Philippines

Asia Pacific

Key points
International and domestic arbitrations in the Philippines are
governed by different statutes: the Alternative Dispute Resolution
Act 2004 (ADR Act), the Arbitration Law, the UNCITRAL model law
and the Special Rules of Court on Alternative Dispute Resolution
along with the draft Implementing Rules and Regulations of the
ADR Act (currently pending approval).
The Philippine Supreme Court is supportive of arbitration and has
confirmed that courts should not generally review the findings of
law and fact in an award, and should not undertake to substitute
their judgment for that of the arbitrators.
The Philippines is a party to the New York Convention.
Under the ADR Act of 2004 a party may be represented by any
person of its choice, both in domestic arbitration and in
international commercial arbitration held in the Philippines. This
representative, unless admitted to the practice of law in the
Philippines, may not appear as counsel in any Philippine court or
any other quasi-judicial body, even if such an appearance is in
relation to the arbitration.
The Construction Industry Arbitration Commission (CIAC) has
exclusive jurisdiction over any construction disputes which are
subject to an arbitration clause or arbitration agreement.

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Confidentiality
The arbitration proceedings, including the records, evidence and
award, are confidential and should not be published except with the
consent of the parties; or for the limited purpose of disclosing to the
court relevant documents in cases where resort to the court is allowed.
For a model confidentiality clause, see the Arbitration section
on drafting arbitration clauses.

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Model arbitration clause

Any dispute, controversy or claim arising out of or relating to this
contract, or the breach, termination or invalidity thereof, shall be
settled by arbitration in accordance with the PDRCI Arbitration Rules
as at present in force.
the appointing authority shall be
institution/person)
the number of arbitrators shall be
the place of arbitration shall be

(name of

(one or three)
(city or country)

the language to be used in the arbitral proceedings shall be

(language).
Philippine Dispute Resolution Center, Inc. (PDRCI)
See the Arbitration section for best practice in drafting arbitration clauses.
Weblink
www.PDRCI.org
The Philippine Dispute Resolution Center, Inc.

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What arbitration bodies are there within the jurisdiction?

The Philippine Chamber of Commerce and Industry has established

the Philippine Dispute Resolution Center, Inc. (PDRCI). The Center was
created to encourage the use of arbitration, mediation and other modes
of alternative dispute resolution for the settlement of domestic and
international disputes in the Philippines. It provides dispute resolution
services to the public.
The Philippine Clearing House Corporation (PCHC) has established an
Arbitration Committee. Member banks cannot invoke the jurisdiction of
the trial courts without prior recourse to the PCHC Arbitration Committee.
In the public sector, the Office for Alternative Dispute Resolution,
an agency attached to the Department of Justice (DOJ), promotes the
use of ADR in the private and public sectors and assists the government
in evaluating the use by both public and private sectors of ADR, and
recommends to Congress statutory changes to improve ADR practices.
The Construction Industry Arbitration Commission (CIAC) has exclusive
jurisdiction over any construction disputes which are subject to an
arbitration clause or arbitration agreement. The CIAC was created by the
Construction Industry Arbitration Law of 1985 (Executive Order No. 1008).
Other arbitration bodies include the Philippine Chapter of The Chartered
Institute of Arbitrators, East Asia region, and the Philippine Institute
of Arbitrators. The latter is primarily a learned society that promotes
arbitration as a mode of alternative dispute resolution in the Philippines.

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Is there an Arbitration Act governing arbitration proceedings,

and is it based on the UNCITRAL model law?

The Alternative Dispute Resolution Act of 2004 (ADR Act) took effect in
April 2004. Under the ADR Act, the Philippines adopted the UNCITRAL
model law to govern international commercial arbitration.
The ADR Act declared that domestic arbitration would continue to be
governed by the 1953 Arbitration Law (Arbitration Law), as amended
by chapter 5 of the ADR Act. It also made applicable certain provisions
of the UNCITRAL model law.
Under the ADR Act, a committee convened by the Secretary of Justice
will formulate the regulations necessary for the implementation of the
ADR Act, to be approved by a Joint Congressional Oversight Committee.
To date, these regulations still have to be approved.
What follows covers international commercial arbitration and domestic
arbitration under the ADR Act, the Arbitration Law, the UNCITRAL model
law and the Special Rules of Court on Alternative Dispute Resolution
(Special ADR Rules) with some notes from the draft Implementing Rules
and Regulations of the ADR Act (draft Implementing Rules) which is
pending approval.

