Alternative Dispute Resolution

CHAPTER 4: Arbitration in General

CHAPTER 4: ARBITRATION IN GENERAL

I.

Concept of Arbitration

Arbitration
A voluntary dispute resolution process in which one or more arbitrators,
appointed in accordance with the agreement of the parties or rules
promulgated pursuant to the ADR Act, resolve a dispute by rendering an
award.
An arrangement for taking and abiding by the judgement of selected persons
in some disputed matter, instead of carrying it to established tribunals of
justice, and is intended to avoid the formalities, the delay, the expense and
vexation of ordinary litigation.
A merit or evidence based form of ADR.
Arbitration vs Mediation
ARBITRATION
It is the arbitrator that decides
the dispute and renders an
arbitral award to conclude
the arbitral proceeding.

MEDIATION
It is the parties themselves who
enter
into
and
execute
a
mediated
settlement
agreement to conclude the
mediation proceeding

A completed arbitral proceeding is concluded by an arbitral award

constituting the partial or final decision by an arbitrator.
Forms of arbitral award
a. Award on agreed terms
b. Consent award
c. Award based on compromise

II.

Kinds of Arbitration
1. Voluntary
- Involves the reference of a dispute to an impartial body, the
members of which are chosen by the parties themselves, which
parties freely consent in advance to abide by the arbitral award
issued after the proceedings where both parties had the opportunity
to be heard.
- Governed by the ADR act and its IRR.
2. Compulsory

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III.

The process of settlement of labor disputes by a government

agency which ahs the opportunity to investigate and to make an
award which is binding on all parties
A mode of arbitration where the parties are compelled to accept the
resolution of their dispute through arbitration by a third party
Not governed by the ADR act and its IRR.

Classification based on SEAT OF ARBITRATION and the

PRESENCE OF FOREIGN ELEMENTS
1. Domestic
- The components of parties places of business, place of arbitration,
place of performance of a substantial part of the obligation, and
place where the subject matter of the dispute is most closely
connected, are all located in the Philippines
- Governed by the Arbitration Law (R.A. No. 876), the Model Law, and
specific provision of the ADR Act.
2. International
- The components of parties places of business, place of arbitration,
place of performance of a substantial part of the obligation, and
place where the subject matter of the dispute is most closely
connected, is outside the Philippines
- Governed by the ADR Act and its IRR eve if the place of arbitration
is outside the Philippines
Requisites:
a. The parties of business, which at the time of the conclusion of the
arbitration agreement, is in different state.
b. The place of arbitration provided in the arbitration agreement in which
the parties have their places of business, is out the Philippines
c. The place where a substantial part of the obligation is to be performed
or the place with which the subject matter of the dispute is most closely
connected, and in which the parties have their places of business, is out
the Philippines
d. The parties have expressly agreed that the subject matter of the
arbitration agreement relates to more than one country.

An international arbitration is at the same time commercial if it covers

matters arising from all relationships of a commercial nature, whether
contractual or not, in which case the arbitration is called international
commercial arbitration.
3. Foreign
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IV.

If its seat is outside the Philippines even if the place of arbitration is

in the Philippines.
The ADR Act and its IRR govern the recognition and enforcement of
foreign arbitral award.

Policy on Arbitration

In Korea Technologies Co., Ltd. V. Lerma, the Supreme Court had an opportunity to
reiterate the judicial policy on arbitration in the following manner:
Being an inexpensive, speedy and amicable
method of settling dispute, arbitration along with
mediation, conciliation and negotiation is
encouraged by the Supreme Court. Aside from
unclogging judicial docket, arbitration also hastens
the resolution n of disputes, especially of the
commercial kind. It is thus regarded as the wave of
the future in international civil and commercial
disputes. Brushing aside a contractual agreement
calling for arbitration between the parties would be
a step backward.
In Koppel, Inc. v. Makati Rotary Club Foundation, Inc., the Supreme Court went on to
sustain the state policy of encouraging alternative dispute resolution
notwithstanding the harsh legal implications that the policy may create. The
Supreme Court said:
This Court is not unaware of the apparent
harshness of the Decision that it is about to make.
Nonetheless, this Court must make the same if only
to stress the point that, in our jurisdiction, bone fide
arbitration agreements are recognized as valid; and
that laws, rules and regulations do exist protecting
and ensuring their enforcement as a matter of state
policy. Gone should be the days when courts treat
otherwise valid arbitration agreements with disdain
and hostility, if not outright jealous, and then get
away with it. Court should instead learn to treat
alternative means of dispute resolution as effective
partners in the administration of justice and, in the
case of arbitration agreements, to afford them
judicial restraint. Today, this Court only performs its
part in upholding a once disregarded state policy.
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V.

