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Membership.............................................................23
Governing bodies.....................................................24
Contents
World Council......................................................24
Executive Board...................................................24
I. INTRODUCTION......................................................2
International Secretariat.....................................24
1.1 BRIEF DESCRIPTION OF ADR SYSTEM....2
National Committees..........................................24
Alternative Dispute Resolution (ADR).........................2
Finance Committee.............................................24
1.2 BASIC PRINCIPLE OF ADR.........................2
Dispute Resolution Services....................................24
1.3 UNDERSTANDING DISPUTE
RESOLUTION OPTIONS..........................................3 Policy and business practices..................................24
1.4 Advantages/Benefits and Disadvantages of 2.2.3 INTERNATIONAL CENTER FOR
Alternative Dispute Resolution.................................5 SETTLEMENT OF INVESTMENT DISPUTES
(ICSID) (CONVENTION ON THE SETTLEMENT
1.4.1 Benefits of ADR.....................................5
OF INESTMENT DISPUTE BETWEEN STATES
1.4.2 Disadvantages of ADR.........................8 AND NATIONALS OF OTHER STATES)...........24
1.4.3 BENEFITS OF ALTERNATIVE 2.2.4 UNITED NATIONS COMMISSION
DISPUTE RESOLUTION......................................9 FOR INTERNATIONAL TRADE LAW
1.5 COMPARISON BETWEEN Litigation AND (UNICITRAL MODEL LAW ON INTRNATIONAL
ADR 10 COMMERCIAL ARBITRATION-1985)...............26

1.5.1 Litigation (Court Based Adjudication)10 History.....................................................................26

1.5.2 Alternative Dispute Resolution (ADR) Membership............................................................26


10 Conventions.............................................................27
1.5.3 Litigation and ADR Contrasted...........11 Model laws...............................................................27
1.6 LIMITATION OF ADR IN GENERAL.........11 CLOUT (Case Law on UNCITRAL Texts)...............27
1.7 SUBJECT OF ADR.......................................11 2.2.5 WORLD TRADE ORGANIZATION
2 INTERNATIONAL ALTERNATIVE DISPUTE (MARRAKESH AGREEMENT) (DISPUTE
RESOLUTION/ PEACEFUL SETTLEMENT OF SETTLEMENT UNDERSTANDING)..................27
INTERNATIONAL DISPUTE......................................17 2.3 ENFORCEMENT AND RECOGNITION OF
2.1 INTRODUCTION TO PUBLIC AWARDS.................................................................36
INTERNATIONAL LAW AND PRIVATE Convention on the Recognition and Enforcement of
INTERNATIONAL LAW..........................................17 Foreign Arbitral Awards..............................................36
Public international law...............................................17 Contents...................................................................36
Private international law..............................................17 Background..............................................................36
Conflicts between public international law and Summary of provisions............................................37
national sovereignty....................................................17
Parties to the New York Convention.......................37
2.1.1 BASIC PRINCIPLES OF
United States Issues................................................37
INTERNATIONAL LAW (SOVEREIGNTY,
JURISDICTION, INDEPENDENCE etc.)...........18 2.4 TYPES OF ADR...........................................38
2.1.1.1 Sovereignty.................................................18 2.4.1 1. Negotiation......................................38
2.1.1.3 Independence...............................................19 2.4.2 Assisted negotiation............................38
2.1.2 ARTICLE 33 PARAGRAPH 1 OF THE 2.4.3 2. Mediation........................................38
UN CHARTER.....................................................21 2.4.4 3. Conciliation.....................................38
2.1.3 INTERNATIONAL COURT OF 2.4.5 4. Arbitration.......................................38
JUSTICE 21
Case presentation or mini-trial...........................41
2.2 RELEVANT ALTERNATIVE DISPUTE
SETTLEMENT INSTITUTIONS..............................21 Independent expert appraisal or early neutral
evaluation.............................................................41
2.2.2 INTERNATIONAL COURT OF
ARBITRATION (INTERNATIONAL CHAMBER Litigation..............................................................41
OF COMMERCE)................................................23 2.4.6 5. INQUIRY AND FACT FINDING.....41
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2.4.7 6. GOOD OFFICES..............................41 Some of the senior judiciary in certain jurisdictions (of
which England and Wales is one) are strongly in favor
3 DOMESTIC ARBITRATION................................41
of the use of mediation to settle disputes.1
3.1 INTRODUCTION TO DOMESTIC
COMMERCIAL DISPUTE RESOLUTION..............41 A type of dispute resolution that seeks to limit the costs
of litigation by using alternative, often out-of-court
3.2 ALTERNATIVE DISPUTE RESOLUTION
means, such as arbitration, conciliation and summary
ACT OF 2004...........................................................41
possession proceedings. Alternative dispute
Republic Act No. 9285.............................................41 resolutionoptions are voluntary, and often involve a
April 2, 2004............................................................41 neutral third party to make decisions.2

3.3 REPUBLIC ACT NO. 876 ARBITRATION


1.2 BASIC PRINCIPLE OF ADR
LAW OF THE PHILIPPINES..................................50
 ADR is based on several key principles. First,
3.4 A.M. No. 07-11-08-SC SPECIAL consensual processes (participation, scope and
RULES OF COURT ON ALTERNATIVE DISPUTE structure) are more likely to result in outcomes
RESOLUTION September 1, 2009.........................55 satisfactory to the disputants than a solution
imposed by a court. Inherent in this principle
3.5 DEPARTMENT CIRCULAR NO. 98...........87 is the ability of the parties to structure a
3.6 OTHER SC ISSUANCES ON ADR............126 process that is tailored to the situation and to
the dispute at hand. There is ample experience
3.7 JUDICIAL DISPUTE RESOLUTION........126 demonstrating that disputants are more likely
to achieve outcomes that serve all disputants’
Judicial dispute resolution (JDR).............................126
interests and purposes -- the “win/win”
solution -- than solutions imposed by an
outside decision maker.

I. INTRODUCTION  The second key principle is the involvement of


a third-party neutral whose presence can
improve the dynamics of the dialogue needed
1.1 BRIEF DESCRIPTION OF ADR to achieve a settlement and, in environmental
disputes, knowledge and expertise to evaluate
SYSTEM the merits and to help frame options for
solution if so desired by the parties. The third
Alternative Dispute Resolution (ADR) party’s role is to assist in the process, not to
also known as external dispute resolution in some dictate the outcome. This individual is neutral
countries, such as Australia includes dispute resolution in the sense of having no stake in the outcome
processes and techniques that act as a means for or in the parties. A third-party neutral has no
disagreeing parties to come to an agreement short of authority except as granted under the order or
litigation. It is a collective term for the ways that agreement defining the ADR process.
parties can settle disputes, with (or without) the help
 One of the principal objectives of the ADR
of a third party.
process is to help the parties communicate
with each other civilly, by providing a clear
Despite historic resistance to ADR by many popular
statement of the interests driving the dispute
parties and their advocates, ADR has gained and, most importantly, by truly listening to the
widespread acceptance among both the general public other side of the dispute. Parties often lack a
and the legal profession in recent years. In fact, some clear idea of what they are fighting for, much
courts now require some parties to resort to ADR of less a good idea of what needs are driving their
some type, usually mediation, before permitting the opponents.
parties' cases to be tried (indeed the European
 Finally, ADR processes generally are
Mediation Directive (2008) expressly contemplates so-
confidential except as otherwise agreed by the
called "compulsory" mediation; attendance that is, not parties, with the exception of public policy
settlement at mediation). disputes that often facilitate in full public view.
Agreements to engage in most ADR processes
The rising popularity of ADR can be explained by the typically have a confidentiality clause.
increasing caseload of traditional courts, the Mediation conducted in Michigan court
perception that ADR imposes fewer costs than proceedings is expressly made confidential by
litigation, a preference for confidentiality, and the MCR 2.411(C)(5). As of mid 2010, the
desire of some parties to have greater control over the confidentiality provisions under MCR 2.411
are being considered for revision. SCAO
selection of the individual or individuals who will
August 2010 Report on MCR 2.411.
decide their dispute.
1
http://en.wikipedia.org/wiki/Alternative_dispute_resolution
2
http://www.businessdictionary.com/definition/alternative-dispute-
resolution.html#ixzz204cSk0Xz
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 When the ADR process is not ordered under Most ADR processes require confidentiality so that the
MCR 2.411, the parties must provide for parties' fundamental interests can be explored.
confidentiality by agreement. Where disputes
are mediated before or during civil litigation, COMMISSION APPROVAL
MRE 408 and FRE 408 make settlement offers
and conduct and statements made in The CPUC will expeditiously approve settlements that
settlement negotiations (i.e., during the ADR are legally sufficient.4
process), not admissible. These rules, however,
do not require the exclusion of evidence
otherwise discoverable merely because it is 1.3 UNDERSTANDING DISPUTE
presented in the course of settlement RESOLUTION OPTIONS
discussions. There are many ways to approach dispute resolution.
The great majority of problems encountered by small
 The Michigan mediation rule expressly
business are resolved through simple discussion and
provides that a mediator may not disclose
anything that transpired during the mediation common sense between the parties and do not escalate
to the trial judge except the date of completion into a dispute.
of the process, who participated in the
mediation, whether settlement was reached In virtually all instances, small businesses should at
and whether further ADR proceedings are first attempt to resolve their disputes through direct
contemplated. MCR 2.411(C)(3). Best practice discussion and negotiation.
in drafting the mediation agreement should
provide the express requirement that the Disputes will occur, however, where there is a lack of
mediator make his or her report to the court in communication, where there are unrealistic
writing with copies to the parties, so that the
expectations or where there is a grievance that cannot
parties can be assured this rule has been
observed. Note that this rule does not permit be resolved through direct discussion.
the mediator to report to the trial court
whether any party appeared to be acting in When a dispute occurs, each party has a choice about
good faith. the dispute resolution method that they would like to
pursue. Unfortunately, litigation is usually the norm
 Likewise, communications made during ADR and dispute resolution is often approached as a matter
processes convened by a federal court are between lawyers and the Courts. There are, however, a
protected from disclosure, 28 USC 652(d), variety of other approaches available which may save
although the scope of the protection is not as
time and money and preserve business relationships.
broad as under the Michigan Court Rules. 3
Dispute resolution options for small business range
from negotiation-based methods, where the parties
In its August 2005 resolution (Resolution ALJ-185), have full control over the outcome (generally known as
the Commission announced five basic principles that 'alternative dispute resolution' - ADR), to adversarial
are the foundation of the CPUC ADR program: methods where the parties have less control over the
outcome (such as arbitration and litigation). Where a
VOLUNTARY negotiated settlement is reached through ADR, the
terms of the settlement, once agreed and signed by the
The parties usually must agree to submit their dispute parties, are legally binding and can be enforced if
to mediation or early neutral evaluation. An ALJ, necessary.
however, may require parties to attend facilitated
workshops, settlement conferences, or meet with a The chart below sets out some of the advantages and
neutral to explore the feasibility of mediation. disadvantages of different approaches to dispute
resolution.
TIMELINESS

ADR should shorten, not prolong, proceedings. But


even if a negotiated settlement takes longer, the result DISADVANTAGE
ADVANTAGES METHOD
may be more beneficial to all. S

GOOD FAITH  Parties → Alternativ ←  Does Not


Control e Dispute Establish
Those who engage in ADR should do so in an attempt Outcome Resolution Legal
to reach agreement--not to delay or secure tactical (ADR) Precedent
advantage.  Time -
 Not Open
CONFIDENTIALITY
3 4
http://envdeskbook.org/CH19/Ch19ADR.htm#_Toc325551391 http://www.cpuc.ca.gov/PUC/ADR/adrprinciples.htm
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arrive at an agreement that suits both. This is


Efficient
in contrast to litigation and arbitration where a
judge or arbitrator imposes a decision which
 Cost - To Public may be disappointing for one or both parties.
Efficient Scrutiny
A mediator is appointed by the parties to help
 Confidentia establish effective communication and by
l doing so find a solution which satisfies both
their needs and interests. The informal process
 Maintains is speedy and cost effective and caters for on-
Business  Not going business relationships.
Relationshi Appropriate
ps For Fraud INTERMEDIATION
Or Criminal
 Similar to Mediation in concept but more
 Non- Behaviour
sophisticated. The neutral third party closely
Adversarial interacts with the parties in dispute to assess
, Informal all relevant material, identify key issues, and
Process most importantly, helps to design a process
that will lead to resolution of the dispute.
 Appropriat
e For Fraud  Parties Have The process involves separate meetings with
Or Limited the parties at their offices to conduct extensive
Criminal Control reality testing, and analysis of parties' legal,
Matters Over The commercial and financial positions. The
Outcome process utilises creative thinking techniques
 Can and is suitable for more complex, large or
Establish a Adversal sensitive matters.
Approache  High Cost &
Legal Lengthy
Precedent → s
← Process FACILITATION
 The parties appoint a neutral facilitator to
litigation manage the dispute resolution process,
 Appropriat  May Destroy
arbitration identify issues and apply specialist techniques
e Where Business
One Party to achieve the desired outcome. The facilitator
Relationship
Has No assists by preparing an agenda, chairing
s
Intention meetings, distributing relevant information
Of between the parties and steering them to reach
Complianc agreed objectives. The process is less formal
e and more flexible than Mediation. It has wide
application and is often used where there are
several parties or groups involved with
AN EXPLANATION OF ALTERNATIVE differing points of view, such as creditors or
DISPUTE RESOLUTION METHODS multi-party claimants, joint venture
negotiations, and environmental and planning
disputes.
ASSISTED NEGOTIATION
 The parties engage a professional negotiator or EXPERT DETERMINATION/RECOMMENDATION
'go-between' to assist parties reach a desired  The parties agree to an independent expert to
result. It is usually informal and the negotiator provide a report on specific aspects of a
can either be appointed by one party or both. dispute by examining relevant documentation
In the latter situation he/she is a joint and material. The expert is usually
negotiator. This method is often helpful in commissioned to report on technical matters
smaller disputes where parties are still talking such as standards, compliance, quality
to one another and need help to break an specifications, quantification of loss or similar
impasse, and where they have identified all the issues. The expert may be asked to provide a
issues to be negotiated. recommendation or a determination on the
matter depending on the circumstances.
MEDIATION
 Mediation is a process where an independent PARTNERING
person is used to assist the parties in dispute  Often used for long term contracts or in the
to find a mutually acceptable solution. The building/construction industries and in joint
mediator will systematically work through the venture type projects. A Partnering agreement
issues, help identify alternatives, and facilitate or charter is based on the parties' need to act
final agreement. The process is non- in good faith and with fair dealing to one
adversarial and focuses on the parties' another. The Partnering process focuses on the
resolving the dispute themselves using the definition of mutual objectives, improved
skills of a mediator. The key principle of communication, the identification of likely
mediation is that the parties work together to problems and development of formal problem
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solving and dispute resolution strategies. It is  Lower costs


useful, for example, where there is a need to
complete a technical or building project with a  Less complexity ("less is more")
minimum of disruption and cost and within a
tight time frame.  Parties choice of neutral third party (and
therefore expertise in area of dispute) to
AN EXPLANATION OF ADVERSARIAL direct negotiations/adjudicate
DISPUTE RESOLUTION METHODS
 Likelihood and speed of settlements
LITIGATION
 Litigation is an adversarial legal process  Practical solutions tailored to parties’
conducted in a Court of law, in accordance interests and needs (not rights and wants,as
with strict procedures, where the parties they may perceive them)
present legal arguments and evidence to
support their claims before a judge. The judge  Durability of agreements
applies the relevant law to the evidence,
resulting in a judgement in favour of one of the
parties involved.
 Confidentiality

ARBITRATION  The preservation of relationships;[11] and


 Arbitration is an adversarial process, agreed by the preservation of reputations.5
the parties in dispute, in which each party
presents legal arguments and evidence, in The international literature on ADR identifies five
accordance with formal procedures, to a major outcomes from ADR. They are:
mutually agreed arbitrator. The arbitrator
makes a determination in favour of one of the
parties. This determination is usually legally  increased settlement
binding.  improved satisfaction with the outcome or
manner in which the dispute is resolved
among disputants
1.4 Advantages/Benefits and  reduced time in dispute
Disadvantages of Alternative
 reduced costs in relating to the dispute
Dispute Resolution resolution

The take-up of ADR depends on a combination of three  increased compliance with agreed solutions.
critical factors. First, the extent to which disputants
and their advisors are aware of ADR. Second, the Among stakeholders there is broad agreement that
adequacy of the supply of ADR services for those that dispute resolution throughADR mechanisms can be
would wish to take-up ADRservices. Third, the beneficial. Nevertheless, there are some significant
perceived advantages and disadvantages of ADR. variations among stakeholders about the extent and
nature of those benefits for disputants. ADR
This section is concerned primarily with the third of practitioners are most enthusiastic about the benefits
those factors. It notes, however, the low level of of ADRtake-up. Lawyers and disputants tend to be
awareness of ADR among disputants, the critical and more qualified with regard to the actual benefits
influential position of lawyers in determining whether associated with ADR.
disputants seek resolution through ADR, and
comments on the extent to which the court system ADR Practitioners' View of ADR Benefits
raises awareness about the potential for ADR as a
dispute resolution pathway. Participants in the ADR Practitioners Survey were
convinced of the efficacyof ADR techniques in
1.4.1 Benefits of ADR resolving disputes that were already or could be filed in
the District or High Courts. Two thirds of the
respondents (66 percent) reported that they believed
ADR has been both; increasingly used alongside, that more that 80 percent of disputes could be resolved
and integrated formally, into legal systems through ADR. Only 4 percent reported that they
believed that 55 percent or fewer disputes were
internationally in order to capitalise on the typical
amenable to effective resolution through ADR (Table
advantages of ADR over litigation: 4.1).

 Suitability for multi-party disputes ADR Practitioners' Estimates of Disputes


 Flexibility of procedure - the process is Effectively Settled by ADR(ADR Practitioners
determined and controlled by the parties Survey n=139)*
the dispute 5
http://en.wikipedia.org/wiki/Alternative_dispute_resolution#Benefits
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Proportion of Disputes Settled by ADRPractitioners Preservation of ongoing


86 43.9
ADR Responses % relationship
0-20 percent of disputes 0 0 Desire for compromise
82 41.8
21-30 percent of disputes 1 <1 solution
31-40 percent of disputes 0 0 Desire for more control over
80 40.8
41-50 percent of disputes 4 3 process and outcome
51-60 percentof disputes 9 6 Privacy and confidentiality 74 37.8
61-70 percent of disputes 5 4 Directed by contract, statute or
61 31.1
71-80 percent of disputes 28 20 existing agreement
81-90 percent of disputes 32 23 Desire for creative solution 48 24.5
91-100 percent of disputes 60 43 Concerns about court
39 19.9
procedures [8]
* Six missing cases.
* Multiple response.
It was noted in the ADR practitioner focus groups,
however, that not all ADRtechniques generated Mediation and negotiation are seen as more likely than
benefits in the same way or to the same extent. A arbitration to generate ADR benefits including:
strong distinction was made between mediation and
arbitration. Table 4.2 represents ADRpractitioners'  increased opportunities to resolve a dispute in
assessment of the relative potential of arbitration and a way satisfactory to the parties
mediation in relation to the benefits typically  increased likelihood of the parties complying
associated with ADR. with the remedies or solutions generated
through ADR
ADR Practitioner Views on the Relative
Potential of Arbitration and Mediation  reductions in time delays

Arbitration Mediation  reductions in costs, and


Reduced financial costs Low-Medium Medium-High
Flexible solution Low High  maintenance of confidentiality about both the
Confidentiality High High dispute, the remedies sought and the
Ability to influence outcomes.
Low High
outcome
Disputant control Medium High For lawyers, reaping the potential benefits of ADR is by
Disputants satisfaction Low-High Medium-High no means straightforward. For most lawyers the
Speedy resolution High High effectiveness of ADR is contingent on two major
factors. Firstly, the willingness of disputants to engage
in a resolution process, and, secondly, the experience
ADR practitioners see the real benefits of arbitration
of the ADR practitioners (Table 4.3).
lying in the abilityof the disputants to select an
arbitrator by mutual agreement and the considerable
specialist expertise an arbitrator may bring to the Lawyers' Perceptions of Determinants of ADR
resolution of a dispute with substantial technical Efficacy (Lawyers Survey)
components. It is for the latter reason that arbitrators
have so frequently been used in technical sectors such Lawyers
as the building industry. Lawyers Lawyers Working
Working Working Equally in
 Lawyers' Perceptions of ADR Benefits Perceived Primarily Primarily High
Total
Determinant in District in High Court and
Court Court District
The majority of lawyers believe that disputants seek
ADR resolution ofdisputes in an effort to: (n=74) (n=64) Court
(n=58)
Disputant
 reduce the cost of a dispute willingness
76.0% 80.8% 78.1% 69.0%
 speed resolution, and Experienced
ADR 62.8% 68.5% 60.0% 66.1%
 reduce uncertainty around the outcome of
practitioner
judgment in the court system (Table 4.2).
Supportive
40.3% 37.5% 40.6% 45.6%
counsel
Lawyers' Perceptions of Disputants' Reasons Judicial
for ADR Take-up* (Lawyers Survey) 14.8% 21.9% 10.9% 10.7%
support
Ongoing
Perceived Disputant % of Lawyers relationship
Responses 14.3% 13.7% 15.6% 14.3%
Reason (n=196) between
Want to reduce costs 183 93.4 disputants
Want speedy resolution 159 81.1
Uncertainty of court outcome 142 72.4
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The quantitative data does indicate some of the Disputants' Perceptions of ADR Benefits
subtleties around this issue, however, in relation to the
importance of judicial and counsel support as factors In-depth interviews with 60 disputants with civil cases
in the efficacy of ADR. Overall, 40.3 percent of lawyers filed with the court system in the 2000-2002 period
saw counsel support as an important determinant. revealed that only fourteen used ADR to help resolve
Lawyers working in the High Court or equally in the their dispute.
District Court and High Court were over-represented
among those who saw counsel support as an important
As shows, settlement was achieved in eleven of those
factor. Lawyers working primarily in the District Court
cases throughADR and for a further case ADR resolved
were significantly more likely than lawyers working
some issues. Eleven of those fourteen disputants
primarily in the High Court to see judicial support as
reported that they would use ADR if ADR was 'suited'
an important factor in the efficacy ofADR.
to the nature ofthe dispute.

It is unclear why those differences emerge. The lawyer


Disputant Views on ADR's Contribution to
survey data suggests that there may be some
Resolution of their Dispute (Disputant In-
relationship between the ADR skills and experience
depth Interviews n=14)
oflawyers and the extent to which they perceive the
importance of their own role in encouraging effective
ADR. The High Court lawyers are more likely to be ADR's Contribution to Resolving the Interviewees
trained in and/or engaged in delivering ADR services Case
than the lawyers working primarily in the District The case settled as a result of ADR 11
Court (Table 4.4). ADR did not lead to settlement 2
ADR resolved some issues in the case 1
ADR Training* and ADR Practice Among Total 14
Lawyers (Lawyers Survey)
Overall, thirty of the sixty disputant interviewees had
Lawyers had some experienceof using ADR to resolve a dispute.
Lawyers Lawyers A further twenty disputants knew of ADR. Forty-nine
Working
Working Working of the sixty disputants involved in in-depth interviews
Equally in
Primarily in Primarily in felt able to make some comment about the advantages
High Court
District HighCourt and disadvantages of ADR. It is clear that ADR is seen
and District
Court (n=74) (n=64) as a less costly approach to dispute resolution than
Court (n=58)
N % N % N % having the dispute resolved through a judgment given
Combines legal by the Court. Almost as many see ADRas a
practice with 8 10.8 17 26.6 12 20.7 comparatively faster mechanism for dispute resolution
ADR Practice
(Table 4.6).
Trained LEADR
Accreditation 2 2.7 13 20.3 3 5.2 Disputant Views on the Advantages of ADR
Workshop Identified by Interviewees (Disputant In-depth
AMINZ Interviews n=49)*
Associate or 3 4.1 2 3.1 6 10.3
Fellow Responses %
ADR Advantages
Massey (n=49)* ofInterviewees
University Cheaper resolution 30 61.2
Dispute 1 1.4 0 0.0 1 1.7 Faster resolution 27 55.1
Resolution More control 8 16.3
Diploma Informal
Dispute process/relaxed/less 6 12.2
Resolution stressful
1 1.4 1 1.6 1 1.7 More creative solutions 5 10.2
paper(s) as part
of LLB Other 5 10.2
On-goingADR Preserves relationships 3 6.1
training -
4 5.4 8 12.5 4 6.9
workshops, * Multiple response.
seminars etc

1.4.2 Disadvantages of ADR


* Multiple response.

In relation to the willingness of the disputants, it was There was widespread support across stakeholders for
also noted by manyADR practitioners, lawyers and the the use of ADRtechniques to resolve disputes. ADR
judiciary that although disputants may initially feel was not always seen as an alternative to resolution
hesitant and uncomfortable about ADR, disputants in through the courts, however. Moreover, even the most
retrospectoften find the experience very useful. This enthusiastic supporters of ADR - ADR practitioners -
view is consistent with the findingsof the disputant still saw some potential disadvantagesfor disputants in
research project. using ADR.
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ADR Practitioners' Views on the For lawyers concerns about ADR focus on three issues.
Disadvantages of ADR Those are whether ADR:

Unlike other stakeholders, ADR practitioners tended to  delivers reduced costs and increases timeliness
see any disadvantagesof ADR for disputants as being  delivers a sound and fair outcome, and
related primarily to the particular ADR technique used
or the methods by which ADR techniques are  generates agreements that can be sustained
implemented. and enforced.

It has already been noted that ADR practitioners, like Lawyers were directly involved in two of the
lawyers and disputants, see arbitration as a less stakeholders research projects. Some of the ADR
attractive ADR technique than mediation. It should practitioners were lawyers and some practising lawyers
also be recognised, however, that even within were participants in the ADR practitioner research
mediation, some processes are seen as more likely to project as well as the lawyers' research project.
achieve all the benefits claimed for ADRthan others.
What emerged from the lawyer and ADR practitioner
ADR practitioners recognise that mediation may research projects as well as the disputant research
encompass a variety of models, ranging from project was that lawyers have, perhaps more than
developing consensual solutions to risk management anyof the other stakeholder groups, a diversity of views
or evaluative models for dispute resolution. As Boulle around the merits and potential problems of ADR. In
notes, mediation is: particular there is a view among some lawyers
thatADR both delays dispute resolution and increases
"a decision-making process in which the parties are costs. Increased cost was seen by lawyers participating
assisted by a third-party, the mediator; the mediator in the lawyers' survey as a particular limitation
attempts to improve the process ofdecision-making ofarbitration. Delay was seen as a particular problem
and to assist the parties reach an outcome to which associated with mediation.
each of them can consent". [9]
As shows only a minority of lawyers participating in
Many ADR practitioners believed the full range of the lawyers' survey saw significant limitations with
potential benefits, especially those related to increased ADR techniques. It is notable that the pattern of those
user satisfaction with outcomes and compliance with minority concerns differed in relation to arbitration
ADR resolutions, were less likely to be achieved where and mediation respectively. With regard to arbitration
mediation focused on risk assessment, cost-benefit a substantial minority oflawyers expressed concern
review, or evaluation of the likelihoodof success in that arbitration increased the costs of dispute
court rather than consensual solution development. resolution. By comparison, with regard to mediation
the most substantial minority of lawyers expressed
Many ADR practitioners, both those who combine concern that mediation could be used as a delaying
their ADR practice with legal practice and those who tactic. A smaller but still substantial minority of
do not, expressed considerable concern at techniques lawyers expressed concerns about mediation's
directed primarily at trading-off the probability of enforceability.
success in court. This was perceived as particularly
prevalent in the Auckland region and was Limitations of Arbitration and Mediation
characterised by some ADR practitioners as a model (Lawyers Survey)
which allowed disputants to be 'bullied'. It was a model
that some found antithetical to what they believed to Limitations of
be the core philosophical values of mediation and the Limitations of
Arbitration
core elements which led to better quality solutions - Key Mediation (n=196)*
(n=196)*
the empowerment of the disputants, and the ADRLimitatio
% of % of
expectation that disputants should take responsibility n Response Response
Lawyer Lawyer
for mutually generating and committing to consensual s s
s s
solutions. Enforceability 17 8.7 54 27.6
Delaying tactics 35 17.9 74 37.8
A trading-off approach in mediation was perceived by Increased Costs 80 40.8 35 17.9
ADR practitioners to be particularly widespread in
disputes around insurance and employment matters. * Multiple response.
Some concern was expressed that if that type of
approach became prevalent, or the dominant
perception of mediation, there would be a backlash Only a minority of the lawyers participating in the
against mediation, a hesitancy to take-up mediation lawyers' survey expressed concerns about those issues.
opportunities, and a failure to capture the potential However, the disputants research does reveal how
benefits of mediation such as solution flexibility, powerful lawyers' views can be in relation to take-up of
reduction in stress and relationship repair. ADR. A small group ofdisputants were explicitly
advised by their lawyer not to take-up ADR on the
grounds that it was too expensive or ADR would be
Lawyers' Views on the Disadvantagesof ADR ineffective. Some disputants assumed that if lawyer-to-
PAGE 9

lawyer informal discussion had failed to resolve the dispute resolution usually costs much less than
dispute then ADR would simply not be an option. litigation, allowing smaller financial disputes a
financially viable way to be settled.
Overall, however, surveyed lawyers tended to be
supportive of ADR. Indeed, among the lawyers Speed:
participating in the lawyers' survey around 64.4
percent accepted the notion that there might be merit ADR can be scheduled by the parties and the panelist
in the court ordering parties to take-up ADR prior to as soon as they are able to meet. Compared to the court
proceeding with a case. It is notable, however, that process, where waits of 2-3 years are normal, dispute
only 22.2 percent of the participant lawyers felt court
orders to arbitration were acceptable, compared to resolution is as fast as the parties want it to be.
53.7 percent who accepted the notion of the courts
ordering parties to mediation. Control:

The parties control some of the process; selecting what


Even among lawyers who believed the benefits of ADR
method of ADR they want to follow, selecting the
were such as to justify some mechanism by which the
courts could order parties to mediation, there was still panelist for their dispute resolution; the length of the
a concern that ADR should not be promoted in a process; and, in a mediations case, even the outcome.
manner that compromised litigants' access to justice. Opposed to the court system, where the legal system
and the judge control every aspect, ADR is much more
Disputants' Views on the Disadvantages of flexible.
ADR
Confidentiality:
Although ADR was seen by the disputants
participating in the in-depth interviews as a less costly Disputes resolved in court are public and any
pathway than the court system, a small proportion judgments awarded are also public. Mediation,
ofthe 49 interviewees who felt they could comment on arbitration, and mini trials are all conducted in private
the merits of ADR, identified a series of potential and in strict confidentiality.
drawbacks with ADR. Those are set out in Table 4.8
Experienced Neutral Panelists:
Disadvantages of ADR Identified by
Interviewees (Disputant In-depth Interviews Our panelists are professional mediators and
n=49)* arbitrators with training and expertise in dispute
resolution and insurance. Disputing parties are able to
Key Disadvantages % of
Responses select their panelist from a list of qualified individuals
Identified Interviewees
who are specialized in specific aspects of insurance. In
Lackof enforcement 10 20.4
Increased costs 9 18.4
the court system, binding decisions are made by judges
Delaying tactic 9 18.4 who may lack expertise in insurance practices.
Other 7 14.3
Compromise of principles 7 14.3 Cooperative Approach:
ADR practitioner may not have
3 6.1 All ADR services take place in a more informal, less
the technical skills required
Need other party to be willing confrontational atmosphere. This is more conducive to
2 4.1 maintaining a positive business relationship between
to come to the table
No right of appeal 2 4.1 the two parties. With mediation, specifically, the result
is collaboration between the two parties.
* Multiple response.
1.5 COMPARISON BETWEEN Litigation
Twelve of 49 disputants stated that they saw only
advantages and no disadvantages associated with AND ADR8
ADR.6 At some point in life, and perhaps several times, you
will be faced with a dispute that needs to be settled and
1.4.3 BENEFITS OF ALTERNATIVE DISPUTE you must decide just how to reach a solution. Court
7 based adjudication and ADR are two of the methods
RESOLUTION
used in settling those disputes; and distributive and
Cost: integrative are two types of bargaining utilized in the
ADR processes.
One of the largest reasons parties choose to resolve
their disputes outside of the courts is cost. Alternative
6
http://www.justice.govt.nz/publications/global-
publications/a/alternative-dispute-resolution-general-civil-
cases/4-advantages-and-disadvantages-of-adr 8
http://general-law.knoji.com/litigation-vs-alternative-
7
http://www.ibabc.org/idrsbc/benefits.html dispute-resolution-adr/
PAGE 10

1.5.1 Litigation (Court Based Adjudication) One of the objections to litigation is that it can be
Litigation is a lawsuit to be decided in court before a intimidating – the powerful against the weak – the rich
judge or jury. However, litigation can be intimidating against the poor. The fact is that some forms of ADR
and risky for the litigants. In addition, because court like arbitration can prove to be just as intimidating.
proceedings are adversarial, a battle between lawyers,
the truth is not always the end result. A prominent Methods of negotiation in ADR can be divided into
New York defense attorney and Criminal Court Judge two basic types: distributive; and, integrative.
said in all honesty, “I have nothing to do with justice…
Distributive:
Justice is not even part of the equation.”
Distributive negotiating has a win or lose outcome –
Through the courts and litigation you can obtain
the pie only has so many pieces and the more one side
money, put a stop to certain activities, and have
gets, the less the other side has. Most often this type of
statutes and documents interpreted; but the outcome
bargaining is utilized when there are fixed resources in
is that one person wins and one loses. Litigation is
dispute such as money or property. Personal
expensive, sometimes prohibitively, preventing some
relationships are low on the scale of importance.
from taking their cases into the courts. Even if one can
afford litigation, then you must face the crowded court Distributive processes are often criticized because they
docket and be willing to wait as the lengthy process put emphasis on the parties’ differences and lead to
begins – a lengthy process which keeps disputes destructive actions. To be successful in distributive
broiling and relationships torn apart. negotiating parties must guard their information and
try to get as much information from the opponent as
An additional issue is the fact that the dispute must be
possible. Hardball is often necessary in distributive
able to be translated into legal issues – so some
techniques and relationships become second place or
disputes that seem real may not be able to be framed
are neglected and ignored.
into a legal issue that can be decided in court.
Even when some cooperative bargaining techniques
On the plus side, litigation ends in a decision that is
may prove beneficial and are put in place, there may be
binding and enforceable; and it is appealable.
portions of the negotiations that can only be settled by
Adjudication is public and has more safeguards than
dividing the pie or using distributive techniques.
many other processes. Secondly, court decisions are
based on precedent and are more predictable than Integrative:
alternative resolutions which can be formulated by the
neutral party. Integrative bargaining is interest based and looks for a
win/win solution. These techniques encourage
In the final analysis, each person deserves their day in cooperative problem solving which addresses all
court if that is the method they prefer. However, parties’ needs and interests. Negotiators here envision
regardless of the pros and cons of litigation, one major a pie with more unlimited pieces and desire an
consideration in making a decision as to the resolution outcome that will maintain, rather than destroy,
method is the importance of the relationship between relationships.
the two parties in the dispute. In litigation most
relationships are left unable to be repaired. If your At times, even in disputes that involve money, it
relationship with the opposing party is important to becomes clear to neutral parties that they must mend
you or it is one that must be maintained, it is time to the relationship before the money issue can be
perhaps consider an ADR process. resolved – this means including integrative bargaining.
In order to be successful in integrative negotiations all
1.5.2 Alternative Dispute Resolution (ADR) the interests on both sides must be identified and fears
ADR is a series of methods for settling disputes other must be addressed. The goal is to have both sides work
than court based adjudication. There are several ADR on a solution that will be beneficial to both and allow
processes which can be voluntary or ordered by the their relationship to remain intact.
courts. Some states require persons to enter into
arbitration or mediation before their case can be heard While there are many ADR processes, they all utilize
in court. Hoping the case can be settled in this manner, either distributive or integrative strategies; or a
states do this for economic reasons as well as to assist combination of both. These processes cover a wide
in clearing court dockets. In other cases such as spectrum from binding arbitration normally narrow in
employment and some other contracts, arbitration is scope to reconciliation being a lengthy process focused
required for settling disputes. In these contractual on mending relationships between people, races,
cases arbitration decisions are final and cannot be religions and even countries.
appealed in court in most instances.
If the dispute you are involved in has a fixed quantity
to work with and the other party is not a friend or
PAGE 11

someone with whom you must maintain a relationship, 1.6 LIMITATION OF ADR IN GENERAL
then you could chose from court ordered adjudication, Generally ADR are usually faster, and cheaper than
arbitration (binding or non-binding), mediation (non- litigation.. they are also private and informal when also
binding); but consider the time and the expense of compared to litigation and it gets both parties involved
court. Consider too, that ADR can also be expensive in the settlement process and the decisions are not
and if you chose to go to court when ADR fails, then necessarily final. However ADR does not alway
you can be faced with great expense. The process here guarantee an agreed upon decision and with
will be the distributive type – adversarial, demanding arbitration the decision is final.10
concession, win at all cost.
----SEE DISADVANTAGES----
If, on the other hand, the dispute involves friends or
lasting relationships, you might wish to avoid court 1.7 SUBJECT OF ADR
and work to maintain those relationships. Here the
Typical ADR Processes :
process will be the integrative type – parties are joint
problem solvers, focusing on interests, and working A process is any procedure agreed to by the parties and
toward a wise decision that is good for all. You could the third party neutral by which the parties will work
utilize mediation, a reconciliation process, restorative to resolve their dispute. Figure 19-1 illustrates the
justice or restitution among others. spectrum of ADR processes. For further discussion see
SCAO’s Taxonomy of Alternative Dispute Resolution
The deciding factors in your decision of whether to go
Processes. The most common ADR procedures are as
to court or utilize one of the many ADR methods will
follows.
be the type of dispute, the outcome you desire, the
relationship you have with the opposing party, and the Convening (also called conflict assessment) involves
cost involved in each. Should you decide on ADR, then the use of a neutral third party to help assess the
you will need to decide whether this will be a causes of the conflict, to identify the persons or entities
distributive or integrative negotiation. that would be affected by the outcome of the conflict,
and to help these parties consider the best process (for
9
1.5.3 Litigation and ADR Contrasted example, mediation, consensus-building, or a lawsuit)
A crucial distinction between litigation and ADR is that for them to deal with the conflict. The convener may
whilst many legal practitioners engage in ADR also help get the parties ready for participation in a
processes, there is no legal or professional requirement dispute resolution process by providing educating the
for either the ADR practitioner or for party parties on the nature of the selected process.
representatives at ADR processes to be legally qualified
or to be members of legal professions such as the bar Facilitation or Consensus Building is a process used to
or the law society. Many of those who engage in ADR help a group of people or parties have constructive
practice are first and foremost experts in particular discussions about complex or potentially controversial
fields such as architects, builders, civil engineers, issues. The facilitator helps the parties set ground rules
mariners, scientists and social workers, albeit with a for these discussions, promotes effective
thorough understanding of ADR processes and some communication, elicits creative options, and keeps the
knowledge and understanding of law. In house legal group focused and on track. Facilitation can be used
experts in large corporate organisations can take part even where parties have not yet agreed to attempt to
in the entire ADR process without engaging resolve a conflict.
professional lawyers thus cutting costs further, both in
Mediation is a process in which a neutral third party
terms of time lost through communicating with the
(the mediator) assists disputants in reaching a
professionals and in respect of legal fees and costs.
mutually satisfying settlement of their differences.
It is also the practical knowledge and understanding of Mediation is voluntary, informal, and confidential. The
industry and commerce which assures the parties to mediator helps the disputants to communicate clearly,
ADR processes that the people responsible for settling to listen carefully, and to consider creative ways for
their dispute or assisting them to reach a settlement reaching resolution. The mediator makes no
understand their business and their concerns. It judgments about the people or the conflict (unless
further assures them that the outcome will not be requested under the evaluative model), and issues no
based purely on legal technicalities but will take into decision. Any agreement that is reached must satisfy
account commercial practicalities and technical details all the disputants. The Michigan Court Rules define
which lawyers may not fully comprehend. mediation as a “process in which a neutral third party
facilitates communication between parties, assists in
10
http://wiki.answers.com/Q/What_are_the_disadvantages
_and_advantages_of_Alternative_dispute_resolution#ixzz2
9
http://www.nadr.co.uk/background/contrast.php 04zUKU00
PAGE 12

identifying issue, and helps explore solutions to Arbitration is an adjudicatory process in which a
promote a mutually acceptable settlement.” MCR person or panel, other than a judge, controls pretrial
2.411(A)(2). A mediator has no authoritative decision- procedures, takes evidence, and renders an award
making power. Id. which is the equivalent of a verdict. To be enforceable
in a court the award must be entered as a judgment in
In Michigan, the terms mediation and facilitation are a court of competent jurisdiction. MCL 600.5025
often used interchangeably to describe what is known There are narrow grounds for appeal and the parties
generally elsewhere as mediation. may agree that no appeal will be permitted. Although
some treatises discuss “non binding” arbitration, any
Case Evaluation is an ADR process created by MCR
nonbinding process is some form of mediation and
2.403 in which a three-person panel hears
that the term “arbitration” is best used only for a
presentations by litigants and provides a written
binding process. Arbitration offers several advantages
evaluation of the value of the case. If all of the parties
over adjudication by a court. First, the parties can
accept, a final judgment is entered on all claims
assert more control in defining the procedure. Second,
asserted in the case in the amount of the evaluation. If
arbitrations are private although awards usually are
one or both parties reject, the rule provides for the
entered as judgments by a court, making the terms of
imposition of sanctions in certain circumstances. The
the outcome public. The process generally is quicker
evaluation is limited to a monetary amount, so it is not
than court proceedings and is intended to be, and
well suited to resolving disputes seeking any form of
usually is, less expensive than litigation.
injunctive or other equitable relief. Although case
evaluation panels are usually assigned by the office The American Arbitration Association (AAA) is a major
carrying out a circuit court’s case evaluation program, arbitration service provider but there are many other
see generally MCR 2.404, in more complex disputes service providers. The parties are free to fashion their
the parties often stipulate to specific panel members own approach to arbitration but, unlike other ADR
who the disputants believe have expertise in the processes, the parties cannot withdraw from
subject matter involved in the dispute. This has the arbitration once it has been commenced. Because
effect of giving the parties more confidence in the case arbitration is binding, the parties should be very
evaluation award when made. This deviation from familiar with the Michigan Arbitration Act and the
usual procedure should be undertaken after obtaining Federal Arbitration Act (discussed in § 19.19) before
an appropriate court order. agreeing to arbitration. In addition, because AAA’s
arbitration rules are often incorporated into
Early Neutral Evaluation is an evaluative ADR process
agreements whether or not the AAA is the arbitration
initiated early in a case, often at the direction of the
services provider, parties should be familiar with these
court, in which the third party, who has experience or
procedures before agreeing to be bound by them.
expertise in the subject matter of the suit, meets with
the parties and may receive presentations, after which Practitioners should review the arbitrator’s authority
the neutral provides the parties with an evaluation of to compel discovery and attendance of witnesses under
the likelihood of success and likely ranges of damages. any applicable statute and the procedures under which
The expectation is that an early evaluation from a the arbitration is conducted. For example, the
knowledgeable, objective expert will prompt the arbitrator’s authority is broader under the Federal
parties to take a more realistic approach to settling Arbitration Act and narrower under the AAA’s
their dispute. There are many variations on this procedures. The parties’ agreement to arbitrate may
process, including use of the process to simplify or specify discovery obligations as a matter of contract.
focus issues. In some cases, the neutral may withhold
the evaluation from the parties and proceed to mediate If arbitration may be subject to international rules,
the conflict, revealing the evaluation only if the particular care should be taken because these
mediation is unsuccessful. procedures may be very different from the American
norm.
Mini and Summary Jury Trials involve advisory trial
proceedings. In the first case, the dispute is presented Med-Arb is an ADR process in which the parties agree
to a third-party neutral. A summary jury trial involves in advance to commence mediation but to continue to
impaneling an advisory jury to whom the parties make binding arbitration of any issues not resolved by
an abbreviated presentation of their cases. The neutral mediation. A different neutral generally is used for the
or the jury, as the case may be, then deliberates and arbitration after the mediation is completed. This
renders an advisory verdict. Where the credibility of process offers the advantage of achieving a final
key witness is central to a case, such a trial may resolution if mediation does not fully settle all matters.
provide valuable guidance to counsel about the likely It is not often used in environmental disputes.
success of their case.
Modes of ADR
PAGE 13

The most common approaches in Michigan for negotiate the terms and conditions under which
environmental disputes are mediation (both evaluative arbitrators are used to resolve disputes, including the
and facilitative models), third-party neutral fact procedures for their selection. Some agreements may
finding, and facilitated rule or policy development. provide for "permanent" arbitrators and some may
provide for arbitration panels.
Most two-party environmental disputes utilize
mediation at some point, whether initiated by the Conciliation involves building a positive relationship
parties or ordered by the court. Participants usually between the parties to a dispute. A third party or
include attorneys, party representatives and experts. conciliator (who may or may not be totally neutral to
Where the facilitative model is employed, the third- the interests of the parties) may be used by the parties
party neutral is usually one individual. Where the to help build such relationships.
parties seek evaluative input, it is not uncommon to
use a three-person panel. In some cases, the mediation A conciliator may assist parties by helping to establish
follows the facilitative model but if the parties do not communication, clarifying misperceptions, dealing
reach an agreement, the neutral is asked to provide an with strong emotions, and building the trust necessary
evaluation either as a general advisory number or in for cooperative problem-solving. Some of the
the form of an evaluation to be accepted or rejected by techniques used by conciliators include providing for a
the parties. In the latter case, the evaluator receives the neutral meeting place, carrying initial messages
acceptance or rejections from each party in confidence. between/among the parties, reality testing regarding
Only if both sides accept does the neutral disclose the perceptions or misperceptions, and affirming the
parties’ responses. This way, if only one party accepts, parties' abilities to work together. Since a general
it does not lose any bargaining position by having its objective of conciliation is often to promote openness
acceptance disclosed to the other side. by the parties (to take the risk to begin negotiations),
this method allows parties to begin dialogues, get to
Because many environmental disputes deal with not know each other better, build positive perceptions, and
just a specific sum certain but often involve definition enhance trust. The conciliation method is often used in
of the respective parties’ duties and liabilities after the conjunction with other methods such as facilitation or
settlement, neutrals in environmental mediations may mediation.
play a more active role than in more typical tort or
contract disputes where the principal dispute is usually Cooperative problem-solving is one of the most basic
money. For this same reason, environmental methods of dispute resolution. This informal process
mediation may result in numerous sessions conducted usually does not use the services of a third party and
over a substantial time period. typically takes place when the concerned parties agree
to resolve a question or issue of mutual concern. It is a
ADR Techniques or Methods11 positive effort by the parties to collaborate rather than
compete to resolve a dispute.
Binding arbitration involves the presentation of a
dispute to an impartial or neutral individual Cooperative problem-solving may be the procedure of
(arbitrator) or panel (arbitration panel) for issuance of first resort when the parties recognize that a problem
a binding decision. Unless arranged otherwise, the or dispute exists and that they may be affected
parties usually have the ability to decide who the negatively if the matter is not resolved. It is most
individuals are that serve as arbitrators. In some cases, commonly used when a conflict is not highly polarized
the parties may retain a particular arbitrator (often and prior to the parties forming "hard line" positions.
from a list of arbitrators) to decide a number of cases This method is a key element of labor-management
or to serve the parties for a specified length of time cooperation programs.
(this is common when a panel is involved). Parties
Dispute panels use one or more neutral or impartial
often select a different arbitrator for each new dispute.
individuals who are available to the parties as a means
A common understanding by the parties in all cases,
to clarify misperceptions, fill in information gaps, or
however, is that they will be bound by the opinion of
resolve differences over data or facts. The panel
the decision maker rather than simply be obligated to
reviews conflicting data or facts and suggests ways for
"consider" an opinion or recommendation. Under this
the parties to reconcile their differences. These
method, the third party's decision generally has the
recommendations may be procedural in nature or they
force of law but does not set a legal precedent. It is
may involve specific substantive recommendations,
usually not reviewable by the courts.
depending on the authority of the panel and the needs
Binding arbitration is a statutorily-mandated feature of or desires of the parties. Information analyses and
Federal labor management agreements. Consistent suggestions made by the panel may be used by the
with statute, the parties to such agreements are free to parties in other processes such as negotiations.

11
http://www.opm.gov/er/adrguide/section1-a.asp
PAGE 14

This method is generally an informal process and the Factfinding is the use of an impartial expert (or group)
parties have considerable latitude about how the panel selected by the parties, an agency, or by an individual
is used. It is particularly useful in those organizations with the authority to appoint a factfinder in order to
where the panel is non-threatening and has established determine what the "facts" are in a dispute. The
a reputation for helping parties work through and rationale behind the efficacy of factfinding is the
resolve their own disputes short of using some formal expectation that the opinion of a trusted and impartial
dispute resolution process. neutral will carry weight with the parties. Factfinding
was originally used in the attempt to resolve labor
Early neutral evaluation uses a neutral or impartial disputes, but variations of the procedure have been
third party to provide a non-binding evaluation, applied to a wide variety of problems in other areas as
sometimes in writing, which gives the parties to a well.
dispute an objective perspective on the strengths and
weaknesses of their cases. Under this method, the Factfinders generally are not permitted to resolve or
parties will usually make informal presentations to the decide policy issues. The factfinder may be authorized
neutral to highlight the parties' cases or positions. The only to investigate or evaluate the matter presented
process is used in a number of courts across the and file a report establishing the facts in the matter. In
country, including U.S. District Courts. some cases, he or she may be authorized to issue either
a situation assessment or a specific non-binding
Early neutral evaluation is appropriate when the procedural or substantive recommendation as to how a
dispute involves technical or factual issues that lend dispute might be resolved. In cases where such
themselves to expert evaluation. It is also used when recommendations are not accepted, the data (or facts)
the parties disagree significantly about the value of will have been collected and organized in a fashion that
their cases and when the top decision makers of one or will facilitate further negotiations or be available for
more of the parties could be better informed about the use in later adversarial procedures.
real strengths and weaknesses of their cases. Finally, it
is used when the parties are seeking an alternative to Interest-based problem-solving is a technique that
the expensive and time-consuming process of creates effective solutions while improving the
following discovery procedures. relationship between the parties. The process separates
the person from the problem, explores all interests to
Facilitation involves the use of techniques to improve define issues clearly, brainstorms possibilities and
the flow of information in a meeting between parties to opportunities, and uses some mutually agreed upon
a dispute. The techniques may also be applied to standard to reach a solution. Trust in the process is a
decision-making meetings where a specific outcome is common theme in successful interest-based problem-
desired (e.g., resolution of a conflict or dispute). The solving.
term "facilitator" is often used interchangeably with
the term "mediator," but a facilitator does not typically Interest-based problem-solving is often used in
become as involved in the substantive issues as does a collective bargaining between labor and management
mediator. The facilitator focuses more on the process in place of traditional, position-based bargaining.
involved in resolving a matter. However, as a technique, it can be effectively applied in
many contexts where two or more parties are seeking
The facilitator generally works with all of the meeting's to reach agreement.
participants at once and provides procedural
directions as to how the group can move efficiently Mediated arbitration, commonly known as "med-arb,"
through the problem-solving steps of the meeting and is a variation of the arbitration procedure in which an
arrive at the jointly agreed upon goal. The facilitator impartial or neutral third party is authorized by the
may be a member of one of the parties to the dispute or disputing parties to mediate their dispute until such
may be an external consultant. Facilitators focus on time as they reach an impasse. As part of the process,
procedural assistance and remain impartial to the when impasse is reached, the third party is authorized
topics or issues under discussion. by the parties to issue a binding opinion on the cause
of the impasse or the remaining issue(s) in dispute.
The method of facilitating is most appropriate when:
(1) the intensity of the parties' emotions about the In some cases, med-arb utilizes two outside parties--
issues in dispute are low to moderate; (2) the parties or one to mediate the dispute and another to arbitrate any
issues are not extremely polarized; (3) the parties have remaining issues after the mediation process is
enough trust in each other that they can work together completed. This is done to address some parties'
to develop a mutually acceptable solution; or (4) the concerns that the process, if handled by one third
parties are in a common predicament and they need or party, mixes and confuses procedural assistance (a
will benefit from a jointly-acceptable outcome. characteristic of mediation) with binding decision
making (a characteristic of arbitration). The concern is
that parties might be less likely to disclose necessary
PAGE 15

information for a settlement or are more likely to A third party who is often a former judge or individual
present extreme arguments during the mediation stage versed in the relevant law is the individual who
if they know that the same third party will ultimately oversees a minitrial. That individual is responsible for
make a decision on the dispute. explaining and maintaining an orderly process of case
presentation and usually makes an advisory ruling
Mediated arbitration is useful in narrowing issues regarding a settlement range, rather than offering a
more quickly than under arbitration alone and helps specific solution for the parties to consider. The parties
parties focus their resources on the truly difficult can use such an advisory opinion to narrow the range
issues involved in a dispute in a more efficient and of their discussions and to focus in on acceptable
effective manner. settlement options--settlement being the ultimate
objective of a minitrial.
Mediation is the intervention into a dispute or
negotiation of an acceptable, impartial and neutral The minitrial method is a particularly efficient and cost
third party who has no decision-making authority. The effective means for settling contract disputes and can
objective of this intervention is to assist the parties in be used in other cases where some or all of the
voluntarily reaching an acceptable resolution of issues following characteristics are present: (1) it is important
in dispute. Mediation is useful in highly-polarized to get facts and positions before high-level decision
disputes where the parties have either been unable to makers; (2) the parties are looking for a substantial
initiate a productive dialogue, or where the parties level of control over the resolution of the dispute; (3)
have been talking and have reached a seemingly some or all of the issues are of a technical nature; and
insurmountable impasse. (4) a trial on the merits of the case would be very long
and/or complex.
A mediator, like a facilitator, makes primarily
procedural suggestions regarding how parties can Negotiated rulemaking, commonly known as "reg-
reach agreement. Occasionally, a mediator maysuggest neg," brings together representatives of various
some substantive options as a means of encouraging interest groups and a Federal agency to negotiate the
the parties to expand the range of possible resolutions text of a proposed rule. The method is used before a
under consideration. A mediator often works with the proposed rule is published in the Federal Register
parties individually, in caucuses, to explore acceptable under the Administrative Procedures Act (APA). The
resolution options or to develop proposals that might first step is to set up a well-balanced group
move the parties closer to resolution. representing the regulated public, public interest
groups, and state and local governments, and join
Mediators differ in their degree of directiveness or
them with a representative of the Federal agency in a
control while assisting disputing parties. Some
Federally chartered advisory committee to negotiate
mediators set the stage for bargaining, make minimal
the text of the rule. If the committee reaches consensus
procedural suggestions, and intervene in the
on the rule, then the Federal agency can use this
negotiations only to avoid or overcome a deadlock.
consensus as a basis for its proposed rule.
Other mediators are much more involved in forging
the details of a resolution. Regardless of how directive While reg-neg may result in agreement on composition
the mediator is, the mediator performs the role of of a particular rule an agency may wish to propose,
catalyst that enables the parties to initiate progress when the rule is proposed it is still subject to public
toward their own resolution of issues in dispute. review under the APA. This is the last step in the
process. Federal agency experience is that the process
Minitrials involve a structured settlement process in
shortens considerably the amount of time and reduces
which each side to a dispute presents abbreviated
the resources needed to promulgate sensitive, complex,
summaries of its cases before the major decision
and far-reaching regulations--often regulations
makers for the parties who have authority to settle the
mandated by statute.
dispute. The summaries contain explicit data about the
legal basis and the merits of a case. The rationale Settlement conferences involve a pre-trial conference
behind a minitrial is that if the decision makers are conducted by a settlement judge or referee and
fully informed as to the merits of their cases and that attended by representatives for the opposing parties
of the opposing parties, they will be better prepared to (and sometimes attended by the parties themselves) in
successfully engage in settlement discussions. The order to reach a mutually acceptable settlement of the
process generally follows more relaxed rules for matter in dispute. The method is used in the judicial
discovery and case presentation than might be found system and is a common practice in some jurisdictions.
in the court or other proceeding and usually the parties Courts that use this method may mandate settlement
agree on specific limited periods of time for conferences in certain circumstances.
presentations and arguments.
The role of a settlement judge is similar to that of a
mediator in that he or she assists the parties
PAGE 16

procedurally in negotiating an agreement. Such judges Partnering is used to improve a variety of working
play much stronger authoritative roles than mediators, relationships, primarily between the Federal
since they also provide the parties with specific Government and contractors, by seeking to prevent
substantive and legal information about what the disputes before they occur. The method relies on an
disposition of the case might be if it were to go to agreement in principle to share the risks involved in
court. They also provide the parties with possible completing a project and to establish and promote a
settlement ranges that could be considered. nurturing environment. This is done through the use of
team-building activities to help define common goals,
Non-binding arbitration involves presenting a dispute improve communication, and foster a problem-solving
to an impartial or neutral individual (arbitrator) or attitude among the group of individuals who must
panel (arbitration panel) for issuance of an advisory or work together throughout a contract's term.
non-binding decision. This method is generally one of
the most common quasi-judicial means for resolving Partnering in the contract setting typically involves an
disputes and has been used for a long period of time to initial partnering workshop after the contract award
resolve labor/management and commercial disputes. and before the work begins. This is a facilitated
Under the process, the parties have input into the workshop involving the key stakeholders in the project.
selection process, giving them the ability to select an The purpose of the workshop is to develop a team
individual or panel with some expertise and knowledge approach to the project. This generally results in a
of the disputed issues, although this is not a partnership agreement that includes dispute
prerequisite for an individual to function as an prevention and resolution procedures.
arbitrator. Generally, the individuals chosen are those
known to be impartial, objective, fair, and to have the Peer review is a problem-solving process where an
ability to evaluate and make judgments about data or employee takes a dispute to a group or panel of fellow
facts. The opinions issued by the third party in such employees and managers for a decision. The decision
cases are non-binding; however, parties do have the may or may not be binding on the employee and/or the
flexibility to determine, by mutual agreement, that an employer, depending on the conditions of the
opinion will be binding in a particular case. particular process. If it is not binding on the employee,
he or she would be able to seek relief in traditional
Non-binding arbitration is appropriate for use when forums for dispute resolution if dissatisfied with the
some or all of the following characteristics are present decision under peer review. The principle objective of
in a dispute: (1) the parties are looking for a quick the method is to resolve disputes early before they
resolution to the dispute; (2) the parties prefer a third become formal complaints or grievances.
party decision maker, but want to ensure they have a
role in selecting the decision maker; and (3) the parties Typically, the panel is made up of employees and
would like more control over the decision making managers who volunteer for this duty and who are
process than might be possible under more formal trained in listening, questioning, and problem-solving
adjudication of the dispute. skills as well as the specific policies and guidelines of
the panel. Peer review panels may be standing groups
Ombudsmen are individuals who rely on a number of of individuals who are available to address whatever
techniques to resolve disputes. These techniques disputes employees might bring to the panel at any
include counseling, mediating, conciliating, and given time. Other panels may be formed on an ad hoc
factfinding. Usually, when an ombudsman receives a basis through some selection process initiated by the
complaint, he or she interviews parties, reviews files, employee, e.g., blind selection of a certain number of
and makesrecommendations to the disputants. names from a pool of qualified employees and
Typically, ombudsmen do not impose solutions. The managers.
power of the ombudsman lies in his or her ability to
persuade the parties involved to accept his or her
recommendations. Generally, an individual not
accepting the proposed solution of the ombudsman is
free to pursue a remedy in other forums for dispute
resolution.