What are the available rules?

Each arbitration body has its own set of arbitration rules, which the
parties can choose to adopt in full or in part. Where the rules adopted by
the parties do not provide for a particular procedure, the provisions of the
ADR Act (and the Arbitration Law for domestic arbitration and the UNCITRAL
model law for international commercial arbitration) apply as appropriate.

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The CIAC Rules of Arbitration are usually applied in construction disputes.

Regardless of the choice of arbitration rules of the parties to a construction
contract, the CIAC will take jurisdiction of the arbitration if one of the
parties first submits a request for arbitration to the CIAC.
For commercial disputes, the parties usually apply the ICC Rules of
Arbitration (for institutional arbitration) or the UNCITRAL Arbitration Rules
(for ad hoc arbitration), which have gained international acceptance.
In recent years, however, more and more parties have chosen to apply
the PDRCI Arbitration Rules.
The PDRCI has played an important role in private sector-regulated
arbitration in providing dispute resolution services to the business
community. Its arbitration rules are based on the UNCITRAL Rules.
Among the minor differences between the PDRCI Arbitration Rules
and the UNCITRAL Rules are the following provisions in the absence
of an agreement by the parties: the choice of Metro Manila as the default
place of arbitration; the choice of English as the default language of the
arbitration; and the choice of PDRCI as the default appointing authority.

What supervision is there of arbitrators and their awards?

Parties may request the termination of the mandate of an arbitrator

in the event that someone becomes unable to perform their function or
for other reasons fails to act without undue delay. If an arbitrator refuses
to withdraw and the appointing authority (defined below) fails or refuses
to decide on the termination, any party may file a petition to terminate
the mandate of the arbitrator with the court. The order of the court
resolving the petition is not subject to judicial review.

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Under the PDRCI Arbitration Rules

The PDRCI may act as the appointing authority when:
a party requests that the PDRCI appoint an arbitrator on its behalf
the parties are unable to select or appoint and request that the PDRCI
appoint the arbitrator
the arbitration agreement between the parties provides that the PDRCI
will act as the appointing authority or that the arbitration shall be
conducted under PDRCI arbitration rules.
Where there is an unsuccessful challenge involving an arbitrator
unsuccessful because either the arbitrator or the other party refuses the
challenge the challenging party may apply to the PDRCI to rule on the
challenge.
Supreme Court
The Supreme Court has expressed support for arbitration and declared
that, in general, courts should not review the findings of law and fact
contained in an award and should not undertake to substitute their
judgment for that of the arbitrators.
The arbitration award is not absolute: it may be the subject of judicial
review on limited grounds.
International arbitration
An arbitration award may in certain circumstances be set aside by the
trial court, upon the application of a party to the dispute (where there is,
for example, incapacity of a party, invalidity of the agreement, lack of
notice of the proceedings or conflict with Philippine public policy)
(UNCITRAL model law, article 34).

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Domestic arbitration
The appropriate trial court may issue an order vacating the award (where
there is, for example, corruption, fraud, misconduct by the arbitrators)
(Arbitration Law, section 24) or modifying or correcting the award (where
there is, for example, evident miscalculation of the figures, an award
upon a matter not submitted to the arbitrators or a failure to resolve an
issue submitted to the arbitrators) (section 25).
If the arbitration award is made through mistake, violence, intimidation,
undue influence or fraud, it may be subject to annulment or rescission.

How quickly can a tribunal be set up?

Under the ADR Act, the parties are free to agree on a procedure for
appointing arbitrators, including time frames. Unless an earlier period
is provided in the arbitration agreement, if a party fails to appoint an
arbitrator within 30 days from receipt of a request to do so from the
other party, or if the arbitrators fail to appoint the presiding arbitrator
within 30 days from their own appointment, a party may request the
appropriate appointing authority to make the appointment. According
to the Philippine Civil Code and the draft Implementing Rules, any clause
giving one of the parties power to choose more arbitrators than the other
is void.
Under the ADR Act, the appointing authority is the person or institution
named in the agreement as the appointing authority, or the institution
under whose rules the arbitration is agreed to be conducted, or, in ad hoc
arbitration, the National President of the Integrated Bar of the Philippines.
Generally, when the appointing authority fails or is unable to perform
its duty within the applicable period from the receipt of request for
appointment, the applicant may renew the application with the

