Involved in Arbitration / ADR? We know the different processes. We can help you dissect and analyze them, refine and combine them, create hybrid procedures to make them suitable for particular relationships, as well as develop strategies and point you to the right direction. Philippine Institute of Arbitrators
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• Arbitration is a device whereby thesettlement of a question, which is of interest for two or more persons, isentrusted to one or more other persons – the arbitrator or arbitrators- who derive
their powers from a private agreement,not from the authorities of a State, andwho are to proceed and decide the case onthe basis of such an agreement –
In arbitration the parties create their owntribunal. They appoint their “judges”, craftthe procedure; agree on several categoriesof choice. As creators they own thetribunal; as owners and creators they canshape the tribunal to what they want it to
be. As owners and creators they pay theexpenses of the tribunal that they created.The arbitrators are akin to temporaryemployees whose job description is to
• Principle of Finality of Award isContractual “x x x arbitrators are judges chosen by the
parties to decide the matters submitted to. them, finally and without appeal x x x” (Burchell v Marsh, 58 U.S.. 344, 15 L.Ed.96 (1854).
“The essence of the arbitration process isthat an arbitral award shall put the disputeto rest x x x. Arbitral finality is a corecomponent of the parties’ agreement to
“The Arbitral Tribunal shall at all times adopt the
most expeditious procedure for the introductionand reception of evidence, and SHALL HAVECOMPLETE CONTROL OVER THE PROCEEDINGS,but in any case shall afford full and equal
opportunity to all parties to present relevantevidence” (CIAC Rules Sec. 13.4).
“The CIAC shall have original and exclusive jurisdiction over
disputes arising from, or connected with, contracts entered into byparties involved in construction in the Philippines, whether thedispute arises before or after the completion of the contract, orafter the abandonment or breach thereof. These disputes mayinvolve government or private contracts. For the Board to acquire jurisdiction, the parties to the dispute must agree to submit thesame to voluntary arbitration.” (E.O. 1008, Chapter IV, Sec. 4).
“Any dispute arising in the course of theexecution of this Contract y reason of differences in interpretation of theContract Documents which the OWNER and the CONTRACTOR are unable toresolve between themselves, shall besubmitted by either party for resolution of decision to a Board of Arbitrators x x x.”
payment for several items under theircontract x x x involves a dispute arisingfrom differences in interpretation of thecontract. Verily, the matter of ascertaining
the duties and obligations of the partiesunder their contract all involveinterpretation of the contract.”
In short, the determining factor is whether or notthe contract involved is a construction contractwith an arbitration clause.
“The payments, demand and disputed issues x x xall arose because of the construction activitiesand/or are connected or related to theseactivities. x x x Attorney’s fees and interests
payment, on the other hand, are costs directlyincidental to the dispute.”
“Parties may continue to stipulate as regardstheir preferred forum in case of voluntaryarbitration, but in so doing, they may not divestthe CIAC of jurisdiction as provided by law. x x x.
The law in effect, automatically gives the partiesan ALTERNATIVE forum before whom they may
• In arbitration (agreement based), the use by theTribunal of so-called “secret evidence” in decidinga dispute results to due process and right to beheard issues, hence providing for a ground tovacate the award.
• That is so because arbitration is evidentiary. Or,as frequently stated: “The Tribunal is not allowed
• The use by the Tribunal of “secret evidence” mayresult to due process and right to be heard issues,hence providing for a ground to vacate the award.
• It amounts to “refusing to hear evidencepertinent and material to the controversy” indomestic arbitration (R.A. 876 Sec. 24) or a partybeing “otherwise unable to present his case” in
international arbitration (Model Law Art. 34.2(ii)). Similar provisions in R.A. 9285 and New York Convention
evidence” because the issue is “legal”, nottechnical. CIAC awards are appealable onissues of law and we can expect thereviewing authority, the Court of Appeals,
• In the Philippines and by a 1990 jurisprudence, a generalincorporation clause in a contract will suffice toincorporate an arbitration agreement contained inanother instrument.
“Clearly, the Bill of Lading incorporates by referencethe terms of the Charter Party. x x x. This shouldinclude the provision on arbitration even without aspecific stipulation to that effect.” (National Union FireInsurance Company of Pittsburg, PA/AmericanInternational Underwriter (Phil.) Inc., vs. Stolt-NielsenPhilippines, Inc. and Court of Appeals, G.R. No. 87958,
– The liberal view is that a mere reference to acontract containing an arbitration clause wouldnot of itself be sufficient to incorporate andarbitration clause.
– The strict view, said to be the prevalent view,requires a specific reference to an arbitrationclause for an arbitration agreement to bevalidly incorporated by reference.
– Arbitration clauses amount to a waiver of theright to go court, hence the waiver must beclear
– Arbitration clauses are merely ancilliary orcollateral, hence not germane, to the main
contract – With respect to transferable documents of title,the transferee could not reasonably beassumed to know that the incorporatedinstrument has an arbitration clause(innumerable foreign cases).
With the change in the law, it is now reasonableto assume that, at least in international
arbitration, there would be a change in theprevailing jurisprudence involving incorporationclauses.
“In interpreting the Model law, regard shallbe had to its international origin and to the needfor uniformity in its interpretation x x x.” (ModelLaw Sec. 20)
• Model Law Art. 7 was not one of the provisionsmade applicable to our domestic arbitration law.
“Arts. 8, 10, 11, 12, 13, 14, 18 and 19 and 29 to32 of the Model Law and Sections 22 to 31 of the preceding Chapter 4 shall apply to domesticarbitration.” (R.A. 9285 Sec. 33).
– If losses and expenses result from delay/s and/ordisruption/s caused by a number of differentevents in such a way that it is impossible toseparate out the consequences of each of thoseevents, the contractor does not need to establishcausal links between individual events andparticular loss if he can demonstrate that all of the events relied upon are in law the
responsibility of the employer (LaingManagement (Scotland) Ltd v John DoyleConstruction Ltd, Building Law Reports (2004) p296.
“A common example occurs when a contractor contendsthat delay and disruption have resulted from a combinationof the late provision of drawings and information anddesign changes instructed on the employer’s behalf; in sucha case all of the matters relied on are the legalresponsibility of the employer.”
“x x x it is impractical to disentangle that part of the losswhich is attributable to each head of claim”.
• What we did, instead, was to rely on theprovisions of law on temperate and moderatedamages.
• Doing so is compatible with the rules involvingglobal claims and also with Philippine law. Thatis, asserting a global claim will not deprive theTribunal of its jurisdiction to make the necessary
assessment, based on the concept of reasonableness and apportionment as far aspracticable.
– On the other hand, asserting a global claim willnot violate the proposition that there should be
a “cause and effect” link between the breachesand the loss. The claimant will still have toallege and prove that the other partycommitted several breaches and that the
claimant suffered loss and damage as a result.However, due to the interaction andcomplexity of the several breaches, it may bedifficult, if not impossible, to identify whichloss could be attributed to each breach.
• Parting Shot: In a way, the following provisionsof law appear to allow something similar to aglobal claim:
“If the person obliged to do something failsto do it, the same shall be executed at his cost” (NCC Art. 1167).
“The same rule shall be observed if he doesit in contravention of the tenor of the obligation.Furthermore, it may be decreed that what hasbeen poorly done be undone.” (NCC Art. 1168).