Ombudsmen may be used to handle employee


workplace complaints and disputes or complaints and
disputes from outside of the place of employment, such
as those from customers or clients. Ombudsmen are
often able to identify and track systemic problems and
suggest ways of dealing with those problems.
PAGE 17

2 INTERNATIONAL Private international law, or conflict of


laws, which addresses the questions of (1) which
ALTERNATIVE DISPUTE jurisdiction may hear a case, and (2) the law
concerning which jurisdiction applies to the issues in
RESOLUTION/ PEACEFUL the case.12

SETTLEMENT OF
Conflict of laws (or private international law) is a set of
procedural rules that determines which legal system
and which jurisdiction's applies to a given dispute. The
INTERNATIONAL DISPUTE rules typically apply when a legal dispute has a
"foreign" element such as a contract agreed to by
2.1 INTRODUCTION TO PUBLIC parties located in different countries, although the
"foreign" element also exists in multi-jurisdictional
INTERNATIONAL LAW AND PRIVATE countries such as the United Kingdom, the United
INTERNATIONAL LAW States, Australia and Canada.

Public international law, which governs the The term conflict of laws itself originates from
relationship between provinces and international situations where the ultimate outcome of a legal
entities. It includes these legal fields: treaty law, law of dispute depended upon which law applied, and the
sea, international criminal law, the laws of war or common law courts manner of resolving the conflict
international humanitarian law and international between those laws. In civil law, lawyers and legal
human rights law. scholars refer to conflict of laws as private
international law. Private international law has no real
Public international law concerns the structure connection with public international law, and is
and conduct of sovereign states; analogous instead a feature of local law which varies from country
entities, such as the Holy See; and to country.
intergovernmental organizations. To a lesser
The three branches of conflict of laws are
degree, international law also may affect
multinational corporations and individuals, an  Jurisdiction – whether the forum court has the
impact increasingly evolving beyond domestic power to resolve the dispute at hand
legal interpretation and enforcement. Public  Choice of law – the law which is being applied
international law has increased in use and to resolve the dispute
importance vastly over the twentieth century, due  Foreign judgments – the ability to recognize
to the increase in global trade, environmental and enforce a judgment from an external
deterioration on a worldwide scale, awareness of forum within the jurisdiction of the
human rights violations, rapid and vast increases adjudicating forum
in international transportation and a boom in
global communications.
Conflicts between public international law
The field of study combines two main branches: and national sovereignty
See also: Monism and dualism in international law
the law of nations (jus gentium) and
international agreements and conventions (jus The conflict between international law and national
inter gentes), which have different foundations sovereignty is subject to vigorous debate and dispute in
and should not be confused. academia, diplomacy, and politics. Certainly, there is a
growing trend toward judging a state's domestic
Public international law should not be confused actions in the light of international law and standards.
with "private international law", which is Numerous people now view the nation-state as the
concerned with the resolution of conflict of laws. primary unit of international affairs, and believe that
In its most general sense, international law only states may choose to voluntarily enter into
"consists of rules and principles of general commitments under international law, and that they
application dealing with the conduct of states and have the right to follow their own counsel when it
of intergovernmental organizations and with their comes to interpretation of their commitments. Certain
relations inter se, as well as with some of their scholars and political leaders feel that these modern
developments endanger nation states by taking power
relations with persons, whether natural or
juridical. 12
http://en.wikipedia.org/wiki/International_law
PAGE 18

away from state governments and ceding it to explanation can be provided. In theoretical terms, the
international bodies such as the U.N. and the World idea of "sovereignty", historically, from Socrates to
Bank, argue that international law has evolved to a Thomas Hobbes, has always necessitated a moral
imperative on the entity exercising it.
point where it exists separately from the mere consent
of states, and discern a legislative and judicial process
For centuries past, the idea that a state could be
to international law that parallels such processes
sovereign was always connected to its ability to
within domestic law. This especially occurs when states guarantee the best interests of its own citizens. Thus, if
violate or deviate from the expected standards of a state could not act in the best interests of its own
conduct adhered to by all civilized nations. citizens, it could not be thought of as a “sovereign”
state.[2]
A number of states place emphasis on the principal of
territorial sovereignty, thus seeing states as having free The concept of sovereignty has been discussed
rein over their internal affairs. Other states oppose this throughout history, from the time of the Romans
view. One group of opponents of this point of view, through to the present day. It has changed in its
including many European nations, maintain that all definition, concept, and application throughout,
especially during the Age of Enlightenment. The
civilized nations have certain norms of conduct
current notion of state sovereignty is often traced back
expected of them, including the prohibition of to the Peace of Westphalia (1648), which, in relation to
genocide, slavery and the slave trade, wars of states, codified the basic principles:
aggression, torture, and piracy, and that violation of
these universal norms represents a crime, not only  territorial integrity
against the individual victims, but against humanity as  border inviolability
a whole. States and individuals who subscribe to this
view opine that, in the case of the individual  supremacy of the state (rather than the
responsible for violation of international law, he "is Church)
become, like the pirate and the slave trader before him,
hostis humani generis, an enemy of all mankind",[4]  a sovereign is the supreme lawmaking
authority within its jurisdiction.13
and thus subject to prosecution in a fair trial before
any fundamentally just tribunal, through the exercise
of universal jurisdiction. 2.1.1.2 Universal jurisdiction14
is a principle of international law that allows states to
Though the European democracies tend to support investigate and prosecute a national of any state found
broad, universalistic interpretations of international within their borders who is alleged to have committed
law, many other democracies have differing views on certain international crimes.
international law. Several democracies, including
India, Israel and the United States, take a flexible, This principle is premised upon the idea that crimes
eclectic approach, recognizing aspects of public under international law such as war crimes, crimes
international law such as territorial rights as universal, against humanity, airplane hijacking and genocide as
regarding other aspects as arising from treaty or well as torture, extrajudicial killings, and forced
custom, and viewing certain aspects as not being disappearances are so serious and reprehensible that
subjects of public international law at all. Democracies any state may prosecute the offender regardless of
in the developing world, due to their past colonial nationality because they are in essence an “enemy of
histories, often insist on non-interference in their mankind.”
internal affairs, particularly regarding human rights
In exercising universal jurisdiction, the investigating
standards or their peculiar institutions, but often
and prosecuting state represents the interests of the
strongly support international law at the bilateral and
international community as a whole in enforcing
multilateral levels, such as in the United Nations, and
international law and ending impunity for atrocities
especially regarding the use of force, disarmament
and crimes that shock the consciousness of humanity.
obligations, and the terms of the UN Charter.
Universal jurisdiction allows a state to prosecute an
2.1.1 BASIC PRINCIPLES OF INTERNATIONAL individual in its courts where none of the traditional
LAW (SOVEREIGNTY, JURISDICTION, bases for jurisdiction, i.e. territorial, nationality,
INDEPENDENCE etc.) passive personality, or protective, exists. Universal
jurisdiction is usually a type of permissive jurisdiction,
2.1.1.1 Sovereignty in that it requires a State to establish domestic laws
authorizing the right to exercise jurisdiction over
is the quality of having supreme, independent specified crimes.
authority over a geographic area, such as a territory. [1]
It can be found in a power to rule and make law that 13
http://en.wikipedia.org/wiki/Sovereignty
rests on a political fact for which no purely legal 14
http://www.judicialmonitor.org/archive_1007/generalprinciples.html
PAGE 19

The main limitation on the exercise of universal crimes against humanity, extrajudicial executions, war
jurisdiction is head of state immunity, which has been crimes, torture and forced disappearances.[4]
extended to other certain high-ranking state ministers.
A sitting head of state or high-ranking minister is Opponents, such as Henry Kissinger, argue that
immune from prosecution by another state. This universal jurisdiction is a breach on each state's
principle was reaffirmed by the International Court of sovereignty: all states being equal in sovereignty, as
Justice in the Case Concerning The Arrest Warrant of affirmed by the United Nations Charter, "Widespread
11 April 2000 (Congo v. Belgium). Yerodia Ndombasi, agreement that human rights violations and crimes
Congo’s Foreign Minister, was found to be immune against humanity must be prosecuted has hindered
from prosecution by Belgium. The ICJ, however, in a active consideration of the proper role of international
concurring opinion, reaffirmed the underlying courts. Universal jurisdiction risks creating universal
principle of universal jurisdiction as being lawful. tyranny — that of judges."[5][6] According to
Kissinger, as a practical matter, since any number of
Universal jurisdiction or universality principle is a states could set up such universal jurisdiction
principle in public international law (as opposed to tribunals, the process could quickly degenerate into
private international law) whereby states claim politically-driven show trials to attempt to place a
criminal jurisdiction over persons whose alleged quasi-judicial stamp on a state's enemies or opponents.
crimes were committed outside the boundaries of the
prosecuting state, regardless of nationality, country of The United Nations Security Council Resolution 1674,
residence, or any other relation with the prosecuting adopted by the United Nations Security Council on
country. The state backs its claim on the grounds that April 28, 2006, "Reaffirm[ed] the provisions of
the crime committed is considered a crime against all, paragraphs 138 and 139 of the 2005 World Summit
which any state is authorized to punish, as it is too Outcome Document regarding the responsibility to
serious to tolerate jurisdictional arbitrage. protect populations from genocide, war crimes, ethnic
cleansing and crimes against humanity" and commits
The concept of universal jurisdiction is therefore the Security Council to action to protect civilians in
closely linked to the idea that some international armed conflict.15
norms are erga omnes, or owed to the entire world
community, as well as the concept of jus cogens – that 2.1.1.3 Independence of the Judiciary16
certain international law obligations are binding on all In Brief
states and cannot be modified by treaty. [1]
International law requires that cases presented in
According to critics, the principle justifies a unilateral international tribunals and cases presented in
act of wanton disregard of the sovereignty of a nation domestic tribunals where international law is
or the freedom of an individual concomitant to the applicable be resolved by tribunals that are
pursuit of a vendetta or other ulterior motives, with the independent and that are composed of independent
obvious assumption that the person or state thus judges.
disenfranchised is not in a position to bring retaliation
to the state applying this principle. In Theory

The concept received a great deal of prominence with Asserting that the above is a principle of international
Belgium's 1993 "law of universal jurisdiction", which law may seem strange, because it is not usually
was amended in 2003 in order to reduce its scope included in the litany of principles of international law
following a case before the International Court of that a student would encounter in studying
Justice regarding an arrest warrant issued under the international law, or that a professor of international
law, entitled Case Concerning the Arrest Warrant of 11 law would enunciate in his or her lectures on
April 2000 (Democratic Republic of the Congo v. international law. For example and by analogy, law
Belgium).[2] The creation of the International students in the United States studying constitutional
Criminal Court (ICC) in 2002 reduced the perceived law or criminal law would not be confronted by a
need to create universal jurisdiction laws, although the professor with cases which discuss, or texts that
ICC is not entitled to judge crimes committed before espouse, the concept of an independent judiciary in
2002. either the federal court system or the court systems of
the individual states. Perhaps the reason is because the
According to Amnesty International, a proponent of necessity of an independent judiciary in a country
universal jurisdiction, certain crimes pose so serious a espousing democracy and the rule of law is self-
threat to the international community as a whole, that evident. Nevertheless it is important to highlight this
states have a logical and moral duty to prosecute an principle and resolve any questions that might be
individual responsible for it; no place should be a safe
haven for those who have committed genocide,[3] 15
http://en.wikipedia.org/wiki/Universal_jurisdiction
16
http://www.judicialmonitor.org/archive_0506/generalprinciples.html
PAGE 20

raised as to the validity of it as a principle in In addition, article 30 requires that the judges who sit
international law. on that court exercise their powers “impartially and
conscientiously.”
One might, in an attempt to resolve any doubt or
question about this principle, respond by simply In resolving any doubt, the ICJ might review Article 38
stating, as indicated above, that international law, of the Statute, which enunciates sources of law to be
because it is law, presumes or has as its basis the “rule applied by the Court:
of law.” And the rule of law necessarily incorporates
the idea of dispute resolution by peaceful means, and The Court, whose function is to decide in accordance
the further idea of the conduct or hearing of cases with international law such disputes as are submitted
according to recognized procedures, including to it, shall apply:
recognized tribunals. And given the necessity of
a. international conventions, whether general or
tribunals to resolve disputes and hear cases, to have
particular, establishing rules expressly recognized by
any validity those tribunals must necessarily be
the contesting states;
independent and made up of independent judges. Thus
one argument would be simply that the whole idea of b. international custom, as evidence of a general
international law requires independent tribunals and practice accepted as law;
independent judges.
c. the general principles of law recognized by civilized
There is, however, another approach that may be taken nations;
in asserting that independent tribunals and
independent judges in the dispute resolution and case- d. subject to the provisions of Article 59, judicial
hearing aspects of international law together form a decisions and the teachings of the most highly
principle of international law. One definition of law is qualified publicists of the various nations, as
that it is simply those principles or rules that a court subsidiary means for the determination of rules of law.
would enforce or give effect to in resolving a case. Thus
in cases involving the public or the government, courts The Court would then inquire whether any of these
would look to a constitution, a statute, or a regulation “sources” of law require an independent judiciary to
adopted by a regulatory body. In private disputes, resolve international cases or domestic cases with an
courts would look to the “private law” of the parties, ingredient of international law. With respect to
such as a contract or agreement. Using this definition international conventions Article 10 of the Universal
of law, is the guarantee of an independent judiciary a Declaration of Human Rights states:
principle of international law that would be recognized
Everyone is entitled in full equality to a fair and public
and applied by an international tribunal? For example,
hearing by an independent and impartial tribunal, in
if a question arose in the International Court of
the determination of his rights and obligations and of
Justice, the grandfather of international courts,
any criminal charge against him.
whether the guarantee of an independent judiciary is a
recognized principle of international law, how would In addition part of Article 5 of the European
the ICJ resolve that issue? Convention on Human Rights states:
Actual Support for Principle In the determination of his civil rights and obligations
or of any criminal charge against him, everyone is
The International Court of Justice might look no
entitled to a fair and public hearing within a
further than the statute that created it, the Statute of
reasonable time by an independent and impartial
the International Court of Justice, adopted by
tribunal established by law.
countries in conjunction with the creation of the
United Nations in 1945 (the ICJ is the immediate One other convention, the International Covenant on
successor to the Permanent Court of International Civil and Political Rights, guarantees in the
Justice, created at the time of the establishment of the determination of any criminal charge or of rights and
League of Nations following World War I). Article 2 of obligations at a suit at law, a fair and public hearing by
that Statute provides: a competent, independent and impartial tribunal
established by law.
The Court shall be composed of a body of independent
judges, elected regardless of their nationality from There are undoubtedly other international conventions
among persons of high moral character, who possess that have similar provisions. Thus the Court could
the qualifications required in their respective countries apply these provisions of international conventions in
for appointment to the highest judicial offices, or are ruling that an independent judiciary is a principle of
jurisconsults of recognized competence in international law.
international law.
PAGE 21

Moreover, most countries have some kind of provision World Court or ICJ) is the primary judicial organ of
in their constitution or in a national statute that the United Nations. It is based in the Peace Palace in
provides for an independent judiciary. Former The Hague, Netherlands. Its main functions are to
Associate Justice of the U.S. Supreme Court, Sandra settle legal disputes submitted to it by states and to
Day O’Connor, in a speech in 2003 before the Arab provide advisory opinions on legal questions submitted
Judicial Forum, pointed out that the constitutions of to it by duly authorized international organs, agencies,
almost all Arab countries contain provisions for an and the UN General Assembly.
independent judiciary. She specifically mentioned in
the speech the constitutions of Bahrain, Egypt, and Jurisdiction
Jordan. Other countries where an independent
As stated in Article 93 of the UN Charter, all 193 UN
judiciary is part of the fabric of the legal system are the
members are automatically parties to the Court's
United States, Canada, and Australia. Thus the concept
statute.[11] Non-UN members may also become parties
of an independent judiciary is a general principle of
to the Court's statute under the Article 93(2)
law recognized by civilized nations.
procedure. For example, before becoming a UN
Other Source Documents member state, Switzerland used this procedure in 1948
to become a party. And Nauru became a party in 1988.
Finally, the concept of an independent judiciary is Once a state is a party to the Court's statute, it is
included in the “teachings of the most highly qualified entitled to participate in cases before the Court.
publicists of the various nations.” The International However, being a party to the statute does not
Commission of Jurists, one of the most prestigious automatically give the Court jurisdiction over disputes
bodies of international jurists and lawyers, in 2004, involving those parties. The issue of jurisdiction is
issued what is known as the Berlin Declaration on considered in the two types of ICJ cases: contentious
Upholding Human Rights and the Rule of Law in issues and advisory opinions.
Combating Terrorism, which confirmed the idea of an
independent judiciary “in the development and 2.2 RELEVANT ALTERNATIVE DISPUTE
implementation of counter-terrorism measures.” Also SETTLEMENT INSTITUTIONS
a group of chief justices from various countries,
meeting in The Hague in 2001-2002, issued what is 2.2.1.1 PERMANENT COURT OF ARBITRATION
known as the Bangalore Draft Code of Judicial
(HAGUE CONVENTION OF 1907)
Conduct 2001, Adopted by the Judicial Group on
Strengthening Judicial Integrity, as revised at the
The Permanent Court of Arbitration (PCA), is an
Round Table Meeting of Chief Justices Held at the
international organization based in The Hague in the
Peace Palace, The Hague, November 25-26, 2002. Netherlands.
Value I of that declaration is independence of the
judiciary, and the following items 1.1-1.4 specifically HISTORY- The court was established in 1899 as one of
spell out what is meant by or contained in that value. the acts of the first Hague Peace Conference, which
makes it the oldest institution for international dispute
Thus three out of the four sources of international law resolution.
that are authorized for use by the International Court
of Justice in its organic statute confirm that an The creation of the PCA is set out under Articles 20 to
independent judiciary is a principle of international 29 of the 1899 Hague Convention for the pacific
law. settlement of international disputes, which was a result
of the first Hague Peace Conference. At the second
2.1.2 ARTICLE 33 PARAGRAPH 1 OF THE UN Hague Peace Conference, the earlier Convention was
revised by the 1907 Convention for the Pacific
CHARTER Settlement of International Disputes.
 The parties to any dispute, the continuance of
which is likely to endanger the maintenance Unlike the ICJ, the PCA is not just open to states but
of international peace and security, shall, also to other parties. The PCA provides services for the
first of all, seek a solution by negotiation, resolution of disputes involving various combinations
enquiry, mediation, conciliation, of states, state entities, intergovernmental
organizations, and private parties.
arbitration, judicial settlement, resort
to regional agencies or arrangements,
PCA courtroom.
or other peaceful means of their own
choice.
The PCA is not a “court in the conventional
understanding of that term, but an administrative
2.1.3 INTERNATIONAL COURT OF JUSTICE
organization with the object of having permanent and
The International Court of Justice (French: Cour readily available means to serve as the registry for
internationale de Justice; commonly referred to as the purposes of international arbitration and other related
PAGE 22

procedures, including commissions of enquiry and A major effort in both the conferences was to create a
conciliation.”[2] It is a permanent framework available binding international court for compulsory arbitration
to assist temporary arbitral tribunals or commissions. to settle international disputes, which was considered
The judges or abitrators that hear cases are officially necessary to replace the institution of war. This effort,
called "Members" of the Court. however, failed to realize success either in 1899 or in
1907. The First Conference was generally a success and
The PCA is housed in the Peace Palace in The Hague, was focused on disarmament efforts. The Second
which was built specially for the Court in 1913 with an Conference failed to create a binding international
endowment from Andrew Carnegie. From 1922 on, the court for compulsory arbitration but did enlarge the
building also housed the distinctly separate Permanent machinery for voluntary arbitration, and established
Court of International Justice, which was replaced by conventions regulating the collection of debts, rules of
the International Court of Justice in 1946. war, and the rights and obligations of neutrals. Along
with disarmament and obligatory arbitration, both
conferences included negotiations concerning the laws
In the early 1980s, the PCA helped in setting up the
of war and war crimes. Many of the rules laid down at
administrative services of the Iran-United States
the Hague Conventions were violated in the First
Claims Tribunal.
World War. The German invasion of Belgium, for
instance, was a violation of Hague III (1907), which
The public at large is usually more familiar with the states that hostilities must not commence without
International Court of Justice than with the Permanent explicit warning
Court of Arbitration, partly because of the closed
nature of cases handled by the PCA and to the low
Most of the great powers, including the United States,
number of cases dealt with between 1946 and 1990.
Britain, Russia, France, China, and Persia, favored a
The PCA's caseload has, however, increased since then.
binding international arbitration, but the condition
The PCA administers cases arising out of international
was that the vote should be unanimous, and a few
countries, led by Germany, vetoed the idea.
treaties (including bilateral and multilateral
investment treaties), and other agreements to
The second conference, in 1907, was generally a
arbitrate. The cases conducted by the PCA span a wide
failure, with few major decisions. However, the
range of legal issues, including disputes over territorial
meeting of major powers did prefigure later 20th-
and maritime boundaries, sovereignty, human rights,
century attempts at international cooperation.
international investment (investor-state arbitrations),
and matters concerning international and regional
trade. The second conference was called at the suggestion of
President Theodore Roosevelt in 1904, but postponed
because of the war between Russia and Japan. The
Hearings are rarely open to the public and sometimes
Second Peace Conference was held from June 15 to
even the decision itself is kept confidential at the
October 18, 1907, to expand upon the original Hague
request of the parties. Many decisions and related
Convention, modifying some parts and adding others,
documents are available on the PCA website.
with an increased focus on naval warfare. The British
tried to secure limitation of armaments, but were
2.2.1.2 Hague Convention of 1907 defeated by the other powers, led by Germany, which
feared a British attempt to stop the growth of the
The Hague Conventions were two international German fleet. Germany also rejected proposals for
treaties negotiated at international peace conferences compulsory arbitration. However, the conference did
at The Hague in the Netherlands: The First Hague enlarge the machinery for voluntary arbitration, and
Conference in 1899 and the Second Hague Conference established conventions regulating the collection of
in 1907. Along with the Geneva Conventions, the debts, rules of war, and the rights and obligations of
Hague Conventions were among the first formal neutrals.
statements of the laws of war and war crimes in the
body of secular international law. A third conference The Final Agreement was signed on October 18, 1907,
was planned for 1914 and later rescheduled for 1915, and entered into force on January 26, 1910. It
but never took place due to the start of World War I. consisted of thirteen sections, of which twelve were
The German international law scholar and neo- ratified and entered into force:
Kantian pacifist Walther Schücking called the
assemblies the "international union of Hague 
I: The Pacific Settlement of International
conferences".[1] and saw them as a nucleus of an Disputes
international federation that was to meet at regular 
II: The Limitation of Employment of Force for
intervals to administer justice and develop Recovery of Contract Debts
international law procedures for the peaceful
settlement of disputes, asserting "that a definite 
III: The Opening of Hostilities
political union of the states of the world has been
created with the First and Second Conferences." The 
IV: The Laws and Customs of War on Land
various agencies created by the Conferences, like the
Permanent Court of Arbitration, "are agents or organs o includes the Annex on The
of the union." Qualifications of Belligerents, Chapter
II: Prisoners of War
PAGE 23


V: The Rights and Duties of Neutral Powers commercial disputes. The International Court of
and Persons in Case of War on Land Arbitration is part of the International Chamber of

Commerce.
VI: The Status of Enemy Merchant Ships at the
Outbreak of Hostilities There are an increasing number of cases being brought
 before the International Court of Arbitration. There
VII: The Conversion of Merchant Ships into
War-Ships have been more than 500 cases a year handled by the
International Court of Arbitration since 1999.

VIII: The Laying of Automatic Submarine
Contact Mines The International Chamber of Commerce (ICC)
is the largest, most representative business

IX: Bombardment by Naval Forces in Time of organization in the world.[citation needed] Its
War hundreds of thousands of member companies in over
 130 countries have interests spanning every sector of
X: Adaptation to Maritime War of the
Principles of the Geneva Convention private enterprise.


XI: Certain Restrictions with Regard to the A world network of national committees keeps the ICC
Exercise of the Right of Capture in Naval War International Secretariat in Paris informed about
national and regional business priorities. More than

XII: The Creation of an International Prize 2,000 experts drawn from ICC’s member companies
Court [Not Ratified][5] feed their knowledge and experience into crafting the

XIII: The Rights and Duties of Neutral Powers ICC stance on specific business issues.
in Naval War
The UN, the World Trade Organization, and many
other intergovernmental bodies, both international
Two declarations were signed as well:
and regional, are kept in touch with the views of
 international business through ICC.
Declaration I: extending Declaration II from
the 1899 Conference to other types of aircraft [6]
 History
Declaration II: on the obligatory arbitration

The Brazilian delegation was led by the statesman Ruy The International Chamber of Commerce was founded
Barbosa, whose contribution was essential for the in 1919 to serve world business by promoting trade and
defense of the principle of legal equality of nations. [7] investment, open markets for goods and services, and
The British delegation included the 11th Lord Reay the free flow of capital. The organization's
(Donald James Mackay), Sir Ernest Satow and Eyre international secretariat was established in Paris and
Crowe. The Russian delegation was led by Fyodor the ICC's International Court of Arbitration was
Martens.The Uruguayan delegation was led by José created in 1923.
Batlle y Ordóñez, great defender of the compulsory
arbitration by creating the idea of an International ICC's first Chairman was 20th c. French Minister of
Court of Arbitration, and an alliance of nations to force Finance Etienne Clémentel. ICC's current Chairman is
the arbitration. Gerard Worms[1]. Harold McGraw III[2] is Vice-
Chairman and Victor K. Fung[3] is Honorary Chairman.
Korea made a futile effort to take part in the In January 2011, Jean-Guy Carrier [4] was elected
conference, in an incident known as the Hague Secret Secretary General of ICC by the ICC World Council.
Emissary Affair. King Gojong dispatched Yi Jun, Yi
Sang-Seol and Yi Wi-Jong as envoys to the second Membership
peace conference, to argue that Eulsa Treaty was
unjust and ask for help from the international society There are two ways to become a member of ICC[5]:
to recover Korea’s diplomatic sovereignty. An
American missionary, Homer Hulbert, also travelled to
1. Through affiliation with an ICC national committee
The Hague to argue against the treaty. All four men
or group.
were denied entry17
2. By direct membership with the ICC International
2.2.2 INTERNATIONAL COURT OF Secretariat when a national committee/group has not
ARBITRATION (INTERNATIONAL yet been established in your country/territory.
CHAMBER OF COMMERCE)
Governing bodies

The International Court of Arbitration is an World Council


institution for the resolution of international
ICC' s supreme governing body is the World Council,
17 consisting of representatives of national committees.
http://en.wikipedia.org/wiki/Hague_Conventions_of_1899_and_1907
PAGE 24

The World Council elects ICC’s highest officers,  Amicable dispute resolution offers a
including the Chairman and the Vice-Chairman, each framework for the settlement of disputes with
of whom serves a two-year term. The Chairman, Vice- the assistance of a neutral. Parties choose the
Chairman and the Honorary Chairman (the immediate settlement technique, such as negotiation or a
past Chairman) provide the organization with high- mini-trial.
level world leadership.They play an important role in  Dispute boards are independent bodies
ICC section. designed to help resolve disagreements arising
during the course of a contract.
Executive Board
 Expertise is a way of finding the right person
to make an independent assessment on any
Strategic direction for ICC is provided by its Executive
subject relevant to business operations.
Board, consisting of up to 30 business leaders and ex-
officio members. It is elected by the World Council on
 DOCDEX provides expert decisions to resolve
the recommendation of the Chairmanship. Meeting
disputes related to documentary credits,
three times a year, the Executive Board oversees the
collections and demand guarantees,
establishment of ICC’s strategic priorities and the
incorporating ICC banking rules.
implementation of its policies.
Policy and business practices
International Secretariat

ICC policies, rules and standards are prepared by


The ICC International Secretariat, based in Paris, is the
specialized working bodies. Normal procedure requires
operational arm of ICC. It develops and carries out
policy statements first to be adopted by a commission,
ICC’s work programme, feeding business views into
in consultation with national committees, and then
intergovernmental organizations on issues that directly
approved by the Executive Board, before they can be
affect business operations. The International
regarded as official and public ICC positions.
Secretariat is led by the Secretary General, who is
appointed by the World Council.
Commissions examine major policy issues of interest
to world business. Each national committee (NC) or
National Committees
group may appoint delegates to represent it at
meetings. Officers are appointed by the Chairman and
In 90 of the world’s nations, members have established Secretary General in consultation with NCs. Meetings
formal ICC structures called national committees. In of commissions are normally held twice a year.
countries where there is no national committee,
companies and organizations such as chambers of Task forces are constituted under the various
commerce and professional associations can become commissions for a limited period to undertake specific
direct members. projects and report back to their parent commission.
Some task forces may include representatives of more
Finance Committee than one commission.

The Finance Committee advises the Executive Board 2.2.3 INTERNATIONAL CENTER FOR
on all financial matters. On behalf of the Executive SETTLEMENT OF INVESTMENT DISPUTES
Board, it prepares the budget and regularly reports to
the board. It reviews the financial implications of ICC (ICSID) (CONVENTION ON THE
activities and supervises the flow of revenues and SETTLEMENT OF INESTMENT DISPUTE
expenses of the organization. BETWEEN STATES AND NATIONALS OF
OTHER STATES)
Dispute Resolution Services

ICC International Court of Arbitration has received The International Centre for Settlement of Investment
15,000 cases since its inception in 1923. [28] Over the Disputes (ICSID), an institution of the World Bank
past decade, the Court's workload has considerably
Group based in Washington, D.C., United States, was
expanded.
established in 1966 pursuant to the Convention on the
Settlement of Investment Disputes between States and
The Court's membership has also grown and now
covers 86 countries. With representatives in North Nationals of Other States (the ICSID Convention or
America, Latin and Central America, Africa and the Washington Convention). As of May 2011, 157
Middle East and Asia, the ICC Court has significantly countries had signed the ICSID Convention.
increased its training activities on all continents and in
all major languages used in international trade. ICSID has an Administrative Council, chaired by the
World Bank's President, and a Secretariat. It provides
ICC Dispute Resolution Services exist in many forms: facilities for the conciliation and arbitration of
investment disputes between member countries and
individual investors.
PAGE 25

During the first decade of the 21st century, with the Kyrgyzstan, Namibia, Russia, Sao Tome and Principe,
proliferation of bilateral investment treaties (BITs), Thailand
most of which refer present and future investment
disputes to the ICSID, the caseload of the ICSID Former members are Bolivia, Ecuador, and soon to be
substantially increased. As of 30 March 2007, ICSID Venezuela.[4]
had registered 263 cases, more than 30 of which were
Other non-members are Andorra, Angola, Antigua and
pending against Argentina, most resulting from
Barbuda, Bhutan, Brazil, Cook Islands, Cuba, Djibouti,
Argentine government actions precipitated by
Dominica, Equatorial Guinea, Eritrea, India, Iran,
Argentina's economic crisis. ICSID caseload may be
Iraq, Kiribati, Laos, Liechtenstein, Libya, Maldives,
reduced by announcements from Nicaragua and
Marshall Islands, Mexico, Monaco, Montenegro,
Venezuela that they intend to withdraw from the
Myanmar, Nauru, Niue, North Korea, Palau, Poland,
ICSID.[1][2]
San Marino, South Africa, Suriname, Tajikistan,
Establishment Tuvalu, Vanuatu, Vatican City, Vietnam, and the rest of
states with limited recognition.
On a number of occasions in the past, the World Bank
as an institution and the President of the Bank in his Activities
personal capacity have assisted in mediation or
Pursuant to the Convention, ICSID provides facilities
conciliation of investment disputes between
for the conciliation and arbitration of disputes between
governments and private foreign investors. The
member countries and investors who qualify as
creation of the International Centre for Settlement of
nationals of other member countries. Recourse to
Investment Disputes (ICSID) in 1966 was in part
ICSID conciliation and arbitration is entirely
intended to relieve the President and the staff of the
voluntary. However, once the parties have consented
burden of becoming involved in such disputes. But the
to arbitration under the ICSID Convention, neither can
Bank's overriding consideration in creating ICSID was
unilaterally withdraw its consent.[5] Moreover, all
the belief that an institution specially designed to
ICSID Contracting States, whether or not parties to the
facilitate the settlement of investment disputes
dispute, are required by the Convention to recognize
between governments and foreign investors could help
and enforce ICSID arbitral awards.
to promote increased flows of international
investment. Besides this original role, the Centre has since 1978
had a set of Additional Facility Rules authorizing the
ICSID was established under the Convention on the
ICSID Secretariat to administer certain types of
Settlement of Investment Disputes between States and
proceedings between States and foreign nationals
Nationals of Other States which came into force on
which fall outside the scope of the Convention. These
October 14, 1966. ICSID has an Administrative Council
include conciliation and arbitration proceedings where
and a Secretariat. The Administrative Council is
either the State party or the home State of the foreign
chaired by the World Bank's President and consists of
national is not a member of ICSID. Additional Facility
one representative of each State which has ratified the
conciliation and arbitration are also available for cases
Convention. Annual meetings of the Council are held
where the dispute is not an investment dispute
in conjunction with the joint Bank/Fund annual
provided it relates to a transaction which has "features
meetings.
that distinguishes it from an ordinary commercial
ICSID is an autonomous international organization. transaction." The Additional Facility Rules further
However, it has close links with the World Bank. All of allow ICSID to administer a type of proceedings not
ICSID's members are also members of the Bank. provided for in the Convention, namely fact-finding
Unless a government makes a contrary designation, its proceedings to which any State and foreign national
Governor for the Bank sits ex officio on ICSID's may have recourse if they wish to institute an inquiry
Administrative Council. The expenses of the ICSID "to examine and report on facts."
Secretariat are financed out of the Bank's budget,
although the costs of individual proceedings are borne
by the parties involved.[3] A third activity of ICSID in the field of the settlement
of disputes has consisted in the Secretary-General of
Membership
ICSID accepting to act as the appointing authority of
Members of the ICSID are 156 of the UN members and arbitrators for ad hoc (i.e., non-institutional)
Kosovo. arbitration proceedings. This is most commonly done
in the context of arrangements for arbitration under
Signed, but not ratified, have Belize, Canada, the Arbitration Rules of the United Nations
Dominican Republic, Ethiopia, Guinea-Bissau, Commission on International Trade Law (UNCITRAL),
which are specially designed for ad hoc proceedings.
PAGE 26

customary commercial law; customary rules of


evidence and procedure; and general principles of
Provisions on ICSID arbitration are commonly found commercial law
in investment contracts between governments of
member countries and investors from other member The United Nations Commission on
countries. Advance consents by governments to submit International Trade Law (UNCITRAL) was
investment disputes to ICSID arbitration can also be established by the United Nations General Assembly
found in about twenty investment laws and in over 900 by its Resolution 2205 (XXI) of 17 December 1966 "to
bilateral investment treaties. Arbitration under the promote the progressive harmonization and
auspices of ICSID is similarly one of the main unification of international trade law".
mechanisms for the settlement of investment disputes
UNCITRAL carries out its work at annual sessions held
under four recent multilateral trade and investment
alternately in New York City and Vienna.
treaties (the North American Free Trade Agreement,
the Energy Charter Treaty, the Cartagena Free Trade
History
Agreement and the Colonia Investment Protocol of
Mercosur).
When world trade began to expand dramatically in the
1960s, national governments began to realize the need
In addition to these activities, ICSID also carries on
for a global set of standards and rules to harmonize
advisory and research activities, publishing Investment national and regional regulations, which until then
Laws of the World and of Investment Treaties, and governed international trade.
collaborates with other World Bank Group units. Since
April 1986, the Centre has published a semi-annual Membership
law journal entitled ICSID Review: Foreign Investment
Law Journal. UNCITRAL's original membership comprised 29
states, and was expanded to 36 in 1973, and again to
ICSID proceedings do not necessarily take place in 60 in 2002. Member states of UNCITRAL are
Washington, D.C. Other possible locations include the representing different legal traditions and levels of
Permanent Court of Arbitration at The Hague, the economic development, as well as different geographic
Regional Arbitration Centres of the Asian-African regions. States includes 14 African states, 14 Asian
Legal Consultative Committee at Cairo and Kuala states, 8 Eastern European states, 10 Latin American
and Caribbean states, and 14 Western European states.
Lumpur, the Australian Centre for International
The Commission member States are elected by the
Commercial Arbitration at Melbourne, the Australian General Assembly. Membership is structured so as to
Commercial Disputes Centre at Sydney, the Singapore be representative of the world's various geographic
International Arbitration Centre, the GCC Commercial regions and its principal economic and legal systems.
Arbitration Centre at Bahrain and the Frankfurt Members of the commission are elected for terms of
International Arbitration Center of German Institution six years, the terms of half the members expiring every
of Arbitration (DIS) and the Frankfurt Chamber of three years. As of 21 June 2010, the members of
UNCITRAL, and the years when their memberships
Commerce and Industry.18 expire, are:
2.2.4 UNITED NATIONS COMMISSION FOR
The methods of work are organized at three levels. The
INTERNATIONAL TRADE LAW first level is UNCITRAL itself (The Commission),
(UNICITRAL MODEL LAW ON which holds an annual plenary session. The second
INTRNATIONAL COMMERCIAL level is the intergovernmental working groups (which
is developing the topics on UNCITRAL's work
ARBITRATION-1985) program. Texts designed to simplify trade transactions
International commercial law is the body of law that and reduce associated costs are developed by working
governs international sale transactions. A transaction groups comprising all member States of UNCITRAL,
will qualify to be international if elements of more than which meet once or twice per year. Non-member States
one country are involved. and interested international and regional
organizations are also invited and can actively
contribute to the work since decisions are taken by
Since World War II international trade has grown consensus, not by vote. Draft texts completed by these
extensively, seeing the increasing importance of working groups are submitted to UNCITRAL for
international commercial law. It plays a vital role in finalization and adoption at its annual session. The
world development, particularly through the International Trade Law Division of the United
integration of world markets. Nations Office of Legal Affairs provides substantive
secretariat services to UNCITRAL, such as conducting
research and preparing studies and drafts. This is the
Lex mercatoria refers to that part of international
third level, which assists the other two in the
commercial law which is unwritten, including preparation and conduct of their work.
18
http://en.wikipedia.org/wiki/International_Centre_for_Settlement_of_In
vestment_Disputes Uncitral is:
PAGE 27

 Coordinating the work of organizations active  the United Nations Convention on


and encouraging cooperation among them. Independent Guarantees and Stand-by Letters
 Promoting wider participation in existing of Credit (1995)
international conventions and wider
acceptance of existing model and uniform  the United Nations Convention on the
laws. Assignment of Receivables in International
Trade (2001)
 Preparing or promoting the adoption of new
international conventions, model laws and  the United Nations Convention on the Use of
uniform laws and promoting the codification Electronic Communications in International
and wider acceptance of international trade Contracts (2005)
terms, provisions, customs and practice, in
collaboration, where appropriate, with the  the United Nations Convention on Contracts
organizations operating in this field. for the International Carriage of Goods Wholly
or Partly by Sea (2008)
 Promoting ways and means of ensuring a
uniform interpretation and application of Model laws
international conventions and uniform laws in
the field of the law of international trade.
A model law is a legislative text that is recommended
to States for enactment as part of their national law.
 Collecting and disseminating information on
Model laws are generally finalized and adapted by
national legislation and modern legal
UNCITRAL, at its annual session, while conventions
developments, including case law, in the field
requires the convening of a diplomatic conference.
of the law of international trade.

 Establishing and maintaining a close  UNCITRAL Model Law on International


collaboration with the UN Conference on Commercial Arbitration (1985) (text)
Trade and development.  Model Law on International Credit Transfers
(1992)
 Maintaining liaison with other UN organs and
specialized agencies concerned with  UNCITRAL Model Law on Procurement of
international trade. Goods, Construction and Services (1994)

Conventions  UNCITRAL Model Law on Electronic


Commerce (1996)
The Convention is an agreement among participating  Model Law on Cross-border Insolvency (1997)
states establishing obligations binding upon those
States that ratify or accede to it. A convention is  UNCITRAL Model Law on Electronic
designed to unify law by establishing binding legal Signatures (2001)
obligations To become a party to a convention, States
are required formally to deposit a binding instrument  UNCITRAL Model Law on International
of ratification or accession with the depositary. The Commercial Conciliation (2002)
entry into force of a convention is usually dependent
upon the deposit of a minimum number of instruments  Model Legislative Provisions on Privately
of ratification. Financed Infrastructure Projects (2003)

UNCITRAL conventions: UNCITRAL also drafted the:

 the Convention on the Limitation Period in the  UNCITRAL Arbitration Rules (1976) (text)—
International Sale of Goods (1974) (text) revised rules will be effective August 15, 2010;
 the United Nations Convention on the pre-released, July 12, 2010
Carriage of Goods by Sea (1978)  UNCITRAL Conciliation Rules (1980)

 the United Nations Convention on Contracts  UNCITRAL Arbitration Rules (1982)


for the International Sale of Goods (1980)
 UNCITRAL Notes on Organizing Arbitral
 the United Nations Convention on Proceedings (1996)
International Bills of Exchange and
International Promissory Notes (1988) CLOUT (Case Law on UNCITRAL Texts)
 the United Nations Convention on the Liability
of Operators of Transport Terminals in The Case Law on UNCITRAL Texts system is a
International Trade (1991) collection of court decisions and arbitral awards
interpreting UNCITRAL texts.
PAGE 28

CLOUT includes case abstracts in the six United Scope of the WTO
Nations languages on the United Nations Convention
on Contracts for the International Sale of Goods 1. The WTO shall provide the common institutional
(CISG) (Vienna, 1980) and the UNCITRAL Model Law
framework for the conduct of trade relations among its
on International Commercial Arbitration (1985).
Members in matters related to the agreements and
associated legal instruments included in the Annexes
2.2.5 WORLD TRADE ORGANIZATION
to this Agreement.
(MARRAKESH AGREEMENT) (DISPUTE
SETTLEMENT UNDERSTANDING) 2. The agreements and associated legal instruments
The Parties to this Agreement, included in Annexes 1, 2 and 3 (hereinafter referred to
as “Multilateral Trade Agreements”) are integral parts
Recognizing that their relations in the field of trade of this Agreement, binding on all Members.
and economic endeavour should be conducted with a
view to raising standards of living, ensuring full 3. The agreements and associated legal instruments
employment and a large and steadily growing volume included in Annex 4 (hereinafter referred to as
of real income and effective demand, and expanding “Plurilateral Trade Agreements”) are also part of this
the production of and trade in goods and services, Agreement for those Members that have accepted
while allowing for the optimal use of the world’s them, and are binding on those Members. The
resources in accordance with the objective of Plurilateral Trade Agreements do not create either
sustainable development, seeking both to protect and obligations or rights for Members that have not
preserve the environment and to enhance the means accepted them.
for doing so in a manner consistent with their
respective needs and concerns at different levels of 4. The General Agreement on Tariffs and Trade
economic development, 1994 as specified in Annex 1A (hereinafter referred to
as “GATT 1994”) is legally distinct from the General
Recognizing further that there is need for positive Agreement on Tariffs and Trade, dated 30 October
efforts designed to ensure that developing countries, 1947, annexed to the Final Act Adopted at the
and especially the least developed among them, secure Conclusion of the Second Session of the Preparatory
a share in the growth in international trade Committee of the United Nations Conference on Trade
commensurate with the needs of their economic and Employment, as subsequently rectified, amended
development, or modified (hereinafter referred to as “GATT 1947”).

Being desirous of contributing to these objectives by Article III back to top


entering into reciprocal and mutually advantageous Functions of the WTO
arrangements directed to the substantial reduction of 1. The WTO shall facilitate the implementation,
tariffs and other barriers to trade and to the administration and operation, and further the
elimination of discriminatory treatment in objectives, of this Agreement and of the Multilateral
international trade relations, Trade Agreements, and shall also provide the
framework for the implementation, administration and
Resolved, therefore, to develop an integrated, more operation of the Plurilateral Trade Agreements.
viable and durable multilateral trading system
encompassing the General Agreement on Tariffs and 2. The WTO shall provide the forum for
Trade, the results of past trade liberalization efforts, negotiations among its Members concerning their
and all of the results of the Uruguay Round of multilateral trade relations in matters dealt with under
Multilateral Trade Negotiations, the agreements in the Annexes to this Agreement. The
WTO may also provide a forum for further
Determined to preserve the basic principles and to negotiations among its Members concerning their
further the objectives underlying this multilateral multilateral trade relations, and a framework for the
trading system, implementation of the results of such negotiations, as
may be decided by the Ministerial Conference.
Agree as follows:
3. The WTO shall administer the Understanding on
Article I back to top Rules and Procedures Governing the Settlement of
Establishment of the Organization Disputes (hereinafter referred to as the “Dispute
Settlement Understanding” or “DSU”) in Annex 2 to
The World Trade Organization (hereinafter referred to this Agreement.
as “the WTO”) is hereby established.

Article II back to top


PAGE 29

4. The WTO shall administer the Trade Policy oversee the functioning of the Multilateral Trade
Review Mechanism (hereinafter referred to as the Agreements in Annex 1A. The Council for Trade in
“TPRM”) provided for in Annex 3 to this Agreement. Services shall oversee the functioning of the General
Agreement on Trade in Services (hereinafter referred
5. With a view to achieving greater coherence in to as “GATS”). The Council for TRIPS shall oversee the
global economic policy-making, the WTO shall functioning of the Agreement on Trade-Related
cooperate, as appropriate, with the International Aspects of Intellectual Property Rights (hereinafter
Monetary Fund and with the International Bank for referred to as the “Agreement on TRIPS”). These
Reconstruction and Development and its affiliated Councils shall carry out the functions assigned to them
agencies. by their respective agreements and by the General
Council. They shall establish their respective rules of
Article IV back to top procedure subject to the approval of the General
Structure of the WTO Council. Membership in these Councils shall be open
to representatives of all Members. These Councils shall
1. There shall be a Ministerial Conference meet as necessary to carry out their functions.
composed of representatives of all the Members, which
shall meet at least once every two years. The 6. The Council for Trade in Goods, the Council for
Ministerial Conference shall carry out the functions of Trade in Services and the Council for TRIPS shall
the WTO and take actions necessary to this effect. The establish subsidiary bodies as required. These
Ministerial Conference shall have the authority to take subsidiary bodies shall establish their respective rules
decisions on all matters under any of the Multilateral of procedure subject to the approval of their respective
Trade Agreements, if so requested by a Member, in Councils.
accordance with the specific requirements for decision-
making in this Agreement and in the relevant 7. The Ministerial Conference shall establish a
Multilateral Trade Agreement. Committee on Trade and Development, a Committee
on Balance-of-Payments Restrictions and a Committee
2. There shall be a General Council composed of on Budget, Finance and Administration, which shall
representatives of all the Members, which shall meet as carry out the functions assigned to them by this
appropriate. In the intervals between meetings of the Agreement and by the Multilateral Trade Agreements,
Ministerial Conference, its functions shall be and any additional functions assigned to them by the
conducted by the General Council. The General General Council, and may establish such additional
Council shall also carry out the functions assigned to it Committees with such functions as it may deem
by this Agreement. The General Council shall establish appropriate. As part of its functions, the Committee on
its rules of procedure and approve the rules of Trade and Development shall periodically review the
procedure for the Committees provided for in special provisions in the Multilateral Trade
paragraph 7. Agreements in favour of the least-developed country
Members and report to the General Council for
3. The General Council shall convene as appropriate action. Membership in these Committees
appropriate to discharge the responsibilities of the shall be open to representatives of all Members.
Dispute Settlement Body provided for in the Dispute
Settlement Understanding. The Dispute Settlement 8. The bodies provided for under the Plurilateral
Body may have its own chairman and shall establish Trade Agreements shall carry out the functions
such rules of procedure as it deems necessary for the assigned to them under those Agreements and shall
fulfilment of those responsibilities. operate within the institutional framework of the
WTO. These bodies shall keep the General Council
4. The General Council shall convene as informed of their activities on a regular basis.
appropriate to discharge the responsibilities of the
Trade Policy Review Body provided for in the TPRM.
The Trade Policy Review Body may have its own Article V back to top
chairman and shall establish such rules of procedure as Relations with Other Organizations
it deems necessary for the fulfilment of those
responsibilities. 1. The General Council shall make appropriate
arrangements for effective cooperation with other
5. There shall be a Council for Trade in Goods, a intergovernmental organizations that have
Council for Trade in Services and a Council for Trade- responsibilities related to those of the WTO.
Related Aspects of Intellectual Property Rights
(hereinafter referred to as the “Council for TRIPS”), 2. The General Council may make appropriate
which shall operate under the general guidance of the arrangements for consultation and cooperation with
General Council. The Council for Trade in Goods shall
PAGE 30

non-governmental organizations concerned with (b) the measures to be taken in respect of Members
matters related to those of the WTO. in arrears.

The financial regulations shall be based, as far as


Article VI back to top practicable, on the regulations and practices of GATT
The Secretariat 1947.

1. There shall be a Secretariat of the WTO 3. The General Council shall adopt the financial
(hereinafter referred to as “the Secretariat”) headed by regulations and the annual budget estimate by a two-
a Director-General. thirds majority comprising more than half of the
Members of the WTO.
2. The Ministerial Conference shall appoint the
Director-General and adopt regulations setting out the 4. Each Member shall promptly contribute to the
powers, duties, conditions of service and term of office WTO its share in the expenses of the WTO in
of the Director-General. accordance with the financial regulations adopted by
the General Council.
3. The Director-General shall appoint the members
of the staff of the Secretariat and determine their
duties and conditions of service in accordance with Article VIII back to top
regulations adopted by the Ministerial Conference. Status of the WTO

4. The responsibilities of the Director-General and 1. The WTO shall have legal personality, and shall
of the staff of the Secretariat shall be exclusively be accorded by each of its Members such legal capacity
international in character. In the discharge of their as may be necessary for the exercise of its functions.
duties, the Director-General and the staff of the
Secretariat shall not seek or accept instructions from 2. The WTO shall be accorded by each of its
any government or any other authority external to the Members such privileges and immunities as are
WTO. They shall refrain from any action which might necessary for the exercise of its functions.
adversely reflect on their position as international
officials. The Members of the WTO shall respect the 3. The officials of the WTO and the representatives
international character of the responsibilities of the of the Members shall similarly be accorded by each of
Director-General and of the staff of the Secretariat and its Members such privileges and immunities as are
shall not seek to influence them in the discharge of necessary for the independent exercise of their
their duties. functions in connection with the WTO.

4. The privileges and immunities to be accorded by


Article VII back to top a Member to the WTO, its officials, and the
Budget and Contributions representatives of its Members shall be similar to the
privileges and immunities stipulated in the Convention
1. The Director-General shall present to the on the Privileges and Immunities of the Specialized
Committee on Budget, Finance and Administration the Agencies, approved by the General Assembly of the
annual budget estimate and financial statement of the United Nations on 21 November 1947.
WTO. The Committee on Budget, Finance and
Administration shall review the annual budget 5. The WTO may conclude a headquarters
estimate and the financial statement presented by the agreement.
Director-General and make recommendations thereon
to the General Council. The annual budget estimate
shall be subject to approval by the General Council. Article IX back to top
Decision-Making
2. The Committee on Budget, Finance and
Administration shall propose to the General Council 1. The WTO shall continue the practice of decision-
financial regulations which shall include provisions making by consensus followed under GATT 1947(1).
setting out: Except as otherwise provided, where a decision cannot
be arrived at by consensus, the matter at issue shall be
(a) the scale of contributions apportioning the decided by voting. At meetings of the Ministerial
expenses of the WTO among its Members; and Conference and the General Council, each Member of
the WTO shall have one vote. Where the European
Communities exercise their right to vote, they shall
have a number of votes equal to the number of their
PAGE 31

member States(2)which are Members of the WTO. exceptional circumstances justifying the waiver still
Decisions of the Ministerial Conference and the exist and whether the terms and conditions attached to
General Council shall be taken by a majority of the the waiver have been met. The Ministerial Conference,
votes cast, unless otherwise provided in this on the basis of the annual review, may extend, modify
Agreement or in the relevant Multilateral Trade or terminate the waiver.
Agreement(3).
5. Decisions under a Plurilateral Trade Agreement,
2. The Ministerial Conference and the General including any decisions on interpretations and waivers,
Council shall have the exclusive authority to adopt shall be governed by the provisions of that Agreement.
interpretations of this Agreement and of the
Multilateral Trade Agreements. In the case of an
interpretation of a Multilateral Trade Agreement in Article X back to top
Annex 1, they shall exercise their authority on the basis Amendments
of a recommendation by the Council overseeing the
functioning of that Agreement. The decision to adopt 1. Any Member of the WTO may initiate a proposal
an interpretation shall be taken by a three-fourths to amend the provisions of this Agreement or the
majority of the Members. This paragraph shall not be Multilateral Trade Agreements in Annex 1 by
used in a manner that would undermine the submitting such proposal to the Ministerial
amendment provisions in Article X. Conference. The Councils listed in paragraph 5 of
Article IV may also submit to the Ministerial
3. In exceptional circumstances, the Ministerial Conference proposals to amend the provisions of the
Conference may decide to waive an obligation imposed corresponding Multilateral Trade Agreements in
on a Member by this Agreement or any of the Annex 1 the functioning of which they oversee. Unless
Multilateral Trade Agreements, provided that any such the Ministerial Conference decides on a longer period,
decision shall be taken by three fourths (4) of the for a period of 90 days after the proposal has been
Members unless otherwise provided for in this tabled formally at the Ministerial Conference any
paragraph. decision by the Ministerial Conference to submit the
proposed amendment to the Members for acceptance
(a) A request for a waiver concerning this shall be taken by consensus. Unless the provisions of
Agreement shall be submitted to the Ministerial paragraphs 2, 5 or 6 apply, that decision shall specify
Conference for consideration pursuant to the practice whether the provisions of paragraphs 3 or 4 shall
of decision-making by consensus. The Ministerial apply. If consensus is reached, the Ministerial
Conference shall establish a time-period, which shall Conference shall forthwith submit the proposed
not exceed 90 days, to consider the request. If amendment to the Members for acceptance. If
consensus is not reached during the time-period, any consensus is not reached at a meeting of the
decision to grant a waiver shall be taken by three Ministerial Conference within the established period,
fourths4 of the Members. the Ministerial Conference shall decide by a two-thirds
majority of the Members whether to submit the
proposed amendment to the Members for acceptance.
(b) A request for a waiver concerning the Except as provided in paragraphs 2, 5 and 6, the
Multilateral Trade Agreements in Annexes 1A or 1B or provisions of paragraph 3 shall apply to the proposed
1C and their annexes shall be submitted initially to the amendment, unless the Ministerial Conference decides
Council for Trade in Goods, the Council for Trade in by a three-fourths majority of the Members that the
Services or the Council for TRIPS, respectively, for provisions of paragraph 4 shall apply.
consideration during a time-period which shall not
exceed 90 days. At the end of the time-period, the 2. Amendments to the provisions of this Article and
relevant Council shall submit a report to the to the provisions of the following Articles shall take
Ministerial Conference. effect only upon acceptance by all Members:

4. A decision by the Ministerial Conference Article IX of this Agreement;


granting a waiver shall state the exceptional Articles I and II of GATT 1994;
circumstances justifying the decision, the terms and Article II:1 of GATS;
conditions governing the application of the waiver, and Article 4 of the Agreement on TRIPS.
the date on which the waiver shall terminate. Any
waiver granted for a period of more than one year shall 3. Amendments to provisions of this Agreement, or
be reviewed by the Ministerial Conference not later of the Multilateral Trade Agreements in Annexes 1A
than one year after it is granted, and thereafter and 1C, other than those listed in paragraphs 2 and 6,
annually until the waiver terminates. In each review, of a nature that would alter the rights and obligations
the Ministerial Conference shall examine whether the of the Members, shall take effect for the Members that
PAGE 32

have accepted them upon acceptance by two thirds of Members upon approval by the Ministerial
the Members and thereafter for each other Member Conference.
upon acceptance by it. The Ministerial Conference may
decide by a three-fourths majority of the Members that 9. The Ministerial Conference, upon the request of
any amendment made effective under this paragraph is the Members parties to a trade agreement, may decide
of such a nature that any Member which has not exclusively by consensus to add that agreement to
accepted it within a period specified by the Ministerial Annex 4. The Ministerial Conference, upon the request
Conference in each case shall be free to withdraw from of the Members parties to a Plurilateral Trade
the WTO or to remain a Member with the consent of Agreement, may decide to delete that Agreement from
the Ministerial Conference. Annex 4.

