July 28, 2018

Grading system: _____________________________________________________________

50% - Finals Aug. 11, 2018
50% - Pre-Finals (quizzes, recitation and exercises)

Email address: [email protected] Aug. 18, 2018

Arbitration Period: 30 days award
Note: arbitration is not technically less expensive than litigation!
Why Arbitration?
Bare minimum qualifications in order to be an arbitrator: 1. ICC rules are more flexible than court rules
1. Impartiality – internal, i.e. open as to the merits
2. Independence – external, i.e. relationship with others Impartial Independence
Free from bias Free from any relation to the
Doctrine of separability – dispute resolution clause is separable from the parties
whole agreement such that termination of the agreement shall not defeat the
Internal External
purpose of the dispute resolution clause
Open minded to merits
2 kinds of mediation:
1. Adjudicative
2. Facultative Types of Mediation
1. Adjudicative
Hall Street case 2. Facilitative
 A case of arbitration then an appeal by litigation
Mediation Arbitration Litigation
 US SC: invalid appeal bc the arbitral award is already binding
 Sir: So what remedy is left? Annul the arbitral award! (actual term is Recommendation Award Judgment
“set aside the award”)
 Grounds for setting aside the award (attack its intrinsic validity):
o Lack of jurisdiction Private Not private mode
o Lack of impartiality of the judge or arbitrator
 Where do you go to set aside the arbitral award? Courts! But which Jurisdiction agreed by Jurisdiction by law
courts? parties

Importance of place of arbitration Some courts refuse or are not capable of giving interim reliefs if there is a
1. Determines which court has supervisory jurisdiction stipulation in the agreement between the parties that they chose arbitration
2. Determines the court which will have the power to set aside the as agreed mode of dispute resolution.
award
3. Determines the nationality of the award Doctrine of Separability provides that the illegality in the contract will not
 i.e. where the award will be enforced affect the arbitration clause because the illegality is in the contract and the
 NY Convention – signatory states have agreed as to the arbitration clause although embedded in the same instrument, is a different
enforceability of arbitral awards and independent agreement – provided that countries recognize power of
arbitration
Aug. 04, 2018
 or services; distribution agreements; construction of
Place of Arbitration: (legal implication and importance) works; commercial representation or agency; factoring;
1. Determines the court which has supervisory jurisdiction of award leasing, consulting; engineering; licensing; investment;
2. Determines the court which has power to set aside award financing; banking; insurance; joint venture and other
3. Determines the nationality of the award forms of industrial or business cooperation; carriage of
goods or passengers by air, sea, rail or road.
Parties to the New York Convention are mandated to recognize and  Section 19 of RA 9285 provided for the adoption of the Model
enforce awards of other state-parties. Law on International Commercial Arbitration
o SEC. 19. Adoption of the Model Law on
Venue: Place of hearing International Commercial Arbitration. - International
commercial arbitration shall be governed by the Model
Case of Hall Street in re litigation as appeal mechanism of Arbitration Law on International Commercial Arbitration (the
"Model Law") adopted by the United Nations
SIAC video: UN Convention on International Sale of Goods Commission on International Trade Law on June 21,
1985 (United Nations Document A/40/17) and
Not all disputes can be subject to arbitration. Some issues cannot be made recommended approved on December 11, 1985, copy
subject of arbitration or any other alternative dispute resolution of which is hereto attached as Appendix "A".
1. RA 876 Section 3 o Adopted UNCITRAL Model Law on Arbitration
2. Article 2035 of the New Civil Code or those that (1985)
cannot be subject to compromise o However, in a case of Korea Technologies Co v.
3. RA 9285 Section 6 Lerma, the SC said "as signatory of the UNCITRAL in
Note: in these cases, civil liability arising from crime may be arbitrable. the New York Convention, the Philippines committed
itself to be bound by the Model Law" but the footnote
Arbitration is where the parties agreed to bring the dispute to a neutral third of such model law pertains to the 2006 UNCITRAL
party whose arbitral award is binding on the parties. Model Law and not the 1985 Model Law
