Alternative Dispute

Resolution
 Presentation Outline

▧ Introduction
▧ Why ADR?
▧ ADR types
▧ Concepts and Procedure
▧ Arbitration
▧ Mediation
▧ Question Time (with prizes!)
 1.
Introduction
Why ADR
ADR in the PH
 Why ADR? Why not?
ADVANTAGES
▧ Confidentiality
▧ Shorter time-scale
▧ Can appoint arbitrators
▧ More flexibility in the
conduct and selection of
rules that govern
proceedings
▧ Finality of award
▧ Guarantee of impartiality,
fairness, independence of
arbitrators
DISADVANTAGES
▧ Final decision is difficult
to overturn even if
erroneous
▧ Cost of arbitration has
risen dramatically
▧ Some pieces of
evidence, which would
be inadmissible under
the ROC, may be
admitted by the arbital
tribunal
ADR in the Philippines: Pertinent Laws

▧ Civil Code of the Philippines (Title XIV)

▧ R.A. 876 (Arbitration Law)
▧ R.A. 9285 (Alternative Dispute Resolution
Act of 2004 - ADR Act)
▧ Supreme Court A.M. No. 07-11-08-SC
issued on 01 September 2009 (Special
Rules of Court on Alternative Dispute
Resolution)
▧ DOJ Issued IRR of the ADR Act of 2004
ADR in the Philippines: Pertinent Laws

▧ Executive Order No. 78 (2012) mandated

the inclusion of provisions of the use of
ADR mechanisms in all contracts involving:
○ Public-Private Partnership Projects
○ Build-Operate and Transfer Projects
○ Joint Venture Agreements between Government
and Private Entities
○ Agreements entered into by Local Government
Units
▧ Piatco Case in the ICC in Singapore
ADR in the Philippines: Pertinent Laws

▧ The Philippines is a signatory to the

Arbitration Rules of the UNCITRAL Model
Law
▧ The ADR Law of 2004 has adopted in its
entirety the UNCITRAL Model Law (Model
Law)
 ADR in the Philippines: Types

▧ Arbitration
▧ Mediation
○ Court Annexed Mediation (CAM) and Mobile
Court Annexed Mediation (Justice on Wheels!)
○ Judicial Dispute Resolution (JDR)
▧ Neutral or Early Neutral Evaluation
▧ Mini-Trial
▧ Mediation-Arbitration (Med-Arb)
 17 cases
Handled by PDRCI as of 2014

46 cases to 61 cases
Handled by CIAC (2013 and 2014)

859
Total cases filed with CIAC (682/859 resolved)
 1I.
Concepts and Procedure
Arbitration
Mediation
ARBITRATION
What may not be subject to arbitration?

▧ Labor disputes covered by the Labor Code

▧ Civil status of persons
▧ Validity of marriage
▧ Any grounds for legal separation
▧ Jurisdiction of courts
▧ Future legitime
▧ Criminal liability
▧ Future support
 Arbitration in the Philippines

▧ Construction Industry Arbitration

Commission (CIAC)
▧ Philippine Dispute Resolution Center, Inc.
(PDRCI)
○ Most commonly administers arbitration
proceedings involving all kinds of subject matter
except construction contracts
▧ ICC International Court of Arbitration
▧ Singapore International Arbitration Centre
▧ Hong Kong International Arbitration Centre
 Arbitration in the Philippines

▧ The Philippines is a signatory to the

Arbitration Rules of the UNCITRAL Model
Law
▧ The ADR Law of 2004 has adopted in its
entirety the UNCITRAL Model Law (Model
Law)
PROCEDURE
 Arbitration in the Philippines

▧ General Rule: an arbitration agreement is

consensual and therefore only binding on
the contracting parties.
▧ Exceptions:
○ Section 7(2), UNCITRAL Model Law)
○ Rule A.6, Special Rules of Court on ADR
(Guidelines for the Resolution of Issues Related
to Arbitration of Loans Secured by Collateral)
 Arbitration in the Philippines

“Any controversy or claim arising out of or

relating to this contract, or the breach thereof,
shall be settled by arbitration”
 Referral to ADR (Rule 4)

▧ A party to a pending action (Security Bank)

