Alternative Dispute Resolution Notes for Arellano University School of Law

ADR (based on ATTY HIGUIT’S OUTLINE) - 1

Membership ....................................... ........................................................... ....................... ... 23 Contents

Governing bodies ............................................. ...................................................... ......... 23 World Council ....................................... ....................................................... ................ 23

I. INTRODUCT INTR ODUCT ION ..................................... ....................................................... ..................2 1.1

BRIEF DESCRIPTION OF ADR SYSTEM .... 2

Alternative Dispute Resolution (ADR) ......................... ........................... 2 1.2

BASIC PRINCIPLE OF ADR .......................... .......................... 2

1.3 UNDERSTANDING DISPUTE RESOLUTION OPTIONS ....................................... ........................................... .... 3 1.4 Advantages/Benefits and Disadvantages of Alternative Dispute Resolution .................................. .................................. 5 1.4.1

Benefits of ADR ADR ...................................... ...................................... 5

1.4.2

Disadvantages Disadvantages of ADR ADR .......................... .......................... 8

1.4.3 BENEFITS OF ALTERNATIVE DISPUTE RESOLUTION ...................................... ........................................ 9 1.5 ADR

COMPARISON BETWEEN Litigation AND 10

1.5.1

Litigation (Court Based Adjudication) 10

1.5.2

Alternative Dispute Resolution (ADR) 10

Executive Board ....................................... .................................................... ............. 24 International Secretariat .................................... ...................................... .. 24 National Committees.................. Committees...................................... .......................... ...... 24 Finance Committee .............................................. .............................................. 24 Dispute Resolution Services .................................... .................................... 24 Policy and business practices ................................... ................................... 24 2.2.3 INTERNATIONAL CENTER FOR SETTLEMENT OF INVESTMENT DISPUTES (ICSID) (CONVENTION ON THE SETTLEMENT OF INESTMENT DISPUTE BETWEEN STATES AND NATIONALS OF OTHER STATES) ........... 24 2.2.4 UNITED NATIONS COMMISSION FOR INTERNATIONAL TRADE LAW (UNICITRAL MODEL LAW ON INTRNATIONAL COMMERCIAL ARBITRATION-1985)............... 26 History ....................................... .......................................................... ................................ ............. 26 Membership ....................................... ........................................................... ....................... ... 26 Conventions........................................ ............................................................ ....................... ... 27

Litigation and ADR Contrasted............11

Model laws ................................. .................................................... ................................ ............. 27

1.6

LIMITATION OF ADR IN GENERAL .........11

CLOUT (Case Law on UNCITRAL Texts) ............... ............... 27

1.7

SUBJECT OF ADR...................................... ......................................... ...11

2.2.5 WORLD TRADE ORGANIZATION (MARRAKESH AGREEMENT) (DISPUTE SETTLEMENT UNDERSTANDING).................. 27

1.5.3

2 INTERNATIONAL ALTERNATIVE DISPUTE RESOLUTION/ PEACEFUL SETTLEMENT OF INTERNATIONAL DISPUTE ..................................... ....................................... .. 17

2.3 ENFORCEMENT AND RECOGNITION OF AWARDS ........................ ............................................ ......................................... ....................... .. 36

2.1 INTRODUCTION TO PUBLIC INTERNATIONAL LAW AND PRIVATE INTERNATIONAL LAW .................................. ........................................... ......... 17

Convention on the Recognition and Enforcement of Foreign Arbitral Awards ...................................... ............................................... ......... 36

Public international law ................................................ ................................................ 17

Contents........................................................ ..................................................................... ............. 36

Private international law ...................................... ............................................... ......... 17

Background ..................................... ......................................................... .......................... ...... 36

Conflicts between public international law and national sovereignty sovereignty .................................................. .................................................... ... 17

Summary of provisions................................ provisions............................................. ............. 37

2.1.1 BASIC PRINCIPLES OF INTERNATIONAL LAW (SOVEREIGNTY, JURISDICTION, INDEPENDENCE etc.) ........... 18

Parties to the New York Convention ....................... ....................... 37 United States Issues............................................... Issues.................................................. ... 37 2.4

TYPES OF ADR ...................................... ............................................ ...... 38

2.1.1.1

Sovereignty ....................................... ................................................... ............18

2.4.1

1. Negotiation ....................................... ....................................... 38

2.1.1.3

Independence Independence ................................................ ............................................... 19

2.4.2

Assisted negotiation ............................ ............................ 38

2.1.2 ARTICLE 33 PARAGRAPH 1 OF THE UN CHARTER ........................................... ....................................................... ............ 21

2.4.3

2. Mediation ....................................... ......................................... .. 38

2.4.4

3. Conciliation ...................................... ...................................... 38

2.1.3 INTERNATIONAL COURT OF JUSTICE 21

2.4.5

4. Arbitration........................ Arbitration........................................ ................ 38

2.2 RELEVANT ALTERNATIVE DISPUTE SETTLEMENT INSTITUTIONS .............................. .............................. 21 2.2.2 INTERNATIONAL COURT OF ARBITRATION (INTERNATIONAL CHAMBER CHAMBER OF COMMERCE) .................................................. ..................................................23

Case presentation or mini-trial mini -trial ............................41 Independent expert appraisal or early neutral evaluation ....................................... ........................................................... ........................ ....41 Litigation ..................................... ......................................................... ........................... .......41 2.4.6

5. INQUIRY AND FACT FINDING .....41


2.4.7 3

6. GOOD OFFICES ............................... ............................... 41

DOMESTIC ARBITRATION ................................ ................................ 41 3.1 INTRODUCTION TO DOMESTIC COMMERCIAL DISPUTE RESOLUTION .............. 41 3.2 ALTERNATIVE DISPUTE RESOLUTION ACT OF 2004 ...................................... .......................................................... ....................... ... 41 Republic Act A ct No. 9285 ........................................ .............................................. ...... 41 April 2, 2004 ....................................... ........................................................... ....................... ... 41 3.3 REPUBLIC ACT NO. 876 ARBITRATION LAW OF THE PHILIPPINES ...................................50 ...................................50

Some of the senior judiciary in certain jurisdictions (of which England and Wales is one) are strongly in favor of the use of mediation to settle disputes. 1 A type of dispute dispute resolution that seeks to limit the costs the costs of litigation by using alternative, often out-of-court means, means, such as as arbitration, arbitration, conciliation and summary and summary possession proceedings. proceedings. Alternative dispute resolutionoptions are voluntary, voluntary, and often involve a neutral third neutral third party to make decisions. make decisions.2

1.2 BASIC PRINCIPLE OF ADR 

3.4 A.M. No. 07-11-08-SC 07-1 1-08-SC SPECIAL SPECIAL RULES OF COURT ON ALTERNATIVE DISPUTE RESOLUTION September 1, 2009 ......................... 55 3.5

DEPARTMENT CIRCULAR NO. 98 ...........87

3.6

OTHER SC ISSUANCES ON ADR ............ 126

3.7

JUDICIAL DISPUTE RESOLUTION ........ 126

Judicial dispute resolution (JDR) .............................. 126

I. INTRODUCTION



1.1 BRIEF DESCRIPTION OF ADR SYSTEM Alternative Dispute Resolution (ADR) also known as external dispute resolution in some countries, such as Australia includes dispute resolution processes and techniques that act as a means for disagreeing parties to come to an agreement short of litigation. It is a collective term for the ways that parties can settle disputes, with (or without) the help of a third party.



Despite historic resistance to ADR by many popular parties and their advocates, ADR has gained widespread acceptance among both the general public pu blic and the legal profession in recent years. In fact, some courts now require some parties to resort to ADR of some type, usually mediation, before permitting the parties' cases to be tried (indeed the European Mediation Directive (2008) expressly contemplates socalled "compulsory" mediation; attendance that is, not settlement at mediation).



The rising popularity of ADR can be explained by the increasing caseload of traditional courts, the perception that ADR imposes fewer costs than litigation, a preference for confidentiality, and the desire of some parties to have greater control over the selection of the individual or individuals who will decide their dispute. 1

ADR is based on several key principles. First, consensual processes (participation, scope and structure) are more likely to result in outcomes satisfactory to the disputants than a solution imposed by a court. Inherent in this principle is the ability of the parties to structure a process that is tailored to the situation and to the dispute at hand. There is ample experience demonstrating that disputants are more likely to achieve outcomes that serve all disputants’ interests and purposes -- the “win/win” solution -- than solutions imposed by an outside decision maker. The second key principle is the involvement of a third-party neutral whose presence can improve the dynamics of the dialogue needed to achieve a settlement and, in environmental disputes, knowledge and expertise to evaluate the merits and to help frame options for solution if so desired by the parties. The third party’s role is to assist in the process, not to dictate the outcome. This individual is neutral in the sense of having no stake in the outcome or in the parties. A third-party neutral has no authority except as granted under the order or agreement defining the ADR process. One of the principal objectives of the ADR process is to help the parties communicate with each other civilly, by providing a clear statement of the interests driving the dispute and, most importantly, by truly listening to the other side of the dispute. Parties often lack a clear idea of what they are fighting for, much less a good idea of what needs are driving their opponents. Finally, ADR processes generally are confidential except as otherwise agreed by the parties, with the exception of public policy disputes that often facilitate in full public view. Agreements to engage in most ADR processes typically have a confidentiality clause. Mediation conducted in Michigan court proceedings is expressly made confidential by MCR 2.411(C)(5). 2.411(C)(5). As of mid 2010, the confidentiality provisions under MCR 2.411

http://en.wikipedia.org/wiki/A http://en.wikipedia.org/wiki/Alternative_dispu lternative_dispute_resolution te_resolution http://www.businessdictionary.com/ http://www.businessdictionary.com/definition/alternati definition/alternative-disputeve-disputeresolution.html#ixzz204cSk0Xz

2


are being considered for revision. SCAO August 2010 Report on MCR 2.411. 





When the ADR process is not ordered under MCR 2.411, 2.411, the parties must provide for confidentiality by agreement. Where disputes are mediated before or during civil litigation, MRE 408 and FRE and FRE 408 make settlement offers and conduct and statements made in settlement negotiations (i.e., during the ADR process), not admissible. These rules, however, do not require the exclusion of evidence otherwise discoverable merely because it is presented in the course of settlement discussions. The Michigan mediation rule expressly provides that a mediator may not disclose anything that transpired during the mediation to the trial judge except the date of completion of the process, who participated in the mediation, whether settlement was reached and whether further ADR proceedings are contemplated. contemplated. MCR 2.411(C)(3). 2.411(C)(3). Best practice in drafting the mediation agreement should provide the express requirement that the mediator make his or her report to the court in writing with copies to the parties, so that the parties can be assured this rule has been observed. Note that this rule does not permit the mediator to report to the trial court whether any party appeared to be acting in good faith. Likewise, communications made during ADR processes convened by a federal court are protected from disclosure, 28 USC 652(d), although the scope of the protection is not as broad as under the Michigan Court Rules. 3

In its August 2005 resolution (Resolution ALJ-185), the Commission announced five basic principles that are the foundation of the CPUC ADR program: p rogram: VOLUNTARY The parties usually must agree to submit their dispute to mediation or early neutral evaluation. An ALJ, however, may require parties to attend facilitated workshops, settlement conferences, or meet with a neutral to explore the feasibility of mediation. TIMELINESS ADR should shorten, not prolong, proceedings. But even if a negotiated settlement takes longer, the result may be more beneficial to all. GOOD FAITH

3

http://envdeskbook.org/CH19/C http://envdeskbook.org/CH19/Ch19ADR.htm#_ h19ADR.htm#_Toc325551391 Toc325551391

Those who engage in ADR should do so in an attempt to reach agreement--not to delay or secure tactical advantage. CONFIDENTIALITY Most ADR processes require confidentiality so that the parties' fundamental interests can be explored. COMMISSION APPROVAL The CPUC will expeditiously approve settlements that are legally sufficient. 4

1.3 UNDERSTANDING DISPUTE RESOLUTION OPTIONS There are many ways to approach dispute resolution. The great majority of problems encountered by small business are resolved through simple discussion and common sense between the parties and do not escalate into a dispute. In virtually all instances, small businesses should at first attempt to resolve their disputes through direct discussion and negotiation. Disputes will occur, however, where there is a lack of communication, where there are unrealistic expectations or where there is a grievance that cannot be resolved through direct discussion. When a dispute occurs, each party has a choice about the dispute resolution method that they would like to pursue. Unfortunately, litigation is usually the norm and dispute resolution is often approached as a matter between lawyers and the Courts. There are, however, a variety of other approaches available which may save time and money and preserve business relationships. Dispute resolution options for small business range from negotiation-based methods, where the parties have full control over the outcome (generally known as 'alternative dispute resolution' - ADR), to adversarial methods where the parties have less control over the outcome (such as arbitration and litigation). Where a negotiated settlement is reached through ADR, the terms of the settlement, once agreed and signed by the parties, are legally binding and can be enforced if necessary. The chart below sets out some of the advantages and disadvantages of different approaches to dispute resolution.

ADVANTAGES

4

METHOD

DISADVANTAGE S

http://www.cpuc.ca.gov/PUC/A http://www.cpuc.ca.gov/PUC/ADR/adrprinciples.htm DR/adrprinciples.htm




















Parties Control Outcome Time Efficient Cost Efficient



Alternativ e Dispute Resolutio n (ADR)



Does Not Establish Legal Precedent Not Open To Public Scrutiny

A mediator is appointed by the parties to help establish effective communication and by doing so find a solution which satisfies both their needs and interests. The informal process is speedy and cost effective and caters for ongoing business relationships.

Confidenti al Maintains Business Relationsh ips



Non Adversaria l, Informal Process Appropriat e For Fraud Or Criminal Matters



Can Establish a Legal Precedent

Adversal Approach es

Appropriat e Where One Party Has No Intention Of Complianc e

litigation arbitratio n





Not Appropriate For Fraud Or Criminal Behaviour

INTERMEDIATION Similar to Mediation in concept but more sophisticated. The neutral third party closely interacts with the parties in dispute to assess all relevant material, identify key issues, and most importantly, helps to design a process that will lead to resolution of the dispute. 

The process involves separate meetings with the parties at their offices to conduct extensive reality testing, and analysis of parties' legal, commercial and financial positions. The process utilises creative thinking techniques and is suitable for more complex, large or sensitive matters.

Parties Have Limited Control Over The Outcome High Cost & Lengthy Process May Destroy Business Relationshi ps

AN EX PLANATION OF ALTERNATIVE DISPUTE RESOLUTION METHODS ASSISTED NEGOTIATION The parties engage a professional negotiator or 'go-between' to assist parties reach a desired result. It is usually informal and the negotiator can either be appointed by one party or both. In the latter situation he/she is a joint negotiator. This method is often helpful in smaller disputes where parties are still talking to one another and need help to break an impasse, and where they have identified all the issues to be negotiated. 

MEDIATION Mediation is a process where an independent person is used to assist the parties in dispute to find a mutually acceptable solution. The mediator will systematically work through the issues, help identify alternatives, and facilitate final agreement. The process is nonadversarial and focuses on the parties' resolving the dispute themselves using the skills of a mediator. The key principle of 

mediation is that the parties work together to arrive at an agreement that suits both. This is in contrast to litigation and arbitration where a judge or arbitrator imposes a decision which may be disappointing for one or both parties.

FACILITATION The parties appoint a neutral facilitator to manage the dispute resolution process, identify issues and apply specialist techniques to achieve the desired outcome. The facilitator assists by preparing an agenda, chairing meetings, distributing relevant information between the parties and steering them to reach agreed objectives. The process is less formal and more flexible than Mediation. It has wide application and is often used where there are several parties or groups involved with differing points of view, such as creditors or multi-party claimants, joint venture negotiations, and environmental and planning disputes. 

EXPERT DETERMINATION/RECOMMENDATION The parties agree to an independent expert to provide a report on specific aspects of a dispute by examining relevant documentation and material. The expert is usually commissioned to report on technical matters such as standards, compliance, quality specifications, quantification of loss or similar issues. The expert may be asked to provide a recommendation or a determination on the matter depending on the circumstances. 

PARTNERING Often used for long term contracts or in the building/construction industries and in joint venture type projects. A Partnering agreement or charter is based on the parties' need to act in good faith and with fair dealing to one another. The Partnering process focuses on the definition of mutual objectives, improved communication, the identification of likely 


problems and development of formal problem solving and dispute resolution strategies. It is useful, for example, where there is a need to complete a technical or building project with a minimum of disruption and cost and within a tight time frame.



  

AN EXPLANATION OF ADVERSARIAL DISPUTE RESOLUTION METHODS 

LITIGATION Litigation is an adversarial legal process conducted in a Court of law, in accordance with strict procedures, where the parties present legal arguments and evidence to support their claims before a judge. The judge applies the relevant law to the evidence, resulting in a judgement in favour of one of the parties involved.





ARBITRATION Arbitration is an adversarial process, agreed by the parties in dispute, in which each party presents legal arguments and evidence, in accordance with formal procedures, to a mutually agreed arbitrator. The arbitrator makes a determination in favour of one of the parties. This determination is usually legally binding.

  

Flexibility of procedure - the process is determined and controlled by the parties the dispute Lower costs Less complexity ("less is more") Parties choice of neutral third party (and therefore expertise in area of dispute) to direct negotiations/adjudicate Likelihood and speed of settlements Practical solutions tailored to parties’ interests and needs (not rights and wants,as they may perceive them) Durability of agreements Confidentiality The preservation of relationships; [11] and the preservation of reputations.5

The international literature on ADR identifies five major outcomes from ADR. They are:



 

 



1.4 Advantages/Benefits and Disadvantages of Alternative Dispute Resolution The take-up of ADR depends on a combination of three critical factors. First, the extent to which disputants and their advisors are aware of ADR. Second, the adequacy of the supply of ADR services for those that would wish to take-up ADRservices. Third, the perceived advantages and disadvantages of ADR. This section is concerned primarily with the third of those factors. It notes, however, the low level of awareness of ADR among disputants, the critical and influential position of lawyers in determining whether disputants seek resolution through ADR, and comments on the extent to which the court system raises awareness about the potential for ADR as a dispute resolution pathway.

1.4.1

Benefits of ADR

ADR has been both; increasingly used alongside, and integrated formally, into legal systems internationally in order to capitalise on the typical advantages of ADR over litigation: 

Suitability for multi-party disputes

increased settlement improved satisfaction with the outcome or manner in which the dispute is resolved among disputants reduced time in dispute reduced costs in relating to the dispute resolution increased compliance with agreed solutions.

Among stakeholders there is broad agreement that dispute resolution throughADR mechanisms can be beneficial. Nevertheless, there are some significant variations among stakeholders about the extent and nature of those benefits for disputants. ADR practitioners are most enthusiastic about the benefits of ADRtake-up. Lawyers and disputants tend to be more qualified with regard to the actual benefits associated with ADR. ADR Practitioners' View of ADR Benefits Participants in the ADR Practitioners Survey were convinced of the efficacyof ADR techniques in resolving disputes that were already or could be filed in the District or High Courts. Two thirds of the respondents (66 percent) reported that they believed that more that 80 percent of disputes could be resolved through ADR. Only 4 percent reported that they believed that 55 percent or fewer disputes were amenable to effective resolution through ADR (Table 4.1). ADR Practitioners' Estimates of Disputes Effectively Settled by ADR(ADR Practitioners Survey n=139)* Proportion of Disputes Settled by ADRPractitioners ADR Responses % 0-20 percent of disputes 5

0

0

http://en.wikipedia.org/wiki/Alternative_dispute_resolution#Benefits

ADR (based on ATTY HIGUIT’S OUTLINE) - 6 21-30 percent of disputes

1

<1

Want to reduce costs

183

93.4

31-40 percent of disputes

0

0

Want speedy resolution

159

81.1


4

3

Uncertainty of court outcome 142

72.4

51-60 percentof disputes

9

6


5

4

Preservation relationship

86

43.9


28

20

82

41.8


32

23


60

43

Desire for more control over 80 process and outcome

40.8

Privacy and confidentiality

74

37.8

Directed by contract, statute 61 or existing agreement

31.1

Desire for creative solution

48

24.5

Concerns about procedures [8]

39

19.9

* Six missing cases. It was noted in the ADR practitioner focus groups, however, that not all ADRtechniques generated benefits in the same way or to the same extent. A strong distinction was made between mediation and arbitration. Table 4.2 represents ADRpractitioners' assessment of the relative potential of arbitration and mediation in relation to the benefits typically associated with ADR. ADR Practitioner Views on the Relative Potential of Arbitration and Mediation

Desire solution



Reduced financial costs

MediumHigh

Flexible solution

Low

High



Confidentiality

High

High



Low

High

Disputant control

Medium

High

Disputants satisfaction

Low-High

MediumHigh

Speedy resolution

High

High

to

influence



ADR practitioners see the real benefits of arbitration lying in the abilityof the disputants to select an arbitrator by mutual agreement and the considerable specialist expertise an arbitrator may bring to the resolution of a dispute with substantial technical components. It is for the latter reason that arbitrators have so frequently been used in technical sectors such as the building industry. 

Lawyers' Perceptions of ADR Benefits

The majority of lawyers believe that disputants seek ADR resolution ofdisputes in an effort to:

compromise

court

Mediation and negotiation are seen as more likely than arbitration to generate ADR benefits including:

LowMedium

Ability outcome

ongoing

* Multiple response.