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appropriate trial court. Trial courts may be able to act on an application

within 60 days from the filing. The proceedings for the appointment of
arbitrator (and challenge to the appointment) before the trial court are
summary in nature.
Under the Special ADR Rules, the decision of the trial court appointing
an arbitrator is not subject to appeal.
The PDRCI has a list of accredited arbitrators from which a party may,
if it wishes, choose an arbitrator. A party to an arbitration under the
PDRCI Arbitration Rules need not choose from the list.
The CIAC has a list of accredited arbitrators, from which all arbitrators,
in an arbitration under the CIAC Rules of Arbitration, are to be chosen.

What happens if one party refuses to participate in the process?

International arbitration
Applying the UNCITRAL model law, if a party fails to act as required under
an agreed appointment procedure, any party may request the appointing
authority to take necessary measures, unless the agreement provides
other means for securing the appointment. If the claimant fails to
communicate its statement of claim within the period agreed upon
by the parties or determined by the arbitral tribunal, the tribunal will
terminate the proceedings. If the respondent fails to communicate its
statement of defence, the tribunal will continue the proceedings, without
treating this as an admission of the claimants allegations. If any party
fails to appear at a hearing or to produce documentary evidence, the
tribunal may continue the proceedings and make the award on the
evidence before it.

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The PDRCI rules follow in large part the UNCITRAL Arbitration Rules and
therefore provide for a similar procedure with reference to international
commercial arbitration, in case of a partys failure to participate in the
arbitration proceedings. The tribunal will terminate the proceedings upon
default of the claimant and continue with the proceedings upon default of
the respondent (in the absence of sufficient cause for the default from
the defaulting party).
Domestic arbitration
Under the Arbitration Law, if one party neglects, fails or refuses to
arbitrate, the aggrieved party may file with the trial court a copy of the
demand for arbitration under the contract to arbitrate (with a notice that
the original demand was sent by registered mail or delivered in person
to the party against whom the claim is asserted) in a petition for an order
directing that the arbitration proceeds as originally agreed. If there is an
issue as to the making of the agreement or as to the fact of default, the
court will summarily hear such issue.
If a party fails to appoint an arbitrator, any party may request the
appointing authority to take the necessary measures, unless the
agreement on the appointment procedure provides other means for
securing the appointment. The hearings may proceed in the absence
of any party who, after due notice, fails to attend or fails to obtain an
adjournment. The award cannot be made solely on the default of a party.
The arbitrators will require the other party to submit any evidence they
may require for making an award.

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What interim measures are available?

The following measures are available:

injunctive relief
security for costs
pre-arbitration disclosure of documents
preservation of evidence.

Before the arbitral tribunal is constituted, a party may apply to the

appropriate trial court for an interim measure of protection (ADR Act,
section 28).
After the constitution of the tribunal and during the proceedings,
a party may request an interim measure of protection (or a variation
of an existing order) from the tribunal or the appropriate trial court.
Under the Special ADR Rules, a court order granting or denying an
interim measure is issued without prejudice to subsequent changes
by the arbitral tribunal; an interim measure issued by an arbitral tribunal
is therefore deemed to have amended or revoked a measure previously
issued by the court where there is any inconsistency.
The tribunal, or the appropriate trial court, may grant interim relief:

to prevent irreparable loss or injury

to provide security for the performance of any obligation
to produce or preserve any evidence
to compel any other appropriate act or omission.

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A tribunal may grant interim measures concerning preliminary injunctions,

appointment of receivers, and the detention, preservation and inspection
of property. A court may also grant a preliminary attachment against
property or garnishment of funds in the custody of a bank or a third person.
A decision of the trial court granting or denying an interim measure may
be subject to further judicial review.
Under the Arbitration Law (which, under the ADR Act, is still applicable
to domestic arbitration), arbitrators can require any person to attend a
hearing as a witness when the relevancy of the testimony has been
demonstrated to the tribunal (Arbitration Law, section 14).
No similar power is granted under the UNCITRAL model law. Parties must
apply to the appropriate court for a subpoena to compel a witness to
testify or present a document.
Under the Special ADR Rules, a party to an arbitration may request the
court to provide assistance in taking evidence (to comply with a subpoena,
to appear as witness, to allow inspection, etc.) whenever the need arises.
The order of the court granting assistance in taking evidence is not subject
to reconsideration or appeal but if the court declines to grant assistance
in taking evidence, the applicant may file an appeal. Any person who
disobeys the order of the court to testify when required may be subject
to sanctions through contempt proceedings.

