Kheynan C.

Calvez Llb-II
CHAPTER 4: INTERNATIONAL COMMERCIAL ARBITRATION
R.A. 9285 AND THE MODEL LAW: CONVERGENCE?
The UNCITRAL Model Law on International Commercial Arbitration (The Model Law) was
adopted by the United Nations Commission on International Trade Law (UNCITRAL) on June
21, 1985. The Model Law constitutes a sound basis for the desired harmonization and
improvement of the national laws. It covers all stages of the arbitral process from the
arbitration agreement to the recognition and enforcement of the arbitral awards and
reflects a worldwide consensus on the principles and important issues of international
arbitration practice. Since its adoption by UNCITRAL, the Model Law has come to represent
the accepted international legislative standard for a modern arbitration law and a
significant number of jurisdictions have enacted arbitration legislation based on the Model
Law.
In the Philippines, the Republic Act 9285 incorporated the UNCITRAL Model Law, as
evidenced by Sections 19 and 20 of Chapter 4 of the latter law.
SEC. 19. Adoption of the Model Law on International Commercial Arbitration.
International commercial arbitration shall be governed by the Model Law on International
Commercial Arbitration (the Model Law) adopted by the United Nations Commission on
International Trade Law on June 21, 1985 (United Nations Document A/40/17) and
recommended for enactment by the General Assembly in Resolution No. 40/72 approved
on December 11, 1985, copy of which is hereto attached as Appendix A.
SEC. 20. Interpretation of Model Law. In interpreting the Model Law, regard shall be
had to its international origin and to the need for uniformity in its interpretation and resort
may be made to the travaux preparatories and the report of the Secretary General of the
United Nations Commission on International Trade Law dated March 25, 1985 entitled,
International Commercial Arbitration: Analytical Commentary on Draft Trade identified by
reference number A/CN. 9/264.
International commercial arbitration has opened the doors for the Philippines to be to be a
seat for international commercial arbitration. Thus, it can now be said that the Philippines
has become an arbitration-friendly country..
SALIENT FEATURES
International commercial arbitration becomes such if it covers matters arising from all
relationships of a commercial nature, whether contractual or not. These relationships are
enumerated by the law under the same provision.

A.

Interpretation of the Act

The law provides that in interpreting R.A. No. 9285, the courts are directed to give due
regard to the policy of favoring arbitration. Where action is commenced by or against
multiple parties, one or more of whom are parties to an arbitration agreement, the court
shall refer to arbitration those parties who are bound by the arbitration agreement
although the civil action may continue as to those who are not bound by such arbitration
agreement.

B.

Legal Representation in International Arbitration

Section 22 provides that in international arbitration conducted in the Philippines, a party

may be presented by any person of his choice. Provided, that such representative, unless
admitted to the practice of law in the Philippines, shall not be authorized to appear as
counsel in any Philippine court, or any other quasi-judicial body whether or not such
appearance is in relation to the arbitration in which he appears.
Consistent with the Philippines intention to be an international commercial arbitration
center, this provision allows foreign lawyers, though not admitted to practice law in the
territory of the seat of the arbitration, to represent a party before the international arbitral
tribunal. Such foreign lawyers fall within the scope of any person and any interpretation
to the contrary would defeat the spirit of the law.
To summarize the above-quoted, allowing foreign lawyers to represent a party before an
international arbitral tribunal does not tantamount to a surrender of sovereignty and in
fact would be more beneficial not only to the image of the Philippines as an international
commercial arbitration center, but also to the local bar as it exposed them to a new
dimension of practice of law.
C.

Confidentiality of Proceedings

Section 23 of the ADR Law expressly declares arbitration proceedings, including the
records, evidence, and arbitral award, to be confidential and shall not be published except
(1) with the consent of the parties, or (2) for the limited purpose of disclosing to the court
of relevant documents in cases where resort to the court is allowed herein.
Absent in the Republic Act No. 876 or Philippine Arbitration Law, this provision is highly
welcomed by businessmen who want to settle their commercial disputes unnoticed by the
general public and to safeguard their trade secrets and strategies.
At the same time, the provision sets out the grounds in which the courts may issue a
protective order to prevent or prohibit disclosure of documents or information containing

secret processes, developments, research and other information where it is shown that the
applicant shall be materially prejudiced by an authorized disclosure thereof.
D.