1. Republic Act No. 9285 or Alternative Dispute Resolution Act of  How was that even possible if law was passed
2004 prior to the amendment of model law so how
2. Republic Act No. 876 or Arbitration Law of 1953 come we adopt the recent???
3. Executive Order No. 1008 or Construction Industry Arbitration 2. Domestic Arbitration
Law (1985)  Governed by RA 876
 Created the CIAC 3. Construction Arbitration
4. AM 07-11-08-SC or Special Rules on ADR (2009)  Governed by EO 1008
 Construction within the Philippines
Types of Arbitration in the Philippines
1. International Commercial Arbitration According to Article I No. 3 of UNCITRAL Model Law of 1985, an
 Governed by RA 9285 arbitration is international if:
 Chapter 4, Sections 19-31 of RA 9285 governed International A. The parties to an arbitration agreement have, at the time of the
Arbitration conclusion of that agreement, their places of business in different
 Section 21 of RA 9285 defined Commercial arbitration States;
o SEC. 21. Commercial Arbitration. - An arbitration is B. One of the following places is situated outside the State in which the
"commercial" if it covers matters arising from all parties have their places of business:
relationships of a commercial nature, whether (i) The place of arbitration if determined in, or pursuant to, the
contractual or not. Relationships of a transactions: any arbitration agreement;
trade transaction for the supply or exchange of goods
 (ii) Any place where a substantial part of the obligations of the arbitrator or coarbitrator or chairman of a tribunal a person
commercial relationship is to be performed or the place with which who has not been previously accredited by CIAC: Provided,
the subject-matter of the dispute is most closely connected; or That:
C. The parties have expressly agreed that the subject-matter of the (a) The dispute is a construction dispute in which
arbitration agreement relates to more than one country one party is an international party
(b) The person to be appointed agreed to abide by
 Practice of Professions in the Philippines, is it limited to citizens of the arbitration rules and policies of CIAC;
the Philippines? Not all. (c) He/she is either coarbitrator upon the nomination
 Law, however, is limited to Filipino citizens of the international party; or he/she is the common
 Foreign lawyers can represent arbitration in the Philippines whether choice of the two CIAC-accredited arbitrators first
such arbitration is international pursuant to Section 22 (RA 9285) or appointed one of whom was nominated by the
domestic pursuant to Section 33(RA9285) but they are not allowed international party; and
for construction arbitration pursuant to Section 38 (RA9285). (d) The foreign arbitrator shall be of different
o SEC. 22. Legal Representation in International nationality from the international party.
Arbitration. - In international arbitration conducted in the o Rule 7.4. Grounds. - An arbitrator may be challenged on any
Philippines, a party may be presented by any person of his of the grounds for challenge provided for in Republic Act No.
choice. Provided, that such representative, unless admitted 9285 and its implementing rules, Republic Act No. 876 or the
to the practice of law in the Philippines, shall not be Model Law. The nationality or professional qualification of an
authorized to appear as counsel in any Philippine court, or arbitrator is not a ground to challenge an arbitrator unless
any other quasi-judicial body whether or not such the parties have specified in their arbitration agreement a
appearance is in relation to the arbitration in which he nationality and/or professional qualification for appointment
appears. as arbitrator.
o SEC. 33. Applicability to Domestic Arbitration. - Article 8,
10, 11, 12, 13, 14, 18 and 19 and 29 to 32 of the Model Law CIAC or Construction Industry Arbitration Commission is a government
and Section 22 to 31 of the preceding Chapter 4 shall apply body connected with the Department of Trade and Industry
to domestic arbitration. ~but actually it is not the CIAC which renders the award but the
o SEC. 38. Applicability to Construction Arbitration. - The arbitrators but whatever
provisions of Sections 17 (d) of Chapter 2, and Section 28
and 29 of this Act shall apply to arbitration of construction Arbitral award for international commercial arbitration and domestic
disputes covered by this Chapter. arbitration cannot be made subject of appeal or certiorari pursuant to Rule
 Practice of foreign lawyers is limited to arbitration only. They cannot 19.7 of Special Rules of Court on ADR, but those construction arbitration
practice before any courts or quasi-judicial arbitration even if related under CIAC can be given relief or can be appealed or made subject of
to the arbitration proceedings certiorari under Rule 43 Rules of Court only for instances or grounds
 Appointment of foreign arbitrator is allowed for construction provided under Section 24 of RA 876.
arbitration under Section 37(RA9285) and for international  Rule 19.7. No appeal or certiorari on the merits of an arbitral award.
commercial arbitration under Rule 7.4 under Special Rules of - An agreement to refer a dispute to arbitration shall mean that the
Court on ADR which provides that "The nationality or professional arbitral award shall be final and binding. Consequently, a party to an
qualification of an arbitrator is not a ground to challenge an arbitrator arbitration is precluded from filing an appeal or a petition for certiorari
unless the parties have specified in their arbitration agreement a questioning the merits of an arbitral award.
nationality and/or professional qualification for appointment of
arbitrator.”  Section 24. Grounds for vacating award. - In any one of the
o SEC. 37. Appointment of Foreign Arbitrator. - The following cases, the court must make an order vacating the award
Construction Industry Arbitration Commission (CIAC) shall upon the petition of any party to the controversy when such party
promulgate rules to allow for the appointment of a foreign proves affirmatively that in the arbitration proceedings:
 (a) The award was procured by corruption, fraud, or other connected with, contracts entered into by parties involved in
undue means; or construction in the Philippines, whether the dispute arises
(b) That there was evident partiality or corruption in the before or after the completion of the contract, or after the
arbitrators or any of them; or abandonment or breach thereof. These disputes may involve
(c) That the arbitrators were guilty of misconduct in government or private contracts. For the Board to acquire
refusing to postpone the hearing upon sufficient cause jurisdiction, the parties to a dispute must agree to submit
shown, or in refusing to hear evidence pertinent and material the same to voluntary arbitration.