4. Amendments to provisions of this Agreement or 10. Amendments to a Plurilateral Trade Agreement


of the Multilateral Trade Agreements in Annexes 1A shall be governed by the provisions of that Agreement.
and 1C, other than those listed in paragraphs 2 and 6,
of a nature that would not alter the rights and
obligations of the Members, shall take effect for all Article XI back to top
Members upon acceptance by two thirds of the Original Membership
Members.
1. The contracting parties to GATT 1947 as of the
5. Except as provided in paragraph 2 above, date of entry into force of this Agreement, and the
amendments to Parts I, II and III of GATS and the European Communities, which accept this Agreement
respective annexes shall take effect for the Members and the Multilateral Trade Agreements and for which
that have accepted them upon acceptance by two thirds Schedules of Concessions and Commitments are
of the Members and thereafter for each Member upon annexed to GATT 1994 and for which Schedules of
acceptance by it. The Ministerial Conference may Specific Commitments are annexed to GATS shall
decide by a three-fourths majority of the Members that become original Members of the WTO.
any amendment made effective under the preceding
provision is of such a nature that any Member which 2. The least-developed countries recognized as such
has not accepted it within a period specified by the by the United Nations will only be required to
Ministerial Conference in each case shall be free to undertake commitments and concessions to the extent
withdraw from the WTO or to remain a Member with consistent with their individual development, financial
the consent of the Ministerial Conference. and trade needs or their administrative and
Amendments to Parts IV, V and VI of GATS and the institutional capabilities.
respective annexes shall take effect for all Members
upon acceptance by two thirds of the Members.
Article XII back to top
6. Notwithstanding the other provisions of this Accession
Article, amendments to the Agreement on TRIPS
meeting the requirements of paragraph 2 of Article 71 1. Any State or separate customs territory
thereof may be adopted by the Ministerial Conference possessing full autonomy in the conduct of its external
without further formal acceptance process. commercial relations and of the other matters
provided for in this Agreement and the Multilateral
7. Any Member accepting an amendment to this Trade Agreements may accede to this Agreement, on
Agreement or to a Multilateral Trade Agreement in terms to be agreed between it and the WTO. Such
Annex 1 shall deposit an instrument of acceptance with accession shall apply to this Agreement and the
the Director-General of the WTO within the period of Multilateral Trade Agreements annexed thereto.
acceptance specified by the Ministerial Conference.
2. Decisions on accession shall be taken by the
8. Any Member of the WTO may initiate a proposal Ministerial Conference. The Ministerial Conference
to amend the provisions of the Multilateral Trade shall approve the agreement on the terms of accession
Agreements in Annexes 2 and 3 by submitting such by a two-thirds majority of the Members of the WTO.
proposal to the Ministerial Conference. The decision to
approve amendments to the Multilateral Trade 3. Accession to a Plurilateral Trade Agreement shall
Agreement in Annex 2 shall be made by consensus and be governed by the provisions of that Agreement.
these amendments shall take effect for all Members
upon approval by the Ministerial Conference.
Decisions to approve amendments to the Multilateral Article XIII back to top
Trade Agreement in Annex 3 shall take effect for all Non-Application of Multilateral Trade Agreements
between Particular Members
PAGE 33

1. This Agreement and the Multilateral Trade 3. Until the entry into force of this Agreement, the
Agreements in Annexes 1 and 2 shall not apply as text of this Agreement and the Multilateral Trade
between any Member and any other Member if either Agreements shall be deposited with the Director-
of the Members, at the time either becomes a Member, General to the CONTRACTING PARTIES to GATT
does not consent to such application. 1947. The Director-General shall promptly furnish a
certified true copy of this Agreement and the
2. Paragraph 1 may be invoked between original Multilateral Trade Agreements, and a notification of
Members of the WTO which were contracting parties each acceptance thereof, to each government and the
to GATT 1947 only where Article XXXV of that European Communities having accepted this
Agreement had been invoked earlier and was effective Agreement. This Agreement and the Multilateral Trade
as between those contracting parties at the time of Agreements, and any amendments thereto, shall, upon
entry into force for them of this Agreement. the entry into force of this Agreement, be deposited
with the Director-General of the WTO.
3. Paragraph 1 shall apply between a Member and
another Member which has acceded under Article XII 4. The acceptance and entry into force of a
only if the Member not consenting to the application Plurilateral Trade Agreement shall be governed by the
has so notified the Ministerial Conference before the provisions of that Agreement. Such Agreements shall
approval of the agreement on the terms of accession by be deposited with the Director-General to the
the Ministerial Conference. CONTRACTING PARTIES to GATT 1947. Upon the
entry into force of this Agreement, such Agreements
4. The Ministerial Conference may review the shall be deposited with the Director-General of the
operation of this Article in particular cases at the WTO.
request of any Member and make appropriate
recommendations.
Article XV back to top
5. Non-application of a Plurilateral Trade Withdrawal
Agreement between parties to that Agreement shall be
governed by the provisions of that Agreement. 1. Any Member may withdraw from this Agreement.
Such withdrawal shall apply both to this Agreement
and the Multilateral Trade Agreements and shall take
Article XIV back to top effect upon the expiration of six months from the date
Acceptance, Entry into Force and Deposit on which written notice of withdrawal is received by
the Director-General of the WTO.
1. This Agreement shall be open for acceptance, by
signature or otherwise, by contracting parties to GATT 2. Withdrawal from a Plurilateral Trade Agreement
1947, and the European Communities, which are shall be governed by the provisions of that Agreement.
eligible to become original Members of the WTO in
accordance with Article XI of this Agreement. Such
acceptance shall apply to this Agreement and the Article XVI back to top
Multilateral Trade Agreements annexed hereto. This Miscellaneous Provisions
Agreement and the Multilateral Trade Agreements
annexed hereto shall enter into force on the date 1. Except as otherwise provided under this
determined by Ministers in accordance with paragraph Agreement or the Multilateral Trade Agreements, the
3 of the Final Act Embodying the Results of the WTO shall be guided by the decisions, procedures and
Uruguay Round of Multilateral Trade Negotiations and customary practices followed by the CONTRACTING
shall remain open for acceptance for a period of two PARTIES to GATT 1947 and the bodies established in
years following that date unless the Ministers decide the framework of GATT 1947.
otherwise. An acceptance following the entry into force
of this Agreement shall enter into force on the 30th 2. To the extent practicable, the Secretariat of GATT
day following the date of such acceptance. 1947 shall become the Secretariat of the WTO, and the
Director-General to the CONTRACTING PARTIES to
2. A Member which accepts this Agreement after its GATT 1947, until such time as the Ministerial
entry into force shall implement those concessions and Conference has appointed a Director-General in
obligations in the Multilateral Trade Agreements that accordance with paragraph 2 of Article VI of this
are to be implemented over a period of time starting Agreement, shall serve as Director-General of the
with the entry into force of this Agreement as if it had WTO.
accepted this Agreement on the date of its entry into
force.
PAGE 34

3. In the event of a conflict between a provision of settlement system as "the most active international
this Agreement and a provision of any of the adjudicative mechanism in the world today."[3]
Multilateral Trade Agreements, the provision of this
Agreement shall prevail to the extent of the conflict. Dispute Settlement Understanding

4. Each Member shall ensure the conformity of its Prompt compliance with recommendations or rulings
laws, regulations and administrative procedures with of the DSB is essential in order to ensure effective
its obligations as provided in the annexed Agreements. resolution of disputes to the benefit of all Members.

5. No reservations may be made in respect of any — World Trade Organization, Article 21.1 of the DSU
provision of this Agreement. Reservations in respect of
any of the provisions of the Multilateral Trade In 1994, the WTO members agreed on the
Agreements may only be made to the extent provided Understanding on Rules and Procedures Governing
for in those Agreements. Reservations in respect of a the Settlement of Disputes or Dispute Settlement
provision of a Plurilateral Trade Agreement shall be Understanding (DSU) (annexed to the "Final Act"
governed by the provisions of that Agreement. signed in Marrakesh in 1994).[4] Pursuant to the rules
detailed in the DSU, member states can engage in
6. This Agreement shall be registered in accordance consultations to resolve trade disputes pertaining to a
with the provisions of Article 102 of the Charter of the "covered agreement" or, if unsuccessful, have a WTO
United Nations. panel hear the case.[5] The priority, however, is to
settle disputes, through consultations if possible. By
DONE at Marrakesh this fifteenth day of April one January 2008, only about 136 of the nearly 369 cases
thousand nine hundred and ninety-four, in a single had reached the full panel process.[2]
copy, in the English, French and Spanish languages,
each text being authentic. Duration of a Dispute Settlement procedure

Explanatory Notes: back to top These approximate periods for each stage of a dispute
settlement
The terms “country” or “countries” as used in this procedure are target figures
Agreement and the Multilateral Trade Agreements are The agreement is flexible. In addition, the countries
to be understood to include any separate customs can settle
territory Member of the WTO. their dispute themselves at any stage.
Totals are also approximate.
In the case of a separate customs territory Member of
the WTO, where an expression in this Agreement and 60 days
the Multilateral Trade Agreements is qualified by the Consultations, mediation, etc.
45 days
term “national”, such expression shall be read as
Panel set up and panellists appointed
pertaining to that customs territory, unless otherwise 6 months
specified. Final panel report to parties
3 weeks
Dispute settlement is regarded by the World Trade Final panel report to WTO members
Organization (WTO) as the central pillar of the 60 days
multilateral trading system, and as the organization's Dispute Settlement Body adopts report (if no appeal)
Total = 1 year (without appeal)
"unique contribution to the stability of the global
60–90 days
economy".[1] A dispute arises when one member Appeals report
country adopts a trade policy measure or takes some 30 days
action that one or more fellow members considers to a Dispute Settlement Body adopts appeals report
breach of WTO agreements or to be a failure to live up Total = 1 year 3 months (with appeal)
to obligations. By joining the WTO, member countries
have agreed that if they believe fellow members are in Source:Understanding the WTO: Settling Disputes - A
violation of trade rules, they will use the multilateral unique contribution
system of settling disputes instead of taking action
unilaterally — this entails abiding by agreed The operation of the WTO dispute settlement process
procedures (Dispute Settlement Understanding) and involves the parties and third parties to a case and may
respecting judgments, primarily of the Dispute also involve the DSB panels, the Appellate Body, the
Settlement Body (DSB), the WTO organ responsible WTO Secretariat, arbitrators, independent experts,
for adjudication of disputes.[2] A former WTO and several specialized institutions.[6] The General
Director-General characterized the WTO dispute Council discharges its responsibilities under the DSU
through the Dispute Settlement Body (DSB).[7] Like
PAGE 35

the General Council, the DSB is composed of of dispute settlement in general public international
representatives of all WTO Members. The DSB is law.[16]
responsible for administering the DSU, i.e. for
overseeing the entire dispute settlement process. It Members may express their views on the report of the
also has the authority to establish panels, adopt panel Appellate Body, but they cannot derail it. The DSU
and Appellate Body reports, maintain surveillance of states unequivocally that an Appellate Body report
implementation of rulings and recommendations, and shall be adopted by the DSB and unconditionally
authorize the suspension of obligations under the accepted by the parties, unless the DSB decides by
covered agreements.[8] The DSB meets as often as consensus within thirty days of its circulation not to
necessary to adhere to the timeframes provided for in adopt the report.[17] Unless otherwise agreed by the
the DSU.[9] parties to the dispute, the period from establishment of
the panel to consideration of the report by the DSB
[edit] From complaint to final report shall as a general rule not exceed nine months if there
is no appeal, and twelve months if there is an appeal.
If a member state considers that a measure adopted by [18]
another member state has deprived it of a benefit
accruing to it under one of the covered agreements, it [edit] Compliance
may call for consultations with the other member state.
[10] If consultations fail to resolve the dispute within The DSU addresses the question of compliance and
60 days after receipt of the request for consultations, retaliation. Within thirty days of the adoption of the
the complainant state may request the establishment report, the member concerned is to inform the DSB of
of a Panel. It is not possible for the respondent state to its intentions in respect of implementation of the
prevent or delay the establishment of a Panel, unless recommendations and rulings. If the member explains
the DSB by consensus decides otherwise.[11] The that it is impracticable to comply immediately with the
panel, normally consisting of three members recommendations and rulings, it is to have a
appointed ad hoc by the Secretariat, sits to receive "reasonable period of time" in which to comply. If no
written and oral submissions of the parties, on the agreement is reached about the reasonable period for
basis of which it is expected to make findings and compliance, that issue is to be the subject of binding
conclusions for presentation to the DSB. The arbitration; the arbitrator is to be appointed by
proceedings are confidential, and even when private agreement of the parties. If there is a disagreement as
parties are directly concerned, they are not permitted to the satisfactory nature of the measures adopted by
to attend or make submissions separate from those of the respondent state to comply with the report, that
the state in question.[12] Disputes can also arise under disagreement is to be decided by a panel, if possible
Non-violation nullification of benefits claims.[13] the same panel that heard the original dispute, but
apparently without the possibility of appeal from its
The final version of the panel's report is distributed decision. The DSU provides that even if the respondent
first to the parties; two weeks later it is circulated to all asserts that it has complied with the recommendation
the members of the WTO. In sharp contrast with other in a report, and even if the complainant party or the
systems, the report is required to be adopted at a panel accepts that assertion, the DSB is supposed to
meeting of the DSB within 60 days of its circulation, keep the implementation of the recommendations
unless the DSB by consensus decides not to adopt the under surveillance.[19]
report or a party to the dispute gives notice of its
intention to appeal.[14] A party may appeal a panel [edit] Compensation and retaliation
report to the standing Appellate Body, but only on
issues of law and legal interpretations developed by the If all else fails, two more possibilities are set out in the
panel. Each appeal is heard by three members of the DSU:
permanent seven-member Appellate Body set up by If a member fails within the "reasonable period" to
the Dispute Settlement Body and broadly representing carry out the recommendations and rulings, it may
the range of WTO membership. Members of the negotiate with the complaining state for a mutually
Appellate Body have four-year terms. They must be acceptable compensation. Compensation is not
individuals with recognized standing in the field of law defined, but may be expected to consist of the grant of
and international trade, not affiliated with any a concession by the respondent state on a product or
government. The Appellate Body may uphold, modify service of interest to the complainant state.[20]
or reverse the panel's legal findings and conclusions. If no agreement on compensation is reached within
Normally appeals should not last more than 60 days, twenty days of the expiry of the "reasonable period",
with an absolute maximum of 90 days.[15] The the prevailing state may request authorization from the
possibility for appeal makes the WTO dispute DSB to suspend application to the member concerned
resolution system unique among the judicial processes of concessions or other obligations under the covered
agreements.[20] The DSU makes clear that retaliation
PAGE 36

is not favored, and sets the criteria for retaliation.[21] recommendations and rulings of panels.[31] In order
In contrast to prior GATT practice, authorization to to assist developing countries in overcoming their
suspend concessions in this context is semi-automatic, limited expertise in WTO law and assist them in
in that the DSB "shall grant the authorization [...] managing complex trade disputes, an Advisory Centre
within thirty days of the expiry of the reasonable on WTO Law was established in 2001. The aim is to
period", unless it decides by consensus to reject the level the playing field for these countries and customs
request.[22] Any suspension or concession or other territories in the WTO system by enabling them to
obligation is to be temporary. If the respondent state have a full understanding of their rights and
objects to the level of suspension proposed or to the obligations under the WTO Agreement
consistency of the proposed suspension with the DSU
principles, still another arbitration is provided for, if
possible by the original panel members or by an 2.3 ENFORCEMENT AND RECOGNITION
arbitrator or arbitrators appointed by the Director- OF AWARDS
General, to be completed within sixty days from
expiration of the reasonable period.[22]
Convention on the Recognition and
Enforcement of Foreign Arbitral Awards
While such "retaliatory measures" are a strong
mechanism when applied by economically powerful
countries like the United States or the European From Wikipedia, the free encyclopedia
Union, when applied by economically weak countries
against stronger ones, they can often be ignored.[23] Jump to: navigation, search
This has been the case, for example, with the March
2005 Appellate Body ruling in case DS 267,[24] which New York Convention
declared US cotton subsidies illegal.[citation needed] Convention on the Recognition and Enforcement of
Foreign Arbitral Awards
Whether or not the complainant has taken a measure
Signed June 10, 1958
of retaliation, surveillance by the DSB is to continue, to
Location New York, US
see whether the recommendations of the panel or the
Appellate Body have been implemented.[25] Effective 7 June 1959
Condition 3 ratifications
[edit] Developing countries Signatories 24
Parties 146
Like most of the agreements adopted in the Uruguay Depositaries Secretary-General of the United Nations
Round, the DSU contains several provisions directed to Chinese, English, French, Russian and
Languages
developing countries.[26] The Understanding states Spanish

that members should give "special attention" to the Convention on the Recognition and Enforcement of Foreign
problems and interests of developing country Arbitral Awards at Wikisource
members.[27] Further, if one party to a dispute is a
developing country, that party is entitled to have at The Convention on the Recognition and
least one panelist who comes from a developing Enforcement of Foreign Arbitral Awards, also
country.[28] If a complaint is brought against a known as the New York Convention, was adopted
developing country, the time for consultations (before by a United Nations diplomatic conference on 10 June
1958 and entered into force on 7 June 1959. The
a panel is convened) may be extended, and if the
Convention requires courts of contracting states to give
dispute goes to a panel, the deadlines for the effect to private agreements to arbitrate and to
developing country to make its submissions may be recognize and enforce arbitration awards made in
relaxed.[29] Also, the Secretariat is authorized to make other contracting states. Widely considered the
a qualified legal expert available to any developing foundational instrument for international arbitration,
country on request. Formal complaints against least it applies to arbitrations which are not considered as
developed countries are discouraged, and if domestic awards in the state where recognition and
enforcement is sought. Though other international
consultations fail, the Director-General and the
conventions apply to the cross-border enforcement
Chairman of the DSB stand ready to offer their good
offices before a formal request for a panel is made.[30]
of arbitration awards, the New York Convention is
As to substance, the DSU provides that the report of by far the most important.
panels shall "explicitly indicate" how account has been
taken of the "differential and more favorable
treatment" provisions of the agreement under which
the complaint is brought. Whether or not a developing
country is a party to a particular proceeding,
"particular attention" is to be paid to the interests of
the developing countries in the course of implementing
PAGE 37

Contents Summary of provisions


[hide] Under the Convention, an arbitration award issued in
any other state can generally be freely enforced in any
 1 Background other contracting state (save that some contracting
 2 Summary of provisions states may elect to enforce only awards from other
 3 Parties to the New York Convention contracting states - the "reciprocity" reservation), only
 4 States which are Not Party to the New York subject to certain, limited defenses. These defenses
Convention are:
 5 United States Issues
 6 External links 1. a party to the arbitration agreement was,
under the law applicable to him, under some
incapacity;
 7 References 2. the arbitration agreement was not valid under
Background its governing law;
In 1953, the International Chamber of Commerce 3. a party was not given proper notice of the
(ICC) produced the first draft Convention on the appointment of the arbitrator or of the
Recognition and Enforcement of International Arbitral arbitration proceedings, or was otherwise
Awards to the United Nations Economic and Social unable to present its case;
Council. With slight modifications, the Council 4. the award deals with an issue not
submitted the convention to the International contemplated by or not falling within the
Conference in the Spring of 1958. The Conference was terms of the submission to arbitration, or
chaired by Willem Schurmann, the Dutch Permanent contains matters beyond the scope of the
Representative to the United Nations and Oscar arbitration (subject to the proviso that an
Schachter, a leading figure in international law who award which contains decisions on such
later taught at Columbia Law School and the Columbia matters may be enforced to the extent that it
School of International and Public Affairs, and served contains decisions on matters submitted to
as the President of the American Society of arbitration which can be separated from those
International Law. matters not so submitted);
5. the composition of the arbitral tribunal was
International arbitration is an increasingly popular not in accordance with the agreement of the
means of alternative dispute resolution for cross- parties or, failing such agreement, with the law
border commercial transactions. The primary of the place where the hearing took place (the
advantage of international arbitration over court "lex loci arbitri");
litigation is enforceability: an international arbitration 6. the award has not yet become binding upon
award is enforceable in most countries in the world. the parties, or has been set aside or suspended
Other advantages of international arbitration include by a competent authority, either in the country
the ability to select a neutral forum to resolve disputes, where the arbitration took place, or pursuant
that arbitration awards are final and not ordinarily to the law of the arbitration agreement;
subject to appeal, the ability to choose flexible 7. the subject matter of the award was not
procedures for the arbitration, and confidentiality. capable of resolution by arbitration; or
8. enforcement would be contrary to "public
Once a dispute between parties is settled, the winning policy".
party needs to collect the award or judgment. Unless
the assets of the losing party are located in the country
where the court judgment was rendered, the winning
party needs to obtain a court judgment in the
Parties to the New York Convention
jurisdiction where the other party resides or where its
assets are located. Unless there is a treaty on As of May 2012, 146 of the 193 United Nations
recognition of court judgments between the country Member States have adopted the New York
where the judgment is rendered and the country where Convention. The Convention has also been ratified by
the winning party seeks to collect, the winning party Holy See and the Cook Islands. About fifty of the U.N.
will be unable to use the court judgment to collect. Member States have not adopted the Convention. In
addition, Taiwan has not adopted the Convention and
a number of British Overseas Territories have not had
Countries which have adopted the New York the Convention extended to them by Order in Council.
Convention have agreed to recognize and enforce British Overseas Territories to which the New York
international arbitration awards. As of July 23, 2011, Convention has not yet been extended by Order in
there are 146 signatories which have adopted the New Council are: Anguilla, British Virgin Islands, Falkland
York Convention: 144 of the 193 United Nations Islands, Turks and Caicos Islands, Montserrat, Saint
Member States, the Cook Islands (a New Zealand Helena (including Ascension and Tristan da Cunha).
dependent territory), and the Holy See have adopted The British Virgin Islands have implemented the New
the New York Convention.[1] 49 U.N. Member States York Convention into domestic law (Arbitration
have not yet adopted the New York Convention. A Ordinance 1976), although Britain has never issued an
number of British dependent territories have not yet Order in Council legally extending the New York
had the Convention extended to them by Order in Convention to the British Virgin Islands.
Council.
PAGE 38

United States Issues • the processes used in agencies that


Under American law, the recognition of foreign administer legislative rights, in which
arbitral awards is governed by chapter 2 of the Federal case participation may be mandatory
Arbitration Act, which incorporate the New York and the conciliator may be obliged to
Convention.[2] ensure that the solution reached
adheres to the relevant legislation.

2.4.5 4. Arbitration

However, the New York Convention on the


Arbitration involves submitting a dispute to an
Recognition and Enforcement of Foreign
arbitrator who hears arguments from the parties then
Arbitral Awards (the "Convention") does not
resolves the conflict by making a decision (usually
preempt state law. In Foster v. Neilson, the Supreme
binding) called an ‘award’. The courts can enforce the
Court held “Our constitution declares a treaty to be the
award. There are varying degree of formality in how
law of the land. It is, consequently, to be regarded in
evidence is presented during arbitration. This
courts of justice as equivalent to an act of the
approach provides greater flexibility and more party
Legislature, whenever it operates of itself without the
control than the formal court system. It is also usually
aid of any legislative provision.” Foster v. Neilson, 27
private and confidential.
U.S. 253, 314 (1829). See also Valentine v. U.S. ex rel.
Neidecker, 57 S.Ct. 100, 103 (1936); Medellin v.
Dretke, 125 S.Ct. 2088, 2103 (2005); Sanchez-Llamas Arbitration, a form of alternative dispute resolution
v. Oregon, 126 S.Ct. 2669, 2695 (2006). Thus, over a (ADR), is a legal technique for the resolution of
course of 181 years, the United States Supreme Court disputes outside the courts, where the parties to a
has repeatedly held that a self-executing treaty is an dispute refer it to one or more persons (the
act of the Legislature (i.e., act of Congress). "arbitrators", "arbiters" or "arbitral tribunal"), by whose
decision (the "award") they agree to be bound. It is a
resolution technique in which a third party reviews the
2.4 TYPES OF ADR evidence in the case and imposes a decision that is
legally binding for both sides and enforceable.[1] Other
2.4.1 1. Negotiation forms of ADR include mediation[2] (a form of
settlement negotiation facilitated by a neutral third
Negotiation involves “conferring with another with a party) and non-binding resolution by experts.
view to agreement”. There are no formal rules to Arbitration is often used for the resolution of
governing how negotiations should be conducted, commercial disputes, particularly in the context of
although there are culturally acceptable approaches. international commercial transactions. The use of
Negotiation is much more than persuasion. Although arbitration is also frequently employed in consumer
you can try to persuade a difficult person to see it your and employment matters, where arbitration may be
way, you are merely discussing or arguing your way mandated by the terms of employment or commercial
through a problem unless you can vary the terms and contracts.
commit resources.
Arbitration can be either voluntary or mandatory
2.4.2 Assisted negotiation (although mandatory arbitration can only come from a
statute or from a contract that is voluntarily entered
Here the parties are assisted in their negotiations by a into, where the parties agree to hold all existing or
third party who coaches or represents them in the future disputes to arbitration, without necessarily
negotiations without a formalised structure. Lawyers, knowing, specifically, what disputes will ever occur)
accountants, trusted friends or other technical or and can be either binding or non-binding. Non-binding
professional advisers are often called upon to fulfil this arbitration is similar to mediation in that a decision can
role. not be imposed on the parties. However, the principal
distinction is that whereas a mediator will try to help
the parties find a middle ground on which to
2.4.3 2. Mediation
compromise, the (non-binding) arbitrator remains
totally removed from the settlement process and will
In mediation, a neutral third party mediator facilitates only give a determination of liability and, if appropriate,
the negotiation of a solution by the parties involved. an indication of the quantum of damages payable. By
LEADR NZ mainly deals with mediation. Explore our one definition arbitration is binding and so non-binding
mediation section for full details. arbitration is technically not arbitration.

2.4.4 3. Conciliation Arbitration is a proceeding in which a dispute is


 This is used to refer to a number of different resolved by an impartial adjudicator whose decision
processes. The most common are: the parties to the dispute have agreed, or legislation
• where a third party acts as a conduit, has decreed, will be final and binding. There are
transmitting offers of settlement limited rights of review and appeal of arbitration
between the parties but taking a much awards. Arbitration is not the same as:
less active role in the negotiation than
a mediator, or
PAGE 39

judicial proceedings, although in some jurisdictions, in some arbitration agreements and systems, the
court proceedings are sometimes referred as recovery of attorneys' fees is unavailable, making it
arbitrations[3] difficult or impossible for consumers or employees to
get legal representation[citation needed]; however
alternative dispute resolution (or ADR) most arbitration codes and agreements provide for the
same relief that could be granted in court
Parties often seek to resolve their disputes through
arbitration because of a number of perceived potential if the arbitrator or the arbitration forum depends on
advantages over judicial proceedings: the corporation for repeat business, there may be an
inherent incentive to rule against the consumer or
employee
when the subject matter of the dispute is highly
technical, arbitrators with an appropriate degree of
expertise can be appointed (as one cannot "choose there are very limited avenues for appeal, which
the judge" in litigation)[5] means that an erroneous decision cannot be easily
overturned
arbitration is often faster than litigation in court )[6]
although usually thought to be speedier, when there
are multiple arbitrators on the panel, juggling their
arbitration can be cheaper and more flexible for
schedules for hearing dates in long cases can lead to
businesses[citation needed]
delays
arbitral proceedings and an arbitral award are
in some legal systems, arbitrary awards have fewer
generally non-public, and can be made confidential[7]
enforcement options than judgments; although in the
United States arbitration awards are enforced in the
in arbitral proceedings the language of arbitration may same manner as court judgments and have the same
be chosen, whereas in judicial proceedings the official effect
language of the country of the competent court will be
automatically applied
arbitrators are generally unable to enforce
interlocutory measures against a party, making it
because of the provisions of the New York Convention easier for a party to take steps to avoid enforcement of
1958, arbitration awards are generally easier to member or a small group of members in arbitration
enforce in other nations than court judgments due to increasing legal fees, without explaining to the
members the adverse consequences of an
in most legal systems there are very limited avenues unfavorable ruling
for appeal of an arbitral award, which is sometimes an
advantage because it limits the duration of the dispute rule of applicable law is not necessarily binding on the
and any associated liability arbitrators, although they cannot disregard the
law[citation needed]
Some of the disadvantages include:
discovery may be more limited in arbitration or entirely
arbitration may become highly complex[citation nonexistent
needed]
the potential to generate billings by attorneys may be
arbitration may be subject to pressures from powerful less than pursuing the dispute through trial
law firms representing the stronger and wealthier
party[citation needed] unlike court judgments, arbitration awards themselves
are not directly enforceable. A party seeking to enforce
arbitration agreements are sometimes contained in an arbitration award must resort to judicial remedies,
ancillary agreements, or in small print in other called an action to "confirm" an award
agreements, and consumers and employees often do
not know in advance that they have agreed to although grounds for attacking an arbitration award in
mandatory binding pre-dispute arbitration by court are limited, efforts to confirm the award can be
purchasing a product or taking a job fiercely fought[citation needed], thus necessitating
huge legal expenses that negate the perceived
if the arbitration is mandatory and binding, the parties economic incentive to arbitrate the dispute in the first
waive their rights to access the courts and to have a place.
judge or jury decide the case
[edit] Arbitrability
in some arbitration agreements, the parties are
required to pay for the arbitrators, which adds an By their nature, the subject matter of some disputes is
additional layer of legal cost that can be prohibitive, not capable of arbitration. In general, two groups of
especially in small consumer disputes[citation needed] legal procedures cannot be subjected to arbitration:
PAGE 40

Procedures which necessarily lead to a determination a conventional arbitration clause, but not in a
which the parties to the dispute may not enter into an submission agreement.
agreement upon:[8] Some court procedures lead to
judgments which bind all members of the general In keeping with the informality of the arbitration
public, or public authorities in their capacity as such, or process, the law is generally keen to uphold the
third parties, or which are being conducted in the validity of arbitration clauses even when they lack the
public interest. For example, until the 1980s, antitrust normal formal language associated with legal
matters were not arbitrable in the United States.[9] contracts. Clauses which have been upheld include:
Matters relating to crimes, status and family law are
generally not considered to be arbitrable, as the power "arbitration in London - English law to apply"[13]
of the parties to enter into an agreement upon these
matters is at least restricted. However, most other
disputes that involve private rights between two parties "suitable arbitration clause"[14]
can be resolved using arbitration. In some disputes,
parts of claims may be arbitrable and other parts not. "arbitration, if any, by ICC Rules in London"[15]
For example, in a dispute over patent infringement, a
determination of whether a patent has been infringed The courts have also upheld clauses which specify
could be adjudicated upon by an arbitration tribunal, resolution of disputes other than in accordance with a
but the validity of a patent could not: As patents are specific legal system. These include provision
subject to a system of public registration, an arbitral indicating:
panel would have no power to order the relevant body
to rectify any patent registration based upon its that the arbitrators "must not necessarily judge
determination. according to the strict law but as a general rule ought
chiefly to consider the principles of practical
Some legal orders exclude or restrict the possibility of business"[16]
arbitration for reasons of the protection of weaker
members of the public, e.g. consumers. Examples: "internationally accepted principles of law governing
German law excludes disputes over the rental of living contractual relations"[17]
space from any form of arbitration[10], while arbitration
agreements with consumers are only considered valid
if they are signed by either party,[11] and if the signed
document does not bear any other content than the
arbitration agreement.[12] Agreements to refer disputes to arbitration generally
have a special status in the eyes of the law. For
example, in disputes on a contract, a common defence
Arbitration agreement
is to plead the contract is void and thus any claim
based upon it fails. It follows that if a party successfully
See also: Arbitration clause claims that a contract is void, then each clause
contained within the contract, including the arbitration
In theory, arbitration is a consensual process; a party clause, would be void. However, in most countries, the
cannot be forced to arbitrate a dispute unless he courts have accepted that:
agrees to do so. In practice, however, many fine-print
arbitration agreements are inserted in situations in 1.a contract can only be declared void by a court or
which consumers and employees have no bargaining other tribunal; and
power. Moreover, arbitration clauses are frequently
placed within sealed users' manuals within products,
2.if the contract (valid or otherwise) contains an
within lengthy click-through agreements on websites,
arbitration clause, then the proper forum to determine
and in other contexts in which meaningful consent is
whether the contract is void or not, is the arbitration
not realistic. Such agreements are generally divided
tribunal.[18]
into two types:

Arguably, either position is potentially unfair; if a


agreements which provide that, if a dispute should
person is made to sign a contract under duress, and
arise, it will be resolved by arbitration. These will
the contract contains an arbitration clause highly
generally be normal contracts, but they contain an
favourable to the other party, the dispute may still
arbitration clause
referred to that arbitration tribunal.[citation needed]
Conversely a court may be persuaded that the
agreements which are signed after a dispute has arbitration agreement itself is void having been signed
arisen, agreeing that the dispute should be resolved under duress. However, most courts will be reluctant
by arbitration (sometimes called a "submission to interfere with the general rule which does allow for
agreement") commercial expediency; any other solution (where one
first had to go to court to decide whether one had to go
The former is the far more prevalent type of arbitration to arbitration) would be self defeating.
agreement. Sometimes, legal significance attaches to
the type of arbitration agreement. For example, in Sources of law---- States regulate arbitration through a
certain Commonwealth countries, it is possible to variety of laws. The main body of law applicable to
provide that each party should bear their own costs in arbitration is normally contained either in the national
PAGE 41

Private International Law Act (as is the case in 2.4.6 5. INQUIRY AND FACT FINDING
Switzerland) or in a separate law on arbitration (as is
the case in England). In addition to this, a number of 2.4.7 6. GOOD OFFICES
national procedural laws may also contain provisions
relating to arbitration.

By far the most important international instrument on 3 DOMESTIC ARBITRATION


arbitration law[citation needed] is the 1958 New York
Convention on Recognition and Enforcement of
Foreign Arbitral Awards. Some other relevant
3.1 INTRODUCTION TO DOMESTIC
international instruments are: COMMERCIAL DISPUTE
RESOLUTION
The Geneva Protocol of 1923

The Geneva Convention of 1927


3.2 ALTERNATIVE DISPUTE
The European Convention of 1961 RESOLUTION ACT OF 2004
The Washington Convention of 1965 Republic Act No. 9285
(governing settlement of international
investment disputes) April 2, 2004

The UNCITRAL Model Law (providing a AN ACT TO INSTITUTIONALIZE THE USE OF AN


model for a national law of arbitration) ALTERNATIVE DISPUTE RESOLUTION SYSTEM IN
THE PHILIPPINES AND TO ESTABLISH THE
The UNCITRAL Arbitration Rules (providing a
OFFICE FOR ALTERNATIVE DISPUTE
set of rules for an ad hoc arbitration)
RESOLUTION, AND FOR OTHER PURPOSES
Case presentation or mini-trial
Be it enacted by the Senate and House of
Representatives of the Philippines in Congress
This is where in-house representatives present brief
summaries of the parties’ cases to senior executives of assembled:
both parties with authority to settle the dispute, in a
structured information exchange. The senior CHAPTER 1 - GENERAL PROVISIONS
executives then negotiate a solution, taking into
account the information presented to them. Sometimes SECTION 1. Title. - This act shall be known as the
an independent third party will chair the presentation. "Alternative Dispute Resolution Act of 2004."

Independent expert appraisal or early neutral SEC. 2. Declaration of Policy. - it is hereby declared the
evaluation policy of the State to actively promote party autonomy
in the resolution of disputes or the freedom of the
This is where the parties appoint an independent party to make their own arrangements to resolve their
expert to investigate and provide an opinion on the
disputes. Towards this end, the State shall encourage
issues in dispute, either as a basis for solution or
simply to clarify the issues. In some cases, the parties and actively promote the use of Alternative Dispute
agree to be bound by the opinion, which is often Resolution (ADR) as an important means to achieve
submitted to them in draft form before being finalised. speedy and impartial justice and declog court dockets.
The process may then become a type of mediation on As such, the State shall provide means for the use of
the draft opinion, putting responsibility for a solution ADR as an efficient tool and an alternative procedure
back into the hands of the parties. for the resolution of appropriate cases. Likewise, the
State shall enlist active private sector participation in
Litigation
the settlement of disputes through ADR. This Act shall
be without prejudice to the adoption by the Supreme
This is the system in which the courts impose a binding Court of any ADR system, such as mediation,
decision on the parties. It is formal, with strict rules of
conciliation, arbitration, or any combination thereof as
evidence, and adversarial. The legal framing, analysis
and argument, together with the adversarial nature of a means of achieving speedy and efficient means of
the process, means that the system has little scope for resolving cases pending before all courts in the
reconciling or accommodating the parties' interests. It Philippines which shall be governed by such rules as
also produces 'winners and losers'. the Supreme Court may approve from time to time.

SEC. 3. Definition of Terms. - For purposes of this Act,


the term:
PAGE 42

mediation or for purposes of considering, conducting,


(a) "Alternative Dispute Resolution System" means any participating, initiating, continuing of reconvening
process or procedure used to resolve a dispute or mediation or retaining a mediator; and (3) pleadings,
controversy, other than by adjudication of a presiding motions manifestations, witness statements, reports
judge of a court or an officer of a government agency, filed or submitted in an arbitration or for expert
as defined in this Act, in which a neutral third party evaluation;
participates to assist in the resolution of issues, which
includes arbitration, mediation, conciliation, early (i) "Convention Award" means a foreign arbitral award
neutral evaluation, mini-trial, or any combination made in a Convention State;
thereof;
(j) "Convention State" means a State that is a member
(b) "ADR Provider" means institutions or persons of the New York Convention;
accredited as mediator, conciliator, arbitrator, neutral
evaluator, or any person exercising similar functions in (k) "Court" as referred to in Article 6 of the Model Law
any Alternative Dispute Resolution system. This is shall mean a Regional Trial Court;
without prejudice to the rights of the parties to choose
nonaccredited individuals to act as mediator, (l) "Court-Annexed Mediation" means any mediation
conciliator, arbitrator, or neutral evaluator of their process conducted under the auspices of the court,
dispute. after such court has acquired jurisdiction of the
dispute;
Whenever reffered to in this Act, the term "ADR
practitioners" shall refer to individuals acting as (m) "Court-Referred Mediation" means mediation
mediator, conciliator, arbitrator or neutral evaluator; ordered by a court to be conducted in accordance with
the Agreement of the Parties when as action is
(c) "Authenticate" means to sign, execute or adopt a prematurely commenced in violation of such
symbol, or encrypt a record in whole or in part, agreement;
intended to identity the authenticating party and to
adopt, accept or establish the authenticity of a record (n) "Early Neutral Evaluation" means an ADR process
or term; wherein parties and their lawyers are brought together
early in a pre-trial phase to present summaries of their
(d) "Arbitration" means a voluntary dispute resolution cases and receive a nonbinding assessment by an
process in which one or more arbitrators, appointed in experienced, neutral person, with expertise in the
accordance with the agreement of the parties, or rules subject in the substance of the dispute;
promulgated pursuant to this Act, resolve a dispute by
rendering an award; (o) "Government Agency" means any government
entity, office or officer, other than a court, that is
(e) "Arbitrator" means the person appointed to render vested by law with quasi-judicial power to resolve or
an award, alone or with others, in a dispute that is the adjudicate dispute involving the government, its
subject of an arbitration agreement; agencies and instrumentalities, or private persons;

(f) "Award" means any partial or final decision by an


arbitrator in resolving the issue in a controversy; (p) "International Party" shall mean an entity whose
place of business is outside the Philippines. It shall not
(g) "Commercial Arbitration" An arbitration is include a domestic subsidiary of such international
"commercial if it covers matter arising from all party or a coventurer in a joint venture with a party
relationships of a commercial nature, whether which has its place of business in the Philippines.
contractual or not;
The term foreigner arbitrator shall mean a person who
(h) "Confidential information" means any information, is not a national of the Philippines.
relative to the subject of mediation or arbitration,
expressly intended by the source not to be disclosed, or (q) "Mediation" means a voluntary process in which a
obtained under circumstances that would create a mediator, selected by the disputing parties, facilitates
reasonable expectation on behalf of the source that the communication and negotiation, and assist the parties
information shall not be disclosed. It shall include (1) in reaching a voluntary agreement regarding a dispute.
communication, oral or written, made in a dispute
resolution proceedings, including any memoranda, (r) "Mediator" means a person who conducts
notes or work product of the neutral party or non-party mediation;
participant, as defined in this Act; (2) an oral or
written statement made or which occurs during
PAGE 43

(s) "Mediation Party" means a person who participates


in a mediation and whose consent is necessary to SEC. 6. Exception to the Application of this Act. - The
resolve the dispute; provisions of this Act shall not apply to resolution or
settlement of the following: (a) labor disputes covered
(t) "Mediation-Arbitration" or Med-Arb is a step by Presidential Decree No. 442, otherwise known as
dispute resolution process involving both mediation the Labor Code of the Philippines, as amended and its
and arbitration; Implementing Rules and Regulations; (b) the civil
status of persons; (c) the validity of a marriage; (d) any
(u) "Mini-Trial" means a structured dispute resolution ground for legal separation; (e) the jurisdiction of
method in which the merits of a case are argued before courts; (f) future legitime; (g) criminal liability; and (h)
a panel comprising senior decision makers with or those which by law cannot be compromised.
without the presence of a neutral third person after
which the parties seek a negotiated settlement; CHAPTER 2 - MEDIATION

(v) "Model Law" means the Model Law on SEC. 7. Scope. - The provisions of this Chapter shall
International Commercial Arbitration adopted by the cover voluntary mediation, whether ad hoc or
United Nations Commission on International Trade institutional, other than court-annexed. The term
Law on 21 June 1985; "mediation' shall include conciliation.

(w) "New York Convention" means the United Nations SEC. 8. Application and Interpretation. - In applying
Convention on the Recognition and Enforcement of construing the provisions of this Chapter,
Foreign Arbitral Awards approved in 1958 and ratified consideration must be given to the need to promote
by the Philippine Senate under Senate Resolution No. candor or parties and mediators through
71; confidentiality of the mediation process, the policy of
fostering prompt, economical, and amicable resolution
(x) "Non-Convention Award" means a foreign arbitral of disputes in accordance with the principles of
award made in a State which is not a Convention State; integrity of determination by the parties, and the
policy that the decision-making authority in the
(y) "Non-Convention State" means a State that is not a mediation process rests with the parties.
member of the New York Convention.
SEC. 9. Confidentiality of Information. - Information
(z) "Non-Party Participant" means a person, other than obtained through mediation proceedings shall be
a party or mediator, who participates in a mediation subject to the following principles and guidelines:
proceeding as a witness, resource person or expert;
(a) Information obtained through mediation shall be
(aa) "Proceeding" means a judicial, administrative, or privileged and confidential.
other adjudicative process, including related pre-
hearing motions, conferences and discovery; (b) A party, a mediator, or a nonparty participant may
refuse to disclose and may prevent any other person
(bb) "Record" means an information written on a from disclosing a mediation communication.
tangible medium or stored in an electronic or other
similar medium, retrievable form; and (c) Confidential Information shall not be subject to
discovery and shall be inadmissible if any adversarial
(cc) "Roster" means a list of persons qualified to proceeding, whether judicial or quasi-judicial,
provide ADR services as neutrals or to serve as However, evidence or information that is otherwise
arbitrators. admissible or subject to discovery does not become
inadmissible or protected from discovery solely by
SEC. 4. Electronic Signatures in Global and E- reason of its use in a mediation.
Commerce Act. - The provisions of the Electronic
Signatures in Global and E-Commerce Act, and its (d) In such an adversarial proceeding, the following
implementing Rules and Regulations shall apply to persons involved or previously involved in a mediation
proceeding contemplated in this Act. may not be compelled to disclose confidential
information obtained during mediation: (1) the parties
SEC. 5. Liability of ADR Provider and Practitioner. - to the dispute; (2) the mediator or mediators; (3) the
The ADR providers and practitioners shall have the counsel for the parties; (4) the nonparty participants;
same civil liability for the Acts done in the (5) any persons hired or engaged in connection with
performance of then duties as that of public officers as the mediation as secretary, stenographer, clerk or
provided in Section 38 (1), Chapter 9, Book of the assistant; and (6) any other person who obtains or
Administrative Code of 1987.
PAGE 44

possesses confidential information by reason of in which a public agency is protecting the interest of an
his/her profession. individual protected by law; but this exception does
not apply where a child protection matter is referred to
(e) The protections of this Act shall continue to apply mediation by a court or a public agency participates in
even of a mediator is found to have failed to act the child protection mediation;
impartially.
(6) sought or offered to prove or disprove a claim or
(f) a mediator may not be called to testify to provide complaint of professional misconduct or malpractice
information gathered in mediation. A mediator who is filed against mediator in a proceeding; or
wrongfully subpoenaed shall be reimbursed the full
cost of his attorney's fees and related expenses. (7) sought or offered to prove or disprove a claim of
complaint of professional misconduct of malpractice
SEC. 10. Waiver of Confidentiality. - A privilege arising filed against a party, nonparty participant, or
from the confidentiality of information may be waived representative of a party based on conduct occurring
in a record, or orally during a proceeding by the during a mediation.
mediator and the mediation parties.
(b) There is no privilege under Section 9 if a court or
A privilege arising from the confidentiality of administrative agency, finds, after a hearing in camera,
information may likewise be waived by a nonparty that the party seeking discovery of the proponent of
participant if the information is provided by such the evidence has shown that the evidence is not
nonparty participant. otherwise available, that there is a need for the
evidence that substantially outweighs the interest in
A person who discloses confidential information shall protecting confidentiality, and the mediation
be precluded from asserting the privilege under communication is sought or offered in:
Section 9 of this Chapter to bar disclosure of the rest of
the information necessary to a complete understanding (1) a court proceeding involving a crime or felony; or
of the previously disclosed information. If a person
suffers loss or damages in a judicial proceeding against (2) a proceeding to prove a claim or defense that under
the person who made the disclosure. the law is sufficient to reform or avoid a liability on a
contract arising out of the mediation.
A person who discloses or makes a representation
about a mediation is preclude from asserting the (c) A mediator may not be compelled to provide
privilege under Section 9, to the extent that the evidence of a mediation communication or testify in
communication prejudices another person in the such proceeding.
proceeding and it is necessary for the person
prejudiced to respond to the representation of (d) If a mediation communication is not privileged
disclosure. under an exception in subsection (a) or (b), only the
portion of the communication necessary for the
SEC. 11. Exceptions to Privilege. - application of the exception for nondisclosure may be
admitted. The admission of particular evidence for the
(a) There is no privilege against disclosure under limited purpose of an exception does not render that
Section 9 if mediation communication is: evidence, or any other mediation communication,
admissible for any other purpose.
(1) in an agreement evidenced by a record
authenticated by all parties to the agreement; SEC. 12. Prohibited Mediator Reports. - A mediator
may not make a report, assessment, evaluation,
(2) available to the public or that is made during a recommendation, finding, or other communication
session of a mediation which is open, or is required by regarding a mediation to a court or agency or other
law to be open, to the public; authority that make a ruling on a dispute that is the
subject of a mediation, except:
(3) a threat or statement of a plan to inflict bodily
injury or commit a crime of violence; (a) Where the mediation occurred or has terminated,
or where a settlement was reached.
(4) internationally used to plan a crime, attempt to
commit, or commit a crime, or conceal an ongoing (b) As permitted to be disclosed under Section 13 of
crime or criminal activity; this Chapter.

(5) sought or offered to prove or disprove abuse,


neglect, abandonment, or exploitation in a proceeding
PAGE 45

SEC. 13. Mediator's Disclosure and Conflict of Interest.


- The mediation shall be guided by the following In case of conflict between the institutional mediation
operative principles: rules and the provisions of this Act, the latter shall
prevail.
(a) Before accepting a mediation, an individual who is
requested to serve as a mediator shall: SEC. 17. Enforcement of Mediated Settlement
Agreement. - The mediation shall be guided by the
(1) make an inquiry that is reasonable under the following operative principles:
circumstances to determinate whether there are any
known facts that a reasonable individual would (a) A settlement agreement following successful
consider likely to affect the impartiality of the mediation shall be prepared by the parties with the
mediator, including a financial or personal interest in assistance of their respective counsel, if any, and by the
the outcome of the mediation and any existing or past mediator.
relationship with a party or foreseeable participant in
the mediation; and The parties and their respective counsels shall
endeavor to make the terms and condition thereof
(2) disclosure to the mediation parties any such fact complete and make adequate provisions for the
known or learned as soon as is practical before contingency of breach to avoid conflicting
accepting a mediation. interpretations of the agreement.

(b) If a mediation learns any fact described in (b) The parties and their respective counsels, if any,
paragraph (a) (1) of this section after accepting a shall sign the settlement agreement. The mediator
mediation, the mediator shall disclose it as soon as shall certify that he/she explained the contents of the
practicable. settlement agreement to the parties in a language
known to them.
At the request of a mediation party, an individual who
is requested to serve as mediator shall disclose his/her (c) If the parties so desire, they may deposit such
qualifications to mediate a dispute. settlement agreement with the appropriate Clerk of a
Regional Trial Court of the place where one of the
This Act does not require that a mediator shall have parties resides. Where there is a need to enforce the
special qualifications by background or profession settlement agreement, a petition may be filed by any of
unless the special qualifications of a mediator are the parties with the same court, in which case, the
required in the mediation agreement or by the court shall proceed summarily to hear the petition, in
mediation parties. accordance with such rules of procedure as may be
promulgated by the Supreme Court.
SEC. 14. Participation in Mediation. - Except as
otherwise provided in this Act, a party may designate a (d) The parties may agree in the settlement agreement
lawyer or any other person to provide assistance in the that the mediator shall become a sole arbitrator for the
mediation. A lawyer of this right shall be made in dispute and shall treat the settlement agreement as an
writing by the party waiving it. A waiver of arbitral award which shall be subject to enforcement
participation or legal representation may be rescinded under Republic Act No. 876, otherwise known as the
at any time. Arbitration Law, notwithstanding the provisions of
Executive Order No. 1008 for mediated dispute outside
SEC. 15. Place of Mediation. - The parties are free to of the CIAC.
agree on the place of mediation. Failing such
agreement, the place of mediation shall be any place CHAPTER 3 - OTHER ADR FORMS
convenient and appropriate to all parties.
SEC. 18. Referral of Dispute to other ADR Forms. - The
SEC. 16. Effect of Agreement to Submit Dispute to parties may agree to refer one or more or all issues
Mediation Under Institutional Rules. - An agreement arising in a dispute or during its pendency to other
to submit a dispute to mediation by any institution forms of ADR such as but not limited to (a) the
shall include an agreement to be bound by the internal evaluation of a third person or (b) a mini-trial, (c)
mediation and administrative policies of such mediation-arbitration, or a combination thereof.
institution. Further, an agreement to submit a dispute
to mediation under international mediation rule shall For purposes of this Act, the use of other ADR forms
be deemed to include an agreement to have such rules shall be governed by Chapter 2 of this Act except where
govern the mediation of the dispute and for the it is combined with arbitration in which case it shall
mediator, the parties, their respective counsel, and likewise be governed by Chapter 5 of this Act.
nonparty participants to abide by such rules.
PAGE 46

CHAPTER 4 - INTERNATIONAL COMMERCIAL is shown that the applicant shall be materially


ARBITRATION prejudiced by an authorized disclosure thereof.

SEC. 19. Adoption of the Model Law on International SEC. 24. Referral to Arbitration. - A court before which
Commercial Arbitration. - International commercial an action is brought in a matter which is the subject
arbitration shall be governed by the Model Law on matter of an arbitration agreement shall, if at least one
International Commercial Arbitration (the "Model party so requests not later that the pre-trial
Law") adopted by the United Nations Commission on conference, or upon the request of both parties
International Trade Law on June 21, 1985 (United thereafter, refer the parties to arbitration unless it
Nations Document A/40/17) and recommended finds that the arbitration agreement is null and void,
approved on December 11, 1985, copy of which is inoperative or incapable of being performed.
hereto attached as Appendix "A".
SEC. 25. Interpretation of the Act. - In interpreting the
SEC. 20. Interpretation of Model Law. - In interpreting Act, the court shall have due regard to the policy of the
the Model Law, regard shall be had to its international law in favor of arbitration. Where action is commenced
origin and to the need for uniformity in its by or against multiple parties, one or more of whom
interpretation and resort may be made to the travaux are parties who are bound by the arbitration
preparatories and the report of the Secretary General agreement although the civil action may continue as to
of the United Nations Commission on International those who are not bound by such arbitration
Trade Law dated March 25, 1985 entitled, agreement.
"International Commercial Arbitration: Analytical
Commentary on Draft Trade identified by reference SEC. 26. Meaning of "Appointing Authority.". -
number A/CN. 9/264." "Appointing Authority" as used in the Model Law shall
mean the person or institution named in the
SEC. 21. Commercial Arbitration. - An arbitration is arbitration agreement as the appointing authority; or
"commercial" if it covers matters arising from all the regular arbitration arbitration institution under
relationships of a commercial nature, whether whose rules the arbitration is agreed to be conducted.
contractual or not. Relationships of a transactions: any Where the parties have agreed to submit their dispute
trade transaction for the supply or exchange of goods to institutional arbitration rules, and unless they have
or services; distribution agreements; construction of agreed to a different procedure, they shall be deemed
works; commercial representation or agency; to have agreed to procedure under such arbitration
factoring; leasing, consulting; engineering; licensing; rules for the selection and appointment of arbitrators.
investment; financing; banking; insurance; joint In ad hoc arbitration, the default appointment of an
venture and other forms of industrial or business arbitrator shall be made by the National President of
cooperation; carriage of goods or passengers by air, the Integrated Bar of the Philippines (IBP) or his duly
sea, rail or road. authorized representative.

SEC. 22. Legal Representation in International SEC. 27. What Functions May be Performed by
Arbitration. - In international arbitration conducted in Appointing Authority. - The functions referred to in
the Philippines, a party may be presented by any Articles 11(3), 11(4), 13(3) and 14(1) of the Model Law
person of his choice. Provided, that such shall be performed by the Appointing Authority, unless
representative, unless admitted to the practice of law the latter shall fail or refuse to act within thirty (30)
in the Philippines, shall not be authorized to appear as days from receipt of the request in which case the
counsel in any Philippine court, or any other quasi- applicant may renew the application with the Court.
judicial body whether or not such appearance is in
relation to the arbitration in which he appears. SEC. 28. Grant of Interim Measure of Protection. -

SEC. 23. Confidential of Arbitration Proceedings. - The (a) It is not incompatible with an arbitration
arbitration proceedings, including the records, agreement for a party to request, before constitution of
evidence and the arbitral award, shall be considered the tribunal, from a Court an interim measure of
confidential and shall not be published except (1) with protection and for the Court to grant such measure.
the consent of the parties, or (2) for the limited After constitution of the arbitral tribunal and during
purpose of disclosing to the court of relevant arbitral proceedings, a request for an interim measure
documents in cases where resort to the court is allowed of protection or modification thereof, may be made
herein. Provided, however, that the court in which the with the arbitral tribunal or to the extent that the
action or the appeal is pending may issue a protective arbitral tribunal has no power to act or is unable to act
order to prevent or prohibit disclosure of documents or effectively, the request may be made with the Court.
information containing secret processes, The arbitral tribunal is deemed constituted when the
developments, research and other information where it sole arbitrator or the third arbitrator who has been
PAGE 47

nominated, has accepted the nomination and written enforcing an interim measures ordered by an arbitral
communication of said nomination and acceptance has tribunal.
been received by the party making request.
SEC. 30. Place of Arbitration. - The parties are free to
(b) The following rules on interim or provisional relief agree on the place of arbitration. Failing such
shall be observed: agreement, the place of arbitration shall be in Metro
Manila, unless the arbitral tribunal, having regard to
(1) Any party may request that provision relief be the circumstances of the case, including the
granted against the adverse party: convenience of the parties shall decide on a different
place of arbitration.
(2) Such relief may be granted:
The arbitral tribunal may, unless otherwise agreed by
(i) to prevent irreparable loss or injury: the parties, meet at any place it considers appropriate
for consultation among its members, for hearing
(ii) to provide security for the performance of any witnesses, experts, or the parties, or for inspection of
obligation; goods, other property or documents.

(iii) to produce or preserve any evidence; or SEC. 31. Language of the Arbitration. - The parties are
free to agree on the language or languages to be used in
(iv) to compel any other appropriate act or omission. the arbitral proceedings. Failing such agreement, the
language to be used shall be English in international
(3) The order granting provisional relief may be arbitration, and English or Filipino for domestic
conditioned upon the provision of security or any act arbitration, unless the arbitral tribunal shall determine
or omission specified in the order. a different or another language or languages to be used
in the proceedings. This agreement or determination,
(4) Interim or provisional relief is requested by written unless otherwise specified therein, shall apply to any
application transmitted by reasonable means to the written statement by a party, any hearing and any
Court or arbitral tribunal as the case may be and the award, decision or other communication by the
party against whom the relief is sought, describing in arbitral tribunal.
appropriate detail the precise relief, the party against
whom the relief is requested, the grounds for the relief, The arbitral tribunal may order that any documentary
and evidence supporting the request. evidence shall be accompanied by a translation into the
language or languages agreed upon by the parties or
(5) The order shall be binding upon the parties. determined in accordance with paragraph 1 of this
section.
(6) Either party may apply with the Court for
assistance in Implementing or enforcing an interim CHAPTER 5 - DOMESTIC ARBITRATION
measure ordered by an arbitral tribunal.
SEC. 32. Law Governing Domestic Arbitration. -
(7) A party who does not comply with the order shall Domestic arbitration shall continue to be governed by
be liable for all damages resulting from Republic Act No. 876, otherwise known as "The
noncompliance, including all expenses, and reasonable Arbitration Law" as amended by this Chapter. The
attorney's fees, paid in obtaining the order's judicial term "domestic arbitration" as used herein shall mean
enforcement. an arbitration that is not international as defined in
Article (3) of the Model Law.
SEC. 29. Further Authority for Arbitrator to Grant
Interim Measure of Protection. - Unless otherwise SEC. 33. Applicability to Domestic Arbitration. -
agreed by the parties, the arbitral tribunal may, at the Article 8, 10, 11, 12, 13, 14, 18 and 19 and 29 to 32 of
request of a party, order any party to take such interim the Model Law and Section 22 to 31 of the preceding
measures of protection as the arbitral tribunal may Chapter 4 shall apply to domestic arbitration.
consider necessary in respect of the subject matter of
the dispute following the rules in Section 28, CHAPTER 6 - ARBITRATION OF CONSTRUCTION
paragraph 2. Such interim measures may include but DISPUTES
shall not be limited to preliminary injuction directed
against a party, appointment of receivers or detention, SEC. 34. Arbitration of Construction Disputes:
preservation, inspection of property that is the subject Governing Law. - The arbitration of construction
of the dispute in arbitration. Either party may apply disputes shall be governed by Executive Order No.
with the Court for assistance in implementing or 1008, otherwise known as the Constitution Industry
Arbitration Law.
PAGE 48

court a written agreement exclusive for the Court,


SEC. 35. Coverage of the Law. - Construction disputes rather than the CIAC, to resolve the dispute.
which fall within the original and exclusive jurisdiction
of the Construction Industry Arbitration Commission CHAPTER 7 - JUDICIAL REVIEW OF ARBITRAL
(the "Commission") shall include those between or AWARDS
among parties to, or who are otherwise bound by, an
arbitration agreement, directly or by reference whether A. DOMESTIC AWARDS
such parties are project owner, contractor,
subcontractor, quantity surveyor, bondsman or issuer SEC. 40. Confirmation of Award. - The confirmation of
of an insurance policy in a construction project. a domestic arbitral award shall be governed by Section
23 of R.A. 876.
The Commission shall continue to exercise original
and exclusive jurisdiction over construction disputes A domestic arbitral award when confirmed shall be
although the arbitration is "commercial" pursuant to enforced in the same manner as final and executory
Section 21 of this Act. decisions of the Regional Trial Court.

