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ADR/ARBITRATION – FINAL EXAM

ANSWER THE FOLLOWING AND SUPPORT YOUR ANSWERS.

DO NOT USE MORE THAN SEVEN LINES.
Use this questionnaire in answering the questions. Send to marioe.-
valderrama@gmail.com in both word and pdf formats.

01. You are the sole arbitrator in an international arbitration with seat in the
Philippines. You are an expert in the issue involved in the dispute. You are confronted
with submissions from the parties both of which you believe are based on the wrong
premises. You want to base your decision on what you believe to be the correct view. At
the same time, you do not want your award to be set aside. What are you going to do?

Answer: If I were the sole arbitrator, I will require my “correct view” to be proved
as an evidence since by informing the parties and avoid sounding “partial”. It will
be a due process violation if I will use my expertise as a “secret evidence”. Hence, If
upon agreement of the parties, the evidence will be proved, it will no longer be a
ground to vacate the award or to not be recognized, which is also my goal as the ar-
bitrator.

02. A was appointed arbitrator by the Complainant. A disclosed that he was pre-
viously hired as counsel for X corporation in an ongoing case that has nothing whatso-
ever to do with the arbitration. X Corporation happened to be an affiliate of Complainant.
Respondent challenged A, but A refused to inhibit himself arguing that the fact that he
made the disclosure indicates that he believes that he is not disqualified. The issue was el-
evated to the appointing authority. You are the appointing authority. Would you disqual-
ify A? Use the IBA Guidelines as your basis.

Answer: If I were the Appointing Authority, I would disqualify A. Under the

non-waivable red list of the IBA guidelines, when the arbitrator is a legal represen-
tative or an employee of one of the parties, or has significant personal or financial
interest to the case, regular advises the party or an affiliate of which, Disclosure
shall not cure the disqualification. Hence, A shall be disqualified.

03. Your client entered into an international contract with the following arbitra-
tion clause:
“All disputes arising out of the present contract shall be settled by way of arbitra-
tion.”
A dispute now exists between the parties to the contract. The other party de-
manded an arbitration but your client would not want to go to arbitration. Your client
consulted you and asked you if he can avoid the arbitration. What will be your advice?

Answer: I will advice the concept of the Autonomy of Arbitration clause. The
arbitration clause is considered independent from the main contract. Hence, I will

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advise him to challenge the arbitration clause and not the main contract as to juris-
diction of the Arbitral Tribunal.

04. A local construction contract involving a foreign party has the following arbi-
tration clause: “Any dispute arising out of or in relation to this contract shall be referred
to arbitration to be administered by the International Chamber of Commerce under its
rules as at present in force. The seat of arbitration shall be Hong Kong.”
The Filipino party in anticipation of an arbitration to be initiated by the foreign party
commenced an arbitration in CIAC. The foreign party filed a motion to dismiss on the
ground that the Philippines is not the seat designated by the parties and CIAC was not the
institution agreed upon by the parties. Will the motion prosper?
Answer: No. The motion will not prosper. Since the type of Arbitration is in-
stitutional, it must follow the rules of the institution which was stipulated to be ad-
ministered by the ICC and that the seat of arbitration shall be in Hong Kong. Initi-
ated move by the Filipino Party shall be dismissed.

05. The respondent challenged the jurisdiction of the Tribunal. The Tribunal ruled
that it has no jurisdiction. Your client, however, would like the arbitration to proceed.
What are you going to do?

Answer: If my client would like the arbitration to proceed despite the Tri-
bunals’ rule that it has no jurisdiction, I would appeal to the courts, specifically the
RTC, as provided under Special Rules.

06. Company A and Company B was merged with Company A as the surviving
entity. Company B had previously entered into a contract with an arbitration clause. A
dispute arose and the claimant impleaded Company A. Company A challenged the juris-
diction of the tribunal on the ground that it is not a signatory to the arbitration agreement
and therefore not bound by it. Decide.

07. The two party appointed arbitrators appointed the chair of the tribunal. One of
the parties challenged the chair on the ground that he does not believe that the appointee
is capable of being a tribunal chair. The other party agreed to the challenge. The ap-
pointed chair refused to recuse himself on the grounds that (a) he was appointed by the
arbitrators; (b) he has considerable experience as arbitrator and he teach arbitration law
and practice in a reputable university and (c) the ground of challenge is not one of the
grounds to challenge an arbitrator. Was the refusal valid?

Answer: No. Under the Model Law, when both or all the parties agreed to
challenge, the Challenged Arbitrator has no other option but to resign since it is the
parties’ decision which shall prevail. This is comparison when only one party chal-
lenged the said arbitrator, in such case, he may recuse or refuse— to be decided by tri-
bunal.

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08. A and B entered into an international contract with an arbitration clause, des-
ignating Singapore as the seat of arbitration and Philippine law as the law of the contract.
The contract was perfected and implemented in the Philippines. When a conflict arose B
filed a court case in the Philippines. A requested the Philippine court to refer the parties
to arbitration in Singapore, but the court denied the request. So, A went to Singapore and
requested the Singapore Court to enjoin B from proceeding with the court case. Was A’s
action legally feasible?
Answer: Yes. The law governing the lex arbitri, is the law of the seat of arbi-
tration. Hence, since it is Singapore as the seat of Arbitration, the lex arbitri shall
also be Singapore. A may therefore request Singapore court to join B from proceed-
ing with the court case by arguing that the main contract is different or independent
from the Arbitration Clause.

09. X, a Filipino, was hired by Company B as the latter’s General Manager. Com-
pany B is a Filipino business entity and its operations are in the Philippines. The contract
of employment has an arbitration agreement with seat in country Y and and the law gov-
erning the contract is the law of country Y. The salary of X is of such amount that, under
the law of country Y, the dispute may be resolved by arbitration. Subsequently a dispute
arose and Company B initiated an arbitration in country Y. X challenged the jurisdiction
of the tribunal constituted under the law of country Y. Decide.
Answer: I will decide to issue an interim award on jurisdiction wherein the
party should request for a full dress hearing on the issue of jurisdiction.This sum-
mary hearing shall decide whether or not the tribunal has prima facie jurisdiction.
This is one of the options when there is a challenge as to jurisdiction of an arbitral
tribunal, in such case, there may be evidence to prove what is the proper recourse.

10. An arbitral institution uses the “eyes of the parties test” as its standard for dis-
closure and for disqualification. The appointed arbitrator in an arbitration did not disclose
that ten (10) years ago he sat as arbitrator in a case where one of the parties to the present
arbitration is also a party. He was challenged by one of the parties. The arbitrator refused
to inhibit himself arguing that, under the IBA Guidelines, he has no duty to disclose be-
cause the situation falls within the so-called Green List. Was the argument valid?

Answer: No. The argument is not valid. Since the arbitration uses the “eyes
of the parties test”, Failure to disclose these shall create an appearance of bias, and
may be a ground for disqualification. Although the facts per se is not the disqualify-
ing event, Failure to disclose such will lessen the trust of the party/parties, and be-
comes the ground for disqualification. This is reflected in ICC.

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