CHALLENGING AN

ARBITRATION
AWARD
CORPUZ . DE GUZMAN . ESTIOKO . LACAP .
PANGANIBAN
 What is the role of an arbitrator after
an award?
GENERAL RULE:
● The arbitrator’s role in the arbitration process generally ends when
the final award is issued.

● In legal terms, the arbitrator is said to be functus officio.

● The authority of arbitrators is terminated by the completion and

delivery of an award.

● Under the functus officio doctrine, it is improper for an arbitrator to

reconsider or modify an award without the consent of both parties.

○ Upon the receipt of a request for reconsideration or

modification from one party, the arbitrator will probably
respond that he or she is powerless to reconsider the award
EXCEPTIONS:
● An arbitrator can correct a mistake, such as a clerical
mistake or obvious error of arithmetic computation, which
is apparent on the face of the award.

● Where the award does not adjudicate an issue that has

been submitted, then as to such issue the arbitrator has
not exhausted his or her function and it remains open to
the arbitrator for subsequent determination.

● Where the award, although seemingly complete, leaves

doubt whether the submission has been fully executed,
contains an ambiguity.
ATTEMPTS TO SET ASIDE AN AWARD

● Arbitration awards can be challenged in court, but

these awards will only be overturned by the court in
rare and limited cases
○ Only if the award is the product of fraud,
corruption, or serious misconduct by the
arbitrator
● Arbitral awards are considered to be final and
binding
● For the most part, they cannot be challenged on the
merits, but only on procedural grounds or grounds of
arbitrator misconduct or bias.
LOSING PARTY

● Two opportunities to challenge an award:

○ in the Court of the situs

○ In the Court where the prevailing party is

attempting to enforce the award against the
assets of the losing party
METHODS OF CHALLENGE

● Bring an action to annul, set aside, or vacate the

award (the terms differ in different jurisdictions) in
the court at the situs of the arbitration
○ This is the appropriate place to challenge the
award, because the court at the situs is
considered to have supervisory jurisdiction over
the arbitral process to ensure that it was
conducted in a fair and non-corrupt manner

○ Law governing: lex arbitri, or the curial law,

which governs the arbitration proceedings at the
situs
METHODS OF CHALLENGE
● Internal challenges — Each arbitral body has its own
procedures for parties to seek modification or
reconsideration of an award.
● Where to challenge award in the courts
○ The New York Convention allows a losing party
to seek to vacate or annul an award only in
(i) the country where the award was made or
(ii) the country whose procedural laws were
utilized for the arbitration.
○ Those countries have "primary jurisdiction" over
the arbitral award.
 Grounds for Challenging an Award under the
New York Convention

Defenses to enforcement under the New York Convention

are construed narrowly, "to encourage the recognition and
enforcement of commercial arbitration agreements in
international contracts."
Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara, 364 F.3d 274, 288 (5th Cir.), cert. denied, 543 U.S. 917 (2004)
 Grounds for Challenging an Award under the
New York Convention
The seven enumerated defenses to enforcement appear in
Article V of the New York Convention are:

a. The parties were under an incapacity at the time

the arbitration agreement was made, or the
agreement is not valid under the laws of the
country to which the parties have subjected it to
(Art. V.1.(a)).

b. The losing party at the arbitration was not given

proper notice or was otherwise unable to present
his case. (Art. V.1.(b)).
Grounds for Challenging an Award under the
New York Convention
a. S

b. S
c. the award deals with an issue not subject to the
arbitration agreement or beyond the scope of the
arbitration agreement (Art. V.1.(c).
d. the composition of the arbitral body or the arbitral
procedure was not in accordance with the agreement of
the parties, or failing such agreement, was not in
accordance with the law of the country where the
arbitration took place. (Art. V.1.(d)).
Grounds for Challenging an Award under the
New York Convention
e. The award has not yet become binding on the parties,
or has been set aside or suspended by a competent
authority in the country in which, or under the law of
which, the award was made. (Art. V.1.(e))
f. The subject matter of the difference is not capable of
settlement by arbitration under the law of the country
where enforcement is sought (Art. V.2.(a))
g. The recognition or enforcement of the award would be
contrary to the public policy of the country where
enforcement is sought (Art. V.2.(b)).
Grounds for Challenging Arbitration Award
in the Philippines
(A.M. No. 07-11-08)