SEC. 36. Authority to Act as Mediator or Arbitrator. - The confirmation of a domestic award shall be made by
By written agreement of the parties to a dispute, an the regional trial court in accordance with the Rules of
arbitrator may act as mediator and a mediator may act Procedure to be promulgated by the Supreme Court.
as arbitrator. The parties may also agree in writing
that, following a successful mediation, the mediator A CIAC arbitral award need not be confirmed by the
shall issue the settlement agreement in the form of an regional trial court to be executory as provided under
arbitral award. E.O. No. 1008.

SEC. 37. Appointment of Foreign Arbitrator. - The SEC. 41. Vacation Award. - A party to a domestic
Construction Industry Arbitration Commission (CIAC) arbitration may question the arbitral award with the
shall promulgate rules to allow for the appointment of appropriate regional trial court in accordance with the
a foreign arbitrator or coarbitrator or chairman of a rules of procedure to be promulgated by the Supreme
tribunal a person who has not been previously Court only on those grounds enumerated in Section 25
accredited by CIAC: Provided, That: of Republic Act No. 876. Any other ground raised
against a domestic arbitral award shall be disregarded
(a) the dispute is a construction dispute in which one by the regional trial court.
party is an international party
B. FOREIGN ARBITRAL AWARDS
(b) the person to be appointed agreed to abide by the
arbitration rules and policies of CIAC; SEC. 42. Application of the New York Convention. -
The New York Convention shall govern the recognition
(c) he/she is either coarbitrator upon the nomination and enforcement of arbitral awards covered by the said
of the international party; or he/she is the common Convention.
choice of the two CIAC-accredited arbitrators first
appointed one of whom was nominated by the The recognition and enforcement of such arbitral
international party; and awards shall be filled with regional trial court in
accordance with the rules of procedure to be
(d) the foreign arbitrator shall be of different promulgated by the Supreme Court. Said procedural
nationality from the international party. rules shall provide that the party relying on the award
or applying for its enforcement shall file with the court
SEC. 38. Applicability to Construction Arbitration. - the original or authenticated copy of the award and the
The provisions of Sections 17 (d) of Chapter 2, and arbitration agreement. If the award or agreement is
Section 28 and 29 of this Act shall apply to arbitration not made in any of the official languages, the party
of construction disputes covered by this Chapter. shall supply a duly certified translation thereof into
any of such languages.
SEC. 39. Court to Dismiss Case Involving a
Construction Dispute. - A regional trial court which a The applicant shall establish that the country in which
construction dispute is filed shall, upon becoming foreign arbitration award was made is a party to the
aware, not later than the pretrial conference, that the New York Convention.
parties had entered into an arbitration to be conducted
by the CIAC, unless both parties, assisted by their If the application for rejection or suspension of
respective counsel, shall submit to the regional trial enforcement of an award has been made, the regional
trial court may, if it considers it proper, vacate its
PAGE 49

decision and may also, on the application of the party filled with the regional trial court (i) where arbitration
claiming recognition or enforcement of the award, proceedings are conducted; (ii) where the asset to be
order the party to provide appropriate security. attached or levied upon, or the act to be enjoined is
located; (iii) where any of the parties to the dispute
SEC. 43. Recognition and Enforcement of Foreign resides or has his place of business; or (iv) in the
Arbitral Awards Not Covered by the New York National Judicial Capital Region, at the option of the
Convention. - The recognition and enforcement of applicant.
foreign arbitral awards not covered by the New York
Convention shall be done in accordance with SEC. 48. Notice of Proceeding to Parties. - In a special
procedural rules to be promulgated by the Supreme proceeding for recognition and enforcement of an
Court. The Court may, grounds of comity and arbitral award, the Court shall send notice to the
reciprocity, recognize and enforce a nonconvention parties at their address of record in the arbitration, or
award as a convention award. if any party cannot be served notice at such address, at
such party's last known address. The notice shall be
SEC. 44. Foreign Arbitral Award Not Foreign sent at least fifteen (15) days before the date set for the
Judgment. - A foreign arbitral award when confirmed initial hearing of the application.
by a court of a foreign country, shall be recognized and
enforced as a foreign arbitral award and not a CHAPTER 8 - MISCELLANEOUS PROVISIONS
judgment of a foreign court.
SEC. 49. Office for Alternative Dispute Resolution. -
A foreign arbitral award, when confirmed by the There is hereby established the Office for Alternative
regional trial court, shall be enforced as a foreign Dispute Resolution as an attached agency to the
arbitral award and not as a judgment of a foreign Department of Justice (DOJ) which shall have a
court. Secretariat to be headed by an executive director. The
executive director shall be appointed by the President
A foreign arbitral award, when confirmed by the of the Philippines.
regional trial court, shall be enforced in the same
manner as final and executory decisions of courts of The objective of the office are:
law of the Philippines.
(a) to promote, develop and expand the use of ADR in
SEC. 45. Rejection of a Foreign Arbitral Award. - A the private and public sectors; and
party to a foreign arbitration proceeding may oppose
an application for recognition and enforcement of the To assist the government to monitor, study and
arbitral award in accordance with the procedural rules evaluate the use by the public and the private sector of
to be promulgated by the Supreme Court only on those ADR, and recommend to Congress needful statutory
grounds enumerated under Article V of the New York changes to develop. Strengthen and improve ADR
Convention. Any other ground raised shall be practices in accordance with world standards.
disregarded by the regional trial court.
SEC. 50. Powers and Functions of the Office for
SEC. 46. Appeal from Court Decisions on Arbitral Alternative Dispute Resolution. - The Office for
Awards. - A decision of the regional trial court Alternative Dispute Resolution shall have the following
confirming, vacating, setting aside, modifying or powers and functions:
correcting an arbitral award may be appealed to the
Court of Appeals in accordance with the rules of (a) To formulate standards for the training of the ADR
procedure to be promulgated by the Supreme Court. practitioners and service providers;

The losing party who appeals from the judgment of the (b) To certify that such ADR practitioners and ADR
court confirming an arbitral award shall required by service providers have undergone the professional
the appealant court to post counterbond executed in training provided by the office;
favor of the prevailing party equal to the amount of the
award in accordance with the rules to be promulgated (c) To coordinate the development, implementation,
by the Supreme Court. monitoring, and evaluation of government ADR
programs;
SEC. 47. Venue and Jurisdiction. - Proceedings for
recognition and enforcement of an arbitration (d) To charge fees for their services; and
agreement or for vacation, setting aside, correction or
modification of an arbitral award, and any application (e) To perform such acts as may be necessary to carry
with a court for arbitration assistance and supervision into effect the provisions of this Act.
shall be deemed as special proceedings and shall be
PAGE 50

SEC. 51. Appropriations. - The amount necessary to


carry out the provisions of this Act shall be included in SEC. 56. Effectivity. - This act shall take effect fifteen
the General Appropriations Act of the year following days (15) after its publication in at least two (2)
its enactment into law and thereafter. national newspapers of general circulation.

SEC. 52. Implementing Rules and Regulations (IRR). -


Within one (1) month after the approval of this Act, the
secretary of justice shall convene a committee that
shall formulate the appropriate rules and regulations
3.3 REPUBLIC ACT NO. 876
necessary for the implementation of this Act. The ARBITRATION LAW OF THE
committee, composed of representatives from: PHILIPPINES
(a) the Department of Justice; AN ACT TO AUTHORIZE THE MAKING OF
ARBITRATION AND SUBMISSION AGREEMENTS,
(b) the Department of Trade and Industry; TO PROVIDE FOR THE APPOINTMENT OF
ARBITRATORS AND THE PROCEDURE FOR
(c) the Department of the Interior and Local ARBITRATION IN CIVIL CONTROVERSIES, AND
Government; FOR OTHER PURPOSES

(d) the president of the Integrated Bar of the Section 1. Short Title. - This Act shall be known as "The
Philippines; Arbitration Law."

(e) A representative from the arbitration profession; Section 2. Persons and matters subject to arbitration. -
and Two or more persons or parties may submit to the
arbitration of one or more arbitrators any controversy
(f) A representative from the mediation profession; existing between them at the time of the submission
and and which may be the subject of an action, or the
parties to any contract may in such contract agree to
(g) A representative from the ADR organizations settle by arbitration a controversy thereafter arising
between them. Such submission or contract shall be
shall within three (3) months after convening, submit valid, enforceable and irrevocable, save upon such
the IRR to the Joint Congressional Oversight grounds as exist at law for the revocation of any
Committee for review and approval. The Oversight contract.
Committee shall be composed of the chairman of the
Senate Committee on Justice and Human Rights, Such submission or contract may include question
chairman of the House Committee on Justice, and one arising out of valuations, appraisals or other
(1) member each from the majority and minority of controversies which may be collateral, incidental,
both Houses. precedent or subsequent to any issue between the
parties.
The Joint Oversight Committee shall become functus
officio upon approval of the IRR. A controversy cannot be arbitrated where one of the
parties to the controversy is an infant, or a person
SEC. 53. Applicability of the Katarungan judicially declared to be incompetent, unless the
Pambarangay. - This Act shall not be interpreted to appropriate court having jurisdiction approve a
repeal, amend or modify the jurisdiction of the petition for permission to submit such controversy to
Katarungan Pambarangay under Republic Act No. arbitration made by the general guardian or guardian
7160, otherwise known as the Local Government Code ad litem of the infant or of the incompetent.
of 1991.
But where a person capable of entering into a
SEC. 54. Repealing Clause. - All laws, decrees, submission or contract has knowingly entered into the
executive orders, rules and regulations which are same with a person incapable of so doing, the objection
inconsistent with the provisions of this Act are hereby on the ground of incapacity can be taken only in behalf
repealed, amended or modified accordingly. of the person so incapacitated.

SEC. 55. Separability Clause. - If for any reason or Section 3. Controversies or cases not subject to the
reasons, any portion or provision of this Act shall be provisions of this Act. - This Act shall not apply to
held unconstitutional or invalid, all other parts or controversies and to cases which are subject to the
provisions not affected shall thereby continue to jurisdiction of the Court of Industrial Relations or
remain in full force and effect.
PAGE 51

which have been submitted to it as provided by First Instance having jurisdiction, of the submission
Commonwealth Act Numbered One hundred and agreement, setting forth the nature of the controversy,
three, as amended. and the amount involved, if any. Such submission may
be filed by any party and shall be duly executed by both
Section 4. Form of arbitration agreement. - A contract parties.
to arbitrate a controversy thereafter arising between
the parties, as well as a submission to arbitrate an (d) In the event that one party neglects, fails or refuses
existing controversy shall be in writing and subscribed to arbitrate under a submission agreement, the
by the party sought to be charged, or by his lawful aggrieved party shall follow the procedure prescribed
agent. in subparagraphs (a) and (b) of this section.

The making of a contract or submission for arbitration Section 6. Hearing by court. - A party aggrieved by the
described in section two hereof, providing for failure, neglect or refusal of another to perform under
arbitration of any controversy, shall be deemed a an agreement in writing providing for arbitration may
consent of the parties to the jurisdiction of the Court of petition the court for an order directing that such
First Instance of the province or city where any of the arbitration proceed in the manner provided for in such
parties resides, to enforce such contract or submission. agreement. Five days notice in writing of the hearing of
such application shall be served either personally or by
Section 5. Preliminary procedure. - An arbitration shall registered mail upon the party in default. The court
be instituted by: shall hear the parties, and upon being satisfied that the
making of the agreement or such failure to comply
(a) In the case of a contract to arbitrate future therewith is not in issue, shall make an order directing
controversies by the service by either party upon the the parties to proceed to arbitration in accordance with
other of a demand for arbitration in accordance with the terms of the agreement. If the making of the
the contract. Such demand shall be set forth the nature agreement or default be in issue the court shall
of the controversy, the amount involved, if any, and the proceed to summarily hear such issue. If the finding be
relief sought, together with a true copy of the contract that no agreement in writing providing for arbitration
providing for arbitration. The demand shall be served was made, or that there is no default in the proceeding
upon any party either in person or by registered mail. thereunder, the proceeding shall be dismissed. If the
In the event that the contract between the parties finding be that a written provision for arbitration was
provides for the appointment of a single arbitrator, the made and there is a default in proceeding thereunder,
demand shall be set forth a specific time within which an order shall be made summarily directing the parties
the parties shall agree upon such arbitrator. If the to proceed with the arbitration in accordance with the
contract between the parties provides for the terms thereof.
appointment of three arbitrators, one to be selected by
each party, the demand shall name the arbitrator The court shall decide all motions, petitions or
appointed by the party making the demand; and shall applications filed under the provisions of this Act,
require that the party upon whom the demand is made within ten days after such motions, petitions, or
shall within fifteen days after receipt thereof advise in applications have been heard by it.
writing the party making such demand of the name of
the person appointed by the second party; such notice Section 7. Stay of civil action. - If any suit or
shall require that the two arbitrators so appointed proceeding be brought upon an issue arising out of an
must agree upon the third arbitrator within ten days agreement providing for the arbitration thereof, the
from the date of such notice. court in which such suit or proceeding is pending,
upon being satisfied that the issue involved in such suit
(b) In the event that one party defaults in answering or proceeding is referable to arbitration, shall stay the
the demand, the aggrieved party may file with the action or proceeding until an arbitration has been had
Clerk of the Court of First Instance having jurisdiction in accordance with the terms of the agreement:
over the parties, a copy of the demand for arbitration Provided, That the applicant, for the stay is not in
under the contract to arbitrate, with a notice that the default in proceeding with such arbitration.
original demand was sent by registered mail or
delivered in person to the party against whom the Section 8. Appointment of arbitrators. - If, in the
claim is asserted. Such demand shall set forth the contract for arbitration or in the submission described
nature of the controversy, the amount involved, if any, in section two, provision is made for a method of
and the relief sought, and shall be accompanied by a naming or appointing an arbitrator or arbitrators, such
true copy of the contract providing for arbitration. method shall be followed; but if no method be
provided therein the Court of First Instance shall
(c) In the case of the submission of an existing designate an arbitrator or arbitrators.
controversy by the filing with the Clerk of the Court of
PAGE 52

The Court of First Instance shall appoint an arbitrator No party shall select as an arbitrator any person to act
or arbitrators, as the case may be, in the following as his champion or to advocate his cause.
instances:
If, after appointment but before or during hearing, a
(a) If the parties to the contract or submission are person appointed to serve as an arbitrator shall
unable to agree upon a single arbitrator; or discover any circumstances likely to create a
presumption of bias, or which he believes might
(b) If an arbitrator appointed by the parties is disqualify him as an impartial arbitrator, the arbitrator
unwilling or unable to serve, and his successor has not shall immediately disclose such information to the
been appointed in the manner in which he was parties. Thereafter the parties may agree in writing:
appointed; or
(a) to waive the presumptive disqualifying
(c) If either party to the contract fails or refuses to circumstances; or
name his arbitrator within fifteen days after receipt of
the demand for arbitration; or (b) to declare the office of such arbitrator vacant. Any
such vacancy shall be filled in the same manner as the
(d) If the arbitrators appointed by each party to the original appointment was made.
contract, or appointed by one party to the contract and
by the proper Court, shall fail to agree upon or to select Section 11. Challenge of arbitrators. - The arbitrators
the third arbitrator. may be challenged only for the reasons mentioned in
the preceding section which may have arisen after the
(e) The court shall, in its discretion appoint one or arbitration agreement or were unknown at the time of
three arbitrators, according to the importance of the arbitration.
controversy involved in any of the preceding cases in
which the agreement is silent as to the number of The challenge shall be made before them.
arbitrators.
If they do not yield to the challenge, the challenging
(f) Arbitrators appointed under this section shall either party may renew the challenge before the Court of First
accept or decline their appointments within seven days Instance of the province or city in which the challenged
of the receipt of their appointments. In case of arbitrator, or, any of them, if there be more than one,
declination or the failure of an arbitrator or arbitrators resides. While the challenging incident is discussed
to duly accept their appointments the parties or the before the court, the hearing or arbitration shall be
court, as the case may be, shall proceed to appoint a suspended, and it shall be continued immediately after
substitute or substitutes for the arbitrator or the court has delivered an order on the challenging
arbitrators who decline or failed to accept his or their incident.
appointments.
Section 12. Procedure by arbitrators. - Subject to the
Section 9. Appointment of additional arbitrators. - terms of the submission or contract, if any are
Where a submission or contract provides that two or specified therein, are arbitrators selected as prescribed
more arbitrators therein designated or to be thereafter herein must, within five days after appointment if the
appointed by the parties, may select or appoint a parties to the controversy reside within the same city
person as an additional arbitrator, the selection or or province, or within fifteen days after appointment if
appointment must be in writing. Such additional the parties reside in different provinces, set a time and
arbitrator must sit with the original arbitrators upon place for the hearing of the matters submitted to them,
the hearing. and must cause notice thereof to be given to each of the
parties. The hearing can be postponed or adjourned by
Section 10. Qualifications of arbitrators. - Any person the arbitrators only by agreement of the parties;
appointed to serve as an arbitrator must be of legal otherwise, adjournment may be ordered by the
age, in full-enjoyment of his civil rights and know how arbitrators upon their own motion only at the hearing
to read and write. No person appointed to served as an and for good and sufficient cause. No adjournment
arbitrator shall be related by blood or marriage within shall extend the hearing beyond the day fixed in the
the sixth degree to either party to the controversy. No submission or contract for rendering the award, unless
person shall serve as an arbitrator in any proceeding if the time so fixed is extended by the written agreement
he has or has had financial, fiduciary or other interest of the parties to the submission or contract or their
in the controversy or cause to be decided or in the attorneys, or unless the parties have continued with
result of the proceeding, or has any personal bias, the arbitration without objection to such adjournment.
which might prejudice the right of any party to a fair
and impartial award. The hearing may proceed in the absence of any party
who, after due notice, fails to be present at such
PAGE 53

hearing or fails to obtain an adjournment thereof. An Section 15. Hearing by arbitrators. - Arbitrators may,
award shall not be made solely on the default of a at the commencement of the hearing, ask both parties
party. The arbitrators shall require the other party to for brief statements of the issues in controversy and/or
submit such evidence as they may require for making an agreed statement of facts. Thereafter the parties
an award. may offer such evidence as they desire, and shall
produce such additional evidence as the arbitrators
No one other than a party to said arbitration, or a shall require or deem necessary to an understanding
person in the regular employ of such party duly and determination of the dispute. The arbitrators shall
authorized in writing by said party, or a practicing be the sole judge of the relevancy and materiality of the
attorney-at-law, shall be permitted by the arbitrators evidence offered or produced, and shall not be bound
to represent before him or them any party to the to conform to the Rules of Court pertaining to
arbitration. Any party desiring to be represented by evidence. Arbitrators shall receive as exhibits in
counsel shall notify the other party or parties of such evidence any document which the parties may wish to
intention at least five days prior to the hearing. submit and the exhibits shall be properly identified at
the time of submission. All exhibits shall remain in the
The arbitrators shall arrange for the taking of a custody of the Clerk of Court during the course of the
stenographic record of the testimony when such a arbitration and shall be returned to the parties at the
record is requested by one or more parties, and when time the award is made. The arbitrators may make an
payment of the cost thereof is assumed by such party ocular inspection of any matter or premises which are
or parties. in dispute, but such inspection shall be made only in
the presence of all parties to the arbitration, unless any
Persons having a direct interest in the controversy party who shall have received notice thereof fails to
which is the subject of arbitration shall have the right appear, in which event such inspection shall be made
to attend any hearing; but the attendance of any other in the absence of such party.
person shall be at the discretion of the arbitrators.
Section 16. Briefs. - At the close of the hearings, the
Section 13. Oath of arbitrators. - Before hearing any arbitrators shall specifically inquire of all parties
testimony, arbitrators must be sworn, by any officer whether they have any further proof or witnesses to
authorized by law to administer an oath, faithfully and present; upon the receipt of a negative reply from all
fairly to hear and examine the matters in controversy parties, the arbitrators shall declare the hearing closed
and to make a just award according to the best of their unless the parties have signified an intention to file
ability and understanding. Arbitrators shall have the briefs. Then the hearing shall be closed by the
power to administer the oaths to all witnesses arbitrations after the receipt of briefs and/or reply
requiring them to tell the whole truth and nothing but briefs. Definite time limit for the filing of such briefs
the truth in any testimony which they may give in any must be fixed by the arbitrators at the close of the
arbitration hearing. This oath shall be required of hearing. Briefs may filed by the parties within fifteen
every witness before any of his testimony is heard. days after the close of the oral hearings; the reply
briefs, if any, shall be filed within five days following
Section 14. Subpoena and subpoena duces tecum. - such fifteen-day period.
Arbitrators shall have the power to require any person
to attend a hearing as a witness. They shall have the Section 17. Reopening of hearing. - The hearing may be
power to subpoena witnesses and documents when the reopened by the arbitrators on their own motion or
relevancy of the testimony and the materiality thereof upon the request of any party, upon good cause, shown
has been demonstrated to the arbitrators. Arbitrators at any time before the award is rendered. When
may also require the retirement of any witness during hearings are thus reopened the effective date for the
the testimony of any other witness. All of the closing of the hearings shall be the date of the closing
arbitrators appointed in any controversy must attend of the reopened hearing.
all the hearings in that matter and hear all the
allegations and proofs of the parties; but an award by Section 18. Proceeding in lieu of hearing. - The parties
the majority of them is valid unless the concurrence of to a submission or contract to arbitrate may, by written
all of them is expressly required in the submission or agreement, submit their dispute to arbitration by other
contract to arbitrate. The arbitrator or arbitrators shall than oral hearing. The parties may submit an agreed
have the power at any time, before rendering the statement of facts. They may also submit their
award, without prejudice to the rights of any party to respective contentions to the duly appointed
petition the court to take measures to safeguard and/or arbitrators in writing; this shall include a statement of
conserve any matter which is the subject of the dispute facts, together with all documentary proof. Parties may
in arbitration. also submit a written argument. Each party shall
provide all other parties to the dispute with a copy of
all statements and documents submitted to the
PAGE 54

arbitrators. Each party shall have an opportunity to specified, the Court of First Instance for the province
reply in writing to any other party's statements and or city in which one of the parties resides or is doing
proofs; but if such party fails to do so within seven business, or in which the arbitration was held, shall
days after receipt of such statements and proofs, he have jurisdiction. Any application to the court, or a
shall be deemed to have waived his right to reply. Upon judge thereof, hereunder shall be made in manner
the delivery to the arbitrators of all statements and provided for the making and hearing of motions,
documents, together with any reply statements, the except as otherwise herein expressly provided.
arbitrators shall declare the proceedings in lieu of
hearing closed. Section 23. Confirmation of award. - At any time
within one month after the award is made, any party to
Section 19. Time for rendering award. - Unless the the controversy which was arbitrated may apply to the
parties shall have stipulated by written agreement the court having jurisdiction, as provided in section
time within which the arbitrators must render their twenty-eight, for an order confirming the award; and
award, the written award of the arbitrators shall be thereupon the court must grant such order unless the
rendered within thirty days after the closing of the award is vacated, modified or corrected, as prescribed
hearings or if the oral hearings shall have been waived, herein. Notice of such motion must be served upon the
within thirty days after the arbitrators shall have adverse party or his attorney as prescribed by law for
declared such proceedings in lieu of hearing closed. the service of such notice upon an attorney in action in
This period may be extended by mutual consent of the the same court.
parties.alf-itc
Section 24. Grounds for vacating award. - In any one of
Section 20. Form and contents of award. - The award the following cases, the court must make an order
must be made in writing and signed and acknowledged vacating the award upon the petition of any party to
by a majority of the arbitrators, if more than one; and the controversy when such party proves affirmatively
by the sole arbitrator, if there is only one. Each party that in the arbitration proceedings:
shall be furnished with a copy of the award. The
arbitrators in their award may grant any remedy or (a) The award was procured by corruption, fraud, or
relief which they deem just and equitable and within other undue means; or
the scope of the agreement of the parties, which shall
include, but not be limited to, the specific performance (b) That there was evident partiality or corruption in
of a contract. the arbitrators or any of them; or

In the event that the parties to an arbitration have, (c) That the arbitrators were guilty of misconduct in
during the course of such arbitration, settled their refusing to postpone the hearing upon sufficient cause
dispute, they may request of the arbitrators that such shown, or in refusing to hear evidence pertinent and
settlement be embodied in an award which shall be material to the controversy; that one or more of the
signed by the arbitrators. No arbitrator shall act as a arbitrators was disqualified to act as such under
mediator in any proceeding in which he is acting as section nine hereof, and wilfully refrained from
arbitrator; and all negotiations towards settlement of disclosing such disqualifications or of any other
the dispute must take place without the presence of the misbehavior by which the rights of any party have been
arbitrators. materially prejudiced; or

The arbitrators shall have the power to decide only (d) That the arbitrators exceeded their powers, or so
those matters which have been submitted to them. The imperfectly executed them, that a mutual, final and
terms of the award shall be confined to such disputes. definite award upon the subject matter submitted to
them was not made.
The arbitrators shall have the power to assess in their
award the expenses of any party against another party, Where an award is vacated, the court, in its discretion,
when such assessment shall be deemed necessary. may direct a new hearing either before the same
arbitrators or before a new arbitrator or arbitrators to
Section 21. Fees of arbitration. - The fees of the be chosen in the manner provided in the submission or
arbitrators shall be fifty pesos per day unless the contract for the selection of the original arbitrator or
parties agree otherwise in writing prior to the arbitrators, and any provision limiting the time in
arbitration. which the arbitrators may make a decision shall be
deemed applicable to the new arbitration and to
Section 22. Arbitration deemed a special proceeding. - commence from the date of the court's order.
Arbitration under a contract or submission shall be
deemed a special proceeding, of which the court Where the court vacates an award, costs, not exceeding
specified in the contract or submission, or if none be fifty pesos and disbursements may be awarded to the
PAGE 55

prevailing party and the payment thereof may be award, and a copy of each of the court upon such
enforced in like manner as the payment of costs upon application.
the motion in an action.
The judgment shall be docketed as if it were rendered
Section 25. Grounds for modifying or correcting award. in an action.
- In any one of the following cases, the court must
make an order modifying or correcting the award, The judgment so entered shall have the same force and
upon the application of any party to the controversy effect in all respects, as, and be subject to all the
which was arbitrated: provisions relating to, a judgment in an action; and it
may be enforced as if it had been rendered in the court
(a) Where there was an evident miscalculation of in which it is entered.
figures, or an evident mistake in the description of any
person, thing or property referred to in the award; or Section 29. Appeals. - An appeal may be taken from an
order made in a proceeding under this Act, or from a
(b) Where the arbitrators have awarded upon a matter judgment entered upon an award through certiorari
not submitted to them, not affecting the merits of the proceedings, but such appeals shall be limited to
decision upon the matter submitted; or questions of law. The proceedings upon such an
appeal, including the judgment thereon shall be
(c) Where the award is imperfect in a matter of form governed by the Rules of Court in so far as they are
not affecting the merits of the controversy, and if it had applicable.
been a commissioner's report, the defect could have
been amended or disregarded by the court. Section 30. Death of party. - Where a party dies after
making a submission or a contract to arbitrate as
The order may modify and correct the award so as to prescribed in this Act, the proceedings may be begun
effect the intent thereof and promote justice between or continued upon the application of, or notice to, his
the parties. executor or administrator, or temporary administrator
of his estate. In any such case, the court may issue an
Section 26. Motion to vacate, modify or correct award: order extending the time within which notice of a
when made. - Notice of a motion to vacate, modify or motion to confirm, vacate, modify or correct an award
correct the award must be served upon the adverse must be served. Upon confirming an award, where a
party or his counsel within thirty days after award is party has died since it was filed or delivered, the court
filed or delivered, as prescribed by law for the service must enter judgment in the name of the original party;
upon an attorney in an action. and the proceedings thereupon are the same as where
a party dies after a verdict.
Section 27. Judgment. - Upon the granting of an order
confirming, modifying or correcting an award, Section 31. Repealing clause. - The provisions of
judgment may be entered in conformity therewith in chapters one and two, Title XIV, of the Civil Code shall
the court wherein said application was filed. Costs of remain in force. All other laws and parts of laws
the application and the proceedings subsequent inconsistent with this Act are hereby repealed. If any
thereto may be awarded by the court in its discretion. provision of this Act shall be held invalid the
If awarded, the amount thereof must be included in the remainder that shall not be affected thereby.
judgment.
Section 32. Effectivity. - This Act shall take effect six
Section 28. Papers to accompany motion to confirm, months after its approval.
modify, correct, or vacate award. - The party moving
for an order confirming, modifying, correcting, or
vacating an award, shall at the time that such motion is 3.4 A.M. No. 07-11-08-SC
filed with the court for the entry of judgment thereon
SPECIAL RULES OF COURT ON
also file the following papers with the Clerk of Court;
ALTERNATIVE DISPUTE
(a) The submission, or contract to arbitrate; the RESOLUTION September 1, 2009
appointment of the arbitrator or arbitrators; and each
written extension of the time, if any, within which to Acting on the recommendation of the Chairperson of
make the award. the Sub-Committee on the Rules on Alternative
Dispute Resolution submitting for this Court’s
(b) A verified of the award. consideration and approval the proposed Special Rules
of Court on Alternative Dispute Resolution, the Court
(c) Each notice, affidavit, or other paper used upon the Resolved to APPROVE the same.
application to confirm, modify, correct or vacate such
PAGE 56

This Rule shall take effect on October 30, 2009 c. Interim Measures of Protection;
following its publication in three (3) newspapers of
general circulation. d. Appointment of Arbitrator;

SPECIAL RULES OF COURT ON ALTERNATIVE e. Challenge to Appointment of Arbitrator;


DISPUTE RESOLUTION
f. Termination of Mandate of Arbitrator;
PART I
GENERAL PROVISIONS AND POLICIES g. Assistance in Taking Evidence;

RULE 1: GENERAL PROVISIONS h. Confidentiality/Protective Orders; and

Rule 1.1. Subject matter and governing rules.-The i. Deposit and Enforcement of Mediated Settlement
Special Rules of Court on Alternative Dispute Agreements.
Resolution (the "Special ADR Rules") shall apply to
and govern the following cases: (A) Service and filing of petition in summary
proceedings.-The petitioner shall serve, either by
a. Relief on the issue of Existence, Validity, or personal service or courier, a copy of the petition upon
Enforceability of the Arbitration Agreement; the respondent before the filing thereof. Proof of
service shall be attached to the petition filed in court.
b. Referral to Alternative Dispute Resolution ("ADR");
For personal service, proof of service of the petition
c. Interim Measures of Protection; consists of the affidavit of the person who effected
service, stating the time, place and manner of the
d. Appointment of Arbitrator; service on the respondent. For service by courier, proof
of service consists of the signed courier proof of
e. Challenge to Appointment of Arbitrator; delivery. If service is refused or has failed, the affidavit
or delivery receipt must state the circumstances of the
f. Termination of Mandate of Arbitrator; attempted service and refusal or failure thereof.

g. Assistance in Taking Evidence; (B) Notice.-Except for cases involving Referral to ADR
and Confidentiality/Protective Orders made through
h. Confirmation, Correction or Vacation of Award in motions, the court shall, if it finds the petition
Domestic Arbitration; sufficient in form and substance, send notice to the
parties directing them to appear at a particular time
i. Recognition and Enforcement or Setting Aside of an and date for the hearing thereof which shall be set no
Award in International Commercial Arbitration; later than five (5) days from the lapse of the period for
filing the opposition or comment. The notice to the
j. Recognition and Enforcement of a Foreign Arbitral respondent shall contain a statement allowing him to
Award; file a comment or opposition to the petition within
fifteen (15) days from receipt of the notice.
k. Confidentiality/Protective Orders; and
The motion filed pursuant to the rules on Referral to
l. Deposit and Enforcement of Mediated Settlement ADR or Confidentiality/Protective Orders shall be set
Agreements. for hearing by the movant and contain a notice of
hearing that complies with the requirements under
Rule 1.2. Nature of the proceedings.-All proceedings Rule 15 of the Rules of Court on motions.
under the Special ADR Rules are special proceedings.
(C) Summary hearing. - In all cases, as far as
Rule 1.3. Summary proceedings in certain cases.-The practicable, the summary hearing shall be conducted
proceedings in the following instances are summary in in one (1) day and only for purposes of clarifying facts.
nature and shall be governed by this provision:
Except in cases involving Referral to ADR or
a. Judicial Relief Involving the Issue of Existence, Confidentiality/Protective Orders made through
Validity or Enforceability of the Arbitration motions, it shall be the court that sets the petition for
Agreement; hearing within five (5) days from the lapse of the
period for filing the opposition or comment.
b. Referral to ADR;
PAGE 57

(D) Resolution. - The court shall resolve the matter h. Any other pleading specifically disallowed under any
within a period of thirty (30) days from the day of the provision of the Special ADR Rules.
hearing.
The court shall motu proprio order a pleading/motion
Rule 1.4. Verification and submissions. -Any pleading, that it has determined to be dilatory in nature be
motion, opposition, comment, defense or claim filed expunged from the records.
under the Special ADR Rules by the proper party shall
be supported by verified statements that the affiant has Rule 1.7. Computation of time. - In computing any
read the same and that the factual allegations therein period of time prescribed or allowed by the Special
are true and correct of his own personal knowledge or ADR Rules, or by order of the court, or by any
based on authentic records and shall contain as applicable statute, the day of the act or event from
annexes the supporting documents. which the designated period of time begins to run is to
be excluded and the date of performance included. If
The annexes to the pleading, motion, opposition, the last day of the period, as thus computed, falls on a
comment, defense or claim filed by the proper party Saturday, a Sunday, or a legal holiday in the place
may include a legal brief, duly verified by the lawyer where the court sits, the time shall not run until the
submitting it, stating the pertinent facts, the applicable next working day.
law and jurisprudence to justify the necessity for the
court to rule upon the issue raised. Should an act be done which effectively interrupts the
running of the period, the allowable period after such
Rule 1.5. Certification Against Forum Shopping. - A interruption shall start to run on the day after notice of
Certification Against Forum Shopping is one made the cessation of the cause thereof.
under oath made by the petitioner or movant: (a) that
he has not theretofore commenced any action or filed The day of the act that caused the interruption shall be
any claim involving the same issues in any court, excluded from the computation of the period.
tribunal or quasi-judicial agency and, to the best of his
knowledge, no such other action or claim is pending Rule 1.8. Service and filing of pleadings, motions and
therein; (b) if there is such other pending action or other papers in non-summary proceedings. - The
claim, a complete statement of the present status initiatory pleadings shall be filed directly with the
thereof; and (c) if he should thereafter learn that the court. The court will then cause the initiatory pleading
same or similar action or claim has been filed or is to be served upon the respondent by personal service
pending, he shall report that fact within five (5) days or courier. Where an action is already pending,
therefrom to the court wherein his aforementioned pleadings, motions and other papers shall be filed
petition or motion has been filed. and/or served by the concerned party by personal
service or courier. Where courier services are not
A Certification Against Forum Shopping shall be available, resort to registered mail is allowed.
appended to all initiatory pleadings except a Motion to
Refer the Dispute to Alternative Dispute Resolution. (A) Proof of filing. - The filing of a pleading shall be
proved by its existence in the record of the case. If it is
Rule 1.6. Prohibited submissions. - The following not in the record, but is claimed to have been filed
pleadings, motions, or petitions shall not be allowed in personally, the filing shall be proved by the written or
the cases governed by the Special ADR Rules and shall stamped acknowledgment of its filing by the clerk of
not be accepted for filing by the Clerk of Court: court on a copy of the same; if filed by courier, by the
proof of delivery from the courier company.
a. Motion to dismiss;
(B) Proof of service. - Proof of personal service shall
b. Motion for bill of particulars; consist of a written admission by the party served, or
the official return of the server, or the affidavit of the
c. Motion for new trial or for reopening of trial; party serving, containing a full statement of the date,
place and manner of service. If the service is by
d. Petition for relief from judgment; courier, proof thereof shall consist of an affidavit of the
proper person, stating facts showing that the document
e. Motion for extension, except in cases where an ex- was deposited with the courier company in a sealed
parte temporary order of protection has been issued; envelope, plainly addressed to the party at his office, if
known, otherwise at his residence, with postage fully
f. Rejoinder to reply; pre-paid, and with instructions to the courier to
immediately provide proof of delivery.
g. Motion to declare a party in default; and
PAGE 58

(C) Filing and service by electronic means and proof the National President of the Integrated Bar of the
thereof. - Filing and service of pleadings by electronic Philippines or his duly authorized representative.
transmission may be allowed by agreement of the
parties approved by the court. If the filing or service of c. "Authenticate" means to sign, execute or use a
a pleading or motion was done by electronic symbol, or encrypt a record in whole or in part,
transmission, proof of filing and service shall be made intended to identify the authenticating party and to
in accordance with the Rules on Electronic Evidence. adopt, accept or establish the authenticity of a record
or term.
Rule 1.9. No summons. - In cases covered by the
Special ADR Rules, a court acquires authority to act on d. "Foreign Arbitral Award" is one made in a country
the petition or motion upon proof of jurisdictional other than the Philippines.
facts, i.e., that the respondent was furnished a copy of
the petition and the notice of hearing. e. "Legal Brief" is a written legal argument submitted
to a court, outlining the facts derived from the factual
(A) Proof of service. - A proof of service of the petition statements in the witness’s statements of fact and
and notice of hearing upon respondent shall be made citing the legal authorities relied upon by a party in a
in writing by the server and shall set forth the manner, case submitted in connection with petitions, counter-
place and date of service. petitions (i.e., petitions to vacate or to set aside and/or
to correct/modify in opposition to petitions to confirm
(B) Burden of proof. - The burden of showing that a or to recognize and enforce, or petitions to confirm or
copy of the petition and the notice of hearing were to recognize and enforce in opposition to petitions to
served on the respondent rests on the petitioner. vacate or set aside and/or correct/modify), motions,
evidentiary issues and other matters that arise during
The technical rules on service of summons do not the course of a case. The legal brief shall state the
apply to the proceedings under the Special ADR Rules. applicable law and the relevant jurisprudence and the
In instances where the respondent, whether a natural legal arguments in support of a party’s position in the
or a juridical person, was not personally served with a case.
copy of the petition and notice of hearing in the
proceedings contemplated in the first paragraph of f. "Verification" shall mean a certification under oath
Rule 1.3 (B), or the motion in proceedings by a party or a person who has authority to act for a
contemplated in the second paragraph of Rule 1.3 (B), party that he has read the pleading/motion, and that
the method of service resorted to must be such as to he certifies to the truth of the facts stated therein on
reasonably ensure receipt thereof by the respondent to the basis of his own personal knowledge or authentic
satisfy the requirement of due process. documents in his possession. When made by a lawyer,
verification shall mean a statement under oath by a
Rule 1.10. Contents of petition/motion. - The initiatory lawyer signing a pleading/motion for delivery to the
pleading in the form of a verified petition or motion, in Court or to the parties that he personally prepared the
the appropriate case where court proceedings have pleading/motion, that there is sufficient factual basis
already commenced, shall include the names of the for the statements of fact stated therein, that there is
parties, their addresses, the necessary allegations sufficient basis in the facts and the law to support the
supporting the petition and the relief(s) sought. prayer for relief therein, and that the pleading/motion
is filed in good faith and is not interposed for delay.
Rule 1.11. Definition. - The following terms shall have
the following meanings:
Rule 1.12. Applicability of Part II on Specific Court
a. "ADR Laws" refers to the whole body of ADR laws in Relief. - Part II of the Special ADR Rules on Specific
the Philippines. Court Relief, insofar as it refers to arbitration, shall
also be applicable to other forms of ADR.
b. "Appointing Authority" shall mean the person or
institution named in the arbitration agreement as the Rule 1.13. Spirit and intent of the Special ADR Rules. –
appointing authority; or the regular arbitration In situations where no specific rule is provided under
institution under whose rule the arbitration is agreed the Special ADR Rules, the court shall resolve such
to be conducted. Where the parties have agreed to matter summarily and be guided by the spirit and
submit their dispute to institutional arbitration rules, intent of the Special ADR Rules and the ADR Laws.
and unless they have agreed to a different procedure,
they shall be deemed to have agreed to procedure RULE 2: STATEMENT OF POLICIES
under such arbitration rules for the selection and
appointment of arbitrators. In ad hoc arbitration, the Rule 2.1. General policies. - It is the policy of the State
default appointment of arbitrators shall be made by to actively promote the use of various modes of ADR
PAGE 59

and to respect party autonomy or the freedom of the The Special ADR Rules recognize the principle of
parties to make their own arrangements in the competence-competence, which means that the
resolution of disputes with the greatest cooperation of arbitral tribunal may initially rule on its own
and the least intervention from the courts. To this end, jurisdiction, including any objections with respect to
the objectives of the Special ADR Rules are to the existence or validity of the arbitration agreement or
encourage and promote the use of ADR, particularly any condition precedent to the filing of a request for
arbitration and mediation, as an important means to arbitration.
achieve speedy and efficient resolution of disputes,
impartial justice, curb a litigious culture and to de-clog The Special ADR Rules recognize the principle of
court dockets. separability of the arbitration clause, which means that
said clause shall be treated as an agreement
The court shall exercise the power of judicial review as independent of the other terms of the contract of which
provided by these Special ADR Rules. Courts shall it forms part. A decision that the contract is null and
intervene only in the cases allowed by law or these void shall not entail ipso jure the invalidity of the
Special ADR Rules. arbitration clause.

Rule 2.2. Policy on arbitration.- (A) Where the parties Rule 2.3. Rules governing arbitral proceedings. - The
have agreed to submit their dispute to arbitration, parties are free to agree on the procedure to be
courts shall refer the parties to arbitration pursuant to followed in the conduct of arbitral proceedings. Failing
Republic Act No. 9285 bearing in mind that such such agreement, the arbitral tribunal may conduct
arbitration agreement is the law between the parties arbitration in the manner it considers appropriate.
and that they are expected to abide by it in good faith.
Further, the courts shall not refuse to refer parties to Rule 2.4. Policy implementing competence-
arbitration for reasons including, but not limited to, competence principle. - The arbitral tribunal shall be
the following: accorded the first opportunity or competence to rule
on the issue of whether or not it has the competence or
a. The referral tends to oust a court of its jurisdiction; jurisdiction to decide a dispute submitted to it for
decision, including any objection with respect to the
b. The court is in a better position to resolve the existence or validity of the arbitration agreement.
dispute subject of arbitration; When a court is asked to rule upon issue/s affecting
the competence or jurisdiction of an arbitral tribunal
c. The referral would result in multiplicity of suits; in a dispute brought before it, either before or after the
arbitral tribunal is constituted, the court must exercise
d. The arbitration proceeding has not commenced; judicial restraint and defer to the competence or
jurisdiction of the arbitral tribunal by allowing the
e. The place of arbitration is in a foreign country; arbitral tribunal the first opportunity to rule upon such
issues.
f. One or more of the issues are legal and one or more
of the arbitrators are not lawyers; Where the court is asked to make a determination of
whether the arbitration agreement is null and void,
g. One or more of the arbitrators are not Philippine inoperative or incapable of being performed, under
nationals; or this policy of judicial restraint, the court must make no
more than a prima facie determination of that issue.
h. One or more of the arbitrators are alleged not to
possess the required qualification under the Unless the court, pursuant to such prima facie
arbitration agreement or law. determination, concludes that the arbitration
agreement is null and void, inoperative or incapable of
(B) Where court intervention is allowed under ADR being performed, the court must suspend the action
Laws or the Special ADR Rules, courts shall not refuse before it and refer the parties to arbitration pursuant
to grant relief, as provided herein, for any of the to the arbitration agreement.
following reasons:
Rule 2.5. Policy on mediation. - The Special ADR Rules
a. Prior to the constitution of the arbitral tribunal, the do not apply to Court-Annexed Mediation, which shall
court finds that the principal action is the subject of an be governed by issuances of the Supreme Court.
arbitration agreement; or
Where the parties have agreed to submit their dispute
b. The principal action is already pending before an to mediation, a court before which that dispute was
arbitral tribunal. brought shall suspend the proceedings and direct the
parties to submit their dispute to private mediation. If
PAGE 60

the parties subsequently agree, however, they may opt


to have their dispute settled through Court-Annexed Rule 3.5. Grounds. - A petition may be granted only if
Mediation. it is shown that the arbitration agreement is, under the
applicable law, invalid, void, unenforceable or
Rule 2.6. Policy on Arbitration-Mediation or inexistent.
Mediation-Arbitration. - No arbitrator shall act as a
mediator in any proceeding in which he is acting as Rule 3.6. Contents of petition. - The verified petition
arbitrator; and all negotiations towards settlement of shall state the following:
the dispute must take place without the presence of
that arbitrator. Conversely, no mediator shall act as a. The facts showing that the persons named as
arbitrator in any proceeding in which he acted as petitioner or respondent have legal capacity to sue or
mediator. be sued;

Rule 2.7. Conversion of a settlement agreement to an b. The nature and substance of the dispute between the
arbitral award. - Where the parties to mediation have parties;
agreed in the written settlement agreement that the
mediator shall become the sole arbitrator for the c. The grounds and the circumstances relied upon by
dispute or that the settlement agreement shall become the petitioner to establish his position; and
an arbitral award, the sole arbitrator shall issue the
settlement agreement as an arbitral award, which shall d. The relief/s sought.
be subject to enforcement under the law.
Apart from other submissions, the petitioner must
PART II attach to the petition an authentic copy of the
SPECIFIC COURT RELIEF arbitration agreement.

RULE 3: JUDICIAL RELIEF INVOLVING THE ISSUE Rule 3.7. Comment/Opposition.-The


OF EXISTENCE, VALIDITY AND ENFORCEABILITY comment/opposition of the respondent must be filed
OF THE ARBITRATION AGREEMENT within fifteen (15) days from service of the petition.

Rule 3.1. When judicial relief is available. - The judicial Rule 3.8. Court action. - In resolving the petition, the
relief provided in Rule 3, whether resorted to before or court must exercise judicial restraint in accordance
after commencement of arbitration, shall apply only with the policy set forth in Rule 2.4, deferring to the
when the place of arbitration is in the Philippines. competence or jurisdiction of the arbitral tribunal to
rule on its competence or jurisdiction.
A. Judicial Relief before Commencement of Arbitration
Rule 3.9. No forum shopping. - A petition for judicial
Rule 3.2. Who may file petition. - Any party to an relief under this Rule may not be commenced when the
arbitration agreement may petition the appropriate existence, validity or enforceability of an arbitration
court to determine any question concerning the agreement has been raised as one of the issues in a
existence, validity and enforceability of such prior action before the same or another court.
arbitration agreement serving a copy thereof on the
respondent in accordance with Rule 1.4 (A). Rule 3.10. Application for interim relief. - If the
petitioner also applies for an interim measure of
Rule 3.3. When the petition may be filed. - The petition protection, he must also comply with the requirements
for judicial determination of the existence, validity of the Special ADR Rules for the application for an
and/or enforceability of an arbitration agreement may interim measure of protection.
be filed at any time prior to the commencement of
arbitration. Rule 3.11. Relief against court action. - Where there is a
prima facie determination upholding the arbitration
Despite the pendency of the petition provided herein, agreement.-A prima facie determination by the court
arbitral proceedings may nevertheless be commenced upholding the existence, validity or enforceability of an
and continue to the rendition of an award, while the arbitration agreement shall not be subject to a motion
issue is pending before the court. for reconsideration, appeal or certiorari.

Rule 3.4. Venue. - A petition questioning the existence, Such prima facie determination will not, however,
validity and enforceability of an arbitration agreement prejudice the right of any party to raise the issue of the
may be filed before the Regional Trial Court of the existence, validity and enforceability of the arbitration
place where any of the petitioners or respondents has agreement before the arbitral tribunal or the court in
his principal place of business or residence. an action to vacate or set aside the arbitral award. In
PAGE 61

the latter case, the court’s review of the arbitral The arbitrators shall be impleaded as nominal parties
tribunal’s ruling upholding the existence, validity or to the case and shall be notified of the progress of the
enforceability of the arbitration agreement shall no case.
longer be limited to a mere prima facie determination
of such issue or issues as prescribed in this Rule, but Rule 3.17. Comment/Opposition. - The
shall be a full review of such issue or issues with due comment/opposition must be filed within fifteen (15)
regard, however, to the standard for review for arbitral days from service of the petition.
awards prescribed in these Special ADR Rules.
Rule 3.18. Court action. - (A) Period for resolving the
B. Judicial Relief after Arbitration Commences petition.- The court shall render judgment on the basis
of the pleadings filed and the evidence, if any,
Rule 3.12. Who may file petition. - Any party to submitted by the parties, within thirty (30) days from
arbitration may petition the appropriate court for the time the petition is submitted for resolution.
judicial relief from the ruling of the arbitral tribunal on
a preliminary question upholding or declining its (B) No injunction of arbitration proceedings. - The
jurisdiction. Should the ruling of the arbitral tribunal court shall not enjoin the arbitration proceedings
declining its jurisdiction be reversed by the court, the during the pendency of the petition.
parties shall be free to replace the arbitrators or any
one of them in accordance with the rules that were Judicial recourse to the court shall not prevent the
applicable for the appointment of arbitrator sought to arbitral tribunal from continuing the proceedings and
be replaced. rendering its award.

Rule 3.13. When petition may be filed. - The petition (C) When dismissal of petition is appropriate. - The
may be filed within thirty (30) days after having court shall dismiss the petition if it fails to comply with
received notice of that ruling by the arbitral tribunal. Rule 3.16 above; or if upon consideration of the
grounds alleged and the legal briefs submitted by the
Rule 3.14. Venue. - The petition may be filed before the parties, the petition does not appear to be prima facie
Regional Trial Court of the place where arbitration is meritorious.
taking place, or where any of the petitioners or
respondents has his principal place of business or Rule 3.19. Relief against court action. - The aggrieved
residence. party may file a motion for reconsideration of the order
of the court. The decision of the court shall, however,
Rule 3.15. Grounds. - The petition may be granted not be subject to appeal. The ruling of the court
when the court finds that the arbitration agreement is affirming the arbitral tribunal’s jurisdiction shall not
invalid, inexistent or unenforceable as a result of which be subject to a petition for certiorari. The ruling of the
the arbitral tribunal has no jurisdiction to resolve the court that the arbitral tribunal has no jurisdiction may
dispute. be the subject of a petition for certiorari.

Rule 3.16. Contents of petition. - The petition shall Rule 3.20. Where no petition is allowed. - Where the
state the following: arbitral tribunal defers its ruling on preliminary
question regarding its jurisdiction until its final award,
a. The facts showing that the person named as the aggrieved party cannot seek judicial relief to
petitioner or respondent has legal capacity to sue or be question the deferral and must await the final arbitral
sued; award before seeking appropriate judicial recourse.

b. The nature and substance of the dispute between the A ruling by the arbitral tribunal deferring resolution on
parties; the issue of its jurisdiction until final award, shall not
be subject to a motion for reconsideration, appeal or a
c. The grounds and the circumstances relied upon by petition for certiorari.
the petitioner; and
Rule 3.21. Rendition of arbitral award before court
d. The relief/s sought. decision on petition from arbitral tribunal’s
preliminary ruling on jurisdiction. - If the arbitral
In addition to the submissions, the petitioner shall tribunal renders a final arbitral award and the Court
attach to the petition a copy of the request for has not rendered a decision on the petition from the
arbitration and the ruling of the arbitral tribunal. arbitral tribunal’s preliminary ruling affirming its
jurisdiction, that petition shall become ipso facto moot
and academic and shall be dismissed by the Regional
Trial Court. The dismissal shall be without prejudice to
PAGE 62

the right of the aggrieved party to raise the same issue Rule 4.5. Court action. - After hearing, the court shall
in a timely petition to vacate or set aside the award. stay the action and, considering the statement of policy
embodied in Rule 2.4, above, refer the parties to
Rule 3.22. Arbitral tribunal a nominal party. - The arbitration if it finds prima facie, based on the
arbitral tribunal is only a nominal party. The court pleadings and supporting documents submitted by the
shall not require the arbitral tribunal to submit any parties, that there is an arbitration agreement and that
pleadings or written submissions but may consider the the subject-matter of the dispute is capable of
same should the latter participate in the proceedings, settlement or resolution by arbitration in accordance
but only as nominal parties thereto. with Section 6 of the ADR Act. Otherwise, the court
shall continue with the judicial proceedings.
RULE 4: REFERRAL TO ADR
Rule 4.6. No reconsideration, appeal or certiorari. - An
Rule 4.1. Who makes the request. - A party to a order referring the dispute to arbitration shall be
pending action filed in violation of the arbitration immediately executory and shall not be subject to a
agreement, whether contained in an arbitration clause motion for reconsideration, appeal or petition for
or in a submission agreement, may request the court to certiorari.
refer the parties to arbitration in accordance with such
agreement. An order denying the request to refer the dispute to
arbitration shall not be subject to an appeal, but may
Rule 4.2. When to make request. - (A) Where the be the subject of a motion for reconsideration and/or a
arbitration agreement exists before the action is filed. - petition for certiorari.
The request for referral shall be made not later than
the pre-trial conference. After the pre-trial conference, Rule 4.7. Multiple actions and parties. - The court shall
the court will only act upon the request for referral if it not decline to refer some or all of the parties to
is made with the agreement of all parties to the case. arbitration for any of the following reasons:

(B) Submission agreement. - If there is no existing a. Not all of the disputes subject of the civil action may
arbitration agreement at the time the case is filed but be referred to arbitration;
the parties subsequently enter into an arbitration
agreement, they may request the court to refer their b. Not all of the parties to the civil action are bound by
dispute to arbitration at any time during the the arbitration agreement and referral to arbitration
proceedings. would result in multiplicity of suits;

Rule 4.3. Contents of request. - The request for referral c. The issues raised in the civil action could be speedily
shall be in the form of a motion, which shall state that and efficiently resolved in its entirety by the court
the dispute is covered by an arbitration agreement. rather than in arbitration;

Apart from other submissions, the movant shall attach d. Referral to arbitration does not appear to be the
to his motion an authentic copy of the arbitration most prudent action; or
agreement.
e. The stay of the action would prejudice the rights of
The request shall contain a notice of hearing addressed the parties to the civil action who are not bound by the
to all parties specifying the date and time when it arbitration agreement.
would be heard. The party making the request shall
serve it upon the respondent to give him the The court may, however, issue an order directing the
opportunity to file a comment or opposition as inclusion in arbitration of those parties who are not
provided in the immediately succeeding Rule before bound by the arbitration agreement but who agree to
the hearing. such inclusion provided those originally bound by it do
not object to their inclusion.
Rule 4.4. Comment/Opposition. - The
comment/opposition must be filed within fifteen (15) Rule 4.8. Arbitration to proceed.- Despite the
days from service of the petition. The pendency of the action referred to in Rule 4.1, above,
comment/opposition should show that: (a) there is no arbitral proceedings may nevertheless be commenced
agreement to refer the dispute to arbitration; and/or or continued, and an award may be made, while the
(b) the agreement is null and void; and/or (c) the action is pending before the court.
subject-matter of the dispute is not capable of
settlement or resolution by arbitration in accordance RULE 5: INTERIM MEASURES OF PROTECTION
with Section 6 of the ADR Act.
PAGE 63

Rule 5.1. Who may ask for interim measures of d. The grounds relied on for the allowance of the
protection. - A party to an arbitration agreement may petition
petition the court for interim measures of protection.
Apart from other submissions, the petitioner must
Rule 5.2. When to petition. - A petition for an interim attach to his petition an authentic copy of the
measure of protection may be made (a) before arbitration agreement.
arbitration is commenced, (b) after arbitration is
commenced, but before the constitution of the arbitral Rule 5.6. Type of interim measure of protection that a
tribunal, or (c) after the constitution of the arbitral court may grant.- The following, among others, are the
tribunal and at any time during arbitral proceedings interim measures of protection that a court may grant:
but, at this stage, only to the extent that the arbitral
tribunal has no power to act or is unable to act a. Preliminary injunction directed against a party to
effectively. arbitration;

Rule 5.3. Venue. - A petition for an interim measure of b. Preliminary attachment against property or
protection may be filed with the Regional Trial Court, garnishment of funds in the custody of a bank or a
which has jurisdiction over any of the following places: third person;

a. Where the principal place of business of any of the c. Appointment of a receiver;


parties to arbitration is located;
d. Detention, preservation, delivery or inspection of
b. Where any of the parties who are individuals property; or,
resides;
e. Assistance in the enforcement of an interim measure
c. Where any of the acts sought to be enjoined are of protection granted by the arbitral tribunal, which
being performed, threatened to be performed or not the latter cannot enforce effectively.
being performed; or
Rule 5.7. Dispensing with prior notice in certain cases.
d. Where the real property subject of arbitration, or a - Prior notice to the other party may be dispensed with
portion thereof is situated. when the petitioner alleges in the petition that there is
an urgent need to either (a) preserve property, (b)
Rule 5.4. Grounds. - The following grounds, while not prevent the respondent from disposing of, or
limiting the reasons for the court to grant an interim concealing, the property, or (c) prevent the relief
measure of protection, indicate the nature of the prayed for from becoming illusory because of prior
reasons that the court shall consider in granting the notice, and the court finds that the reason/s given by
relief: the petitioner are meritorious.

a. The need to prevent irreparable loss or injury; Rule 5.8. Comment/Opposition. - The
comment/opposition must be filed within fifteen (15)
b. The need to provide security for the performance of days from service of the petition. The opposition or
any obligation; comment should state the reasons why the interim
measure of protection should not be granted.
c. The need to produce or preserve evidence; or
Rule 5.9. Court action. - After hearing the petition, the
d. The need to compel any other appropriate act or court shall balance the relative interests of the parties
omission. and inconveniences that may be caused, and on that
basis resolve the matter within thirty (30) days from
Rule 5.5. Contents of the petition. - The verified (a) submission of the opposition, or (b) upon lapse of
petition must state the following: the period to file the same, or (c) from termination of
the hearing that the court may set only if there is a
a. The fact that there is an arbitration agreement; need for clarification or further argument.

b. The fact that the arbitral tribunal has not been If the other parties fail to file their opposition on or
constituted, or if constituted, is unable to act or would before the day of the hearing, the court shall motu
be unable to act effectively; proprio render judgment only on the basis of the
allegations in the petition that are substantiated by
c. A detailed description of the appropriate relief supporting documents and limited to what is prayed
sought; for therein.
PAGE 64

In cases where, based solely on the petition, the court b. The party opposing the application found new
finds that there is an urgent need to either (a) preserve material evidence, which the arbitral tribunal had not
property, (b) prevent the respondent from disposing considered in granting in the application, and which, if
of, or concealing, the property, or (c) prevent the relief considered, may produce a different result; or
prayed for from becoming illusory because of prior
notice, it shall issue an immediately executory c. The measure of protection ordered by the arbitral
temporary order of protection and require the tribunal amends, revokes, modifies or is inconsistent
petitioner, within five (5) days from receipt of that with an earlier measure of protection issued by the
order, to post a bond to answer for any damage that court.
respondent may suffer as a result of its order. The ex-
parte temporary order of protection shall be valid only If it finds that there is sufficient merit in the opposition
for a period of twenty (20) days from the service on the to the application based on letter (b) above, the court
party required to comply with the order. Within that shall refer the matter back to the arbitral tribunal for
period, the court shall: appropriate determination.

a. Furnish the respondent a copy of the petition and a Rule 5.12. Security. - The order granting an interim
notice requiring him to comment thereon on or before measure of protection may be conditioned upon the
the day the petition will be heard; and provision of security, performance of an act, or
omission thereof, specified in the order.
b. Notify the parties that the petition shall be heard on
a day specified in the notice, which must not be beyond The Court may not change or increase or decrease the
the twenty (20) day period of the effectivity of the ex- security ordered by the arbitral tribunal.
parte order.
Rule 5.13. Modification, amendment, revision or
The respondent has the option of having the temporary revocation of court’s previously issued interim
order of protection lifted by posting an appropriate measure of protection. - Any court order granting or
counter-bond as determined by the court. denying interim measure/s of protection is issued
without prejudice to subsequent grant, modification,
If the respondent requests the court for an extension of amendment, revision or revocation by the arbitral
the period to file his opposition or comment or to reset tribunal as may be warranted.
the hearing to a later date, and such request is granted,
the court shall extend the period of validity of the ex- An interim measure of protection issued by the arbitral
parte temporary order of protection for no more than tribunal shall, upon its issuance be deemed to have
twenty days from expiration of the original period. ipso jure modified, amended, revised or revoked an
interim measure of protection previously issued by the
After notice and hearing, the court may either grant or court to the extent that it is inconsistent with the
deny the petition for an interim measure of protection. subsequent interim measure of protection issued by
The order granting or denying any application for the arbitral tribunal.
interim measure of protection in aid of arbitration
must indicate that it is issued without prejudice to Rule 5.14. Conflict or inconsistency between interim
subsequent grant, modification, amendment, revision measure of protection issued by the court and by the
or revocation by an arbitral tribunal. arbitral tribunal. - Any question involving a conflict or
inconsistency between an interim measure of
Rule 5.10. Relief against court action. - If respondent protection issued by the court and by the arbitral
was given an opportunity to be heard on a petition for tribunal shall be immediately referred by the court to
an interim measure of protection, any order by the the arbitral tribunal which shall have the authority to
court shall be immediately executory, but may be the decide such question.
subject of a motion for reconsideration and/or appeal
or, if warranted, a petition for certiorari. Rule 5.15. Court to defer action on petition for an
interim measure of protection when informed of
Rule 5.11. Duty of the court to refer back. - The court constitution of the arbitral tribunal. - The court shall
shall not deny an application for assistance in defer action on any pending petition for an interim
implementing or enforcing an interim measure of measure of protection filed by a party to an arbitration
protection ordered by an arbitral tribunal on any or all agreement arising from or in connection with a dispute
of the following grounds: thereunder upon being informed that an arbitral
tribunal has been constituted pursuant to such
a. The arbitral tribunal granted the interim relief ex agreement. The court may act upon such petition only
parte; or if it is established by the petitioner that the arbitral
tribunal has no power to act on any such interim
PAGE 65

measure of protection or is unable to act thereon Rule 6.2. Who may request for appointment. - Any
effectively. party to an arbitration may request the court to act as
an Appointing Authority in the instances specified in
Rule 5.16. Court assistance should arbitral tribunal be Rule 6.1 above.
unable to effectively enforce interim measure of
protection. - The court shall assist in the enforcement Rule 6.3. Venue. - The petition for appointment of
of an interim measure of protection issued by the arbitrator may be filed, at the option of the petitioner,
arbitral tribunal which it is unable to effectively in the Regional Trial Court (a) where the principal
enforce. place of business of any of the parties is located, (b) if
any of the parties are individuals, where those
RULE 6: APPOINTMENT OF ARBITRATORS individuals reside, or (c) in the National Capital
Region.
Rule 6.1. When the court may act as Appointing
Authority. - The court shall act as Appointing Rule 6.4. Contents of the petition. -The petition shall
Authority only in the following instances: state the following:

a. Where any of the parties in an institutional a. The general nature of the dispute;
arbitration failed or refused to appoint an arbitrator or
when the parties have failed to reach an agreement on b. If the parties agreed on an appointment procedure, a
the sole arbitrator (in an arbitration before a sole description of that procedure with reference to the
arbitrator) or when the two designated arbitrators have agreement where such may be found;
failed to reach an agreement on the third or presiding
arbitrator (in an arbitration before a panel of three c. The number of arbitrators agreed upon or the
arbitrators), and the institution under whose rules absence of any agreement as to the number of
arbitration is to be conducted fails or is unable to arbitrators;
perform its duty as appointing authority within a
reasonable time from receipt of the request for d. The special qualifications that the arbitrator/s must
appointment; possess, if any, that were agreed upon by the parties;

b. In all instances where arbitration is ad hoc and the e. The fact that the Appointing Authority, without
parties failed to provide a method for appointing or justifiable cause, has failed or refused to act as such
replacing an arbitrator, or substitute arbitrator, or the within the time prescribed or in the absence thereof,
method agreed upon is ineffective, and the National within a reasonable time, from the date a request is
President of the Integrated Bar of the Philippines (IBP) made; and
or his duly authorized representative fails or refuses to
act within such period as may be allowed under the f. The petitioner is not the cause of the delay in, or
pertinent rules of the IBP or within such period as may failure of, the appointment of the arbitrator.
be agreed upon by the parties, or in the absence
thereof, within thirty (30) days from receipt of such Apart from other submissions, the petitioner must
request for appointment; attach to the petition (a) an authentic copy of the
arbitration agreement, and (b) proof that the
c. Where the parties agreed that their dispute shall be Appointing Authority has been notified of the filing of
resolved by three arbitrators but no method of the petition for appointment with the court.
appointing those arbitrators has been agreed upon,
each party shall appoint one arbitrator and the two Rule 6.5. Comment/Opposition. - The
arbitrators thus appointed shall appoint a third comment/opposition must be filed within fifteen (15)
arbitrator. If a party fails to appoint his arbitrator days from service of the petition.
within thirty (30) days of receipt of a request to do so
from the other party, or if the two arbitrators fail to Rule 6.6. Submission of list of arbitrators. - The court
agree on the third arbitrator within a reasonable time may, at its option, also require each party to submit a
from their appointment, the appointment shall be list of not less than three (3) proposed arbitrators
made by the Appointing Authority. If the latter fails or together with their curriculum vitae.
refuses to act or appoint an arbitrator within a
reasonable time from receipt of the request to do so, Rule 6.7. Court action. - After hearing, if the court
any party or the appointed arbitrator/s may request finds merit in the petition, it shall appoint an
the court to appoint an arbitrator or the third arbitrator; otherwise, it shall dismiss the petition.
arbitrator as the case may be.
In making the appointment, the court shall have
regard to such considerations as are likely to secure the
PAGE 66

appointment of an independent and impartial agreement a nationality and/or professional


arbitrator. qualification for appointment as arbitrator.