to the controversy; that one or more of the arbitrators was
disqualified to act as such under section nine hereof, and China Jiang v. Rosal Infrastructure
wilfully refrained from disclosing such disqualifications or of o Rather it is plain and clear that as long as the parties agreed to
any other misbehavior by which the rights of any party have voluntary submit themselves to voluntary arbitration even if the
been materially prejudiced; or parties agreed and stipulated for another forum, the parties are
(d) That the arbitrators exceeded their powers, or so not precluded to submit the case to the CIAC because such
imperfectly executed them, that a mutual, final and definite right is vested by law.
award upon the subject matter submitted to them was not o But what if the parties stipulated that dispute shall be resolved by
made. ICC, and one of the parties went to ICC, can the other party
assail the jurisdiction of ICC since CIAC has original and
Where an award is vacated, the court, in its discretion, may exclusive jurisdiction?
direct a new hearing either before the same arbitrators or before a
new arbitrator or arbitrators to be chosen in the manner provided in New York Convention
the submission or contract for the selection of the original arbitrator  Provides for recognition and enforcement of Foreign Arbitral Awards
or arbitrators, and any provision limiting the time in which the and those provided under Article 2(1) and 2(3)
arbitrators may make a decision shall be deemed applicable to the  Article 2 does not just deal with foreign arbitral awards but also to
new arbitration and to commence from the date of the court's order. arbitration clause
o Article II
Where the court vacates an award, costs, not exceeding fifty 1. Each Contracting State shall recognize an
pesos and disbursements may be awarded to the prevailing party agreement in writing under which the parties
and the payment thereof may be enforced in like manner as the undertake to submit to arbitration all or any
payment of costs upon the motion in an action. differences which have arisen or which may arise
between them in respect of a defined legal
Original and Exclusive jurisdiction of CIAC under EO 1008 relationship, whether contractual or not,
 The parties must agree to voluntary submit the dispute to arbitration concerning a subject matter capable of settlement
by arbitration
Just because there is a construction does not mean that if there is a dispute, 2. The term “agreement in writing” shall include an
it should go to CIAC. arbitral clause in a contract or an arbitration
agreement, signed by the parties or contained in
Even if there is no express agreement or specified that it is CIAC, as long as an exchange of letters or telegrams
the issue involves construction projects within the Philippines and that 3. The court of a Contracting State, when seized of
the parties agreed to submit themselves to voluntary arbitration even an action in a matter in respect of which the
without naming CIAC, the arbitration jurisdiction belong to CIAC because parties have made an agreement within the
EO 1008 provides that CIAC has original and exclusive jurisdiction over such meaning of this article, shall, at the request of one
matter. of the parties, refer the parties to arbitration,
o Sec. 4. Jurisdiction. The CIAC shall have original and unless it finds that the said agreement is (a) null
exclusive jurisdiction over disputes arising from, or
 and void, (b) inoperative or (c) incapable of (a) The parties to the agreement referred to in article II were,
being performed under the law applicable to them, under some incapacity, or
 Article 2(3) is important because a party may ask the court to refer the said agreement is not valid under the law to which the
the parties for arbitration pursuant to their arbitration agreement and parties have subjected it or, failing any indication thereon,
the courts are mandated to do what was requested unless such under the law of the country where the award was made; or
arbitration agreement is: (b) The party against whom the award is invoked was not given
o (i) Null and void such as those where the subject pertains to proper notice of the appointment of the arbitrator or of the
those disputes that cannot be subject of arbitration arbitration proceedings or was otherwise unable to present
o (ii) Inoperative his case; or
o (iii) Incapable of being performed (c) The award deals with a difference not contemplated by or
not falling within the terms of the submission to arbitration, or
Domestic award it contains decisions on matters beyond the scope of the
 If place of arbitration is the same as the place of enforcement submission to arbitration, provided that, if the decisions on
 If a party has a foreign arbitral award in a country which is a matters submitted to arbitration can be separated from those
signatory of the New York Convention then that party can enforce not so submitted, that part of the award which contains
such award on that country decisions on matters submitted to arbitration may be
recognized and enforced; or
In litigation cases, Section 48 of Rule 40 of Rules of Court (???) provides (d) The composition of the arbitral authority or the arbitral
for effect of foreign judgments or final orders but in either case, a party can procedure was not in accordance with the agreement of the
question the findings of the foreign court or that said judgments or final parties, or, failing such agreement, was not in accordance
orders may be repelled by evidence of: with the law of the country where the arbitration took place;
1. Want of jurisdiction or
2. Want of notice to the party (e) The award has not yet become binding on the parties, or has
3. Collusion been set aside or suspended by a competent authority of the
4. Fraud country in which, or under the law of which, that award was
5. Clear mistake of law or fact. made
2. Recognition and enforcement of an arbitral award may also be
Similarly, Article V of the New York Convention provided that recognition refused if the competent authority in the country where recognition
and enforcement of the award may be refused, at the request of the party and enforcement is sought finds that:
against whom it is invoked, if there is: (a) The subject matter of the difference is not capable of
a. Proof of incapacity settlement by arbitration under the law of that country; or
b. Invalid arbitration (b) The recognition or enforcement of the award would be
c. Due process violation contrary to the public policy of that country
d. No jurisdiction or lack of jurisdiction
e. Did not follow the arbitral procedure Also, Article 34 of the UNCITRAL provides for the same to wit:
f. Not yet binding or has set aside Article 34. Application for setting aside as exclusive recourse against arbitral
g. Arbitrability award
h. Contrary to public policy. (1) Recourse to a court against an arbitral award may be made only by an
application for setting aside in accordance with paragraphs (2) and (3) of this
Article V article.