What right is there to challenge the appointment of an arbitrator?

Under the Arbitration Law any person appointed to serve as an arbitrator

must be of legal age, in full enjoyment of their civil rights and literate.
Arbitrators must not be related to either party to the controversy; and
they must not have (or have had) financial, fiduciary or other interest in
the dispute or in the result of the proceedings, or have any personal bias,

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which might prejudice the right of any party to a fair and impartial award.
No party may select as an arbitrator any person to act as its champion or
to advocate its cause.
Under the ADR Act, an arbitrator may be challenged only if circumstances
exist that give rise to justifiable doubts as to that individuals impartiality
or independence, or if the arbitrator does not possess qualifications
agreed to by the parties. A party may challenge an arbitrator it has
appointed, or in whose appointment it has participated, only for reasons
of which it becomes aware after the appointment has been made. The
draft Implementing Rules also allow challenge when an arbitrator refuses
to respond to questions by a party regarding the nature and extent of any
dealings with a party or its counsel.
The ADR Act also provides that the parties are free to agree on a
procedure for challenging an arbitrator. In the absence of an agreement,
a party who intends to challenge an arbitrator must, within 15 days
after becoming aware of the constitution of the arbitral tribunal or
after becoming aware of any disqualification, send a written statement
of the reasons for the challenge to the tribunal. The tribunal must decide
on the challenge (unless the challenged arbitrator withdraws or the other
party agrees to the challenge). If the challenge is not successful, the
challenging party may request the appointing authority within 30 days
from receipt of the decision rejecting the challenge to decide on the
challenge. This decision cannot be appealed. If the appointing authority
fails or refuses to act on the challenge within the agreed period, within
30 days from receipt of request, any party may renew the challenge with
the appropriate trial court.
Under the Special ADR Rules, the decision of the court is not subject to
further judicial review.

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Can a party appeal the arbitrators decision and, if so, are there
any time limits to be aware of or unusual provisions?

An agreement to refer a dispute to arbitration means that the arbitration

award will be final and binding. A party to an arbitration is therefore
precluded from filing an appeal questioning the merits of an award.
For both domestic and international arbitrations, the trial court will not
set aside an arbitration award on any ground other than those provided
under the Arbitration Law or the UNCITRAL model law, unless there has
been a violation of public policy.
A decision of the trial court confirming, vacating, setting aside, modifying
or correcting an arbitration award may be appealed to the Court of
Appeals in accordance with the Special ADR Rules.
International arbitration
An arbitration award may be set aside by the trial court only on specified
grounds (UNCITRAL model law, article 34). An application for setting
aside an award may not be made after three months have elapsed from
the date on which the party making the application received the award,
or from the date on which a request for correction or interpretation of an
award, or for an additional award, was disposed of by the arbitral tribunal.
Domestic arbitration
Under the Arbitration Law, any party may apply to the trial court for an
order confirming the award. The application may be made at any time
after the lapse of 30 days from receipt by the applicant of the arbitration
award (in accordance with the Special ADR Rules). The court must grant
the order unless the award is vacated, modified or corrected.

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A petition to vacate, modify or correct the award must be filed not later
than 30 days from the receipt of the arbitral award. The Special ADR Rules
provide that where there is an action to vacate, the prevailing party may
oppose the action if the grounds cited do not affect the merits of the case
and may be remedied. The party may request the court to suspend the
proceedings for vacation for a period of time and to direct the arbitral
tribunal to reopen and conduct a new hearing and take any other action
needed to eliminate the grounds for vacation of the award.
Under the draft Implementing Rules, the tribunal is given the power, upon
request of a party within 30 days from receipt of the award, to correct or
to interpret the award or to make an additional award regarding claims
presented in the proceedings but omitted from the award.

10 Is the Philippines a party to the New York Convention?

Yes. The Philippines has exercised both the reciprocity and the
commerciality reservations.
an arbitration award be enforceable in the Philippines and,
11 ifWill
so, what is the procedure?
The Philippines is committed to enforcing foreign arbitration awards as
a result of its adherence to the New York Convention.
It is presumed that a foreign arbitration award was made and released
in due course of arbitration and is subject to enforcement by the court.
A Philippine court is not allowed to set aside a foreign arbitration award
but may refuse recognition and enforcement based on the limited grounds
provided under the New York Convention.