Objectives of Arbitration
To provide a speedy and inexpensive method of settling disputes by
allowing the parties to a void the formalities, delay, expense, and
aggravation which commonly accompany ordinary litigation, especially
litigation which goes through the hierarchy of courts.

VI.

Arbitrator

The person appointed to render an award in a dispute that is the subject

of an arbitration agreement.
Characterized as a quasi-judicial instrumentality

Arbitrator vs Arbiter
ARBITRATOR
May use his own discretion in the
performance of his function

VII.

ARBITER
Bound by rules of law and equity
in rendering an award.
Example: Labor Arbiters of the
Arbitration Branch of the NLRC

Arbitration Agreement
(Articles 4.7. to 4.9, IRR)

The agreement of the parties to submit to arbitration all or certain disputes

which have arisen or which may arise between them in respect of a defines
legal relationship.
It is contractual in nature. As such, it should have the essential elements of a
contract such as:
(1) consent of the parties freely given
(2) the cause or consideration, and
(3) lawful object

Modes of Submitting a Dispute to Arbitration

1. Agreement to Submit to Arbitration an agreement to submit some
future dispute usually stipulated upon a civil contract between the parties
2. Submission Agreement an agreement to submit an existing matter of
difference to arbitrators

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Formal requirements of an Agreement to Arbitrate

a. It must be in writing
b. It must be subscribe by the parties or their representatives
An arbitration agreement may be included in the container contract in which
case, it is referred to as an arbitration clause or a compromissoire, or may be
constituted in a separate contract.

VIII. Doctrine of Separability

-

IX.

Otherwise known as the doctrine of severability

Enunciates that an arbitration agreement is independent of the
main contract even it is contained in an arbitration clause.
The arbitration agreement or clause is to be treated as a separate
agreement such that, even if the validity of the main contract is
challenged, the arbitration agreement or clause remains valid and
enforceable.
The doctrine denotes that the invalidity of the main contract does
not affect the validity of the arbitration agreement.

Due Process in Arbitral Proceedings

In line with the principle that ADR providers and practitioners, including
arbitrators, act in a quasi-judicial capacity, and that they are quasi-judicial
agencies or instrumentalities, the principles of administrative due process
equally apply to arbitral proceedings.

X.

Judicial Review and Court Intervention

(Articles 4.5 and 4.8, IRR)

Types of Judicial Intervention

1. Judicial Assistance in Arbitration
- Allows the parties in an arbitration to secure from the courts orders
or processes that will aid in the conduct of the arbitration
- May include:
a. Referral to arbitration
b. Issuance of interim measure o protection
c. Assistance in taking evidence
d. Issuance of confidentiality and protective orders
2. Judicial Review of Arbitral Awards
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Involves passing upon, to the extent allowed and on grounds

provided for by law, the propriety of the arbitral award

3. Judicial Review of Court Decisions in ADR related cases

- Involves the remedies available from decision or orders of the RTC
and the CA rendered in the first two types of judicial intervention
Judicial remedies an aggrieved party to domestic arbitral award
1. A petition in the proper RTC to issue an order to vacate the award on the
grounds provided for in Section 24 of RA 876
2. A petition for review in the CA under Rule 43 of the Rules of Court on question
of fact, of law, or mixed questions of fact and law
3. A petition for certiorari under Rules 65 of the Rules of Court should the
arbitrator have acted without or in excess of his jurisdiction or with grave
abuse of discretion amounting to lack or excess of jurisdiction
Rule 19.10. Rule on judicial review on arbitration in the Philippines. As a general
rule, the court can only vacate or set aside the decision of an arbitral tribunal upon
a clear showing that acting an arbitral award under Section 24 of Republic Act no.
876 or under Rule 34 of the Model Law in a domestic arbitration, or for setting aside
an award in an international arbitration under Article 34 of the Model law, or for
such other grounds provided under these Special Laws.

XI.

Interim Measure in Arbitration

-

Exemplified the complementation between arbitration and court

action
Otherwise referred to in the ADR Act as interim measure of
protection or provisional reliefs, are ancillary remedies intended
for the protection of the subject matter of the dispute
Akin to the provisional remedies under 1997 Rules of Civil
Procedure (rules 57 to 61)
Include but not limited to preliminary injunction, appointment of
receivers, detention of property, preservation of property, and
inspection of property subject of the dispute.

Prepared by: Group 4

Liza Cainap
Crizza Coz
James Culla
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Joey Elauria