INTERNATIONAL

COMMERCIAL
ARBITRATION IN THE
PHILIPPINES
The Evolution of ICA

■ Law is a living organism.

■ Alternative Dispute Resolution

– 2 Kinds

DOMESTIC INTERNATIONAL
 INTERNATIONAL ARBITRATION
Elements

1. Place of business in different country

2.Place outside place of business

2.1. place of arbitration

2.2.place of performance of substantial obligation
2.3.place of most close connection of subject matter

3. Express agreement that subject matter

relates to more than one country
Advantages OF ICA

1.Foreign investor preference

2.Speed
3.Subject matter expertise
4.Confidentiality
EVOLUTION OF ICA

Past Present Future

THE PAST

■ 1921: Chan Linte v Law Union, 42 Phil 548

■ 1924: Vega v San Carlos Milling, 51 Phil 908
■ 1950: Civil Code (See Articles 2042 & 2046)
■ 1953: R.A. No. 876 (The Arbitration Law)

■ The Problem: No Law that catered specifically to the recognition and enforcement of
foreign arbitral awards. (See Eastboard Navigation Ltd. V, Juan Ysmael, 102 Phil 1 [1957])
■ What was used? The procedure for the recognition and enforcement of a foreign judgment.
 THE PAST
■ What is wrong with this procedure?

Foreign Judgment Foreign Arbitral Award

-judgment decreed by a foreign court --an award rendered by an arbitrator or panel
of arbitrators in a foreign country
-not binding upon the parties, generally -binding upon the parties
-See Sec. 48, Rule 39, Rules of Court: a
foreign judgment is “presumptive evidence”
of a right between the parties.

■ What is the effect if the same procedure is used?

THE PAST

■ 6 June 1967: Convention on the Recognition and Enforcement of Foreign

Arbitral Awards
– Reciprocal recognition of international arbitration agreements between
parties of different nationalities
– Mandated each State to issue rules of procedure

■ Effect: for over half a century, the Supreme Court did not establish any rule
of procedure for the recognition and enforcement of foreign arbitral awards.
Hence, international arbitral awards were still treated as foreign judgments.
THE PRESENT

■ 2 April 2004: ADR ACT OF 2004

■ Korea Technologies v. Lerma, 542 SCRA 1 (2008)
– Both Domestic Arbitration and International Arbitration
must have their own rules of procedure
■ 1 September 2009: Special Rules of Court on ADR (SADR)
 THE PRESENT: SADR

■ Nature of Proceedings
■ Venue
■ Doctrine of Separability
■ Commencement of Action for Recognition and Enforcement for
Foreign Arbitral Awards
■ Filing Fees – Mijares v. Ranada, 455 SCRA 397 (petitions for
recognition of foreign arbitral awards is a “similarly situated instance”
as an action for recognition and enforcement of a foreign judgment)
THE PRESENT: SADR

■ Grounds for Refusal of Recognition and Enforcement of Foreign Arbitral

Awards (Read: Rule 13:4, SADR)
– Grounds are exclusive.
■ May the RTC annul a foreign arbitral award? (See: Rule 19.11, SADR)
■ May RTC recognize and enforce a foreign arbitral award made in a country that
is not a party to the New York Convention? (See: Rule 13.12, SADR)
■ When may an appeal be made?
– Denial
– Grant
THE PRESENT: Pitfalls

■ No provisions that categorically state that foreign arbitral awards are

conclusively binding in the Philippines.
– See: NPC v. Alonzo-Legasto, 443 SCRA 342 (2004): An arbitration award is
not absolute and (not) without exceptions; “where the conditions described
in Articles 2038, 2039 and 2040 of the Civil Code, the arbitrators award may
be annulled.”
■ SADR (Rule 13.12, SADR) distinguishes between foreign arbitral awards
rendered by a country party to the Convention and a non-Convention party.
Rule 13.12 implies that if the country is not a party to the Convention,
foreign arbitral awards rendered by it shall only be “presumptively valid”.
THE FUTURE: Revision of 1997 Rules of Court: First Draft, 30 May
2013

Sec. 4.49. Effect of a foreign arbitral award. – The judgment or final order of a foreign arbitral body
having jurisdiction to render the judgment or final order shall be binding and conclusive on the
parties. An action for confirmation (???) and enforcement of a foreign arbitral award shall be
subject to the following:

(a) Foreign arbitral award to subject to court review. – A foreign arbitral award shall not be subject
to judicial review. Any judicial inquiry will be limited to the question of whether there was an
agreement to arbitrate or whether the arbitration was conducted in a lawful manner;

(b)Confirmation of foreign arbitral award. – A court must confirm a foreign arbitral award unless:
(1) It is shown that there is no valid agreement to arbitrate;
(2) It is shown that the arbitration was conducted in an unlawful manner or not in accordance with the
agreement of the parties;

(c) The award is attended by fraud, collusion or a clear mistake of fact or law.
THE FUTURE

■ International Arbitration Law is almost 100 years old.

■ International trade is expected to grow exponentially.
– Globalization killed distance and wiped out international trade
boundaries.
■ Dispute resolution leans towards ADR that is “least detrimental to
business.”
■ The law is never static.
■ Expect ADR to evolve along these directions.