Arbitration Mediation

for

of

increased opportunities to resolve a dispute in a way satisfactory to the parties increased likelihood of the parties complying with the remedies or solutions generated through ADR reductions in time delays reductions in costs, and maintenance of confidentiality about both the dispute, the remedies sought and the outcomes.

For lawyers, reaping the potential benefits of ADR is by no means straightforward. For most lawyers the effectiveness of ADR is contingent on two major factors. Firstly, the willingness of disputants to engage in a resolution process, and, secondly, the experience of the ADR practitioners (Table 4.3). Lawyers' Perceptions of Determinants of ADR Efficacy (Lawyers Survey) Lawyers Lawyers Lawyers Working Working Working Equally Primarily Primarily in High Perceived Total in District in High Court and Determinant Court Court District (n=74) (n=64) Court (n=58)

reduce the cost of a dispute speed resolution, and reduce uncertainty around the outcome of judgment in the court system (Table 4.2).

Disputant willingness

76.0% 80.8%

78.1%

69.0%

Experienced ADR practitioner

62.8% 68.5%

60.0%

66.1%

Lawyers' Perceptions of Disputants' Reasons for ADR Take-up* (Lawyers Survey)

Supportive counsel

40.3% 37.5%

40.6%

45.6%

Judicial support

14.8% 21.9%

10.9%

10.7%

Ongoing

14.3% 13.7%

15.6%

14.3%

  

Perceived Reason

Disputant

% of Lawyers Responses (n=196)



relationship between disputants

The quantitative data does indicate some of the subtleties around this issue, however, in relation to the importance of judicial and counsel support as factors in the efficacy of ADR. Overall, 40.3 percent of lawyers saw counsel support as an important determinant. Lawyers working in the High Court or equally in the District Court and High Court were over-represented among those who saw counsel support as an important factor. Lawyers working primarily in the District Court were significantly more likely than lawyers working primarily in the High Court to see judicial support as an important factor in the efficacy ofADR. It is unclear why those differences emerge. The lawyer survey data suggests that there may be some relationship between the ADR skills and experience oflawyers and the extent to which they perceive the importance of their own role in encouraging effective ADR. The High Court lawyers are more likely to be trained in and/or engaged in delivering ADR services than the lawyers working primarily in the District Court (Table 4.4). ADR Training* and ADR Practice Among Lawyers (Lawyers Survey) Lawyers Lawyers Lawyers Working Working Working Equally in Primarily Primarily in High Court in District HighCourt and District Court (n=74) (n=64) Court (n=58) N

%

N

%

N

%

Combines legal practice with 8 ADR Practice

10.8

17

26.6

12

20.7

Trained LEADR Accreditation Workshop

2

2.7

13

20.3

3

5.2

or 3

4.1

2

3.1

6

10.3

1

1.4

0

0.0

1

1.7

AMINZ Associate Fellow Massey University Dispute Resolution Diploma

Dispute Resolution 1 paper(s) as part of LLB On-goingADR training 4 workshops, seminars etc

1.4

5.4

1

8

1.6

12.5

1

4

1.7

6.9

In relation to the willingness of the disputants, it was also noted by manyADR practitioners, lawyers and the judiciary that although disputants may initially feel hesitant and uncomfortable about ADR, disputants in retrospectoften find the experience very useful. This view is consistent with the findingsof the disputant research project. Disputants' Perceptions of ADR Benefits In-depth interviews with 60 disputants with civil cases filed with the court system in the 2000-2002 period revealed that only fourteen used ADR to help resolve their dispute. As shows, settlement was achieved in eleven of those cases throughADR and for a further case ADR resolved some issues. Eleven of those fourteen disputants reported that they would use ADR if ADR was 'suited' to the nature ofthe dispute. Disputant Views on ADR's Contribution to Resolution of their Dispute (Disputant Indepth Interviews n=14) ADR's Contribution to Resolving the Interviewees Case The case settled as a result of ADR

11

ADR did not lead to settlement

2

ADR resolved some issues in the case

1

Total

14

Overall, thirty of the sixty disputant interviewees had had some experienceof using ADR to resolve a dispute. A further twenty disputants knew of ADR. Forty-nine of the sixty disputants involved in in-depth interviews felt able to make some comment about the advantages and disadvantages of ADR. It is clear that ADR is seen as a less costly approach to dispute resolution than having the dispute resolved through a judgment given by the Court. Almost as many see ADRas a comparatively faster mechanism for dispute resolution (Table 4.6). Disputant Views on the Advantages of ADR Identified by Interviewees (Disputant In-depth Interviews n=49)* ADR Advantages

Responses (n=49)*

% ofInterviewees

Cheaper resolution

30

61.2

Faster resolution

27

55.1

More control

8

16.3

Informal process/relaxed/less stressful

6

12.2

More creative solutions

5

10.2

Other

5

10.2

Preserves relationships

3

6.1



1.4.2

Disadvantages of ADR

A trading-off approach in mediation was perceived by ADR practitioners to be particularly widespread in disputes around insurance and employment matters. Some concern was expressed that if that type of approach became prevalent, or the dominant perception of mediation, there would be a backlash against mediation, a hesitancy to take-up mediation opportunities, and a failure to capture the potential benefits of mediation such as solution flexibility, reduction in stress and relationship repair.

There was widespread support across stakeholders for the use of ADRtechniques to resolve disputes. ADR was not always seen as an alternative to resolution through the courts, however. Moreover, even the most enthusiastic supporters of ADR - ADR practitioners still saw some potential disadvantagesfor disputants in using ADR.

Lawyers' Views on the Disadvantagesof ADR

ADR Practitioners' Disadvantages of ADR

For lawyers concerns about ADR focus on three issues. Those are whether ADR:

Views

on

the

Unlike other stakeholders, ADR practitioners tended to see any disadvantagesof ADR for disputants as being related primarily to the particular ADR technique used or the methods by which ADR techniques are implemented. It has already been noted that ADR practitioners, like lawyers and disputants, see arbitration as a less attractive ADR technique than mediation. It should also be recognised, however, that even within mediation, some processes are seen as more likely to achieve all the benefits claimed for ADRth an others. ADR practitioners recognise that mediation may encompass a variety of models, ranging from developing consensual solutions to risk management or evaluative models for dispute resolution. As Boulle notes, mediation is: "a decision-making process in which the parties are assisted by a third-party, the mediator; the mediator attempts to improve the process ofdecision-making and to assist the parties reach an outcome to which each of them can consent". [9] Many ADR practitioners believed the full range of potential benefits, especially those related to increased user satisfaction with outcomes and compliance with ADR resolutions, were less likely to be achieved where mediation focused on risk assessment, cost-benefit review, or evaluation of the likelihoodof success in court rather than consensual solution development. Many ADR practitioners, both those who combine their ADR practice with legal practice and those who do not, expressed considerable concern at techniques directed primarily at trading-off the probability of success in court. This was perceived as particularly prevalent in the Auckland region and was characterised by some ADR practitioners as a model which allowed disputants to be 'bullied'. It was a model that some found antithetical to what they believed to be the core philosophical values of mediation and the core elements which led to better quality solutions the empowerment of the disputants, and the expectation that disputants should take responsibility for mutually generating and committing to consensual solutions.

  

delivers reduced costs and increases timeliness delivers a sound and fair outcome, and generates agreements that can be sustained and enforced.

Lawyers were directly involved in two of the stakeholders research projects. Some of the ADR practitioners were lawyers and some practising lawyers were participants in the ADR practitioner research project as well as the lawyers' research project. What emerged from the lawyer and ADR practitioner research projects as well as the disputant research project was that lawyers have, perhaps more than anyof the other stakeholder groups, a diversity of views around the merits and potential problems of ADR. In particular there is a view among some lawyers thatADR both delays dispute resolution and increases costs. Increased cost was seen by lawyers participating in the lawyers' survey as a particular limitation ofarbitration. Delay was seen as a particular problem associated with mediation. As shows only a minority of lawyers participating in the lawyers' survey saw significant limitations with ADR techniques. It is notable that the pattern of those minority concerns differed in relation to arbitration and mediation respectively. With regard to arbitration a substantial minority oflawyers expressed concern that arbitration increased the costs of dispute resolution. By comparison, with regard to mediation the most substantial minority of lawyers expressed concern that mediation could be used as a delaying tactic. A smaller but still substantial minority of lawyers expressed concerns about mediation's enforceability. Limitations of Arbitration (Lawyers Survey) Limitations Arbitration (n=196)*

and

Mediation

of Limitations Mediation (n=196)*

of

Key ADRLimitatio % of % of n Response Response Lawyer Lawyer s s s s Enforceability

17

Delaying tactics 35

8.7

54

27.6

17.9

74

37.8

ADR (based on ATTY HIGUIT’S OUTLINE) - 9 Increased Costs 80

40.8

35

17.9

* Multiple response. Only a minority of the lawyers participating in the lawyers' survey expressed concerns about those issues. However, the disputants research does reveal how powerful lawyers' views can be in relation to take-up of ADR. A small group ofdisputants were explicitly advised by their lawyer not to take-up ADR on the grounds that it was too expensive or ADR would be ineffective. Some disputants assumed that if lawyer-tolawyer informal discussion had failed to resolve the dispute then ADR would simply not be an option. Overall, however, surveyed lawyers tended to be supportive of ADR. Indeed, among the lawyers participating in the lawyers' survey around 64.4 percent accepted the notion that there might be merit in the court ordering parties to take-up ADR prior to proceeding with a case. It is notable, however, that only 22.2 percent of the participant lawyers felt court orders to arbitration were acceptable, compared to 53.7 percent who accepted the notion of the courts ordering parties to mediation. Even among lawyers who believed the benefits of ADR were such as to justify some mechanism by which the courts could order parties to mediation, there was still a concern that ADR should not be promoted in a manner that compromised litigants' access to justice. Disputants' Views on the Disadvantages of ADR Although ADR was seen by the disputants participating in the in-depth interviews as a less costly pathway than the court system, a small proportion ofthe 49 interviewees who felt they could comment on the merits of ADR, identified a series of potential drawbacks with ADR. Those are set out in Table 4.8 Disadvantages of ADR Identified by Interviewees (Disputant In-depth Interviews n=49)* Key Disadvantages % of Responses Identified Interviewees Lackof enforcement

10

20.4

Increased costs

9

18.4

Delaying tactic

9

18.4

Other

7

14.3

Compromise of principles

7

14.3

ADR practitioner may not have the technical skills 3 required

6.1

Need other party to be willing 2 to come to the table

4.1

No right of appeal

4.1


2

Twelve of 49 disputants stated that they saw only advantages and no disadvantages associated with ADR.6

1.4.3

BENEFITS OF ALTERNATIVE DISPUTE RESOLUTION7

Cost: One of the largest reasons parties choose to resolve their disputes outside of the courts is cost. Alternative dispute resolution usually costs much less than litigation, allowing smaller financial disputes a financially viable way to be settled. Speed: ADR can be scheduled by the parties and the panelist as soon as they are able to meet. Compared to the court process, where waits of 2-3 years are normal, dispute resolution is as fast as the parties want it to be. Control: The parties control some of the process; selecting what method of ADR they want to follow, selecting the panelist for their dispute resolution; the length of the process; and, in a mediations case, even the outcome. Opposed to the court system, where the legal system and the judge control every aspect, ADR is much more flexible. Confidentiality: Disputes resolved in court are public and any judgments awarded are also public. Mediation, arbitration, and mini trials are all conducted in private and in strict confidentiality. Experienced Neutral Panelists: Our panelists are professional mediators and arbitrators with training and expertise in dispute resolution and insurance. Disputing parties are able to select their panelist from a list of qualified individuals who are specialized in specific aspects of insurance. In the court system, binding decisions are made by judges who may lack expertise in insurance practices. Cooperative Approach: All ADR services take place in a more informal, less confrontational atmosphere. This is more conducive to maintaining a positive business relationship between the two parties. With mediation, specifically, the result is collaboration between the two parties.

6

http://www.justice.govt.nz/publications/globalpublications/a/alternative-dispute-resolution-general-civilcases/4-advantages-and-disadvantages-of-adr 7 http://www.ibabc.org/idrsbc/benefits.html


1.5 COMPARISON BETWEEN Litigation AND ADR8 At some point in life, and perhaps several times, you will be faced with a dispute that needs to be settled and you must decide just how to reach a solution. Court based adjudication and ADR are two of the methods used in settling those disputes; and distributive and integrative are two types of bargaining utilized in the ADR processes.

1.5.1 Litigation (Court Based Adjudication) Litigation is a lawsuit to be decided in court before a judge or jury. However, litigation can be intimidating and risky for the litigants. In addition, because court proceedings are adversarial, a battle between lawyers, the truth is not always the end result. A prominent New York defense attorney and Criminal Court Judge said in all honesty, “I have nothing to do with justice…Justice is not even part of the equation.” Through the courts and litigation you can obtain money, put a stop to certain activities, and have statutes and documents interpreted; but the outcome is that one person wins and one loses. Litigation is expensive, sometimes prohibitively, preventing some from taking their cases into the courts. Even if one can afford litigation, then you must face the crowded court docket and be willing to wait as the lengthy process begins – a lengthy process which keeps disputes broiling and relationships torn apart. An additional issue is the fact that the dispute must be able to be translated into legal issues – so some disputes that seem real may not be able to be framed into a legal issue that can be decided in court. On the plus side, litigation ends in a decision that is binding and enforceable; and it is appealable. Adjudication is public and has more safeguards than many other processes. Secondly, court decisions are based on precedent and are more predictable than alternative resolutions which can be formulated by the neutral party. In the final analysis, each person deserves their day in court if that is the method they prefer. However, regardless of the pros and cons of litigation, one major consideration in making a decision as to the resolution method is the importance of the relationship between the two parties in the dispute. In litigation most relationships are left unable to be repaired. If your relationship with the opposing party is important to you or it is one that must be maintained, it is time to perhaps consider an ADR process.

8

http://general-law.knoji.com/litigation-vs-alternativedispute-resolution-adr/

1.5.2 Alternative Dispute Resolution (ADR) ADR is a series of methods for settling disputes other than court based adjudication. There are several ADR processes which can be voluntary or ordered by the courts. Some states require persons to enter into arbitration or mediation before their case can be heard in court. Hoping the case can be settled in this manner, states do this for economic reasons as well as to assist in clearing court dockets. In other cases such as employment and some other contracts, arbitration is required for settling disputes. In these contractual cases arbitration decisions are final and cannot be appealed in court in most instances. One of the objections to litigation is that it can be intimidating – the powerful against the weak – the rich against the poor. The fact is that some forms of ADR like arbitration can prove to be just as intimidating. Methods of negotiation in ADR can be divided into two basic types: distributive; and, integrative. Distributive: Distributive negotiating has a win or lose outcome – the pie only has so many pieces and the more one side gets, the less the other side has. Most often this type of bargaining is utilized when there are fixed resources in dispute such as money or property. Personal relationships are low on the scale of importance. Distributive processes are often criticized becaus e they put emphasis on the parties’ differences and lead to destructive actions. To be successful in distributive negotiating parties must guard their information and try to get as much information from the opponent as possible. Hardball is often necessary in distributive techniques and relationships become second place or are neglected and ignored. Even when some cooperative bargaining techniques may prove beneficial and are put in place, there may be portions of the negotiations that can only be settled by dividing the pie or using distributive techniques. Integrative: Integrative bargaining is interest based and looks for a win/win solution. These techniques encourage cooperative problem solving which addresses all parties’ needs and interests. Negotiators here envision a pie with more unlimited pieces and desire an outcome that will maintain, rather than destroy, relationships. At times, even in disputes that involve money, it becomes clear to neutral parties that they must mend the relationship before the money issue can be resolved – this means including integrative bargaining. In order to be successful in integrative negotiations all the interests on both sides must be identified and fears


must be addressed. The goal is to have both sides work on a solution that will be beneficial to both and allow their relationship to remain intact. While there are many ADR processes, they all utilize either distributive or integrative strategies; or a combination of both. These processes cover a wide spectrum from binding arbitration normally narrow in scope to reconciliation being a lengthy process focused on mending relationships between people, races, religions and even countries. If the dispute you are involved in has a fixed quantity to work with and the other party is not a friend or someone with whom you must maintain a relationship, then you could chose from court ordered adjudication, arbitration (binding or non-binding), mediation (non binding); but consider the time and the expense of court. Consider too, that ADR can also be expensive and if you chose to go to court when ADR fails, then you can be faced with great expense. The process here will be the distributive type – adversarial, demanding concession, win at all cost. If, on the other hand, the dispute involves friends or lasting relationships, you might wish to avoid court and work to maintain those relationships. Here the process will be the integrative type – parties are joint problem solvers, focusing on interests, and working toward a wise decision that is good for all. You could utilize mediation, a reconciliation process, restorative justice or restitution among others. The deciding factors in your decision of whether to go to court or utilize one of the many ADR methods will be the type of dispute, the outcome you desire, the relationship you have with the opposing party, and the cost involved in each. Should you decide on ADR, then you will need to decide whether this will be a distributive or integrative negotiation.

1.5.3 Litigation and ADR Contrasted 9 A crucial distinction between litigation and ADR is that whilst many legal practitioners engage in ADR processes, there is no legal or professional requirement for either the ADR practitioner or for party representatives at ADR processes to be legally qu alified or to be members of legal professions such as the bar or the law society. Many of those who engage in ADR practice are first and foremost experts in particular fields such as architects, builders, civil engineers, mariners, scientists and social workers, albeit with a thorough understanding of ADR processes and some knowledge and understanding of law. In house legal experts in large corporate organisations can take part in the entire ADR process without engaging professional lawyers thus cutting costs further, both in

terms of time lost through communicating with the professionals and in respect of legal fees and costs. It is also the practical knowledge and understanding of industry and commerce which assures the parties to ADR processes that the people responsible for settling their dispute or assisting them to reach a settlement understand their business and their concerns. It further assures them that the outcome will not be based purely on legal technicalities but will take into account commercial practicalities and technical details which lawyers may not fully comprehend.

1.6 LIMITATION OF ADR IN GENERAL Generally ADR are usually faster, and cheaper than litigation.. they are also private and informal when also compared to litigation and it gets both parties involved in the settlement process and the decisions are not necessarily final. However ADR does not alway guarantee an agreed upon decision and with arbitration the decision is final. 10 ----SEE DISADVANTAGES----

1.7 SUBJECT OF ADR Typical ADR Processes : A process is any procedure agreed to by the parties and the third party neutral by which the parties will work to resolve their dispute. Figure 19-1 illustrates the spectrum of ADR processes. For further discussion see SCAO’s Taxonomy of Alternative Dispute Resolution Processes. The most common ADR procedures are as follows. Convening (also called conflict assessment) involves the use of a neutral third party to help assess the causes of the conflict, to identify the persons or entities that would be affected by the outcome of the conflict, and to help these parties consider the best process (for example, mediation, consensus-building, or a lawsuit) for them to deal with the conflict. The convener may also help get the parties ready for participation in a dispute resolution process by providing educating the parties on the nature of the selected process. Facilitation or Consensus Building is a process used to help a group of people or parties have constructive discussions about complex or potentially controversial issues. The facilitator helps the parties set ground rules for these discussions, promotes effective communication, elicits creative options, and keeps the group focused and on track. Facilitation can be used

10

http://wiki.answers.com/Q/What_are_the_disadvantages

_and_advantages_of_Alternative_dispute_resolution#ixzz2 04zUKU00 9

http://www.nadr.co.uk/background/contrast.php


even where parties have not yet agreed to attempt to resolve a conflict. Mediation is a process in which a neutral third party (the mediator) assists disputants in reaching a mutually satisfying settlement of their differences. Mediation is voluntary, informal, and confidential. The mediator helps the disputants to communicate clearly, to listen carefully, and to consider creative ways for reaching resolution. The mediator makes no judgments about the people or the conflict (unless requested under the evaluative model), and issues no decision. Any agreement that is reached must satisfy all the disputants. The Michigan Court Rules define mediation as a “process in which a neutral third party facilitates communication between parties, assists in identifying issue, and helps explore solutions to promote a mutually acceptable settlement.” MCR 2.411(A)(2). A mediator has no authoritative decisionmaking power. Id. In Michigan, the terms mediation and facilitation are often used interchangeably to describe what is known generally elsewhere as mediation. Case Evaluation is an ADR process created by MCR 2.403 in which a three-person panel hears presentations by litigants and provides a written evaluation of the value of the case. If all of the parties accept, a final judgment is entered on all claims asserted in the case in the amount of the evaluation. If one or both parties reject, the rule provides for the imposition of sanctions in certain circumstances. The evaluation is limited to a monetary amount, so it is not well suited to resolving disputes seeking any form of injunctive or other equitable relief. Although case evaluation panels are usually assigned by the office carrying out a circuit court’s case evaluation program, see generally MCR 2.404, in more complex disputes the parties often stipulate to specific panel members who the disputants believe have expertise in the subject matter involved in the dispute. This has the effect of giving the parties more confidence in the case evaluation award when made. This deviation from usual procedure should be undertaken after obtaining an appropriate court order. Early Neutral Evaluation is an evaluative ADR process initiated early in a case, often at the direction of the court, in which the third party, who has experience or expertise in the subject matter of the suit, meets with the parties and may receive presentations, after which the neutral provides the parties with an evaluation of the likelihood of success and likely ranges of damages. The expectation is that an early evaluation from a knowledgeable, objective expert will prompt the parties to take a more realistic approach to settling their dispute. There are many variations on this process, including use of the process to simplify or

focus issues. In some cases, the neutral may withhold the evaluation from the parties and proceed to mediate the conflict, revealing the evaluation only if the mediation is unsuccessful. Mini and Summary Jury Trials involve advisory trial proceedings. In the first case, the dispute is presented to a third-party neutral. A summary jury trial involves impaneling an advisory jury to whom the parties make an abbreviated presentation of their cases. The neutral or the jury, as the case may be, then deliberates and renders an advisory verdict. Where the credibility of key witness is central to a case, such a trial may provide valuable guidance to counsel about the likely success of their case. Arbitration is an adjudicatory process in which a person or panel, other than a judge, controls pretrial procedures, takes evidence, and renders an award which is the equivalent of a verdict. To be enforceable in a court the award must be entered as a judgment in a court of competent jurisdiction. MCL 600.5025 There are narrow grounds for appeal and the parties may agree that no appeal will be permitted. Although some treatises discuss “non binding” arbitration, any nonbinding process is some form of mediation and that the term “arbitration” is best used only for a binding process. Arbitration offers several advantages over adjudication by a court. First, the parties can assert more control in defining the procedure. Second, arbitrations are private although awards usually are entered as judgments by a court, making the terms of the outcome public. The process generally is quicker than court proceedings and is intended to be, and usually is, less expensive than litigation. The American Arbitration Association (AAA) is a major arbitration service provider but there are many other service providers. The parties are free to fashion their own approach to arbitration but, unlike other ADR processes, the parties cannot withdraw from arbitration once it has been commenced. Because arbitration is binding, the parties should be very familiar with the Michigan Arbitration Act and the Federal Arbitration Act (discussed in § 19.19) before agreeing to arbitration. In addition, because AAA’s arbitration rules are often incorporated into agreements whether or not the AAA is the arbitration services provider, parties should be familiar with these procedures before agreeing to be bound by them. Practitioners should review the arbitrator’s authority to compel discovery and attendance of witnesses under any applicable statute and the procedures under which the arbitration is conducted. For example, the arbitrator’s authority is broader under the Federal Arbitration Act and narrower under the AAA’s procedures. The parties’ agreement to arbitrate may specify discovery obligations as a matter of contract.