1. Recognition and enforcement of the award may be refused, at the (2) An arbitral award may be set aside by the court specified in article 6 only
request of the party against whom it is invoked, only if that party if:
furnishes to the competent authority where the recognition and (a) the party making the application furnishes proof that:
enforcement is sought, proof that:
 (i) a party to the arbitration agreement referred to in article 7 was o Procurement law – if a gov’t wants something
under some incapacity; or the said agreement is not valid under the done, they must undergo a public bidding
law to which the parties have subjected it or, failing any indication o Swiss Challenge – different model from
thereon, under the law of this State; or procurement; e.g. Bulacan Airport proposal; such
(ii) the party making the application was not given proper no- tice of proposal is not from the gov’t but from Ramon Ang
the appointment of an arbitrator or of the arbitral proceedings or was of San Miguel (purely private initiative)
otherwise unable to present his case; or  Concession agreement in the 90s to build the NAIA Terminal
(iii) the award deals with a dispute not contemplated by or not falling 3. What happened? It was cancelled due to an anomaly in
within the terms of the submission to arbitration, or contains decisions the award of the project; who cancelled it? The gov’t.
on matters beyond the scope of the sub- mission to arbitration,  This is actually transpo case Agan vs PIATCO
provided that, if the decisions on matters submitted to arbitration can  Concession agreement was cancelled bc PIATCO was a
be separated from those not so submitted, only that part of the award disqualified bidding for not being able to prove its financial
which contains decisions on matters not submitted to arbitration may capacity
be set aside; or  However, by the time it was cancelled, NAIA was already
(iv) the composition of the arbitral tribunal or the arbitral proce- dure almost finished!
was not in accordance with the agreement of the par- ties, unless such  The concession agreement provided for two arbitration
agreement was in conflict with a provision of this Law from which the clauses: (1) for construction dispute (CIAC); and (2) non-
parties cannot derogate, or, failing such agreement, was not in construction (SIAC)
accordance with this Law; or  It’s not a construction issue bc the issue is WON the gov’t is
(b) the court finds that: correct in invalidating the contract
(i) the subject-matter of the dispute is not capable of settlement by  In the bidding for Cebu Mactan Airport, all the PH
arbitration under the law of this State; or conglomerates had foreign airport partners. Why? Technical
(ii) the award is in conflict with the public policy of this State. expertise! The foreign companies are really in the business
(3) An application for setting aside may not be made after three months have of building airports (e.g.
elapsed from the date on which the party making that application had
 How do airports earn money? Principally from commercial
received the award or, if a request had been made under article 33, from the
businesses inside the airports (lease of commercial areas in
date on which that request had been disposed of by the arbitral tribunal.
