APDR

Arbitration Agreement
Agenda
• Definition
• Requisites
• Characteristic
• Foreign v. Local Arbitration
• Arbitration Agreement
• Cases
A. Definition of Voluntary Arbitration
• Arbitration means 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 this act,
resolve a dispute by rendering an award (RA 9285, sec. 3d)
A. Definition of Voluntary Arbitration
A consensual mode of dispute resolution by a third-party neutral
chosen by the parties leading to a final and binding award.

(Fouchard, Gaillard, Goldman on International Commercial Arbitration)

B. Requisites
1. Consensual mode of dispute resolution
2. Neutral third party chosen by parties to decide dispute
3. Award is final and binding
B.1 Voluntary arbitration is consensual
Common mistake in voluntary arbitration is looking at the law first instead of applying contractual precepts.

a. The contract is the law between and among the parties

Case: Frabelle Fishing Corporation. v. Philippine American Life Insurance Company, 530 SCRA 543 (2007)

b. The contract may be void, voidable or unenforceable depending on the presence of requisites.

Case: 1. Cargill Philippines, Inc. v. San Fernando Regala Trading, Inc., 641 SCRA 31
2. Gonzales v. Climax Mining Ltd., 512 SCRA 148

IMPORTANT TO CHECK OF ALL REQUISITES OF A VALID VOLUNTARY ARBITRATION CONTRACT ARE PRESENT
B.1 Voluntary arbitration is consensual
• Consensual mode of dispute resolution
• Consent/meeting of the minds
• Capacity of parties to consent important
Cases:
1. Associated Bank v. Court of Appeals, 233 SCRA 137
2. Ormoc Sugarcane Planters’ Association, Inc. v. Court of Appeals, 596 SCRA 630
3. Aboitiz Transport System Corporation v. Carlos Gothong Lines, GR No. 198266, 18 July 2014
4. Steamship Mutual Underwriting Association Limited v. Sulpicio Lines, Inc., G.R. No. 196072, 20
September 2017

• Object
• The law must allow submission of the dispute to arbitration
• Note exceptions to disputes that may be submitted to voluntary arbitration
Case:
1. Korea Technologies Co., Ltd. v. Lerma, 542 SCRA 1
• Consideration
• No need to be monetary
• Form
• In writing and subscribed by the parties
• Arbitration clause or submission agreement
Cases:
1. BF Corporation v. Court of Appeals, 288 SCRA 267
B.1 Voluntary arbitration is consensual
What are the qualifications of the arbitrators?
-Chosen by the parties
-Impartiality and independence
-Ethics and confidentiality of proceedings
What rules will be applied to the proceedings?
-Parties’ preference is paramount.
-Consider whether the arbitration is ad hoc or institutional.
What is the basis for jurisdiction of tribunal? How does the award become
final and binding?
-Parties agree to be bound by the award.
C. Characteristics of a Voluntary Arbitration
1. It is party and case specific.
2. It is a private dispute resolution practice.
3. The arbitral tribunal is an instrumentality of the parties and has no
imperium.
4. It is evidentiary.
C.1 Parties and case specific
• The award only binds the parties.
C.2 Private dispute resolution process
• Operates extra-judicially.
• Minimal interference from the court.
• Award has to be integrated into the legal/judicial system by confirmation or
recognition.

1. Vega v. San Carlos Milling Co. Ltd, 51 Phil. 908 (1924)

2. Mindanao Portland Cement Corporation v. McDonough Construction Co.,
19 SCRA 808
3. La Naval Drug Corporation v. CA, GR No. 103200, 31 August 1994
4. Del Monte Corporation-USA v. Court of Appeals, G.R. No. 136154, 7
February 2001.
C3. Tribunal is an instrumentality of the
parties and has no imperium
• The tribunal’s jurisdiction is based on the agreement of the parties
• The tribunal can only decide issues which the parties submitted to
arbitration
• Certiorari jurisdiction of courts does not apply.
• Tribunals and parties have to rely on courts to execute the award.

Cases
1. Fruehauf Electronics Philippines Corporation v. Technology Electronics
Assembly and Management Pacific Corporation, G.R. No. 204197, 23
November 2016
2. Asset Privitization Trust v. Court of Appeals, 300 SCRA 579
C.4 Voluntary arbitration is evidentiary
• Tribunals must provide the parties with sufficient opportunity to
present evidence.
• Award should only be based on evidence.
• Tribunals cannot use its expertise in deciding the dispute.
• The rule on judicial notice does not apply.
D. Foreign v. Local Arbitration/Place of
Arbitration v. Venue of Arbitration Proceedings
Foreign – place (seat) of arbitration is a country other than the
Philippines. The applicable law of arbitration is the arbitration of the
law of the place (seat).

Place arbitration = Singapore; Singapore arbitration law will be applied.

RA 9285/RA 876/Special ADR Rule will not be applied.

• When are foreign arbitration relevant to Philippine lawyers?

• Confirmation or recognition by Philippine courts.
D. Foreign v. Local Arbitration/Place of
Arbitration v. Venue of Arbitration
• Local arbitration – Philippine is the place/seat of arbitration.
Philippine arbitration law will apply.

• Domestic Arbitration – without foreign element.

• International Arbitration – with foreign element.

D. Foreign v. Local Arbitration/Place of
Arbitration v. Venue of Arbitration
Foreign elements to consider
-parties place of business
-place where substantial part of the obligations is to be performed.
-place with which the subject matter of the dispute is most closely
connected
E. Arbitration Agreement
• Essential functions of arbitration agreement
• To produce mandatory consequence for the parties
• To exclude minimize the intervention of the State courts in the resolution of
disputes
• To empower the arbitrators to resolve the parties’ disputes
• To adopt a procedure for resolving the dispute
E. Arbitration Agreement
• A badly crafted arbitration agreement
• May prevent arbitration from going forward
• May delay arbitration proceedings
• May result in undue court intervention
• May adversely affect enforceability of award

Defects
• Inconsistency
• Uncertainty
• Inoperability
E. Arbitration Agreement
• IBA Guidelines for Drafting International Arbitration Clauses
- Ad hoc or institutional
- Use recommended clause of selected rules as starting point
- Non-limitation and broad definition of scope of dispute
- Selection of place of arbitration
- Number of arbitrators
- Language of arbitration
- Rules of law governing contract and subsequent disputes