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Involved in Arbitration / ADR?We know the different processes.

We can help you dissect and analyze themrefine and combine them and create hybridprocedures to make them suitable forparticular relationships as well as to developstrate!ies and point you to the ri!ht direction."isit us at #www.philippinearbitrators.or!$

%hilippine Institute of Arbitrators

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COMPREHENDING PARTY AUTONOMY IN THE RESOLUTION

OF PRIVATE DISPUTES AND COMPREHENDING

ARBITRATIONSBY

MARIO E. VALDERRAMA LLB, FCIARb, FHKIArb, FPIArbCIArb Approved Tutor

PDRCI Accredited Arbitr tor CIAC Accredited Arbitr tor

!E"M Accredited Arbitr torAppe #ed C $e$ Medi tor

Co%t ct Det i#$

Te# &o '() *++ - Te#e / '(0 1()Mobi#e +2 ) * * 32*E45 i# 65 rv #.# 7895 i#.co5:

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PART ONE

()*%R+,+-DI- %AR& A0&)-)* I-&,+ R+1)20&I)- )3 %RI"A&+ DI1%0&+1

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PARTY AUTONOMY:CONCEPT AND NATURE

R.A. 4567 defined it as 8the freedom of theparty 9should be parties: to make their ownarran!ements to resolve their disputes; 9see1ec. 5:.

It is contractual by nature.

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INHERENT OR GRANTEDRIGHT?

It is an inherent ri!ht. %arties entered intocontracts even before !overnments andcourts came into bein!.

Accordin!ly the law affirmed rather than!ranted the ri!ht or freedom.

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BASIS

&he basis is the underlyin! concept behindthe freedom to contract< a party who reachedthe a!e of ma=ority is an adult and is

presumed to have sufficient discretion tomake informed decisions.,e may therefore create le!al relations bycontract.In the same manner he also has the freedomto make his own arran!ements in resolvin!his private disputes.

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TEST OF VALIDITY OFDISPUTE RESOLUTIONCLAUSES A!ain contractual.

It is valid if valid as a contract.-ote< *ost of the !rounds to challen!e the

=urisdiction of an arbitral tribunal and many ofthe !rounds to challen!e an award are!rounds to attack a contract or based on

contractual precepts. &he other !rounds arebased on the =udicial constituent element ofan arbitration.

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THE PROPER APPROACH:Clearing U! "#e C$n%&'i$n

T;e proper ppro c; i$ to pp#.

T;e 7ro%9 ppro c; 7i## re$u#t to t;e

7ro%9 co%c#u$io%$.

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THE CORRECT APPROACH

T;e correct ppro c; i$ to #oo t t;e co%tr ctir$t, %d t;ere ter deter5i%e i t;e co%tr ctco%tr ve%ed 5 %d tor< provi$io%$ o # 7.

I% 9ree5e%t b $ed rbitr tio%, our e/ 5p#e,t;e co%tr ct i$ to bide b< t;e deci$io% o t;erbitr # tribu% #. T;e co%c#u$io%, t;ere ore, i$

t; t 5erit$ revie7 i$ %ot v i# b#e.

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THE APPLICABLE RULES

&he applicable rules are the contractualprecepts.)ur interest as a !eneral proposition shouldbe on6 also -(( Art. 5C 7.9*a!ellan (apital *ana!ement (orporationvs. Eosa 77 1(RA >7F G5CC>H:

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DYNAMICS: ILLUSTRATION

In an arbitration the parties cannot a!ree onwhether or not the award shall be a reasonedaward. *ay the arbitrator in the e ercise ofhis discretion insist that the award shall bewithout reason?

Answer< -o. &he default le!al provision isthat the award should be with reasons. B see*A2 Art. >.5@ also R.A. 4567 1ec. .

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DYNAMICS: ILLUSTRATION

In an I(( arbitration the parties a!reed thatthe award shall be without reason. "alid?

Answer< -o. 0nder I(( Rules the rule thatthe award should be with reasons ismandatory. B see 9old: I(( Rule Art. 57.5.

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S"e!' in E.er-i'ing Par"+ A&"$n$*+

C;oo$e t;e 5ode o di$pute

re$o#utio%

A9ree o% t;e ru#e$ %d procedure$t; t 7i## 9over% t;e c;o$e% 5ode.

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FIRST STEP

&he first step involves makin! a choice fromamon! the different modes of dispute resolution.

-ote that the choices involve varyin! de!rees ofparty control from almost unlimited to almostnone.

-ote also that in certain instances the partieshave limited choices or no choice at all.

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FIRST STEP: T#e Di'!&"eRe'$l&"i$n S!e-"r&*

-on Jurisdictional and ADRAvoid %ce, vio#e%ce, c; %ce&e9oti tio%

Co%ci#i tio% %d Medi tio%Ot;er ADR or5$"peci # Me%tio% Ad udic tio%

uri$dictio% #Arbitr tio%

"t tutor< Arbitr tio%

Liti9 tio%

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SECOND STEP

&he second step is more complicated.

1ample (lause rbitr tio% i %< o t;ee#e5e%t$ i$ %ot pre$e%t.

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CLEARING THECONFUSION:

"TAT TE BA"ED ARBITRATIO&"

1ub (lassification

Optio% # 4 %eed$ $tipu# tio% to rbitr te, e.9.CIAC %d vo#u%t r< # bor rbitr tio%$

I5po$ed doe$ %ot reJuire 9ree5e%t torbitr te, e.9. co%$u5er %d co5pu#$or< # borrbitr tio%$

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CLEARING THE CONFUSION: AGREEMENT BASED ARBITRATION

Co%tr ctu #- $

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ARBITRATION

(ontractual -ature

Arbitration is a creature of contract not oflaw. It is based on the contract principle ofparty autonomy or the will of the partiese pressed as the freedom to contract.

,ence the !overnin! law affirmed ratherthan !ranted the ri!ht to choose arbitration.

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ARBITRATION

Co%tr ctu # & ture B $i$

A% du#t i$ pre$u5ed to ; ve $u icie%t

di$cretio% ;e%ce c p b#e o 5 i%9 i% or5eddeci$io%$.

He c %, t;ere ore, 5 e rr %9e5e%t$ 7it; ;i$cou%terp rt to re$o#ve t;eir di$pute$ i% t;e $ 5e5 %%er t; t ;e %d ;i$ cou%terp rt c % cre te#e9 # re# tio%$ b< co%tr ct.

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ARBITRATION

(ontractual -ature