Mining Arbitration

Mining Arbitration

Mining

- The science, technology and business of mineral discovery and exploitation. (Infomine.com)

-"Mining operation" means mining activities involving exploration, feasibility, development, utilization, and
processing. (Section 3 (af), RA 7942)

Arbitration

-voluntary dispute resolution process in which one or more arbitrators, appointed in accordance with the agreement
of the parties, or rules promulgated pursuant to this Act, resolve a dispute by rendering an award (RA9285, sec3 (d)

Mining dispute

is a dispute involving

1. rights to mining areas,

2. mineral agreements, FTAAs, or permits, and

3. surface owners, occupants and claimholders/concessionaires.

GONZALESvs. CLIMAX MINING LTD.

[G.R. No. 161957. February 28, 2005]

Arbitrators or Mining Arbitrators

means the person appointed to render an award, alone or with others, in a dispute that is the subject of an
arbitration agreement.

(Section 3 (e), RA 9285)

FAQs (Frequently Asked Questions)

What laws govern mining arbitration?

1. Republic Act No. 876 (“The Arbitration Law”)

AN ACT TO AUTHORIZE THE MAKING OF ARBITRATION AND SUBMISSION AGREEMENTS, TO PROVIDE FOR THE
APPOINTMENT OF ARBITRATORS AND THE PROCEDURE FOR ARBITRATION IN CIVIL CONTROVERSIES, AND FOR OTHER
PURPOSES

2. Republic Act No. 9285

AN ACT TO INSTITUTIONALIZE THE USE OF AN ALTERNATIVE DISPUTE RESOLUTION SYSTEM IN THE

PHILIPPINES AND TO ESTABLISH THE OFFICE FOR ALTERNATIVE DISPUTE RESOLUTION, AND FOR OTHER PURPOSES

What laws govern mining arbitration?

3. UNCITRAL Law– United Nations Commission on International Trade Law on 21 June 1985

4. Republic Act No. 7942

The Philippine Mining Act of 1995

Which agency is tasked with mining arbitration?

Generally, the DENR (Department of Environment and Natural Resources) pursuant to Republic Act 7942.

What are the qualifications, composition, and term of office of the Panel of Arbitrators?
Composition and qualifications:

The panel of arbitrators in the regional office of the Department composed of three (3) members, and duly designated
by the Secretary as recommended by the Mines and Geosciences Bureau Director. (Section 77, RA 7942)

The Panel of Arbitrators

Term of Office

Not specifically stated

Section 77, RA 7942:

“ …The members of the panel shall perform their duties and obligations in hearing and deciding cases until their
designation is withdrawn or revoked by the Secretary…”

Note: Those designated as members of the panel shall serve as such in addition to their work in the Department
without receiving any additional compensation.

What is the exclusive and original jurisdiction of the Panel of Arbitrators?

The panel shall have exclusive and original jurisdiction to hear and decide on the following: R A S P

R (a) Disputes involving rights to mining areas;

A (b) Disputes involving mineral agreements or permits;

S (c) Disputes involving surface owners, occupants and claimholders/concessionaires; and

P (d) Disputes pending before the Bureau and the Department at the date of the effectivity of this Act. (Section 77 of
RA 7942)

Whether the decision or order of the panel of arbitrators may be appealed by the party not satisfied thereto?

Yes.

Sec. 78 Appellate Jurisdiction. The decision or order of the panel of arbitrators may be appealed by the party not
satisfied thereto to the mines Adjudication Board within fifteen (15) days from receipt thereof which must decide the
case within thirty (30) days from submission thereof for decision. (RA 7942)

What is the result if the parties reach an amicable settlement?

In Arbitration, the arbitrator or arbitration panel shall issue an arbitration award. At any time within one month after
the award for issues arbitrated, is made, any party to the controversy may apply to the court having jurisdiction for an
order confirming the award; and thereupon the court must grant such order unless the award is vacated, modified or
corrected. (http://oadr.doj.gov.ph)

What are the remedies if one of the parties failed to comply with the agreement?

