Crisang, Stephen Nikolai L. Atty.

Myra Angeli Gallardo-Batungbakal

Alternative Dispute Resolution
3A-1
______________________________________________________________________________
1. The SIAC shall have jurisdiction over the case. (Correct answer is CIAC)

The principle of competence-competence means that the arbitral tribunal may initially rule
on its own jurisdiction, including any objections with respect to the existence or validity of
the arbitration agreement or any condition precedent to the filing of a request for
arbitration.
(Special ADR Rules, Rule 2.2)

The arbitral tribunal shall be accorded the first opportunity or competence to rule on the
issue of whether or not it has the competence or jurisdiction to decide a dispute submitted
to it for decision, including any objection with respect to the existence or validity of the
arbitration agreement. When a court is asked to rule upon issue/s affecting the competence
or jurisdiction of an arbitral tribunal in a dispute brought before it, either before or after the
arbitral tribunal is constituted, the court must exercise judicial restraint and defer to the
competence or jurisdiction of the arbitral tribunal by allowing the arbitral tribunal the first
opportunity to rule upon such issues.
(Special ADR Rules, Rule 2.4)

If any party objects to the existence or validity of the arbitration agreement or to the
competence of SIAC to administer an arbitration, before the Tribunal is constituted, the
Registrar shall determine if such objection shall be referred to the Court. If the Registrar so
determines, the Court shall decide if it is prima facie satisfied that the arbitration shall
proceed. The arbitration shall be terminated if the Court is not so satisfied. Any decision by
the Registrar or the Court that the arbitration shall proceed is without prejudice to the
power of the Tribunal to rule on its own jurisdiction.
(SIAC Rules of 2016, Rule 28.1)

The Tribunal shall have the power to rule on its own jurisdiction, including any objections
with respect to the existence, validity or scope of the arbitration agreement. An arbitration
agreement which forms part of a contract shall be treated as an agreement independent of
the other terms of the contract. A decision by the Tribunal that the contract is null and void
shall not entail ipso jure the invalidity of the arbitration agreement, and the Tribunal shall
not cease to have jurisdiction by reason of any allegation that the contract is non-existent or
null and void.
(SIAC Rules of 2016, Rule 28.2)
Thus, the SIAC, pursuant to the substantive laws enunciated above shall exercise jurisdiction
and as such shall be accorded the first opportunity or competence to rule on the
issues/controversies of the case.

Relevant Jurisprudence:

In Ontario Medical Association v Willis Canada Inc. the Court of Appeal extensively
considered the 'competence-competence principle' applicable to the determination of
whether a dispute is governed by an arbitrator or by a court. The principle holds
generally that an arbitrator is entitled, at first instance, to make a determination of its
own jurisdiction.

In Haas v. Gunasekaram, 2016 ONCA 744, the Ontario Court of Appeal recently held
that claims in tort and fraud, and resulting claims to set aside the agreement between
the parties, were within the jurisdiction of the arbitral tribunal under an arbitration
agreement. Accordingly, the court action between the parties was stayed. This decision
is important due to the pro-arbitration principles of contractual interpretation which the
Court of Appeal adopted, and due to its finding that the claims in tort and fraud – which
are often found to fall outside arbitration clauses – were properly within the jurisdiction
of the arbitral tribunal.

In Dallah Real Estate and Tourism Holding Company v. The Ministry of Religious
Affairs, Government of Pakistan, the principle has been recognised by the Permanent
Court of International Justice and the International Court of Justice: Rosenne, The Law
and Practice of the International Court 1920-1996 (3rd ed 1997), Vol II, pp 846 et seq. In
the Advisory Opinion on the Interpretation of the Greco-Turkish Agreement (1928)
Series B No 16, 20, the Permanent Court of International Justice said: “as a general rule,
any body possessing jurisdictional powers has the right in the first place itself to
determine the extent of its jurisdiction ... ”. In the Nottebohm case (Liechtenstein v
Guatemala), 1953 ICJ Rep 111, 119, the International Court of Justice, after referring to
the Alabama case in 1872, and the views of the rapporteur of the Hague Convention of
1899 for the Pacific Settlement of International Disputes, said: “it has been generally
recognised....that...an international tribunal has the right to decide as to its own
jurisdiction”.

In PHILROCK, INC., vs. CONSTRUCTION INDUSTRY ARBITRATION COMMISSION and

Spouses VICENTE and NELIA CID, the Courts encourage the use of alternative methods
of dispute resolution. When parties agree to settle their disputes arising from or
connected with construction contracts, the arbitral body acquires primary jurisdiction. It
may resolve not only the merits of such controversies; when appropriate, it may also
award damages, interests, attorney's fees and expenses of litigation.
2. If I were the judge of the court where the case is filed, I will dismiss the case.

As provided by law in the ADR Act of 2004, A Regional Trial Court before which
construction dispute is filed shall, upon becoming aware, not later than the pre-trial
conference, that the parties had entered into an arbitration agreement, dismiss the case
and refer the parties to arbitration to be conducted by the CIAC, unless both parties,
assisted by their respective counsel, shall submit to the Regional Trial Court a written
agreement exclusively for the Court, rather than the CIAC, to resolve the dispute.
(RA 9285, Section 39)

In FEDERAL BUILDERS, INC vs POWER FACTORS, INC., an agreement to submit to

voluntary arbitration for purposes of vesting jurisdiction over a construction dispute in
the Construction Industry Arbitration Commission (CIAC) need not be contained in the
construction contract, or be signed by the parties. It is enough that the agreement be in
writing.

In a similar case, the court held in PHILROCK, INC., v. CONSTRUCTION INDUSTRY

ARBITRATION COMMISSION and Spouses VICENTE and NELIA CID, Courts encourage the
use of alternative methods of dispute resolution. When parties agree to settle their
disputes arising from or connected with construction contracts, the Construction
Industry Arbitration Commission (CIAC) acquires primary jurisdiction. It may resolve not
only the merits of such controversies; when appropriate, it may also award damages,
interests, attorney’s fees and expenses of litigation.

In summary, the law prefers arbitration as a form of settling disputes arising from a
construction contract and it is incumbent upon it to dismiss the case and refer the same
to arbitration. A court can only hear and decide on a construction dispute if both parties
agree in writing that the Courts shall have jurisdiction to resolve the dispute. Absent this
written agreement, I, as the judge shall dismiss the case and refer the parties to
arbitration by the CIAC.