A Philippine court shall not set aside a foreign arbitral award

but may refuse it recognition and enforcement on any or all of
the following grounds:
a. The party making the application to refuse recognition
and enforcement of the award furnishes proof that:
(i). 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
Grounds for Challenging Arbitration Award
in the Philippines
(A.M. No. 07-11-08)

(ii). 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
(iii). 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 decisions on matters submitted to
arbitration can be separated from those not so
submitted, only that part of the award which contains
decisions on matters not submitted to arbitration may
be set aside; or
Grounds for Challenging Arbitration Award
in the Philippines
(A.M. No. 07-11-08)

(iv). The composition of the arbitral tribunal or the arbitral

procedure was not in 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
(v). 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; or
b. The court finds that:
(i). The subject-matter of the dispute is not capable of settlement
or resolution by arbitration under Philippine law; or
(ii). The recognition or enforcement of the award would be contrary
to public policy.
Maritime Industry / Certain Trade
Associations
● A challenge to an arbitration award may be brought to
another arbitration panel or to a Board of Appeal
ICSID (treaty-based arbitrations)
● The ICSID Convention provides for several possible
remedies after an award has been rendered:

○ Supplementation and Rectification (Art. 49(2))

■ For omissions and errors in the award

■ Can only be made by the tribunal that rendered

the award

○ Interpretation (Art. 50)

■ There must be a specific dispute concerning the

meaning or scope of the award

■ The interpretation will be given, if possible, by

the tribunal that rendered the award
ICSID (treaty-based arbitrations)
○ Revision (Art. 51)

■ Deals with substantive alteration of the original

award on the basis of newly discovered facts
that were unknown when the award was
rendered

■ Any revision shall be made, if possible, by the

same tribunal that rendered the award

■ If this is not possible, a new tribunal will be

constituted for this purpose.
 ICSID (treaty-based arbitrations)
○ Annulment (Art. 52)

■ Only concerned with the basic legitimacy of the process

of decision but not with its substantive correctness

■ Annulment proceedings always take place before a

separate ad hoc committee

■ Grounds:

● Tribunal was not properly constituted;

● Tribunal has manifestly exceeded its powers;

● There was corruption on the part of a member of

the Tribunal;

● There has been a serious departure from a

ICSID (treaty-based arbitrations)

● However these gateways do not allow a tribunal to

examine the reasoning of the award and do not affect
finality

● If parties wish to erase part or the entire award they may

do so through annulment

● Annulment does not focus on reasoning but rather on

legitimacy

○ The reasons for seeking annulment are procedural

and exclude all errors of law

● Parties may challenge the final award by arguing that it

was the result of an illegitimate process
ICSID (treaty-based arbitrations)

● All post-award remedies require a specific request by a

party

○ There is no ex officio remedy

● There can be no resort to domestic courts against an

ICSID award

● A party to an award under the ICSID Convention can

appeal only to another ICSID arbitral tribunal

● If the second panel annuls the original award, either

party can request yet another tribunal to render an
award
 Remedies After an Award
ICC On its own initiative, the arbitral tribunal may correct an award;
Any application of a party for the correction of an error must be made to the
Secretariat within 30 days of the receipt of the award by such party

ICDR Within 30 days after the receipt of an award, any party, with notice to the other
party, may request the arbitral tribunal to interpret the award or correct any
clerical, typographical, or computational errors or make an additional award as
to claims, counterclaims, or setoffs presented but omitted from the award.

PCA Within 30 days from receipt of the award, any party may request the tribunal to
correct any error in the award or to interpret such award.

LCIA Within 28 days of receipt of any award, the Arbitral Tribunal may, upon a party’s
request or upon its own initiative, may correct any error (including any error in
computation, any clerical or typographical error or any error of a similar nature)
in the award
A party may also request the Arbitral Tribunal to make an additional award as to
any claim or cross-claim presented in the arbitration but not decided in any
award
CONCLUSION

● Institutional Arbitration
● Seat of Arbitration