At any time after the petition is filed and before the Rule 7.5. Contents of the petition. - The petition shall
court makes an appointment, it shall also dismiss the state the following:
petition upon being informed that the Appointing
Authority has already made the appointment. a. The name/s of the arbitrator/s challenged and
his/their address;
Rule 6.8. Forum shopping prohibited. - When there is
a pending petition in another court to declare the b. The grounds for the challenge;
arbitration agreement inexistent, invalid,
unenforceable, on account of which the respondent c. The facts showing that the ground for the challenge
failed or refused to participate in the selection and has been expressly or impliedly rejected by the
appointment of a sole arbitrator or to appoint a party- challenged arbitrator/s; and
nominated arbitrator, the petition filed under this rule
shall be dismissed. d. The facts showing that the Appointing Authority
failed or refused to act on the challenge.
Rule 6.9. Relief against court action. - If the court
appoints an arbitrator, the order appointing an The court shall dismiss the petition motu proprio
arbitrator shall be immediately executory and shall not unless it is clearly alleged therein that the Appointing
be the subject of a motion for reconsideration, appeal Authority charged with deciding the challenge, after
or certiorari. An order of the court denying the petition the resolution of the arbitral tribunal rejecting the
for appointment of an arbitrator may, however, be the challenge is raised or contested before such Appointing
subject of a motion for reconsideration, appeal or Authority, failed or refused to act on the challenge
certiorari. within thirty (30) days from receipt of the request or
within such longer period as may apply or as may have
RULE 7: CHALLENGE TO APPOINTMENT OF been agreed upon by the parties.
ARBITRATOR
Rule 7.6. Comment/Opposition. - The challenged
Rule 7.1. Who may challenge. - Any of the parties to an arbitrator or other parties may file a comment or
arbitration may challenge an arbitrator. opposition within fifteen (15) days from service of the
petition.
Rule 7.2. When challenge may be raised in court. -
When an arbitrator is challenged before the arbitral Rule 7.7. Court action. - After hearing, the court shall
tribunal under the procedure agreed upon by the remove the challenged arbitrator if it finds merit in the
parties or under the procedure provided for in Article petition; otherwise, it shall dismiss the petition.
13 (2) of the Model Law and the challenge is not
successful, the aggrieved party may request the The court shall allow the challenged arbitrator who
Appointing Authority to rule on the challenge, and it is subsequently agrees to accept the challenge to
only when such Appointing Authority fails or refuses to withdraw as arbitrator.
act on the challenge within such period as may be
allowed under the applicable rule or in the absence The court shall accept the challenge and remove the
thereof, within thirty (30) days from receipt of the arbitrator in the following cases:
request, that the aggrieved party may renew the
challenge in court. a. The party or parties who named and appointed the
challenged arbitrator agree to the challenge and
Rule 7.3. Venue. - The challenge shall be filed with the withdraw the appointment.
Regional Trial Court (a) where the principal place of
business of any of the parties is located, (b) if any of b. The other arbitrators in the arbitral tribunal agree to
the parties are individuals, where those individuals the removal of the challenged arbitrator; and
reside, or (c) in the National Capital Region.
c. The challenged arbitrator fails or refuses to submit
Rule 7.4. Grounds. - An arbitrator may be challenged his comment on the petition or the brief of legal
on any of the grounds for challenge provided for in arguments as directed by the court, or in such
Republic Act No. 9285 and its implementing rules, comment or legal brief, he fails to object to his removal
Republic Act No. 876 or the Model Law. The following the challenge.
nationality or professional qualification of an
arbitrator is not a ground to challenge an arbitrator The court shall decide the challenge on the basis of
unless the parties have specified in their arbitration evidence submitted by the parties.
PAGE 67

arbitrator, upon request of any party, fails or refuses to


The court will decide the challenge on the basis of the withdraw from his office.
evidence submitted by the parties in the following
instances: Rule 8.2. When to request. - If an arbitrator refuses to
withdraw from his office, and subsequently, the
a. The other arbitrators in the arbitral tribunal agree to Appointing Authority fails or refuses to decide on the
the removal of the challenged arbitrator; and termination of the mandate of that arbitrator within
such period as may be allowed under the applicable
b. If the challenged arbitrator fails or refuses to submit rule or, in the absence thereof, within thirty (30) days
his comment on the petition or the brief of legal from the time the request is brought before him, any
arguments as directed by the court, or in such party may file with the court a petition to terminate the
comment or brief of legal arguments, he fails to object mandate of that arbitrator.
to his removal following the challenge.
Rule 8.3. Venue. - A petition to terminate the mandate
Rule 7.8. No motion for reconsideration, appeal or of an arbitrator may, at that petitioner’s option, be
certiorari. - Any order of the court resolving the filed with the Regional Trial Court (a) where the
petition shall be immediately executory and shall not principal place of business of any of the parties is
be the subject of a motion for reconsideration, appeal, located, (b) where any of the parties who are
or certiorari. individuals resides, or (c) in the National Capital
Region.
Rule 7.9. Reimbursement of expenses and reasonable
compensation to challenged arbitrator. - Unless the Rule 8.4. Contents of the petition. - The petition shall
bad faith of the challenged arbitrator is established state the following:
with reasonable certainty by concealing or failing to
disclose a ground for his disqualification, the a. The name of the arbitrator whose mandate is sought
challenged arbitrator shall be entitled to to be terminated;
reimbursement of all reasonable expenses he may have
incurred in attending to the arbitration and to a b. The ground/s for termination;
reasonable compensation for his work on the
arbitration. Such expenses include, but shall not be c. The fact that one or all of the parties had requested
limited to, transportation and hotel expenses, if any. A the arbitrator to withdraw but he failed or refused to
reasonable compensation shall be paid to the do so;
challenged arbitrator on the basis of the length of time
he has devoted to the arbitration and taking into d. The fact that one or all of the parties requested the
consideration his stature and reputation as an Appointing Authority to act on the request for the
arbitrator. The request for reimbursement of expenses termination of the mandate of the arbitrator and
and for payment of a reasonable compensation shall be failure or inability of the Appointing Authority to act
filed in the same case and in the court where the within thirty (30) days from the request of a party or
petition to replace the challenged arbitrator was filed. parties or within such period as may have been agreed
The court, in determining the amount of the award to upon by the parties or allowed under the applicable
the challenged arbitrator, shall receive evidence of rule.
expenses to be reimbursed, which may consist of air
tickets, hotel bills and expenses, and inland The petitioner shall further allege that one or all of the
transportation. The court shall direct the challenging parties had requested the arbitrator to withdraw but he
party to pay the amount of the award to the court for failed or refused to do so.
the account of the challenged arbitrator, in default of
which the court may issue a writ of execution to Rule 8.5. Comment/Opposition. - The
enforce the award. comment/opposition must be filed within fifteen (15)
days from service of the petition.
RULE 8: TERMINATION OF THE MANDATE OF
ARBITRATOR Rule 8.6. Court action. - After hearing, if the court
finds merit in the petition, it shall terminate the
Rule 8.1. Who may request termination and on what mandate of the arbitrator who refuses to withdraw
grounds.- Any of the parties to an arbitration may from his office; otherwise, it shall dismiss the petition.
request for the termination of the mandate of an
arbitrator where an arbitrator becomes de jure or de Rule 8.7. No motion for reconsideration or appeal. -
facto unable to perform his function or for other Any order of the court resolving the petition shall be
reasons fails to act without undue delay and that immediately executory and shall not be subject of a
PAGE 68

motion for reconsideration, appeal or petition for e. To perform any similar acts.
certiorari.
Rule 9.6. Contents of the petition. - The petition must
Rule 8.8. Appointment of substitute arbitrator. - state the following:
Where the mandate of an arbitrator is terminated, or
he withdraws from office for any other reason, or a. The fact that there is an ongoing arbitration
because of his mandate is revoked by agreement of the proceeding even if such proceeding could not continue
parties or is terminated for any other reason, a due to some legal impediments;
substitute arbitrator shall be appointed according to
the rules that were applicable to the appointment of b. The arbitral tribunal ordered the taking of evidence
the arbitrator being replaced. or the party desires to present evidence to the arbitral
tribunal;
RULE 9: ASSISTANCE IN TAKING EVIDENCE
c. Materiality or relevance of the evidence to be taken;
Rule 9.1. Who may request assistance. - Any party to and
an arbitration, whether domestic or foreign, may
request the court to provide assistance in taking d. The names and addresses of the intended
evidence. witness/es, place where the evidence may be found, the
place where the premises to be inspected are located or
Rule 9.2. When assistance may be sought. - Assistance the place where the acts required are to be done.
may be sought at any time during the course of the
arbitral proceedings when the need arises. Rule 9.7. Comment/Opposition. - The
comment/opposition must be filed within fifteen (15)
Rule 9.3. Venue. - A petition for assistance in taking days from service of the petition.
evidence may, at the option of the petitioner, be filed
with Regional Trial Court where (a) arbitration Rule 9.8. Court action. - If the evidence sought is not
proceedings are taking place, (b) the witnesses reside privileged, and is material and relevant, the court shall
or may be found, or (c) where the evidence may be grant the assistance in taking evidence requested and
found. shall order petitioner to pay costs attendant to such
assistance.
Rule 9.4. Ground. - The court may grant or execute the
request for assistance in taking evidence within its Rule 9.9. Relief against court action. - The order
competence and according to the rules of evidence. granting assistance in taking evidence shall be
immediately executory and not subject to
Rule 9.5. Type of assistance. - A party requiring reconsideration or appeal. If the court declines to grant
assistance in the taking of evidence may petition the assistance in taking evidence, the petitioner may file a
court to direct any person, including a representative motion for reconsideration or appeal.
of a corporation, association, partnership or other
entity (other than a party to the ADR proceedings or its Rule 9.10. Perpetuation of testimony before the
officers) found in the Philippines, for any of the arbitral tribunal is constituted. - At anytime before
following: arbitration is commenced or before the arbitral
tribunal is constituted, any person who desires to
a. To comply with a subpoena ad testificandum and/or perpetuate his testimony or that of another person may
subpoena duces tecum; do so in accordance with Rule 24 of the Rules of Court.

b. To appear as a witness before an officer for the Rule 9.11. Consequence of disobedience. - The court
taking of his deposition upon oral examination or by may impose the appropriate sanction on any person
written interrogatories; who disobeys its order to testify when required or
perform any act required of him.
c. To allow the physical examination of the condition of
persons, or the inspection of things or premises and, RULE 10: CONFIDENTIALITY/PROTECTIVE
when appropriate, to allow the recording and/or ORDERS
documentation of condition of persons, things or
premises (i.e., photographs, video and other means of Rule 10.1. Who may request confidentiality. - A party,
recording/documentation); counsel or witness who disclosed or who was
compelled to disclose information relative to the
d. To allow the examination and copying of subject of ADR under circumstances that would create
documents; and a reasonable expectation, on behalf of the source, that
the information shall be kept confidential has the right
PAGE 69

to prevent such information from being further information was not obtained during an ADR
disclosed without the express written consent of the proceeding, (c) there was a waiver of confidentiality, or
source or the party who made the disclosure. (d) the petitioner/movant is precluded from asserting
confidentiality.
Rule 10.2. When request made. - A party may request a
protective order at anytime there is a need to enforce Rule 10.8. Court action. - If the court finds the petition
the confidentiality of the information obtained, or to or motion meritorious, it shall issue an order enjoining
be obtained, in ADR proceedings. a person or persons from divulging confidential
information.
Rule 10.3. Venue. - A petition for a protective order
may be filed with the Regional Trial Court where that In resolving the petition or motion, the courts shall be
order would be implemented. guided by the following principles applicable to all
ADR proceedings: Confidential information shall not
If there is a pending court proceeding in which the be subject to discovery and shall be inadmissible in any
information obtained in an ADR proceeding is adversarial proceeding, whether judicial or quasi
required to be divulged or is being divulged, the party judicial. However, evidence or information that is
seeking to enforce the confidentiality of the otherwise admissible or subject to discovery does not
information may file a motion with the court where the become inadmissible or protected from discovery
proceedings are pending to enjoin the confidential solely by reason of its use therein.
information from being divulged or to suppress
confidential information. For mediation proceedings, the court shall be further
guided by the following principles:
Rule 10.4. Grounds. - A protective order may be
granted only if it is shown that the applicant would be a. Information obtained through mediation shall be
materially prejudiced by an unauthorized disclosure of privileged and confidential.
the information obtained, or to be obtained, during an
ADR proceeding. b. A party, a mediator, or a nonparty participant may
refuse to disclose and may prevent any other person
Rule 10.5. Contents of the motion or petition. - The from disclosing a mediation communication.
petition or motion must state the following:
c. In such an adversarial proceeding, the following
a. That the information sought to be protected was persons involved or previously involved in a mediation
obtained, or would be obtained, during an ADR may not be compelled to disclose confidential
proceeding; information obtained during the mediation: (1) the
parties to the dispute; (2) the mediator or mediators;
b. The applicant would be materially prejudiced by the (3) the counsel for the parties: (4) the nonparty
disclosure of that information; participants; (5) any persons hired or engaged in
connection with the mediation as secretary,
c. The person or persons who are being asked to stenographer; clerk or assistant; and (6) any other
divulge the confidential information participated in an person who obtains or possesses confidential
ADR proceedings; and information by reason of his/ her profession.

d. The time, date and place when the ADR proceedings d. The protection of the ADR Laws shall continue to
took place. apply even if a mediator is found to have failed to act
impartially.
Apart from the other submissions, the movant must set
the motion for hearing and contain a notice of hearing e. A mediator may not be called to testify to provide
in accordance with Rule 15 of the Rules of Court. information gathered in mediation. A mediator who is
wrongfully subpoenaed shall be reimbursed the full
Rule 10.6. Notice. - Notice of a request for a protective cost of his attorney fees and related expenses.
order made through a motion shall be made to the
opposing parties in accordance with Rule 15 of the Rule 10.9. Relief against court action. - The order
Rules of Court. enjoining a person or persons from divulging
confidential information shall be immediately
Rule 10.7. Comment/Opposition. - The executory and may not be enjoined while the order is
comment/opposition must be filed within fifteen (15) being questioned with the appellate courts.
days from service of the petition. The opposition or
comment may be accompanied by written proof that
(a) the information is not confidential, (b) the
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If the court declines to enjoin a person or persons from Rule 11.3. Venue. - The petition for confirmation,
divulging confidential information, the petitioner may correction/modification or vacation of a domestic
file a motion for reconsideration or appeal. arbitral award may be filed with Regional Trial Court
having jurisdiction over the place in which one of the
Rule 10.10. Consequence of disobedience. - Any person parties is doing business, where any of the parties
who disobeys the order of the court to cease from reside or where arbitration proceedings were
divulging confidential information shall be imposed conducted.
the proper sanction by the court.
Rule 11.4. Grounds. - (A) To vacate an arbitral award. -
RULE 11: CONFIRMATION, CORRECTION OR The arbitral award may be vacated on the following
VACATION OF AWARD IN DOMESTIC grounds:
ARBITRATION
a. The arbitral award was procured through
Rule 11.1. Who may request confirmation, correction or corruption, fraud or other undue means;
vacation. - Any party to a domestic arbitration may
petition the court to confirm, correct or vacate a b. There was evident partiality or corruption in the
domestic arbitral award. arbitral tribunal or any of its members;

Rule 11.2. When to request confirmation, c. The arbitral tribunal was guilty of misconduct or any
correction/modification or vacation. - form of misbehavior that has materially prejudiced the
rights of any party such as refusing to postpone a
(A) Confirmation. - At any time after the lapse of thirty hearing upon sufficient cause shown or to hear
(30) days from receipt by the petitioner of the arbitral evidence pertinent and material to the controversy;
award, he may petition the court to confirm that
award. d. One or more of the arbitrators was disqualified to
act as such under the law and willfully refrained from
(B) Correction/Modification. - Not later than thirty disclosing such disqualification; or
(30) days from receipt of the arbitral award, a party
may petition the court to correct/modify that award. e. The arbitral tribunal exceeded its powers, or so
imperfectly executed them, such that a complete, final
(C) Vacation. - Not later than thirty (30) days from and definite award upon the subject matter submitted
receipt of the arbitral award, a party may petition the to them was not made.
court to vacate that award.
The award may also be vacated on any or all of the
(D) A petition to vacate the arbitral award may be filed, following grounds:
in opposition to a petition to confirm the arbitral
award, not later than thirty (30) days from receipt of a. The arbitration agreement did not exist, or is invalid
the award by the petitioner. A petition to vacate the for any ground for the revocation of a contract or is
arbitral award filed beyond the reglementary period otherwise unenforceable; or
shall be dismissed.
b. A party to arbitration is a minor or a person
(E) A petition to confirm the arbitral award may be judicially declared to be incompetent.
filed, in opposition to a petition to vacate the arbitral
award, at any time after the petition to vacate such The petition to vacate an arbitral award on the ground
arbitral award is filed. The dismissal of the petition to that the party to arbitration is a minor or a person
vacate the arbitral award for having been filed beyond judicially declared to be incompetent shall be filed only
the reglementary period shall not result in the on behalf of the minor or incompetent and shall allege
dismissal of the petition for the confirmation of such that (a) the other party to arbitration had knowingly
arbitral award. entered into a submission or agreement with such
minor or incompetent, or (b) the submission to
(F) The filing of a petition to confirm an arbitral award arbitration was made by a guardian or guardian ad
shall not authorize the filing of a belated petition to litem who was not authorized to do so by a competent
vacate or set aside such award in opposition thereto. court.

(G) A petition to correct an arbitral award may be In deciding the petition to vacate the arbitral award,
included as part of a petition to confirm the arbitral the court shall disregard any other ground than those
award or as a petition to confirm that award. enumerated above.
PAGE 71

(B) To correct/modify an arbitral award. - The Court the consolidation of the two proceedings in one court
may correct/modify or order the arbitral tribunal to and in one case.
correct/modify the arbitral award in the following
cases: Where the petition to confirm the award and petition
to vacate or correct/modify were simultaneously filed
a. Where there was an evident miscalculation of figures by the parties in the same court or in different courts
or an evident mistake in the description of any person, in the Philippines, upon motion of either party, the
thing or property referred to in the award; court may order the consolidation of the two cases
before either court.
b. Where the arbitrators have awarded upon a matter
not submitted to them, not affecting the merits of the In all instances, the petition must be verified by a
decision upon the matter submitted; person who has knowledge of the jurisdictional facts.

c. Where the arbitrators have omitted to resolve an Rule 11.6. Contents of petition. - The petition must
issue submitted to them for resolution; or state the following:

d. Where the award is imperfect in a matter of form a. The addresses of the parties and any change thereof;
not affecting the merits of the controversy, and if it had
been a commissioner’s report, the defect could have b. The jurisdictional issues raised by a party during
been amended or disregarded by the Court. arbitration proceedings;

Rule 11.5. Form of petition. - An application to vacate c. The grounds relied upon by the parties in seeking
an arbitral award shall be in the form of a petition to the vacation of the arbitral award whether the petition
vacate or as a petition to vacate in opposition to a is a petition for the vacation or setting aside of the
petition to confirm the same award. arbitral award or a petition in opposition to a petition
to confirm the award; and
An application to correct/modify an arbitral award
may be included in a petition to confirm an arbitral d. A statement of the date of receipt of the arbitral
award or in a petition to vacate in opposition to award and the circumstances under which it was
confirm the same award. received by the petitioner.

When a petition to confirm an arbitral award is Apart from other submissions, the petitioner must
pending before a court, the party seeking to vacate or attach to the petition the following:
correct/modify said award may only apply for those
reliefs through a petition to vacate or correct/modify a. An authentic copy of the arbitration agreement;
the award in opposition to the petition to confirm the
award provided that such petition to vacate or b. An authentic copy of the arbitral award;
correct/modify is filed within thirty (30) days from his
receipt of the award. A petition to vacate or c. A certification against forum shopping executed by
correct/modify an arbitral award filed in another court the applicant in accordance with Section 5 of Rule 7 of
or in a separate case before the same court shall be the Rules of Court; and
dismissed, upon appropriate motion, as a violation of
the rule against forum-shopping. d. An authentic copy or authentic copies of the
appointment of an arbitral tribunal.
When a petition to vacate or correct/modify an arbitral
award is pending before a court, the party seeking to Rule 11.7. Notice. - Upon finding that the petition filed
confirm said award may only apply for that relief under this Rule is sufficient both in form and in
through a petition to confirm the same award in substance, the Court shall cause notice and a copy of
opposition to the petition to vacate or correct/modify the petition to be delivered to the respondent allowing
the award. A petition to confirm or correct/modify an him to file a comment or opposition thereto within
arbitral award filed as separate proceeding in another fifteen (15) days from receipt of the petition. In lieu of
court or in a different case before the same court shall an opposition, the respondent may file a petition in
be dismissed, upon appropriate motion, as a violation opposition to the petition.
of the rule against forum shopping.
The petitioner may within fifteen (15) days from
As an alternative to the dismissal of a second petition receipt of the petition in opposition thereto file a reply.
for confirmation, vacation or correction/modification
of an arbitral award filed in violation of the non-forum Rule 11.8. Hearing. - If the Court finds from the
shopping rule, the court or courts concerned may allow petition or petition in opposition thereto that there are
PAGE 72

issues of fact, it shall require the parties, within a subject to cross-examination thereon. The Court shall
period of not more than fifteen (15) days from receipt have full control over the proceedings in order to
of the order, to simultaneously submit the affidavits of ensure that the case is heard without undue delay.
all of their witnesses and reply affidavits within ten
(10) days from receipt of the affidavits to be replied to. Rule 11.9. Court action. - Unless a ground to vacate an
There shall be attached to the affidavits or reply arbitral award under Rule 11.5 above is fully
affidavits documents relied upon in support of the established, the court shall confirm the award.
statements of fact in such affidavits or reply affidavits.
An arbitral award shall enjoy the presumption that it
If the petition or the petition in opposition thereto is was made and released in due course of arbitration and
one for vacation of an arbitral award, the interested is subject to confirmation by the court
party in arbitration may oppose the petition or the
petition in opposition thereto for the reason that the In resolving the petition or petition in opposition
grounds cited in the petition or the petition in thereto in accordance with these Special ADR Rules,
opposition thereto, assuming them to be true, do not the court shall either confirm or vacate the arbitral
affect the merits of the case and may be cured or award. The court shall not disturb the arbitral
remedied. Moreover, the interested party may request tribunal’s determination of facts and/or interpretation
the court to suspend the proceedings for vacation for a of law.
period of time and to direct the arbitral tribunal to
reopen and conduct a new hearing and take such other In a petition to vacate an award or in petition to vacate
action as will eliminate the grounds for vacation of the an award in opposition to a petition to confirm the
award. The opposition shall be supported by a brief of award, the petitioner may simultaneously apply with
legal arguments to show the existence of a sufficient the Court to refer the case back to the same arbitral
legal basis for the opposition. tribunal for the purpose of making a new or revised
award or to direct a new hearing, or in the appropriate
If the ground of the petition to vacate an arbitral award case, order the new hearing before a new arbitral
is that the arbitration agreement did not exist, is tribunal, the members of which shall be chosen in the
invalid or otherwise unenforceable, and an earlier manner provided in the arbitration agreement or
petition for judicial relief under Rule 3 had been filed, submission, or the law. In the latter case, any provision
a copy of such petition and of the decision or final limiting the time in which the arbitral tribunal may
order of the court shall be attached thereto. But if the make a decision shall be deemed applicable to the new
ground was raised before the arbitral tribunal in a arbitral tribunal.
motion to dismiss filed not later than the submission
of its answer, and the arbitral tribunal ruled in favor of In referring the case back to the arbitral tribunal or to
its own jurisdiction as a preliminary question which a new arbitral tribunal pursuant to Rule 24 of Republic
was appealed by a party to the Regional Trial Court, a Act No. 876, the court may not direct it to revise its
copy of the order, ruling or preliminary award or award in a particular way, or to revise its findings of
decision of the arbitral tribunal, the appeal therefrom fact or conclusions of law or otherwise encroach upon
to the Court and the order or decision of the Court the independence of an arbitral tribunal in the making
shall all be attached to the petition. of a final award.

If the ground of the petition is that the petitioner is an RULE 12: RECOGNITION AND ENFORCEMENT OR
infant or a person judicially declared to be SETTING ASIDE OF AN
incompetent, there shall be attached to the petition INTERNATIONALCOMMERCIAL ARBITRATION
certified copies of documents showing such fact. In AWARD
addition, the petitioner shall show that even if the
submission or arbitration agreement was entered into Rule 12.1. Who may request recognition and
by a guardian or guardian ad litem, the latter was not enforcement or setting aside. - Any party to an
authorized by a competent court to sign such the international commercial arbitration in the Philippines
submission or arbitration agreement. may petition the proper court to recognize and enforce
or set aside an arbitral award.
If on the basis of the petition, the opposition, the
affidavits and reply affidavits of the parties, the court Rule 12.2. When to file petition. - (A) Petition to
finds that there is a need to conduct an oral hearing, recognize and enforce. - The petition for enforcement
the court shall set the case for hearing. This case shall and recognition of an arbitral award may be filed
have preference over other cases before the court, anytime from receipt of the award. If, however, a
except criminal cases. During the hearing, the timely petition to set aside an arbitral award is filed,
affidavits of witnesses shall take the place of their the opposing party must file therein and in opposition
direct testimonies and they shall immediately be thereto the petition for recognition and enforcement of
PAGE 73

the same award within the period for filing an contains decisions on matters submitted to arbitration
opposition. may be enforced; or

(B) Petition to set aside. - The petition to set aside an (iv). The composition of the arbitral tribunal or the
arbitral award may only be filed within three (3) arbitral procedure was not in accordance with the
months from the time the petitioner receives a copy agreement of the parties, unless such agreement was in
thereof. If a timely request is made with the arbitral conflict with a provision of Philippine law from which
tribunal for correction, interpretation or additional the parties cannot derogate, or, failing such agreement,
award, the three (3) month period shall be counted was not in accordance with Philippine law;
from the time the petitioner receives the resolution by
the arbitral tribunal of that request. b. The court finds that:

A petition to set aside can no longer be filed after the (i). The subject-matter of the dispute is not capable of
lapse of the three (3) month period. The dismissal of a settlement by arbitration under the law of the
petition to set aside an arbitral award for being time- Philippines; or
barred shall not automatically result in the approval of
the petition filed therein and in opposition thereto for (ii). The recognition or enforcement of the award
recognition and enforcement of the same award. would be contrary to public policy.
Failure to file a petition to set aside shall preclude a
party from raising grounds to resist enforcement of the In deciding the petition, the Court shall disregard any
award. other ground to set aside or enforce the arbitral award
other than those enumerated above.
Rule 12.3. Venue. - A petition to recognize and enforce
or set aside an arbitral award may, at the option of the The petition to set-aside or a pleading resisting the
petitioner, be filed with the Regional Trial Court: (a) enforcement of an arbitral award on the ground that a
where arbitration proceedings were conducted; (b) party was a minor or an incompetent shall be filed only
where any of the assets to be attached or levied upon is on behalf of the minor or incompetent and shall allege
located; (c) where the act to be enjoined will be or is that (a) the other party to arbitration had knowingly
being performed; (d) where any of the parties to entered into a submission or agreement with such
arbitration resides or has its place of business; or (e) in minor or incompetent, or (b) the submission to
the National Capital Judicial Region. arbitration was made by a guardian or guardian ad
litem who was not authorized to do so by a competent
Rule 12.4. Grounds to set aside or resist enforcement. - court.
The court may set aside or refuse the enforcement of
the arbitral award only if: Rule 12.5. Exclusive recourse against arbitral award. -
Recourse to a court against an arbitral award shall be
a. The party making the application furnishes proof made only through a petition to set aside the arbitral
that: award and on grounds prescribed by the law that
governs international commercial arbitration. Any
(i). A party to the arbitration agreement was under other recourse from the arbitral award, such as by
some incapacity, or the said agreement is not valid appeal or petition for review or petition for certiorari
under the law to which the parties have subjected it or, or otherwise, shall be dismissed by the court.
failing any indication thereof, under Philippine law; or
Rule 12.6. Form. - The application to recognize and
(ii). The party making the application to set aside or enforce or set aside an arbitral award, whether made
resist enforcement was not given proper notice of the through a petition to recognize and enforce or to set
appointment of an arbitrator or of the arbitral aside or as a petition to set aside the award in
proceedings or was otherwise unable to present his opposition thereto, or through a petition to set aside or
case; or petition to recognize and enforce in opposition thereto,
shall be verified by a person who has personal
(iii). The award deals with a dispute not contemplated knowledge of the facts stated therein.
by or not falling within the terms of the submission to
arbitration, or contains decisions on matters beyond When a petition to recognize and enforce an arbitral
the scope of the submission to arbitration; provided award is pending, the application to set it aside, if not
that, if the decisions on matters submitted to yet time-barred, shall be made through a petition to set
arbitration can be separated from those not so aside the same award in the same proceedings.
submitted, only that part of the award which contains
decisions on matters not submitted to arbitration may When a timely petition to set aside an arbitral award is
be set aside or only that part of the award which filed, the opposing party may file a petition for
PAGE 74

recognition and enforcement of the same award in the arbitral tribunal’s preliminary determination in
opposition thereto. favor of its own jurisdiction, the petitioner shall
apprise the court before which the petition to recognize
Rule 12.7. Contents of petition. - (A) Petition to and enforce or set aside is pending of the status of the
recognize and enforce. - The petition to recognize and appeal or its resolution.
enforce or petition to set aside in opposition thereto, or
petition to set aside or petition to recognize and Rule 12.8. Notice. - Upon finding that the petition filed
enforce in opposition thereto, shall state the following: under this Rule is sufficient both in form and in
substance, the court shall cause notice and a copy of
a. The addresses of record, or any change thereof, of the petition to be delivered to the respondent directing
the parties to arbitration; him to file an opposition thereto within fifteen (15)
days from receipt of the petition. In lieu of an
b. A statement that the arbitration agreement or opposition, the respondent may file a petition to set
submission exists; aside in opposition to a petition to recognize and
enforce, or a petition to recognize and enforce in
c. The names of the arbitrators and proof of their opposition to a petition to set aside.
appointment;
The petitioner may within fifteen (15) days from
d. A statement that an arbitral award was issued and receipt of the petition to set aside in opposition to a
when the petitioner received it; and petition to recognize and enforce, or from receipt of the
petition to recognize and enforce in opposition to a
e. The relief sought. petition to set aside, file a reply.

Apart from other submissions, the petitioner shall Rule 12.9. Submission of documents. - If the court
attach to the petition the following: finds that the issue between the parties is mainly one
of law, the parties may be required to submit briefs of
a. An authentic copy of the arbitration agreement; legal arguments, not more than fifteen (15) days from
receipt of the order, sufficiently discussing the legal
b. An authentic copy of the arbitral award; issues and the legal basis for the relief prayed for by
each of them.
c. A verification and certification against forum
shopping executed by the applicant in accordance with If the court finds from the petition or petition in
Sections 4 and 5 of Rule 7 of the Rules of Court; and opposition thereto that there are issues of fact relating
to the ground(s) relied upon for the court to set aside,
d. An authentic copy or authentic copies of the it shall require the parties within a period of not more
appointment of an arbitral tribunal. than fifteen (15) days from receipt of the order
simultaneously to submit the affidavits of all of their
(B) Petition to set aside. - The petition to set aside or witnesses and reply affidavits within ten (10) days
petition to set aside in opposition to a petition to from receipt of the affidavits to be replied to. There
recognize and enforce an arbitral award in shall be attached to the affidavits or reply affidavits, all
international commercial arbitration shall have the documents relied upon in support of the statements of
same contents as a petition to recognize and enforce or fact in such affidavits or reply affidavits.
petition to recognize and enforce in opposition to a
petition to set aside an arbitral award. In addition, the Rule 12.10. Hearing. - If on the basis of the petition,
said petitions should state the grounds relied upon to the opposition, the affidavits and reply affidavits of the
set it aside. parties, the court finds that there is a need to conduct
an oral hearing, the court shall set the case for hearing.
Further, if the ground of the petition to set aside is that This case shall have preference over other cases before
the petitioner is a minor or found incompetent by a the court, except criminal cases. During the hearing,
court, there shall be attached to the petition certified the affidavits of witnesses shall take the place of their
copies of documents showing such fact. In addition, direct testimonies and they shall immediately be
the petitioner shall show that even if the submission or subject to cross-examination thereon. The court shall
arbitration agreement was entered into by a guardian have full control over the proceedings in order to
or guardian ad litem, the latter was not authorized by a ensure that the case is heard without undue delay.
competent court to sign such the submission or
arbitration agreement. Rule 12.11. Suspension of proceedings to set aside. -
The court when asked to set aside an arbitral award
In either case, if another court was previously may, where appropriate and upon request by a party,
requested to resolve and/or has resolved, on appeal, suspend the proceedings for a period of time
PAGE 75

determined by it to give the arbitral tribunal an


opportunity to resume the arbitral proceedings or to RULE 13: RECOGNITION AND ENFORCEMENT OF
take such other action as in the arbitral tribunal’s A FOREIGN ARBITRAL AWARD
opinion will eliminate the grounds for setting aside.
The court, in referring the case back to the arbitral Rule 13.1. Who may request recognition and
tribunal may not direct it to revise its award in a enforcement. - Any party to a foreign arbitration may
particular way, or to revise its findings of fact or petition the court to recognize and enforce a foreign
conclusions of law or otherwise encroach upon the arbitral award.
independence of an arbitral tribunal in the making of a
final award. Rule 13.2. When to petition. - At any time after receipt
of a foreign arbitral award, any party to arbitration
The court when asked to set aside an arbitral award may petition the proper Regional Trial Court to
may also, when the preliminary ruling of an arbitral recognize and enforce such award.
tribunal affirming its jurisdiction to act on the matter
before it had been appealed by the party aggrieved by Rule 13.3. Venue. - The petition to recognize and
such preliminary ruling to the court, suspend the enforce a foreign arbitral award shall be filed, at the
proceedings to set aside to await the ruling of the court option of the petitioner, with the Regional Trial Court
on such pending appeal or, in the alternative, (a) where the assets to be attached or levied upon is
consolidate the proceedings to set aside with the located, (b) where the act to be enjoined is being
earlier appeal. performed, (c) in the principal place of business in the
Philippines of any of the parties, (d) if any of the
Rule 12.12. Presumption in favor of confirmation. - It is parties is an individual, where any of those individuals
presumed that an arbitral award was made and resides, or (e) in the National Capital Judicial Region.
released in due course and is subject to enforcement by
the court, unless the adverse party is able to establish a Rule 13.4. Governing law and grounds to refuse
ground for setting aside or not enforcing an arbitral recognition and enforcement. - The recognition and
award. enforcement of a foreign arbitral award shall be
governed by the 1958 New York Convention on the
Rule 12.13. Judgment of the court. - Unless a ground to Recognition and Enforcement of Foreign Arbitral
set aside an arbitral award under Rule 12.4 above is Awards (the "New York Convention") and this Rule.
fully established, the court shall dismiss the petition. The court may, upon grounds of comity and
If, in the same proceedings, there is a petition to reciprocity, recognize and enforce a foreign arbitral
recognize and enforce the arbitral award filed in award made in a country that is not a signatory to the
opposition to the petition to set aside, the court shall New York Convention as if it were a Convention
recognize and enforce the award. Award.

In resolving the petition or petition in opposition A Philippine court shall not set aside a foreign arbitral
thereto in accordance with the Special ADR Rules, the award but may refuse it recognition and enforcement
court shall either set aside or enforce the arbitral on any or all of the following grounds:
award. The court shall not disturb the arbitral
tribunal’s determination of facts and/or interpretation a. The party making the application to refuse
of law. recognition and enforcement of the award furnishes
proof that:
Rule 12.14. Costs. - Unless otherwise agreed upon by
the parties in writing, at the time the case is submitted (i). A party to the arbitration agreement was under
to the court for decision, the party praying for some incapacity; or the said agreement is not valid
recognition and enforcement or setting aside of an under the law to which the parties have subjected it or,
arbitral award shall submit a statement under oath failing any indication thereof, under the law of the
confirming the costs he has incurred only in the country where the award was made; or
proceedings for such recognition and enforcement or
setting aside. The costs shall include the attorney’s fees (ii). The party making the application was not given
the party has paid or is committed to pay to his counsel proper notice of the appointment of an arbitrator or of
of record. the arbitral proceedings or was otherwise unable to
present his case; or
The prevailing party shall be entitled to an award of
costs, which shall include reasonable attorney’s fees of (iii). The award deals with a dispute not contemplated
the prevailing party against the unsuccessful party. The by or not falling within the terms of the submission to
court shall determine the reasonableness of the claim arbitration, or contains decisions on matters beyond
for attorney’s fees. the scope of the submission to arbitration; provided
PAGE 76

that, if the decisions on matters submitted to allowing him to file an opposition thereto within thirty
arbitration can be separated from those not so (30) days from receipt of the notice and petition.
submitted, only that part of the award which contains
decisions on matters not submitted to arbitration may Rule 13.7. Opposition. - The opposition shall be
be set aside; or verified by a person who has personal knowledge of the
facts stated therein.
(iv). The composition of the arbitral tribunal or the
arbitral procedure was not in accordance with the Rule 13.8. Submissions. - If the court finds that the
agreement of the parties or, failing such agreement, issue between the parties is mainly one of law, the
was not in accordance with the law of the country parties may be required to submit briefs of legal
where arbitration took place; or arguments, not more than thirty (30) days from receipt
of the order, sufficiently discussing the legal issues and
(v). The award has not yet become binding on the the legal bases for the relief prayed for by each other.
parties or has been set aside or suspended by a court of
the country in which that award was made; or If, from a review of the petition or opposition, there are
issues of fact relating to the ground/s relied upon for
b. The court finds that: the court to refuse enforcement, the court shall, motu
proprio or upon request of any party, require the
(i). The subject-matter of the dispute is not capable of parties to simultaneously submit the affidavits of all of
settlement or resolution by arbitration under their witnesses within a period of not less than fifteen
Philippine law; or (15) days nor more than thirty (30) days from receipt
of the order. The court may, upon the request of any
(ii). The recognition or enforcement of the award party, allow the submission of reply affidavits within a
would be contrary to public policy. period of not less than fifteen (15) days nor more than
thirty (30) days from receipt of the order granting said
The court shall disregard any ground for opposing the request. There shall be attached to the affidavits or
recognition and enforcement of a foreign arbitral reply affidavits all documents relied upon in support of
award other than those enumerated above. the statements of fact in such affidavits or reply
affidavits.
Rule 13.5. Contents of petition. - The petition shall
state the following: Rule 13.9. Hearing. - The court shall set the case for
hearing if on the basis of the foregoing submissions
a. The addresses of the parties to arbitration; there is a need to do so. The court shall give due
priority to hearings on petitions under this Rule.
b. In the absence of any indication in the award, the During the hearing, the affidavits of witnesses shall
country where the arbitral award was made and take the place of their direct testimonies and they shall
whether such country is a signatory to the New York immediately be subject to cross-examination. The
Convention; and court shall have full control over the proceedings in
order to ensure that the case is heard without undue
c. The relief sought. delay.

Apart from other submissions, the petition shall have Rule 13.10. Adjournment/deferment of decision on
attached to it the following: enforcement of award. - The court before which a
petition to recognize and enforce a foreign arbitral
a. An authentic copy of the arbitration agreement; and award is pending, may adjourn or defer rendering a
decision thereon if, in the meantime, an application for
b. An authentic copy of the arbitral award. the setting aside or suspension of the award has been
made with a competent authority in the country where
If the foreign arbitral award or agreement to arbitrate the award was made. Upon application of the
or submission is not made in English, the petitioner petitioner, the court may also require the other party to
shall also attach to the petition a translation of these give suitable security.
documents into English. The translation shall be
certified by an official or sworn translator or by a Rule 13.11. Court action. - It is presumed that a foreign
diplomatic or consular agent. arbitral award was made and released in due course of
arbitration and is subject to enforcement by the court.
Rule 13.6. Notice and opposition. - Upon finding that
the petition filed under this Rule is sufficient both in The court shall recognize and enforce a foreign arbitral
form and in substance, the court shall cause notice and award unless a ground to refuse recognition or
a copy of the petition to be delivered to the respondent
PAGE 77

enforcement of the foreign arbitral award under this Rule 15.4. Registry Book. - The Clerk of Court of each
rule is fully established. Regional Trial Court shall keep a Registry Book that
shall chronologically list or enroll all the mediated
The decision of the court recognizing and enforcing a settlement agreements/settlement awards that are
foreign arbitral award is immediately executory. deposited with the court as well as the names and
address of the parties thereto and the date of
In resolving the petition for recognition and enrollment and shall issue a Certificate of Deposit to
enforcement of a foreign arbitral award in accordance the party that made the deposit.
with these Special ADR Rules, the court shall either [a]
recognize and/or enforce or [b] refuse to recognize and Rule 15.5. Enforcement of mediated settlement
enforce the arbitral award. The court shall not disturb agreement. - Any of the parties to a mediated
the arbitral tribunal’s determination of facts and/or settlement agreement, which was deposited with the
interpretation of law. Clerk of Court of the Regional Trial Court, may, upon
breach thereof, file a verified petition with the same
Rule 13.12. Recognition and enforcement of non- court to enforce said agreement.
convention award. - The court shall, only upon
grounds provided by these Special ADR Rules, Rule 15.6. Contents of petition. - The verified petition
recognize and enforce a foreign arbitral award made in shall:
a country not a signatory to the New York Convention
when such country extends comity and reciprocity to a. Name and designate, as petitioner or respondent, all
awards made in the Philippines. If that country does parties to the mediated settlement agreement and
not extend comity and reciprocity to awards made in those who may be affected by it;
the Philippines, the court may nevertheless treat such
award as a foreign judgment enforceable as such under b. State the following:
Rule 39, Section 48, of the Rules of Court.
(i). The addresses of the petitioner and respondents;
PART III and
PROVISIONS SPECIFIC TO MEDIATION
(ii). The ultimate facts that would show that the
RULE 14: GENERAL PROVISIONS adverse party has defaulted to perform its obligation
under said agreement; and
Rule 14.1. Application of the rules on arbitration. -
Whenever applicable and appropriate, the pertinent c. Have attached to it the following:
rules on arbitration shall be applied in proceedings
before the court relative to a dispute subject to (i). An authentic copy of the mediated settlement
mediation. agreement; and

RULE 15: DEPOSIT AND ENFORCEMENT OF (ii). Certificate of Deposit showing that the mediated
MEDIATED SETTLEMENT AGREEMENTS settlement agreement was deposited with the Clerk of
Court.
Rule 15.1. Who makes a deposit. - Any party to a
mediation that is not court-annexed may deposit with Rule 15.7. Opposition. - The adverse party may file an
the court the written settlement agreement, which opposition, within fifteen (15) days from receipt of
resulted from that mediation. notice or service of the petition, by submitting written
proof of compliance with the mediated settlement
Rule 15.2. When deposit is made. - At any time after an agreement or such other affirmative or negative
agreement is reached, the written settlement defenses it may have.
agreement may be deposited.
Rule 15.8. Court action. - After a summary hearing, if
Rule 15.3. Venue. - The written settlement agreement the court finds that the agreement is a valid mediated
may be jointly deposited by the parties or deposited by settlement agreement, that there is no merit in any of
one party with prior notice to the other party/ies with the affirmative or negative defenses raised, and the
the Clerk of Court of the Regional Trial Court (a) where respondent has breached that agreement, in whole or
the principal place of business in the Philippines of any in part, the court shall order the enforcement thereof;
of the parties is located; (b) if any of the parties is an otherwise, it shall dismiss the petition.
individual, where any of those individuals resides; or
(c) in the National Capital Judicial Region. PART IV
PROVISIONS SPECIFIC TO CONSTRUCTION
ARBITRATION
PAGE 78

the court shall motu proprio resolve the motion only


RULE 16: GENERAL PROVISIONS on the basis of the facts alleged in the motion.

Rule 16.1. Application of the rules on arbitration. - After hearing, the court shall dismiss the civil action
Whenever applicable and appropriate, the rules on and refer the parties to arbitration if it finds, based on
arbitration shall be applied in proceedings before the the pleadings and supporting documents submitted by
court relative to a dispute subject to construction the parties, that there is a valid and enforceable
arbitration. arbitration agreement involving a construction
dispute. Otherwise, the court shall proceed to hear the
RULE 17: REFERRAL TO CIAC case.

Rule 17.1. Dismissal of action. - A Regional Trial Court All doubts shall be resolved in favor of the existence of
before which a construction dispute is filed shall, upon a construction dispute and the arbitration agreement.
becoming aware that the parties have entered into an
arbitration agreement, motu proprio or upon motion Rule 17.6. Referral immediately executory. - An order
made not later than the pre-trial, dismiss the case and dismissing the case and referring the dispute to
refer the parties to arbitration to be conducted by the arbitration by CIAC shall be immediately executory.
Construction Industry Arbitration Commission
(CIAC), unless all parties to arbitration, assisted by Rule 17.7. Multiple actions and parties. - The court
their respective counsel, submit to the court a written shall not decline to dismiss the civil action and make a
agreement making the court, rather than the CIAC, the referral to arbitration by CIAC for any of the following
body that would exclusively resolve the dispute. reasons:

Rule 17.2. Form and contents of motion. - The request a. Not all of the disputes subject of the civil action may
for dismissal of the civil action and referral to be referred to arbitration;
arbitration shall be through a verified motion that shall
(a) contain a statement showing that the dispute is a b. Not all of the parties to the civil action are bound by
construction dispute; and (b) be accompanied by proof the arbitration agreement and referral to arbitration
of the existence of the arbitration agreement. would result in multiplicity of suits;

If the arbitration agreement or other document c. The issues raised in the civil action could be speedily
evidencing the existence of that agreement is already and efficiently resolved in its entirety by the Court
part of the record, those documents need not be rather than in arbitration;
submitted to the court provided that the movant has
cited in the motion particular references to the records d. Referral to arbitration does not appear to be the
where those documents may be found. most prudent action; or

The motion shall also contain a notice of hearing e. Dismissal of the civil action would prejudice the
addressed to all parties and shall specify the date and rights of the parties to the civil action who are not
time when the motion will be heard, which must not be bound by the arbitration agreement.
later than fifteen (15) days after the filing of the
motion. The movant shall ensure receipt by all parties The court may, however, issue an order directing the
of the motion at least three days before the date of the inclusion in arbitration of those parties who are bound
hearing. by the arbitration agreement directly or by reference
thereto pursuant to Section 34 of Republic Act No.
Rule 17.3. Opposition. - Upon receipt of the motion to 9285.
refer the dispute to arbitration by CIAC, the other
party may file an opposition to the motion on or before Furthermore, the court shall issue an order directing
the day such motion is to be heard. The opposition the case to proceed with respect to the parties not
shall clearly set forth the reasons why the court should bound by the arbitration agreement.
not dismiss the case.
Rule 17.8. Referral - If the parties manifest that they
Rule 17.4. Hearing. - The court shall hear the motion have agreed to submit all or part of their dispute
only once and for the purpose of clarifying relevant pending with the court to arbitration by CIAC, the
factual and legal issues. court shall refer them to CIAC for arbitration.

Rule 17.5. Court action. - If the other parties fail to file PART V
their opposition on or before the day of the hearing, PROVISIONS SPECIFIC TO OTHER FORMS OF ADR
PAGE 79

RULE 18: GENERAL PROVISIONS a. That the arbitration agreement is inexistent, invalid
or unenforceable pursuant to Rule 3.10 (B);
Rule 18.1. Applicability of rules to other forms of ADR.
- This rule governs the procedure for matters brought b. Upholding or reversing the arbitral tribunal’s
before the court involving the following forms of ADR: jurisdiction pursuant to Rule 3.19;

a. Early neutral evaluation; c. Denying a request to refer the parties to arbitration;

b. Neutral evaluation; d. Granting or denying a party an interim measure of


protection;
c. Mini-trial;
e. Denying a petition for the appointment of an
d. Mediation-arbitration; arbitrator;

e. A combination thereof; or f. Refusing to grant assistance in taking evidence;

f. Any other ADR form. g. Enjoining or refusing to enjoin a person from


divulging confidential information;
Rule 18.2. Applicability of the rules on mediation. - If
the other ADR form/process is more akin to mediation h. Confirming, vacating or correcting a domestic
(i.e., the neutral third party merely assists the parties arbitral award;
in reaching a voluntary agreement), the herein rules on
mediation shall apply. i. Suspending the proceedings to set aside an
international commercial arbitral award and referring
Rule 18.3. Applicability of rules on arbitration.-If the the case back to the arbitral tribunal;
other ADR form/process is more akin to arbitration
(i.e., the neutral third party has the power to make a j. Setting aside an international commercial arbitral
binding resolution of the dispute), the herein rules on award;
arbitration shall apply.
k. Dismissing the petition to set aside an international
Rule 18.4. Referral. - If a dispute is already before a commercial arbitral award, even if the court does not
court, either party may before and during pre-trial, file recognize and/or enforce the same;
a motion for the court to refer the parties to other ADR
forms/processes. At any time during court l. Recognizing and/or enforcing, or dismissing a
proceedings, even after pre-trial, the parties may petition to recognize and/or enforce an international
jointly move for suspension of the action pursuant to commercial arbitral award;
Article 2030 of the Civil Code of the Philippines where
the possibility of compromise is shown. m. Declining a request for assistance in taking
evidence;
Rule 18.5. Submission of settlement agreement. -
Either party may submit to the court, before which the n. Adjourning or deferring a ruling on a petition to set
case is pending, any settlement agreement following a aside, recognize and/or enforce an international
neutral or an early neutral evaluation, mini-trial or commercial arbitral award;
mediation-arbitration.
o. Recognizing and/or enforcing a foreign arbitral
PART VI award, or refusing recognition and/or enforcement of
MOTION FOR RECONSIDERATION, APPEAL AND the same; and
CERTIORARI
p. Granting or dismissing a petition to enforce a
RULE 19: MOTION FOR RECONSIDERATION, deposited mediated settlement agreement.
APPEAL AND CERTIORARI
No motion for reconsideration shall be allowed from
A. MOTION FOR RECONSIDERATION the following rulings of the Regional Trial Court:

Rule 19.1. Motion for reconsideration, when allowed. - a. A prima facie determination upholding the
A party may ask the Regional Trial to reconsider its existence, validity or enforceability of an arbitration
ruling on the following: agreement pursuant to Rule 3.1 (A);

b. An order referring the dispute to arbitration;


PAGE 80

recourse to one remedy shall preclude recourse to the


c. An order appointing an arbitrator; other.

d. Any ruling on the challenge to the appointment of an Rule 19.10. Rule on judicial review on arbitration in the
arbitrator; Philippines. - As a general rule, the court can only
vacate or set aside the decision of an arbitral tribunal
e. Any order resolving the issue of the termination of upon a clear showing that the award suffers from any
the mandate of an arbitrator; and of the infirmities or grounds for vacating an arbitral
award under Section 24 of Republic Act No. 876 or
f. An order granting assistance in taking evidence. under Rule 34 of the Model Law in a domestic
arbitration, or for setting aside an award in an
Rule 19.2. When to move for reconsideration. - A international arbitration under Article 34 of the Model
motion for reconsideration may be filed with the Law, or for such other grounds provided under these
Regional Trial Court within a non-extendible period of Special Rules.
fifteen (15) days from receipt of the questioned ruling
or order. If the Regional Trial Court is asked to set aside an
arbitral award in a domestic or international
Rule 19.3. Contents and notice. - The motion shall be arbitration on any ground other than those provided in
made in writing stating the ground or grounds therefor the Special ADR Rules, the court shall entertain such
and shall be filed with the court and served upon the ground for the setting aside or non-recognition of the
other party or parties. arbitral award only if the same amounts to a violation
of public policy.
Rule 19.4. Opposition or comment. - Upon receipt of
the motion for reconsideration, the other party or The court shall not set aside or vacate the award of the
parties shall have a non-extendible period of fifteen arbitral tribunal merely on the ground that the arbitral
(15) days to file his opposition or comment. tribunal committed errors of fact, or of law, or of fact
and law, as the court cannot substitute its judgment for
Rule 19.5. Resolution of motion. - A motion for that of the arbitral tribunal.
reconsideration shall be resolved within thirty (30)
days from receipt of the opposition or comment or Rule 19.11. Rule on judicial review of foreign arbitral
upon the expiration of the period to file such award. - The court can deny recognition and
opposition or comment. enforcement of a foreign arbitral award only upon the
grounds provided in Article V of the New York
Rule 19.6. No second motion for reconsideration. - No Convention, but shall have no power to vacate or set
party shall be allowed a second motion for aside a foreign arbitral award.
reconsideration.
C. APPEALS TO THE COURT OF APPEALS
B. GENERAL PROVISIONS ON APPEAL AND
CERTIORARI Rule 19.12. Appeal to the Court of Appeals. - An appeal
to the Court of Appeals through a petition for review
Rule 19.7. No appeal or certiorari on the merits of an under this Special Rule shall only be allowed from the
arbitral award. - An agreement to refer a dispute to following final orders of the Regional Trial Court:
arbitration shall mean that the arbitral award shall be
final and binding. Consequently, a party to an a. Granting or denying an interim measure of
arbitration is precluded from filing an appeal or a protection;
petition for certiorari questioning the merits of an
arbitral award. b. Denying a petition for appointment of an arbitrator;

Rule 19.8. Subject matter and governing rules. - The c. Denying a petition for assistance in taking evidence;
remedy of an appeal through a petition for review or
the remedy of a special civil action of certiorari from a d. Enjoining or refusing to enjoin a person from
decision of the Regional Trial Court made under the divulging confidential information;
Special ADR Rules shall be allowed in the instances,
and instituted only in the manner, provided under this e. Confirming, vacating or correcting/modifying a
Rule. domestic arbitral award;

Rule 19.9. Prohibited alternative remedies. - Where the f. Setting aside an international commercial arbitration
remedies of appeal and certiorari are specifically made award;
available to a party under the Special ADR Rules,
PAGE 81

g. Dismissing the petition to set aside an international accompanied by a clearly legible duplicate original or a
commercial arbitration award even if the court does certified true copy of the decision or resolution of the
not decide to recognize or enforce such award; Regional Trial Court appealed from, together with
certified true copies of such material portions of the
h. Recognizing and/or enforcing an international record referred to therein and other supporting papers,
commercial arbitration award; and (d) contain a sworn certification against forum
shopping as provided in the Rules of Court. The
i. Dismissing a petition to enforce an international petition shall state the specific material dates showing
commercial arbitration award; that it was filed within the period fixed herein.

j. Recognizing and/or enforcing a foreign arbitral Rule 19.17. Effect of failure to comply with
award; requirements. - The court shall dismiss the petition if it
fails to comply with the foregoing requirements
k. Refusing recognition and/or enforcement of a regarding the payment of the docket and other lawful
foreign arbitral award; fees, the deposit for costs, proof of service of the
petition, the contents and the documents, which
l. Granting or dismissing a petition to enforce a should accompany the petition.
deposited mediated settlement agreement; and
Rule 19.18. Action on the petition. - The Court of
m. Reversing the ruling of the arbitral tribunal Appeals may require the respondent to file a comment
upholding its jurisdiction. on the petition, not a motion to dismiss, within ten
(10) days from notice, or dismiss the petition if it finds,
Rule 19.13. Where to appeal. - An appeal under this upon consideration of the grounds alleged and the
Rule shall be taken to the Court of Appeals within the legal briefs submitted by the parties, that the petition
period and in the manner herein provided. does not appear to be prima facie meritorious.