Referral to Arbitration

The ADR Law provides that a court before which an action is brought in a matter which is
the subject matter of an arbitration agreement shall, if at least one party so requests not
later that the pre-trial conference, or upon the request of both parties thereafter, refer the
parties to arbitration unless it finds that the arbitration agreement is null and void,
inoperative or incapable of being performed.
It must also be noted that under the above-quoted provision, referral is dependent on the
requests. The latter can only be done in two ways: first, request made by at least on party
not late than the pre-trial conference, and second, request made both parties after the
pre-trial conference. Now, absent these requests, the court cannot refer the parties to
arbitration except upon the courts finding that the arbitration agreement is null and void,
inoperative or incapable of being performed.

E. Appointing Authority
The ADR Law defines appointing authority as used in the Model Law, which refers to the
person or institution named in the arbitration agreement as the appointing authority; or
the regular arbitration arbitration institution under whose rules the arbitration is agreed to
be conducted. Where the parties have agreed to submit their dispute to institutional
arbitration rules, and unless they have agreed to a different procedure, they shall be
deemed to have agreed to procedure under such arbitration rules for the selection and
appointment of arbitrators. In ad hoc arbitration, the default appointment of an arbitrator
shall be made by the National President of the Integrated Bar of the Philippines (IBP) or his
duly authorized representative.
There is nothing controversial in this provision except that the National President of the IBP
or his duly authorized representative, as appointing authority, must be wary about
exercising such authority. It must be exercised with wisdom and under the principles of
independence, impartiality or neutrality, and transparency. It must be recognized the
human decision-making is highly prone to prejudice and the appointing authority must
ensure that the arbitration practice in the Philippines is ran by competent and credible
arbitrators.
F. Place and Venue of Arbitration

Section 30 of the ADR Law provides that the parties are free to agree on the place of
arbitration. Failing such agreement, the place of arbitration shall be in Metro Manila, unless
the arbitral tribunal, having regard to the circumstances of the case, including the
convenience of the parties shall decide on a different place of arbitration.
It is widely recognized that in international commercial arbitration, parties may agree to
conduct the arbitration proceedings in a place that guarantees impartiality or neutrality.
However, when parties fail to agree, resort is had to the tribunal having regard to
circumstances of the case and convenience of the parties. In addition, the law also
provides that absent any agreement between the parties and any decision of the tribunal
as the venue, the place or venue of arbitration shall be in Metro Manila.
G. Interim and Provisional Measures of Protection
The ADR Law expanded the powers of the arbitrators and defined clearly the role of courts,
as well as the arbitral tribunal, in the issuance and enforcement of interim/conservatory
measures.
Courts are permitted, as a rule, to grant interim and provisional reliefs during the
pendency of arbitral proceedings. It is also recognized that arbitral tribunals are
authorized authority to grant interim measures such as preliminary injunction,
appointment of receivers, detention, preservation and inspection of property, among
others. Even granting that both the courts and the arbitral tribunal are given the same
power, parties cannot avail of these simultaneously. Court has only authority to grant
interim measures to the extent that the arbitral tribunal has no power to act or is unable
to act effectively. The law does not provide for concurrent power of the courts and the
arbitral tribunal to grant interim measure of protection. The court must exercise this power
sparingly, giving way or precedence to the exercise thereof by the arbitral tribunal.
The ADR Act provides in Section 28, paragraph (a) that: It is not incompatible with an
arbitration agreement for a party, before constitution of the arbitral tribunal, to request
from a Court an interim measure of protection and for the Court to grant such measure.
After constitution of the arbitral tribunal and during arbitral proceedings, a request for an
interim measure of protection, or modification thereof, may be made with the arbitral
tribunal or to the extent that the arbitral tribunal has no power to act or is unable to act
effectively, the request may be made with the Court.
Section 29 appear to extend and widen the scope of powers found in Section 28 although
it is more a case of an elaboration of the powers set out in Section 28. Section 29
specifically refers to the granting of preliminary injunctions but includes also the power to
appoint a receiver, powers of detention and preservation and inspection of property, which
is the subject matter of the arbitration. Helpfully, Section 29 makes clear that a party may
seek the courts assistance in enforcing the interim orders of an arbitral tribunal.