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Under the ADR Act, the recognition and enforcement of such awards must
be filed with the appropriate regional trial court in accordance with the
Special ADR Rules. The petition to recognise and enforce a foreign
arbitration award may be filed at any time after the receipt of the award.
If an application for rejection or suspension of enforcement of an award
has been made, the court may vacate its decision and may also, on the
application of the party claiming recognition or enforcement of the award,
order the party to provide security.
The Special ADR Rules allow a court where the action for recognition is
pending to defer or suspend the proceedings before it if an application
for the setting aside or suspension of the award has been made with a
competent authority in the country where the award is made. The court
may also require the party to give suitable security.
As regards foreign arbitration awards not covered by the New York
Convention, their recognition and enforcement must follow the rules set
out in the Special ADR Rules. The Philippine courts may, on grounds of
comity and reciprocity, recognise and enforce a non-Convention award
as a Convention award.
A party to a foreign arbitration may oppose an application for recognition
and enforcement of the foreign arbitration award only on those grounds
set out in article 5 of the New York Convention. The trial court must
disregard any other ground raised.
A foreign arbitration award, when confirmed by a court of a foreign country,
must be recognised and enforced as a foreign arbitration award, and
not as a judgment of a foreign court. A foreign arbitration award, when
confirmed by the appropriate Philippine trial court, must be enforced in
the same manner as final decisions of courts of law of the Philippines.

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Whilst no figures are available to indicate the likelihood of judicial

enforcement of an arbitration award, the Supreme Court has
demonstrated a reluctance to interfere, anticipate or nullify the
proceedings or results of a voluntary arbitration.

12 What are the likely costs of the arbitration?

For arbitrations administered by the PDRCI, the tribunal will fix the costs
in its award. These will include:
tribunal fees
travel and other expenses incurred by arbitrators
costs of expert advice and other assistance required by arbitrators
travel and other expenses of witnesses (where approved by the tribunal)
costs for legal representation and assistance of the successful party
(if claimed during the proceedings and seen as reasonable)
fees and expenses of the appointing authority
expenses of the PDRCI committee constituted to designate the
appointing authority.
The tribunal fees should be fixed in consultation with the parties at the
preliminary conference.
They should be reasonable in amount, taking into account the amount
in dispute, the complexity of the subject matter, the time spent by the

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arbitrators and any other circumstances. The tribunal should take the
PDRCI schedule of fees into account and should fix its fees only after
consultation with PDRCI.
Under the draft Implementing Rules, the enumeration above, aside from
the last item on the expenses of the PDRCI committee, also applies to
domestic arbitration and other international commercial arbitration not
administered by PDRCI. It also allows the tribunal to request from each
party deposits for certain costs.
The Special ADR Rules require the payment of filing fees, the amount
of which depends on the amount of the award, for actions to confirm
or enforce, vacate or set aside an arbitration award in a domestic
arbitration or in an international commercial arbitration.

13 Are split clauses valid and enforceable?

Split clauses allow one or more parties to elect arbitration or litigation
after the dispute arises. There is no prohibition on split clauses and
similar agreements under Philippine laws or existing Supreme Court
decisions. It is the policy of the State to promote party autonomy in the
resolution of disputes or the freedom of the parties to make their own
arrangements to resolve disputes (ADR Act).
It is also the policy of the State to recognise the basic contractual
freedom of the parties to establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary
to law, morals, good customs, public order or public policy (Philippine
Civil Code). The availability of the option to resort to court or arbitration
by either party would largely depend on the terms and conditions of the
arbitration agreement.

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The concept of a split clause has not yet been tested before the Philippine
courts and there have been no Supreme Court decisions on the matter.
Considering Philippine policy on autonomy (with reference to the terms
and conditions in a contract and ways by which parties wish to resolve
their disputes), a split clause may be regarded as enforceable in the
Philippines. The exception would be cases where it may be considered
against public policy or inequitable, depending on the terms of the clause.
In the view of some jurisdictions, arbitration clauses which give only one
party the option to choose whether to resort to court are invalid. It is
likely that the Philippine courts would take the same view.

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