the airports), minor lang yung sa airline companies
(4) The court, when asked to set aside an award, may, where appropriate
 Fraport – German airline construction company which is a
and so requested by a party, suspend the setting aside proceedings for a
shareholder of PIATCO; can it invoke the concession
period of time determined by it in order to give the arbitral tribunal an
agreement? No, it is not a party! PIATCO has a separate
opportunity to resume the arbitral proceedings or to take such other action as
personality! But how was it able to initiate arbitration
in the arbitral tribunal's opinion will eliminate the grounds for setting aside
proceedings? Thru treaty! (Germany-PH bilateral investment
treaty)
o Under said treaty, both countries promised that
Sept. 01, 2018 investors of one country in the other country will
be given certain protections; one of these is in the
Places involved in investment treaty arbitration cases: case of dispute, we can go to arbitration (Art. 9 of
1. MRT the treaty)
2. Laguna Lake o Hence, even if Fraport is not a party of the treaty,
3. NAIA Terminal 3 Fraport can invoke the said treaty
 Who built it? Not the gov’t! non-gov’t entity built it. Why not? o Fraport has two choices:
Bc gov’t has no funds! So they used BOT program (build- 1. Court of PH
operate-transfer) 2. ICSID
 Two ways to get public infrastructure projects:
o Where do you think Fraport will go? ICSID 1970s during the oil crisis in the
(International Center for Settlement of Investment Middle East. The gov’t decided that
Disputes)! Bc going to PH Courts would be we should look for oil here in our
suicide. PH Supreme Court already declared the country; but we don’t have the
concession contracts invalid expertise! So it goes to big private
o What’s the cause of action of Fraport? Breach of oil companies
treaty obligation of PH! o So what motivated Shell to agree
o So even if you are not a party in an agreement in a despite the risk that there might not
gov’t contract, you can still go to arbitration if you be any gas field to be found? Tax
can find such clause in an investment treaty assumption vs tax exemption
between your state and the other state o Tax assumption – tax assumed by
o PH has 31 bilateral investment treaties with other the gov’t
countries. It has none with the US o Tax exemption – no liability at all
o There are 5 known investment treaty cases in o The concession agreement included
which the PH is part of: tax assumption that DOE will pay for
1. SGS vs PH the taxes
2. Fraport AG vs PH = Germany vs PH o Dispute refers to claim of the gov’t
3. Baggerwerken se Cloedt en Zoon vs PH = for income taxes amounting to
Belgium + PH Php53B
o Laguna Lake dredging project o COA imposed the tax claim; COA
o Project of Gloria but was cancelled said it was not allowed under the
by Pnoy Admin law; but Shell was invoking the tax
o Baggerwerken got $16M assumption provision in the
o Really bad because PH cancelled agreement
the contract only bc made by o Can PIATCO invoke the investment
previous admin; it was ordered to treaty? No, bc it is not a German
pay $16M and was not even able to corporation
get any tangible benefit!!! o Can Fraport invoke the concession
o PH hasn’t paid Baggerwerken yet agreement? No, it is not a party
4. Shell PH Exploration BV vs PH = o What happened in this case? It took
Netherlands vs PH eight years but Fraport lost
o Malampaya is a gas field Northwest o The case was dismissed for lack of
of Palawan jurisdiction bc the treaty says that
o Batangas has 3 gas power plants the investment in the host country
which were built by virtue of the must be in accordance with the laws
discovery of the Malampaya gas of the host state
field o The problem Fraport had was that
o Two kilometers deep underwater the PH contended that the
o Concession agreement granted by investment made by Fraport in the
the gov’t to Shell which gives it the PH was not in accordance with PH
right to explore natural resources of laws; the gov’t discovered that
PH (recall Consti law) Fraport investment in PIATCO
o This agreement was entered into exceeded the 40% investment limit
before Malampaya was found! In the (it actually reached 60% through
 secret agreements with PIATCO); NAFTA (North American
hence it was a violation of the Anti- Free Trade Agreement)
Dummy Law cases; members are US,
o Setting aside of decision by losing Canada and Mexico;
party is “annulment of judgment” in NAFTA provides that
ICSID NAFTA cases will
o ICSID’s Washington Convention of proceed according to
1965 has no grounds for setting ICSID Convention, but
aside the judgment under Art. 54(1) Canada and Mexico were
of ICSID Convention unlike NY not signatories to ICSID
Convention, which has seven! No o Fraport, when it lost, had to go
defenses here! This is one of the through the annulment committee;
advantages in getting an ICSID their main ground was violation of
award (high chance of due process. Theory of Fraport: in
enforceability); ICSID awards are ruling that it violated the Anti-
really public and high profile so Dummy Law, the Tribunal did not
sometimes governments who are give it the chance to challenge the
found liable are forced to pay evidence! The committee agreed
o ICSID – part of the World Bank; with Fraport; so, you have the
located in Washington, DC Fraport II case
o ICSID Convention – 153 o Fraport II case: the second new
signatories; no place of tribunal gave Fraport the chance to
arbitration in ICSID bc challenge the evidence; but it
that concept is strictly in dismissed the claim under the same
NY Convention only; ground
hence, consequence is o PIATCO also lost in the Singapore
that no court has case against PH gov’t
supervision over such o Who is operating Terminal 3? MIAA
case(hence, Washington, (Manila International Airport
DC courts has no Authority); what do you call it?
supervisory powers over Expropriation! While the arbitration
an annulment case); proceedings are ongoing, there
ICSID Annulment were also expropriation proceedings
Committee (3 members) ongoing in PH courts
will decide whether the o PH paid PIATCO at least $500M
grounds for annulment o Akala ko ba void yung concession
are valid; req’t: the parties agreement? So how can PIATCO
must be from signatory get its money? Quantum Meruit!