I. Recognition and Enforcement of Foreign Arbitral Award

Section 42 of the ADR Law provides that the New York Convention shall govern the
recognition and enforcement of arbitral awards covered by the said Convention. In
addition, it provides that the recognition and enforcement of such arbitral awards shall be
filed with regional trial court in accordance with the rules of procedure to be promulgated
by the Supreme Court. Moreover, the applicant is required to establish that the country in
which foreign arbitration award was made is a party to the New York Convention.
Under this provision, arbitral awards in International Commercial Arbitration are readily
enforced pursuant to the New York Convention of 1958 unlike in other foreign judgments.
Participant countries to the Convention are obliged to enforce arbitral awards as if they
were made domestically, subject to limited grounds on which enforcement may be
refused.
Attention must also be given to Section 43, which actually deals with the recognition and
enforcement of non-New York convention awards. Unlike Section 42, this section gives
consideration and attends to the recognition of non-New York Convention awards, which
must be in accordance with the procedural rules to be promulgated by the Supreme Court.
However, the provision refers to international comity and reciprocity as grounds for the
recognition of such awards.
Another provision worth discussing is Section 44, which distinguishes a foreign arbitral
award from a foreign judgment. It is widely known that foreign judgments are generally
not enforceable in other jurisdictions except in cases of reciprocity and comity. On the
other hand, arbitral awards are more readily enforceable. The law provides that a party
applying for the enforcement of the arbitral award only needs to file with the Regional Trial
Court the original or duly authenticated copy of the award and the arbitration agreement.
The law also provides that a foreign arbitral award, when confirmed by the RTC, shall be
enforced in the same manner as final and executory decisions of courts of law of the
Philippines.
Indeed, this provision highlights the rationale why arbitration is considered the preferred
alternative in the international setting.

CONCLUSION

The enactment of the Alternative Dispute Resolution Act of 2004 (Republic Act No. 9285),
adopting the provisions of the Model Law, has paved the way to make Philippines one of
the international commercial arbitration in Asia. The law was indeed adopted not only to
address the perennial problems besetting the Philippines courts system like the clogged
court dockets, slow-paced litigation process, and costly litigation, but also to adjudicate
international disputes arising from the increasing number of international commercial
transactions. More importantly, the law was adopted to pave the way for transacting
parties to make their own arrangements in settling their disputes without seeking the
intervention of the courts.
Indeed, the ADR Law has made promises and being a relatively new law, with its
Implementing Rules and Regulation promulgated in the late 2000s, there is more to expect
in its implementation by competent and credible arbitrators and arbitration institutions
and in the interpretation of its provisions by the Supreme Court. Indeed, its
implementation is still in its initial stage.
There is a need to introduce arbitration to the general public as an alternative method of
dispute resolution. Millions of Filipinos may, until now, have little awareness of arbitration
as an alternative method of dispute resolution. And that is the reason why every time they
engage in a dispute, it is almost automatic to them to file a case in court. Thus, efforts
must be made to make it well-known and widely-practiced.
To encourage foreign parties to resort to arbitration in the Philippines, the courts must
provide minimal assistance to the arbitration proceedings. Unbridled intervention of the
courts in arbitration proceedings will consequently prevent parties from resorting to
arbitration and preclude foreign parties from choosing the Philippines as venue for
arbitration.
Finally, as an international commercial arbitration center, Philippines has long way to go.
Efforts must be exerted by the government to improve the image of the Philippines and to
promote it as the seat of international commercial arbitration in Asia. The government
must show that Philippines is highly conducive to international commercial arbitration by
showing to them that Philippines highly values transparency, neutrality and impartiality,
and independence of judgment, and that only competent, conscientious and credible
arbitrators are appointed to handle arbitration proceedings.
Singapore and Hongkong may be ahead for now, but once the ADR centers in the
Philippines have been fully equipped, who knows Philippines might be the premiere center
for international commercial arbitration not only in Asia but also of the world?