Rule 19.14. When to appeal. - The petition for review Rule 19.19. Contents of Comment. - The comment shall
shall be filed within fifteen (15) days from notice of the be filed within ten (10) days from notice in seven (7)
decision of the Regional Trial Court or the denial of the legible copies and accompanied by clearly legible
petitioner’s motion for reconsideration. certified true copies of such material portions of the
record referred to therein together with other
Rule 19.15. How appeal taken. - Appeal shall be taken supporting papers. The comment shall (a) point out
by filing a verified petition for review in seven (7) insufficiencies or inaccuracies in petitioner’s statement
legible copies with the Court of Appeals, with proof of of facts and issues, and (b) state the reasons why the
service of a copy thereof on the adverse party and on petition should be denied or dismissed. A copy thereof
the Regional Trial Court. The original copy of the shall be served on the petitioner, and proof of such
petition intended for the Court of Appeals shall be service shall be filed with the Court of Appeals.
marked original by the petitioner.
Rule 19.20. Due course. - If upon the filing of a
Upon the filing of the petition and unless otherwise comment or such other pleading or documents as may
prescribed by the Court of Appeals, the petitioner shall be required or allowed by the Court of Appeals or upon
pay to the clerk of court of the Court of Appeals the expiration of the period for the filing thereof, and
docketing fees and other lawful fees of P3,500.00 and on the basis of the petition or the records, the Court of
deposit the sum of P500.00 for costs. Appeals finds prima facie that the Regional Trial Court
has committed an error that would warrant reversal or
Exemption from payment of docket and other lawful modification of the judgment, final order, or resolution
fees and the deposit for costs may be granted by the sought to be reviewed, it may give due course to the
Court of Appeals upon a verified motion setting forth petition; otherwise, it shall dismiss the same.
valid grounds therefor. If the Court of Appeals denies
the motion, the petitioner shall pay the docketing and Rule 19.21. Transmittal of records. - Within fifteen (15)
other lawful fees and deposit for costs within fifteen days from notice that the petition has been given due
days from the notice of the denial. course, the Court of Appeals may require the court or
agency concerned to transmit the original or a legible
Rule 19.16. Contents of the Petition. - The petition for certified true copy of the entire record of the
review shall (a) state the full names of the parties to proceeding under review. The record to be transmitted
the case, without impleading the court or agencies may be abridged by agreement of all parties to the
either as petitioners or respondent, (b) contain a proceeding. The Court of Appeals may require or
concise statement of the facts and issues involved and permit subsequent correction of or addition to the
the grounds relied upon for the review, (c) be record.
PAGE 82

A special civil action for certiorari may be filed against


Rule 19.22. Effect of appeal. - The appeal shall not stay the following orders of the court.
the award, judgment, final order or resolution sought
to be reviewed unless the Court of Appeals directs a. Holding that the arbitration agreement is inexistent,
otherwise upon such terms as it may deem just. invalid or unenforceable;

Rule 19.23. Submission for decision. - If the petition is b. Reversing the arbitral tribunal’s preliminary
given due course, the Court of Appeals may set the case determination upholding its jurisdiction;
for oral argument or require the parties to submit
memoranda within a period of fifteen (15) days from c. Denying the request to refer the dispute to
notice. The case shall be deemed submitted for arbitration;
decision upon the filing of the last pleading or
memorandum required by the Court of Appeals. d. Granting or refusing an interim relief;

The Court of Appeals shall render judgment within e. Denying a petition for the appointment of an
sixty (60) days from the time the case is submitted for arbitrator;
decision.
f. Confirming, vacating or correcting a domestic
Rule 19.24. Subject of appeal restricted in certain arbitral award;
instance. - If the decision of the Regional Trial Court
refusing to recognize and/or enforce, vacating and/or g. Suspending the proceedings to set aside an
setting aside an arbitral award is premised on a finding international commercial arbitral award and referring
of fact, the Court of Appeals may inquire only into such the case back to the arbitral tribunal;
fact to determine the existence or non-existence of the
specific ground under the arbitration laws of the h. Allowing a party to enforce an international
Philippines relied upon by the Regional Trial Court to commercial arbitral award pending appeal;
refuse to recognize and/or enforce, vacate and/or set
aside an award. Any such inquiry into a question of i. Adjourning or deferring a ruling on whether to set
fact shall not be resorted to for the purpose of aside, recognize and or enforce an international
substituting the court’s judgment for that of the commercial arbitral award;
arbitral tribunal as regards the latter’s ruling on the
merits of the controversy. j. Allowing a party to enforce a foreign arbitral award
pending appeal; and
Rule 19.25. Party appealing decision of court
confirming arbitral award required to post bond. - The k. Denying a petition for assistance in taking evidence.
Court of Appeals shall within fifteen (15) days from
receipt of the petition require the party appealing from Rule 19.27. Form. - The petition shall be accompanied
the decision or a final order of the Regional Trial by a certified true copy of the questioned judgment,
Court, either confirming or enforcing an arbitral order or resolution of the Regional Trial Court, copies
award, or denying a petition to set aside or vacate the of all pleadings and documents relevant and pertinent
arbitral award to post a bond executed in favor of the thereto, and a sworn certification of non-forum
prevailing party equal to the amount of the award. shopping as provided in the Rules of Court.

Failure of the petitioner to post such bond shall be a Upon the filing of the petition and unless otherwise
ground for the Court of Appeals to dismiss the petition. prescribed by the Court of Appeals, the petitioner shall
pay to the clerk of court of the Court of Appeals
D. SPECIAL CIVIL ACTION FOR CERTIORARI docketing fees and other lawful fees of P3,500.00 and
deposit the sum of P500.00 for costs. Exemption from
Rule 19.26. Certiorari to the Court of Appeals. - When payment of docket and other lawful fees and the
the Regional Trial Court, in making a ruling under the deposit for costs may be granted by the Court of
Special ADR Rules, has acted without or in excess of its Appeals upon a verified motion setting forth valid
jurisdiction, or with grave abuse of discretion grounds therefor. If the Court of Appeals denies the
amounting to lack or excess of jurisdiction, and there is motion, the petitioner shall pay the docketing and
no appeal or any plain, speedy, and adequate remedy other lawful fees and deposit for costs within fifteen
in the ordinary course of law, a party may file a special days from the notice of the denial.
civil action for certiorari to annul or set aside a ruling
of the Regional Trial Court. Rule 19.28. When to file petition. - The petition must
be filed with the Court of Appeals within fifteen (15)
days from notice of the judgment, order or resolution
PAGE 83

sought to be annulled or set aside. No extension of Rule 19.35. Service and enforcement of order or
time to file the petition shall be allowed. judgment. - A certified copy of the judgment rendered
in accordance with the last preceding section shall be
Rule 19.29. Arbitral tribunal a nominal party in the served upon the Regional Trial Court concerned in
petition. - The arbitral tribunal shall only be a nominal such manner as the Court of Appeals may direct, and
party in the petition for certiorari. As nominal party, disobedience thereto shall be punished as contempt.
the arbitral tribunal shall not be required to submit
any pleadings or written submissions to the court. The E. APPEAL BY CERTIORARI TO THE SUPREME
arbitral tribunal or an arbitrator may, however, submit COURT
such pleadings or written submissions if the same
serves the interest of justice. Rule 19.36. Review discretionary. - A review by the
Supreme Court is not a matter of right, but of sound
In petitions relating to the recognition and judicial discretion, which will be granted only for
enforcement of a foreign arbitral award, the arbitral serious and compelling reasons resulting in grave
tribunal shall not be included even as a nominal party. prejudice to the aggrieved party. The following, while
However, the tribunal may be notified of the neither controlling nor fully measuring the court's
proceedings and furnished with court processes. discretion, indicate the serious and compelling, and
necessarily, restrictive nature of the grounds that will
Rule 19.30. Court to dismiss petition. - The court shall warrant the exercise of the Supreme Court’s
dismiss the petition if it fails to comply with Rules discretionary powers, when the Court of Appeals:
19.27 and 19.28 above, or upon consideration of the
ground alleged and the legal briefs submitted by the a. Failed to apply the applicable standard or test for
parties, the petition does not appear to be prima facie judicial review prescribed in these Special ADR Rules
meritorious. in arriving at its decision resulting in substantial
prejudice to the aggrieved party;
Rule 19.31. Order to comment. - If the petition is
sufficient in form and substance to justify such b. Erred in upholding a final order or decision despite
process, the Court of Appeals shall immediately issue the lack of jurisdiction of the court that rendered such
an order requiring the respondent or respondents to final order or decision;
comment on the petition within a non-extendible
period of fifteen (15) days from receipt of a copy c. Failed to apply any provision, principle, policy or
thereof. Such order shall be served on the respondents rule contained in these Special ADR Rules resulting in
in such manner as the court may direct, together with a substantial prejudice to the aggrieved party; and
copy of the petition and any annexes thereto.
d. Committed an error so egregious and harmful to a
Rule 19.32. Arbitration may continue despite petition party as to amount to an undeniable excess of
for certiorari. - A petition for certiorari to the court jurisdiction.
from the action of the appointing authority or the
arbitral tribunal allowed under this Rule shall not The mere fact that the petitioner disagrees with the
prevent the arbitral tribunal from continuing the Court of Appeals’ determination of questions of fact, of
proceedings and rendering its award. Should the law or both questions of fact and law, shall not warrant
arbitral tribunal continue with the proceedings, the the exercise of the Supreme Court’s discretionary
arbitral proceedings and any award rendered therein power. The error imputed to the Court of Appeals must
will be subject to the final outcome of the pending be grounded upon any of the above prescribed grounds
petition for certiorari. for review or be closely analogous thereto.

Rule 19.33. Prohibition against injunctions. - The A mere general allegation that the Court of Appeals has
Court of Appeals shall not, during the pendency of the committed serious and substantial error or that it has
proceedings before it, prohibit or enjoin the acted with grave abuse of discretion resulting in
commencement of arbitration, the constitution of the substantial prejudice to the petitioner without
arbitral tribunal, or the continuation of arbitration. indicating with specificity the nature of such error or
abuse of discretion and the serious prejudice suffered
Rule 19.34. Proceedings after comment is filed. - After by the petitioner on account thereof, shall constitute
the comment is filed, or the time for the filing thereof sufficient ground for the Supreme Court to dismiss
has expired, the court shall render judgment granting outright the petition.
the relief prayed for or to which the petitioner is
entitled, or denying the same, within a non-extendible Rule 19.37. Filing of petition with Supreme Court. - A
period of fifteen (15) days. party desiring to appeal by certiorari from a judgment
or final order or resolution of the Court of Appeals
PAGE 84

issued pursuant to these Special ADR Rules may file


with the Supreme Court a verified petition for review The Supreme Court may on its own initiative deny the
on certiorari. The petition shall raise only questions of petition on the ground that the appeal is without merit,
law, which must be distinctly set forth. or is prosecuted manifestly for delay, or that the
questions raised therein are too insubstantial to
Rule 19.38. Time for filing; extension. - The petition require consideration.
shall be filed within fifteen (15) days from notice of the
judgment or final order or resolution appealed from, or Rule 19.42. Due course; elevation of records. - If the
of the denial of the petitioner's motion for new trial or petition is given due course, the Supreme Court may
reconsideration filed in due time after notice of the require the elevation of the complete record of the case
judgment. or specified parts thereof within fifteen (15) days from
notice.
On motion duly filed and served, with full payment of
the docket and other lawful fees and the deposit for PART VII
costs before the expiration of the reglementary period, FINAL PROVISIONS
the Supreme Court may for justifiable reasons grant an
extension of thirty (30) days only within which to file RULE 20: FILING AND DEPOSIT FEES
the petition.
Rule 20.1. Filing fee in petitions or counter-petitions to
Rule 19.39. Docket and other lawful fees; proof of confirm or enforce, vacate or set aside arbitral award
service of petition. - Unless he has theretofore done so or for the enforcement of a mediated settlement
or unless the Supreme Court orders otherwise, the agreement. - The filing fee for filing a petition to
petitioner shall pay docket and other lawful fees to the confirm or enforce, vacate or set aside an arbitral
clerk of court of the Supreme Court of P3,500.00 and award in a domestic arbitration or in an international
deposit the amount of P500.00 for costs at the time of commercial arbitration, or enforce a mediated
the filing of the petition. Proof of service of a copy settlement agreement shall be as follows:
thereof on the lower court concerned and on the
adverse party shall be submitted together with the PhP 10,000.00 - if the award does not exceed PhP
petition. 1,000,000.00

Rule 19.40. Contents of petition. - The petition shall be PhP 20,000.00 - if the award does not exceed PhP
filed in eighteen (18) copies, with the original copy 20,000,000.00
intended for the court being indicated as such by the
petitioner, and shall (a) state the full name of the PhP 30,000.00 - if the award does not exceed PhP
appealing party as the petitioner and the adverse party 50,000,000.00
as respondent, without impleading the lower courts or
judges thereof either as petitioners or respondents; (b) PhP 40,000.00 - if the award does not exceed PhP
indicate the material dates showing when notice of the 100,000,000.00
judgment or final order or resolution subject thereof
was received, when a motion for new trial or PhP 50,000.00 - if the award exceeds PhP
reconsideration, if any, was filed and when notice of 100,000,000.00
the denial thereof was received; (c) set forth concisely a
statement of the matters involved, and the reasons or The minimal filing fee payable in "all other actions not
arguments relied on for the allowance of the petition; involving property" shall be paid by the petitioner
(d) be accompanied by a clearly legible duplicate seeking to enforce foreign arbitral awards under the
original, or a certified true copy of the judgment or New York Convention in the Philippines.
final order or resolution certified by the clerk of court
of the court a quo and the requisite number of plain Rule 20.2. Filing fee for action to enforce as a counter-
copies thereof, and such material portions of the petition. - A petition to enforce an arbitral award in a
record as would support the petition; and (e) contain a domestic arbitration or in an international commercial
sworn certification against forum shopping. arbitration submitted as a petition to enforce and/or
recognize an award in opposition to a timely petition to
Rule 19.41. Dismissal or denial of petition. - The failure vacate or set aside the arbitral award shall require the
of the petitioner to comply with any of the foregoing payment of the filing fees prescribed in Rule 20.1
requirements regarding the payment of the docket and above.
other lawful fees, deposit for costs, proof of service of
the petition, and the contents of and the documents Rule 20.3. Deposit fee for mediated settlement
which should accompany the petition shall be agreements. - Any party to a mediated settlement
sufficient ground for the dismissal thereof.
PAGE 85

agreement who deposits it with the clerk of court shall court shall determine the reasonableness of the claim
pay a deposit fee of P500.00. for attorney’s fees.

Rule 20.4. Filing fee for other proceedings. - The filing Rule 21.5. Bill of Costs. - Unless otherwise agreed upon
fee for the filing of any other proceedings, including by the parties in writing, at the time the case is
applications for interim relief, as authorized under submitted to the court for decision, the party praying
these Special Rules not covered under any of the for recognition and enforcement or for setting aside an
foregoing provisions, shall be P10,000.00. arbitral award shall submit a statement under oath
confirming the costs he has incurred only in the
RULE 21: COSTS proceedings for such recognition and enforcement or
setting-aside. The costs shall include attorney’s fees the
Rule 21.1. Costs. - The costs of the ADR proceedings party has paid or is committed to pay to his counsel of
shall be borne by the parties equally unless otherwise record.
agreed upon or directed by the arbitrator or arbitral
tribunal. The prevailing party shall be entitled to an award of
costs, which shall include reasonable attorney’s fees of
Rule 21.2. On the dismissal of a petition against a the prevailing party against the unsuccessful party. The
ruling of the arbitral tribunal on a preliminary court shall determine the reasonableness of the claim
question upholding its jurisdiction. - If the Regional for attorney’s fees.
Trial Court dismisses the petition against the ruling of
the arbitral tribunal on a preliminary question Rule 21.6. Government’s exemption from payment of
upholding its jurisdiction, it shall also order the fees. - The Republic of the Philippines, its agencies and
petitioner to pay the respondent all reasonable costs instrumentalities are exempt from paying legal fees
and expenses incurred in opposing the petition. provided in these Special ADR Rules. Local
"Costs" shall include reasonable attorney’s fees. The governments and government controlled corporation
court shall award costs upon application of the with or with or without independent charters are not
respondent after the petition is denied and the court exempt from paying such fees.
finds, based on proof submitted by respondent, that
the amount of costs incurred is reasonable. RULE 22: APPLICABILITY OF THE RULES OF
COURT
Rule 21.3. On recognition and enforcement of a foreign
arbitral award. - At the time the case is submitted to Rule 22.1. Applicability of Rules of Court. - The
the court for decision, the party praying for recognition provisions of the Rules of Court that are applicable to
and enforcement of a foreign arbitral award shall the proceedings enumerated in Rule 1.1 of these
submit a statement under oath confirming the costs he Special ADR Rules have either been included and
has incurred only in the proceedings in the Philippines incorporated in these Special ADR Rules or specifically
for such recognition and enforcement or setting-aside. referred to herein.
The costs shall include attorney’s fees the party has
paid or is committed to pay to his counsel of record. In connection with the above proceedings, the Rules of
Evidence shall be liberally construed to achieve the
The prevailing party shall be entitled to an award of objectives of the Special ADR Rules.
costs which shall include the reasonable attorney’s fees
of the prevailing party against the unsuccessful party. RULE 23: SEPARABILITY
The court shall determine the reasonableness of the
claim for attorney’s fees. Rule 23.1. Separability Clause. - If, for any reason, any
part of the Special ADR Rules shall be held
Rule 21.4. Costs. - At the time the case is submitted to unconstitutional or invalid, other Rules or provisions
the court for decision, the party praying for hereof which are not affected thereby, shall continue to
confirmation or vacation of an arbitral award shall be in full force and effect.
submit a statement under oath confirming the costs he
has incurred only in the proceedings for confirmation RULE 24: TRANSITORY PROVISIONS
or vacation of an arbitral award. The costs shall include
the attorney’s fees the party has paid or is committed Rule 24.1. Transitory Provision. - Considering its
to pay to his counsel of record. procedural character, the Special ADR Rules shall be
applicable to all pending arbitration, mediation or
The prevailing party shall be entitled to an award of other ADR forms covered by the ADR Act, unless the
costs with respect to the proceedings before the court, parties agree otherwise. The Special ADR Rules,
which shall include the reasonable attorney’s fees of however, may not prejudice or impair vested rights in
the prevailing party against the unsuccessful party. The accordance with law.
PAGE 86

providing security for the payment of his loan who is


RULE 25: ONLINE DISPUTE RESOLUTION aggrieved by the action taken by the lender against the
collateral securing the loan may, if such action against
Rule 25.1. Applicability of the Special ADR Rules to the collateral is taken before the arbitral tribunal is
Online Dispute Resolution. - Whenever applicable and constituted, apply with the appropriate court for
appropriate, the Special ADR Rules shall govern the interim relief against any such action of the lender.
procedure for matters brought before the court Such interim relief may be obtained only in a special
involving Online Dispute Resolution. proceeding for that purpose, against the action taken
by the lender against the collateral, pending the
Rule 25.2. Scope of Online Dispute Resolution. - constitution of the arbitral tribunal. Any determination
Online Dispute Resolution shall refer to all electronic made by the court in that special proceeding pertaining
forms of ADR including the use of the internet and to the merits of the controversy, including the right of
other web or computed based technologies for the lender to proceed against the collateral, shall be
facilitating ADR. only provisional in nature.

RULE 26: EFFECTIVITY After the arbitral tribunal is constituted, the court shall
stay its proceedings and defer to the jurisdiction of the
Rule 26.1. Effectivity. - The Special ADR Rules shall arbitral tribunal over the entire controversy including
take effect fifteen (15) days after its complete any question regarding the right of the lender to
publication in two (2) newspapers of general proceed against the collateral.
circulation.

Rule A.4. Remedy of borrower against action taken by


RULE A: GUIDELINES FOR THE RESOLUTION OF the lender against the collateral after the arbitral
ISSUES RELATED TO ARBITRATION OF LOANS tribunal has been constituted. - After the arbitral
SECURED BY COLLATERAL tribunal is constituted, the borrower providing security
for the payment of his loan who is aggrieved by the
Rule A.1. Applicability of an arbitration agreement in a action taken by the lender against the collateral
contract of loan applies to the accessory contract securing the loan may apply to the arbitral tribunal for
securing the loan. - An arbitration agreement in a relief, including a claim for damages, against such
contract of loan extends to and covers the accessory action of the lender. An application to the court may
contract securing the loan such as a pledge or a also be made by the borrower against any action taken
mortgage executed by the borrower in favor of the by the lender against the collateral securing the loan
lender under that contract of loan. but only if the arbitral tribunal cannot act effectively to
prevent an irreparable injury to the rights of such
Rule A.2. Foreclosure of pledge or extra-judicial borrower during the pendency of the arbitral
foreclosure of mortgage not precluded by arbitration. - proceeding.
The commencement of the arbitral proceeding under
the contract of loan containing an arbitration An arbitration agreement in a contract of loan
agreement shall not preclude the lender from availing precludes the borrower therein providing security for
himself of the right to obtain satisfaction of the loan the loan from filing and/or proceeding with any action
under the accessory contract by foreclosure of the in court to prevent the lender from foreclosing the
thing pledged or by extra-judicial foreclosure of the pledge or extra-judicially foreclosing the mortgage. If
collateral under the real estate mortgage in accordance any such action is filed in court, the lender shall have
with Act No. 3135. the right provided in the Special ADR Rules to have
such action stayed on account of the arbitration
The lender may likewise institute foreclosure agreement.
proceedings against the collateral securing the loan
prior to the commencement of the arbitral proceeding. Rule A.5. Relief that may be granted by the arbitral
tribunal. - The arbitral tribunal, in aid of the arbitral
By agreeing to refer any dispute under the contract of proceeding before it, may upon submission of
loan to arbitration, the lender who is secured by an adequate security, suspend or enjoin the lender from
accessory contract of real estate mortgage shall be proceeding against the collateral securing the loan
deemed to have waived his right to obtain satisfaction pending final determination by the arbitral tribunal of
of the loan by judicial foreclosure. the dispute brought to it for decision under such
contract of loan.
Rule A.3. Remedy of the borrower against an action
taken by the lender against the collateral before the The arbitral tribunal shall have the authority to resolve
constitution of the arbitral tribunal. - The borrower the issue of the validity of the foreclosure of the thing
PAGE 87

pledged or of the extrajudicial foreclosure of the 3.5 DEPARTMENT CIRCULAR NO. 98


collateral under the real estate mortgage if the same
IMPLEMENTING RULES AND REGULATIONS
has not yet been foreclosed or confirm the validity of
such foreclosure if made before the rendition of the
OF THE ALTERNATIVE DISPUTE
arbitral award and had not been enjoined. RESOLUTION ACT OF 2004.

Rule A.6. Arbitration involving a third-party provider


of security. - An arbitration agreement contained in a Whereas, pursuant to Section 52 of Republic Act No.
contract of loan between the lender and the borrower 9285, otherwise known as the "Alternative Dispute
extends to and covers an accessory contract securing Resolution Act of 2004" (ADR Act"), the Secretary of
the loan, such as a pledge, mortgage, guaranty or Justice is directed to convene a Committee for the
suretyship, executed by a person other than the formulation of the appropriate rules and regulations
borrower only if such third-party securing the loan has necessary for the implementation of the ADR Act;
agreed in the accessory contract, either directly or by
reference, to be bound by such arbitration agreement. Whereas, the committee was composed of
representatives from the Department of Justice, the
Unless otherwise expressly agreed upon by the third- Department of Trade and Industry, the Department of
party securing the loan, his agreement to be bound by the Interior and Local Government, the President of
the arbitration agreement in the contract of loan shall the Integrated Bar of the Philippines, a representative
pertain to disputes arising from or in connection with from the ADR organizations.
the relationship between the lender and the borrower
as well as the relationship between the lender and such Wherefore, the following rules and regulations are
third-party including the right of the lender to proceed hereby adopted as the Implementing Rules and
against the collateral securing the loan, but shall Regulations of Republic Act no.9285.
exclude disputes pertaining to the relationship
exclusively between the borrower and the provider of IMPLEMENTING RULES AND REGULATIONS OF
security such as that involving a claim by the provider THE ALTERNATIVE DISPUTE RESOLUTION ACT
of security for indemnification against the borrower. OF 2004 (R.A No. 9285)

In this multi-party arbitration among the lender, the Pursuant to Section 52 of republic Act No. 9285,
borrower and the third party securing the loan, the otherwise known as the alternative Dispute Resolution
parties may agree to submit to arbitration before a sole Act of 2004" ("ADR Act"), the following Rules and
arbitrator or a panel of three arbitrators to be Regulations (these "Rules") are hereby promulgated to
appointed either by an Appointing Authority implement the provisions of the ADR Act:
designated by the parties in the arbitration agreement
or by a default Appointing Authority under the law. Chapter 1
GENERAL PROVISIONS
In default of an agreement on the manner of
appointing arbitrators or of constituting the arbitral RULE 1 – Policy and Application
tribunal in such multi-party arbitration, the dispute
shall be resolved by a panel of three arbitrators to be Article 1.1 Purpose. These Rules are promulgated to
designated by the Appointing Authority under the law. prescribe the procedures and guidelines for the
But even in default of an agreement on the manner of implementation of the ADR Act.
appointing an arbitrator or constituting an arbitral
tribunal in a multi-party arbitration, if the borrower Article 1.2 Declaration of policy. It is the policy of the
and the third party securing the loan agree to designate State:
a common arbitrator, arbitration shall be decided by a
panel of three arbitrators: one to be designated by the (a) To promote party autonomy in the resolution of
lender; the other to be designated jointly by the disputes or the freedom of the parties to make their
borrower and the provider of security who have agreed own arrangements to resolve their disputes;
to designate the same arbitrator; and a third arbitrator
who shall serve as the chairperson of the arbitral panel (b) To encourage and actively promote the use of
to be designated by the two party-designated Alternative Dispute Resolution ("ADR") as an
arbitrators. important means to achieve speedy and impartial
justice and declog court dockets;

(c) To provide means for the use of ADR as an efficient


tool and an alternative procedure for the resolution of
appropriate cases; and
PAGE 88

(d) To enlist active private sector participation in the 2. Alternative Dispute Resolution System means any
settlement of disputes through ADR process or procedures used to resolve a dispute or
controversy, other than by adjudication of a presiding
Article 1.3 Exception to the Application of the ADR Act. judge of a court or an officer of a government agency,
The provisions of the ADR Act shall not apply to the as defined in the ADR Act, in which neutral third
resolution or settlement of the following: person participates to assist in the resolution of issues,
Including arbitration, mediation, conciliation, early
(a) labor disputes covered by Presidential Decree No. neutral evaluation, mini-trial or any combination
442, otherwise known as the "Labor Code of the thereof.
Philippines, as a amended", and its Implementing
Rules and Regulations; 3. Arbitration means a voluntary dispute resolution
process in which one or more arbitrators, appointed in
(b) the civil status of persons; accordance with the agreement of the parties or these
Rules, resolve a dispute by rendering an award.
(c) the validity of marriage;
4. Arbitration Agreement means agreement by the
(d) any ground for legal separation; parties to submit to arbitration all or certain disputes
which have arisen or which may arise between them in
(e) the jurisdiction of courts; respect of a defined legal relationship, whether
contractual or not. An arbitration agreement may be in
(f) future legitimate; the form of an arbitration clause in a contract or in the
form of a separate agreement.
(g) criminal liability;
5. Authenticate means to sign, execute, adopt a symbol
(h) those disputes which by law cannot be or encrypt a record or establish the authenticity of a
compromised; and record or term.

(i) disputes referred to court-annexed mediation. 6. Award means any partial or final decision by an
arbitrator in resolving the issue or controversy.
Article 1.4. Electronic Signature and E-Commerce Act.
The provisions of the Electronic Signature and E- 7. Confidential Information means any information,
Commerce Act, and its implementing Rules and relative to the subject of mediation or arbitration,
Regulations shall apply to proceedings contemplated expressly intended by the source not to disclosed, or
in the ADR Act. obtained under circumstances that would create
reasonable expectation on behalf of the source that the
Article 1.5. Liability of ADR Providers/Practitioners. information shall not be disclosed. It shall include:
The ADR provides /practitioners shall have the same
civil liability for acts done in the performance of their (a) communication, oral or written, made in a dispute
official duties as that of public officers as provided in resolution proceeding, including any memoranda,
Section 38 (1), Chapter 9, Book 1 of the Administrative notes or work product of the neutral party or non-party
Code of 1987, upon a clear showing of bad faith, malice participant;
or gross negligence.
(b) an oral or written statement made or which occurs
RULE 2- Definition of Terms during mediation or for purposes of considering,
conducting, participating, initiating, continuing or
Article 1.6 Definition of Terms. For purposes of these reconvening mediation or retaining a mediator; and
Rules, the terms shall be defined as follows:
(c) pleadings, motions, manifestations, witness
A. Terms Applicable to All Chapters statements, reports filed or submitted in arbitration or
for expert evaluation.
1. ADR Provider means the Institutions or persons
accredited as mediators, conciliators, arbitrators, 8. Counsel means a lawyer duly admitted to the
neutral evaluators or any person exercising similar practice of law in the Philippines and in good standing
functions in any Alternative dispute resolution system. who represents a party in any ADR process.
This is without prejudice to the rights of the parties to
choose non-accredited individuals to act as mediator, 9. Court means Regional Trial Court Except insofar as
conciliator, arbitrator or neutral evaluator of their otherwise defined under Model Law.
dispute.
PAGE 89

10. Government Agency means any governmental 8. Mediator means a person who conducts mediation.
entity, office or officer, other than a court that is vested
by law with quasi-judicial power or the power to 9. Non-Party Participant means a person, other than a
resolve or adjudicate disputes involving the party or mediator, who participates in a mediation
government, its agencies and instrumentalities or proceeding as a witness, resource person or expert.
private persons.
C. Terms Applicable to the Chapter on International
11. Model Law means the Model on International Commercial Arbitration
Commercial Arbitration adopted by the United Nations
Commission on International Trade Law on 21 June 1. Appointing Authority as used in the Model Law shall
1985. mean the person or institution named in the
arbitration agreement as the appointing authority; or
12. Proceedings means judicial, administrative or other the regular arbitration institution under whose rules
adjudicative process, including related pre-hearing or the arbitration is agreed to be conducted. Where the
post hearing motions, conferences and discovery. parties have agreed to submit their dispute to
institutional arbitration rules and unless they have
13. Record means information written on a tangible agreed to a different procedure, they shall be deemed
medium or stored in an electronic or other similar to have agreed to the procedure under such arbitration
medium, retrievable in a perceivable form. rules for the selection and appointment of arbitrators.
In ad hoc arbitration, the default appointment of an
14. Roster means a list of persons qualified to provide arbitrator shall be made by the National President of
ADR services as neutrals or to serve as arbitrators. the Integrated Bar of the Philippines (IBP) or his /her
duly authorized representative.
15. Special ADR Rules means the Special Rules of
Court on Alternative Dispute Resolution issued by the 2. Arbitral Tribunal (under the Model Law) means a
Supreme Court on September 1, 2009. sole arbitrator or a panel of arbitrators.

B. Terms and Applicable to the Chapter Mediation 3. Arbitration means any arbitration whether or not
administered by a permanent arbitration institution.
1. Ad hoc Mediation means any mediation other than
institutional or court-annexed. 4. Commercial Arbitration means an arbitration that
covers matters arising from all relationships of a
2. Institutional Mediation means any mediation commercial nature, whether contractual or not.
process conducted under the rules of a mediation Relationships of a commercial nature include, but are
institution. not limited to, the following commercial transactions:
any trade transaction for the supply or exchange of
3. Court-Annexed Mediation means mediation process goods or services; distribution agreements;
conducted under the auspices of the court and in construction of works; commercial representation or
accordance with Supreme Court approved guidelines, agency; factoring; leasing; consulting; engineering;
after such court has acquired jurisdiction of the licensing; investment; financing; banking; insurance;
dispute. joint venture and other forms of industrial or business
cooperation; carriage of goods or passengers by air, sea
4. Court-Referred Mediation means mediation ordered rail or road.
by a court to be conducted in accordance with the
agreement of the parties when an action is prematurely 5. Convention Award means a foreign arbitral award in
commenced in violation of such agreement. a Convention State.

5. Certified Mediator means a mediator certified by the 6. Convention State means a state that is a member of
Office for ADR as having successfully completed its the New York Convention.
regular professional training program.
7. Court (under the Model Law) means a body or organ
6. Mediation means a voluntary process in which a of the judicial system of the Philippines (i.e., the
mediator, selected by the disputing party voluntary Regional Trial Court, Court of Appeals and Supreme
agreement regarding a dispute. Court).

7. Mediation Party means a person who participates in 8. International Arbitration means an arbitration
a mediation and whose consent is necessary to resolve where:
the dispute.
PAGE 90

(a) the parties to an arbitration agreement have, at the Challenge, termination of the Mandate of Arbitrator/s
time of the conclusion of that agreement, their places and for taking action thereon.
of business in different states; or
4. Arbitration means a voluntary dispute resolution
(b) one of the following places is situated outside the process in which one or more arbitrators, Appointed in
Philippines in which the parties have their places of accordance with the agreement of the parties or these
business: Rules, resolve a dispute by rendering an award.

(i) the place of arbitration if determined in, or 5. Arbitral Tribunal means a sole arbitrator or a panel,
pursuant to , the arbitration agreement; board or committee of arbitrators.

(ii) any place where a substantial part of the 6. Claimant means a person/s with a claim against
obligations of the commercial relationship is to be another and who commence/s arbitration against the
performed or the place with the subject matter of the latter.
dispute is most closely connected; or
7. Court means, unless otherwise specified in these
(c) the parties have expressly agreed that the subject Rules, a Regional Trial Court.
matter of the arbitration agreement relates to more
than one country. 8. Day means calendar day.

For this purpose: 9. Domestic Arbitration means arbitration that is not


international as defined in Article 1(3) of the Mode
(a) if a party has more than one place of business, the Law.
place of business is that which has the closest
relationship to the arbitration agreement; 10. Institutional Arbitration means arbitration
administered by an entity, which is registered as a
(b) if a party does not have a place of business, domestic corporation with the Securities and Exchange
reference is to be made to his/her habitual residence. Commission (SEC) and engaged in. among others,
arbitration of disputes in the Philippines on a regular
9. New York Convention means the United Nations and permanent basis.
Convention of the Recognition and Enforcement of
Foreign Arbitral Awards approved in 1958 and ratified 11. Request for Appointment means the letter-request
by the Philippine Senate under Senate Resolution to the appointing authority of either or both parties for
No.71. the appointment of arbitrator/s or of the two
arbitrators first appointed by the parties for the
10. Non-Convention Award means a foreign arbitral appointment of the third member of an arbitral
ward made in a state, which is not a Convention State. tribunal.

11. Non-Convention State means a state that is not a 12. Representative is a person duly authorized in
member of the New York Convention. writing by a party to a dispute, who could be a counsel,
a person in his/her employ or any other person of
D. Terms Applicable to the Chapter on Domestic his/her choice, duly authorized to represent said party
Arbitration in the arbitration proceedings.

1. Ad hoc Arbitration means arbitration administered 13. Respondent means the person/s against whom the
by an arbitrator and/or the parties themselves. An claimant commence/s arbitration.
arbitration administered by an institution shall be
regarded as ad hoc arbitration if such institution is not 14. Written communication means the pleading,
a permanent or regular arbitration institution in the motion, manifestation, notice, order, award and any
Philippines. other document or paper submitted or filed with the
arbitral tribunal or delivered to a party.
2. Appointing Authority in Ad Hoc Arbitration means,
in the absence of an agreement, the National President E. Terms Applicable to the Chapter on Other ADR
of the IBP or his/her duly authorized representative. Forms

3. Appointing Authority Guidelines means the set of 1. Early Neutral Evaluation means an ADR process
rules approved or adopted by an appointing authority wherein parties and their lawyers are brought together
for the making of a Request for Appointment, early in the pre-trial phase to present summaries of
their cases and to receive a non-binding assessment by
PAGE 91

an experienced neutral person, with expertise in the


subject matter or substance of the dispute. (f) To charge for services rendered such as, among
others, for training and certifications of ADR
2. Mediation-Arbitration or Med-Arb is a two-step providers;
dispute resolution process involving mediation and
then followed by arbitration. (g) To accept donations, grants and other assistance
from local and foreign sources; and
3. Mini-trial means a structured dispute resolution
method in which the merits of a case are argued before (h) To exercise such other powers as may be necessary
a panel comprising of senior decision-makers, with or and proper to carry into effect the provisions of the
without the presence of a neutral third person, before ADR Act.
which the parties seek a negotiated settlement.
Article 2.3. Functions of the OADR. The OADR shall
CHAPTER 2 have the following functions;
THE OFFICE FOR ALTERNATIVE DISPUTE
RESOLUTION (a) To promote, develop and expand the use of ADR in
the private and public sectors through information,
RULE 1- Office for Alternative Dispute Resolution education and communication;
(OADR)
(b) To monitor, study and evaluate the use of ADR by
Article 2.1. Establishment of the Office for Alternative the private and public sectors for purposes of, among
Dispute Resolution. There is hereby established the others, policy formulation;
OADR as an agency attached to the Department of
Justice. It shall have a Secretariat and shall be headed (c) To recommend to Congress needful statutory
by an Executive Director, who shall be appointed by changes to develop, strengthen and improve ADR
the President of the Philippines, taking into practices in accordance with international professional
consideration the recommendation of the Secretary of standards;
Justice.
(d) To make studies on and provide linkages for the
Article 2.2. Powers of the OADR. The OADR shall have development, implementation, monitoring and
the following powers; evaluation of government and private ADR programs
and secure information about their respective
(a) To act as appointing authority of mediators and administrative rules/procedures, problems
arbitrators when the parties agree in writing that it encountered and how they were resolved;
shall be empowered to do so;
(e) To compile and publish a list or roster of ADR
(b) To conduct seminars, symposia, conferences and providers/practitioners, who have undergone training
other public fora and publish proceedings of said by the OADR, or by such training
activities and relevant materials/information that providers/institutions recognized or certified by the
would promote, develop and expand the use of ADR; OADR as performing functions in any ADR system.
The list or roster shall include the addresses, contact
(c) To establish an ADR library or resource center numbers, e-mail addresses, ADR service/s rendered
where ADR laws, rules and regulation, jurisprudence, (e.g. arbitration, mediation) and experience in ADR of
books, articles and other information about ADR in the the ADR providers/practitioners;
Philippines and elsewhere may be stored and accessed;
(f) To compile a list or roster of foreign or international
(d) To establish training programs for ADR ADR providers/practitioners. The list or roster shall
providers/practitioners, both in the public and private include the addresses, contact numbers, e-mail
sectors; and to undertake periodic and continuing addresses, ADR service/s rendered (e.g. arbitration,
training programs for arbitration and mediation and mediation) and experience in ADR of the ADR
charge fees on participants. It may do so in providers/practitioners; and
conjunction with or in cooperation with the IBP,
private ADR organizations, and local and foreign (g) To perform such other functions as may be
government offices and agencies and international assigned to it.
organizations;
Article 2.4. Divisions of the OADR. The OADR shall
(e) To certify those who have successfully completed have the following staff and service divisions, among
the regular professional training programs provided by others:
the OADR;
PAGE 92

(a) Secretariat – shall provide necessary support and


discharge such other functions and duties as may be RULE 1 – General Provisions
directed by the Executive Director.
Article 3.1. Scope of Application. These Rules apply to
(b) Public information and Promotion Division – shall voluntary mediation, whether ad hoc or institutional,
be charged with the dissemination of information, the other than court-annexed mediation and only in
promotion of the importance and public acceptance of default of an agreement of the parties on the applicable
mediation, conciliation, arbitration or any combination rules.
thereof and other ADR forms as a means of achieving
speedy and efficient means of resolving all disputes These Rules shall also apply to all cases pending before
and to help in the promotion, development and an administrative or quasi-judicial agency that are
expansion of the use of ADR. subsequently agreed upon by the parties to be referred
to mediation.
(c) Training Division – shall be charged with the
formulation of effective standards for the training of Article 3.2. Statement of Policy. In applying and
ADR practitioners; conduct of training in accordance construing the provisions of these Rules, consideration
with such standards; issuance of certifications of must be given to the need to promote candor of parties
training to ADR practitioners and ADR service and mediators through confidentiality of the mediation
providers who have undergone the professional process, the policy of fostering prompt, economical
training provided by the OADR; and the coordination and amicable resolution of disputes in accordance with
of the development, implementation, monitoring and principles of integrity of determination by the parties
evaluation of government and private sector ADR and the policy that the decision-making authority in
programs. the mediation process rests with the parties.

(d) Records and Library Division – shall be charged A party may petition a court before which an action is
with the establishment and maintenance of a central prematurely brought in a matter which is the subject of
repository of ADR laws, rules and regulations, a mediation agreement, if at least one party so
jurisprudence, books, articles, and other information requests, not later than the pre-trial conference or
about ADR in the Philippines and elsewhere. upon the request of both parties thereafter, to refer the
parties to mediation in accordance with the agreement
RULE 2 – The Advisory Council of the parties.

Article 2.5. Composition of the Advisory Council. There RULE 2- Selection of a Mediator
is also created an Advisory Council composed of a
representative from each of the following: Article 3.3. Freedom to Select mediator. The parties
have the freedom to select mediator. The parties may
(a) Mediation profession; request the OADR to provide them with a list or roster
or the resumes of its certified mediators. The OADR
(b) Arbitration profession; may be requested to inform the mediator of his/her
selection.
(c) ADR organizations;
Article 3.4. Replacement of Mediator. If the mediator
(d) IBP; and selected is unable to act as such for any reason, the
parties may, upon being informed of such fact, select
(e) Academe. another mediator.

The members of the Council, who shall be appointed Article 3.5. Refusal or Withdrawal of Mediator. A
by the Secretary of Justice upon the recommendation mediator may refuse from acting as such, withdraw or
of the OADR Executive Director, shall choose a may be compelled to withdraw from mediator
Chairman from among themselves. proceedings under the following circumstances:

Article 2.6. Role of the Advisory Council. The Advisory (a) If any of the parties so requests the mediator to
Council shall advise the Executive Director on policy, withdraw;
operational and other relevant matters. The Council
shall meet regularly, at least once every two (2) (b) The mediator does not have the qualifications,
months, or upon call by the Executive Director. training and experience to enable him/her to meet the
reasonable expectations of the parties;
CHAPTER 3
MEDIATION (c) Where the mediator's impartially is in question;
PAGE 93

(a) Before accepting a mediation, an individual who is


(d) If continuation of the process would violate any requested to serve as a mediator shall:
ethical standards;
(i) make an inquiry that is reasonable under the
(e) If the safety of any of the parties would be circumstances to determine whether there are known
jeopardized; facts that a reasonable individual would consider likely
to affect the impartiality of the mediator, including a
(f) If the mediator is unable to provide effective financial or personal interest in the outcome of the
services; mediation and any existing or past relationship with a
party of foreseeable participant in the mediation; and
(g) In case of conflict of interest; and
(ii) disclose to the mediation parties any such fact
(h) In any of the following instances, if the mediator is known or learned as soon as practical before accepting
satisfied that: a mediation.

(i) one or more of the parties is/are not acting in good (b) If a mediator learns any fact described in paragraph
faith; (a) of this Article after accepting a mediation, the
mediator shall disclose it as soon as practicable to the
(ii) the parties' agreement would be illegal or involve mediation parties.
the commission of a crime;
Article 3.8. Confidentiality. A mediator shall keep in
(iii) continuing the dispute resolution would give rise utmost confidence all confidential information
to an appearance of impropriety; obtained in the course of the mediation process.

(iv) continuing with the process would cause A mediator shall discuss issues of confidentiality and
significant harm to a non-participating person or to the extent of confidentiality provided in any private
the public; or sessions or caucuses that the mediator holds with a
party.
(v) continuing discussion would not be in the best
interest of the parties, their minor children or the Article 3.9. Consent and Self-Determination. (a) A
dispute resolution process. mediator shall make reasonable efforts to ensure that
each party understands the nature and character of the
RULE 3 – Ethical Conduct of a Mediator mediation proceeding including private caucuses, the
issues, the available options, the alternatives to non-
Article 3.6 Competence. It is not required that a settlement, and that each party is free and able to make
mediator shall have special qualifications by whatever choices he/she desires regarding
background or profession unless the special participation in mediation generally and regarding
qualifications of a mediator shall : specific settlement options.

(a) maintain the continually upgrade his/her If a mediator believes that a party, who is not
professional competence in mediation skills; represented by counsel, is unable to understand, or
fully participate, the mediation proceedings for any
(b) ensure that his/her qualifications, training and reason, a mediator may either:
experience are known to and accepted by the parties;
and (i) limit the scope of the mediation proceedings in a
manner consistent with the party's ability to
(c) serve only when his/her qualifications, training and participate, and/or recommend that the party obtain
experience enable him/her to meet the reasonable appropriate assistance in order to continue with the
expectations of the parties and shall not hold process; or
himself/herself out or give the impression that he/she
does not have. (ii) terminate the mediation proceedings.

Upon the request of a mediation party, an individual (b) A mediator shall recognize and put in mind that the
who is requested to serve as mediator shall disclose primary responsibility of resolving a dispute and the
his/her qualifications to mediate a dispute. shaping of a voluntary and uncoerced settlement rests
with the parties.
Article 3.7 Impartially. A mediator shall maintain
impartiality.
PAGE 94

Article 3.10. Separation of Mediation from Counseling


and Legal Advice. (a) Except in evaluative mediation or Article 3.14. Designation of Counsel or Any Person to
when the parties so request, a mediator shall: Assist Mediation. Except as otherwise provided by the
ADR Act or by these Rules, a party may designate a
(i) refrain from giving legal or technical advice and lawyer or any other person to provide assistance in the
otherwise engaging in counseling or advocacy; and mediation. A waiver of this right shall be made in
writing by the party waiving it. A waiver of
(ii) abstain from expressing his/her personal opinion participation or legal representation may be rescinded
on the rights and duties of the parties and the merits of at any time.
any proposal made.
Article 3.15. Role of Counsel. (a) The lawyer shall view
(b) Where appropriate and where either or both parties his/her role in the mediation as a collaborator with the
are not represented by counsel, a mediator shall; other lawyer in working together toward the common
goal of helping their clients resolve their differences to
(i) recommend that the parties seek outside their mutual advantage.
professional advice to help them make informed
decision and to understand the implication of any (b) The lawyer shall encourage and assist his/her client
proposal; and to actively participate in positive discussions and
cooperate in crafting an agreement to resolve their
(ii) suggest that the parties seek independent legal dispute.
and/or technical advice before a settlement agreement
is signed. (c) The lawyer must assist his/her client to
comprehend and appreciate the mediation process and
(c) without the consent of al parties, and for a its benefits, as well as the client’s greater personal
reasonable time under the particular circumstance, a responsibility for the success of mediation in resolving
mediator who also practices another profession shall the dispute.
not establish a professional relationship in that other
profession with one of the parties, or any person or (d) In preparing for participation in mediation, the
entity, in a substantially and factually related matter. lawyer shall confer and discuss with his/her client the
following:
Article 3.11. Charging of Fees. (a) A mediator shall fully
disclose and explain to the parties the basis of cost, (i) The mediation process as essentially a negotiation
fees and charges. between the parties assisted by their respective
lawyers, and facilitated by a mediator, stressing it its
(b) The mediator who withdraws from the mediation difference from litigation, its advantages and benefits,
shall return to the parties any unearned fee and the clients heightened role in mediation and
unused deposit. responsibility for its success and explaining the role of
the lawyer in mediation proceedings,
(c) A mediator shall not enter into a fee agreement,
which is contingent upon the results of the mediation (ii) The substance of the upcoming mediation such as;
or the amount of the settlement.
(aa) The substantive issues involved in the dispute and
Article 3.12 Promotion of Respect and Control of their prioritization in terms of importance to his/her
Abuse of Process. The mediatorcle 3.12 Promotion of client’s real interests and needs.
Respect and Control of Abuse of Process. of the settle
mentcost ablish a professional relationship I shall (bb) The study of other party’s position in relation to
encourage mutual respect between the parties, and the issues with a view to understanding the underlying
shall take reasonable steps, subject to the principle of interests, fears, concerns and needs;
self-determination, to limit abuses of the mediation
process. (cc) The information or facts to be gathered or sought
from the other side or to be exchanged that are
Article 3.13. Solicitation or Acceptance of any Gift. No necessary for informed decision-making;
mediator or any member of a mediator’s immediate
family or his/her agent shall request, solicit, receive or (dd) The possible options for settlement but stressing
accept any gift or any type of compensation other than the need to be open-minded about other possibilities;
the agreed fee and expenses in connection with any and
matter coming before the mediator.
(ee) The best, worst and most likely alternative to a
RULE 4 – Role of Parties and their Counsels non-negotiated settlement.
PAGE 95

(e) The mediation proceeding shall be held in private.


Article 3.16. Other Matters which the Counsel shall do Person, other than the parties, their representatives
to Assist Mediation. The lawyer; and mediator, may attend only with the consent of all
the parties,
(a) shall give support to the mediator so that his/her
client will fully understand the rules and processes of (f) the mediation shall be closed:
mediation;
(i) by the execution of a settlement agreement by the
(b) shall impress upon his/her client the importance of parties;
speaking for himself/herself and taking responsibility
for making decisions during the negotiations within (ii) by the withdrawal of any party from mediation; and
the mediation process.;
(iii) by the written declaration of the mediator that any
(c) may ask for a recess in order to give advice or further effort at mediation would not be helpful
suggestions to his/her client in private, if he/she
perceives that his/her client is unable to bargain RULE 6 – Place of Mediation
effectively;
Article 3.18. Agreement of Parties on the Place of
(d) shall assist his/her client and the mediator put in Mediation. The parties are free to agree on the place of
writing the terms of the settlement agreement that the mediation. Failing such agreement, the place of
parties have entered into. That lawyers shall see to it mediation shall be any place convenient and
that the terms of the settlement agreement are not appropriate to all parties.
contrary to law, morals, good customs, public order or
public policy. RULE 7 – Effect of Agreement to Submit Dispute to
Mediation Under Institutional Rules
RULE 5 – Conduct of Mediation
Article 3.19 Agreement to Submit a Dispute to
Article 3.17. Articles to be Considered in the Conduct of Mediation by an Institution. An agreement to submit a
Mediation. (a) The mediator shall not make untruthful dispute to mediation by an institution shall include an
or exaggerated claims about the dispute resolution agreement to be bound by the internal mediation and
process, its costs and benefits, its outcome or the administrative policies of such institution. Further, an
mediator’s qualifications and abilities during the entire agreement to submit a dispute to mediation under
mediation process. institutional mediation rules shall be deemed to
include an agreement to have such rules govern the
(b) The mediator shall held the parties reach a mediation of the dispute and for the mediator, the
satisfactory resolution to their dispute but has no parties, their respective counsels and non-party
authority to impose a settlement on the parties. participants to abide by such rules.

(c) The parties shall personally appear for mediation RULE 8 – Enforcement of Mediated Settlement
and may be assisted by a lawyer. A party maybe Agreement
represented by an agent who must have full authority
to negotiate and settle the dispute. Article 3.20. Operative Principles to Guide Mediation.
The mediation shall be guided by the following
(d) The mediation process shall, in general, consists of operative principles:
the following stages:
(a) A settlement agreement following successful
(i) opening statement of the mediator mediation shall be prepared by the parties with the
assistance of their respective counsels. If any, and by
(ii) individual narration by the parties; the mediator. The parties and their respective counsels
shall endeavor to make the terms and condition of the
(iii) exchange by the parties; settlement agreement complete and to make adequate
provision for the contingency of breach to avoid
(iv) summary of issues; conflicting interpretations of the agreement.

(v) generation and evaluation of options; and (b) The parties and their respective counsels, if any,
shall sign the settlement agreement. The mediator
(vi) closure shall certify that he/she explained the contents of the
settlement agreement to the parties in a language
known to them.
PAGE 96

(iv) the non-party participants


(c) If the parties agree, the settlement agreement may
be jointly deposited by the parties or deposited by one (v) any person hired or engaged in connection with the
party with prior notice to the other party/ties with the mediation as secretary, stenographer, clerk or
Clerk of Court of the Regional Trial Court (a) where the assistant; and
principal place of business in the Philippines of any of
the parties is located; (b) if any of the parties is an (vi) any other person who obtains or possesses
individual, where any of those individuals resides; or confidential information by reason of his/her
(c) in the National Capital Judicial Region. Where profession.
there is a need to enforce the settlement agreement, a
petition may be filed by any of the parties with the (e) The protections of the ADR Act shall continue to
same court in which case, the court shall proceed apply even if a mediator is found to have failed to act
summarily to hear the petition, in accordance with the impartially.
Special ADR Rules.
(f) A mediator may not be called to testify to provide
(d) The parties may agree in the settlement agreement confidential information gathered in mediation. A
that the mediator shall become a sole arbitrator for the mediator who is wrongfully subpoenaed shall be
dispute and shall treat the settlement agreement as an reimbursed the full cost of his/her attorney’s fees and
arbitral award which shall be subject to enforcement related expenses.
under Republic Act No. 876, otherwise know as "The
Arbitration Law", notwithstanding the provisions of Article 3.22. Waiver of Confidentiality. (a) A privilege
Executive Order No. 1008, s. 1985, other wise known arising from the confidentiality of information may be
as the "Construction Industry Arbitration Law" for waived in a record or orally during a proceeding by the
mediated disputes outside the Construction Industry mediator and the mediation parties.
Arbitration Commission.
(b) With the consent of the mediation parties, a
RULE 9 – Confidentiality of Information privilege arising from the confidentiality of
information may likewise be waived by a non-party
Article 3.21. Confidentiality of Information. participant if the information is provided by such non-
Information obtained through mediation proceedings party participant.
shall be subject to the following principles and
guidelines: (c) A person who discloses confidential information
shall be precluded from asserting the privilege under
(a) Information obtained through mediation shall be Article 3.21 (Confidentiality of Information) to bar
privileged and confidential disclosure of the rest of the information necessary to a
complete understanding of the previously disclosed
(b) A party, mediator, or non-party participant may information. If a person suffers loss or damage as a
refuse to disclose and may prevent any other person result of the disclosure of the confidential information,
from disclosing a confidential information. he/she shall be entitled to damages in a judicial
proceeding against the person who made the
(c) Confidential information shall not be subject to disclosure.
discovery and shall be inadmissible in any adversarial
proceeding, whether judicial or quasi-judicial. (d) A person who discloses or makes a representation
However, evidence or information that is otherwise about a mediation is precluded from asserting the
admissible or subject to discovery does not become privilege mentioned in Article 3.21 to the extent that
inadmissible or protected from discovery solely by the communication prejudices another person in the
reason of its use in a mediation. proceeding and it is necessary for the person
prejudiced to respond to the representation or
(d) In such an adversarial proceeding, the following disclosure.
persons involved or previously involved in a mediation
may not be compelled to disclosed confidential Article 3.23. Exceptions to the Privilege of
information obtained during the mediation: Confidentiality of information. (a) There is no privilege
against disclosure under Article 3.21 in the following
(i) the parties to the dispute; instances:

(ii) the mediator or mediators; (i) in an agreement evidenced by a record


authenticated by all parties to the agreement;
(iii) the counsel for the parties;
PAGE 97

(ii) available to the public or made during a session of a (a) to state that the mediation occurred or has
mediation which is open, or is required by law to be terminated, or where a settlement was reached; or
open, to the public;
(b) as permitted to be disclosed under Article 3.23
(iii) a threat or statement of a plan to inflict bodily (Exception to the Privilege of Confidentiality of
injury or commit a crime of violence; Information).

