1. What are the advantages of resolving disputes through arbitration?

In this context, discuss the

advantages of dispute resolution through arbitration rather than through litigation in courts.

2. Finality in arbitration awards.

A. Please discuss the reasons why an arbitration award ought to be easy to enforce in an international
context.

An arbitral award ought to be easy to enforce in an international context due to the following
reasons:
a. Existence of common standards for the recognition of arbitration agreements and court
recognition and enforcement of foreign arbitral awards;
b. Rule of comity and reciprocity;
c. Simplified procedure before the RTC, i.e. service of summons is not to be strictly followed and
opposition to the petition is non-extendible, low filing fees since the arbitral award is considered as
one incapable of pecuniary estimation.

The “New York Convention” means the United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards approved in 1958 and ratified by the Philippine Senate under
Senate Resolution No. 71. It aims to provide common legislative standards for the recognition of
arbitration agreements and court recognition and enforcement of foreign and non-domestic arbitral
awards. Thus, the New York Convention primarily governs the recognition and enforcement of foreign
arbitral awards by our courts.1
Rule 13.5 of the Special Rules of Court on Alternative Dispute Resolution (AM No. 07-11-08-
SC) which consolidated the salient provisions of RA No. 9285, the New York Convention requires that
the petitioner plead in the petition the 1) addresses of the parties to arbitration, 2) the country where
the arbitral award was made and whether such country is a signatory of the New York Convention, and
3) the relief sought. The petitioners further required to attach to the petition an authentic copy of the
arbitration agreement and an authentic copy of the arbitral award. If the arbitration agreement and
award are not in English, its official translation, certified by an official or sworn translator or by a
diplomatic consular agent, is required to be attached in the petition.
If the petition is sufficient in form and substance, the RTC will then cause the service of a copy of
the petition upon the respondent which shall be made either by personal service or courier. Under
Special ADR Rules, service of summons upon the respondent is not required. What is important is that
the respondent received a copy of the petition and notice of initial hearing so as to satisfy the
requirement of due process. Then, the respondent ought to file a verified opposition within 30 days
from receipt of the notice and petition which he cannot extend for a motion of extension is a
prohibited pleading under Special ADR Rules. Another prohibited pleading is a motion for a bill of
particulars.
As for the hearings, under Rule 13.9 under the same aforementioned Rules, the affidavits of
witnesses take the place of their direct testimonies in court and they shall be immediately subject to
cross-examination.
It is also important to note that foreign judgments and foreign arbitral awards are held by the
Supreme Court as one that is incapable of pecuniary estimation such that the filing and docket fees of
which are minimal and not based on the amount pleaded in the petition. In the case of Mijares v.
Ranada (GR No. 139325, April 12, 2005) the Court wisely said that if the rule on filing fees pertaining
to foreign judgments and foreign arbitral awards were otherwise, foreign judgments would be virtually
be unenforceable in the Philippines due to the exorbitant filing fees.
Rule 20.1 of AM No. 07-11-08-SC has standardized the schedule of filing fees according to the
following:

PhP 10,000.00 - if the award does not exceed PhP 1,000,000.00

1. Transfeld Philippines, Inc. v. Luzon Hydro Corporation, 523 Phil. 374 (2006)
2. Asset Privatization Trust v. Court of Appeals, 300 SCRA 579 (1998)
 PhP 20,000.00 - if the award does not exceed PhP 20,000,000.00

PhP 30,000.00 - if the award does not exceed PhP 50,000,000.00

PhP 40,000.00 - if the award does not exceed PhP 100,000,000.00

PhP 50,000.00 - if the award exceeds PhP 100,000,000.00

The court shall in no case substitute its own judgment for that of the arbitral
tribunal. In a plethora of cases, the Supreme Court ruled that courts will not
review the findings of law and fact contained in an award, and will not undertake
to substitute their judgment for that of the arbitrators, since any other rule would
make an award the commencement, not the end, of litigation. Errors of law and
fact, or an erroneous decision on matters submitted to the judgment of the
arbitrators, are insufficient to invalidate an award fairly and honestly made. 2
The recognition and enforcement flows as a matter of ministerial duty upon the court to which it
is filed when there is no determination that any of the grounds under Article V of the New York
Convention and Rule 13.4 of the Special ADR Rules exist.
If, however, the seat of arbitration is not a signatory of the New York Convention, it is still
enforceable in the Philippines based on comity and reciprocity.
The theory of comity applies as it is the recognition which one nation allows within its territory
to the legislative, executive, or judicial acts of another nation, having due regard both to international
duty and convenience, and to the rights of its own citizens, [and] of other persons who are under the
protection of its laws. (Hilton v. Guyot, 159 US 113) This goes hand in hand with reciprocity such that
if the laws and judgments of Philippine courts are recognized in a foreign state, Philippine courts in
turn will recognize the laws and judgments emanating from said foreign state. (supra)

B. Analyze and research the issues relating to enforcement of foreign arbitral awards in the context of
existing international conventions (New York Convention).

The prevailing issue relating to the enforcement of foreign arbitral award is the existence of the
arbitral award itself as well as the agreement for arbitration. These two are the most important matters
that are looked into by the the court. It is mighty to note that our jurisdiction adopts a policy in favor
of arbitration (Lanuza, Jr. v. BF Corporation, et al., 744 Phil. 612 (2014)) hence the courts should very
well enforce a decision when there are no grounds under Article V of the New York Convention are
present. These limited grounds that should be looked into are:
a. A party to the arbitration agreement was under some incapacity ; or the said agreement
is not valid under the law to which the parties have subjected it or, failing any
indication thereof, under the law of the country where the award was made; or
b. The party making the application was not given proper notice of the
appointment of an arbitrator or of the arbitral proceedings or was otherwise
unable to present his case; or
c. The award deals with a dispute not contemplated by or not falling within
the terms of the submission to arbitration, or contains decisions on matters
beyond the scope of the submission to arbitration; provided that, if the decision
on matters submitted to arbitration can be separated from those matters not so
submitted, only that part of the award which contains on matters not submitted to
arbitration may be set aside; or
d. The composition of the arbitral award or the arbitral procedure was not in

1. Transfeld Philippines, Inc. v. Luzon Hydro Corporation, 523 Phil. 374 (2006)
2. Asset Privatization Trust v. Court of Appeals, 300 SCRA 579 (1998)
accordance with the agreement of the parties; or failing such agreement, was not
in accordance with the law of the country where arbitration took place; or
e. The award has not yet become binding on the parties or has been set
aside or suspended by a court of the country in which that award was made.

The ADR Act and the Special ADR Rules both declare as a policy that the State shall encourage
and actively promote the use of alternative dispute resolution, such as arbitration, as an important
means to achieve speedy and impartial justice and declog court dockets. (See Sec. 2 of RA 9285 and
Rule 2.1 of the Special ADR Rules). This pro-arbitration policy is further evidenced by the rule on
presumption in favor of enforcement of a foreign arbitral award under the Special ADR Rules.

3. Third Party Funding in international arbitration. Should institutions allow third party funding in
International Arbitrations? Please analyze the advantages and disadvantages of allowing such third
party funding.

Summary:

1. Transfeld Philippines, Inc. v. Luzon Hydro Corporation, 523 Phil. 374 (2006)
2. Asset Privatization Trust v. Court of Appeals, 300 SCRA 579 (1998)