Topic of the Case : Interim Measures in Arbitration

Title of the Case : Transfield Philippines Inc. vs. Luzon Hydro Corporation (LHC)
Citation of the Case: G.R 146717

Facts:

The controversy arises when Transfield Philippines (Petitioner) failed to comply to

its contracted obligation from Luzon Hydro Corporation (Respondent). Petitioner and
respondent entered into a contract from which Transfield Philippines agreed to construct,
on a turnkey basis, a 70-Megawatt hydro-electric power station. Transfield was given the
sole responsibility for the design, construction, commissioning, testing and completion of
the project. Under the agreements of the turnkey contract it provides the period for which
the project is to be completed and allows for the petitioner to claim extensions of time
(EOT) and furthermore in case of dispute, the parties are bound to settle their differences
through mediation, conciliation. In order to guarantee the performance of the petitioner,
two standby-letters of credit were required to be opened as a Securities. During the
construction of the plant. Transfield requested for extension of time due to typhoon,
however respondent didn’t give due course to the requested EOT but it was referred to
the arbitration committee. Pending the resolution in the Arbitration Committee as to
whether or not petitioner is entitled to extension of time, LHC demanded on the standby
letters of credit because petitioner failed to comply its obligation. However, such demand
was object by the Petitioner on the ground that there is still pending arbitration on their
request for extension of time, hence petitioner went to the court to sought for injunctive
relief.

Issue:

Whether or not the pendency of arbitral proceedings forecloses resort to

provisional reliefs.

Ruling:

As a fundamental point, the pendency of arbitral proceedings does not foreclose

resort to the courts for provisional reliefs. The rules of the ICC, which governs the parties
arbitral dispute, allows the application of a party to judicial authority for interim or
conservatory measures. Likewise, Section 14 of RA 879 recognizes the rights of any party
to petition to the court to take measures to safeguard and/or conserve any matter which
is the subject of the dispute in arbitration. In addition, RA 9285 otherwise known as the
Alternative Dispute Resolution Act of 2004, allows the filing of provisional or interim
measures with the regular courts whenever the arbitral tribunal has no power to act or to
act effectively.