(iv) intentionally used to plan a crime, attempt to The parties may, by an agreement in writing, stipulate
commit, or commit a crime, or conceal an ongoing that the settlement agreement shall be sealed and not
crime or criminal activity. disclosed to any third party including the court. Such
stipulation, however, shall not apply to a proceeding to
(v) sought or offered to prove or disprove abuse, enforce or set aside the settlement agreement.
neglect, abandonment or exploitation in a proceeding
in which a public agency is protecting the interest of an RULE 10 – Fees and Cost of Mediation
individual protected by law; but this exception does
not apply where a child protection matter is referred to Article 3.25. Fees and Cost of Ad hoc Mediation. In ad
mediation by a court or where a public agency hoc mediation, the parties are free to make their own
participates in the child protection mediation; arrangement as to mediation cost and fees. In default
thereof, the schedule of cost and fees to be approved by
(vi) sought or offered to prove or disapprove a claim or the OADR shall be followed.
complaint of professional misconduct or malpractice
filed against a party, non-party participant, or Article 3.26. Fees and Cost of Institutional Mediation.
representative of a party based on conduct occurring (a) In institutional mediation, mediation cost shall
during a mediation. include the administrative charges of the mediation
institution under which the parties have agreed to be
(b) If a court or administrative agency finds, after a bound, mediator’s fees and associated expenses, if any.
hearing in camera, that the party seeking discovery of In default of agreement of the parties as to the amount
the proponent of the evidence has shown that the and manner of payment of mediation’s cost and fees,
evidence is not otherwise available, that there is a need the same shall be determined in accordance with the
for the evidence that substantially outweighs the applicable internal rules of the mediation service
interest in protecting confidentially, and the mediation providers under whose rules the mediation is
communication is sought or offered in: conducted.

(i) a court proceeding involving a crime or felony; or (b) A mediation service provider may determine such
mediation fee as is reasonable taking into
(ii) a proceeding to prove a claim or defense that under consideration the following factors, among others:
the law is sufficient to reform or avoid a liability on a
contract arising out of the mediation. (i) the complexity of the case;

(c) A mediator may not be compelled to provide (ii) the number of hours spent in mediation; and
evidence of a mediation communication or testify in
such proceeding. (iii) the training, experience and stature of mediators.

(d) If a mediation communication is not privileged CHAPTER 4


under an exception in sub-section (a) or (b) hereof, INTERNATIONAL COMMERCIAL ARBITRATION
only the portion of the communication necessary for
the application of the exception for non-disclosure may RULE 1 – General Provisions
be admitted. The admission of a particular evidence for
the limited purpose of an exception does not render Article 4.1. Scope of Application. (a) This Chapter
that evidence, or any other mediation communication, applies to international commercial arbitration,
admissible for any other purpose. subject to any agreement in force between the
Philippines and other state or states.
Article 3.24. Non-Reporting or Communication by
Mediator. A mediator may not make a report, (b) This Chapter applies only if the place or seat of
assessment, evaluation, recommendation, finding or arbitration is the Philippines and in default of any
other communication regarding a mediation to a court agreement of the parties on the applicable rules.
or agency or other authority that may make a ruling on
a dispute that is the subject of a mediation, except: (c) This Chapter shall not affect any other law of the
Philippines by virtue of which certain disputes may not
PAGE 98

be submitted to arbitration or may be submitted to (ii) the communication is deemed to have been
arbitration only according to provisions other than received on the day it is so delivered.
those of the ADR Act.
(b) The provisions of this Article do not apply to
Article 4.2. Rules of Interpretation. (a) International communications in court proceedings, which shall be
commercial arbitration shall be governed by the Model governed by the Rules of Court.
Law on International Commercial Arbitration.
Article 4.4. Waiver of Right to Object. Any party who
(b) In interpreting this Chapter, regard shall be had to knows that any provision of this Chapter from which
the international origin of the Model Law and to the the parties may derogate or any requirement under the
need for uniformity in its interpretation. Resort may be arbitration agreement has not been complied with and
made to the travaux preparatoires and the Report of yet proceeds with the arbitration without stating the
the Secretary-General of the United Nations objections for such non-compliance without undue
Commission on International Trade Law dated March delay or if a time limit is provided therefor, within such
1985 entitled, "International Commercial Arbitration: period of time, shall be deemed to have waived the
Analytical Commentary on Draft Text identified by right to object.
reference number A/CN. 9/264".
Article 4.5. Extent of Court Intervention. In matters
(c) Moreover, in interpreting this Chapter, the court governed by this Chapter, no court shall intervene
shall have due regard to the policy of the law in favor of except where so provided in the ADR Act. Resort to
arbitration and the policy of the Philippines to actively Philippine courts for matters within the scope of the
promote party autonomy in the resolution of disputes ADR Act shall be governed by the Special ADR Rules.
or the freedom of the parties to make their own
arrangement to resolve their dispute. Article 4.6. Court or Other Authority for Certain
Functions of Arbitration Assistance and Supervision.
(d) Where a provision of this Chapter, except the Rules
applicable to the substance of the dispute, leaves the (a) The functions referred to in paragraphs (c) and (d)
parties free to determine a certain issue, such freedom of Article 4.11 (Appointment of Arbitrators) and
includes the right of the parties to authorize a third paragraph (c) of Article 4.13 (Challenge Procedure)
party, including an institution, to make that and paragraph (a) of Article 4.14 (Failure or
determination. Impossibility to Act) shall be performed by the
appointing authority as defined in Article 1.6 C1, unless
(e) Where a provision of this Chapter refers to the fact the latter shall fail or refuse to act within thirty (30)
that the parties have agreed or that they may agree or days from receipt of the request in which case the
in any other way refers to an agreement of the parties, applicant may renew the application with the court.
such agreement includes any arbitration rules referred The appointment of an arbitrator is not subject to
to in that agreement. appeal or motion for reconsideration.

(f) Where a provision of this Chapter, other than in (b) The functions referred to in paragraph (c) of Article
paragraph (a) of Article 4.25 (Default of a Party) and 4.16 (c) (Competence of Arbitral Tribunal to Rule on its
paragraphs (b) (i) of Article 4.32 (Termination of Jurisdiction), second paragraph of Article 4.34
Proceedings), refers to a claim, it also applies to a (Application for Setting Aside an Exclusive Recourse
counter-claim, and where it refers to a defense, it also Against Arbitral Award), Article 4.35 (Recognition and
applies to a defense to such counter-claim. Enforcement), Article 4.38 (Venue and Jurisdiction),
shall be performed by the appropriate Regional Trial
Article 4.3. Receipt of Written Communications. (a) Court.
Unless otherwise agreed by the parties:
(c) A Court may not refuse to grant, implement or
(i) any written communication is deemed to have been enforce a petition for an interim measure, including
received if it is delivered to the addressee personally or those provided for in Article 4.9 (Arbitration
at his/her place of business, habitual residence or Agreement and Interim Measures by Court), Article 4.
mailing address; if none of these can be found after 11 (Appointment of Arbitrators), Article 4.13
making a reasonable inquiry, a written communication (Challenge Procedure), Article 4,27 (Court Assistance
is deemed to have been received if it is sent to the in Taking Evidence), on the sole ground that the
addressee’s last known place of business, habitual Petition is merely an ancillary relief and the principal
residence or mailing address by registered letter or any action is pending with the arbitral tribunal.
other means which provides a record of the attempt to
deliver it; RULE 2- Arbitration Agreement
PAGE 99

Article 4.7 Definition and Form of Arbitration A party may bring a petition under this Article before
Agreement. The Arbitration agreement, as defined in the court in accordance with the Rules of Court or the
Articles 1.6 A4, shall be in writing. An agreement is in Special ADR Rules.
writing if it is contained in a document signed by the
parties or in an exchange of letters, telex, telegrams or RULE 3 – Composition of Arbitral Tribunal
other means of telecommunication which provide a
record of the agreement, or in an exchange of Article 4.10 Number of Arbitrators. The parties are free
statements of claim and defense in which the existence to determine the number of arbitrators Failing such
of an agreement, or in an exchange of statements of determination, the number of arbitrators shall be three
claim and defense in which the existence of an (3).
agreement is alleged by one party and not denied by
another. The reference in a contract to a document Article 4.11. Appointment of Arbitrators. (a) No person
containing an arbitration clause constitutes an shall be produced by reason of his/her nationality from
arbitration agreement provided that the contracts is acting as an arbitrator, unless otherwise agreed by the
writing and the reference is such as to make that clause parties.
part of the contract.
(b) The parties are free to agree on a procedure of
Article 4.8 Arbitration Agreement and Substantive appointing the arbitrator or arbitrators, subject to
Claim Before Court. (a) A court before which an action provisions of paragraphs (d) and (e) of this Article.
is brought in a matter which is the subject of an
arbitration agreement shall, if at least one party so (c) Failing such agreement:
requests of both parties thereafter, refer the parties to
arbitration unless it finds that the arbitration (i) in an arbitration with three (3 ) arbitrators, each
agreement is null and void, inoperative or incapable of party shall appoint one arbitrator, and the two (2)
being performed. arbitrators thus appointed shall appoint the third
arbitrator; if any party fails to appoint the arbitrator
(b) Where an action referred to in the previous within thirty (30) days of receipt of a request to do so
paragraph has been brought , arbitral proceedings may from the other party, or if the two (2) arbitrators fail to
nevertheless be commenced or continued, and an agree on the third arbitrator within thirty days (30)
award may be made, while the issue is pending before days of their appointment shall be made, upon request
the court. of a party, by the appointing authority;

(c) Where the action is commenced by or against (ii) in an arbitration with a sole arbitrator, if the
multiple parties, one or more of whom are parties to an parties are unable to agree on the arbitrator, he/she
arbitration agreement, the court shall refer to shall be appointed, upon request of a party, by the
arbitration those parties who are bound by the appointing authority.
arbitration agreement although the civil action may
continue as to those who are not bound by such (d) Where, under an appointment procedure agreed
arbitration agreement. upon the parties,

Article 4.9 Arbitration Agreement and Interim (i) a party fails to act as required under such
Measures by Court. (a) It is not incompatible with an procedure, or
arbitration agreement for a party to request from a
court, before the constitution of the arbitral tribunal or (ii) the parties , or two arbitrators, are unable to reach
during arbitral proceedings, an interim measure of an agreement expected of them under such procedure,
protection and for a court to grant such measure. or

(b) To the extent that the arbitral tribunal has no (iii) a third party, including an institution, fails to
power to act or is unable to act effectively, a request for perform any function entrusted to it under such
interim measure of protection, or modification thereof procedure,
as provided for, and in the manner indicated in ,
Article 4.17 (Power of Tribunal to Order Interim Any party may request the appointing authority to take
Measures ), may be made with the court. the necessary measure to appoint an arbitrator, unless
the agreement on the appointment procedure provides
The rules of interim or provisional relief provided for other means for securing the appointment.
in paragraph ( c ) of Article 4.17 of these Rules shall be
observed. (e) A decision on a matter entrusted by paragraphs (c)
and (d) of this to the appointing authority shall be
immediate executory and not be subject to a motion
PAGE 100

for reconsideration or appeal. The appointing A party may bring a petition under this Article before
authority shall have in appointing an arbitrator, due the court in accordance with the Rules of Court or the
regard to any qualifications required of the arbitrator Special ADR Rules.
by the agreement of the parties and to such
considerations as are likely to secure the appointment Article 4.14. Failure or Impossibility to Act. (a) If an
of an independent and impartial arbitrator and, in the arbitrator becomes de jure or de facto unable to
case of a sole or third arbitrator , shall take into perform his/her functions or for other reasons fails to
account as well the advisability of appointing an act without undue delay, his/her mandate terminates if
arbitrator of a nationality other than the Rules of Court he/she withdraws from his/her office or if the parties
of the Special ADR Rules. agree on the termination. Otherwise, if the controversy
remains concerning any of these grounds, any party
Article 4.12 Grounds for Challenge. (a) When a person may request the appointing authority to decide on the
is approached in connection with his/her possible termination of the mandate, which decision shall be
appointment as an arbitrator, he/she impartiality or immediately executory and not subject for motion for
independence. An arbitrator, from the time of his/her reconsideration or appeal.
appointment and throughout the arbitral proceedings
shall, without delay, disclose any such circumstance to (b) If, under this Article or paragraph (b) of Article
the parties unless they have already been informed of 4.13 (Challenge Procedure), an arbitrator withdraws
them him/her. from his/her office or a party agrees for termination of
the mandate of an arbitrator, this does not imply
(b) An arbitrator may be challenged only if acceptance of the validity of any ground referred to in
circumstances exist that give rise to justifiable doubts this Article or in paragraph (b) of Article 4.12 (Grounds
as to his/her impartiality or independence, or if he/she for Challenge).
does not possess qualifications agreed to by the
parties. A party may challenge an arbitrator appointed Article 4.15. Appointment of Substitute Arbitrator.
by him/her, or in whose appointment he/she has Where the mandate of an arbitrator terminates under
participated, only for reasons of which he/she becomes Articles 4.13 (Challenge Procedure) and 4.14 (Failure
aware after the appointment has been made. or Impossibility to Act) or because of his/her
withdrawal from office for any other reason or because
of the revocation of his/her mandate, a substitute
Article 4.13. Challenge Procedure. (a) The parties are arbitrator shall be appointed according to the rules
free to agree on a procedure for challenging an that were applicable to the appointment of the
arbitrator, subject to the provisions of this Article. arbitrator being replaced.

(b) Failing such agreement, a party who intends to RULE 4 – Jurisdiction of Arbitral Tribunal
challenge an arbitrator shall, within fifteen (15) days
after becoming aware of the constitution of the arbitral Article 4.16. Competence of Arbitral Tribunal to Rule
tribunal or after becoming aware of any circumstances on its Jurisdiction. (a) The arbitral tribunal may rule
referred to in paragraph (b) of Article 4.12 (Grounds on its own jurisdiction, including any objections with
for Challenge,) send a written statement of the reasons respect to the existence or validity of the arbitration
for the challenge to the arbitral tribunal. Unless the agreement or any condition precedent to the filing of
challenged arbitrator withdraws from his/her office or the request for arbitration. For that purpose, an
the other party agrees to the challenged arbitrator arbitration clause, which forms part of a contract shall
withdraws from his/her office or the party agrees to be treated as an agreement independent of the other
the challenge, the arbitral tribunal shall decide on the terms of the contract. A decision by the arbitral
challenge. tribunal that the contract is null and void shall not
entail ipso jure the invalidity of the arbitration clause.
(c) If a challenge under any procedure agreed upon by
the parties or under the procedure of paragraph (b) of (b) A plea that the arbitral tribunal does not have
this Article is not successful, the challenging party may jurisdiction shall be raised not later than the
request the appointing authority, within thirty (30) submission of the statement of defense (I.e., in an
days after having received notice of the decision Answer or Motion to Dismiss). A party is not precluded
rejecting the challenge, to decide on the challenge, from raising such plea by the fact that he/she has
which decision shall be immediately executory and not appointed, or participated in the appointment of, an
subject to motion for reconsideration or appeal. While arbitrator. A plea that the arbitral tribunal is exceeding
such a request is pending, the arbitral tribunal, the scope of its authority shall be raised as soon as the
including the challenged arbitrator, may continue the matter alleged to be beyond the scope of its authority is
arbitral proceedings and make an award. raised during the arbitral proceedings. The arbitral
PAGE 101

tribunal may, in either case, admit a later plea if it (iii) The order granting provisional relief may be
considers the delay justified. conditioned upon the provision of security or any act
or omission specified in order.
(c) The arbitral tribunal may rule on a plea referred to
in paragraph (b) of this Article either as a preliminary (iv) Interim or provisional relief is requested by
question or in an award on the merits. If the arbitral written application transmitted by reasonable means
tribunal rules as a preliminary question that it has to the arbitral tribunal and the party against whom
jurisdiction, any party may request, within thirty (30) relief is sought, describing in appropriate details of the
days after having received notice of that ruling, the precise relief, the party against whom the relief is
Regional Trial Court to decide the matter, which requested, the ground for the relief, and the evidence,
decision shall be immediately executory and not supporting the request.
subject to motion for reconsideration or appeal. While
such a request is pending, the arbitral tribunal may (v) The order granting or denying an application for
contribute the arbitral proceedings and make an the interim relief shall be binding upon the parties.
award.
(vi) Either party may apply with the court for
Article 4.17. Power of Arbitral Tribunal to Order assistance in implementing or enforcing an interim
Interim Measures. (a) Unless otherwise agreed by the measure ordered by an arbitral tribunal.
parties, the arbitral tribunal may, at the request of the
party, order any party to take such interim measures of (vii) A party who does not comply with the order shall
protection as the arbitral tribunal may consider be liable for all damages, resulting from
necessary in respect of the subject to matter of the noncompliance, including all expenses, and reasonable
dispute following paragraph (c) of this Article. Such attorney's fees, paid in obtaining the order's judicial
interim measures may include, but shall not be limited enforcement.
to, preliminary injunction directed against a party,
appointment of receivers, or detention, preservation, RULE 5 – Conduct of Arbitral Proceedings
inspection of property that is the subject of the dispute
in arbitration. Article 4.18. Equal Treatment of Parties. The parties
shall be treated with equality and each shall be given a
(b) After constitution of the arbitral tribunal, and full opportunity of presenting his/her case.
during arbitral proceeding, a request for interim
measures of protection, or modification thereof shall Article 4.19. Determination of the Rules of Procedure.
be made with the arbitral tribunal. The arbitral (a) Subject to the provisions of this Chapter, the parties
tribunal is deemed constituted when the sole arbitrator are free to agree on the procedure to be followed by the
or the third arbitrator, who has been nominated, has arbitral tribunal in conducting the proceedings.
accepted the nomination and written communication
of said nomination and acceptance has been received (b) Falling such agreement, the arbitral tribunal may,
by the party making the request. subject to this Chapter, conduct the arbitration in such
manner as it considers appropriate. Unless the arbitral
(c) The following rules on interim or provisional relief tribunal considers it inappropriate, the UNCITRAL
shall be observed: Arbitration Rules adopted by the UNCITRAL on 28
April 1976 and the UN General Assemble on 15
(i) Any party may request that the interim or December 1976 shall apply subject to the following
provisional relief shall be observed: clarification: All references to the "Secretary-General
of the Permanent Court of Arbitration at the Hague"
(ii) Such relief may be granted: shall be deemed to refer to the appointing authority.

(aa) To prevent irreparable loss or injury; (c) The power conferred upon the arbitral tribunal
includes the power to determine the admissibility,
(bb) To provide security for the performance of an relevance, materiality and weight of any evidence.
obligation;
Article 4.20. Place of Arbitration. (a) The parties are
(cc) To produce or preserve evidence free to agree on the place of arbitration. Failing such
agreement, the place of arbitration shall be in Metro
(dd) To compel any other appropriate acts or Manila unless the arbitral tribunal, having regard to
omissions. the circumstances of the case, including the
convenience of the parties, shall decide on a different
place of arbitration.
PAGE 102

(b) Notwithstanding the rule stated in paragraph (a) of


this provision, the arbitral tribunal may, unless (b) The parties shall be given sufficient advance notice
otherwise agreed by the parties, meet at any place it of any hearing and of any meeting of the arbitral
considers appropriate for consultation among its tribunal for the purposes of inspection goods, other
members, for hearing witnesses, experts or the parties, property or documents.
or for inspection of goods, other property or
documents. (c) All statements, documents or other information
supplied to the arbitral by one party shall be
Article 4.21. Commencement of Arbitral Proceedings. communicated to the other party. Also, an expert
Unless otherwise agreed by the parties, the arbitral report or evidentiary document on which the arbitral
proceedings in respect of a particular dispute tribunal may rely in making its decision shall be
commence on the date on which a request for that communicated to the parties.
dispute to be referred to arbitration is received by the
respondent. Article 4.25 Default of a Party. Unless otherwise agreed
by the parties, if, without, showing sufficient cause,
Article 4.22. Language. (a) The parties are free to agree
on the language or languages to be used in the arbitral (a) the claimant fails to communicate his statement of
proceedings. Failing such agreement, the language to claim in accordance with paragraph (a) Article 4.23
be used shall be English. This agreement, unless (Statement of Claim and Defense), the arbitral tribunal
otherwise specified therein, shall apply to any written shall terminate the proceedings;
statement by a party, any hearing and any award,
decision or other communication by the arbitral (b) the respondent fails to communicate his/her/its
tribunal. statement of defense in accordance with paragraph (a)
Article 4.23 (Statement of Claim and Defense), the
(b) The arbitral tribunal may order that any arbitral tribunal shall continue the proceedings
documentary evidence shall be accompanied by a without treating such failure in itself as an admission
translation into the language or languages agreed upon of the claimant’s allegations.
by the parties or determined by the arbitral tribunal in
accordance with paragraph (a) of this Article. (c) any party’s fails to appear at a hearing or to produce
documentary evidence, the arbitral tribunal may
Article 4.23 Statements of Claim and Defense. (a) continue the proceedings and make the award on the
Within the period of time agreed by the parties or evidence before it.
determined by the arbitral tribunal, the claimant shall
state the facts supporting his/her/its claim, the points Article 4.26. Expert Appointed by the Arbitral
at issue and the relief or remedy sought, and the Tribunal. Unless otherwise agreed by the parties, the
respondent shall state his/her/its defense in respect of arbitral tribunal,
these particulars, unless the parties have otherwise
agreed as to the required elements of such statements. (a) may appoint one or more experts to report to it on
The parties may submit with their statements, all specific issues to be determined by the arbitral
documents they consider to be relevant or may add a tribunal; or
reference to the documents or other evidence they will
submit. (b) may require a party to give the expert any relevant
information or to produce, or to provide access to, any
(b) Unless otherwise agreed by the parties, either party relevant documents, goods or other property for
may amend or supplement his/her claim or defense his/her inspection.
during the course of the arbitral proceedings, unless
the arbitral tribunal considers it inappropriate to allow Unless otherwise agreed by the parties, if a party so
such amendment having regard to the delay in making requests or if the arbitral tribunal considers it
it. necessary, the expert shall, after delivery of his/her
written or oral report, participate in a hearing where
Article 4.24 Hearing and Written Proceedings. (a) the parties have the opportunity to put questions to
Subject to any contrary agreement by the parties, the him and to present expert witnesses in order to testify
arbitral tribunal shall decide whether to hold oral on the points at issue.
hearings for the presentation of evidence or for oral
argument, or whether the proceedings shall be Article 4.27. Court Assistance in Taking Evidence. The
conducted on the basis of documents and other arbitral tribunal or a party with the approval of the
materials. However, unless the parties have agreed arbitral tribunal may request from a court of the
that no hearings at an appropriate stage of the Philippines assistance in taking evidence. The court
proceedings, if so requested by a party.
PAGE 103

may execute the request within its competence and


according to its rules on taking evidence. Article 4.31. Form and Contents of Award. (a) The
award shall be made in writing and shall be signed by
The arbitral tribunal shall have the power to require the arbitrator or arbitrators. In arbitral proceedings
any person to attend a hearing as a witness. The with more than one arbitrator, the signatures of the
arbitral tribunal shall have the power to subpoena majority of all members of the arbitral tribunal shall
witnesses and documents when the relevancy of the suffice, provided that the reason for any omitted
testimony and the materiality thereof has been signature is stated.
demonstrated to it. The arbitral tribunal may also
require the retirement of any witness during the (b) The award shall state the reasons upon which it is
testimony of any other witness. based, unless the parties have agreed that no reasons
are to be given or the award is an award on agreed
A party may bring a petition under this Section before terms under paragraph (a) of Article 4.20 (Place of
the court in accordance with the Rules of Court or the Arbitration).
Special ADR Rules.
(c) The award shall state its date and the place of
Article 4.28. Rules Applicable to the Substance of arbitration as determined in accordance with
Dispute. (a) The arbitral tribunal shall decide the paragraph (a) of this Article. The award shall be
dispute in accordance with such rules of law as are deemed to have been made at that place.
chosen by the parties as applicable to the substance of
the dispute. Any designation of the law or legal system (d) After the award is made, a copy signed by the
of a given state shall be construed, unless otherwise arbitrators in accordance with paragraph (a) of this
expressed, as directly referring to the substantive law Article shall be delivered. to each party.
of that state and not its conflict of laws rules.
Article 4.32. Termination of Proceedings. (a) The
(b) Failing any designation by the parties, the arbitral arbitral proceedings are terminated by the final award
tribunal shall apply the law determined by the conflict or by an order of the arbitral tribunal in accordance
of laws rules, which it considers applicable. with paragraph (b) of this Article. (b) The arbitral
tribunal shall issue an order for the termination of the
(c) The arbitral tribunal shall decide ex aequo et bono arbitral proceedings when:
or as amiable compositeur only if the parties have
expressly authorized it to do so. (i) The claimant withdraws his/her/its claim, unless
the respondent objects thereto and the arbitral
(d) In all cases, the arbitral tribunal shall decide in tribunal recognized a legitimate interest on his/her/its
accordance with the terms of the contract and shall part in obtaining a final settlement of the dispute;
take into account the usages of the trade applicable to
the transaction. (ii) The parties agree the termination of the
proceedings;
Article 4.29. Decision-Making by Panel of Arbitrators.
In arbitral proceedings with more than one arbitrator, (iii) The arbitral tribunal finds that the continuation of
any decision of the arbitral tribunal shall be made, the proceedings has for any other reason become
unless otherwise agreed by other parties, by a majority unnecessary or impossible.
of all its members. However, questions of procedure
may be decided by a presiding arbitrator , if so (c) The mandate of the arbitral tribunal ends with
authorized by the parties or all members of the arbitral termination of the arbitral proceedings subject to the
tribunal. provisions of Articles 4.33 (Correction and
Interpretation of Award, Additional Award) and
Article 4.30. Settlement. If, during arbitral paragraph (d) of Articles 4.34 (Application for Setting
proceedings, the parties settle the dispute, the arbitral Aside an Exclusive Recourse against Arbitral Award).
tribunal shall terminate the proceedings and, if
requested by the parties and not objected to by the (d) Notwithstanding the foregoing, the arbitral
arbitral tribunal, record the settlement in the form of tribunal may, for special reasons, reserve in the final
an arbitral award on agreed terms. award or order, a hearing to quantity costs and
determine which party shall bear the costs or the
An award on agreed terms shall be made in accordance division thereof as may be determined to be equitable.
with the provisions of Article 4.31 (Form and Contents Pending determination of this issue, the award shall
of Award), and shall state that it is an award. Such an not be deemed final for purposes of appeal ,vacation,
award has the same status and effect as any other correction, or any post-award proceedings.
award on the merits of the case.
PAGE 104

Article 4.33. Correction and Interpretation of Award, (aa) a party to the arbitration agreement was under
Additional Award. (a) Within thirty (30) days from some incapacity ; or the said agreement is not valid
receipt of the award, unless another period of time has under the law to which the parties have subjected it or,
been agreed upon by the parties: failing any indication thereon, under the law of the
Philippines; or
(i) A party may, with notice to the other party, request
the arbitral tribunal to correct in the award any errors (bb) the party making the application was not given
in computation, any clerical or typographical errors or proper notice of the appointment of an arbitrator or of
any errors of similar nature; the arbitral proceedings or was otherwise unable to
present his case; or
(ii) A party may, it so agreed by the parties and with
notice to the other party, request the arbitral tribunal (cc) the award deals with a dispute not contemplated
to give an interpretation of a specific point or part of by or not failing within the terms of the submission to
the award. arbitration, or contains, decisions on matters beyond
the scope of the submission to arbitration, provided
(b) If the arbitral tribunal considers the request to be that, if the decisions on matters submitted to
justified, It shall make the correction or give the arbitration can be separated from those not so
interpretation within thirty (30) days from receipt of submitted, only the part of the award which contains
the request. The interpretation shall form part of the decisions on matters not submitted to arbitration may
award. be set aside; or

(c) The arbitral tribunal may correct any error of the (dd) the composition of the arbitral tribunal or the
type referred to in paragraph (a) of this Article on its arbitral procedure was not in accordance with the
own initiative within thirty (30) day from the date of agreement of the parties, unless such agreement was in
the award conflict with a provision of ADR Act from which the
parties cannot derogate, or, falling such agreement,
(d) Unless otherwise agreed by the parties, a party was not in accordance with ADR Act; or
may, with notice to the other party, request, within
thirty (30) days receipt of the award, the arbitral (ii) the Court finds that:
tribunal to make an additional award as to claims
presented in the arbitral proceedings but omitted from (aa) the subject-matter of the dispute is not capable of
the award. If the arbitral tribunal considers the request settlement by arbitration under the law of the
to be justified, it shall make the additional award Philippines; or
within sixty (60) days
(bb) the award is in conflict with the public policy of
(e) The arbitral tribunal may extend, if necessary, the the Philippines.
period of time within which it shall make a correction
interpretation or an additional award under (c) An application for setting aside may not be made
paragraphs (a) and (b) of this Article. after three months have elapsed from the date on
which the party making that application had received
(f) The provisions of Article 4.31 (Form and Contents the award or, If a request had been made under Article
of Award) shall apply to a correction or interpretation 4.33 (Correction and Interpretation of Award,
of the award or to an additional award. Additional Award) from the date on which that request
has been disposed of by the Arbitral tribunal
Article 4.34. Aplication for Setting Aside an Exclusive
Recourse against Arbitral Award. (d) The court, when asked to set aside an award, may,
where appropriate and so requested by a party,
(a) Recourse to a court against an arbitral award may suspend the setting aside proceedings for a period of
be made only by application for setting aside in time determined by it in order to give the arbitral
accordance with second and third paragraphs of this tribunal an opportunity resume the arbitral
Article. proceedings or take such other action as in the arbitral
tribunal's opinion will eliminate the grounds for
(b) An arbitral award may be set aside by the Regional setting aside.
Trial Court only If:
(e) A party may bring a petition under this Article
(i) the party making the application furnishes proof before the court in accordance with the Special ADR
that: Rules.

RULE 6 – Recognition and Enforcement of Awards


PAGE 105

Article 4.35. Recognition and Enforcement. (a) A A CONVENTION AWARD.


foreign arbitral award shall be recognized as binding
and, upon petition in writing to the regional trial Recognition or enforcement of an arbitral award, made
Court, shall be enforced subject to the provisions of in a state, which is a party to the New York
this Article and of Article 4.36 (Grounds for Refusing Convention, may be refused, at the request of the party
Recognition or Enforcement). against whom it is provoked, only if the party furnishes
to the Regional Trial Court proof that:
(b) The petition for recognition and enforcement of
such arbitral awards shall be filled with the Regional (a) The parties to the arbitration agreement are, under
trial Court In accordance with Special ADR Rules. the law applicable to them, under some incapacity; or
the said agreement is not valid under the law to which
(i) Convention Award - The New York Convention shall the parties have subjected it or; failing any indication
govern the recognition and enforcement of arbitral thereon, under the law of the country where the award
awards covered by said Convention. The petitioner was made; or
shall establish that the country in which the foreign
arbitration award was made is a party to the New York (b) the party against whom the award is invoked was
Convention not given proper notice of the appointment of an
arbitrator or of the arbitral proceedings or was
(ii) Non-Convention Award – The recognition and otherwise in able to present his case; or
enforcement of foreign arbitral awards not covered by
the New York Convention shall be done in accordance (c) the award deals with dispute not contemplated by
with procedural rules to be promulgated by the or not failing within the terms of the submission to
Supreme Court. The court may, on grounds of comity arbitration, or it contains decisions on matters beyond
and reciprocity, recognize and enforce a non- the scope of the submission to arbitration; provided
convention award as a convention award. that, if the decisions on matters submitted to
arbitration can be separated from those not so
(c) The party relying on an award or applying for its submitted, that part of the award which contains
enforcement shall file with the Regional Trial Court the decisions on matters submitted to arbitration may be
original or duly authenticated copy of the award and recognized and enforced; or
the original arbitration agreement or a duly
authenticated copy thereof. If the award or agreement (d) the composition of the arbitral tribunal or the
is not made in an official language of the Philippines, arbitral procedure was not in accordance with the
the party shall supply a duly certified translation agreement of the parties or, failing such agreement,
thereof into such language. was not in accordance with the law of the country
where the arbitration too place; or
(d) A foreign arbitral award when confirmed by a court
of a foreign country, shall be recognized and enforced (e) the award has not become binding on the parties or
as a foreign arbitral award and not as a judgment of a has been set aside or suspended by a court of the
foreign court. country in which, or under the law of which, that
award was made.
(e) A foreign arbitral award when confirmed by the
Regional Trial Court, shall be enforced in the same Recognition and enforcement of an arbitral award may
manner as final and executory decisions of courts of also be refused if the Regional Trial Court where
law of the Philippines. recognition and enforcement is sought finds that:

(f) If the Regional Trial Court has recognized the (a) the subject-matter of the dispute is not capable of
arbitral award but an application for rejection and/or) settlement by arbitration under the law of Philippines;
suspension of enforcement of that award is or
subsequently made, the Regional Trial Court may, if it
considers the application to be proper, vacate or (b) the recognition or enforcement of the award would
suspend the decision to enforce that award and may be contrary to the public policy of the Philippines.
also, on the application of the party claiming
recognition or enforcement of that award, order the A party to a foreign arbitration proceeding may oppose
other party seeking rejection or suspension to provide an application for recognition and enforcement of the
appropriate security. arbitral award in accordance with the Special ADR
Rules only on the grounds enumerated under
Article 4.36. Grounds for Refusing Recognition or paragraph (a) and (c) of Article 4.35 (Recognition and
Enforcement.
PAGE 106

Enforcement). Any other ground raised shall be Article 4.38. Venue and Jurisdiction. Proceedings for
disregarded by the Regional Trial Court. recognition and enforcement of an arbitration
agreement or for vacation or setting aside of an arbitral
B. NON-CONVENTION AWARD. award, and any application with a court for arbitration
assistance and supervision, except appeal, shall be
(a) A foreign arbitral award rendered in a state which deemed as special proceedings and shall be filed with
is not a party to the New York Convention will be the Regional Trial Court where:
recognized upon proof of the existence of comity and
reciprocity and may be treated as a convention award. (a) the arbitration proceedings are conducted;
If not so treated and if no comity or reciprocity exists,
the non-convention award cannot be recognized (b) where the asset to be attached or levied upon, or
and/or enforced but may be deemed as presumptive the act to be enjoined is located;
evidence of a right as between the parties in
accordance with Section 48 of the Rules of Court. (c) where any of the parties to the dispute resides or
has its place of business; or
(b) If the Regional Trial Court has recognized the
arbitral award but a petition for suspension of (d) in the National Capital Judicial Region at the
enforcement of that award is subsequently made, the option of the applicant.
Regional Trial Court may, if it considers the petition to
be proper, suspend the proceedings to enforce the Article 4.39. Notice of Proceedings to Parties. In a
award, and may also, on the application of the party special proceeding for recognition and enforcement of
claiming recognition or enforcement of that award, an arbitral award, the court shall send notice to the
order the other party seeking suspension to provide parties at their address of record in the arbitration, or
appropriate security. if any party cannot be served notice at such address, at
such party’s last known address. The notice shall be
(c) If the petition for recognition or enforcement of the sent at least fifteen (15) days before the date set for the
arbitral award is filed by a party and a counter-petition initial hearing of the application.
for the rejection of the arbitral award is filed by the
other party, the Regional Trial Court may, if it Article 4.40. Legal Representation in International
considers the counter-petition to be proper but the Commercial Arbitration. In international commercial
objections thereto may be rectified or cured, remit the arbitration conducted in the Philippines, a party may
award to the arbitral tribunal for appropriate action be represented by any person of his/her choice:
and in the meantime suspend the recognition and Provided, that such representative, unless admitted to
enforcement proceedings and may also on the the practice of law in the Philippines, shall not be
application of the petitioner order the counter- authorized to appear as counsel in any Philippine court
petitioner to provide appropriate security. or any other quasi-judicial body whether or not such
appearance is in relation to the arbitration in which
Article 4.37. Appeal from Court Decision on Arbitral he/she appears.
Awards. A decision of the Regional Trial Court
recognizing, enforcing, vacating or setting aside an Article 4.41. Confidentially of Arbitration Proceedings.
arbitral award may be appealed to the Court of Appeals The arbitration proceedings, including the records,
in accordance with the rules of procedure to be evidence and the arbitral award, shall be considered
promulgated by the Supreme Court. confidential and shall not be poolside except:

The losing party who appeals from the judgment of the (a) with the consent of the parties; or
court recognizing and enforcing an arbitral award shall
be required by the Court of Appeals to post a counter- (b) for the limited purpose of disclosing to the court
bond executed if favor of the prevailing party equal to relevant documents in cases where resort to the court
the amount of the award in accordance with the is allowed herein.
Special ADR Rules.
Provided, however, that the court in which the action
Any stipulation by the parties that the arbitral or the appeal is pending may issue a protective order to
tribunal’s award or decision shall be final, and prevent or prohibit disclosure of documents or
therefore not appealable, is valid. Such stipulation information containing secret processes,
carries with it a waiver of the right to appeal from an developments, research and other information where it
arbitral award but without prejudice to judicial review is shown that the applicant shall be materially
by way of certiorari under Rule 65 of the Rules of prejudiced by an authorized disclosure thereof.
Court.
PAGE 107

Article 4.42. Summary nature of proceedings before (iv) The travel and other expenses of witnesses to the
the court. A petition for recognition and enforcement extent such expenses are approved by the arbitral
of awards brought before the court shall be heard and tribunal;
dealt with summarily in accordance with the Special
ADR Rules. (v) The costs for legal representation and assistance of
the successful party if such costs were claimed during
Article 4.43. Death of a Party. Where a party dies after the arbitral proceedings, and only to the extent that the
making a submission or a contract to arbitrate as arbitral tribunal determines that the amount of such
prescribed in these Rules, the proceedings may be costs is reasonable;
begun or continued upon the application of, or notice
to, his/her executor or administrator, or temporary (v1) Any fees and expenses of the appointing authority.
administrator of his/her estate. In any such case, the
court may issue an order extending the time within (b) The fees of the arbitral tribunal shall be reasonable
which notice of a motion to recognize or vacate an in amount, taking into account the amount in dispute,
award must be served. Upon recognizing an award, the complexity of the subject matter, the time spent by
where a party has died since it was filed or delivered, the arbitrators and any other relevant circumstances of
the court must enter judgement in the name of the the case.
original party; and the proceedings thereupon are the
same as where a party dies after a verdict. If an appointing authority has been agreed upon by the
parties and if such authority has issued a schedule of
Article 4.44. Multi-Party Arbitration. When a single fees for arbitrators in international cases which it
arbitration involves more than two parties, the administers, the arbitral tribunal in fixing its fees shall
foregoing rules, to the extent possible, shall be used, take that schedule of fees into account to the extent
subject to such modifications consistent with this that it considers appropriate in the circumstances of
Chapter as the arbitral tribunal shall deem appropriate the case.
to address possible complexities of a multi-party
arbitration. If such appointing authority has not issued a schedule
of fees for arbitrators in international cases, any party
Article 4.45. Consolidation of Proceedings and may, at any time request the appointing authority to
Concurrent Hearings. – The parties and the arbitral furnish a statement setting forth the basis for
tribunal may agree – establishing fees which is customarily followed in
international cases in which the authority appoints
(a) that the arbitration proceedings shall be arbitrators. If the appointing authority consents to
consolidated with other arbitration proceedings; or provide such a statement, the arbitral tribunal, in
fixing its fees, shall take such information into account
(b) that concurrent hearings shall be held, on such to the extent that it considers appropriate in the
terms as may be agreed. circumstances of the case.

Unless the parties agree to confer such power on the (c) In cases referred to in the second and third sub-
arbitral tribunal, the tribunal has no power to order paragraphs of paragraph (b) of this Article, when a
consolidation of arbitration proceedings or concurrent party so requests and the appointing authority
hearings. consents to perform the function, the arbitral tribunal
shall fix its fees only after consultation with the
Article 4.46. Costs. (a) The arbitral tribunal shall fix appointing authority which may make any comment it
the costs of arbitration in its award. The term "costs" deems appropriate to the arbitral tribunal concerning
include only: the fees.

(i) The fees of the arbitral tribunal to be stated (d) Except as provided in the next sub-paragraph of
separately as to each arbitrator and to be fixed by the this paragraph, the costs of arbitration shall, in
tribunal itself in accordance with the paragraph (b) of principle, be borne by the unsuccessful party.
this Article; However, the arbitral tribunal may apportion each of
such costs between the parties if it determines that
(ii) The travel and other expenses incurred by the apportionment is reasonable, taking into account the
arbitrators; circumstances of the case.

(iii) The costs of expert advice and of other assistance With respect to the costs of legal representation and
required by the arbitral tribunal; assistance referred to in paragraph (c) of paragraph (a)
(iii) of this Article, the arbitral tribunal, taking into
account the circumstances of the case, shall be free to
PAGE 108

determine which party shall bear such costs or may


apportion such costs between the parties if it (b) This Chapter shall apply to domestic arbitration
determines that appointment is reasonable. whether the dispute is commercial, as defined in
Section 21 of the ADR Act, or non-commercial, by an
When the arbitral tribunal issues an order for the arbitrator who is a private individual appointed by the
termination of the arbitral proceedings or makes an parties to hear and resolve their dispute by rendering
award on agreed terms, it shall fix the costs of an award; Provided that, although a construction
arbitration referred to in paragraphs (b), (c) and (d) of dispute may be commercial, it shall continue to be
this Article in the context of that order or award. governed by E.O. No. 1008, s.1985 and the rules
promulgated by the Construction Industry Arbitration
(e) The arbitral tribunal, on its establishment, may Commission.
request each party to deposit an equal amount as an
advance for the costs referred to in paragraphs (i), (ii) (c) Two or more persons or parties may submit to
and (iii) of paragraph (a) of this Article. arbitration by one or more arbitrators any controversy
existing between them at the time of the submission
During the course of the arbitral proceedings, the and which may be the subject of an action; or the
arbitral tribunal may request supplementary deposits parties to any contract may in such contract agree to
from the parties. settle by arbitration a controversy thereafter arising
between them. Such submission or contract shall be
If an appointing authority has been agreed upon by the valid, enforceable and irrevocable, save upon such
parties and when a party so requests and the grounds as exist at law for the revocation of any
appointing authority consents to perform the function, contract.
the arbitral tribunal shall fix the amounts of any
deposits or supplementary deposits only after Such submission or contract may include questions
consultation with the appointing authority which may arising out of valuations, appraisals or other
make any comments to the arbitral tribunal which it controversies which may be collateral, incidental,
deems appropriate concerning the amount of such precedent or subsequent to any dispute between the
deposits and supplementary deposits. parties.

If the required deposits are not paid in full within A controversy cannot be arbitrated where one of the
thirty (30) days after receipt of the request, the arbitral parties to the controversy is an infant, or a person
tribunal shall so inform the parties in order that the judicially declared to be incompetent, unless the
required payment may be made. If such payment is not appropriate court having jurisdiction approved a
made, the arbitral tribunal may order the suspension petition for permission to submit such controversy to
or termination of the arbitral proceedings. arbitration made by the general guardian or guardian
ad litem of the infant or of the incompetent.
After the award has been made, the arbitral tribunal
shall render an accounting to the parties of the But where a person capable of entering into a
deposits received and return any unexpended balance submission or contract has knowingly entered into the
to the parties. same with a person incapable of so doing, the objection
on the ground of incapacity can be taken only in behalf
CHAPTER 5 of the person so incapacitated.
DOMESTIC ARBITRATION
Article 5.2. Delivery and Receipt of Written
RULE 1 – General Provisions Communications. (a) Except as otherwise agreed by
the parties, a written communication from one party to
Article 5.1. Scope of Application. (a) Domestic the other or to the arbitrator or to an arbitration
arbitration, which is not international as defined in institution or from the arbitrator or arbitration
paragraph C8 of Article 1.6 shall continue to be institution to the parties shall be delivered to the
governed by Republic Act No. 876, otherwise known as addressee personally, by registered mail or by courier
"The Arbitration Law", as amended by the ADR Act. service. Such communication shall be deemed to have
Articles 8, 10, 11, 12, 13, 14, 18 and 19 and 29 to 32 of been received on the date it is delivered at the
the Model Law and Sections 22 to 31 of the ADR Act addressee’s address of record, place of business,
are specifically applicable to domestic arbitration. residence or last known address. The communication,
as appropriate, shall be delivered to each party to the
In the absence of a specific applicable provision, all arbitration and to each arbitrator, and, in institutional
other rules applicable to international commercial arbitration, one copy to the administering institution.
arbitration may be applied in a suppletory manner to
domestic arbitration.
PAGE 109

(b) During the arbitration proceedings, the arbitrator agreement is in writing if it is contained in a document
may order a mode of delivery and a rule for receipt of signed by the parties or in an exchange of letters, telex,
written communications different from that provided telegrams or other means of telecommunication which
in paragraph (a) of this Article. provide a record of the agreement, or in an exchange of
statements of claim and defense in which the existence
(c) If a party is represented by counsel or a of an agreement is alleged by one party and not denied
representative, written communications for that party by the other. The reference in a contract to a document
shall be delivered to the address of record of such containing an arbitration clause constitutes an
counsel or representative. arbitration agreement provided that the contract is in
writing and the reference is such as to make that clause
(d) Except as the parties may agree or the arbitrator part of the contract.
may direct otherwise, a written communication may be
delivered by electronic mail or facsimile transmission Article 5.7. Arbitration Agreement and Substantive
or by such other means that will provide a record of the Claim Before Court. (a) A party to an action may
sending and receipt thereof at the recipient’s mailbox request the court before which it is pending to stay the
(electronic inbox). Such communication shall be action and to refer the dispute to arbitration in
deemed to have been received on the same date of its accordance with their arbitration agreement not later
transmittal and receipt in the mailbox (electronic than the pre-trial conference. Thereafter, both parties
inbox). may make a similar request with the court. The parties
shall be referred to arbitration unless the court finds
Article 5.3. Waiver of Right to Object. (a) A party shall that the arbitration agreement is null and void,
be deemed to have waived his right to object to non- inoperative or incapable of being performed.
compliance with any non-mandatory provision of these
Rules (from which the parties may derogate) or any (b) Where an action referred to in paragraph (a) of this
requirement under the arbitration agreement when: Article has been brought, arbitral proceedings may
nevertheless be commenced or continued, and an
(i) he/she/it knows of such non-compliance; and award may be made, while the issue is pending before
the court.
(ii) proceeds with the arbitration without stating
his/her/its objections to such non-compliance without (c) Where the action is commenced by or against
undue delay or if a time-limit is provided therefor, multiple parties, one or more of whom are parties to an
within such period of time. arbitration agreement, the court shall refer to
arbitration those parties who are bound by the
(b) If an act is required or allowed to be done under arbitration agreement although the civil action may
this Chapter, unless the applicable rule or the continue as to those who are not bound by such
agreement of the parties provides a different period for arbitration agreement.
the act to be done, it shall be done within a period of
thirty (30) days from the date when such act could Article 5.8. Arbitration Agreement and Interim
have been done with legal effect. Measures by Court. (a) It is not incompatible with an
arbitration agreement for a party to request from a
Article 5.4. Extent of Court Intervention. In matters court, before the constitution of the arbitral tribunal or
governed by this Chapter, no court shall intervene during arbitral proceedings, an interim measure of
except in accordance with the Special ADR Rules. protection and for a court to grant such measure.

Article 5.5. Court or Other Authority for Certain (b) After the constitution of the arbitral tribunal and
Functions of Arbitration Assistance and Supervision. during arbitral proceedings, a request for an interim
The functions referred to in paragraphs (c) and (d) of measure of protection, or modification thereof, may be
Article 5.10 (Appointment of Arbitrators), paragraph made with the arbitral tribunal or to the extent that the
(a) of Article 5.11 (Grounds for Challenge), and arbitral tribunal has no power to act or is unable to act
paragraph (a) of Article 5.13 (Failure or Impossibility effectively, the request may be made with the court.
to Act), shall be performed by the appointing authority,
unless the latter shall fail or refuse to act within thirty (c) The following rules on interim or provisional relief
(30) days from receipt of the request in which case, the shall be observed:
applicant may renew the application with the court.
(i) Any party may request that interim or provisional
RULE 2 – Arbitration Agreement relief be granted against the adverse party.

Article 5.6. Form of Arbitration Agreement. An (ii) Such relief may be granted:
arbitration agreement shall be in writing. An
PAGE 110

(aa) To prevent irreparable loss or injury; serve as an arbitrator shall be related by blood or
marriage within the sixth degree to either party to the
(bb) To provide security for the performance of an controversy. No person shall serve as an arbitrator in
obligation; any proceeding if he/she has or has had financial,
fiduciary or other interest in the controversy or cause
(cc) To produce or preserve evidence; or to be decided or in the result of the proceeding, or has
any personal bias, which might prejudice the right of
(dd) To compel any other appropriate act or omissions. any party to a fair and impartial award.

(iii) The order granting provisional relief may be No party shall select as an arbitrator any person to act
conditioned upon the provision of security or any act as his/her champion or to advocate his/her cause.
or omission specified in the order.
(b) The parties are free to agree on a procedure of
(iv) Interim or provisional relief is requested by appointing the arbitrator or arbitrators. If, in the
written application transmitted by reasonable means contract for arbitration or in the submission, a
to the arbitral tribunal and the party against whom provision is made for a method of appointing an
relief is sought, describing in appropriate detail of the arbitrator or arbitrators, such method shall be
precise relief, the party against whom the relief is followed.
requested, the ground for the relief, and the evidence
supporting the request. (c) Failing such agreement,

(v) The order either grating or denying an application (i) in an arbitration with three (3) arbitrators, each
for interim relief shall be binding upon the parties. party shall appoint one (1) arbitrator, and the two (2)
arbitrators thus appointed shall appoint the third
(vi) Either party may apply with the court for arbitrator; if a party fails to appoint the arbitrator
assistance in implementing or enforcing an interim within thirty (30) days of receipt of a request to do so
measure ordered by an arbitral tribunal. from the other party, or if the two arbitrators fail to
agree on the third arbitrator within thirty (30) days of
(vii) A party who does not comply with the order shall their appointment, the appointment shall be made,
be liable for all damages, resulting from upon request of a party, by the appointing authority;
noncompliance, including all expenses, and reasonable
attorney’s fees, paid in obtaining the order’s judicial (ii) in an arbitration with a sole arbitrator, if the
enforcement. parties are unable to agree on the arbitrator, he/she
shall be appointed, upon request of a party, by the
(d) Unless otherwise agreed by the parties, the arbitral appointing authority.
tribunal may, at the request of a party, order any party
to take such interim measures of protection as the (d) Where, under an appointment procedure agreed
arbitral tribunal may consider necessary in respect of upon by the parties,
the subject matter of the dispute following the Rules in
this Article. Such interim measures may include but (i) a party fails to act or appoint an arbitrator as
shall not be limited to preliminary injunction directed required under such procedure, or
against a party, appointment of receivers or detention,
preservation, inspection of property that is the subject (ii) the parties, or two (2) arbitrators, are unable to
of the dispute in arbitration. Either party may apply appoint an arbitrator or reach an agreement expected
with the court for assistance in implementing or of them under such procedure, or
enforcing an interim measure ordered by an arbitral
tribunal. (iii) a third party, including an institution, fails to
appoint an arbitrator or to perform any function
RULE 3. Composition of Arbitral Tribunal entrusted to it under such procedure, or

Article 5.9. Number of Arbitrators. The parties are free (iv) The multiple claimants or the multiple
to determine the number of arbitrators. Failing such respondents is/are unable to appoint its/their
determination, the number of arbitrators shall be three respective arbitrator, any party may request the
(3). appointing authority to appoint an arbitrator.

Article 5.10. Appointment of Arbitrators. (a) Any In making the appointment, the appointing authority
person appointed to serve as an arbitrator must be of shall summon the parties and their respective counsel
legal age, in full enjoyment of his/her civil rights and to appear before said authority on the date, time and
knows how to read and write. No person appointed to place set by it, for the purpose of selecting and
PAGE 111

appointing a sole arbitrator. If a sole arbitrator is not appointment of an independent and impartial
appointed in such meeting, or the meeting does not arbitrator.
take place because of the absence of either or both
parties despite due notice, the appointing authority (i) The chairman of the arbitral tribunal shall be
shall appoint the sole arbitrator. selected in accordance with the agreement of the
parties and/or the rules agreed upon or, in default
(e) If the default appointment of an arbitrator is thereof, by the arbitrators appointed.
objected to by a party on whose behalf the default
appointment is to be made, and the defaulting party (j) Any clause giving one of the agreement, if otherwise
requests the appointing authority for additional time valid, shall be construed as permitting the
to appoint his/her arbitrator, the appointing authority, appointment of one (1) arbitrator by all claimants and
having regard to the circumstances, may give the one (1) arbitrator by all respondents. The third
requesting party not more than thirty (30) days to arbitrator shall be appointed as provided above.
make the appointment.
If all the claimants or all the respondents cannot
If the objection of a party is based on the ground that decide among themselves on an arbitrator, the
the party did not fail to choose and appoint an appointment shall be made for them by the appointing
arbitrator for the arbitral tribunal, there shall be authority.
attached to the objection the appointment of an
arbitrator together with the latter’s acceptance thereof (k) The appointing authority may adopt Guidelines for
and curriculum vitae. Otherwise, the appointing the making of a Request for Appointment.
authority shall appoint the arbitrator for that party.
(l) Except as otherwise provided in the Guidelines of
(f) In making a default appointment, the appointing the appointing authority, if any, a Request for
authority shall have regard to such considerations as Appointment shall include, as applicable, the
are likely to secure the appointment of an independent following:
and impartial arbitrator. In order to achieve speedy
and impartial justice and to moderate the cost of (i) the demand for arbitration;
arbitration, in choosing an arbitrator, the appointing
authority shall give preference to a qualified person (ii) the name/s and curricula vitae of the appointed
who has a place of residence or business in the same arbitrator/s;
general locality as the agreed venue of the arbitration
and who is likely to accept the arbitrator’s fees agreed (iii) the acceptance of his/her/its appointment of the
upon by the parties, or as fixed in accordance either appointed arbitrator/s;
with the internal guidelines or the Schedule of Fees
approved by the administering institution or by the (iv) any qualification or disqualification of the
appointing authority. arbitrator as provided in the arbitration agreement;

(g) The appointing authority shall give notice in (v) an executive summary of the dispute which should
writing to the parties of the appointment made or its indicate the nature of the dispute and the parties
inability to comply with the Request for Appointment thereto;
and the reasons why it is unable to do so, in which later
case, the procedure described under Article 5.5 (Court (vi) principal office and officers of a corporate party;
or Other Authority for Certain Functions of arbitration
Assistance and Supervision) shall apply. (vii) the person/s appearing as counsel for the
party/ies; and
(h) A decision on a matter entrusted by this Article to
the appointing authority shall be immediately (viii) information about arbitrator’s fees where there is
executory and not subject to appeal or motion for an agreement between the parties with respect thereto.
reconsideration. The appointing authority shall be
deemed to have been given by the parties discretionary In institutional arbitration, the request shall include
authority in making the appointment but in doing so, such further information or particulars as the
the appointing authority shall have due regard to any administering institution shall require.
qualification or disqualification of an arbitrator/s
under paragraph (a) of Article 5.10 (Appointment of (m) A copy of the Request for Appointment shall be
Arbitrators) as well as any qualifications required of delivered to the adverse party. Proof of such delivery
the arbitrator/s by the agreement of the parties and to shall be included in, and shall form part of, the
such considerations as are likely to secure the Request for Appointment filed with the appointing
authority.
PAGE 112

(ii) he/she does not possess qualifications as provided


(n) A party upon whom a copy of the Request for for in this Chapter or those agreed to by the parties;
Appointment is communicated may, within seven (7)
days of its receipt, file with the appointing authority (iii) he/she is disqualified to act as arbitration under
his/her/its objection/s to the Request or ask for an these Rules;
extension of time, not exceeding thirty (30) days from
receipt of the request, to appoint an arbitrator or act in (iv) he refuses to respond to questions by a party
accordance with the procedure agreed upon or regarding the nature and extent of his professional
provided by these Rules. dealings with a party or its counsel.

Within the aforementioned periods, the party seeking (c) If, after appointment but before or during hearing,
the extension shall provide the appointing authority a person appointed to serve as an arbitrator shall
and the adverse party with a copy of the appointment discover any circumstances likely to create a
of his/her arbitrator, the latter’s curriculum vitae, and presumption of bias, or which he/she believes might
the latter’s acceptance of the appointment. In the event disqualify him/her as an impartial arbitrator, the
that the said party fails to appoint an arbitrator within arbitrator shall immediately disclose such information
said period, the appointing authority shall make the to the parties. Thereafter, the parties may agree in
default appointment. writing:

(o) An arbitrator, in accepting an appointment, shall (i) to waive the presumptive disqualifying
include, in his/her acceptance letter, a statement that: circumstances; or

(i) he/she agrees to comply with the applicable law, the (ii) to declare the office of such arbitrator vacant. Any
arbitration rules agreed upon by the parties, or in such vacancy shall be filed in the same manner the
default thereof, these Rules, and the Code of Ethics for original appointment was made.
Arbitrators in Domestic Arbitration, if any;
(d) After initial disclosure is made and in the course of
(ii) he/she accepts as compensation the arbitrator’s the arbitration proceedings, when the arbitrator
fees agreed upon by the parties or as determined in discovers circumstances that are likely to create a
accordance with the rules agreed upon by the parties, presumption of bias, he/she shall immediately disclose
or in default thereof, these Rules; and those circumstances to the parties. A written disclosure
is not required where it is made during the arbitration
(iii) he agrees to devote as much time and attention to and it appears in a written record of the arbitration
the arbitration as the circumstances may require in proceedings.
order to achieve the objective of a speedy, effective and
fair resolution of the dispute. (e) An arbitrator who has or has had financial or
professional dealings with a party to the arbitration or
Article 5.11. Grounds for Challenge. (a) When a person to the counsel of either party shall disclose in writing
is approached in connection with his/her possible such fact to the parties, and shall, in good faith,
appointment as an arbitrator, he/she shall disclose any promptly respond to questions from a party regarding
circumstance likely to give rise to justifiable doubts as the nature, extent and age of such financial or
to his/her impartiality, independence, qualifications professional dealings.
and disqualifications. An arbitrator, from the time of
his/her appointment and throughout the arbitral Article 5.12. Challenge Procedure. (a) The parties are
proceedings, shall without delay, disclose any such free to agree on a procedure for challenging an
circumstances to the parties unless they have already arbitrator, subject to the provisions of paragraph (c) of
been informed of them by him/her. this Article.