A party who does not comply with the order shall be liable for all damages resulting from non-compliance, including
all expenses and reasonable attorney’s fees, paid to obtain the judicial enforcement of the order.

In addition, any party to a mediated settlement agreement, which was deposited with the Clerk of Regional Trial
Court, may upon breach thereof, file a verified petition with the same court to enforce the said mediated agreement.

Cases
1.)GONZALES vs. CLIMAX MINING LTD

2.) Benguet Corporation v. Department of Environment and Natural Resources - Mines Adjudication Board and J.G.
Realty and Mining

1. GONZALES vs. CLIMAX MINING LTD

Issues pertinent to Mining arbitration:

1. Whether the complaint filed by petitioner raises a mining dispute over which the Panel of Arbitrators has
jurisdiction, or a judicial question which should properly be brought before the regular courts.

2. Whether the dispute between the parties should be brought for arbitration under Rep. Act No. 876.

1. Whether the complaint filed by petitioner raises a mining dispute or a judicial question?

-A judicial question is a question that is proper for determination by the courts.

-When the determination of the question involves the exercise of a judicial function;

-The question involves the determination of what the law is and what the legal rights of the parties are with respect
to the matter in controversy.

-A mining dispute is a dispute involving (a) rights to mining areas, (b) mineral agreements, FTAAs, or permits, and (c)
surface owners, occupants and claimholders/concessionaires.

-the Panel of Arbitrators has exclusive and original jurisdiction to hear and decide these mining disputes.

2. Whether or not the dispute between the parties should be brought for arbitration under Rep. Act No. 876?

NO.

The Complaint is not about a dispute involving rights to mining areas, nor is it a dispute involving claimholders or
concessionaires.

The Complaint is also not what is contemplated by Rep. Act No. 7942 when it says the dispute should involve FTAAs.

The Complaint is not exclusively within the jurisdiction of the Panel of Arbitrators just because, or for as long as, the
dispute involves an FTAA. The Complaint raised the issue of the constitutionality of the FTAA, which is definitely a
judicial question. The question of constitutionality is exclusively within the jurisdiction of the courts to resolve as this
would clearly involve the exercise of judicial power. The Panel of Arbitrators does not have jurisdiction over such an
issue since it does not involve the application of technical knowledge and expertise relating to mining.

2.) Benguet Corporation v. DENR- Mines Adjudication Board and J.G. Realty and Mining

Facts: Benguet Corporation and J.G. Realty and Mining entered into a Royalty Agreement with Option to Purchase
(“RAWOP”), wherein J.G. Realty was acknowledged as the owner of four mining claims covered by Mineral Production
Sharing Agreement (“MPSA”) Application

The RAWOP provides:

1. Any disputes x x x shall not be a cause of any action x x x in any court or administrative agency but shall x x x
be referred to a Board of Arbitrators

2. No action shall be instituted in court as to any matter in dispute as hereinabove stated, except to enforce the
decision of the majority of the Arbitrators.”

J.G. Realty sought the cancellation of the RAWOP, filing a petition for this purpose with the Panel of Arbitrators
(“POA”) having territorial jurisdiction over the mining area involved. In its Decision, the POA declared the RAWOP
cancelled. The decision was affirmed on appeal to the Mines Adjudication Board (“MAB”).

Issue: Whether or not the POA lacks jurisdiction over the dispute in view of the arbitration clause?
Yes.

Under Philippine domestic arbitration law, an agreement to avail of voluntary arbitration before resort is made to
the courts or quasi-judicial agencies of the government is a valid contractual stipulation that must be adhered to by
the parties.

The Court stated that there is a clear distinction between compulsory and voluntary arbitration. The arbitration
provided by the POA is compulsory, while the nature of the arbitration provision in the RAWOP is voluntary, not
involving any government agency.

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Thank You!