▧ Order referring to ADR: o reconsideration, appeal or
certiorari (i.e. immediately executory)
▧ (Rule 4.7) Court cannot decline on the following
reasons:
○ Not all disputes of the action may be arbitrated
○ Not all of the parties are bound by the arbitration
agreement
○ Issues raised could be speedily/ efficiently resolved
elsewhere
○ Seems not the prudent action
○ Stay of action would prejudice rights of parties to civil
action not bound by arbitration agreement
 Referral to ADR (Rule 4)

▧ Despite pendency of the action referred to (i.e. the

proceeding to refer the case to ADR) the arbitration
proceedings may be commenced or continued (Rule
4.8)
▧ Contents: (Rule 4.3)
○ Form of a Motion
○ Shall include notice of hearing (i.e. it would be Security Bank
who will schedule the hearing not the court motu proprio)
○ Serve this also to the responden
▧ Comment/ Opposition must be filed within 15 days
from service of petition
Judicial Relief (Rule 3)
▧ Before or after commencement
of arbitration (filed any time prior
to commencement)
BEFORE COMMENCEMENT
▧ Applies only if place of arbitration
is in the PH
▧ ANY party questioning existence
and validity of arbitration
agreement
▧ RTC where place any of petitioner
or respondent has principal place
of business
Judicial Relief (Rule 3)

BEFORE COMMENCEMENT
▧ prima facie determination by
court upholding validity of
arbitration agreement shall not be
subject to MR/appeal/certiorari
▧ but this determination does not
prejudice right of any party to
raise the same issue re:
agreement before the arbital
tribunal or in a petition to vacate
award
Judicial Relief (Rule 3)

AFTER COMMENCEMENT
▧ Applies only if place of arbitration
is in the PH
▧ ANY party questioning existence
and validity of arbitration
agreement
▧ RTC where place any of petitioner
or respondent has principal place
of business
Judicial Relief (Rule 3)

AFTER COMMENCEMENT
▧ ANY party to the arbitration
▧ Judicial relief on the ruling of the
arbital tribunal on a preliminary
question upholding/ declining its
jurisdiction
▧ Filed within 30 days after
receiving the tribunal ruling
▧ RTC where arbitration is/
principal place of business of
parties
Judicial Relief (Rule 3)

AFTER COMMENCEMENT
▧ Aggrieved party cannot seek
judicial relief to question deferral
▧ Must await final arbital award
before judicial recourse
▧ Ruling of tribunal deferring on
resolving jurisdiction: no MR, no
appeal, no petition for certiorari
▧ Tribunal is only a nominal party
Arbitration in the Philippines

Chattel Mortgage on the car

Guidelines on Loans Secured by Collateral: Rule A

▧ Extends to accessory contract

securing such loan such as
pledge/ mortgage
▧ Foreclosure is not precluded by
arbitration
▧ BUT agreeing to refer any
dispute under contract of loan
to arbitration, the lender who is
secured by accessory contract
of real estate mortgage shall be
deemed to have waived right of
judicial foreclosure
 Guidelines on Loans Secured by Collateral: Rule A

REMEDY BEFORE CONSTITUTION

▧ Apply with appropriate court for
interim relief against such action of the
lender
▧ Must be obtained in a special
proceeding for that purpose against
action taken by the lender
▧ Any determination of the court in the
special proceeding is only provisional in
nature
 Guidelines on Loans Secured by Collateral: Rule A

REMEDY AFTER CONSTITUTION

▧ Includes claim for damages
▧ An arbitration agreement in a contract
of loan precludes the borrower therein
providing security for the loan from
filing and/or proceeding with any action
in court to prevent the lender from
foreclosing the pledge or extra-
judicially foreclosing the mortgage.
 Guidelines on Loans Secured by Collateral: Rule A

▧ Arbital Tribunal can also provide

relief!
○ Upon submission of adequate security
○ Suspend/ enjoin lender from
proceeding against collateral securing
the loan pending final determination by
the arbital tribunal of the dispute
brought to it
○ Can also resolve issue of validity of
foreclosure if the same has not been
foreclosed
○ Can also confirm validity of such
foreclosure if made before rendition of
award
 Guidelines on Loans Secured by Collateral: Rule A

▧ Arbitration involving a Third-

Party Provider of Security
○ The accessory contract securing the
loan
○ ONLY IF such 3rd party securing the
loan agreed to the accessory contract
to be bound by such arbitration
agreement
○ Different way of choosing the
arbitrator/s
Arbitration in the Philippines

ARBITRATION PROPER
Interim Measures of Protection (Rule 5)