A person, who is appointed as an arbitrator (b) Failing such agreement, a party who intends to
notwithstanding the disclosure made in accordance challenge an arbitrator shall, within fifteen (15) days
with this Article, shall reduce the disclosure to writing after becoming aware of the constitution of the arbitral
and provide a copy of such written disclosure to all tribunal or after becoming aware of any circumstance
parties in the arbitration. referred to in paragraph (b) of Article 5.11 (Grounds for
Challenge), send a written statement of the reasons for
(b) An arbitrator may be challenged only if: the challenge to the arbitral tribunal. Unless the
challenged arbitrator withdraws from his/her office or
(i) circumstances exist that give rise to justifiable the other party agrees to the challenge, the arbitral
doubts as to his/her impartiality or independence; tribunal shall decide on the challenge.
PAGE 113

(c) If a challenge under any procedure agreed upon by (30) days from the date of its receipt or within such
the parties or under the procedure of paragraph (b) of further time as it may fix, with notice to the parties, the
this Article in not successful, the challenging party may requesting party may renew the request with the court.
request the appointing authority, within thirty (30)
days after having received notice of the decision The request made under this Article shall include the
rejecting the challenge, to decide on the challenge, challenge, the reply or explanation of the challenged
which decision shall be immediately executory and not arbitrator and relevant communication, if any, from
subject to appeal or motion for reconsideration. While either party, or from the arbitral tribunal.
such a request is pending, the arbitral tribunal,
including the challenged arbitrator, may continue the (n) Every communication required or agreement made
arbitral proceedings and make an award. under this Article in respect of a challenge shall be
delivered, as appropriate, to the challenged arbitrator,
(d) If a request for inhibition is made, it shall be to the parties, to the remaining members of the arbitral
deemed as a challenge. tribunal and to the institution administering the
arbitration, if any.
(e) A party may challenge an arbitrator appointed by
him/her/it, or in whose appointment he/she/it has (m) A challenged arbitrator shall be replaced if:
participated, only for reasons of which he/she/it
becomes aware after the appointment has been made. (i) he/she withdraws as arbitrator, or

(f) The challenge shall be in writing and it shall state (ii) the parties agree in writing to declare the office of
specific facts that provide the basis for the ground arbitrator vacant, or
relied upon for the challenge. A challenge shall be
made within fifteen (15) days from knowledge by a (iii) the arbitral tribunal decides the challenge and
party of the existence of a ground for a challenge or declares the office of the challenged arbitrator vacant,
within fifteen (15) days from the rejection by an or
arbitrator of a party’s request for his/her inhibition.
(iv) the appointing authority decides the challenge and
(g) Within fifteen (15) days of receipt of the challenge, declares the office of the challenged arbitrator vacant,
the challenged arbitrator shall decide whether he/she or
shall accept the challenge or reject it. If he/she accepts
the challenge, he/she shall voluntarily withdraw as (v) in default of the appointing authority, the court
arbitrator. If he/she rejects it, he/she shall decides the challenge and declares the office of the
communicate, within the same period of time, his/her challenged arbitrator vacant.
rejection of the challenge and state the facts and
arguments relied upon for such rejection. (n) The decision of the parties, the arbitral tribunal,
the appointing authority, or in proper cases, the court,
(h) An arbitrator who does not accept the challenge to accept or reject a challenge is not subject to appeal
shall be given an opportunity to be heard. or motion for reconsideration.

(i) Notwithstanding the rejection of the challenge by (o) Until a decision is made to replace the arbitrator
the arbitrator, the parties may, within the same fifteen under this Article, the arbitration proceeding shall
(15) day period, agree to the challenge. continue notwithstanding the challenge, and the
challenged arbitrator shall continue to participate
(j) In default of an agreement of the parties to agree on therein as an arbitrator. However, if the challenge
the challenge thereby replacing the arbitrator, the incident is raised before the court, because the parties,
arbitral tribunal shall decide on the challenge within the arbitral tribunal or appointing authority failed or
thirty (30) days from receipt of the challenge. refused to act within the period provided in paragraphs
(j) and (k) of this Article, the arbitration proceeding
(k) If the challenge procedure as agreed upon by the shall be suspended until after the court shall have
parties or as provided in this Article is not successful, decided the incident. The arbitration shall be
or a party or the arbitral tribunal shall decline to act, continued immediately after the court has delivered an
the challenging party may request the appointing order on the challenging incident. If the court agrees
authority in writing to decide on the challenge within that the challenged arbitrator shall be replaced, the
thirty (30) days after having received notice of the parties shall immediately replace the arbitrator
decision rejecting the challenge. The appointing concerned.
authority shall decide on the challenge within fifteen
(15) days from receipt of the request. If the appointing
authority shall fail to act on the challenge within thirty
PAGE 114

(p) The appointment of a substitute arbitrator shall be The participation of a party in the selection and
made pursuant to the procedure applicable to the appointment of an arbitrator and the filling of
appointment of the arbitrator being replaced. appropriate pleadings before the arbitral tribunal to
question its jurisdiction shall not be construed as a
Article 5.13. Failure or Impossibility to Act. (a) If an submission to the jurisdiction of the arbitral tribunal
arbitrator becomes de jure or de facto unable to or of a waiver of his/her/its right to assert such
perform his/her functions or for other reasons fails to grounds to challenge the jurisdiction of the arbitral
act without undue delay, his/her mandate terminates if tribunal or the validity of the resulting award.
he/she withdraws from his/her office or if the parties
agree on the termination. Otherwise, if a controversy (c) The respondent in the arbitration may invoke any
remains concerning any of these grounds, any party such grounds to question before the court the
may request the appointing authority to decide on the existence, validity, or enforceability of the arbitration
termination of the mandate, which decision shall be agreement, or the propriety of the arbitration, or the
immediately executory and not subject to appeal or jurisdiction of the arbitrator and invoke the pendency
motion for reconsideration. of such action as ground for suspension of the
arbitration proceeding. The arbitral tribunal, having
(b) If, under this Article or Article 5.12 (Challenge regard to the circumstances of the case, and the need
Procedure), an arbitrator withdraws from his/her for the early and expeditious settlement of the dispute,
office or a party agrees to the termination of the in light of the facts and arguments raised to question
mandate of an arbitrator, this does not imply its jurisdiction, may decide either to suspend the
acceptance Of the validity of any ground referred to in arbitration until the court has made a decision on the
this Article 5.12. issue or continue with arbitration.

Article 5.14. Appointment of Substitute Arbitrator. (d) If a dispute is, under an arbitration agreement, to
Where the mandate of an arbitrator terminates under be submitted to arbitration, but before arbitration is
Articles 5.12 (Challenge Procedure) or 5.13 (Failure or commenced or while it is pending, a party files an
Impossibility) or because of his withdrawal from office action before the court which embodies or includes as
for any other reason or because of the revocation of his a cause of action the dispute that is to be submitted to
mandate by agreement of the parties or in any other arbitration the filling of such action shall not prevent
case of termination of his/her mandate, a substitute the commencement of the arbitration or the
arbitrator shall be appointed according to the rules continuation of the arbitration until the award is
applicable to the arbitrator being replaced. issued.

RULE 4 – Jurisdiction of Arbitral Tribunal Article 5.16 Power of Arbitral Tribunal to Order
Interim Measures. (a) Unless otherwise agreed by the
Article 5.15 Competence of Arbitral Tribunal to Rule on parties, the arbitral tribunal may, at the request of a
its Jurisdiction. (a) When a demand for arbitration party, order any party to take such interim measures of
made by a party to a dispute is objected to by the protection as the arbitral tribunal may consider
adverse party, the arbitral tribunal shall, in the first necessary in respect of the subject matter of the
instance, resolve the objection when made on any of dispute following the rules in this Article. Such interim
the following grounds: measures may include, but shall not be limited to
preliminary injunction directed against a party,
(i) the arbitration agreement is in existent, void, appointment of receivers or detention preservation,
unenforceable or not binding upon a person for any inspection of property that is the subject of the dispute
reason, including the fact that the adverse party is not in arbitration.
privy to said agreement; or
(b) After the constitution of the arbitral tribunal, and
(ii) the dispute is not arbitrable or is outside the scope during arbitral proceedings, a request for interim
of the arbitration agreement; or measures of protection, or modification thereof, shall
be made with the arbitral tribunal. The arbitral
(iii) the dispute is under the original and exclusive tribunal is deemed constituted when the sole arbitrator
jurisdiction of a court or quasi-judicial body, or the third arbitrator, who has been nominated, has
accepted the nomination and written communication
(b) If a party raises any of the grounds for objection, of said nomination and acceptance has been received
the same shall not preclude the appointment of the by the party making the request.
arbitrator/s as such issue is for the arbitral tribunal to
decide. (c) The following rules on interim or provisional relief
shall be observed:
PAGE 115

(i) Any party may request that the provisional or agreement, the place of arbitration shall be in Metro
interim relief be granted against the adverse party. Manila unless the arbitral tribunal, having regard to
the circumstances of the case, including the
(ii) Such relief may be granted: convenience of the parties, shall decide on a different
place of arbitration.
(aa) To prevent irreparable loss or injury;
(b) The arbitral tribunal may, unless otherwise agreed
(bb) To provide security for the performance of an by the parties, meet at any place it considers
obligation; appropriate for consultation among its members, for
hearing witnesses, experts or the parties, or for
(cc) To produce or preserve evidence; or inspection of goods, other property or documents.

(dd) To compel any other appropriate act or omissions. Article 5.20 Commencement of Arbitral Proceedings
(a) Where there is a prior arbitration agreement
(iii) The order granting provisional relief may be between the parties, arbitration is deemed commenced
conditioned upon the provision of security or any act as follows:
or omission specified in the order.
(i) In institutional arbitration is commenced in
(iv) Interim or provisional relief is requested by accordance with the arbitration rules of the institution
written application transmitted by reasonable means agreed upon by the parties.
to the arbitral tribunal and the party against whom
relief is sought, describing in appropriate detail the (ii) In ad hoc arbitration, arbitration is commenced by
precise relief, the party against whom the relief is the claimant upon delivering to the respondent a
requested, the ground for the relief and the evidence demand for arbitration. A demand may be in any form
supporting the request. stating:

(v) The order either granting or denying an application (aa) the name, address and description of each of the
for interim relief shall be binding upon the parties. parties;

(vi) Either party may apply with the court for (bb) a description of the nature and circumstances of
assistance in implementing or enforcing an interim the dispute giving rise to the claim;
measure ordered by an arbitral tribunal.
(cc) a statement of the relief sought, including the
(vii) A party who does not comply with the order shall amount of the claim;
be liable for all damages, resulting from
noncompliance, including all expenses, and reasonable (dd) the relevant agreements, if any, including the
attorney’s fee paid in obtaining the order’s judicial arbitration agreement, a copy of which shall be
enforcement. attached; and

RULE 5 – Conduct of Arbitral Proceedings (ee) appointment of arbitrators and / or demand to


appoint.
Article 5.17. Equal Treatment of Parties. The parties
shall be treated with equally and each party shall be (b) If the arbitration agreement provides for the
given a full opportunity of presenting his/her/its case. appointment of a sole arbitrator, the demand shall
include an invitation of the claimant to the respondent
Article 5.18 Determination of Rules of Procedure. (a) to meet and agree upon such arbitrator, the place, time
Subjected to the provisions of these Rules, the parties and date stated therein which shall not be less than
are free to agree on the procedure to be followed by the thirty (30) days from receipt of the demand.
arbitral tribunal in conducting the proceedings.
(c) If the arbitration agreement provides for the
(b) Failing such agreement, the arbitral tribunal may establishment of an arbitral tribunal of three (3)
subject to the provision of the ADR Act, conduct the arbitrators, the demand shall name the arbitrator
arbitration in such manner as it considers appropriate. appointed by the claimant. It shall include the
The power conferred upon the arbitral tribunal curriculum vitae of the arbitrator appointed by the
includes the power to determine admissibility, claimant and the latter’s acceptance of the
relevance, materially and weight of evidence. appointment.

Article 5.19 Place of Arbitration. (a) The parties are (d) Where there is no prior arbitration agreement,
free to agree on the place of arbitration. Failing such arbitration may be initiated by one party through a
PAGE 116

demand upon the other to submit their dispute to (b) Within thirty (30) days from the appointment of
arbitration. Arbitration shall be deemed commenced the arbitrator or the constitution of an arbitral
upon the agreement by the other party to submit the tribunal, the arbitral tribunal shall call the parties and
dispute to arbitration. their respective counsels to a pre-hearing conference to
discuss the following matters:
(e) The demand shall required the respondent to name
his/her/its/ arbitrator within a period which shall not (i) The venue or place/s where the arbitration
be less than fifteen (15) days from receipt of the proceeding may be conducted in an office space, a
demand. This period may be extended by agreement of business center, a function room or any suitable place
the parties. Within said period, the respondent shall agreed upon by the parties and the arbitral tribunal,
give a written notice to the claimant of the which may vary per session/hearing/conference;
appointment of the respondent’s arbitrator and attach
to the notice the arbitrator’s curriculum vitae and the (ii) The manner of recording the proceedings;
latter’s acceptance of the appointment.
(iii) The periods for the communication of the
Article 5.21 Language (a) The parties are free to agree statement of claims with or without counterclaims, and
on the language or languages to be used in the arbitral answer to the counterclaim/s and the form and
proceedings. Failing such agreement, the language to contents of such pleadings.
be used shall be English or Filipino. The language/s
agreed, unless otherwise specified therein, shall be in (iv) The definition of the issues submitted to the
all hearings and all written statements, orders or other arbitral tribunal for determination and the summary of
communication by the parties and the arbitral tribunal. the claims and counterclaims of the parties;

(b) The arbitral tribunal may order that any (v) The manner by which evidence may be offered if an
documentary evidence shall be accompanied by a oral hearing is required, the submission of sworn
translation into the language or languages agreed upon written statements in lieu of oral testimony, the cross-
by the parties in accordance with paragraph (a) of this examination and further examination of witnesses;
Article.
(vi) The delivery of certain types of communications
Article 5.22 Statement of Claim and Defense (a) Within such as pleadings, terms of reference, order granting
the period of time agreed by the parties or determined interim relief, final award and the like that, if made by
by the arbitral tribunal, the claimant shall state the electronic or similar means, shall require further
facts supporting his/her/its claim, the points at issue confirmation in the form of a hard copy or hard copies
and the relief or remedy sought, and the respondent delivered personally or by registered post.
shall state his/her defense in respect of these
particulars, unless the parties may have otherwise (vii) The issuance of subpoena or subpoena duces
agreed as to the required elements of such statements. tecum by the arbitral tribunal to compel the
The parties may submit with their statements all production of evidence if either party shall or is likely
documents they consider to be relevant or may add a to request it;
reference to the documents or other evidence they will
submit. (viii) The manner by which expert testimony will be
received if a party will or is likely to request the arbitral
(b) Unless otherwise agreed by the parties, either party tribunal to appoint one or more experts, and in such
may amend or supplement his/her/its claim or defense case, the period for the submission to the arbitrator by
during the course of the arbitral proceedings, unless the requesting party of the proposed terms of reference
the arbitral tribunal considers it inappropriate to allow for the expert, the fees to be paid, the manner of
such amendments having regard to the delay in payment to the expert and the deposit by the parties or
making it. the requesting party of such amount necessary to cover
all expenses associated with the referral of such issues
Article 5.23 Hearing and Written Proceedings (a) In ad to the expert before the expert is appointed;
hoc arbitration, the procedure determined by the
arbitrator, with the agreement of the parties, shall be (ix) The possibility of either party applying for an order
followed. In institutional arbitration, the applicable granting interim relief either with arbitral tribunal or
rules of procedure of the arbitration institution shall be with the court, and, in such case, the nature of the
followed. In default of agreement of the parties, the relief to be applied for;
arbitration procedure shall be as provided in this
Chapter. (x) The possibility of a site or ocular inspection, the
purpose of such inspection, and in such case, the date,
place and time of the inspection and the manner of
PAGE 117

conducting it, and the sharing and deposit of any (j) Each witness shall, before giving testimony, be
associated fees and expenses; required to take an oath/ affirmation before the
arbitral tribunal, to tell the whole truth and nothing
(xi) The amount to be paid to the arbitral tribunal as but the truth during the hearing.
fees and the associated costs, charges and expenses of
arbitration and the manner and timing of such (k) The arbitral tribunal shall arrange for the
payments; and transcription of the recorded testimony of each witness
and require each party to share the cost of recording
(xii) Such other relevant matters as the parties and the and transcription of the testimony of each witness.
arbitral tribunal may consider necessary to provide for
a speedy and efficient arbitration of the dispute. (l) Each party shall provide the other party with a copy
of each statement or document submitted to the
(c) To the extent possible, the arbitral tribunal and the arbitral tribunal and shall have an opportunity to reply
parties shall agree upon any such matters and in in writing to the other party's statements and proofs.
default of agreement, the arbitral tribunal shall have
the discretion and authority to make the decision, (m) The arbitral tribunal may require the parties to
although in making decision, regard shall be given to produce such other documents or provide such
the views expressed by both parties. information as in its judgment would be necessary for
it to render a complete, fair and impartial award.
(d) The arbitral tribunal shall, in consultation with the
parties, fix the date/s and the time of hearing, regard (n) The arbitral tribunal shall receive as evidence all
being given to the desirability of conducting and exhibits submitted by a party properly marked and
concluding an arbitration without undue delay. identified at the time of submission.

(e) The hearing set shall not be postponed except with (o) At the close of the hearing, the arbitral tribunal
the conformity of the arbitrator and the parties and shall specifically inquire of all parties whether they
only for a good and sufficient cause. The arbitral have further proof or witnesses to present; upon
tribunal may deny a request to postpone or to cancel a receiving a negative reply, the arbitral tribunal shall
scheduled hearing on the ground that a party has declare the hearing closed.
requested or is intending to request from the court or
from the arbitrator an order granting interim relief. (p) After a hearing is declared closed, no further
motion or manifestation or submission may be allowed
(f) A party may, during the proceedings, represent except for post-hearing briefs and reply briefs that the
himself/herself/itself or through a representative, at parties have agreed to submit within a fixed period
such hearing. after the hearing is declared closed, or when the
arbitral tribunal, motu proprio or upon request of a
(g) The hearing may proceed in the absence of a party party, allows the reopening of the hearing.
who fails to obtain an adjournment thereof or who,
despite due notice, fails to be present, by (q) Decisions on interlocutory matters shall be made
himself/herself/itself or through a representative, at by the sole arbitrator or by the majority of the arbitral
such hearing. tribunal. The arbitral tribunal may authorized its
chairman to issue or release, on behalf of the arbitral
(h) Only parties, their respective representatives, the tribunal, its decision on interlocutory matters.
witnesses and the administrative staff of the arbitral
tribunal shall have the right to be present if the parties, (r) Except as provide in section 17 (d) of the ADR Act.
upon being informed of the presence of such person No arbitrator shall act as a mediator in a any
and the reason for his/her presence, interpose no proceeding in which he/she is acting as arbitrator even
objection thereto. if requested by the parties; and all negotiations.

(i) Issues raised during the arbitration proceeding (s) Before assuming the duties of his/her office, an
relating to (a) the jurisdiction of the arbitral tribunal arbitrator must be sworn by any officer authorized by
over one or more of the claims or counter claims, or (b) law to administer an oath or be required to make an
the arbitrability of a particular claim or counter claim, affirmation to faithfully and fairly hear and examine
shall be resolved by the arbitral tribunal as threshold the matters in controversy and make a just award
issues, if the parties so request, unless they are according to the best his/her ability and
intertwined with factual issues that they cannot be understanding. A copy of the arbitrator's oath or
resolved ahead of the hearing on the merits of the affirmation shall be furnished each party to the
dispute. arbitration.
PAGE 118

(t) Either party may object to the commencement or


continuation of an arbitration proceeding unless the (ii) Such relief may be granted:
arbitrator takes an oath or affirmation as required in
this chapter. If the arbitrator shall refuse to take an (aa) To prevent irreparable loss or injury;
oath or affirmation as required by law and this rule,
he/she shall be replaced. The failure to object to the (bb) To provide security for the performance of an
absence of an oath or affirmation shall be deemed a obligation;
waiver of such objection and the proceedings shall
continue in due course and may not later be used as a (cc) To produce or preserve evidence; or
ground to invalidate the proceedings.
(dd) To compel any other appropriate act or omissions.
(u) the arbitral tribunal shall have the power to
administer oaths to, or require affirmation from, all (iii) The order granting provisional relief may be
witnesses directing them to tell the truth, the whole conditioned upon the provision of security or any act
truth and nothing but the truth in any testimony, oral or omission specified in the order.
or written, which they may give or offer in any
arbitration hearing. The oath or affirmation shall be (iv) Interim provisional relief is requested by written
required of every witness before his/her testimony, application transmitted by reasonable means to the
oral or written, is heard or considered. arbitral tribunal and the party against whom relief is
sought, describing in appropriate detail of the precise
(v) the arbitral tribunal shall have the power to relief, the party against whom relief is requested the
required any person to attend a hearing as a witness. It ground for the relief, and the evidence supporting the
shall have the power to subpoena witnesses, to testify request.
and/or produce documents when the relevancy and
materiality thereof has been shown to the arbitral (v) The order either granting or denying an application
tribunal. The arbitral tribunal may also require the for interim relief shall be binding upon the parties.
exclusion of any witness during the testimony of any
other witness. Unless the parties otherwise agree, all (vi) Either party may apply with the court for
the arbitrators in any controversy must attend all the assistance in implementing or enforcing an interim
hearings and hear the evidence of the parties. measure ordered by an arbitral tribunal.

Article 5.24 Power of Arbitral Tribunal to Order (vii) A party who does not comply with the order shall
Interim Muslim. ( a ) unless otherwise agreed by the be liable for all damages, resulting from
parties, the arbitral tribunal may, at the request of a noncompliance, including all expenses, and reasonably
party and in accordance with the this Article, order any attorney’s fees, paid in obtaining the order’s judicial
party to take such interim measures of protection as enforcement.
the arbitral tribunal may consider necessary in respect
of the subject matter of the dispute of the procedure, (d) The arbitral tribunal shall be have the power at any
Such interim measures may include, but shall not be time, before rendering the award, without prejudice to
limited, to preliminary injunction directed against a the rights of any party to petition the court to take
party, appointment of receivers or detention of measures to safeguard an/or conserve any matter
property that is the subject of the dispute in arbitration which is the subject of the dispute in arbitration.
or its preservation or inspection.
Article 5.25. Default of a Party. Unless otherwise
(b) After the constitution of the arbitral tribunal, and agreed by the parties, if, without showing sufficient
during the arbitration proceedings, a request for causes.
interim measures of protection, or modification
thereof, may be made with the arbitral tribunal. The (a) the claimant fails to communicate his/her/its
arbitral tribunal is deemed constituted when the sole statement of claim in accordance with paragraph (a) of
arbitrator or the third arbitrator, who has been Article 5.22(Statement of Claim and Defense), the
nominated, has accepted the nomination and written arbitral tribunal shall terminate the proceedings;
communication of said nomination and acceptance has
been received by the party making the request. (b) ]the respondent fails to communicate his/her/its
statement of defense in accordance with paragraph (a)
(c) The following rules on interim or provisional relief of Article 5.22 (Statements of Claim and Defense), the
shall be observed: arbitral tribunal shall continue the proceedings
without treating such failure in itself as an admission
(i) Any party may request that provisional or interim of the claimant’s allegations;
relief be granted against the adverse party.
PAGE 119

(c) any party fails to appear at a hearing or to produce dispute in accordance with such law as is chosen by the
documentary evidence, the arbitral tribunal may parties, In the absence of such agreement, Philippine
continue the proceedings and make the award based law shall apply.
on the evidence before it.
(b) The arbitral tribunal may grant any remedy or
Article 5.26. Expert Appointed by the Arbitral relief which it deems just and equitable and within the
Tribunal. (a) Unless otherwise agreed by the parties, scope of the agreement of the parties, which shall
the arbitral tribunal, include, but not be limited to, the specific performance
of a contract.
(i) may appoint one or more experts to report to it on
specific issues to be determined by the arbitral (c) In all cases, the arbitral tribunal shall decide in
tribunal; or accordance with the terms of the contract and shall
take into account the usages of the trade applicable to
(ii) may require a party to give the expert any relevant the transaction.
information or to produce, or to provide access to, any
relevant documents, goods or other property for Article 5.29. Decision Making by the Arbitral Tribunal.
his/her inspection. (a) The arbitration proceedings with more than one
arbitrator, any decision of the arbitral tribunal shall be
(b) Unless otherwise agreed by the parties, if a party so made, unless otherwise agreed by the parties, by a
request or if the arbitral tribunal considers it majority of all its members, However questions of
necessary, the expert shall, after delivery of his/her procedure may be decided by the chairman of the
written or oral report, participate in a hearing where arbitral tribunal, if so authorized by the parties or all
the parties have the opportunity to put questions to members of the arbitral tribunal.
him/her and to present expert witnesses in order to
testify on the points at issue. (b) Unless otherwise agreed upon by the parties, the
arbitral tribunal shall render its written award within
(c) upon agreement of the parties, the finding of the thirty (30) days after the closing of all hearings and/or
expert engaged by the arbitral tribunal on the matter/s submission of the parties’ respective briefs or if the
referred to him shall be binding upon the parties and oral hearings shall have been waived, within thirty(30)
the arbitral tribunal. days after the arbitral tribunal shall have declared such
proceedings in lieu of hearing closed. This period may
Article 5.27. Court Assistance in Taking Evidence and be further extended by mutual consent of the parties.
Other Matters. (a) The arbitral tribunal or a party, with
the approval of the arbitral tribunal may request from Article 5.30 Settlement. (a) if, during arbitral
a court, assistance in taking evidence such as the proceedings, the parties settle the dispute, the arbitral
issuance of subpoena ad testificandum and subpoena tribunal, record the settlement in the form of an
duces tecum, deposition taking, site or ocular arbitral award on agreed terms, consent award or
inspection, and physical examination of properties. award based on compromise.
The court may grant the request within its competence
and according to its rules on taking evidence. (b) An award as rendered above shall be made in
accordance with the provisions of Article 5.31 (Form
(b) The arbitral tribunal or a party to the dispute and Contents of Award) and shall state that it is an
interested in enforcing an order of the arbitral tribunal award. Such an award has the same status and effect as
may request from a competent court, assistance in any other award on the merits of the case.
enforcing orders of the arbitral tribunal, including but
not limited, to the following: Article 5.31. Form and Contents of Award. (a) The
award shall be made in writing and shall be signed by
(i) Interim or provision relief; the arbitral tribunal. In arbitration proceedings with
more than one arbitrator, the signatures of the
(ii) Protective orders with respect to confidentiality; majority of all members of the arbitral tribunal shall
suffice, provided that the reason for any omitted
(iii) Orders of the arbitral tribunal pertaining to the signature us stated.
subject matter of the dispute that may affect third
persons and/or their properties; and/or (b) The award shall state the reasons upon which is
based, unless the parties have agreed that no reasons
(iv) Examination of debtors. are to be given or the award on agreed terms, consent
award based on compromise under Article 5.30
Article 5.28 Rules Applicable to the Substance of (Settlement).
Dispute. (a) The arbitral tribunal shall decide the
PAGE 120

(c) The award shall state its date and the placed of dispute and the parties to the arbitral tribunal, by
arbitration as determined in accordance with the releasing its final award, loses jurisdiction over the
paragraph (a) of Article 5.19 (Place of Arbitration). The dispute and the parties to the arbitration. However,
award shall be deemed to have made at that place. where is shown that the arbitral tribunal failed to
resolved an issue. Submitted to him or determination a
(d) After the award is made, a copy signed by the verified motion to complete a final award may be made
arbitrators in accordance with the paragraph (a) of this within thirty(30) days from its receipt.
Article shall be delivered to each party.
(e) Notwithstanding the foregoing, the arbitral tribunal
(e) The award of the arbitral tribunal need not be may for special reason, reserved in the final award in
acknowledged, sworn to under oath, or affirmed by the order a hearing to quantity costs and determine which
arbitral tribunal unless so required on writing by the party shall bear the costs or apportionment thereof as
parties. If despite such requirement, the arbitral may be determined to be a equitable. Pending
tribunal shall fail to do as required, the parties may, determination of this issue, the award shall not be
within thirty days from the receipt of said award, deemed final for purposes of appeal, vacations,
request the arbitral tribunal to supply the omission. correction, or any post-award proceedings.
The failure of the parties to make an objection or make
such request within the said period shall be deemed a Article 5.33. Correction and Interpretation of Award,
waiver or such requirement and may no longer be Additional Award. (a) Within thirty (30) days from
raised as a ground to invalidate the award. receipt of the award, unless another period of time has
been agreed upon by the parties.
Article 5.32. Termination of Proceedings. (a) The
arbitration proceedings are terminated by the final (i) A party may, with notice to the other party, the
award or by an order of the arbitral tribunal in arbitral tribunal to correct in the awards any errors in
accordance with paragraph (b) of this Article. computation, any clerical or typographical errors or
any errors similar nature
(b) The arbitral tribunal shall issue an order for the
termination of the arbitration proceedings when: (ii) If so agreed by the parties, with notice to the other
party, may request the arbitral tribunal to give an
(i) The claimant withdraws his claim, unless the interpretation of a specific point or part of the award.
respondents objects thereto for the purpose of
prosecuting his counterclaims in the same proceedings If the arbitral tribunal considers the request to be
of the arbitral tribunal recognizes a legitimate interest justified, it shall make the connection or give the
on his part in obtaining a final settlement of the interpretation within thirty (30) days from receipt of
dispute; or the request. The interpretation shall form part of the
award.
(ii) The parties agree on the termination of the
proceedings; or (b) The arbitral tribunal may correct any errors of the
type referred to in paragraph (a) of this Article on its
(iii) The arbitral tribunal finds that the continuation of own initiative within thirty (30) days of the date of the
the proceedings has for any other reason before award.
unnecessary or impossible; or
(c) Unless otherwise agreed by the parties, a party
(iv) The required deposits are not paid in full in may, with notice to the other party, may request within
accordance with paragraph (d) of Article 5.46 (Fees thirty (30) days of receipt of the award, the arbitral
and Costs). tribunal to make an additional award as to claims
presented in the arbitral proceedings but omitted from
(c) The mandate of the arbitral tribunal ends with the the award., If the arbitral tribunal considers the
termination of the arbitration proceedings, subject to request to be justified, it shall make the additional
the provisions of Article 5.33 (Correction and award within sixty (60) days.
Interpretation of Award) and Article 5.34 (Application
for Settings Aside in Exclusive Recourse Against the (d) The arbitral tribunal may extend, if necessary, the
Arbitral Award). period of time within which it shall make a correction,
interpretation or an additional award under
(d) Except as otherwise provided in the arbitration paragraphs (a) and (c) of this Article.
agreement, no motion for reconsideration correction
and interpretation of award or additional award shall (e) The provisions of Article 5.31 (Form and Contents
be with the arbitral tribunal. The arbitral tribunal, by of Award) shall apply to a correction or interpretation
releasing its final award, loses jurisdiction over the of the award to an additional award.
PAGE 121

petition and instead request the court to suspend the


Article 5.34. Application for Setting Aside an Exclusive vacation or setting aside the proceedings for a period
Recourse against Arbitral Award. The court when of time to give the arbitral tribunal an opportunity to
asked to set aside an award, may, where appropriate cure or remedy the award or resume the arbitration
and so requested by a party, suspend the setting aside proceedings or take such other action as will eliminate
proceedings for a period of time determined by it in the grounds for vacation or setting aside.
order to give the arbitral tribunal an opportunity to
resume the arbitral proceedings or to take such other RULE 6 – Recognition and Enforcement of Awards
action as in the arbitral tribunal’s opinion will
eliminate the grounds for setting aside an award. Article 5.36. Confirmation of Award. The party moving
for an order confirming, modifying, correcting, or
Article 5.35. Grounds to Vacate an Arbitral Award. (a) vacating an award, shall, at the time that such motion
The arbitral award may be questioned, vacated or set is filled with the court for the entry of judgment
aside by the appropriate court in accordance with the thereon, also file the original or verified copy of the
Special ADR Rules only on the following grounds: award, the arbitration or settlement agreement, and
such papers as may be required by the Special ADR
(i) The arbitral award was procured by corruption, Rules.
fraud or other undue means; or
Article 5.37. Judgment. Upon the grant of an order
(ii) There was evident partially or corruption in the confirming, modifying or correcting an award,
arbitral tribunal or any of its members; or judgment may be entered in conformity therewith in
the court where said application is filed. Costs of the
(iii) The arbitral tribunal was guilty of misconduct or application and the proceedings subsequent thereto
any form of misbehavior that has materially prejudiced may be awarded by the court In its discretion. If
the rights of any party such as refusing to postpone the awarded, the amount thereof must be included in the
hearing upon sufficient cause shown or to hear judgment. Judgment will be enforced like court
evidence pertinent and material to the controversy; or judgments.

(iv) One or more of the arbitrators was disqualified to Article 5.38. Appeal. A decision of the court
act as such under this Chapter and willfully refrained confirming, vacating, setting aside, modifying or
from disclosing such disqualification ; or correcting an arbitral award may be appealed to the
Court of Appeals in accordance with Special ADR
(v) The arbitral tribunal exceeded its powers, or so Rules.
imperfectly executed them, such that a complete, final
and definite award upon the subject matter submitted The losing party who appeals from the judgment of the
to it was not made. Court confirming an arbitral award shall be required
by the Court of Appeals to post a counter-bond
Any other ground raised to question, vacate or set executed in favor of the prevailing party equal to the
aside the arbitral award shall be disregarded by the amount of the award in accordance with the Special
court. ADR Rules.

(b) Where a petition to vacate or set aside an award is Article 5.39. Venue and Jurisdiction. Proceedings for
filed, the petitioner may simultaneously, or the recognition and enforcement of an arbitration
oppositor may in the alternative, petition the court to agreement or for vacation or setting aside of an arbitral
remit the case to the same arbitral tribunal for the award, and any application with a court for arbitration
purpose of making a new or revised final and definite assistance and supervision, except appeal, shall be
award or to direct a new hearing before the same or deemed as special proceedings and shall be filed with
new arbitral tribunal, the members of which shall be the court
chosen in the manner originally provided in the
arbitration agreement or submission. In the latter case, (a) where the arbitration proceedings are conducted;
any provision limiting the time In which the arbitral
tribunal may make a decision shall be deemed (b) where the asset to be attached or levied upon, or
applicable to the new arbitral tribunal and to the act to be enjoined is located;
commence from the date of the court’s order.
(c) where any of the parties to the dispute resides or
(c) Where a party files a petition with the court to has its place of business; or
vacate or set aside an award by reason of omission/s
that do not affect the merits of the case and may be (d) in the National Capital Judicial Region at the
cured or remedied, the adverse party may oppose that option of the applicant.
PAGE 122

Article 5.44. Multi-Party Arbitration. (a)When a single


Article 5.40. Notice of Proceedings to Parties. In a arbitration involves more than two parties, these
special proceeding for recognition and enforcement of Rules, to the extent possible, shall be used subject to
an arbitral award, the court shall send notice to the such modifications consistent with Articles 5.17 (Equal
parties at their address of record in the arbitration, or Treatment of Parties) and 5.18 (Determination of
if any party cannot be served notice at such address, at Rules of Procedure) as the arbitral tribunal shall deem
such party’s last known address. The notice shall be appropriate to address possible complexities of a
sent in at least fifteen (15) days before the date set for multi-party arbitration. (b) When a claimant includes
the initial hearing of the application. persons who are not parties to or otherwise bound by
the arbitration agreement , directly or by reference,
Article 5.41. Legal Representation in Domestic between him/her and the respondent as additional
Arbitration. (a) In domestic arbitration conducted in claimants or the additional respondents unless not
the Philippines, a party may be represented by any later than the date communicating his/her answer to
person of his/her/its choice: Provided, that such the request for arbitration, either by motion or by a
representative, unless admitted to the practice of law special defense in his answer, he objects, on
in the Philippines, shall not be authorized to appear as jurisdictional grounds, to the inclusion of such
counsel in any Philippine Court, or any other quasi- additional respondents. The additional respondents
judicial body whether or such appearance is in relation shall be deemed to have consented to their inclusion in
to the arbitration in which he/she appears. the arbitration unless, not later than the date of
communicating their answer to the request for
(b) No arbitrator shall act as mediator in any arbitration, wither by motion or a special defense in
proceeding in which he/she is acting as arbitrator and their answer, they object, on jurisdictional grounds, to
all negotiations towards settlement of the dispute must their inclusion.
take without the presence of the arbitrators.
Article 5.45. Consolidation of Proceedings and
Article 5.42. Confidentially of Arbitration Proceedings. Concurrent Hearings. The parties may agree that-
The arbitration proceedings, including the records,
evidence and the arbitral award and other confidential (a) the arbitration proceedings shall be consolidated
information, shall be considered privileged and with other arbitration proceedings; or
confidential and shall not be published except –
(b) that concurrent hearings shall be held, on such
(1) with consent of the parties; or terms as may be agreed.

(2) for the limited purpose of disclosing to the court Unless the parties agree to confer such power on the
relevant documents in cases where resort to the court arbitral tribunal, the tribunal has no power to order
is allowed herein: consolidation of arbitration proceedings or concurrent
hearings.
Provided, however, that the court in which the action
or the appeal is pending may issue a protective order to Article 5.46. Fees and Costs. (a) The fees of the
prevent or prohibit disclosure of documents or arbitrators shall be agreed upon by the parties and the
information containing secret processes, arbitrator/s in writing prior to the arbitration.
developments, research and other information where it
is shown that the applicant shall be materially In default of agreement of the parties as to the amount
prejudiced by an authorized disclosure thereof. and manner of payment of arbitrator’s fees, the
arbitrator’s fees shall be determined in accordance
Article 5.43. Death of a Party. Where a party dies after with the applicable internal rules of the regular
making a submission or a contact to arbitrate as arbitration institution under whose rules he arbitration
prescribed in these Rules, the proceeding may be is conducted; or in ad hoc arbitration, the Schedule of
begun or continued upon the application of, or notice Fees approved by the IBP, If any, or in default thereof,
to, his/her executor or administrator, or to temporary the Schedule of Fees that may be approved by the
administrator of his/her estate. In any such case, the OADR.
court may issue an order extending the time within
which notice of a motion to recognize or vacate an (b) In addition to arbitrator’s fees, the parties shall be
award must be served. Upon recognizing an award, responsible for the payment of the administrative fees
where a party has died since it was filed or delivered, of an arbitration institution administering an
the court must enter judgment in the name of the arbitration and cost of arbitration. The latter shall
original party; and the proceedings thereupon are the include, as appropriate, the fees of an expert appointed
same as where a party dies after a verdict. by the arbitral tribunal, the expenses for conducting a
site inspection, the use of a room where arbitration
PAGE 123

proceedings shall be or have been conducted, the consents to perform the function, the arbitral tribunal
expenses for the recording and transcription of the shall fix its fees only after consultation with the
arbitration proceedings. appointing authority which may make any comment it
deems appropriate to the arbitral tribunal concerning
(c) The arbitral tribunal shall fix the costs of the fees.
arbitration in its award. The term "costs" include only:
(e) Except as provided in the next paragraph, the costs
(i) The fees of the arbitral tribunal to be stated of arbitration shall, in principle, be borne by the
separately as to each arbitrator and to be fixed by the unsuccessful party. However, the arbitral tribunal may
arbitral tribunal itself in accordance with this Article; apportion each of such costs between the parties if it
determines that apportionment is reasonable, taking
(ii) The travel and other expenses incurred by the into account the circumstances of the case.
arbitrators;
With respect to the costs of legal representation and
(iii) The costs of expert advice and of other assistance assistance referred to in paragraph (c) (iii) of this
required by the arbitral tribunal, such as site Article, the arbitral tribunal, taking into account the
inspection and expenses for the recording and circumstances of the case, shall be free to determine
transcription of the arbitration proceedings; which party shall bear such costs or may apportion
such costs between the parties if it determines that
(iv) The travel and other expenses of witnesses to the appointment is reasonable.
extent such expenses are provided by the arbitral
tribunal; When the arbitral tribunal issues an order for the
termination of the arbitral proceedings or makes an
(v) The costs for legal representation and assistance of award on agreed terms, it shall fix the costs of
the successful party if such costs were claimed during arbitration referred to in paragraph (a) of this Article
the arbitral proceedings, and only to the extent that the in the context of that order or award.
arbitral tribunal determines that the amount of such
costs is reasonable; (e) Except as otherwise agreed by the parties, no
additional fees may be charged by the arbitral tribunal
(vi) Any fees and expenses of the appointing authority. for interpretation or correction or completion of its
award under these Rules.
(d) The fees of the arbitral tribunal shall be reasonable
in amount, taking into account the amount in dispute, (f) The arbitral tribunal, on its establishment, may
the complexity of the subject matter, the time spent by request each party to deposit an equal amount as an
the arbitrators and any other relevant circumstances of advance for the costs referred to in paragraphs (i), (ii)
the case. and (iii) of paragraph (c) of this Article.

If an appointing authority has been agreed upon by the During the course of the arbitral proceedings, the
parties and if such appointing authority has issued a arbitral tribunal may request supplementary deposits
schedule of fees for arbitrators in domestic cases which from the parties.
it administers, the arbitral tribunal, in fixing its fees
shall take that schedule of fees into account to the If an appointing authority has been agreed upon by the
extent that it considers appropriate in the parties, and when a party so requests and the
circumstances of the case. appointing authority consents to perform the function,
the arbitral tribunal shall fix the amounts of any
If such appointing authority has not issued a schedule deposits or supplementary deposits only after
of fees for arbitrators in international cases, any party consultation with the appointing authority which may
may, at any time request the appointing authority to make any comments to the arbitral tribunal which it
furnish a statement setting forth the basis for deems appropriate concerning the amount of such
establishing fees which is customarily followed in deposits and supplementary deposits.
international cases in which the authority appoints
arbitrators. If the appointing authority consents to If the required deposits are not paid in full within
provide such a statement, the arbitral tribunal, in thirty (30) days after receipt of the request, the arbitral
fixing its fees shall take such information into account tribunal shall so inform the parties in order that one of
to the extent that it considers appropriate in the them may make the required payment within such a
circumstances of the case. period or reasonable extension thereof as may be
determined by the arbitral tribunal. If such payment is
In cases referred to in paragraph (d) of this Article, not made, the arbitral tribunal may order the
when a party so requests and the appointing authority termination of the arbitral proceedings.
PAGE 124

Article 7.4. Referral. If a dispute is already before a


After the award has been made, the arbitral tribunal court, either party may, before and during pre-trial, file
shall render an accounting to the parties of the a motion for the court to refer the parties to other ADR
deposits received and return any unexpended balance forms/processes. However, at any time during court
to the parties. proceedings, even after pre-trial, the parties may
jointly move for suspension/dismissal of the action
CHAPTER 6 pursuant to Article 2030 of the Civil Code of the
ARBITRATION OF CONSTRUCTION DISPUTES Philippines.

The Construction Industry Arbitration Commission Article 7.5. Submission of Settlement Agreement.
(CIAC), which has original and exclusive jurisdiction Either party may submit to the court before which the
over arbitration of construction disputes pursuant to case is pending any settlement agreement following a
Executive Order No. 1008, s. 1985, otherwise known as neutral or an early neutral evaluation, mini-trial or
the "Construction Industry Arbitration Law", shall mediation-arbitration.
promulgate the Implementing Rules and Regulations
governing arbitration of construction disputes, RULE 2 – Neutral or Early Neutral Evaluation
incorporating therein the pertinent provisions of the
ADR Act. Article 7.6. Neutral or Early Neutral Evaluation. (a)
The neutral or early neutral evaluation shall be
CHAPTER 7 governed by the rules and procedure agreed upon by
OTHER ADR FORMS the parties. In the absence of said agreement, this Rule
shall apply.
RULE 1 – General Provisions
(b) If the parties cannot agree on, or fail to provide for:
Article 7.1. Scope of Application and General
Principles. Except as otherwise agreed, this Chapter (i) The desired qualification of the neutral third
shall apply and supply the deficiency in the agreement person;
of the parties for matters involving the following forms
of ADR: (ii) The manner of his/her selection;

(a) early neutral evaluation; (iii) The appointing authority (not IBP) who shall have
the authority to make the appointment of a neutral
(b) neutral evaluation; third person; or

(c) mini-trial; (iv) If despite agreement on the foregoing and the


lapse of the period of time stipulated for the
(d) mediation-arbitration; appointment, the parties are unable to select a neutral
third person or appointing authority, then, either party
(e) a combination thereof; or may request the default appointing authority, as
defined under paragraph C1 of Article (Definition of
(f) any other ADR form. Terms), to make the appointment taking into
consideration the nature of the dispute and the
Article 7.2. Applicability of the Rules on Mediation. If experience and expertise of the neutral third person.
the other ADR form/process is more akin to
arbitration (i.e., the neutral third-person merely assists (c) The parties shall submit and exchange position
the parties in reaching a voluntary agreement), papers containing the issues and statement of the
Chapter 3 governing Mediation shall have suppletory relevant facts and appending supporting documents
application to the extent that it is not in conflict with and affidavits of witnesses to assist the neutral third
the agreement of the parties or this Chapter. person in evaluating or assessing the dispute.

Article 7.3. Applicability of the Rules on Arbitration. If (d) The neutral third person may request either party
the other ADR form/process is more akin to to address additional issues that he/she may consider
arbitration (i.e., the neutral third-person has the power necessary for a complete evaluation/assessment of the
to make a binding resolution of the dispute), Chapter 5 dispute.
governing Domestic Arbitration shall have suppletory
application to the extent that it is not in conflict with (e) The neutral third person may structure the
the agreement of the parties or this Chapter. evaluation process in any manner he/she deems
appropriate. In the course thereof, the neutral third
person may identify areas of agreement, clarify the
PAGE 125

issues, define those that are contentious, and principal without any further action or ratification by
encourage the parties to agree on a definition of issues the latter.
and stipulate on facts or admit the genuineness and
due execution of documents. (e) Each party shall submit a brief executive summary
of the dispute in sufficient copies as to provide one
(f) The neutral third person shall issue a written copy to each mini-trial panel member and to the
evaluation or assessment within thirty (30) days from adverse party. The summary shall identify the specific
the conclusion of the evaluation process. The opinion factual or legal issue or issues. Each party may attach
shall be non-binding and shall set forth how the to the summary a more exhaustive recital of the facts
neutral third person would have ruled had the matter of the dispute and the applicable law and
been subject to a binding process. The evaluation or jurisprudence.
assessment shall indicate the relative strengths and
weakness of the positions of the parties, the basis for (f) At the date time and place agreed upon, the parties
the evaluation or assessment, and an estimate, when shall appear before the mini-trial panel members. The
feasible, of the amount for which a party may be liable lawyer of each party and/or authorized representative
to the other if the dispute were made subject to a shall present his/her case starting with the claimant
binding process. followed by the respondent. The lawyer and/or
representative of each party may thereafter offer
(g) There shall be no ex-parte communication between rebuttal or sur-rebuttal arguments.
the neutral third person and any party to dispute
without the consent of all parties. Unless the parties agree on a shorter or longer period,
the presentation-in-chief shall be made, without
(h) All papers and written presentations interruption, for one hour and the rebuttal or sur-
communicated to the neutral third person, including rebuttal shall be thirty (30) minutes.
any paper prepared by a party to be communicated to
the neutral third person or to the other party as part of At the end of each presentation, rebuttal or sur-
the dispute resolution process, and the neutral third rebuttal, the mini-trial panel member/s may ask
person’s written non-binding assessment or clarificatory questions from any of the presentors.
evaluation, shall be treated as confidential.
(g) After the mini-trial, the mini-trial panel members
RULE 3 – Mini-Trial shall negotiate a settlement of the dispute by
themselves.
Article 7.7. Mini-Trial. (a) A mini-trial shall be
governed by the rules and procedure agreed upon by In cases where a neutral third person is appointed, the
the parties. In the absence of said agreement, this Rule neutral third person shall assist the proceedings shall
shall apply. be governed by Chapter 3 of Mediation.

(b) A mini-trial shall be conducted either as: (i) a RULE 4 – Mediation-Arbitration


separate dispute resolution process; or (ii) a
continuation of mediation, neutral or early neutral Article 7.8. Mediation–Arbitration (a) A Mediation-
evaluation or any other ADR process. Arbitration shall be governed by the rules and
procedure agreed upon by the parties, In the absence
(c) The parties may agree that a mini-trial be of said agreement, Chapter 5 on Mediation shall first
conducted with or without the presence and apply and thereafter, Chapter 5 on Domestic
participation of a neutral third person. If a neutral Arbitration.
third person is agreed upon and chosen, he/she shall
preside over the mini-trial. The parties may agree to (b) No Person shall having been engage and having
appoint one or more (but equal in number per party) acted as mediator of a dispute between the parties,
senior executive/s, on its behalf, to sit as mini-trial following a failed mediation, act as arbitrator of the
panel members. same dispute, unless the parties, in a written
agreement, expressly authorize the mediator to hear
(d) The senior executive/s chosen to sit as mini-trial and decide the case as an arbitrator
panel members must be duly authorized to negotiate
and settle the dispute with the other party. The (c) The mediator who becomes an arbitrator pursuant
appointment of a mini-trial panel member/s shall be to this Rule shall make an appropriate disclosure to the
communicated to the other party. This appointment parties as if the arbitration proceeding had
shall constitute a representation to the other party that commenced and will proceed as a new dispute
the mini-trial panel member/s has/have the authority resolution process, and shall, before entering upon
to enter into a settlement agreement binding upon the his/her duties, executive the appropriate oath or
PAGE 126

affirmation of office as arbitrator in accordance with the provisions of these Rules shall be applicable to all
these Rules. pending arbitration, mediation or other ADR forms
covered by the ADR Act if the parties agree.
RULE 5- Costs and Fees

Article 7.9 Costs and Fees. (a) Before entering his/her Article. 8.5 Effectivity Clause. These Rules shall take
duties as ADR Provider , he/she shall agree with the effect fifteen (15) days after the completion of its
parties on the cost of the ADR procedure, the fees to be publication in at least two (2) national newspapers of
paid and manner of payment for his her services. general circulation.

(b) n the absence of such agreement, the fees for the APPROVED.
services of the ADR provider/practitioner shall be December 4, 2009
determined as follows:

(i) If the ADR procedure is conducted under the rules 3.6 OTHER SC ISSUANCES ON ADR
and/or administered by an institution regularly
providing ADR services to the general public, the fees
of the ADR professional shall be determined in
accordance with schedule of fees approved by such
institution, if any;

(ii) In ad hoc ADR, the fees shall be determined in


accordance with the schedule of fees approved by the
OADR; 3.7 JUDICIAL DISPUTE RESOLUTION
(iii) In the absence of a schedule of fees approved by
the ADR institution or by the OADR, the fees shall be
Judicial dispute resolution (JDR)
determined by the ADR institution or by the OADR, as
the case may be, and complexity of the process, the
amount in dispute and the professional standing of the
In En Banc A.M. No. 04-1-12-SC-PhilJA, August
ADR professional.
29, 2006, “Re: PhiLJA Resolution No. 06-22, re:
Revised Guidelines for the Implementation of an
(c) A contingency fee arrangement shall not be
Enhanced Pre-Trial Proceeding under the JURIS
allowed. The amount that may be allowed to an ADR
Project, as Amended”, the Philippine Supreme Court
professional may not be made dependent upon the
adopted the rules of the new judicial dispute
success of his/her effort in helping the parties to settle
resolution (JDR) system of the Philippines
their dispute.
(described as an “enhanced pre-trial proceeding”)
under its on-going JURIS Project.
CHAPTER 8
MISCELLANEOUS PROVISION
The Court has piloted the new concept in selected trial
courts in the Philippines which are called “JURIS
Article 8.1. Amendments. These Rules or any portion
model courts”.
hereof may be amended by the Secretary of Justice.

Article 8.2 Separability Clause. If any part, article or As an explanatory note, the Court noted that despite
provision of these Rules are declared invalid or the priority given by Rule 18 of the Rules of Court
unconstitutional, the other parts hereof not affected (“pre-trial”), as amended, for the amicable settlement
thereby shall remain valid. of cases, “most trial judges go through the function of
exploring settlement perfunctorily for various
Article 8.3 Funding. The heads of department and reasons, including fear of being disqualified if he
agencies concerned, especially the Department of goes into the process more intensively”.
Justice, insofar as the funding requirements of the
OADR is concerned, shall immediately include in their In general, the concept is that “mediatable cases” are
annual appropriation the funding necessary to referred to Court-Annex Mediation (CAM) for
implement programs and extend services required by mediation under accredited mediators in the
the ADR Act and these Rules. Philippine Mediation Center (PMC) and subsequently
referred to Judicial Dispute Resolution (JDR) “for
Article 8.4 Transitory Provisions. Considering the further mediation by the judges” if it is not resolved
procedural character of the ADR Act and these Rules, under CAM. If the case is still not settled in JDR, “the
PAGE 127

case is transferred to the pairing court to proceed The concept is that the parties will be “more
with trial”. spontaneous once they are assured that the JDR judge
will not be the one to try the case”.
The judge conducting the JDR is called the JDR
judge instead of pre-trial judge because under the As such, the general rule is that “the JDR Judge
revised guidelines, pre-trial proper is resumed shall not preside over the trial of the same case
after JDR, but this time, to be conducted by the when mediation did not succeed”.
trial judge instead of the judge who conducted
JDR. In multiple sala courts, if the case is not resolved
during JDR, it shall be raffled to another branch,
A case may be referred to JDR “even after conclusion where the rest of the judicial proceedings up to
of the pre-trial and during the trial itself”. judgment shall be held. The judge for that stage shall
be called the trial judge.
The JDR judge “may preside over the trial proceedings
upon joint request of both parties”. Any incidents or motions filed during the first stage
shall be dealt with by the JDR judge at his discretion.
A limited period is imposed for settlement of JDR
cases, i.e., thirty (30) days for first level courts and In single sala courts, the case shall be transferred
sixty (60) days for regional trial courts. These periods for mediation to the nearest court (or pair court, if
may be extended upon the discretion of the JDR judge. any), since “only mediation is involved”.

Where settlement on the civil aspect has been Whatever the result of the mediation may be, the
reached in criminal cases covered by mediation but the case is always returned to the originating court
period of payment in accordance with the terms of for appropriate action - either for the approval of
settlement exceeds one (1) year, the case may be the compromise agreement or for trial, as the
archived upon motion of the prosecution with case may be.
concurrence of the private complainant and
approval by the judge. In Family Courts, due to the special nature of a family
dispute for which specialized family courts have been
The civil aspect of theft, under Art. 308 of the designated, parties may file a joint motion
Revised Penal Code, is now part of the cases for requesting that the case be tried by said special court
referral to mediation. despite the judge thereon having been the JDR
judge.
The concept is that the JDR judge acts as “the
mediator, the conciliator, early neutral evaluator, or However, if there is another family court in the same
a combination of any of the above”. JURIS site, “the trial judge shall be that of the family
court which did not conduct JDR proceedings”.
As a mediator and conciliator, the judge facilitates
the settlement discussions between parties and tries to
reconcile their differences.
In Commercial Courts, the JDR shall be conducted by
As a neutral evaluator, the judge assesses the the pair judge of the commercial court.
relative strengths and weaknesses of each party's case
and makes a non-binding and impartial evaluation of Where JDR does not succeed, “the judge of the
the chances of each party's success in the case. commercial court shall be the trial judge”.

On the basis of his neutral evaluation, the judge Cases may be referred to JDR even during the trial
persuades the parties to reconsider their prior stage upon joint motion of the parties.
reluctance to settle their case amicably.
If the motion is granted, the JDR shall be conducted
Judicial proceedings shall be divided into two stages: by the pairing judge in multiple sala courts, or in
(1) from the filing of a complaint, to the conduct of single sala courts, by the nearest court (or pair
CAM and JDR during the pre-trial stage, and (2) pre- court, if any).
trial proper to trial and judgment.
Whatever the result of the JDR may be, the case is
The judge to whom the case has been originally “always returned to the originating court for
raffled shall preside over the first stage. He shall be appropriate action - either for the approval of
called the JDR judge.
PAGE 128

the compromise agreement or for trial, as the A party who appears without the required
case may be”. authorization may be similarly sanctioned

To safeguard the confidentiality of mediation If settlement is reached, the parties, with assistance of
proceedings, the JDR judge shall not pass on any their counsel, shall draft the compromise agreement
information obtained in the course of conciliation, for approval of the court by judgment upon a
early neutral evaluation, or mediation to the trial compromise.
judge or to any other person.
Where compliance with the compromise agreement is
All JDR conferences shall be conducted in private. forthwith made or the claim is otherwise settled, the
parties shall instead submit a satisfaction of claims
The JDR judge may, however, “confer in or mutual withdrawal of the complaint and
confidence with the mediator who previously counterclaim upon which the Court shall enter an
mediated the case, merely for the purpose of order dismissing the case.
determining unresolved issues”.

The pilot-test shall apply to the following cases:

(1) All civil cases, settlement of estates, and cases


covered by the Rule on Summary Procedure, except
those which by law may not be compromised;

(2) Cases cognizable by the Lupong Tagapamayapa and


those cases that may be referred to it by the judge
under Section 408. Chapter VII of the Republic Act No.
7160, otherwise known as the 1991 Local Government
Code;

(3) The civil aspect of BP 22 cases;

(4) The civil aspect of quasi-offenses under Title 14 of


the Revised Penal Code; and

(5) The civil aspect of Estafa, Libel, and Theft.

A party who fails to appear for mediation or JDR


conference may be imposed the appropriate sanctions
as provided for in Rule 18 of the Rules of Court and the
relevant issuances of the Supreme Court.

A recommendation to impose sanctions shall be made


to the JDR judge by the mediator before whom the
absence took place, upon the request of the present
party.

If all parties are absent despite due notice, the


mediator shall motu proprio recommend the
imposition of proper sanctions upon all of them,
including dismissal of the case.

Among others, the JDR judge may require the non-


appearing party to reimburse the appearing party
his costs, including attorney's fees for that day,
up to treble the amount incurred payable on or
before the next mediation session.