states for ICSID Even if the contract is illegal, you
convention can claim back at least the cost!
o Additional Facility (non- (like unjust enrichment); technically
ICSID Convention); if the they did not earn money by
any of the parties or both operating Terminal 3 but strictly,
are non-signatories; ex.
 they earned money through the  Both applied for rate increase with MWSS; MWSS denied it so the
interest two went to arbitration separately
o Expenses of PH in Fraport I and II  Weirdly, Maynilad won but Manila Water lost; Maynilad’s legal team
cases reached P58M was Sycip Salazar while Manila Water had PBR law firm
5. Elliott BV vs PH (withdrawn)  Why? Maynilad filed the case first
 MWSS refused to comply with the arbitral award but Maynilad and
Yukos Company Arbitration – largest arbitration case concerning damages Manila Water had government guarantees; but regardless, DOF
(US$50M) refused to pay too; so Maynilad initiated arbitration proceedings
against the government in Singapore
Philip Morris vs Australia and Uruguay (2 separate cases)  Maynilad did not enforce the Singapore arbitral award in favor of
o Packaging of cigarette boxes are required to contain graphic health them; but the government has filed an action to set aside the
warnings Singapore arbitral award (not appeal, if for losing party), which is still
o Philip Morris contends that the regulation interferes with its branding pending
o WON the regulations are proportionate or non-discriminatory
o No question that governments can pass graphic health warning PH Competition Law
measures  RA 10667
o Does the regulation harm the investment?  Prevents collusion between competitors, which may result to a cartel
o As to Australia, the case was dismissed for lack of jurisdiction; Philip law
Morris is guilty of abuse of process
 Mentioned in IPL (recall!!)
o As to Uruguay, tribunal said it has jurisdiction but it ruled that
 PH Competition Commission
Uruguay did not violate the investment treaty. It was a reasonable
exercise of police power.
Some arbitration institutions:
1. ICC – International Chamber of Commerce
Vatenfell case
2. ICSID – International Center for Settlement of Investment Disputes
o Swedish energy company which was constructing a nuclear power
3. HKIAC – Hong Kong International Arbitration Center
plant in Germany
4. PDRCI
o Midway, Germany decided that it no longer wanted a nuclear power
5. SIAC
plant
6. CAS
7. WIPO
8. CIETAC
9. CIAC
UNCITRAL – UN Commission on Trade Law; PH adopted 1985 and not 2006
10. PCA
UNCITRAL Arbitration Rules:
Groupwork:
 UNCITRAL Arbitration Rules 1976
o Make an “advertisement”
 UNCITRAL Arbitration Rules 2010 o Should be short
o Target market is a Filipino, either a commercial person or a lawyer
Model Law vs Arbitration Rules o The ad must respond to the target market
o Not required to appear in the video; it could just be animation; just be
NAWASA case creative!
 NAWASA gave concessions to Maynilad and Manila Water to o Five weeks from Sept. 01, 2018 = Oct. 6, 2018 11:59PM is the
provide water services to specified zones in Manila deadline
 Two identical but separate concession agreements which provided
for arbitration (MWSS and Maynilad + MWSS and Manila Water)
 o Final product will be a commercial in video form; send google drive (2) The arbitration agreement shall be in writing. An agreement is in writing if it is contained
link in a document signed by the parties or in an exchange of letters, telex, telegrams or other
o Email address: [email protected] means of telecommunication which provide a record of the agreement, or in an exchange of
statements of claim and defence in which the existence of an agreement is alleged by one party
o Equivalent to at least 7 quizzes/recitation
and not denied by another. The reference in a contract to a document containing an arbitration
clause constitutes an arbitration agreement provided that the contract is in writing and the
October 20, 2018 reference is such as to make that clause part of the contract.

SIAC Model Arbitration Clause o It provides for the kinds of writing:

 Part of a contract or a stipulation in a contract  Letters
 Pre-dispute  Telex
 Telegram
Two types of arbitration agreements:  Estoppel – one party claims and the other party
1. Pre-dispute – Concluded before a dispute arises (pre-agreed does not deny
prior to a dispute) – 80%  Incorporation by reference – e.g. contract of
2. Post-dispute – Agreed after the dispute has arisen (submission affreightment with arbitration clause is incorporated
agreements) – 10 to 20% to a bill of lading by incorporation
 But in Model Law 2006:
 Why is the first type so prevalent? Bc you would want to maintain CHAPTER II. ARBITRATION AGREEMENT
relationships; to resolve the dispute in a fair and efficient manner
 Can you have an oral contract? Yes, but what is the problem? Option I
Enforceability under the Statute of Frauds; what is the exception to
the Statute of Frauds? (1) “Arbitration agreement” is an agreement by the parties to submit to arbitration all
 How do you normally enforce an oral contract? Agreements which or certain disputes which have arisen or which may arise between them in respect of
are partially performed, e.g. sale with partial delivery a defined legal relationship, whether contractual or not. An arbitration agreement
 What about arbitration agreements, should it be in writing? may be in the form of an arbitration clause in a contract or in the form of a separate
 Let’s review the ADR laws: agreement.
o RA 876
 Domestic . (2) The arbitration agreement shall be in writing. 