▧ Any party may ask

▧ RTC which has jurisdiction over
the following:
○ Principal place of business
○ Where parties of individual
resides
○ Where any of the acts sought to
be enjoined are being performed,
threatened to be performed, or
not being performed
○ Real property subject to
arbitration is situated
Interim Measures of Protection (Rule 5)
▧ Prior notice may be dispensed with in
certain cases (Rule 5.7)
▧ Court cannot deny assistance based
on:
○ Granted ex parte
○ Party opposing application found new
material evidence
○ Measure of protection amends,
revokes, modifies or is inconsistent
with earlier measure of protection
issued by the court
▧ If there is sufficient merit in the
opposition, court must refer the
matter back to the arbitral tribunal
Interim Measures of Protection (Rule 5)
▧ Prior notice may be dispensed with in
certain cases (Rule 5.7)
▧ Court cannot deny assistance based
on:
○ Granted ex parte
○ Party opposing application found new
material evidence
○ Measure of protection amends,
revokes, modifies or is inconsistent
with earlier measure of protection
issued by the court
▧ If there is sufficient merit in the
opposition, court must refer the
matter back to the arbitral tribunal
Arbitration in the Philippines

ARBITRATION PROPER
Choosing the Arbitrator/s

▧ Rules 6, 7, 8 deal with the process

in choosing an arbiter, ousting
one as well as terminating his/her
mandate
▧ rules also give instances when the
court may act as Appointing
Authority (i.e. the one choosing)
▧ DOJ IRR gives the method on
how to choose the arbitrator
RULES ON CONFIDENTIALITY AND EVIDENCE

▧ Rules 9 and 10 govern these

▧ Rule 9: May request the court for
assistance in obtaining evidence
○ May request any time, as the need arises
○ Request with RTC where arbitration is taking
place/ residence of witnesses/ where evidence
may be found
○ Type of assistance
▧ Rule 10: Request that specific information
remain confidential
Arbitration in the Philippines

DECISION HAS BEEN MADE!

CONFIRMATION, CORRECTION,
VACATION OF AWARD
 Domestic
Example of a ground when a court
may set aside or refuse enforcement
of arbitral award.
 DOMESTIC ARBITRAL AWARDS

▧ Confirmation
▧ Correction/ modification
▧ Vacation
▧ Petition to vacate in opposition to a
petition to confirm
▧ Petition to confirm in opposition to a
petition to vacate
 DOMESTIC ARBITRAL AWARDS
GROUNDS TO VACATE
▧ Procured through corruption,
fraud or undue means
▧ Evident partiality/ corruption
in the arbitral tribunal
▧ Tribunal is guilty of
misconduct
▧ One or more of the arbitrators
were disqualified to act
▧ Arbitral tribunal exceeded
power
▧ Agreement did not exist
▧ Minor/ incompetent party
GROUNDS TO CORRECT/
MODIFY
▧ Evident miscalculation
of figures or error
▧ Awarded upon a matter
not submitted to them
▧ Arbitrators omitted to
resolve issue not
submitted
▧ Award is imperfect in a
matter of form not
affecting the merits of
controversy
 International Commercial
Arbitration Award
Recognition/ Enforcement/ Setting Aside
Foreign Arbital Award

Recognition and Enforcement

APPEALS
 Appeals (Part IV): MR (not allowed)
▧ A prima facie ▧ Any ruling on the
determination challenge to the
upholding the appointment of an
existence, validity or arbitrator; Any order
enforceability of an resolving the issue of
arbitration agreement the termination of the
pursuant to Rule 3.1 mandate of an
(A); arbitrator; and
▧ An order referring the ▧ An order granting
dispute to arbitration; assistance in taking
▧ An order appointing an evidence.
arbitrator;
 Appeals (Part IV): MR
▧ When? 15 days from receipt ▧ Can deny recognition and
of order. No extensions. enforcement of a foreign
▧ May oppose 15 days after arbitral award only upon the
receipt of MR grounds provided in Article V
of the New York Convention,
▧ Must be resolved 30 days but shall have no power to
from receipt of opposition/ vacate or set aside a foreign
comment or upon expiration arbitral award.
of the 15 days to comment
▧ a party to an arbitration is
precluded from filing an
appeal or a petition for
certiorari questioning the
merits of an arbitral award.
 Appeals (Part IV): Appeal to CA
▧ Granting or denying an
interim measure of
protection;
▧ Denying a petition for
appointment of an arbitrator;
Denying a petition for
assistance in taking
evidence;
▧ Enjoining or refusing to
enjoin a person from
divulging confidential
information;
▧ Confirming, vacating or
correcting/modifying a
domestic arbitral award;
▧ Setting aside an
international commercial
arbitration award;
▧ Dismissing the petition to set
aside an international
commercial arbitration
award even if the court does
not decide to recognize or
enforce such award;
▧ Recognizing and/or
enforcing an international
commercial arbitration
award;
 Appeals (Part IV): Appeal to CA
▧ Dismissing a petition to ▧ Reversing the ruling of the
enforce an international arbitral tribunal upholding its
commercial arbitration jurisdiction.
award;
▧ Recognizing and/or
enforcing a foreign arbitral
award; Refusing recognition
and/or enforcement of a
foreign arbitral award;
▧ Granting or dismissing a
petition to enforce a
deposited mediated
settlement agreement; and
 Appeals (Part IV): Appeal to CA

