Arbitration law in the Philippines

By Augusto A San Pedro Jr and Raquel Wealth A Taguian, Villaraza & Angangco Law Offices
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In the Philippines the time constraints and costliness of litigation are more often moving contracting parties to arbitration, but there remain roadblocks to be aware of when choosing this increasingly popular method of dispute resolution.

Given the aversion of contracting parties to costly and protracted litigation, arbitration as an alternative mode of dispute resolution is gaining more favour and popularity in the Philippines, resulting in arbitration clauses being an integral part of most commercial transactions.

Continuing development

In solidifying arbitration as a viable substitute in resolving commercial disputes, Congress enacted Republic Act No. 9285, also known as the Alternative Dispute Resolution Act of 2004 (ADR Act), which provided the much-needed legislation to institutionalize arbitration in the Philippines. The ADR Act addressed most of the inadequacies of its predecessor, Republic Act No. 876. It governs both domestic and international commercial arbitration, and has adopted the 1985 UNCITRAL Model Law as a complement to the Philippines’ earlier accession to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards on 19 June 1958, which it ratified on 6 July 1967.

Augusto A San Pedro Jr Senior Partner at Villaraza & Angangco Law Offices in Manila Tel: +63 2988 6088 Email: aa.sanpedro@thefirmva.com
Augusto A San Pedro Jr
Senior Partner at Villaraza & Angangco Law Offices in Manila
Tel: +63 2988 6088
Email: aa.sanpedro@thefirmva.com

To smoothly integrate arbitration into the existing judicial system, the Supreme Court issued Administrative Matter No. 076-11-08-SC, dated 1 September 2009, also known as the Special Rules of Court on Alternative Dispute Resolution (special ADR rules), which provided for the procedural guidelines for both domestic and international arbitration, as well as enforcement of arbitration in the Philippines.

The ADR Act likewise established the Office for Alternative Dispute Resolution (OADR) to promote, develop and expand the use of alternative modes of dispute resolution in the country. It is empowered, among other things, to: formulate training standards and certify arbitration practitioners and institutions; co-ordinate the development, implementation, monitoring and evaluation of government alternative dispute resolution programmes; and to carry out the ADR Act. To lessen court interference in ad hoc arbitrations, the national president of the Integrated Bar of the Philippines is recognized in the ADR Act as the default appointing authority.

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Regulatory Basics

Governing law/ordinance
Republic Act No. 9285 or the Alternative Dispute Resolution Act of 2004; Articles 2028-2046 of the Civil Code of the Philippines; Administrative Matter No. 076-11-08-SC (1 September 2009), or the Special Rules of Court on Alternative Dispute Resolution.
Regulator/s
The Office for Alternative Dispute Resolution.
Does the law govern both domestic and international proceedings?
Yes
Is the UNCITRAL Model Law the basis of the law governing international or domestic disputes?
Yes, internationally, while certain provisions of the Model Law were made applicable to domestic arbitration.
Has the Philippines ratified the New York Convention on Enforcement of Arbitration Agreements and Awards?
Yes
What are the most prominent arbitral institutions?
The Philippine Dispute Resolution Centre and the Construction Industry Arbitration Commission.
Can third parties/non-signatories be bound by an arbitration?
As a general rule, no. However, exceptions are made in cases of parties bound by separate or accessory contracts that incorporate arbitration clauses in another primary contract, such as third-party beneficiaries and bond issuers to a construction contract.
What is the attitude of your courts to enforcement of international awards
or agreements?
Philippine courts adopt a stance in favour of arbitration, and particularly refrain from reviewing arbitral awards subject of enforcement.
Are certain types of disputes more commonly being referred to arbitration?
General commercial disputes, disputes involving construction contracts, and disputes over government procurement contracts.

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