o RA 9285
 Coverage: (3) An arbitration agreement is in writing if its content is recorded in any 

 International
 Domestic form, whether or not the arbitration agreement or contract has been con- cluded
 Construction orally, by conduct, or by other means.
 Annex is UNCITRAL Model Law of 1985
o EO 1008 (4) The requirement that an arbitration agreement be in writing is met by an
 Construction electronic communication if the information contained therein is acces- sible so as to
 In RA 9285, Art. 7 (2) of the Model Law, arbitration agreement must be useable for subsequent reference; “electronic communica- tion” means any
be in writing communication that the parties make by means of data messages; “data message”
Article 7. Definition and form of arbitration agreement means information generated, sent, received or stored by electronic, magnetic,
optical or similar means, including, but not limited to, electronic data interchange
(1) "Arbitration agreement" is an agreement by the parties to submit to arbitration all or (EDI), electronic mail, telegram, telex or telecopy.
certain disputes which have arisen or which may arise between them in respect of a defined
legal relationship, whether contractual or not. An arbitration agreement may be in the form of (5) Furthermore, an arbitration agreement is in writing if it is contained in an
an arbitration clause in a contract or in the form of a separate agreement.
exchange of statements of claim and defence in which the existence of an agreement Let’s go back to the SIAC Model Arbitration Clause
is alleged by one party and not denied by the other.
 PIATCO case
(6) The reference in a contract to any document containing an arbitration clause
constitutes an arbitration agreement in writing, provided that the ref- erence is such o Who invalidated the concession agreement? PH
courts bc illegal so contract is null and void
as to make that clause part of the contract.
o When PIATCO sued PH on ground of the
Option II arbitration clause, isn’t that clause also now already
null and void? No, doctrine of separability so that
Article 7. Definition of arbitration agreement
(As adopted by the Commission at its thirty- the other party cannot escape the obligation of
ninth session, in 2006
going through arbitration

Article 16. Competence of arbitral tribunal to rule on its jurisdiction

“Arbitration agreement” is an agreement by the parties to submit to arbitra- tion all
or certain disputes which have arisen or which may arise between them in respect of (1) The arbitral tribunal may rule on its own jurisdiction, including any
a defined legal relationship, whether contractual or not. objections with respect to the existence or validity of the arbitration agreement.
For that purpose, an arbitration clause which forms part of a contract shall be
 But note that we have not yet adopted the 2006 Model Law so treated as an agreement independent of the other terms of the con- tract. A
decision by the arbitral tribunal that the contract is null and void shall not entail
we are still with the 1985 Model Law
ipso jure the invalidity of the arbitration clause.
 What if you have an arbitration agreement but the other party
instead goes to litigation? In New York Convention:  What should the court do if the party invokes that the
contract is null and void, inoperative or incapable of being
Article II
performed? See tension between Art. 16 of Model Law
3. The court of a Contracting State, when seized of an action in a matter in 1985 vs Art. II (3) of NY Convention
respect of which the parties have made an agreement within the meaning of o Prima facie – “on its face”
this article, shall, at the request of one of the parties, refer the parties to  Used by courts to resolve the conflict
arbitration, unless it finds that the said agreement is null and void, between the two provisions
inoperative or incapable of being performed  If the contract on its face is null and void or
incapable of being performed, then go na
 See Rule 4.6 of ADR Rules – no reconsideration, appeal or tayo sa litigation
certiorari  But if on its face, there appears to be a valid
 Scenario: one party files action in the RTC, the other party can arbitration clause, then the court has to refer
ask the court to refer the matter to arbitration OR he can say, the case to arbitration
let’s proceed  They use the standard of preponderance of
 What happens when the other party says “let’s proceed”? evidence since it is a civil matter
waiver of the arbitration clause; he has to raise it at the earliest o Ranking:
opportunity 1. Prima facie – actually lowest
2. Admin cases – substantial evidence
 Civil cases – preponderance of evidence
3. Governing law
Crim cases – beyond reasonable doubt
4.