▧ CA may require the respondent to file comment (10

days from notice)
▧ 7 legible copies
▧ If CA finds prima facie evidence that RTC committed
error, may give due course and after 15 days from
notice that it was given due course, CA may require
court/agency to transmit original or CTC of entire
record of proceeding under review
▧ Appeal does not stay award
▧ Party appealing required to post bond
 Appeals (Part IV): Certiorari (CA)
▧ Holding that the ▧ Denying a petition for the
arbitration agreement is appointment of an
inexistent, invalid or arbitrator;
unenforceable; ▧ Confirming, vacating or
▧ Reversing the arbitral correcting a domestic
tribunal's preliminary arbitral award;
determination upholding ▧ Suspending the
its jurisdiction; proceedings to set aside
▧ Denying the request to an international
refer the dispute to commercial arbitral award
arbitration; and referring the case
▧ Granting or refusing an back to the arbitral
interim relief; tribunal;
 Appeals (Part IV): Certiorari (CA)
▧ Allowing a party to enforce ▧ RTC acted in excess in
an international jurisdiction, grave
commercial arbitral award abuse of discretion
pending appeal;
etc.
▧ Adjourning or deferring a
ruling on whether to set ▧ Arbital tribunal is
aside, recognize and or nominal party
enforce an international ▧ Arbitration may
commercial arbitral award; continue despite
▧ Allowing a party to enforce petition for certiorari
a foreign arbitral award
▧ No injunctions
pending appeal; and
▧ Denying a petition for
assistance in taking
evidence.
 Appeals (Part IV): Certiorari (SC)

▧ Failed to apply the applicable standard or test for judicial

review prescribed in these Special ADR Rules in arriving at
its decision resulting in substantial prejudice to the
aggrieved party;
▧ Erred in upholding a final order or decision despite the lack
of jurisdiction of the court that rendered such final order or
decision;
▧ Failed to apply any provision, principle, policy or rule
contained in these Special ADR Rules resulting in
substantial prejudice to the aggrieved party; and
▧ Committed an error so egregious and harmful to a party as
to amount to an undeniable excess of jurisdiction.
MEDIATION
 Mediation in the Philippines

▧ Part II on Specific Court Relief in the SC

Rules on ADR also applies to Mediation
(Rule 1.12 of SC ADR Rules)
▧ Department of Justice (DOJ) issued DOJ
Memorandum Circular No. 098-09:
Implementing Rules and Regulations of the
ADR Act
DOJ MC 098-09: Chapter 3 MEDIATION
▧ Rule 1: General ▧ Rule 7: Enforcement
Provisions of Mediated
▧ Rule 2: Selection of Settlement
Mediator Agreements
▧ Rule 3: Ethical ▧ Rule 8: Enforcement
Conduct of Mediator of Mediated
Settlement
▧ Rule 4: Role of Parties Agreements
and Their Counsels
▧ Rule 9: Confidentiality
▧ Rule 5: Conduct of
Mediation ▧ Rule 10: Fees and
Costs
▧ Rule 6: Place of
Mediation
QUESTION TIME
 Questions
Example of a ground when a court
may set aside or refuse enforcement
of arbital award.
 Questions
Who may challenge the appointment
of an arbitrator?
 Questions
What is the difference between Court
Annexed Mediation (CAM) and court
referred mediation?
 Questions
What governs Mediation Proceedings
in the Philippines?
 Questions
Difference between an International
Commercial Arbitration Award and a
Foreign Arbitral Award
 BONUS
What is my favorite animal?