

,:~

. "'-....

.-' '> ,

:'... ~ _ ~~",:-, -; c <,

S-Gutierrez, J.

98. 169016