 In the SIAC movie, the tribunal bifurcated the case  Law of the jurisdiction which determines the rights and
o Jurisdiction obligations of the parties
o Merits  How many contracts? Two; 1 for main agreement and other
 Does the tribunal always have to bifurcate? No, especially one for the arbitration agreement
when the issue of jurisdiction is linked with the merits  The governing law clause is usually found in the main
 Where do you look when you want to appeal the ruling on agreement
jurisdiction? Rule 19.1 of ADR Rules of Court  But bc of the doctrine of separability, you can have another
 What if the Court refers the case to arbitration. Then, the governing law clause found in the arbitration agreement
arbitral tribunal bifurcates the case then it rules that it has  If the parties do not specify a governing law clause in the
jurisdiction. Can the other party question the ruling of the arbitration agreement, which governing law clause would apply
tribunal on the jurisdiction? Can he go to Court and but main agreement says the governing law is NY law while
challenge the ruling of the tribunal immediately? the seat of arbitration is HK?
 Determine where the place of arbitration is! See Rule 3.12  The governing law will be determined by the parties’ intent;
of ADR three possibilities
 Pending the ruling of the court on the jurisdiction of the o HK – seat of arbitration
arbitral tribunal, can the party questioning the arbitral o NY – governing law in main agreement
tribunal’s jurisdiction stop the arbitral tribunal from o Law x – something else
proceeding? See Rule 3.18 of ADR Rules (no injunction of  In PH, no decisive case yet as to which governing law applies
arbitration proceedings)  In Singapore, the seat of arbitration is the one that applies
Doctrine of competence competence – the arbitral tribunal can rule  Scenario:
o Main agreement – construction agreement; governed by
on its own jurisdiction
PH (i.e. CIAC)
 1985 MODEL LAW: o Arbitration agreement – governed by Singapore law
(ICC), seat is HK
CHAPTER IV. JURISDICTION OF ARBITRAL TRIBUNAL o But the question is, can the parties exclude the
Article 16. Competence of arbitral tribunal to rule on its jurisdiction
jurisdiction of the CIAC? IDK, no SC ruling yet
 Scenario:
(3) The arbitral tribunal may rule on a plea referred to in paragraph (2) of this article either as o Main agreement: to deliver coffee beans from Batangas
a preliminary question or in an award on the merits. If the arbitral tribunal rules as a to Bali
preliminary question that it has jurisdiction, any party may request, within thirty days after
having received notice of that ruling, the court specified in article 6 to decide the matter, o Governing law in main agreement: PH, Indonesian law,
which decision shall be subject to no appeal; while such a request is pending, the arbitral something else
tribunal may continue the arbitral proceedings and make an award. o Can the “something else” be international law? In
theory, yes. But if there is a dispute, what will apply?
Note: if the arbitral tribunal rules that it has no jurisdiction, the
It’s a term that is too vague
aggrieved party cannot go to court to question that ruling
 o Int’l law as governing law is only advisable if the other Considerations for Choosing the Seat of Arbitration
party is a State or a State-owned corp bc you don’t want
to necessarily agree to be governed by their law since  One of the benefits of choosing arbitration is that the parties
they could easily change their law to favor them can choose who can be the decision makers, i.e. arbitrators
o Remedy: agree to have the primary governing law to be  Only qualification of an arbitrator: impartiality and
int’l law while domestic law only as secondary so the independence
State must act in accordance with int’l law (i.e. the
State cannot change its laws unjustly to prejudice you) Under Model Law of 1985:

Choice of Law Article 12. Grounds for challenge

 Under PH law, parties can choose which law will govern so (1) When a person is approached in connection with his possible appointment as an arbitrator,
long as not contrary to morals, public order or public policy, he shall disclose any circumstances likely to give rise to justifiable doubts as to his
etc. but such law must have substantial connection to the impartiality or independence. An arbitrator, from the time of his appointment and throughout
transaction the arbitral proceedings, shall without delay disclose any such circumstances to the parties
 But in practice, the neutral law may not be substantially
unless they have already been informed of them by him.
connected to the transaction
(2) An arbitrator may be challenged only if circumstances exist that give rise to justifiable
Incoterms
doubts as to his impartiality or independence, or if he does not possess qualifications agreed to
 Set of rules which define the responsibilities of sellers and by the parties. A party may challenge an arbitrator appointed by him, or in whose appointment
buyers for the delivery of goods under sales contracts he has participated, only for reasons of which he becomes aware after the appointment has
 Published by ICC and widely used in commercial transactions been made.
 Can be used as governing law even if not municipal law
 Can “equity” be used as governing law? In theory yes but you How to check if the arbitrator is impartial or independent => Ask if he
are giving the arbitrators too much discretion has relationship with either of the parties

Let’s go back to PIATCO diagram  Test: likelihood that justifiable doubts will arise as to his
impartiality or independence
 Can a non-party to the arbitration contract be a party in the  IBA Guidelines of Conflict of Interest
arbitration? GR: No; XPNs: o Red
1. Stipulation pour autrui (3rd party beneficiary)  Two kinds
2. Assignment  Non-waivable
3. Subrogation  Waivable
4. Successors/mergers o Orange
5. Piercing the veil o Green
 Need not be disclosed
 Examples:
