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Commercial Arbitration

Last verified on Tuesday 5th May 2020

Philippines

Ricardo Ma PG Ongkiko and John Regalado

    Infrastructure

  1. 1.The New York Convention
    Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?
    1. The Philippines is a party to the New York Convention (Convention) after ratifying it on 6 July 1967. Upon ratification, the Philippines declared that it signed the Convention on the basis of reciprocity, and would apply the Convention to the recognition and enforcement of awards made only in the territory of another contracting state and only to differences that arise out of legal relationships, whether contractual or not, which are considered commercial in nature under the national law of the state that is making the declaration.

  2. 2.Other treaties
    Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?
    1. The Philippines is a party to the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (ICSID Convention).

  3. 3.National law
    Is there an arbitration act or equivalent and, if so, is it based on the UNCITRAL Model Law? Does it apply to all arbitral proceedings with their seat in your jurisdiction?
    1. Republic Act No. 9285 (2004), or the Alternative Dispute Resolution Act of 2004 (ADR Act) principally governs arbitration in the Philippines. Under the ADR Act, (i) the 1985 UNCITRAL Model Law (Model Law) primarily governs international commercial arbitration that may be seated in the Philippines; (ii) Republic Act No. 876 (1953), or the Arbitration Law (RA 876), continues to govern domestic arbitration, subject to the provisions of the ADR Act and the Model Law; and (iii) Executive Order No. 1008 (1985) (EO 1008) governs construction disputes in the Philippines.

  4. 4.Arbitration bodies in your jurisdiction
    What arbitration bodies relevant to international arbitration are based within your jurisdiction? Do such bodies also act as appointing authorities?
    1. The following arbitration bodies are based in the Philippines:

      • Construction Industry Arbitration Commission (CIAC), which was created in 1986 by virtue of EO 1008 and has original and exclusive jurisdiction over “contracts entered into by parties involved in construction in the Philippines, whether the disputes arises before or after the completion of the contract, or after the abandonment or breach thereof”,
      • the Philippine Dispute Resolution Center, Incorporated (PDRCI), which was organised in 1996 by the Philippine Chamber of Commerce and Industry to provide alternative dispute resolution services in the Philippines and has forged cooperation agreements with various international arbitration centres, and
      • the Philippine International Center for Conflict Resolution (PICCR), which was organised by the Integrated Bar of the Philippines (IBP) in 2019 to, among others, provide alternative dispute resolution services all over the Philippine archipelago. The CIAC, PDRCI and PICCR also act as appointing authorities. In ad hoc arbitrations, the IBP National President serves as the appointing authority.
  5. 5.Foreign institutions
    Can foreign arbitral providers operate in your jurisdiction?
    1. There is no explicit prohibition against foreign arbitral providers having offices in the Philippines, subject to compliance with legal requirements for doing business. There is also no prohibition having arbitration proceedings under the rules of foreign arbitration institutions being seated, or having hearings held, in the Philippines.    

  6. 6.

    Courts
    Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with, and supportive of, the law and practice of international arbitration?

    1.  There is as yet no specialist arbitration court in the Philippines; however, arbitration-related proceedings are ordinarily assigned to trial courts designated as commercial courts. In any case, the Philippine judiciary is supportive of the law and practice of international arbitration. In particular, the Philippine Supreme Court has enacted the Special Rules of Court on Alternative Dispute Resolution (Special ADR Rules) that govern arbitration-related court proceedings, such as applications for interim relief and the enforcement and setting aside of awards. In the case of Mabuhay Holdings Corp v Sembcorp Logistics Limited (G.R. No. 212734, 5 December 2018), the Supreme Court recognised the state’s policy in favour of arbitration and the enforcement of awards by, among other things, adopting a narrow approach in determining whether the enforcement of an award would be contrary to public policy.

    Agreement to arbitrate

  7. 7.Formalities
    What, if any, requirements must be met if an arbitration agreement is to be valid and enforceable under the law of your jurisdiction? Can an arbitration agreement cover future disputes?
    1. Philippine law requires that an arbitration agreement must be in writing. This means that it is contained in a document, signed by the parties, or in any other means of telecommunication providing a record of the agreement, or in an exchange of statements of claim and defence wherein the agreement’s existence is alleged by a party without being denied by the other party. The reference in a contract to a document that contains an arbitration clause shall constitute an arbitration agreement, provided that the contract is in writing, and the reference is such as to make that clause part of the contract (Department of Justice Circular No. 98, ADR Act’s Implementing Rules and Regulations [ADR Act IR], article 4.7). Parties may agree that future disputes be referred to arbitration.

  8. 8.Arbitrability
    Are any types of dispute non-arbitrable? If so, which?
    1. Philippine law enumerates, by way of exception, the following matters that cannot be subject to arbitration: (i) labour disputes; (ii) the civil status of persons; (iii) the validity of marriage; (iv) any ground for legal separation; (v) the jurisdiction of courts; (vi); future legitime; (vii) future support; viii) criminal liability; and ix) those which by law cannot be compromised (ADR Act, section 6).  

  9. 9.Third parties
    Can a third party be bound by an arbitration clause and, if so, in what circumstances? Can third parties participate in the arbitration process through joinder or a third-party notice?
    1. Contracts, such as an arbitration agreement, generally take effect only between the parties, their assigns, and heirs, as provided in article 1311 of the Civil Code of the Philippines (Civil Code). Thus, as a general rule, a third party cannot be bound by an arbitration agreement. Having said that, joinder of third parties may be allowed under circumstances set out in the applicable arbitration rules, and in the ADR Act IRR in case of ad hoc arbitrations. Under the ADR Act IRR, when a claimant in an arbitration proceeding joins persons who are not parties to the arbitration agreement, the respondent shall be deemed to have consented to the joinder unless the respondent, not later than the date of communicating the answer to the request for arbitration, objects to the joinder. The additional respondents shall also be deemed to have consented to the joinder unless they object not later than the date of communicating their answer (ADR Act IRR, article 5.44(b)).

      The 2015 PDRCI Arbitration Rules (PDRCI Rules) and the 2019 PICCR Handbook and Arbitration Rules (PICCR Rules) both allow a party wishing to join an additional party to the arbitration to submit the appropriate request to the institution or the tribunal once constituted.

  10. 10.Consolidation
    Would an arbitral tribunal with its seat in your jurisdiction be able to consolidate separate arbitral proceedings under one or more contracts and, if so, in what circumstances?
    1. The parties and the tribunal may agree to consolidate different arbitral proceedings or hold concurrent hearings, upon such terms as may be agreed upon. The tribunal has the power to consolidate only if the parties confer such power to it (ADR Act IRR, article 4.45).

      Consolidation may be allowed under the PDRCI and the PICCR arbitration where (i) parties agree to consolidate, (ii) all the claims in the arbitrations are made under the same arbitration agreement, or (iii) generally, in both or all arbitrations, there is a common question of law or fact, or related reliefs, and the institutional body finds the arbitration agreements to be compatible (PICCR Rules, article 10; PDRCI Rules, article 10).

  11. 11.

    Groups of companies
    Is the "group of companies doctrine" recognised in your jurisdiction?

    1. The ‘group of companies doctrine’ has not been expressly recognised by the Philippine Supreme Court as to bind non-parties to an arbitration agreement. However, the Supreme Court has recognised instances wherein it has allowed the piercing of the corporate veil if the corporation is used as a vehicle for fraud or as an alter ego of a person (namely, directors, trustees or officers of a corporation) (Lanuza, Jr v BF Corp., G.R. No. 174938, 1 October 2014). Having said that, this doctrine of piercing of the corporate veil has not yet been applied by the Supreme Court to bind non-parties to an arbitration agreement.

  12. 12.Separability
    Are arbitration clauses considered separable from the main contract?
    1. Philippine courts recognise the principle of separability of the arbitration clause. Thus, an arbitration clause shall be treated as an agreement independent of the other terms of the contract of which it forms part. Thus, even if the contract where the arbitration clause is found is deemed void, it shall not automatically invalidate the arbitration clause (Special ADR Rules, Rule 2.2).

  13. 13.Competence-competence
    Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal’s jurisdiction and competence?
    1. Philippine law recognises the competence-competence principle. Thus, the tribunal may initially rule on its own jurisdiction, including any objections regarding the existence or validity of the arbitration agreement or any condition precedent to the filing of a request for arbitration, and Philippine courts are directed to exercise judicial restraint in ruling on these issues.

      When a Philippine court is asked to determine whether the arbitration agreement is void, inoperative, or incapable of being performed, the court must make only a prima facie determination of that issue. The court must suspend the action and refer the parties to arbitration, unless it makes a prima facie determination that the agreement is void, inoperative, or incapable of being performed (Special ADR Rules, Rules 2.2 and 2.4).

  14. 14.Drafting
    Are there particular issues to note when drafting an arbitration clause where your jurisdiction will be the seat of arbitration or the place where enforcement of an award will be sought?
    1. As a party to the New York Convention, the Philippines generally recognises and enforces the parties’ arbitration agreement. Having said that, considering that the CIAC has been granted by law original and exclusive jurisdiction over construction disputes in the Philippines, the Philippine Supreme Court reads arbitration clauses found in construction contracts, or other contracts that may relate to construction in the Philippines, as providing for CIAC arbitration if such arbitration clause is silent, or providing for CIAC arbitration as an alternative if such arbitration clause names a different arbitration institution. Thus, if the parties to a construction dispute have entered or enter into an arbitration agreement, the parties may refer their construction dispute to CIAC arbitration regardless of the absence of, or different, agreement on the specific arbitration institution under which rules the arbitration shall proceed. Stated differently, Philippine law reads into the arbitration agreement, of parties in a Philippine construction dispute, CIAC arbitration as an alternative, giving the parties a choice of arbitration under the CIAC Rules or the arbitration rules of the specified arbitration institution. 

  15. 15.Institutional arbitration
    Is institutional international arbitration more or less common than ad hoc international arbitration? Are the UNCITRAL Rules commonly used in ad hoc international arbitrations in your jurisdiction?
    1. Institutional international arbitration appears more common in the Philippines than ad hoc international arbitration. UNCITRAL Rules are commonly used in ad hoc international arbitrations in the Philippines.

  16. 16.Multi-party agreements
    What, if any, are the particular points to note when drafting a multi-party arbitration agreement with your jurisdiction in mind? In relation to, for example, the appointment of arbitrators.
    1. Multi-party arbitration agreements should explicitly include a procedure for the appointment of the arbitrators.

      The PDRCI and PICCR arbitration rules allow the multiple claimants and multiple respondents to jointly nominate/appoint the arbitrators (PDRCI Rules, article 15; and PICCR Rules, article 12). The CIAC’s Revised Rules of Procedure Governing Construction Arbitration (CIAC Rules) allow the multiple parties to agree on the method for constituting the tribunal, otherwise the CIAC will appoint the arbitrators. (CIAC Rules, section 9.1.2)

      However, the ADR Act IRR does not address this issue. (ADR Act IRR, article 4.11 [c] and article 5.10 [c]).

    Commencing the arbitration

  17. 17.Request for arbitration
    How are arbitral proceedings commenced in your jurisdiction? Are there any key provisions under the arbitration laws of your jurisdiction relating to limitation periods of which the parties should be aware?
    1. The commencement of arbitral proceedings is generally determined by the procedure adopted by the parties.

      Under the PDRCI, PICCR, and CIAC arbitration rules, arbitration is generally deemed commenced when the notice of, or request for, arbitration is filed and received by the institution, and the filing fee is paid (PDRCI Rules, article 4; PICCR Rules, article 4; and CIAC Rules, section 3.4).

      Ad hoc international commercial arbitration is commenced upon receipt by the respondent of a request for that dispute to be referred to arbitration. In ad hoc domestic arbitration, it is commenced upon the delivery to the respondent of a demand for arbitration (ADR Act IRR, article 4.21 and 5.20).

      Parties are free to agree as to the limitation period for the commencement of the arbitration for so long as the period is reasonable. Absent any such agreement, the dispute that arose from a written contract must be commenced within 10 years from the time the dispute arose (Civil Code, article 1144).

    Choice of law

  18. 18.Choice of law
    How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?
    1. The substantive law which shall govern the dispute depends on the ‘choice of law’ provision in the contract. In the absence of agreement, the tribunal shall apply the conflict of law rules which it considers applicable. In all cases, the tribunal shall decide based on the terms of the contract and taking into account the usages of the trade which applies to the transaction (ADR Act IRR, article 4.28).

      In Crescent Petroleum Ltd v M/V ‘Lok Maheshwari’ (G.R. No. 155014, 11 November 2005), the Philippine Supreme Court stated that, in the absence of an effective choice of law by the parties, the forum contacts to be considered include: (i) the place of contracting; (ii) the place of negotiation of the contract; (iii) the place of performance; (iv) the location of the subject matter of the contract; and (v) the domicile, residence, nationality, place of incorporation and place of business of the parties.

    Appointing the tribunal

  19. 19.Choice of arbitrators
    Does the law of your jurisdiction place any limitations in respect of a party’s choice of arbitrator?
    1. The parties may freely determine the number of arbitrators. No person may be excluded from consideration by reason of nationality, unless the parties otherwise provide. The parties are also free to agree on the procedure to select the arbitrators (ADR Act IRR, articles 4.10 and 4.11).

      Under the ADR Act and Model Law, there are no explicit criteria for an arbitrator under international commercial arbitration. The parties may freely determine the number of arbitrators. No person may be excluded from consideration by reason of nationality, unless the parties otherwise provide. The parties are also free to agree on the procedure to select the arbitrators (ADR Act IRR, articles 4.10 and 4.11).

      Under domestic arbitration, an arbitrator must have legal capacity and be literate. Further, the arbitrator must not (i) be related blood or marriage within the sixth degree to either party, (ii) have had had financial, fiduciary or other interest in the controversy, or (iii) have any personal bias. (RA 876, section 10).

  20. 20.Foreign arbitrators
    Can non-nationals act as arbitrators where the seat is in your jurisdiction or hearings are held there? Is this subject to any immigration or other requirements?
    1. The ADR Act IRR explicitly provides that no person is precluded from acting as an arbitrator by reason of his/her nationality, unless otherwise agreed by the parties (ADR Act IRR, article 4.11).

      There are no special immigration requirements that apply particularly to arbitrators. Furthermore, a temporary visa is generally not required if the arbitrator is a national of a country that has diplomatic relations with the Philippines and their stay in the Philippines does not exceed 30 days.

  21. 21.Default appointment of arbitrators
    How are arbitrators appointed where no nomination is made by a party or parties or the selection mechanism fails for any reason? Do the courts have any role to play?
    1. If the parties fail to determine the number of arbitrators, there shall be three arbitrators. If the parties fail to agree on the selection procedure, each party shall appoint one arbitrator, with the third arbitrator to be selected by the two prior appointees. An appointing authority shall appoint an arbitrator, at the request of any party, if (a) a party fails to appoint an arbitrator within 30 days from receipt of request from the other party, or (b) if the two arbitrators fail to agree on the third arbitrator within 30 days of their appointment (ADR Act IRR, Article 4.11 (c)(i)). Institutional bodies are the default appointing authority in institutional arbitrations (CIAC Rules, Rule 10. 2 and 10.4; PDRCI Rules, articles 13.2 and 14.2; PICCR Rules, articles 12.2 and 12.4), while the National President of the IBP is the default appointing authority in ad hoc arbitrations.   

      The parties may generally apply to the Philippine courts to act as the appointing authority if (i) the institution fails to perform its duty as appointing authority within reasonable time in an institutional arbitration, and (ii) if the National President of the IBP or its duly authorised representative fails to act within the allotted period in an ad hoc arbitration (Special ADR Rules, Rule 6.1(a)(b) in relation to ADR Act IRR, article 4.11 (d)).

  22. 22.Immunity
    Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?
    1. There is no express law granting arbitrators a general immunity from suit. But, arbitrators are not civilly liable for acts done in the performance of their duties, unless there is a clear showing of bad faith, malice or gross negligence (ADR Act, section 5, in relation to the Administrative Code of 1987, Book 1, Chapter 9, section 38(1)).

  23. 23.Securing payment of fees
    Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?
    1. There is no Philippine law specifically providing for security for the payment of arbitrator’s fees. Arbitrators in ad hoc arbitrations will have to enter into an arrangement with the parties for the deposit for arbitration expenses and arbitrator’s fees subject to liquidation and return of any balance, if any, after the arbitration is terminated. The PDRCI have on occasion agreed to provide secretariat services to ad hoc arbitrations for a fee, which includes fundholding services for the deposits of the parties.

    Challenges to arbitrators

  24. 24.Grounds of challenge
    On what grounds may a party challenge an arbitrator? How are challenges dealt with in the courts or (as applicable) the main arbitration institutions in your jurisdiction? Will the IBA Guidelines on Conflicts of Interest in International Arbitration generally be taken into account?
    1. A challenge to an arbitrator may be made only if there are circumstances that exist giving rise to justifiable doubts as to impartiality or independence, or if the arbitrator does not possess the required qualifications as agreed by the parties. If a party appointed the arbitrator or if the former participated in the selection, the party may only challenge the arbitrator for reasons of which the party became aware after the appointment was made (ADR Act IRR, article 4.12 (b)).

      The aggrieved party may request the appointing authority to rule on the challenge. If the appointing authority fails or refuses to rule or act on the challenge, within such period as allowed under the applicable rule or, in the absence thereof, within 30 days from receipt of the request, the aggrieved party may renew that challenge in court (Special ADR Rules, Rule 7.2).

      The IBA Guidelines on Conflicts of Interest in International Arbitration for its arbitration proceedings (IBA Guidelines) are generally taken into account and persuasive, in resolving challenges.

    Interim relief

  25. 25.

    Types of relief
    What main types of interim relief are available in respect of international arbitration and from whom (the tribunal or the courts)? Are anti-suit injunctions available where proceedings are brought elsewhere in breach of an arbitration agreement?

    1. Parties may apply to a tribunal, or Philippine courts before the constitution of the tribunal or after the constitution when the tribunal has no power to act or is unable to act effectively, for the grant of interim relief in order to prevent irreparable loss or injury, provide security for the performance of any obligation, produce or preserve any evidence, and compel any other appropriate act or omission. These include but are not limited to (i) preliminary injunctions against a party, (ii) appointment of a receiver, and (iii) detention, preservation or inspection of the subject property of the arbitration (ADR Act, sections 28 and 29). An anti-suit injunction is in the nature of a preliminary injunction and may be sought from a tribunal or a Philippine court to restrain a party from pursuing a proceeding in breach of an arbitration agreement.

  26. 26.Security for costs
    Does the law of your jurisdiction allow a court or tribunal to order a party to provide security for costs?
    1. The ADR Act grants the tribunal and courts the power to grant interim relief to provide security for the performance of any obligation (ADR Act, section 28[b][2])). This power is broad and may be invoked to cover security for costs, although this has not been confirmed by case law.

    Procedure

  27. 27.

    Procedural rules
    Are there any mandatory rules in your jurisdiction that govern the conduct of the arbitration (eg, general duties of the tribunal and/or the parties)?

    1. Arbitration proceedings seated in the Philippines are primarily governed by the rules agreed upon by the parties and, failing such agreement, such procedure as the tribunal may consider appropriate, as supplemented by the provisions of the ADR Act and the ADR Act IRR.

  28. 28.Refusal to participate
    What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?
    1. If the respondent fails to communicate its defence, the arbitration shall continue and the failure is not treated as an admission. If any party fails to appear at a hearing or to produce documentary evidence, the tribunal may continue and make the award on the evidence before it (ADR Act IRR, articles 4.25 and 5.25).

      If the respondent fails to appoint an arbitrator within 30 days of receipt of a request to do so, the appointment may be made by the appointing authority, upon request of a party (ADR Act IRR, article 4.11[c] and article 5.10 [c]).

  29. 29.

    Admissible evidence
    What types of evidence are usually admitted, and how is evidence usually taken? Will the IBA Rules on the Taking of Evidence in International Arbitration generally be taken into account?

    1. Parties generally offer testimonial evidence of an ordinary or expert witness, as well as documentary evidence supporting the testimony of its witnesses. Parties are given the opportunity to submit judicial affidavits of their witnesses, to which are attached the documentary evidence relevant to the testimony. The opposing party will be given an opportunity to cross-examine the witness during a hearing, where the tribunal may also ask clarificatory questions. In this regard, the parties generally agree that the IBA Rules on the Taking of Evidence in International Commercial Arbitration be taken into account by, or at the least guide, the arbitrators. The power of the tribunal to determine the conduct of the arbitration includes the power to determine the admissibility, relevance, materiality and weight of any evidence (ADR Act IRR, articles 4.19 and 5.18).

  30. 30.Court assistance
    Will the courts in your jurisdiction play any role in the obtaining of evidence?
    1. A party may petition the court to direct any person or entity, which is found in the Philippines, to:

      • comply with a subpoena;
      • appear as witness;
      • allow physical examination of a person’s condition, or inspection of a thing or premises;
      • allow recording or documentation of a person, thing or premises;
      • allow the examination and copying of documents; and
      • perform any similar acts (Special ADR Rules, Rule 9.5).
  31. 31.Document production
    What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?
    1. The tribunal has the power to require the production of documents (ADR Act IRR, Article 4.27). To enforce such directive, a party may petition a Philippine court to assist in the taking of evidence (Special ADR Rules, Rule 9.5).

  32. 32.Hearings
    Is it mandatory to have a final hearing on the merits?
    1. Hearings are not mandatory. In international arbitration, subject to any contrary agreement by the parties, the tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of documents and other materials. However, unless the parties have agreed that no hearings shall be held, the tribunal shall hold such hearings at an appropriate stage of the proceedings, if so requested by a party.

      In domestic arbitration, the parties may agree to submit their dispute to arbitration other than through oral hearing. The parties may submit an agreed statement of facts. They may also submit their respective contentions to the duly appointed arbitrators in writing; this shall include a statement of facts, together with all documentary proof (section 18, R.A 876).

  33. 33.

    Seat or place of arbitration
    If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?

    1. Unless otherwise agreed by the parties, the tribunal may meet at any place appropriate for consultation among its members, for hearing witnesses, experts, or the parties, or for inspection of goods, other property or documents (ADR Act IRR, article 5.19).

    Award

  34. 34.Majority decisions
    Can the tribunal decide by majority?
    1. Unless otherwise agreed by the parties, any decision of a tribunal shall be made by a majority of all its members. For procedural questions, it may be decided by a presiding arbitrator, if authorised by the parties or all the members of the tribunal (ADR Act IRR, article 4.29).

  35. 35.Limitations to awards and relief
    Are there any particular types of remedies or relief that an arbitral tribunal may not grant?
    1. Philippine law does not limit the types of remedies or relief that a tribunal may grant in a valid arbitration, except that the tribunal should not exceed its powers.

  36. 36.Dissenting arbitrators
    Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?
    1. Philippine law does not prohibit the issuance of dissenting opinions. However, they are not common in practice.

  37. 37.Formalities
    What, if any, are the legal and formal requirements for a valid and enforceable award?
    1. The form and content of the award shall be: (i) in writing; (ii) signed by the arbitrator or arbitrators; (iii) state the reasons upon which it is based, unless the parties have agreed that no reasons shall be given or if the award is on agreed terms; and (iv) state the date and place of arbitration. After the award is made, a signed copy shall be delivered to each party (ADR Act IRR, article 4.31).

  38. 38.Time frames
    What time limits, if any, should parties be aware of in respect of an award? In particular, do any time limits govern the interpretation and correction of an award?
    1. A request for correction or interpretation of the award from the tribunal must be made within 30 days from receipt of the award, unless a different period is agreed upon (ADR Act IRR, article 4.33 and 5.33). In domestic arbitration, a petition for the correction of an award may also be filed with the courts within 30 days from receipt of the award (Special ADR Rules, Rule 11.2 [B]).

      In domestic arbitration, a petition to confirm an award may be filed with the appropriate court at any time after the lapse of 30 days from receipt of the award. Petitions in court for the vacation of an arbitral may be filed not later than 30 days from receipt of the award (Special ADR Rules, Rule 11.2[A]).

      In international commercial arbitration conducted in the Philippines, a petition in court for the enforcement and recognition of an award may be filed at any time from receipt of the award. A petition to set aside an award may only be filed within three months from receipt of the award (Special ADR Rules, Rule 12.2).

      In an arbitration conducted outside the Philippines, a petition in court to recognize and enforce a foreign award may be filed at any time after receipt of a foreign award (Special ADR Rules, Rule 13.2).

    Costs and interest

  39. 39.

    Costs
    Are parties able to recover fees paid and costs incurred? Does the "loser pays" rule generally apply in your jurisdiction?

    1. In principle, the costs of arbitration shall be borne by the unsuccessful party. The tribunal may however apportion between the parties such costs if apportionment is reasonable, based on the circumstances (ADR Act IRR, article 4.46(d)).

  40. 40.Interest on the award
    Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?
    1. For an obligation which consists in the payment of a sum of money, and there is a breach, the interest shall be that stipulated by the parties in writing. If there is no stipulation, legal interest is 6 per cent per annum.

      If it is an obligation that does not involve a forbearance of money, an interest for damages awarded shall be 6 per cent per annum. (Civil Code, article 2209; Bangko Sentral ng Pilipinas Circular No. 799, series of 2013). The interest that is demanded shall itself earn interest from the time it is judicially demanded (Eastern Shipping Lines, Inc. v Court of Appeals, G.R. No. 97412, 8 February 2010).

    Challenging awards

  41. 41.Grounds for appeal
    Are there any grounds on which an award may be appealed before the courts of your jurisdiction?
    1. Final awards in a commercial arbitration, whether in a domestic arbitration or an international commercial arbitration seated in the Philippines, are not subject to appeal before the Philippine courts. However, final awards in a CIAC arbitration, may be appealed to the Court of Appeals on questions of law or questions of fact.

  42. 42.Other grounds for challenge
    Are there any other bases on which an award may be challenged, and if so what?
    1. In domestic arbitration, a party may file a petition with the appropriate court to vacate an award on the following grounds:

      • corruption, fraud or other undue means;
      • evident partiality or corruption of the tribunal or its members;
      • misconduct or misbehaviour of the tribunal that materially prejudiced the rights of a party;
      • wilful non-disclosure by an arbitrator of their disqualification;
      • the tribunal exceeded its powers, or so imperfectly executed them, such that a complete, final and definite award upon the subject matter submitted to them was not made;
      • non-existence, invalidity or unenforceability of the arbitration agreement; and
      • minority or incompetence of a party (Special ADR Rules, Rules 11.4).

      In international commercial arbitration seated in the Philippines, a party may file a petition with the appropriate court to set aside an award on the grounds enumerated under article V of the New York Convention, which include:

      • a party’s incapacity
      • improper notification regarding the appointment of arbitrators or the arbitral proceedings;
      • the award deals with a dispute outside the arbitral terms, or contains matters beyond the scope of arbitration;
      • the tribunal’s composition was not in accordance with the parties’ agreements or the law;
      • the award has not yet become binding;
      • the subject-matter of the dispute is incapable of settlement by arbitration under Philippine law; and
      • the recognition or enforcement of the award is against public policy (Special ADR Rules, Rules 11.4 and 12.4).
  43. 43.Modifying an award
    Is it open to the parties to exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?
    1. Article 2044 of the Civil Code provides that any stipulation that the arbitrators’ award or decision shall be final is valid, except when there is a mistake, fraud, violence, intimidation, undue influence or falsity of documents. Nonetheless, parties may not exclude any basis to challenge an award under the New York Convention, and adopted under the ADR Act. This issue, however, has not been resolved by the Philippine Supreme Court.

    Enforcement in your jurisdiction

  44. 44.Enforcement of set-aside awards
    Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?
    1. A Philippine court may refuse to recognise or enforce an award if it finds that the award has been set aside or suspended by a court of the country in which that award was made (Special ADR Rules, Rule 13.4(a)(v)).

  45. 45.Trends
    What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?
    1. The Philippines has a pro-enforcement policy and this was affirmed in the recent decision Mabuhay Holdings Corp v Sembcorp Logistics Limited (G.R. No. 212734, 5 December 2018) where the Philippine Supreme Court ruled, for the first time, that the narrow and restrictive approach must be adopted in defining public policy as a ground to refuse the recognition and enforcement of an award.

      This means that mere errors in the interpretation of the law or factual findings would not suffice to warrant refusal of enforcement under the public policy ground. The illegality or immorality of the award must reach a certain threshold such that, enforcement of the same would be against the State's fundamental tenets of justice and morality, or would blatantly be injurious to the public, or the interests of the society.  This also means that even if the award is contrary to Philippine law, such fact alone would not be sufficient to refuse its enforcement. However, Mabuhay Holdings does not explain how this should be reconciled with article 5 of the Philippine Civil Code, which provides that “acts executed against the provisions of mandatory or prohibitory laws shall be void, except when the law itself authorises their validity.” This was not tested in Mabuhay Holdings considering that the award did not actually violate Philippine law. The Philippine Supreme Court may have to revisit this issue in the future.

  46. 46.State immunity
    To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
    1. State immunity is not among the recognised grounds to resist the enforcement of an award. (Special ADR Rules, Rule 11.4 and 12.4) Further, case law suggests that state immunity cannot be successfully raised as defence at the enforcement stage of commercial arbitration. In particular, Philippine case law provides that: (i) an agreement to submit any dispute to arbitration may be construed as an implicit waiver of immunity from suit, and (ii) the doctrine of immunity from suit is restricted to sovereign or governmental activities and cannot be extended to commercial, private and proprietary acts (China National Machinery & Equipment Corp. v Santamaria, G.R. No. 185572, 7 February 2012).

    Further considerations

  47. 47.Confidentiality
    To what extent are arbitral proceedings in your jurisdiction confidential?
    1. The arbitration proceedings shall generally be considered confidential and shall not be published. The exceptions are: i) consent of the parties; and ii) for the limited purpose of disclosing relevant documents to the court in cases when judicial resort is allowed by law. The court may issue a protective order to prevent or prohibit disclosure of information which contains secret processes, developments, research or such information that shall materially prejudice an applicant (ADR Act, section 23; Special ADR Rules, Rule 10).

  48. 48.Evidence and pleadings
    What is the position relating to evidence produced and pleadings filed in the arbitration? Are these confidential? Is there any way that they might be relied on in other proceedings (whether arbitral or court proceedings)?
    1. The arbitration proceedings, including the records and evidence, are considered confidential. Information obtained during arbitration proceedings may be disclosed to a Philippine court only in the instances wherein resort to the courts is allowed (ADR Act, section 23).

  49. 49.Ethical codes
    What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?
    1. There is no specific mandatory code of ethics applicable to arbitrators. However, the Philippine Institute of Arbitrators has issued a Code of Professional Responsibility for its members. Likewise, if the arbitrator is a Philippine lawyer, the Code of Professional Responsibility promulgated by the Philippine Supreme Court for lawyers will apply.

      Further, PDRCI adopted the (i) Rules of Ethics for International Arbitrators adopted by the International Bar Association (IBA); (ii) 2014 IBA Guidelines on Conflicts of Interest in International Arbitration; and (iii) IBA Guidelines on Party Representation in International Arbitration (PDRCI Administrative Guidelines, article 5, 2015).

  50. 50.Procedural expectations
    Are there any particular procedural expectations or assumptions of which counsel or arbitrators participating in an international arbitration with its seat in your jurisdiction should be aware?
    1. There are none. Except with respect to CIAC arbitration of construction disputes, Philippine arbitration law and rules are generally consistent with international arbitration practice.   

  51. 51.

    Third-party funding
    Is third-party funding permitted in your jurisdiction? If so, are there any rules governing its use?

    1. At present, there are no restrictions on the use of contingency or alternative fee arrangements or third-party funding for arbitration conducted in the Philippines. However, any champertous agreement by a lawyer is against public policy. A contingent fee contract, on the other hand, is permitted.

Interested in contributing to this Know-how?

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GAR know-how provides reliable cross-jurisdictional insight to help cement the building blocks of international practice. In this section, select experienced practitioners answer commonly asked questions for key jurisdictions so allowing readers to be better-placed to solve the challenges of their working days.

Questions

    Infrastructure

  1. 1.The New York Convention
    Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?
  2. 2.Other treaties
    Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?
  3. 3.National law
    Is there an arbitration act or equivalent and, if so, is it based on the UNCITRAL Model Law? Does it apply to all arbitral proceedings with their seat in your jurisdiction?
  4. 4.Arbitration bodies in your jurisdiction
    What arbitration bodies relevant to international arbitration are based within your jurisdiction? Do such bodies also act as appointing authorities?
  5. 5.Foreign institutions
    Can foreign arbitral providers operate in your jurisdiction?
  6. 6.

    Courts
    Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with, and supportive of, the law and practice of international arbitration?


  7. Agreement to arbitrate

  8. 7.Formalities
    What, if any, requirements must be met if an arbitration agreement is to be valid and enforceable under the law of your jurisdiction? Can an arbitration agreement cover future disputes?
  9. 8.Arbitrability
    Are any types of dispute non-arbitrable? If so, which?
  10. 9.Third parties
    Can a third party be bound by an arbitration clause and, if so, in what circumstances? Can third parties participate in the arbitration process through joinder or a third-party notice?
  11. 10.Consolidation
    Would an arbitral tribunal with its seat in your jurisdiction be able to consolidate separate arbitral proceedings under one or more contracts and, if so, in what circumstances?
  12. 11.

    Groups of companies
    Is the "group of companies doctrine" recognised in your jurisdiction?


  13. 12.Separability
    Are arbitration clauses considered separable from the main contract?
  14. 13.Competence-competence
    Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal’s jurisdiction and competence?
  15. 14.Drafting
    Are there particular issues to note when drafting an arbitration clause where your jurisdiction will be the seat of arbitration or the place where enforcement of an award will be sought?
  16. 15.Institutional arbitration
    Is institutional international arbitration more or less common than ad hoc international arbitration? Are the UNCITRAL Rules commonly used in ad hoc international arbitrations in your jurisdiction?
  17. 16.Multi-party agreements
    What, if any, are the particular points to note when drafting a multi-party arbitration agreement with your jurisdiction in mind? In relation to, for example, the appointment of arbitrators.
  18. Commencing the arbitration

  19. 17.Request for arbitration
    How are arbitral proceedings commenced in your jurisdiction? Are there any key provisions under the arbitration laws of your jurisdiction relating to limitation periods of which the parties should be aware?
  20. Choice of law

  21. 18.Choice of law
    How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?
  22. Appointing the tribunal

  23. 19.Choice of arbitrators
    Does the law of your jurisdiction place any limitations in respect of a party’s choice of arbitrator?
  24. 20.Foreign arbitrators
    Can non-nationals act as arbitrators where the seat is in your jurisdiction or hearings are held there? Is this subject to any immigration or other requirements?
  25. 21.Default appointment of arbitrators
    How are arbitrators appointed where no nomination is made by a party or parties or the selection mechanism fails for any reason? Do the courts have any role to play?
  26. 22.Immunity
    Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?
  27. 23.Securing payment of fees
    Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?
  28. Challenges to arbitrators

  29. 24.Grounds of challenge
    On what grounds may a party challenge an arbitrator? How are challenges dealt with in the courts or (as applicable) the main arbitration institutions in your jurisdiction? Will the IBA Guidelines on Conflicts of Interest in International Arbitration generally be taken into account?
  30. Interim relief

  31. 25.

    Types of relief
    What main types of interim relief are available in respect of international arbitration and from whom (the tribunal or the courts)? Are anti-suit injunctions available where proceedings are brought elsewhere in breach of an arbitration agreement?


  32. 26.Security for costs
    Does the law of your jurisdiction allow a court or tribunal to order a party to provide security for costs?
  33. Procedure

  34. 27.

    Procedural rules
    Are there any mandatory rules in your jurisdiction that govern the conduct of the arbitration (eg, general duties of the tribunal and/or the parties)?


  35. 28.Refusal to participate
    What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?
  36. 29.

    Admissible evidence
    What types of evidence are usually admitted, and how is evidence usually taken? Will the IBA Rules on the Taking of Evidence in International Arbitration generally be taken into account?


  37. 30.Court assistance
    Will the courts in your jurisdiction play any role in the obtaining of evidence?
  38. 31.Document production
    What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?
  39. 32.Hearings
    Is it mandatory to have a final hearing on the merits?
  40. 33.

    Seat or place of arbitration
    If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?


  41. Award

  42. 34.Majority decisions
    Can the tribunal decide by majority?
  43. 35.Limitations to awards and relief
    Are there any particular types of remedies or relief that an arbitral tribunal may not grant?
  44. 36.Dissenting arbitrators
    Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?
  45. 37.Formalities
    What, if any, are the legal and formal requirements for a valid and enforceable award?
  46. 38.Time frames
    What time limits, if any, should parties be aware of in respect of an award? In particular, do any time limits govern the interpretation and correction of an award?
  47. Costs and interest

  48. 39.

    Costs
    Are parties able to recover fees paid and costs incurred? Does the "loser pays" rule generally apply in your jurisdiction?


  49. 40.Interest on the award
    Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?
  50. Challenging awards

  51. 41.Grounds for appeal
    Are there any grounds on which an award may be appealed before the courts of your jurisdiction?
  52. 42.Other grounds for challenge
    Are there any other bases on which an award may be challenged, and if so what?
  53. 43.Modifying an award
    Is it open to the parties to exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?
  54. Enforcement in your jurisdiction

  55. 44.Enforcement of set-aside awards
    Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?
  56. 45.Trends
    What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?
  57. 46.State immunity
    To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
  58. Further considerations

  59. 47.Confidentiality
    To what extent are arbitral proceedings in your jurisdiction confidential?
  60. 48.Evidence and pleadings
    What is the position relating to evidence produced and pleadings filed in the arbitration? Are these confidential? Is there any way that they might be relied on in other proceedings (whether arbitral or court proceedings)?
  61. 49.Ethical codes
    What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?
  62. 50.Procedural expectations
    Are there any particular procedural expectations or assumptions of which counsel or arbitrators participating in an international arbitration with its seat in your jurisdiction should be aware?
  63. 51.

    Third-party funding
    Is third-party funding permitted in your jurisdiction? If so, are there any rules governing its use?