If arbitration may be subject to international rules, particular care should be taken because these procedures may be very different from the American norm. Med-Arb is an ADR process in which the parties agree in advance to commence mediation but to continue to binding arbitration of any issues not resolved by mediation. A different neutral generally is used for the arbitration after the mediation is completed. This process offers the advantage of achieving a final resolution if mediation does not fully settle all matters. It is not often used in environmental disputes. Modes of ADR The most common approaches in Michigan for environmental disputes are mediation (both evaluative and facilitative models), third-party neutral fact finding, and facilitated rule or policy development. Most two-party environmental disputes utilize mediation at some point, whether initiated by the parties or ordered by the court. Participants usually include attorneys, party representatives and experts. Where the facilitative model is employed, the thirdparty neutral is usually one individual. Where the parties seek evaluative input, it is not uncommon to use a three-person panel. In some cases, the mediation follows the facilitative model but if the parties do not reach an agreement, the neutral is asked to provide an evaluation either as a general advisory number or in the form of an evaluation to be accepted or rejected by the parties. In the latter case, the evaluator receives the acceptance or rejections from each party in confidence. Only if both sides accept does the neutral disclose the parties’ responses. This way, if only one party accepts, it does not lose any bargaining position by having its acceptance disclosed to the other side. Because many environmental disputes deal with not just a specific sum certain but often involve definition of the respective parties’ duties and liabilities after the settlement, neutrals in environmental mediations may play a more active role than in more typical tort or contract disputes where the principal dispute is usually money. For this same reason, environmental mediation may result in numerous sessions conducted over a substantial time period.

ADR Techniques or Methods11 Binding arbitration involves the presentation of a dispute to an impartial or neutral individual (arbitrator) or panel (arbitration panel) for issuance of a binding decision. Unless arranged otherwise, the parties usually have the ability to decide who the individuals are that serve as arbitrators. In some cases, 11

http://www.opm.gov/er/adrguide/section1-a.asp

the parties may retain a particular arbitrator (often from a list of arbitrators) to decide a number of cases or to serve the parties for a specified length of time (this is common when a panel is involved). Parties often select a different arbitrator for each new dispute. A common understanding by the parties in all cases, however, is that they will be bound by the opinion of the decision maker rather than simply be obligated to "consider" an opinion or recommendation. Under this method, the third party's decision generally has the force of law but does not set a legal precedent. It is usually not reviewable by the courts. Binding arbitration is a statutorily- mandated feature of Federal labor management agreements. Consistent with statute, the parties to such agreements are free to negotiate the terms and conditions under which arbitrators are used to resolve disputes, including the procedures for their selection. Some agreements may provide for "permanent" arbitrators and some may provide for arbitration panels. Conciliation involves building a positive relationship between the parties to a dispute. A third party or conciliator (who may or may not be totally neutral to the interests of the parties) may be used by the parties to help build such relationships. A conciliator may assist parties by helping to establish communication, clarifying misperceptions, dealing with strong emotions, and building the trust necessary for cooperative problem-solving. Some of the techniques used by conciliators include providing for a neutral meeting place, carrying initial messages between/among the parties, reality testing regarding perceptions or misperceptions, and affirming the parties' abilities to work together. Since a general objective of conciliation is often to promote openness by the parties (to take the risk to begin negotiations), this method allows parties to begin dialogues, get to know each other better, build positive perceptions, and enhance trust. The conciliation method is often used in conjunction with other methods such as facilitation or mediation. Cooperative problem-solving is one of the most basic methods of dispute resolution. This informal process usually does not use the services of a third party and typically takes place when the concerned parties agree to resolve a question or issue of mutual concern. It is a positive effort by the parties to collaborate rather than compete to resolve a dispute. Cooperative problem-solving may be the procedure of first resort when the parties recognize that a problem or dispute exists and that they may be affected negatively if the matter is not resolved. It is most commonly used when a conflict is not highly polarized and prior to the parties forming "hard line" positions.


This method is a key element of labor-management cooperation programs. Dispute panels use one or more neutral or impartial individuals who are available to the parties as a means to clarify misperceptions, fill in information gaps, or resolve differences over data or facts. The panel reviews conflicting data or facts and suggests ways for the parties to reconcile their differences. These recommendations may be procedural in nature or they may involve specific substantive recommendations, depending on the authority of the panel and the needs or desires of the parties. Information analyses and suggestions made by the panel may be used by the parties in other processes such as negotiations. This method is generally an informal process and the parties have considerable latitude about how the panel is used. It is particularly useful in those organizations where the panel is non-threatening and has established a reputation for helping parties work through and resolve their own disputes short of using some formal dispute resolution process. Early neutral evaluation uses a neutral or impartial third party to provide a non-binding evaluation, sometimes in writing, which gives the parties to a dispute an objective perspective on the strengths and weaknesses of their cases. Under this method, the parties will usually make informal presentations to the neutral to highlight the parties' cases or positions. The process is used in a number of courts across the country, including U.S. District Courts. Early neutral evaluation is appropriate when the dispute involves technical or factual issues that lend themselves to expert evaluation. It is also used when the parties disagree significantly about the value of their cases and when the top decision makers of one or more of the parties could be better informed about the real strengths and weaknesses of their cases. Finally, it is used when the parties are seeking an alternative to the expensive and time-consuming process of following discovery procedures. Facilitation involves the use of techniques to improve the flow of information in a meeting between parties to a dispute. The techniques may also be applied to decision-making meetings where a specific outcome is desired (e.g., resolution of a conflict or dispute). The term "facilitator" is often used interchangeably with the term "mediator," but a facilitator does not typically become as involved in the substantive issues as does a mediator. The facilitator focuses more on the process involved in resolving a matter. The facilitator generally works with all of the meeting's participants at once and provides procedural directions as to how the group can move efficiently through the problem-solving steps of the meeting and

arrive at the jointly agreed upon goal. The facilitator may be a member of one of the parties to the dispute or may be an external consultant. Facilitators focus on procedural assistance and remain impartial to the topics or issues under discussion. The method of facilitating is most appropriate when: (1) the intensity of the parties' emotions about the issues in dispute are low to moderate; (2) the parties or issues are not extremely polarized; (3) the parties have enough trust in each other that they can work together to develop a mutually acceptable solution; or (4) the parties are in a common predicament and they need or will benefit from a jointly-acceptable outcome. Factfinding is the use of an impartial expert (or group) selected by the parties, an agency, or by an individual with the authority to appoint a factfinder in order to determine what the "facts" are in a dispute. The rationale behind the efficacy of factfinding is the expectation that the opinion of a trusted and impartial neutral will carry weight with the parties. Factfinding was originally used in the attempt to resolve labor disputes, but variations of the procedure have been applied to a wide variety of problems in other areas as well. Factfinders generally are not permitted to resolve or decide policy issues. The factfinder may be authorized only to investigate or evaluate the matter presented and file a report establishing the facts in the matter. In some cases, he or she may be authorized to issue either a situation assessment or a specific non-binding procedural or substantive recommendation as to how a dispute might be resolved. In cases where such recommendations are not accepted, the data (or facts) will have been collected and organized in a fashion that will facilitate further negotiations or be available for use in later adversarial procedures. Interest-based problem-solving is a technique that creates effective solutions while improving the relationship between the parties. The process separates the person from the problem, explores all interests to define issues clearly, brainstorms possibilities and opportunities, and uses some mutually agreed upon standard to reach a solution. Trust in the process is a common theme in successful interest-based problemsolving. Interest-based problem-solving is often used in collective bargaining between labor and management in place of traditional, position-based bargaining. However, as a technique, it can be effectively applied in many contexts where two or more parties are seeking to reach agreement. Mediated arbitration, commonly known as "med-arb," is a variation of the arbitration procedure in which an impartial or neutral third party is authorized by the


disputing parties to mediate their dispute until such time as they reach an impasse. As part of the process, when impasse is reached, the third party is authorized by the parties to issue a binding opinion on the cause of the impasse or the remaining issue(s) in dispute. In some cases, med-arb utilizes two outside parties-one to mediate the dispute and another to arbitrate any remaining issues after the mediation process is completed. This is done to address some parties' concerns that the process, if handled by one third party, mixes and confuses procedural assistance (a characteristic of mediation) with binding decision making (a characteristic of arbitration). The concern is that parties might be less likely to disclose necessary information for a settlement or are more likely to present extreme arguments during the mediation stage if they know that the same third party will ultimately make a decision on the dispute.

summaries of its cases before the major decision makers for the parties who have authority to settle the dispute. The summaries contain explicit data about the legal basis and the merits of a case. The rationale behind a minitrial is that if the decision makers are fully informed as to the merits of their cases and that of the opposing parties, they will be better prepared to successfully engage in settlement discussions. The process generally follows more relaxed rules for discovery and case presentation than might be found in the court or other proceeding and usually the parties agree on specific limited periods of time for presentations and arguments.

Mediated arbitration is useful in narrowing issues more quickly than under arbitration alone and helps parties focus their resources on the truly difficult issues involved in a dispute in a more efficient and effective manner.

A third party who is often a former judge or individual versed in the relevant law is the individual who oversees a minitrial. That individual is responsible for explaining and maintaining an orderly process of case presentation and usually makes an advisory ruling regarding a settlement range, rather than offering a specific solution for the parties to consider. The parties can use such an advisory opinion to narrow the range of their discussions and to focus in on acceptable settlement options--settlement being the ultimate objective of a minitrial.

Mediation is the intervention into a dispute or negotiation of an acceptable, impartial and neutral third party who has no decision-making authority. The objective of this intervention is to assist the parties in voluntarily reaching an acceptable resolution of issues in dispute. Mediation is useful in highly-polarized disputes where the parties have either been unable to initiate a productive dialogue, or where the parties have been talking and have reached a seemingly insurmountable impasse.

The minitrial method is a particularly efficient and cost effective means for settling contract disputes and can be used in other cases where some or all of the following characteristics are present: (1) it is important to get facts and positions before high-level decision makers; (2) the parties are looking for a substantial level of control over the resolution of the dispute; (3) some or all of the issues are of a technical nature; and (4) a trial on the merits of the case would be very long and/or complex.

A mediator, like a facilitator, makes primarily procedural suggestions regarding how parties can reach agreement. Occasionally, a mediator maysuggest some substantive options as a means of encouraging the parties to expand the range of possible resolutions under consideration. A mediator often works with the parties individually, in caucuses, to explore acceptable resolution options or to develop proposals that might move the parties closer to resolution.

Negotiated rulemaking, commonly known as "regneg," brings together representatives of various interest groups and a Federal agency to negotiate the text of a proposed rule. The method is used before a proposed rule is published in the Federal Register under the Administrative Procedures Act (APA). The first step is to set up a well-balanced group representing the regulated public, public interest groups, and state and local governments, and join them with a representative of the Federal agency in a Federally chartered advisory committee to negotiate the text of the rule. If the committee reaches consensus on the rule, then the Federal agency can use this consensus as a basis for its proposed rule.

Mediators differ in their degree of directiveness or control while assisting disputing parties. Some mediators set the stage for bargaining, make minimal procedural suggestions, and intervene in the negotiations only to avoid or overcome a deadlock. Other mediators are much more involved in forging the details of a resolution. Regardless of how directive the mediator is, the mediator performs the role of catalyst that enables the parties to initiate progress toward their own resolution of issues in dispute. Minitrials involve a structured settlement process in which each side to a dispute presents abbreviated

While reg-neg may result in agreement on compositi on of a particular rule an agency may wish to propose, when the rule is proposed it is still subject to public review under the APA. This is the last step in the process. Federal agency experience is that the process shortens considerably the amount of time and reduces the resources needed to promulgate sensitive, complex,


and far-reaching regulations--often mandated by statute.

regulations

Settlement conferences involve a pre-trial conference conducted by a settlement judge or referee and attended by representatives for the opposing parties (and sometimes attended by the parties themselves) in order to reach a mutually acceptable settlement of the matter in dispute. The method is used in the judicial system and is a common practice in some jurisdictions. Courts that use this method may mandate settlement conferences in certain circumstances. The role of a settlement judge is similar to that of a mediator in that he or she assists the parties procedurally in negotiating an agreement. Such judges play much stronger authoritative roles than mediators, since they also provide the parties with specific substantive and legal information about what the disposition of the case might be if it were to go to court. They also provide the parties with possible settlement ranges that could be considered. Non-binding arbitration involves presenting a dispute to an impartial or neutral individual (arbitrator) or panel (arbitration panel) for issuance of an advisory or non-binding decision. This method is generally one of the most common quasi-judicial means for resolving disputes and has been used for a long period of time to resolve labor/management and commercial disputes. Under the process, the parties have input into the selection process, giving them the ability to select an individual or panel with some expertise and knowledge of the disputed issues, although this is not a prerequisite for an individual to function as an arbitrator. Generally, the individuals chosen are those known to be impartial, objective, fair, and to have the ability to evaluate and make judgments about data or facts. The opinions issued by the third party in such cases are non-binding; however, parties do have the flexibility to determine, by mutual agreement, that an opinion will be binding in a particular case. Non-binding arbitration is appropriate for use when some or all of the following characteristics are present in a dispute: (1) the parties are looking for a quick resolution to the dispute; (2) the parties prefer a third party decision maker, but want to ensure they have a role in selecting the decision maker; and (3) the parties would like more control over the decision making process than might be possible under more formal adjudication of the dispute. Ombudsmen are individuals who rely on a number of techniques to resolve disputes. These techniques include counseling, mediating, conciliating, and factfinding. Usually, when an ombudsman receives a complaint, he or she interviews parties, reviews files, and makesrecommendations to the disputants. Typically, ombudsmen do not impose solutions. The

power of the ombudsman lies in his or her ability to persuade the parties involved to accept his or her recommendations. Generally, an individual not accepting the proposed solution of the ombudsman is free to pursue a remedy in other forums for dispute resolution. Ombudsmen may be used to handle employee workplace complaints and disputes or complaints and disputes from outside of the place of employment, su ch as those from customers or clients. Ombudsmen are often able to identify and track systemic problems and suggest ways of dealing with those problems. Partnering is used to improve a variety of working relationships, primarily between the Federal Government and contractors, by seeking to prevent disputes before they occur. The method relies on an agreement in principle to share the risks involved in completing a project and to establish and promote a nurturing environment. This is done through the use of team-building activities to help define common goals, improve communication, and foster a problem-solving attitude among the group of individuals who must work together throughout a contract's term. Partnering in the contract setting typically involves an initial partnering workshop after the contract award and before the work begins. This is a facilitated workshop involving the key stakeholders in the project. The purpose of the workshop is to develop a team approach to the project. This generally results in a partnership agreement that includes dispute prevention and resolution procedures. Peer review is a problem-solving process where an employee takes a dispute to a group or panel of fellow employees and managers for a decision. The decision may or may not be binding on the employee and/or the employer, depending on the conditions of the particular process. If it is not binding on the employee, he or she would be able to seek relief in traditional forums for dispute resolution if dissatisfied with the decision under peer review. The principle objective of the method is to resolve disputes early before they become formal complaints or grievances. Typically, the panel is made up of employees and managers who volunteer for this duty and who are trained in listening, questioning, and problem-solving skills as well as the specific policies and guidelines of the panel. Peer review panels may be standing groups of individuals who are available to address whatever disputes employees might bring to the panel at any given time. Other panels may be formed on an ad hoc basis through some selection process initiated by the employee, e.g., blind selection of a certain number of names from a pool of qualified employees and managers.


2 INTERNATIONAL ALTERNATIVE DISPUTE RESOLUTION/ PEACEFUL SETTLEMENT OF INTERNATIONAL DISPUTE 2.1 INTRODUCTION TO PUBLIC INTERNATIONAL LAW AND PRIVATE INTERNATIONAL LAW

Public international law, which governs the relationship between provinces and international entities. It includes these legal fields: treaty law, law of sea, international criminal law, the laws of war or international humanitarian law and international human rights law.

Public international law concerns the structure and conduct of sovereign states; analogous entities, such as the Holy See; and intergovernmental organizations. To a lesser degree, international law also may affect multinational corporations and individuals, an impact increasingly evolving beyond domestic legal interpretation and enforcement. Public international law has increased in use and importance vastly over the twentieth century, due to the increase in global trade, environmental deterioration on a worldwide scale, awareness of human rights violations, rapid and vast increases in international transportation and a boom in global communications.

The field of study combines two main branches: the law of nations ( jus gentium) and international agreements and conventions ( jus inter gentes), which have different foundations and should not be confused. Public international law should not be confused with " private international law", which is concerned with the resolution of conflict of laws. In its most general sense, international law "consists of rules and principles of general application dealing with the conduct of states and of intergovernmental organizations and with their relations inter se, as well as with some of their relations with persons, whether natural or juridical.

Private international law,

or conflict of laws, which addresses the questions of (1) which jurisdiction may hear a case, and (2) the law concerning which jurisdiction applies to the issues in the case.12 Conflict of laws (or private international law) is a set of procedural rules that determines which legal system and which jurisdiction's applies to a given dispute. The rules typically apply when a legal dispute has a "foreign" element such as a contract agreed to by parties located in different countries, although the "foreign" element also exists in multi-jurisdictional countries such as the United Kingdom, the United States, Australia and Canada.

The term conflict of laws itself originates from situations where the ultimate outcome of a legal dispute depended upon which law applied, and the common law courts manner of resolving the conflict between those laws. In civil law, lawyers and legal scholars refer to conflict of laws as private international law. Private international law has no real connection with public international law, and is instead a feature of local law which varies from country to country. The three branches of conflict of laws are 





Jurisdiction – whether the forum court has the power to resolve the dispute at hand Choice of law – the law which is being applied to resolve the dispute Foreign judgments – the ability to recognize and enforce a judgment from an external forum within the jurisdiction of the adjudicating forum

Conflicts between public international law and national sovereignty See also: Monism and dualism in international law

The conflict between international law and national sovereignty is subject to vigorous debate and dispute in academia, diplomacy, and politics. Certainly, there is a growing trend toward judging a state's domestic actions in the light of international law and standards. Numerous people now view the nation-state as the primary unit of international affairs, and believe that only states may choose to voluntarily enter into commitments under international law, and that they have the right to follow their own counsel when it comes to interpretation of their commitments. Certain scholars and political leaders feel that these modern

12

http://en.wikipedia.org/wiki/International_law


developments endanger nation states by taking power away from state governments and ceding it to international bodies such as the U.N. and the World Bank, argue that international law has evolved to a point where it exists separately from the mere consent of states, and discern a legislative and judicial process to international law that parallels such processes within domestic law. This especially occurs when states violate or deviate from the expected standards of conduct adhered to by all civilized nations. A number of states place emphasis on the principal of territorial sovereignty, thus seeing states as having free rein over their internal affairs. Other states oppose this view. One group of opponents of this point of view, including many European nations, maintain that all civilized nations have certain norms of conduct expected of them, including the prohibition of genocide, slavery and the slave trade, wars of aggression, torture, and piracy, and that violation of these universal norms represents a crime, not only against the individual victims, but against humanity as a whole. States and individuals who subscribe to this view opine that, in the case of the individual responsible for violation of international law, he "is become, like the pirate and the slave trader before him, hostis humani generis, an enemy of all mankind",[4] and thus subject to prosecution in a fair trial before any fundamentally just tribunal, through the exercise of universal jurisdiction. Though the European democracies tend to support broad, universalistic interpretations of international law, many other democracies have differing views on international law. Several democracies, including India, Israel and the United States, take a flexible, eclectic approach, recognizing aspects of public international law such as territorial rights as universal, regarding other aspects as arising from treaty or custom, and viewing certain aspects as not being subjects of public international law at all. Democracies in the developing world, due to their past colonial histories, often insist on non-interference in their internal affairs, particularly regarding human rights standards or their peculiar institutions, but often strongly support international law at the bilateral and multilateral levels, such as in the United Nations, and especially regarding the use of force, disarmament obligations, and the terms of the UN Charter.

2.1.1

BASIC PRINCIPLES OF INTERNATIONAL LAW (SOVEREIGNTY, JURISDICTION, INDEPENDENCE etc.)

2.1.1.1

Sovereignty

is the quality of having supreme, independent authority over a geographic area, such as a territory .[1] It can be found in a power to rule and make law that

rests on a political fact for which no purely legal explanation can be provided. In theoretical terms, the idea of "sovereignty", historically, from Socrates to Thomas Hobbes, has always necessitated a moral imperative on the entity exercising it. For centuries past, the idea that a state could be sovereign was always connected to its ability to guarantee the best interests of its own citizens. Thus, if a state could not act in the best interests of its own citizens, it could not be thought of as a “sovereign” state.[2] The concept of sovereignty has been discussed throughout history, from the time of the Romans through to the present day. It has changed in its definition, concept, and application throughout, especially during the Age of Enlightenment. The current notion of state sovereignty is often traced back to the Peace of Westphalia (1648), which, in relation to states, codified the basic principles:   



territorial integrity border inviolability supremacy of the state (rather than the Church) a sovereign is the supreme lawmaking authority within its jurisdiction.13

2.1.1.2 Universal jurisdiction14 is a principle of international law that allows states to investigate and prosecute a national of any state found within their borders who is alleged to have committed certain international crimes. This principle is premised upon the idea that crimes under international law such as war crimes, crimes against humanity, airplane hijacking and genocide as well as torture, extrajudicial killings, and forced disappearances are so serious and reprehensible that any state may prosecute the offender regardless of nationality because they are in essence an “enemy of mankind.” In exercising universal jurisdiction, the investigating and prosecuting state represents the interests of the international community as a whole in enforcing international law and ending impunity for atrocities and crimes that shock the consciousness of humanity. Universal jurisdiction allows a state to prosecute an individual in its courts where none of the traditional bases for jurisdiction, i.e. territorial, nationality, passive personality, or protective, exists. Universal jurisdiction is u sually a type of permissive jurisdiction, in that it requires a State to establish domestic laws authorizing the right to exercise jurisdiction over specified crimes.

13 14

http://en.wikipedia.org/wiki/Sovereignty http://www.judicialmonitor.org/archive_1007/generalprinciples.html


The main limitation on the exercise of universal jurisdiction is head of state immunity, which has been extended to other certain high-ranking state ministers. A sitting head of state or high-ranking minister is immune from prosecution by another state. This principle was reaffirmed by the International Court of Justice in the Case Concerning The Arrest Warrant of 11 April 2000 (Congo v. Belgium). Yerodia Ndombasi, Congo’s Foreign Minister, was found to be immune from prosecution by Belgium. The ICJ, however, in a concurring opinion, reaffirmed the underlying principle of universal jurisdiction as being lawful. Universal jurisdiction or universality principle is a principle in public international law (as opposed to private international law) whereby states claim criminal jurisdiction over persons whose alleged crimes were committed outside the boundaries of the prosecuting state, regardless of nationality, country of residence, or any other relation with the prosecuting country. The state backs its claim on the grounds that the crime committed is considered a crime against all, which any state is authorized to punish, as it is too serious to tolerate jurisdictional arbitrage. The concept of universal jurisdiction is therefore closely linked to the idea that some international norms are erga omnes, or owed to the entire world community, as well as the concept of jus cogens – that certain international law obligations are binding on all states and cannot be modified by treaty. [1] According to critics, the principle justifies a unilateral act of wanton disregard of the sovereignty of a nation or the freedom of an individual concomitant to the pursuit of a vendetta or other ulterior motives, with the obvious assumption that the person or state thus disenfranchised is not in a position to bring retaliation to the state applying this principle. The concept received a great deal of prominence with Belgium's 1993 "law of universal jurisdiction", which was amended in 2003 in order to reduce its scope following a case before the International Court of Justice regarding an arrest warrant issued under the law, entitled Case Concerning the Arrest Warrant of 11 April 2000 (Democratic Republic of the Congo v. Belgium).[2] The creation of the International Criminal Court (ICC) in 2002 reduced the perceived need to create universal jurisdiction laws, although the ICC is not entitled to judge crimes committed before 2002. According to Amnesty International, a proponent of universal jurisdiction, certain crimes pose so serious a threat to the international community as a whole, that states have a logical and moral duty to prosecute an individual responsible for it; no place should be a safe haven for those who have committed genocide,[3]

crimes against humanity, extrajudicial executions, war crimes, torture and forced disappearances.[4] Opponents, such as Henry Kissinger, argue that universal jurisdiction is a breach on each state's sovereignty: all states being equal in sovereignty, as affirmed by the United Nations Charter, "Widespread agreement that human rights violations and crimes against humanity must be prosecuted has hindered active consideration of the proper role of international courts. Universal jurisdiction risks creating universal tyranny — that of judges."[5][6] According to Kissinger, as a practical matter, since any number of states could set up such universal jurisdiction tribunals, the process could quickly degenerate into politically-driven show trials to attempt to place a quasi-judicial stamp on a state's enemies or opponents. The United Nations Security Council Resolution 1674, adopted by the United Nations Security Council on April 28, 2006, "Reaffirm[ed] the provisions of paragraphs 138 and 139 of the 2005 World Summit Outcome Document regarding the responsibility to protect populations from genocide, war crimes, ethnic cleansing and crimes against humanity" and commits the Security Council to action to protect civilians in armed conflict.15

2.1.1.3 Independence of the Judiciary 16 In Brief International law requires that cases presented in international tribunals and cases presented in domestic tribunals where international law is applicable be resolved by tribunals that are independent and that are composed of independent judges. In Theory Asserting that the above is a principle of international law may seem strange, because it is not usually included in the litany of principles of international law that a student would encounter in studying international law, or that a professor of international law would enunciate in his or her lectures on international law. For example and by analogy, law students in the United States studying constitutional law or criminal law would not be confronted by a professor with cases which discuss, or texts that espouse, the concept of an independent judiciary in either the federal court system or the court systems of the individual states. Perhaps the reason is because the necessity of an independent judiciary in a country espousing democracy and the rule of law is selfevident. Nevertheless it is important to highlight this principle and resolve any questions that might be 15

16

http://en.wikipedia.org/wiki/Universal_jurisdiction http://www.judicialmonitor.org/archive_0506/generalprinciples.html


raised as to the validity of it as a principle in international law. One might, in an attempt to resolve any doubt or question about this principle, respond by simply stating, as indicated above, that international law, because it is law, presumes or has as its basis the “rule of law.” And the rule of law necessarily incorporates the idea of dispute resolution by peaceful means, and the further idea of the conduct or hearing of cases according to recognized procedures, including recognized tribunals. And given the necessity of tribunals to resolve disputes and hear cases, to have any validity those tribunals must necessarily be independent and made up of independent judges. Thus one argument would be simply that the whole idea of international law requires independent tribunals and independent judges. There is, however, another approach that may be taken in asserting that independent tribunals and independent judges in the dispute resolution and casehearing aspects of international law together form a principle of international law. One definition of law is that it is simply those principles or rules that a court would enforce or give effect to in resolving a case. Thus in cases involving the public or the government, courts would look to a constitution, a statute, or a regulation adopted by a regulatory body. In private disputes, courts would look to the “private law” of the parties, such as a contract or agreement. Using this definition of law, is the guarantee of an independent judiciary a principle of international law that would be recognized and applied by an international tribunal? For example, if a question arose in the International Court of Justice, the grandfather of international courts, whether the guarantee of an independent judiciary is a recognized principle of international law, how would the ICJ resolve that issue? Actual Support for Principle The International Court of Justice might look no further than the statute that created it, the Statute of the International Court of Justice, adopted by countries in conjunction with the creation of the United Nations in 1945 (the ICJ is the immediate successor to the Permanent Court of International Justice, created at the time of the establishment of the League of Nations following World War I). Article 2 of that Statute provides: The Court shall be composed of a body of independent judges, elected regardless of their nationality from among persons of high moral character, who possess the qualifications required in their respective countries for appointment to the highest judicial offices, or are jurisconsults of recognized competence in international law.

In addition, article 30 requires that the judges who sit on that court exercise their powers “impartially and conscientiously.” In resolving any doubt, the ICJ might review Article 38 of the Statute, which enunciates sources of law to be applied by the Court: The Court, whose function is to decide in accordance with international law such disputes as are submitted to it, shall apply: a. international conventions, whether general or particular, establishing rules expressly recognized by the contesting states; b. international custom, as evidence of a general practice accepted as law; c. the general principles of law recognized by civilized nations; d. subject to the provisions of Article 59, judicial decisions and the teachings of the most highly qualified publicists of the various nations, as subsidiary means for the determination of rules of law. The Court would then inquire whether any of these “sources” of law require an independent judiciary to resolve international cases or domestic cases with an ingredient of international law. With respect to international conventions Article 10 of the Universal Declaration of Human Rights states: Everyone is entitled in full equality to a fair and public hearing by an independent and impartial tribunal, in the determination of his rights and obligations and of any criminal charge against him. In addition part of Article 5 of the European Convention on Human Rights states: In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. One other convention, the International Covenant on Civil and Political Rights, guarantees in the determination of any criminal charge or of rights and obligations at a suit at law, a fair and public hearing by a competent, independent and impartial tribunal established by law. There are undoubtedly other international conventions that have similar provisions. Thus the Court could apply these provisions of international conventions in ruling that an independent judiciary is a principle of international law.


Moreover, most countries have some kind of provision in their constitution or in a national statute that provides for an independent judiciary. Former Associate Justice of the U.S. Supreme Court, Sandra Day O’Connor, in a speech in 2003 before the Arab Judicial Forum, pointed out that the constitutions of almost all Arab countries contain provisions for an independent judiciary. She specifically mentioned in the speech the constitutions of Bahrain, Egypt, and Jordan. Other countries where an independent judiciary is part of the fabric of the legal system are the United States, Canada, and Australia. Thus the concept of an independent judiciary is a general principle of law recognized by civilized nations. Other Source Documents Finally, the concept of an independent judiciary is included in the “teachings of the most highly qualified publicists of the various nations.” The International Commission of Jurists, one of the most prestigious bodies of international jurists and lawyers, in 2004, issued what is known as the Berlin Declaration on Upholding Human Rights and the Rule of Law in Combating Terrorism, which confirmed the idea of an independent judiciary “in the development and implementation of counter-terrorism measures.” Also a group of chief justices from various countries, meeting in The Hague in 2001-2002, issued what is known as the Bangalore Draft Code of Judicial Conduct 2001, Adopted by the Judicial Group on Strengthening Judicial Integrity, as revised at the Round Table Meeting of Chief Justices Held at the Peace Palace, The Hague, November 25-26, 2002. Value I of that declaration is independence of the judiciary, and the following items 1.1-1.4 specifically spell out what is meant by or contained in that value. Thus three out of the four sources of international law that are authorized for use by the International Court of Justice in its organic statute confirm that an independent judiciary is a principle of international law.

2.1.2 ARTICLE 33 PARAGRAPH 1 OF THE UN CHARTER The parties to any dispute, the continuance of which is likely to endanger the maintenance of international peace and security, shall, first of all, seek a solution by negotiation, enquiry, mediation, conciliation, arbitration, judicial settlement, resort to regional agencies or arrangements, or other peaceful means of their own choice.

World Court or ICJ) is the primary judicial organ of the United Nations. It is based in the Peace Palace in The Hague, Netherlands. Its main functions are to settle legal disputes submitted to it by states and to provide advisory opinions on legal questions submitted to it by duly authorized international organs, agencies, and the UN General Assembly. Jurisdiction As stated in Article 93 of the UN Charter, all 193 UN members are automatically parties to the Court's statute.[11] Non-UN members may also become parties to the Court's statute under the Article 93(2) procedure. For example, before becoming a UN member state, Switzerland used this procedure in 1948 to become a party. And Nauru became a party in 1988. Once a state is a party to the Court's statute, it is entitled to participate in cases before the Court. However, being a party to the statute does not automatically give the Court jurisdiction over disputes involving those parties. The issue of jurisdiction is considered in the two types of ICJ cases: contentious issues and advisory opinions.

2.2 RELEVANT ALTERNATIVE DISPUTE SETTLEMENT INSTITUTIONS 2.2.1.1 PERMANENT COURT OF ARBITRATION (HAGUE CONVENTION OF 1907) The Permanent Court of Arbitration (PCA ), is an international organization based in The Hague in the Netherlands. HISTORY- The court was established in 1899 as one of the acts of the first Hague Peace Conference, which makes it the oldest institution for international dispute resolution. The creation of the PCA is set out under Articles 20 to 29 of the 1899 Hague Convention for the pacific settlement of international disputes, which was a result of the first Hague Peace Conference. At the second Hague Peace Conference, the earlier Convention was revised by the 1907 Convention for the Pacific Settlement of International Disputes.



2.1.3 INTERNATIONAL COURT OF JUSTICE The International Court of Justice (French: Cour internationale de Justice; commonly referred to as the

Unlike the ICJ, the PCA is not just open to states but also to other parties. The PCA provides services for the resolution of disputes involving various combinations of states, state entities, intergovernmental organizations, and private parties. PCA courtroom. The PCA is not a “court in the conventional understanding of that term, but an administrative organization with the object of having permanent and readily available means to serve as the registry for purposes of international arbitration and other related


procedures, including commissions of enquiry and conciliation.”[2] It is a permanent framework available to assist temporary arbitral tribunals or commissions. The judges or abitrators that hear cases are officially called "Members" of the Court. The PCA is housed in the Peace Palace in The Hague, which was built specially for the Court in 1913 with an endowment from Andrew Carnegie. From 1922 on, the building also housed the distinctly sep arate Permanent Court of International Justice, which was replaced by the International Court of Justice in 1946. In the early 1980s, the PCA helped in setting up the administrative services of the Iran-United States Claims Tribunal. The public at large is usually more familiar with the International Court of Justice than with the Permanent Court of Arbitration, partly because of the closed nature of cases handled by the PCA and to the low number of cases dealt with between 1946 and 1990. The PCA's caseload has, however, increased since then. The PCA administers cases arising out of in ternational treaties (including bilateral and multilateral investment treaties), and other agreements to arbitrate. The cases conducted by the PCA span a wide range of legal issues, including disputes over territorial and maritime boundaries, sovereignty, human rights, international investment (investor-state arbitrations), and matters concerning international and regional trade. Hearings are rarely open to the public and sometimes even the decision itself is kept confidential at the request of the parties. Many decisions and related documents are available on the PCA website.

2.2.1.2 Hague Convention of 1907 The Hague Conventions were two international treaties negotiated at international peace conferences at The Hague in the Netherlands: The First Hague Conference in 1899 and the Second Hague Conference in 1907. Along with the Geneva Conventions, the Hague Conventions were among the first formal statements of the laws of war and war crimes in the body of secular international law. A third conference was planned for 1914 and later rescheduled for 1915, but never took place due to the start of World War I. The German international law scholar and neoKantian pacifist Walther Schücking called the assemblies the "international union of Hague conferences".[1] and saw them as a nucleus of an international federation that was to meet at regular intervals to administer justice and develop international law procedures for the peaceful settlement of disputes, asserting "that a definite political union of the states of the world has been created with the First and Second Conferences." The various agencies created by the Conferences, like the Permanent Court of Arbitration, "are agents or organs of the union."

A major effort in both the conferences was to create a binding international court for compulsory arbitration to settle international disputes, which was considered necessary to replace the institution of war. This effort, however, failed to realize success either in 1899 or in 1907. The First Conference was generally a success and was focused on disarmament efforts. The Second Conference failed to create a binding international court for compulsory arbitration but did enlarge the machinery for voluntary arbitration, and established conventions regulating the collection of debts, rules of war, and the rights and obligations of neutrals. Along with disarmament and obligatory arbitration, both conferences included negotiations concerning the laws of war and war crimes. Many of the rules laid down at the Hague Conventions were violated in the First World War. The German invasion of Belgium, for instance, was a violation of Hague III (1907), which states that hostilities must not commence without explicit warning Most of the great powers, including the United States, Britain, Russia, France, China, and Persia, favored a binding international arbitration, but the condition was that the vote should be unanimous, and a few countries, led by Germany, vetoed the idea. The second conference, in 1907, was generally a failure, with few major decisions. However, the meeting of major powers did prefigure later 20thcentury attempts at international cooperation. The second conference was called at the suggestion of President Theodore Roosevelt in 1904, but postponed because of the war between Russia and Japan. The Second Peace Conference was held from June 15 to October 18, 1907, to expand upon the original Hague Convention, modifying some parts and adding others, with an increased focus on naval warfare. The British tried to secure limitation of armaments, but were defeated by the other powers, led by Germany, which feared a British attempt to stop the growth of the German fleet. Germany also rejected proposals for compulsory arbitration. However, the conference did enlarge the machinery for voluntary arbitration, and established conventions regulating the collection of debts, rules of war, and the rights and obligations of neutrals. The Final Agreement was signed on October 18, 1907, and entered into force on January 26, 1910. It consisted of thirteen sections, of which twelve were ratified and entered into force: 



 



I: The Pacific Settlement of International Disputes II: The Limitation of Employment of Force for Recovery of Contract Debts III: The Opening of Hostilities IV: The Laws and Customs of War on Land includes the Annex on The o Qualifications of Belligerents, Chapter II: Prisoners of War V: The Rights and Duties of Neutral Powers and Persons in Case of War on Land

ADR (based on ATTY HIGUIT’S OUTLINE) - 23 















VI: The Status of Enemy Merchant Ships at the Outbreak of Hostilities VII: The Conversion of Merchant Ships into War-Ships VIII: The Laying of Automatic Submarine Contact Mines IX: Bombardment by Naval Forces in Time of War X: Adaptation to Maritime War of the Principles of the Geneva Convention XI: Certain Restrictions with Regard to the Exercise of the Right of Capture in Naval War XII: The Creation of an International Prize Court [Not Ratified][5] XIII: The Rights and Duties of Neutral Powers in Naval War

have been more than 500 cases a year handled by the International Court of Arbitration since 1999. The International Chamber of Commerce (ICC) is the largest, most representative business organization in the world.[citation needed] Its hundreds of thousands of member companies in over 130 countries have interests spanning every sector of private enterprise. A world network of national committees keeps the ICC International Secretariat in Paris informed about national and regional business priorities. More than 2,000 experts drawn from ICC’s member companies feed their knowledge and experience into crafting the ICC stance on specific business issues.

Two declarations were signed as well: 



Declaration I: extending Declaration II from the 1899 Conference to other types of aircraf t[6] Declaration II: on the obligatory arbitration

The UN, the World Trade Organization, and many other intergovernmental bodies, both international and regional, are kept in touch with the views of international business through ICC. History

The Brazilian delegation was led by the statesman Ruy Barbosa, whose contribution was essential for the defense of the principle of legal equality of nations.[7] The British delegation included the 11th Lord Reay (Donald James Mackay), Sir Ernest Satow and Eyre Crowe. The Russian delegation was led by Fyodor Martens.The Uruguayan delegation was led by José Batlle y Ordóñez, great defender of the compulsory arbitration by creating the idea of an International Court of Arbitration, and an alliance of nations to force the arbitration. Korea made a futile effort to take part in the conference, in an incident known as the Hague Secret Emissary Affair. King Gojong dispatched Yi Jun, Yi Sang-Seol and Yi Wi-Jong as envoys to the second peace conference, to argue that Eulsa Treaty was unjust and ask for help from the international society to recover Korea’s diplomatic sovereignty. An American missionary, Homer Hulbert, also travelled to The Hague to argue against the treaty. All four men were denied entry 17

2.2.2

INTERNATIONAL COURT OF ARBITRATION (INTERNATIONAL CHAMBER OF COMMERCE)

The International Court of Arbitration is an institution for the resolution of international commercial disputes. The International Court of Arbitration is part of the International Chamber of Commerce. There are an increasing number of cases being brought before the International Court of Arbitration. There

17

http://en.wikipedia.org/wiki/Hague_Conventions_of_1899_and_1907

The International Chamber of Commerce was founded in 1919 to serve world business by promoting trade and investment, open markets for goods and services, and the free flow of capital. The organization's international secretariat was established in Paris and the ICC's International Court of Arbitration was created in 1923. ICC's first Chairman was 20th c. French Minister of Finance Etienne Clémentel. ICC's current Chairman is Gerard Worms[1]. Harold McGraw III[2] is ViceChairman and Victor K. Fung[3] is Honorary Chairman. In January 2011, Jean-Guy Carrier [4] was elected Secretary General of ICC by the ICC World Counc il. Membership There are two ways to become a member of ICC[5]: 1. Through affiliation with an ICC national committee or group. 2. By direct membership with the ICC International Secretariat when a national committee/group has not yet been established in your country/territory. Governing bodies World Council ICC' s supreme governing body is the World Council, consisting of representatives of national committees. The World Council elects ICC’s highest officers, including the Chairman and the Vice-Chairman, each of whom serves a two-year term. The Chairman, ViceChairman and the Honorary Chairman (the immediate past Chairman) provide the organization with highlevel world leadership.They play an important role in ICC section.


Executive Board Strategic direction for ICC is provided by its Executive Board, consisting of up to 30 business leaders and exofficio members. It is elected by the World Council on the recommendation of the Chairmanship. Meeting three times a year, the Executive Board oversees the establishment of ICC’s strategic priorities and the implementation of its policies. International Secretariat The ICC International Secretariat, based in Paris, is the operational arm of ICC. It develops and carries out ICC’s work programme, feeding business views into intergovernmental organizations on issues that directly affect business operations. The International Secretariat is led by the Secretary General, who is appointed by the World Council. National Committees In 90 of the world’s nations, members have established formal ICC structures called national committees. In countries where there is no national committee, companies and organizations such as chambers of commerce and professional associations can become direct members. Finance Committee The Finance Committee advises the Executive Board on all financial matters. On behalf of the Executive Board, it prepares the budget and regularly reports to the board. It reviews the financial implications of ICC activities and supervises the flow of revenues and expenses of the organization.





Expertise is a way of finding the right person to make an independent assessment on any subject relevant to business operations. DOCDEX provides expert decisions to resolve disputes related to documentary credits, collections and demand guarantees, incorporating ICC banking rules.

Policy and business practices ICC policies, rules and standards are prepared by specialized working bodies. Normal procedure requires policy statements first to be adopted by a commission, in consultation with national committees, and then approved by the Executive Board, before they can be regarded as official and public ICC positions. Commissions examine major policy issues of interest to world business. Each national committee (NC) or group may appoint delegates to represent it at meetings. Officers are appointed by the Chairman and Secretary General in consultation with NCs. Meetings of commissions are normally held twice a y ear. Task forces are constituted under the various commissions for a limited period to undertake specific projects and report back to their parent commission. Some task forces may include representatives of more than one commission.

2.2.3

INTERNATIONAL CENTER FOR SETTLEMENT OF INVESTMENT DISPUTES (ICSID) (CONVENTION ON THE SETTLEMENT OF INESTMENT DISPUTE BETWEEN STATES AND NATIONALS OF OTHER STATES)

Dispute Resolution Services ICC International Court of Arbitration has received 15,000 cases since its inception in 1923.[28] Over the past decade, the Court's workload has considerably expanded. The Court's membership has also grown and now covers 86 countries. With representatives in North America, Latin and Central America, Africa and the Middle East and Asia, the ICC Court has significantly increased its training activities on all continents and in all major languages used in international trade. ICC Dispute Resolution Services exist in many forms: 



Amicable dispute resolution offers a framework for the settlement of disputes with the assistance of a neutral. Parties choose the settlement technique, such as negotiation or a mini-trial. Dispute boards are independent bodies designed to help resolve disagreements arising during the course of a contract.

The International Centre for Settlement of Investment Disputes (ICSID), an institution of the World Bank Group based in Washington, D.C., United States, was established in 1966 pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention or Washington Convention). As of May 2011, 157 countries had signed the ICSID Convention. ICSID has an Administrative Council, chaired by the World Bank's President, and a Secretariat. It provides facilities for the conciliation and arbitration of investment disputes between member countries and individual investors. During the first decade of the 21st century, with the proliferation of bilateral investment treaties (BITs), most of which refer present and future investment disputes to the ICSID, the caseload of the ICSID substantially increased. As of 30 March 2007, ICSID had registered 263 cases, more than 30 of which were pending against Argentina, most resulting from Argentine government actions precipitated by


Argentina's economic crisis. ICSID caseload may be reduced by announcements from Nicaragua and Venezuela that they intend to withdraw from the ICSID.[1][2]

Marshall Islands, Mexico, Monaco, Montenegro, Myanmar, Nauru, Niue, North Korea, Palau, Poland, San Marino, South Africa, Suriname, Tajikistan, Tuvalu, Vanuatu, Vatican City, Vietnam, and the rest of states with limited recognition.

Establishment Activities On a number of occasions in the past, the World Bank as an institution and the President of the Bank in his personal capacity have assisted in mediation or conciliation of investment disputes between governments and private foreign investors. The creation of the International Centre for Settlement of Investment Disputes (ICSID) in 1966 was in part intended to relieve the President and the staff of the burden of becoming involved in such disputes. But the Bank's overriding consideration in creating ICSID was the belief that an institution specially designed to facilitate the settlement of investment disputes between governments and foreign investors could h elp to promote increased flows of international investment. ICSID was established under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States which came into force on October 14, 1966. ICSID has an Administrative Council and a Secretariat. The Administrative Council is chaired by the World Bank's President and consists of one representative of each State which has ratified the Convention. Annual meetings of the Council are held in conjunction with the joint Bank/Fund annual meetings. ICSID is an autonomous international organization. However, it has close links with the World Bank. All of ICSID's members are also members of the Bank. Unless a government makes a contrary designation, its Governor for the Bank sits ex officio on ICSID's Administrative Council. The expenses of the ICSID Secretariat are financed out of the Bank's budget, although the costs of individual proceedings are borne by the parties involved.[3] Membership Members of the ICSID are 156 of the UN members and Kosovo. Signed, but not ratified, have Belize, Canada, Dominican Republic, Ethiopia, Guinea-Bissau, Kyrgyzstan, Namibia, Russia, Sao Tome and Principe, Thailand Former members are Bolivia, Ecuador, and soon to be Venezuela.[4] Other non-members are Andorra, Angola, Antigua and Barbuda, Bhutan, Brazil, Cook Islands, Cuba, Djibouti, Dominica, Equatorial Guinea, Eritrea, India, Iran, Iraq, Kiribati, Laos, Liechtenstein, Libya, Maldives,

Pursuant to the Convention, ICSID provides facilities for the conciliation and arbitration of disputes between member countries and investors who qualify as nationals of other member countries. Recourse to ICSID conciliation and arbitration is entirely voluntary. However, once the parties have consented to arbitration under the ICSID Convention, neither can unilaterally withdraw its consent.[5] Moreover, all ICSID Contracting States, whether or not parties to the dispute, are required by the Convention to recognize and enforce ICSID arbitral awards. Besides this original role, the Centre has since 1978 had a set of Additional Facility Rules authorizing the ICSID Secretariat to administer certain types of proceedings between States and foreign nationals which fall outside the scope of the Convention. These include conciliation and arbitration proceedings where either the State party or the home State of the foreign national is not a member of ICSID. Additional Facility conciliation and arbitration are also available for cases where the dispute is not an investment dispute provided it relates to a transaction which has "features that distinguishes it from an ordinary commercial transaction." The Additional Facility Rules further allow ICSID to administer a type of proceedings not provided for in the Convention, namely fact-finding proceedings to which any State and foreign national may have recourse if they wish to institute an inquiry "to examine and report on facts."

A third activity of ICSID in the field of the settlement of disputes has consisted in the Secretary-General of ICSID accepting to act as the appointing authority of arbitrators for ad hoc (i.e., non-institutional) arbitration proceedings. This is most commonly done in the context of arrangements for arbitration under the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL), which are specially designed for ad hoc proceedings.

Provisions on ICSID arbitration are commonly found in investment contracts between governments of member countries and investors from other member countries. Advance consents by governments to submit investment disputes to ICSID arbitration can also be found in about twenty investment laws and in over 900 bilateral investment treaties. Arbitration under the


auspices of ICSID is similarly one of the main mechanisms for the settlement of investment disputes under four recent multilateral trade and investment treaties (the North American Free Trade Agreement, the Energy Charter Treaty, the Cartagena Free Trade Agreement and the Colonia Investment Protocol of Mercosur).

promote the progressive harmonization unification of international trade law".

In addition to these activities, ICSID also carries on advisory and research activities, publishing Investment Laws of the World and of Investment Treaties, and collaborates with other World Bank Group units. Since April 1986, the Centre has published a semi-annual law journal entitled ICSID Review: Foreign Investment Law Journal.

When world trade began to expand dramatically in the 1960s, national governments began to realize the need for a global set of standards and rules to harmonize national and regional regulations, which until then governed international trade.

ICSID proceedings do not necessarily take place in Washington, D.C. Other possible locations include the Permanent Court of Arbitration at The Hague, the Regional Arbitration Centres of the Asian-African Legal Consultative Committee at Cairo and Kuala Lumpur, the Australian Centre for International Commercial Arbitration at Melbourne, the Australian Commercial Disputes Centre at Sydney, the Singapore International Arbitration Centre, the GCC Commercial Arbitration Centre at Bahrain and the Frankfurt International Arbitration Center of German Institution of Arbitration (DIS) and the Frankfurt Chamber of Commerce and Industry. 18

UNCITRAL's original membership comprised 29 states, and was expanded to 36 in 1973, and again to 60 in 2002. Member states of UNCITRAL are representing different legal traditions and levels of economic development, as well as different geographic regions. States includes 14 African states, 14 Asian states, 8 Eastern European states, 10 Latin American and Caribbean states, and 14 Western European states. The Commission member States are elected by the General Assembly. Membership is structured so as to be representative of the world's various geographic regions and its principal economic and legal systems. Members of the commission are elected for terms of six years, the terms of half the members expiring every three years. As of 21 June 2010, the members of UNCITRAL, and the years when their memberships expire, are:

2.2.4

UNITED NATIONS COMMISSION FOR INTERNATIONAL TRADE LAW (UNICITRAL MODEL LAW ON INTRNATIONAL COMMERCIAL ARBITRATION-1985) International commercial law is the body of law that governs international sale transactions. A transaction will qualify to be international if elements of more than one country are involved. Since World War II international trade has grown extensively, seeing the increasing importance of international commercial law. It plays a vital role in world development, particularly through the integration of world markets. Lex mercatoria refers to that commercial law which is customary commercial law; evidence and procedure; and commercial law

part of international unwritten, including customary rules of general principles of

The United Nations Commission on International Trade Law (UNCITRAL) was established by the United Nations General Assembly by its Resolution 2205 (XXI) of 17 December 1966 "to 18

http://en.wikipedia.org/wiki/International_Centre_for_Settlement_of_I nvestment_Disputes

and

UNCITRAL carries out its work at annual sessions held alternately in New York City and Vienna. History

Membership

The methods of work are organized at three levels. The first level is UNCITRAL itself (The Commission), which holds an annual plenary session. The second level is the intergovernmental working groups (which is developing the topics on UNCITRAL's work program. Texts designed to simplify trade transactions and reduce associated costs are developed by working groups comprising all member States of UNCITRAL, which meet once or twice per year. Non-member States and interested international and regional organizations are also invited and can actively contribute to the work since decisions are taken by consensus, not by vote. Draft texts completed by these working groups are submitted to UNCITRAL for finalization and adoption at its annual session. The International Trade Law Division of the United Nations Office of Legal Affairs provides substantive secretariat services to UNCITRAL, such as conducting research and preparing studies and drafts. This is the third level, which assists the other two in the preparation and conduct of their work. Uncitral is: 



Coordinating the work of organizations active and encouraging cooperation among them. Promoting wider participation in existing international conventions and wider acceptance of existing model and uniform laws.

ADR (based on ATTY HIGUIT’S OUTLINE) - 27 









Preparing or promoting the adoption of new international conventions, model laws and uniform laws and promoting the codification and wider acceptance of international trade terms, provisions, customs and practice, in collaboration, where appropriate, with the organizations operating in this field. Promoting ways and means of ensuring a uniform interpretation and application of international conventions and uniform laws in the field of the law of international trade. Collecting and disseminating information on national legislation and modern legal developments, including case law, in the field of the law of international trade. Establishing and maintaining a close collaboration with the UN Conference on Trade and development. Maintaining liaison with other UN organs and specialized agencies concerned with international trade.

Conventions The Convention is an agreement among participating states establishing obligations binding upon those States that ratify or accede to it. A convention is designed to unify law by establishing binding legal obligations To become a party to a convention, States are required formally to deposit a binding instrument of ratification or accession with the depositary. The entry into force of a convention is usually dependent upon the deposit of a minimum number of instruments of ratification. UNCITRAL conventions: 

















the Convention on the Limitation Period in the International Sale of Goods (1974) (text) the United Nations Convention on the Carriage of Goods by Sea (1978) the United Nations Convention on Contracts for the International Sale of Goods (1980) the United Nations Convention on International Bills of Exchange and International Promissory Notes (1988) the United Nations Convention on the Liability of Operators of Transport Terminals in International Trade (1991) the United Nations Convention on Independent Guarantees and Stand-by Letters of Credit (1995) the United Nations Convention on the Assignment of Receivables in International Trade (2001) the United Nations Convention on the Use of Electronic Communications in International Contracts (2005) the United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea (2008)

Model laws A model law is a legislative text that is recommended to States for enactment as part of their national law. Model laws are generally finalized and adapted by UNCITRAL, at its annual session, while conventions requires the convening of a diplomatic c onference. 







 





UNCITRAL Model Law on International Commercial Arbitration (1985) (text) Model Law on International Credit Transfers (1992) UNCITRAL Model Law on Procurement of Goods, Construction and Services (1994) UNCITRAL Model Law on Electronic Commerce (1996) Model Law on Cross-border Insolvency (1997) UNCITRAL Model Law on Electronic Signatures (2001) UNCITRAL Model Law on International Commercial Conciliation (2002) Model Legislative Provisions on Privately Financed Infrastructure Projects (2003)

UNCITRAL also drafted the: 

  

UNCITRAL Arbitration Rules (1976) (text)— revised rules will be effective August 15, 2010; pre-released, July 12, 2010 UNCITRAL Conciliation Rules (1980) UNCITRAL Arbitration Rules (1982) UNCITRAL Notes on Organizing Arbitral Proceedings (1996)

CLOUT (Case Law on UNCITRAL Texts) The Case Law on UNCITRAL Texts system is a collection of court decisions and arbitral awards interpreting UNCITRAL texts. CLOUT includes case abstracts in the six United Nations languages on the United Nations Convention on Contracts for the International Sale of Goods (CISG) (Vienna, 1980) and the UNCITRAL Model Law on International Commercial Arbitration (1985).

2.2.5

WORLD TRADE ORGANIZATION (MARRAKESH AGREEMENT) (DISPUTE SETTLEMENT UNDERSTANDING) The Parties to this Agreement, Recognizing that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world’s resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means


for doing so in a manner consistent with their respective needs and concerns at different levels of economic development, Recognizing further that there is need for positive efforts designed to ensure that developing countries, and especially the least developed among them, secure a share in the growth in international trade commensurate with the needs of their economic development, Being desirous of contributing to these objectives by entering into reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international trade relations, Resolved, therefore, to develop an integrated, more viable and durable multilateral trading system encompassing the General Agreement on Tariffs and Trade, the results of past trade liberalization efforts, and all of the results of the Uruguay Round of Multilateral Trade Negotiations, Determined to preserve the basic principles and to further the objectives underlying this multilateral trading system,

4. The General Agreement on Tariffs and Trade 1994 as specified in Annex 1A (hereinafter referred to as “GATT 1994”) is legally distinct from the General Agreement on Tariffs and Trade, dated 30 October 1947, annexed to the Final Act Adopted at the Conclusion of the Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment, as subsequently rectified, amended or modified (hereinafter referred to as “GATT 1947”). Article III back to top Functions of the WTO 1. The WTO shall facilitate the implementation, administration and operation, and further the objectives, of this Agreement and of the Multilateral Trade Agreements, and shall also provide the framework for the implementation, administration and operation of the Plurilateral Trade Agreements. 2. The WTO shall provide the forum for negotiations among its Members concerning their multilateral trade relations in matters dealt with under the agreements in the Annexes to this Agreement. The WTO may also provide a forum for further negotiations among its Members concerning their multilateral trade relations, and a framework for the implementation of the results of such negotiations, as may be decided by the Ministerial Conference.

Agree as follows: Article I back to top Establishment of the Organization The World Trade Organization (hereinafter referred to as “the WTO”) is hereby established. Article II back to top Scope of the WTO 1. The WTO shall provide the common institutional framework for the conduct of trade relations among its Members in matters related to the agreements and associated legal instruments included in the Annexes to this Agreement. 2. The agreements and associated legal instruments included in Annexes 1, 2 and 3 (hereinafter referred to as “Multilateral Trade Agreements”) are integral parts of this Agreement, binding on all Members. 3. The agreements and associated legal instruments included in Annex 4 (hereinafter referred to as “Plurilateral Trade Agreements”) are also part of this Agreement for those Members that have accepted them, and are binding on those Members. The Plurilateral Trade Agreements do not create either obligations or rights for Members that have not accepted them.

3. The WTO shall administer the Understanding on Rules and Procedures Governing the Settlement of Disputes (hereinafter referred to as the “Dispute Settlement Understanding” or “DSU”) in Annex 2 to this Agreement. 4. The WTO shall administer the Trade Policy Review Mechanism (hereinafter referred to as the “TPRM”) provided for in Annex 3 to this Agreement. 5. With a view to achieving greater coherence in global economic policy-making, the WTO shall cooperate, as appropriate, with the International Monetary Fund and with the International Bank for Reconstruction and Development and its affiliated agencies. Article IV back to top Structure of the WTO 1. There shall be a Ministerial Conference composed of representatives of all the Members, which shall meet at least once every two years. The Ministerial Conference shall carry out the functions of the WTO and take actions necessary to this effect. The Ministerial Conference shall have the authority to take decisions on all matters under any of the Multilateral Trade Agreements, if so requested by a Member, in accordance with the specific requirements for decision-


making in this Agreement and in the relevant Multilateral Trade Agreement. 2. There shall be a General Council composed of representatives of all the Members, which shall meet as appropriate. In the intervals between meetings of the Ministerial Conference, its functions shall be conducted by the General Council. The General Council shall also carry out the functions assigned to it by this Agreement. The General Council shall establish its rules of procedure and approve the rules of procedure for the Committees provided for in paragraph 7. 3. The General Council shall convene as appropriate to discharge the responsibilities of the Dispute Settlement Body provided for in the Dispute Settlement Understanding. The Dispute Settlement Body may have its own chairman and shall establish such rules of procedure as it deems necessary for the fulfilment of those responsibilities. 4. The General Council shall convene as appropriate to discharge the responsibilities of the Trade Policy Review Body provided for in the TPRM. The Trade Policy Review Body may have its own chairman and shall establish such rules of procedure as it deems necessary for the fulfilment of those responsibilities. 5. There shall be a Council for Trade in Goods, a Council for Trade in Services and a Council for TradeRelated Aspects of Intellectual Property Rights (hereinafter referred to as the “Council for TRIPS”), which shall operate under the general guidance of the General Council. The Council for Trade in Goods shall oversee the functioning of the Multilateral Trade Agreements in Annex 1A. The Council for Trade in Services shall oversee the functioning of the General Agreement on Trade in Services (hereinafter referred to as “GATS”). The Council for TR IPS shall oversee the functioning of the Agreement on Trade-Related Aspects of Intellectual Property Rights (hereinafter referred to as the “Agreement on TRIPS”). These Councils shall carry out the functions assigned to them by their respective agreements and by the General Council. They shall establish their respective rules of procedure subject to the approval of the General Council. Membership in these Councils shall be open to representatives of all Members. These Councils shall meet as necessary to carry out their functions. 6. The Council for Trade in Goods, the Council for Trade in Services and the Council for TRIPS shall establish subsidiary bodies as required. These subsidiary bodies shall establish their respective rules of procedure subject to the approval of their respective Councils.

7. The Ministerial Conference shall establish a Committee on Trade and Development, a Committee on Balance-of-Payments Restrictions and a Committee on Budget, Finance and Administration, which shall carry out the functions assigned to them by this Agreement and by the Multilateral Trade Agreements, and any additional functions assigned to them by the General Council, and may establish such additional Committees with such functions as it may deem appropriate. As part of its functions, the Committee on Trade and Development shall periodically review the special provisions in the Multilateral Trade Agreements in favour of the least-developed country Members and report to the General Council for appropriate action. Membership in these Committees shall be open to representatives of all Members. 8. The bodies provided for under the Plurilateral Trade Agreements shall carry out the functions assigned to them under those Agreements and shall operate within the institutional framework of the WTO. These bodies shall keep the General Council informed of their activities on a regular basis.

Article V back to top Relations with Other Organizations 1. The General Council shall make appropriate arrangements for effective cooperation with other intergovernmental organizations that have responsibilities related to those of the WTO. 2. The General Council may make appropriate arrangements for consultation and cooperation with non-governmental organizations concerned with matters related to those of the WTO.

Article VI back to top The Secretariat 1. There shall be a Secretariat of the WTO (hereinafter referred to as “the Secretariat”) headed by a Director-General. 2. The Ministerial Conference shall appoint the Director-General and adopt regulations setting out the powers, duties, conditions of service and term of office of the Director-General. 3. The Director-General shall appoint the members of the staff of the Secretariat and determine their duties and conditions of service in accordance with regulations adopted by the Ministerial Conference. 4. The responsibilities of the Director-General and of the staff of the Secretariat shall be exclusively international in character. In the discharge of their


duties, the Director-General and the staff of the Secretariat shall not seek or accept instructions from any government or any other authority external to the WTO. They shall refrain from any action which might adversely reflect on their position as international officials. The Members of the WTO shall respect the international character of the responsibilities of the Director-General and of the staff of the Secretariat and shall not seek to influence them in the discharge of their duties.

Article VII back to top Budget and Contributions 1. The Director-General shall present to the Committee on Budget, Finance and Administration the annual budget estimate and financial statement of the WTO. The Committee on Budget, Finance and Administration shall review the annual budget estimate and the financial statement presented by the Director-General and make recommendations thereon to the General Council. The annual budget estimate shall be subject to approval by the General Council. 2. The Committee on Budget, Finance and Administration shall propose to the General Council financial regulations which shall include provisions setting out: (a) the scale of contributions apportioning the expenses of the WTO among its Members; and

(b) the measures to be taken in respect of Members in arrears. The financial regulations shall be based, as far as practicable, on the regulations and practices of GATT 1947. 3. The General Council shall adopt the financial regulations and the annual budget estimate by a twothirds majority comprising more than half of the Members of the WTO. 4. Each Member shall promptly contribute to the WTO its share in the expenses of the WTO in accordance with the financial regulations adopted by the General Council.

Article VIII back to top Status of the WTO 1. The WTO shall have legal personality, and shall be accorded by each of its Members such legal capacity as may be necessary for the exercise of its functions.

2. The WTO shall be accorded by each of its Members such privileges and immunities as are necessary for the exercise of its functions. 3. The officials of the WTO and the representatives of the Members shall similarly be accorded by each of its Members such privileges and immunities as are necessary for the independent exercise of their functions in connection with the WTO. 4. The privileges and immunities to be accorded by a Member to the WTO, its officials, and the representatives of its Members shall be similar to the privileges and immunities stipulated in the Convention on the Privileges and Immunities of the Specialized Agencies, approved by the General Assembly of the United Nations on 21 November 1947. 5. The WTO may conclude a headquarters agreement.

Article IX back to top Decision-Making 1. The WTO shall continue the practice of decisionmaking by consensus followed under GATT 1947(1). Except as otherwise provided, where a decision cannot be arrived at by consensus, the matter at issue shall be decided by voting. At meetings of the Ministerial Conference and the General Council, each Member of the WTO shall have one vote. Where the European Communities exercise their right to vote, they shall have a number of votes equal to the number of their member States(2)which are Members of the WTO. Decisions of the Ministerial Conference and the General Council shall be taken by a majority of the votes cast, unless otherwise provided in this Agreement or in the relevant Multilateral Trade Agreement(3). 2. The Ministerial Conference and the General Council shall have the exclusive authority to adopt interpretations of this Agreement and of the Multilateral Trade Agreements. In the case of an interpretation of a Multilateral Trade Agreement in Annex 1, they shall exercise their authority on the basis of a recommendation by the Council overseeing the functioning of that Agreement. The decision to adopt an interpretation shall be taken by a three-fourths majority of the Members. This paragraph shall not be used in a manner that would undermine the amendment provisions in Article X. 3. In exceptional circumstances, the Ministerial Conference may decide to waive an obligation imposed on a Member by this Agreement or any of the Multilateral Trade Agreements, provided that any such decision shall be taken by three fourths (4) of the


Members unless otherwise provided for in this paragraph. (a) A request for a waiver concerning this Agreement shall be submitted to the Ministerial Conference for consideration pursuant to the practice of decision-making by consensus. The Ministerial Conference shall establish a time-period, which shall not exceed 90 days, to consider the request. If consensus is not reached during the time-period, any decision to grant a waiver shall be taken by three fourths4 of the Members.

(b) A request for a waiver concerning the Multilateral Trade Agreements in Annexes 1A or 1B or 1C and their annexes shall be submitted initially to the Council for Trade in Goods, the Council for Trade in Services or the Council for TRIPS, respectively, for consideration during a time-period which shall not exceed 90 days. At the end of the time-period, the relevant Council shall submit a report to the Ministerial Conference. 4. A decision by the Ministerial Conference granting a waiver shall state the exceptional circumstances justifying the decision, the terms and conditions governing the application of the waiver, and the date on which the waiver shall terminate. Any waiver granted for a period of more than one year shall be reviewed by the Ministerial Conference not later than one year after it is granted, and thereafter annually until the waiver terminates. In each review, the Ministerial Conference shall examine whether the exceptional circumstances justifying the waiver still exist and whether the terms and conditions attached to the waiver have been met. The Ministerial Conference, on the basis of the annual review, may extend, modify or terminate the waiver. 5. Decisions under a Plurilateral Trade Agreement, including any decisions on interpretations and waivers, shall be governed by the provisions of that Agreement.

Article X back to top Amendments 1. Any Member of the WTO may initiate a proposal to amend the provisions of this Agreement or the Multilateral Trade Agreements in Annex 1 by submitting such proposal to the Ministerial Conference. The Councils listed in paragraph 5 of Article IV may also submit to the Ministerial Conference proposals to amend the provisions of the corresponding Multilateral Trade Agreements in Annex 1 the functioning of which they oversee. Unless the Ministerial Conference decides on a longer period, for a period of 90 days after the proposal has been

tabled formally at the Ministerial Conference any decision by the Ministerial Conference to submit the proposed amendment to the Members for acceptance shall be taken by consensus. Unless the provisions of paragraphs 2, 5 or 6 apply, that decision shall specify whether the provisions of paragraphs 3 or 4 shall apply. If consensus is reached, the Ministerial Conference shall forthwith submit the proposed amendment to the Members for acceptance. If consensus is not reached at a meeting of the Ministerial Conference within the established period, the Ministerial Conference shall decide by a two-thirds majority of the Members whether to submit the proposed amendment to the Members for acceptance. Except as provided in paragraphs 2, 5 and 6, the provisions of paragraph 3 shall apply to the proposed amendment, unless the Ministerial Conference decides by a three-fourths majority of the Members that the provisions of paragraph 4 shall apply. 2. Amendments to the provisions of this Article and to the provisions of the following Articles shall take effect only upon acceptance by all Members: Article IX of this Agreement; Articles I and II of GATT 1994; Article II:1 of GATS; Article 4 of the Agreement on TRIPS. 3. Amendments to provisions of this Agreement, or of the Multilateral Trade Agreements in Annexes 1A and 1C, other than those listed in paragraphs 2 and 6, of a nature that would alter the rights and obligations of the Members, shall take effect for the Members that have accepted them upon acceptance by two thirds of the Members and thereafter for each other Member upon acceptance by it. The Ministerial Conference may decide by a three-fourths majority of the Members that any amendment made effective under this paragraph is of such a nature that any Member which has not accepted it within a period specified by the Ministerial Conference in each case shall be free to withdraw from the WTO or to remain a Member with the consent of the Ministerial Conference. 4. Amendments to provisions of this Agreement or of the Multilateral Trade Agreements in Annexes 1A and 1C, other than those listed in paragraphs 2 and 6, of a nature that would not alter the rights and obligations of the Members, shall take effect for all Members upon acceptance by two thirds of the Members. 5. Except as provided in paragraph 2 above, amendments to Parts I, II and III of GATS and the respective annexes shall take effect for the Members that have accepted them upon acceptance by two thirds of the Members and thereafter for each Member upon acceptance by it. The Ministerial Conference may


decide by a three-fourths majority of the Members that any amendment made effective under the preceding provision is of such a nature that any Member which has not accepted it within a period specified by the Ministerial Conference in each case shall be free to withdraw from the WTO or to remain a Member with the consent of the Ministerial Conference. Amendments to Parts IV, V and VI of GATS and the respective annexes shall take effect for all Members upon acceptance by two thirds of the Members. 6. Notwithstanding the other provisions of this Article, amendments to the Agreement on TRIPS meeting the requirements of paragraph 2 of Article 71 thereof may be adopted by the Ministerial Conference without further formal acceptance process. 7. Any Member accepting an amendment to this Agreement or to a Multilateral Trade Agreement in Annex 1 shall deposit an instrument of acceptance with the Director-General of the WTO within the period of acceptance specified by the Ministerial Conference. 8. Any Member of the WTO may initiate a proposal to amend the provisions of the Multilateral Trade Agreements in Annexes 2 and 3 by submitting such proposal to the Ministerial Conference. The decision to approve amendments to the Multilateral Trade Agreement in Annex 2 sh all be made by consensus and these amendments shall take effect for all Members upon approval by the Ministerial Conference. Decisions to approve amendments to the Multilateral Trade Agreement in Annex 3 shall take effect for all Members upon approval by the Ministerial Conference. 9. The Ministerial Conference, upon the request of the Members parties to a trade agreement, may decide exclusively by consensus to add that agreement to Annex 4. The Ministerial Conference, upon the request of the Members parties to a Plurilateral Trade Agreement, may decide to delete that Agreement from Annex 4. 10. Amendments to a Plurilateral Trade Agreement shall be governed by the provisions of that Agreement.

Article XI back to top Original Membership 1. The contracting parties to GATT 1947 as of the date of entry into force of this Agreement, and the European Communities, which accept this Agreement and the Multilateral Trade Agreements and for which Schedules of Concessions and Commitments are annexed to GATT 1994 and for which Schedules of Specific Commitments are annexed to GATS shall become original Members of the WTO.

2. The least-developed countries recognized as such by the United Nations will only be required to undertake commitments and concessions to the extent consistent with their individual development, financial and trade needs or their administrative and institutional capabilities.

Article XII back to top Accession 1. Any State or separate customs territory possessing full autonomy in the conduct of its external commercial relations and of the other matters provided for in this Agreement and the Multilateral Trade Agreements may accede to this Agreement, on terms to be agreed between it and the WTO. Such accession shall apply to this Agreement and the Multilateral Trade Agreements annexed thereto. 2. Decisions on accession shall be taken by the Ministerial Conference. The Ministerial Conference shall approve the agreement on the terms of accession by a two-thirds majority of the Members of the WTO. 3. Accession to a Plurilateral Trade Agreement shall be governed by the provisions of that Agreement.

Article XIII back to top Non-Application of Multilateral Trade Agreements between Particular Members 1. This Agreement and the Multilateral Trade Agreements in Annexes 1 and 2 shall not apply as between any Member and any other Member if either of the Members, at the time either becomes a Member, does not consent to such application. 2. Paragraph 1 may be invoked between original Members of the WTO which were contracting parties to GATT 1947 only where Article XXXV of that Agreement had been invoked earlier and was effective as between those contracting parties at the time of entry into force for them of this Agreement. 3. Paragraph 1 shall apply between a Member and another Member which has acceded under Article XII only if the Member not consenting to the application has so notified the Ministerial Conference before the approval of the agreement on the terms of accession by the Ministerial Conference. 4. The Ministerial Conference may review the operation of this Article in particular cases at the request of any Member and make appropriate recommendations.


5. Non-application of a Plurilateral Trade Agreement between parties to that Agreement shall be governed by the provisions of that Agreement.

Article XIV back to top Acceptance, Entry into Force and Deposit 1. This Agreement shall be open for acceptance, by signature or otherwise, by contracting parties to GATT 1947, and the European Communities, which are eligible to become original Members of the WTO in accordance with Article XI of this Agreement. Such acceptance shall apply to this Agreement and the Multilateral Trade Agreements annexed hereto. This Agreement and the Multilateral Trade Agreements annexed hereto shall enter into force on the date determined by Ministers in accordance with paragraph 3 of the Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations and shall remain open for acceptance for a period of two years following that date unless the Ministers decide otherwise. An acceptance following the entry into force of this Agreement shall enter into force on the 30th day following the date of such acceptance. 2. A Member which accepts this Agreement after its entry into force shall implement those concessions and obligations in the Multilateral Trade Agreements that are to be implemented over a period of time starting with the entry into force of this Agreement as if it had accepted this Agreement on the date of its entry into force. 3. Until the entry into force of this Agreement, the text of this Agreement and the Multilateral Trade Agreements shall be deposited with the DirectorGeneral to the CONTRACTING PARTIES to GATT 1947. The Director-General shall promptly furnish a certified true copy of this Agreement and the Multilateral Trade Agreements, and a notification of each acceptance thereof, to each government and the European Communities having accepted this Agreement. This Agreement and the Multilateral Trade Agreements, and any amendments thereto, shall, upon the entry into force of this Agreement, be deposited with the Director-General of the WTO. 4. The acceptance and entry into force of a Plurilateral Trade Agreement shall be governed by the provisions of that Agreement. Such Agreements shall be deposited with the Director-General to the CONTRACTING PARTIES to GATT 1947. Upon the entry into force of this Agreement, such Agreements shall be deposited with the Director-General of the WTO.

Article XV back to top

Withdrawal 1. Any Member may withdraw from this Agreement. Such withdrawal shall apply both to this Agreement and the Multilateral Trade Agreements and shall take effect upon the expiration of six months from the date on which written notice of withdrawal is received by the Director-General of the WTO. 2. Withdrawal from a Plurilateral Trade Agreement shall be governed by the provisions of that Agreement.

Article XVI back to top Miscellaneous Provisions 1. Except as otherwise provided under this Agreement or the Multilateral Trade Agreements, the WTO shall be guided by the decisions, procedures and customary practices followed by the CONTRACTING PARTIES to GATT 1947 and the bodies established in the framework of GATT 1947. 2. To the extent practicable, the Secretariat of GATT 1947 shall become the Secretariat of the WTO, and the Director-General to the CONTRACTING PARTIES to GATT 1947, until such time as the Ministerial Conference has appointed a Director-General in accordance with paragraph 2 of Article VI of this Agreement, shall serve as Director-General of the WTO. 3. In the event of a conflict between a provision of this Agreement and a provision of any of the Multilateral Trade Agreements, the provision of this Agreement shall prevail to the extent of the conflict. 4. Each Member shall ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the annexed Agreements. 5. No reservations may be made in respect of any provision of this Agreement. Reservations in respect of any of the provisions of the Multilateral Trade Agreements may only be made to the extent provided for in those Agreements. Reservations in respect of a provision of a Plurilateral Trade Agreement shall be governed by the provisions of that Agreement. 6. This Agreement shall be registered in accordance with the provisions of Article 102 of the Charter of the United Nations. DONE at Marrakesh this fifteenth day of April one thousand nine hundred and ninety-four, in a single copy, in the English, French and Spanish languages, each text being authentic. Explanatory Notes: back to top


The terms “country” or “countries” as used in this Agreement and the Multilateral Trade Agreements are to be understood to include any separate customs territory Member of the WTO. In the case of a separate customs territory Member of the WTO, where an expression in this Agreement and the Multilateral Trade Agreements is qualified by the term “national”, such expression shall be read as pertaining to that customs territory, unless otherwise specified. Dispute settlement is regarded by the World Trade Organization (WTO) as the central pillar of the multilateral trading system, and as the organization's "unique contribution to the stability of the global economy".[1] A dispute arises when one member country adopts a trade policy measure or takes some action that one or more fellow members considers to a breach of WTO agreements or to be a failure to live up to obligations. By joining the WTO, member countries have agreed that if they believe fellow members are in violation of trade rules, they will use the multilateral system of settling disputes instead of taking action unilaterally — this entails abiding by agreed procedures (Dispute Settlement Understanding) and respecting judgments, primarily of the Dispute Settlement Body (DSB), the WTO organ responsible for adjudication of disputes.[2] A former WTO Director-General characterized the WTO dispute settlement system as "the most active international adjudicative mechanism in the world today."[3] Dispute Settlement Understanding Prompt compliance with recommendations or rulings of the DSB is essential in order to ensure effective resolution of disputes to the benefit of all Members. — World Trade Organization, Article 21.1 of the DSU In 1994, the WTO members agreed on the Understanding on Rules and Procedures Governing the Settlement of Disputes or Dispute Settlement Understanding (DSU) (annexed to the "Final Act" signed in Marrakesh in 1994).[4] Pursuant to the rules detailed in the DSU, member states can engage in consultations to resolve trade disputes pertaining to a "covered agreement" or, if unsuccessful, have a WTO panel hear the case.[5] The priority, however, is to settle disputes, through consultations if possible. By January 2008, only about 136 of the nearly 369 cases had reached the full panel process.[2] Duration of a Dispute Settlement procedure These approximate periods for each stage of a dispute settlement

procedure are target figures The agreement is flexible. In addition, the countries can settle their dispute themselves at any stage. Totals are also approximate. 60 days Consultations, mediation, etc. 45 days Panel set up and panellists appointed 6 months Final panel report to parties 3 weeks Final panel report to WTO members 60 days Dispute Settlement Body adopts report (if no appeal) Total = 1 year (without appeal) 60–90 days Appeals report 30 days Dispute Settlement Body adopts appeals report Total = 1 year 3 months (with appeal) Source:Understanding the WTO: Settling Disputes - A unique contribution The operation of the WTO dispute settlement process involves the parties and third parties to a case and may also involve the DSB panels, the Appellate Body, the WTO Secretariat, arbitrators, independent experts, and several specialized institutions.[6] The General Council discharges its responsibilities under the DSU through the Dispute Settlement Body (DSB).[7] Like the General Council, the DSB is composed of representatives of all WTO Members. The DSB is responsible for administering the DSU, i.e. for overseeing the entire dispute settlement process. It also has the authority to establish panels, adopt panel and Appellate Body reports, maintain surveillance of implementation of rulings and recommendations, and authorize the suspension of obligations under the covered agreements.[8] The DSB meets as often as necessary to adhere to the timeframes provided for in the DSU.[9] [edit] From complaint to final report If a member state considers that a measure adopted by another member state has deprived it of a benefit accruing to it under one of the covered agreements, it may call for consultations with the other member state.[10] If consultations fail to resolve the dispute within 60 days after receipt of the request for consultations, the complainant state may request the establishment of a Panel. It is not possible for the respondent state to prevent or delay the establishment of a Panel, unless the DSB by consensus decides otherwise.[11] The panel, normally consisting of three members appointed ad hoc by the Secretariat, sits to


receive written and oral submissions of the parties, on the basis of which it is expected to make findings and conclusions for presentation to the DSB. The proceedings are confidential, and even when private parties are directly concerned, they are not permitted to attend or make submissions separate from those of the state in question.[12] Disputes can also arise under Non-violation nullification of benefits claims.[13] The final version of the panel's report is distributed first to the parties; two weeks later it is circulated to all the members of the WTO. In sharp contrast with other systems, the report is required to be adopted at a meeting of the DSB within 60 days of its circulation, unless the DSB by consensus decides not to adopt the report or a party to the dispute gives notice of its intention to appeal.[14] A party may appeal a panel report to the standing Appellate Body, but only on issues of law and legal interpretations developed by th e panel. Each appeal is heard by three members of the permanent seven-member Appellate Body set up by the Dispute Settlement Body and broadly representing the range of WTO membership. Members of the Appellate Body have four-year terms. They must be individuals with recognized standing in the field of law and international trade, not affiliated with any government. The Appellate Body may uphold, modify or reverse the panel's legal findings and conclusions. Normally appeals should not last more than 60 days, with an absolute maximum of 90 days.[15] The possibility for appeal makes the WTO dispute resolution system unique among the judicial processes of dispute settlement in general public international law.[16] Members may express their views on the report of the Appellate Body, but they cannot derail it. The DSU states unequivocally that an Appellate Body report shall be adopted by the DSB and unconditionally accepted by the parties, unless the DSB decides by consensus within thirty days of its circulation not to adopt the report.[17] Unless otherwise agreed by the parties to the dispute, the period from establishment of the panel to consideration of the report by the DSB shall as a general rule not exceed nine months if there is no appeal, and twelve months if there is an appeal.[18] [edit] Compliance The DSU addresses the question of compliance and retaliation. Within thirty days of the adoption of the report, the member concerned is to inform the DSB of its intentions in respect of implementation of the recommendations and rulings. If the member explains that it is impracticable to comply immediately with the recommendations and rulings, it is to have a "reasonable period of time" in which to comply. If no agreement is reached about the reasonable period for

compliance, that issue is to be the subject of binding arbitration; the arbitrator is to be appointed by agreement of the parties. If there is a disagreement as to the satisfactory nature of the measures adopted by the respondent state to comply with the report, that disagreement is to be decided by a panel, if possible the same panel that heard the original dispute, but apparently without the possibility of appeal from its decision. The DSU provides that even if the respondent asserts that it has complied with the recommendation in a report, and even if the complainant party or the panel accepts that assertion, the DSB is supposed to keep the implementation of the recommendations under surveillance.[19] [edit] Compensation and retaliation If all else fails, two more possibilities are set out in the DSU: If a member fails within the "reasonable period" to carry out the recommendations and rulings, it may negotiate with the complaining state for a mutually acceptable compensation. Compensation is not defined, but may be expected to consist of the grant of a concession by the respondent state on a product or service of interest to the complainant state.[20] If no agreement on compensation is reached within twenty days of the expiry of the "reasonable period", the prevailing state may request authorization from the DSB to suspend application to the member concerned of concessions or other obligations under the covered agreements.[20] The DSU makes clear that retaliation is not favored, and sets the criteria for retaliation.[21] In contrast to prior GATT practice, authorization to suspend concessions in this context is semi-automatic, in that the DSB "shall grant the authorization [...] within thirty days of the expiry of the reasonable period", unless it decides by consensus to reject the request.[22] Any suspension or concession or other obligation is to be temporary. If the respondent state objects to the level of suspension proposed or to the consistency of the proposed suspension with the DSU principles, still another arbitration is provided for, if possible by the original panel members or by an arbitrator or arbitrators appointed by the DirectorGeneral, to be completed within sixty days from expiration of the reasonable period.[22] While such "retaliatory measures" are a strong mechanism when applied by economically powerful countries like the United States or the European Union, when applied by economically weak countries against stronger ones, they can often be ignored.[23] This has been the case, for example, with the March 2005 Appellate Body ruling in case DS 267,[24] which declared US cotton subsidies illegal.[citation needed] Whether or not the complainant has taken a measure of retaliation, surveillance by the DSB is to continue, to


see whether the recommendations of the panel or the Appellate Body have been implemented.[25] [edit] Developing countries Like most of the agreements adopted in the Uruguay Round, the DSU contains several provisions directed to developing countries.[26] The Understanding states that members should give "special attention" to the problems and interests of developing country members.[27] Further, if one party to a dispute is a developing country, that party is entitled to have at least one panelist who comes from a developing country.[28] If a complaint is brought against a developing country, the time for consultations (before a panel is convened) may be extended, and if the dispute goes to a panel, the deadlines for the developing country to make its submissions may be relaxed.[29] Also, the Secretariat is authorized to make a qualified legal expert available to any developing country on request. Formal complaints against least developed countries are discouraged, and if consultations fail, the Director-General and the Chairman of the DSB stand ready to offer their good offices before a formal request for a panel is made.[30] As to substance, the DSU provides that the report of panels shall "explicitly indicate" how account has been taken of the "differential and more favorable treatment" provisions of the agreement under which the complaint is brought. Whether or not a developing country is a party to a particular proceeding, "particular attention" is to be paid to the interests of the developing countries in the course of implementing recommendations and rulings of panels.[31] In order to assist developing countries in overcoming their limited expertise in WTO law and assist them in managing complex trade disputes, an Advisory Centre on WTO Law was established in 2001. The aim is to level the playing field for these countries and customs territories in the WTO system by enabling them to have a full understanding of their rights and obligations under the WTO Agreement

2.3 ENFORCEMENT AND RECOGNITION OF AWARDS Convention on the Recognition and Enforcement of Foreign Arbitral Awards

From Wikipedia, the free encyclopedia Jump to: navigation, search New York Convention Convention on the Recognition and Enforcement of Foreign Arbitral Awards

Signed

June 10, 1958

Location

New York, US

Effective

7 June 1959

Condition

3 ratifications

Signatories

24

Parties

146

Depositaries

Secretary-General of the United Nations

Languages

Chinese, English, French, Russian and Spanish

Convention on the Recognition and Enforcement of Foreign Arbitral Awards at Wikisource

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention, was adopted by a United Nations diplomatic conference on 10 June 1958 and entered into force on 7 June 1959. The Convention requires courts of contracting states to give effect to private agreements to arbitrate and to recognize and enforce arbitration awards made in other contracting states. Widely considered the foundational instrument for international arbitration, it applies to arbitrations which are not considered as domestic awards in the state where recognition and enforcement is sought. Though other international conventions apply to the cross-border enforcement of arbitration awards, the New York Convention is by far the most important. Contents [hide]    

  

1 Background 2 Summary of provisions 3 Parties to the New York Convention 4 States which are Not Party to the New York Convention 5 United States Issues 6 External links 7 References

Background In 1953, the International Chamber of Commerce (ICC) produced the first draft Convention on the Recognition and Enforcement of International Arbitral Awards to the United Nations Economic and Social Council. With slight modifications, the Council submitted the convention to the International Conference in the Spring of 1958. The Conference was chaired by Willem Schurmann, the Dutch Permanent Representative to the United Nations and Oscar Schachter, a leading figure in international law who later taught at Columbia Law School and the Columbia School of International and Public Affairs, and served as the President of the American Society of International Law. International arbitration is an increasingly popular means of alternative dispute resolution for cross border commercial transactions. The primary


advantage of international arbitration over court litigation is enforceability: an international arbitration award is enforceable in most countries in the world. Other advantages of international arbitration include the ability to select a neutral forum to resolve disputes, that arbitration awards are final and not ordinarily subject to appeal, the ability to choose flexible procedures for the arbitration, and confidentiality. Once a dispute between parties is settled, the winning party needs to collect the award or judgment. Unless the assets of the losing party are located in the country where the court judgment was rendered, the winning party needs to obtain a court judgment in the jurisdiction where the other party resides or where its assets are located. Unless there is a treaty on recognition of court judgments between the country where the judgment is rendered and the country where the winning party seeks to collect, the winning party will be unable to use the court judgment to collect. Countries which have adopted the New York Convention have agreed to recognize and enforce international arbitration awards. As of July 23, 2011, there are 146 signatories which have adopted the New York Convention: 144 of the 193 United Nations Member States, the Cook Islands (a New Zealand dependent territory), and the Holy See have adopted the New York Convention.[1] 49 U.N. Member States have not yet adopted the New York Convention. A number of British dependent territories have not yet had the Convention extended to them by Order in Council. Summary of provisions Under the Convention, an arbitration award issued in any other state can generally be freely enforced in any other contracting state (save that some contracting states may elect to enforce only awards from other contracting states - the "reciprocity" reservation), only subject to certain, limited defenses. These defenses are: 1.

a party to the arbitration agreement was, under the law applicable to him, under some incapacity; 2. the arbitration agreement was not valid under its governing law ; 3. a party was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings, or was otherwise unable to present its case; 4. the award deals with an issue not contemplated by or not falling within the terms of the submission to arbitration, or contains matters beyond the scope of the arbitration (subject to the proviso that an award which contains decisions on such matters may be enforced to the extent that it contains decisions on matters submitted to arbitration which can be separated from those matters not so submitted); 5. the composition of the arbitral tribunal was not in accordance with the agreement of the parties or, failing such agreement, with the law

of the place where the hearing took place (the "lex loci arbitri"); 6. the award has not yet become binding upon the parties, or has been set aside or suspended by a competent authority, either in the country where the arbitration took place, or pursuant to the law of the arbitration agreement; 7. the subject matter of the award was not capable of resolution by arbitration; or 8. enforcement would be contrary to "public policy".

Parties to the New York Convention As of May 2012, 146 of the 193 United Nations Member States have adopted the New York Convention. The Convention has also been ratified by Holy See and the Cook Islands. About fifty of the U.N. Member States have not adopted the Convention. In addition, Taiwan has not adopted the Convention and a number of British Overseas Territories have not had the Convention extended to them by Order in Council. British Overseas Territories to which the New York Convention has not yet been extended by Order in Council are: Anguilla, British Virgin Islands, Falkland Islands, Turks and Caicos Islands, Montserrat, Saint Helena (including Ascension and Tristan da Cunha). The British Virgin Islands have implemented the New York Convention into domestic law (Arbitration Ordinance 1976), although Britain has never issued an Order in Council legally extending the New York Convention to the British Virgin Islands. United States Issues Under American law, the recognition of foreign arbitral awards is governed by chapter 2 of the Federal Arbitration Act, which incorporate the New York Convention.[2]

However, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "Convention") does not preempt state law. In Foster v. Neilson, the Supreme Court held “Our constitution declares a treaty to be the law of the land. It is, consequently, to be regarded in courts of justice as equivalent to an act of the Legislature, whenever it operates of itself without the aid of any legislative provision.” Foster v. Neilson, 27 U.S. 253, 314 (1829). See also Valentine v. U.S. ex rel. Neidecker, 57 S.Ct. 100, 103 (1936); Medellin v. Dretke, 125 S.Ct. 2088, 2103 (2005); Sanchez-Llamas v. Oregon, 126 S.Ct. 2669, 2695 (2006). Thus, over a course of 181 years, the United States Supreme Court has repeatedly held that a self-executing treaty is an act of the Legislature (i.e., act of Congress).


2.4 TYPES OF ADR 2.4.1

1. Negotiation

Negotiation involves “conferring with another with a view to agreement”. There are no formal rules to governing how negotiations should be conducted, although there are culturally acceptable approaches. Negotiation is much more than persuasion. Although you can try to persuade a difficult person to see it your way, you are merely discussing or arguing your way through a problem unless you can vary the terms and commit resources. 2.4.2 Assisted negotiation Here the parties are assisted in their negotiations by a third party who coaches or represents them in the negotiations without a formalised structure. Lawyers, accountants, trusted friends or other technical or professional advisers are often called upon to fulfil this role. 2.4.3

2. Mediation

In mediation, a neutral third party mediator facilitates the negotiation of a solution by the parties involved. LEADR NZ mainly deals with mediation. Explore our mediation section for full details. 2.4.4 

2.4.5

3. Conciliation This is used to refer to a number of different processes. The most common are: • where a third party acts as a conduit, transmitting offers of settlement between the parties but taking a much less active role in the negotiation than a mediator, or • the processes used in agencies that administer legislative rights, in which case participation may be mandatory and the conciliator may be obliged to ensure that the solution reached adheres to the relevant legislation. 4. Arbitration

Arbitration involves submitting a dispute to an arbitrator who hears arguments from the parties then resolves the conflict by making a decision (usually binding) called an ‘award’. The courts can enforce the award. There are varying degree of formality in how evidence is presented during arbitration. This approach provides greater flexibility and more party control than the formal court system. It is also usually private and confidential. Arbitration, a form of alternative dispute resolution (ADR), is a legal technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons (the "arbitrators", "arbiters" or "arbitral tribunal"), by whose decision (the "award") they agree to be bound. It is a resolution technique in which a third party reviews the

evidence in the case and imposes a decision that is legally binding for both sides and enforceable.[1] Other forms of ADR include mediation[2] (a form of settlement negotiation facilitated by a neutral third party) and non-binding resolution by experts. Arbitration is often used for the resolution of commercial disputes, particularly in the context of international commercial transactions. The use of arbitration is also frequently employed in consumer and employment matters, where arbitration may be mandated by the terms of employment or commercial contracts. Arbitration can be either voluntary or mandatory (although mandatory arbitration can only come from a statute or from a contract that is voluntarily entered into, where the parties agree to hold all existing or future disputes to arbitration, without necessarily knowing, specifically, what disputes will ever occur) and can be either binding or non-binding. Non-binding arbitration is similar to mediation in that a decision can not be imposed on the parties. However, the principal distinction is that whereas a mediator will try to help the parties find a middle ground on which to compromise, the (non-binding) arbitrator remains totally removed from the settlement process and will only give a determination of liability and, if appropriate, an indication of the quantum of damages payable. By one definition arbitration is binding and so non-binding arbitration is technically not arbitration. Arbitration is a proceeding in which a dispute is resolved by an impartial adjudicator whose decision the parties to the dispute have agreed, or legislation has decreed, will be final and binding. There are limited rights of review and appeal of arbitration awards. Arbitration is not the same as: judicial proceedings, although in some jurisdictions, court proceedings are sometimes referred as arbitrations[3]

alternative dis pute res olution (or A DR ) Parties often seek to resolve their disputes through arbitration because of a number of perceived potential advantages over judicial proceedings: when the subject matter of the dispute is highly technical, arbitrators with an appropriate degree of expertise can be appointed (as one cannot "choose the judge" in litigation)[5] arbitration is often faster than litigation in court )[6] arbitration can be cheaper and more flexible for businesses[citation needed] arbitral proceedings and an arbitral award are generally non-public, and can be made confidential[7] in arbitral proceedings the language of arbitration may be chosen, whereas in judicial proceedings the official

ADR (based on ATTY HIGUIT’S OUTLINE) - 39 language of the country of the competent court will be automatically applied because of the provisions of the New York Convention 1958, arbitration awards are generally easier to enforce in other nations than court judgments

arbitrators are generally unable to enforce interlocutory measures against a party, making it easier for a party to take steps to avoid enforcement of member or a small group of members in arbitration due to increasing legal fees, without explaining to the members the adverse consequences of an unfavorable ruling

in most legal systems there are very limited avenues for appeal of an arbitral award, which is sometimes an advantage because it limits the duration of the dispute and any associated liability

rule of applicable law is not necessarily binding on the arbitrators, although they cannot disregard the law[citation needed]

S ome of the dis advantag es include:

discovery may be more limited in arbitration or entirely nonexistent

arbitration needed]

may

become

highly

complex[citation

arbitration may be subject to pressures from powerful law firms representing the stronger and wealthier party[citation needed] arbitration agreements are sometimes contained in ancillary agreements, or in small print in other agreements, and consumers and employees often do not know in advance that they have agreed to mandatory binding pre-dispute arbitration by purchasing a product or taking a job if the arbitration is mandatory and binding, the parties waive their rights to access the courts and to have a judge or jury decide the case in some arbitration agreements, the parties are required to pay for the arbitrators, which adds an additional layer of legal cost that can be prohibitive, especially in small consumer disputes[citation needed] in some arbitration agreements and systems, the recovery of attorneys' fees is unavailable, making it difficult or impossible for consumers or employees to get legal representation[citation needed]; however most arbitration codes and agreements provide for the same relief that could be granted in court if the arbitrator or the arbitration forum depends on the corporation for repeat business, there may be an inherent incentive to rule against the consumer or employee there are very limited avenues for appeal, which means that an erroneous decision cannot be easily overturned although usually thought to be speedier, when there are multiple arbitrators on the panel, juggling their schedules for hearing dates in long cases can lead to delays in some legal systems, arbitrary awards have fewer enforcement options than judgments; although in the United States arbitration awards are enforced in the same manner as court judgments and have the same effect

the potential to generate billings by attorneys may be less than pursuing the dispute through trial unlike court judgments, arbitration awards themselves are not directly enforceable. A party seeking to enforce an arbitration award must resort to judicial remedies, called an action to "confirm" an award although grounds for attacking an arbitration award in court are limited, efforts to confirm the award can be fiercely fought[citation needed], thus necessitating huge legal expenses that negate the perceived economic incentive to arbitrate the dispute in the first place. [edit] Arbitrability By their nature, the subject matter of some disputes is not capable of arbitration. In general, two groups of legal procedures cannot be subjected to arbitration: Procedures which necessarily lead to a determination which the parties to the dispute may not enter into an agreement upon:[8] Some court procedures lead to judgments which bind all members of the general public, or public authorities in their capacity as such, or third parties, or which are being conducted in the public interest. For example, until the 1980s, antitrust matters were not arbitrable in the United States.[9] Matters relating to crimes, status and family law are generally not considered to be arbitrable, as the power of the parties to enter into an agreement upon these matters is at least restricted. However, most other disputes that involve private rights between two parties can be resolved using arbitration. In some disputes, parts of claims may be arbitrable and other parts not. For example, in a dispute over patent infringement, a determination of whether a patent has been infringed could be adjudicated upon by an arbitration tribunal, but the validity of a patent could not: As patents are subject to a system of public registration, an arbitral panel would have no power to order the relevant body to rectify any patent registration based upon its determination. Some legal orders exclude or restrict the possibility of arbitration for reasons of the protection of weaker members of the public, e.g. consumers. Examples: German law excludes disputes over the rental of living space from any form of arbitration[10], while arbitration

ADR (based on ATTY HIGUIT’S OUTLINE) - 40 agreements with consumers are only considered valid if they are signed by either party,[11] and if the signed document does not bear any other content than the arbitration agreement.[12] Arbitration agreement See also: Arbitration clause In theory, arbitration is a consensual process; a party cannot be forced to arbitrate a dispute unless he agrees to do so. In practice, however, many fine-print arbitration agreements are inserted in situations in which consumers and employees have no bargaining power. Moreover, arbitration clauses are frequently placed within sealed users' manuals within products, within lengthy click-through agreements on websites, and in other contexts in which meaningful consent is not realistic. Such agreements are generally divided into two types: agreements which provide that, if a dispute should arise, it will be resolved by arbitration. These will generally be normal contracts, but they contain an arbitration clause agreements which are signed after a dispute has arisen, agreeing that the dispute should be resolved by arbitration (sometimes called a "submission agreement") The former is the far more prevalent type of arbitration agreement. Sometimes, legal significance attaches to the type of arbitration agreement. For example, in certain Commonwealth countries, it is possible to provide that each party should bear their own costs in a conventional arbitration clause, but not in a submission agreement. In keeping with the informality of the arbitration process, the law is generally keen to uphold the validity of arbitration clauses even when they lack the normal formal language associated with legal contracts. Clauses which have been upheld include: "arbitration in London - English law to apply"[13] "suitable arbitration clause"[14] "arbitration, if any, by ICC Rules in London"[15] The courts have also upheld clauses which specify resolution of disputes other than in accordance with a specific legal system. These include provision indicating: that the arbitrators "must not necessarily judge according to the strict law but as a general rule ought chiefly to consider the principles of practical business"[16] "internationally accepted principles of law governing contractual relations"[17]

Agreements to refer disputes to arbitration generally have a special status in the eyes of the law. For example, in disputes on a contract, a common defence is to plead the contract is void and thus any claim based upon it fails. It follows that if a party successfully claims that a contract is void, then each clause contained within the contract, including the arbitration clause, would be void. However, in most countries, the courts have accepted that: 1.a contract can only be declared void by a court or other tribunal; and 2.if the contract (valid or otherwise) contains an arbitration clause, then the proper forum to determine whether the contract is void or not, is the arbitration tribunal.[18] Arguably, either position is potentially unfair; if a person is made to sign a contract under duress, and the contract contains an arbitration clause highly favourable to the other party, the dispute may still referred to that arbitration tribunal.[citation needed] Conversely a court may be persuaded that the arbitration agreement itself is void having been signed under duress. However, most courts will be reluctant to interfere with the general rule which does allow for commercial expediency; any other solution (where one first had to go to court to decide whether one had to go to arbitration) would be self defeating. Sources of law---- States regulate arbitration through a variety of laws. The main body of law applicable to arbitration is normally contained either in the national Private International Law Act (as is the case in Switzerland) or in a separate law on arbitration (as is the case in England). In addition to this, a number of national procedural laws may also contain provisions relating to arbitration. By far the most important international instrument on arbitration law[citation needed] is the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards. Some other relevant international instruments are: The Geneva Protocol of 1923 The Geneva Convention of 1927 The European Convention of 1961 The Washington Convention of 1965 (governing settlement of international investment disputes) The UNCITRAL Model Law (providing a model for a national law of arbitration) The UNCITRAL Arbitration Rules (providing a set of rules for an ad hoc arbitration)


Case presentation or mini-trial This is where in-house representatives present brief summaries of the parties’ cases to senior executives of both parties with authority to settle the dispute, in a structured information exchange. The senior executives then negotiate a solution, taking into account the information presented to them. Sometimes an independent third party will chair the presentation. Independent expert appraisal or early neutral evaluation This is where the parties appoint an independent expert to investigate and provide an opinion on the issues in dispute, either as a basis for solution or simply to clarify the issues. In some cases, the parties agree to be bound by the opinion, which is often submitted to them in draft form before being finalised. The process may then become a type of mediation on the draft opinion, putting responsibility for a solution back into the hands of the parties. Litigation This is the system in which the courts impose a binding decision on the parties. It is formal, with strict rules of evidence, and adversarial. The legal framing, analysis and argument, together with the adversarial nature of the process, means that the system has little scope for reconciling or accommodating the parties' interests. It also produces 'winners and losers'.

2.4.6

5. INQUIRY AND FACT FINDING

2.4.7

6. GOOD OFFICES

3 DOMESTIC ARBITRATION 3.1 INTRODUCTION TO DOMESTIC COMMERCIAL DISPUTE RESOLUTION

3.2 ALTERNATIVE DISPUTE RESOLUTION ACT OF 2004 Republic Act No. 9285 April 2, 2004 AN ACT TO INSTITUTIONALIZE THE USE OF AN ALTERNATIVE DISPUTE RESOLUTION SYSTEM IN THE PHILIPPINES AND TO ESTABLISH THE OFFICE FOR ALTERNATIVE DISPUTE RESOLUTION, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: CHAPTER 1 - GENERAL PROVISIONS SECTION 1. Title. - This act shall be known as the "Alternative Dispute Resolution Act of 2004." SEC. 2. Declaration of Policy. - it is hereby declared the policy of the State to actively promote party autonomy in the resolution of disputes or the freedom of the party to make their own arrangements to resolve their disputes. Towards this end, the State shall encourage and actively promote the use of Alternative Dispute Resolution (ADR) as an important means to achieve speedy and impartial justice and declog court dockets. As such, the State shall provide means for the use of ADR as an efficient tool and an alternative procedure for the resolution of appropriate cases. Likewise, the State shall enlist active private sector participation in the settlement of disputes through ADR. This Act shall be without prejudice to the adoption by the Supreme Court of any ADR system, such as mediation, conciliation, arbitration, or any combination thereof as a means of achieving speedy and efficient means of resolving cases pending before all courts in the Philippines which shall be governed by such rules as the Supreme Court may approve from time to time. SEC. 3. Definition of Terms. - For purposes of this Act, the term: (a) "Alternative Dispute Resolution System" means any process or procedure used to resolve a dispute or controversy, other than by adjudication of a presiding judge of a court or an officer of a government agency, as defined in this Act, in which a neutral third party participates to assist in the resolution of issues, which includes arbitration, mediation, conciliation, early neutral evaluation, mini-trial, or any combination thereof; (b) "ADR Provider" means institutions or persons accredited as mediator, conciliator, arbitrator, neutral evaluator, or any person exercising similar functions in any Alternative Dispute Resolution system. This is without prejudice to the rights of the parties to choose nonaccredited individuals to act as mediator, conciliator, arbitrator, or neutral evaluator of their dispute. Whenever reffered to in this Act, the term "ADR practitioners" shall refer to individuals acting as mediator, conciliator, arbitrator or neutral evaluator; (c) "Authenticate" means to sign, execute or adopt a symbol, or encrypt a record in whole or in part, intended to identity the authenticating party and to


adopt, accept or establish the authenticity of a record or term; (d) "Arbitration" means a voluntary dispute resolution process in which one or more arbitrators, appointed in accordance with the agreement of the parties, or rules promulgated pursuant to this Act, resolve a dispute by rendering an award; (e) "Arbitrator" means the person appointed to render an award, alone or with others, in a dispute that is the subject of an arbitration agreement; (f) "Award" means any partial or final decision by an arbitrator in resolving the issue in a controversy; (g) "Commercial Arbitration" An arbitration is "commercial if it covers matter arising from all relationships of a commercial nature, whether contractual or not; (h) "Confidential information" means any information, relative to the subject of mediation or arbitration, expressly intended by the source not to be disclosed, or obtained under circumstances that would create a reasonable expectation on behalf of the source that the information shall not be disclosed. It shall include (1) communication, oral or written, made in a dispute resolution proceedings, including any memoranda, notes or work product of the neutral party or non-party participant, as defined in this Act; (2) an oral or written statement made or which occurs during mediation or for purposes of considering, conducting, participating, initiating, continuing of reconvening mediation or retaining a mediator; and (3) pleadings, motions manifestations, witness statements, reports filed or submitted in an arbitration or for expert evaluation; (i) "Convention Award" means a foreign arbitral award made in a Convention State; (j) "Convention State" means a State that is a member of the New York Convention; (k) "Court" as referred to in Article 6 of the Model Law shall mean a Regional Trial Court; (l) "Court-Annexed Mediation" means any mediation process conducted under the auspices of the court, after such court has acquired jurisdiction of the dispute; (m) "Court-Referred Mediation" means mediation ordered by a court to be conducted in accordance with the Agreement of the Parties when as action is prematurely commenced in violation of such agreement;

(n) "Early Neutral Evaluation" means an ADR process wherein parties and their lawyers are brought together early in a pre-trial phase to present summaries of their cases and receive a nonbinding assessment by an experienced, neutral person, with expertise in the subject in the substance of the dispute; (o) "Government Agency" means any government entity, office or officer, other than a court, that is vested by law with quasi-judicial power to resolve or adjudicate dispute involving the government, its agencies and instrumentalities, or private persons;

(p) "International Party" shall mean an entity whose place of business is outside the Philippines. It shall not include a domestic subsidiary of such international party or a coventurer in a joint venture with a party which has its place of business in the Philippines. The term foreigner arbitrator shall mean a person who is not a national of the Philippines. (q) "Mediation" means a voluntary process in which a mediator, selected by the disputing parties, facilitates communication and negotiation, and assist the parties in reaching a voluntary agreement regarding a dispute. (r) "Mediator" mediation;

means

a

person

who

conducts

(s) "Mediation Party" means a person who participates in a mediation and whose consent is necessary to resolve the dispute; (t) "Mediation-Arbitration" or Med-Arb is a step dispute resolution process involving both mediation and arbitration; (u) "Mini-Trial" means a structured dispute resolution method in which the merits of a case are argued before a panel comprising senior decision makers with or without the presence of a neutral third person after which the parties seek a negotiated settlement; (v) "Model Law" means the Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law on 21 June 1985; (w) "New York Convention" means the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards approved in 1958 and ratified by the Philippine Senate under Senate Resolution No. 71; (x) "Non-Convention Award" means a foreign arbitral award made in a State which is not a Convention State;


(y) "Non-Convention State" means a State that is not a member of the New York Convention.

policy that the decision-making authority in the mediation process rests with the parties.

(z) "Non-Party Participant" means a person, other than a party or mediator, who participates in a mediation proceeding as a witness, resource person or expert;

SEC. 9. Confidentiality of Information. - Information obtained through mediation proceedings shall be subject to the following principles and guidelines:

(aa) "Proceeding" means a judicial, administrative, or other adjudicative process, including related prehearing motions, conferences and discovery;

(a) Information obtained through mediation shall be privileged and confidential.

(bb) "Record" means an information written on a tangible medium or stored in an electronic or other similar medium, retrievable form; and (cc) "Roster" means a list of persons qualified to provide ADR services as neutrals or to serve as arbitrators. SEC. 4. Electronic Signatures in Global and ECommerce Act. - The provisions of the Electronic Signatures in Global and E-Commerce Act, and its implementing Rules and Regulations shall apply to proceeding contemplated in this Act. SEC. 5. Liability of ADR Provider and Practitioner. The ADR providers and practitioners shall have the same civil liability for the Acts done in the performance of then duties as that of public officers as provided in Section 38 (1), Chapter 9, Book of the Administrative Code of 1987. SEC. 6. Exception to the Application of this Act. - The provisions of this Act shall not apply to resolution or settlement of the following: (a) labor disputes covered by Presidential Decree No. 442, otherwise known as the Labor Code of the Philippines, as amended and its Implementing Rules and Regulations; (b) the civil status of persons; (c) the validity of a marriage; (d) any ground for legal separation; (e) the jurisdiction of courts; (f) future legitime; (g) criminal liability; and (h) those which by law cannot be compromised. CHAPTER 2 - MEDIATION SEC. 7. Scope. - The provisions of this Chapter shall cover voluntary mediation, whether ad hoc or institutional, other than court-annexed. The term "mediation' shall include conciliation. SEC. 8. Application and Interpretation. - In applying construing the provisions of this Chapter, consideration must be given to the need to promote candor or parties and mediators through confidentiality of the mediation process, the policy of fostering prompt, economical, and amicable resolution of disputes in accordance with the principles of integrity of determination by the parties, and the

(b) A party, a mediator, or a nonparty participant may refuse to disclose and may prevent any other person from disclosing a mediation communication. (c) Confidential Information shall not be subject to discovery and shall be inadmissible if any adversarial proceeding, whether judicial or quasi-judicial, However, evidence or information that is otherwise admissible or subject to discovery does not become inadmissible or protected from discovery solely by reason of its use in a mediation. (d) In such an adversarial proceeding, the following persons involved or previously involved in a mediation may not be compelled to disclose confidential information obtained during mediation: (1) the parties to the dispute; (2) the mediator or mediators; (3) the counsel for the parties; (4) the nonparty participants; (5) any persons hired or engaged in connection with the mediation as secretary, stenographer, clerk or assistant; and (6) any other person who obtains or possesses confidential information by reason of his/her profession. (e) The protections of this Act shall continue to apply even of a mediator is found to have failed to act impartially. (f) a mediator may not be called to testify to provide information gathered in mediation. A mediator who is wrongfully subpoenaed shall be reimbursed the full cost of his attorney's fees and related expenses. SEC. 10. Waiver of Confidentiality. - A privilege arising from the confidentiality of information may be waived in a record, or orally during a proceeding by the mediator and the mediation parties. A privilege arising from the confidentiality of information may likewise be waived by a nonparty participant if the information is provided by such nonparty participant. A person who discloses confidential information shall be precluded from asserting the privilege under Section 9 of this Chapter to bar disclosure of the rest of the information necessary to a complete understanding of the previously disclosed information. If a person


suffers loss or damages in a judicial proceeding against the person who made the disclosure. A person who discloses or makes a representation about a mediation is preclude from asserting the privilege under Section 9, to the extent that the communication prejudices another person in the proceeding and it is necessary for the person prejudiced to respond to the representation of disclosure. SEC. 11. Exceptions to Privilege. (a) There is no privilege against disclosure under Section 9 if mediation communication is: (1) in an agreement evidenced by a authenticated by all parties to the agreement;

(2) a proceeding to prove a claim or defense that under the law is sufficient to reform or avoid a liability on a contract arising out of the mediation. (c) A mediator may not be compelled to provide evidence of a mediation communication or testify in such proceeding. (d) If a mediation communication is not privileged under an exception in subsection (a) or (b), only the portion of the communication necessary for the application of the exception for nondisclosure may be admitted. The admission of particular evidence for the limited purpose of an exception does not render that evidence, or any other mediation communication, admissible for any other purpose.

record

(2) available to the public or that is made during a session of a mediation which is open, or is required by law to be open, to the public; (3) a threat or statement of a plan to inflict bodily injury or commit a crime of violence; (4) internationally used to plan a crime, attempt to commit, or commit a crime, or conceal an ongoing crime or criminal activity; (5) sought or offered to prove or disprove abuse, neglect, abandonment, or exploitation in a proceeding in which a public agency is protecting the interest of an individual protected by law; but this exception does not apply where a child protection matter is referred to mediation by a court or a public agency participates in the child protection mediation; (6) sought or offered to prove or disprove a claim or complaint of professional misconduct or malpractice filed against mediator in a proceeding; or (7) sought or offered to prove or disprove a claim of complaint of professional misconduct of malpractice filed against a party, nonparty participant, or representative of a party based on conduct occurring during a mediation. (b) There is no privilege under Section 9 if a court or administrative agency, finds, after a hearing in camera, that the party seeking discovery of the proponent of the evidence has shown that the evidence is not otherwise available, that there is a need for the evidence that substantially outweighs the interest in protecting confidentiality, and the mediation communication is sought or offered in: (1) a court proceeding involving a crime or felony; or

SEC. 12. Prohibited Mediator Reports. - A mediator may not make a report, assessment, evaluation, recommendation, finding, or other communication regarding a mediation to a court or agency or other authority that make a ruling on a dispute that is the subject of a mediation, except: (a) Where the mediation occurred or has terminated, or where a settlement was reached. (b) As permitted to be disclosed under Section 13 of this Chapter. SEC. 13. Mediator's Disclosure and Conflict of Interest. - The mediation shall be guided by the following operative principles: (a) Before accepting a mediation, an individual who is requested to serve as a mediator shall: (1) make an inquiry that is reasonable under the circumstances to determinate whether there are any known facts that a reasonable individual would consider likely to affect the impartiality of the mediator, including a financial or personal interest in the outcome of the mediation and any existing or past relationship with a party or foreseeable participant in the mediation; and (2) disclosure to the mediation parties any such fact known or learned as soon as is practical before accepting a mediation. (b) If a mediation learns any fact described in paragraph (a) (1) of this section after accepting a mediation, the mediator shall disclose it as soon as practicable. At the request of a mediation party, an individual who is requested to serve as mediator shall disclose his/her qualifications to mediate a dispute.


This Act does not require that a mediator shall have special qualifications by background or profession unless the special qualifications of a mediator are required in the mediation agreement or by the mediation parties. SEC. 14. Participation in Mediation. - Except as otherwise provided in this Act, a party may designate a lawyer or any other person to provide assistance in the mediation. A lawyer of this right shall be made in writing by the party waiving it. A waiver of participation or legal representation may be rescinded at any time. SEC. 15. Place of Mediation. - The parties are free to agree on the place of mediation. Failing such agreement, the place of mediation shall be any place convenient and appropriate to all parties. SEC. 16. Effect of Agreement to Submit Dispute to Mediation Under Institutional Rules. - An agreement to submit a dispute to mediation by any institution shall include an agreement to be bound by the internal mediation and administrative policies of such institution. Further, an agreement to submit a dispute to mediation under international mediation rule shall be deemed to include an agreement to have such rules govern the mediation of the dispute and for the mediator, the parties, their respective counsel, and nonparty participants to abide by such rules. In case of conflict between the institutional mediation rules and the provisions of this Act, the latter shall prevail. SEC. 17. Enforcement of Mediated Settlement Agreement. - The mediation shall be guided by the following operative principles: (a) A settlement agreement following successful mediation shall be prepared by the parties with the assistance of their respective counsel, if any, and by the mediator. The parties and their respective counsels shall endeavor to make the terms and condition thereof complete and make adequate provisions for the contingency of breach to avoid conflicting interpretations of the agreement. (b) The parties and their respective counsels, if any, shall sign the settlement agreement. The mediator shall certify that he/she explained the contents of the settlement agreement to the parties in a language known to them. (c) If the parties so desire, they may deposit such settlement agreement with the appropriate Clerk of a Regional Trial Court of the place where one of the

parties resides. Where there is a need to enforce the settlement agreement, a petition may be filed by any of the parties with the same court, in which case, the court shall proceed summarily to hear the petition, in accordance with such rules of procedure as may be promulgated by the Supreme Court. (d) The parties may agree in the settlement agreement that the mediator shall become a sole arbitrator for the dispute and shall treat the settlement agreement as an arbitral award which shall be subject to enforcement under Republic Act No. 876, otherwise known as the Arbitration Law, notwithstanding the provisions of Executive Order No. 1008 for mediated dispute outside of the CIAC. CHAPTER 3 - OTHER ADR FORMS SEC. 18. Referral of Dispute to other ADR Forms. - The parties may agree to refer one or more or all issues arising in a dispute or during its pendency to other forms of ADR such as but not limited to (a) the evaluation of a third person or (b) a mini-trial, (c) mediation-arbitration, or a combination thereof. For purposes of this Act, the use of other ADR forms shall be governed by Chapter 2 of this Act except where it is combined with arbitration in which case it shall likewise be governed by Chapter 5 of this Act. CHAPTER 4 - INTERNATIONAL COMMERCIAL ARBITRATION SEC. 19. Adoption of the Model Law on International Commercial Arbitration. - International commercial arbitration shall be governed by the Model Law on International Commercial Arbitration (the "Model Law") adopted by the United Nations Commission on International Trade Law on June 21, 1985 (United Nations Document A/40/17) and recommended approved on December 11, 1985, copy of which is hereto attached as Appendix "A". SEC. 20. Interpretation of Model Law. - In interpreting the Model Law, regard shall be had to its international origin and to the need for uniformity in its interpretation and resort may be made to the travaux preparatories and the report of the Secretary General of the United Nations Commission on International Trade Law dated March 25, 1985 entitled, "International Commercial Arbitration: Analytical Commentary on Draft Trade identified by reference number A/CN. 9/264." SEC. 21. Commercial Arbitration. - An arbitration is "commercial" if it covers matters arising from all relationships of a commercial nature, whether contractual or not. Relationships of a transactions: any trade transaction for the supply or exchange of goods


or services; distribution agreements; construction of works; commercial representation or agency; factoring; leasing, consulting; engineering; licensing; investment; financing; banking; insurance; joint venture and other forms of industrial or business cooperation; carriage of goods or passengers by air, sea, rail or road.

agreed to a different procedure, they shall be deemed to have agreed to procedure under such arbitration rules for the selection and appointment of arbitrators. In ad hoc arbitration, the default appointment of an arbitrator shall be made by the National President of the Integrated Bar of the Philippines (IBP) or his duly authorized representative.

SEC. 22. Legal Representation in International Arbitration. - In international a rbitration conducted in the Philippines, a party may be presented by any person of his choice. Provided, that such representative, unless admitted to the practice of law in the Philippines, shall not be authorized to appear as counsel in any Philippine court, or any other quasi judicial body whether or not such appearance is in relation to the arbitration in which he appears.

SEC. 27. What Functions May be Performed by Appointing Authority. - The functions referred to in Articles 11(3), 11(4), 13(3) and 14(1) of the Model Law shall be performed by the Appointing Authority, unless the latter shall fail or refuse to act within thirty (30) days from receipt of the request in which case the applicant may renew the application with the Court.

SEC. 23. Confidential of Arbitration Proceedings. - The arbitration proceedings, including the records, evidence and the arbitral award, shall be considered confidential and shall not be published except (1) with the consent of the parties, or (2) for the limited purpose of disclosing to the court of relevant documents in cases where resort to the court is allowed herein. Provided, however, that the court in which the action or the appeal is pending may issue a protective order to prevent or prohibit disclosure of documents or information containing secret processes, developments, research and other information wh ere it is shown that the applicant shall be materially prejudiced by an authorized disclosure thereof.

(a) It is not incompatible with an arbitration agreement for a party to request, before constitution of the tribunal, from a Court an interim measure of protection and for the Court to grant such measure. After constitution of the arbitral tribunal and during arbitral proceedings, a request for an interim measure of protection or modification thereof, may be made with the arbitral tribunal or to the extent that the arbitral tribunal has no power to act or is unable to act effectively, the request may be made with the Court. The arbitral tribunal is deemed constituted when the sole arbitrator or the third arbitrator who has been nominated, has accepted the nomination and written communication of said nomination and acceptance has been received by the party making request.

SEC. 24. Referral to Arbitration. - A court before which an action is brought in a matter which is the subject matter of an arbitration agreement shall, if at least one party so requests not later that the pre-trial conference, or upon the request of both parties thereafter, refer the parties to arbitration unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed.

SEC. 28. Grant of Interim Measure of Protection. -

(b) The following rules on interim or provisional relief shall be observed: (1) Any party may request that provision relief be granted against the adverse party: (2) Such relief may be granted:

SEC. 25. Interpretation of the Act. - In interpreting the Act, the court shall have due regard to the policy of the law in favor of arbitration. Where action is commenced by or against multiple parties, one or more of whom are parties who are bound by the arbitration agreement although the civil action may continue as to those who are not bound by such arbitration agreement.

(i) to prevent irreparable loss or injury:

SEC. 26. Meaning of "Appointing Authority.". "Appointing Authority" as used in the Model Law shall mean the person or institution named in the arbitration agreement as the appointing authority; or the regular arbitration arbitration institution under whose rules the arbitration is agreed to be conducted. Where the parties have agreed to submit their dispute to institutional arbitration rules, and unless they have

(3) The order granting provisional relief may be conditioned upon the provision of security or any act or omission specified in the order.

(ii) to provide security for the performance of any obligation; (iii) to produce or preserve any evidence; or (iv) to compel any other appropriate act or omission.

(4) Interim or provisional relief is requested by written application transmitted by reasonable means to the Court or arbitral tribunal as the case may be and the party against whom the relief is sought, describing in


appropriate detail the precise relief, the party against whom the relief is requested, the grounds for the relief, and evidence supporting the request. (5) The order shall be binding upon the parties. (6) Either party may apply with the Court for assistance in Implementing or enforcing an interim measure ordered by an arbitral tribunal. (7) A party who does not comply with the order shall be liable for all damages resulting from noncompliance, including all expenses, and reasonable attorney's fees, paid in obtaining the order's judicial enforcement. SEC. 29. Further Authority for Arbitrator to Grant Interim Measure of Protection. - Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order any party to take such interim measures of protection as the arbitral tribunal may consider necessary in respect of the subject matter of the dispute following the rules in Section 28, paragraph 2. Such interim measures may include but shall not be limited to preliminary injuction directed against a party, appointment of receivers or detention, preservation, inspection of property that is the subject of the dispute in arbitration. Either party may apply with the Court for assistance in implementing or enforcing an interim measures ordered by an arbitral tribunal. SEC. 30. Place of Arbitration. - The parties are free to agree on the place of arbitration. Failing such agreement, the place of arbitration shall be in Metro Manila, unless the arbitral tribunal, having regard to the circumstances of the case, including the convenience of the parties shall decide on a different place of arbitration. The arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts, or the parties, or for inspection of goods, other property or documents. SEC. 31. Language of the Arbitration. - The parties are free to agree on the language or languages to be u sed in the arbitral proceedings. Failing such agreement, the language to be used shall be English in international arbitration, and English or Filipino for domestic arbitration, unless the arbitral tribunal shall determine a different or another language or languages to be used in the proceedings. This agreement or determination, unless otherwise specified therein, shall apply to any written statement by a party, any hearing and any award, decision or other communication by the arbitral tribunal.

The arbitral tribunal may order that any documentary evidence shall be accompanied by a translation in to the language or languages agreed upon by the parties or determined in accordance with paragraph 1 of this section. CHAPTER 5 - DOMESTIC ARBITRATION SEC. 32. Law Governing Domestic Arbitration. Domestic arbitration shall continue to be governed by Republic Act No. 876, otherwise known as "The Arbitration Law" as amended by this Chapter. The term "domestic arbitration" as used herein shall mean an arbitration that is not international as defined in Article (3) of the Model Law. SEC. 33. Applicability to Domestic Arbitration. Article 8, 10, 11, 12, 13, 14, 18 and 19 and 29 to 32 of the Model Law and Section 22 to 31 of the preceding Chapter 4 shall apply to domestic arbitration. CHAPTER 6 - ARBITRATION OF CONSTRUCTION DISPUTES SEC. 34. Arbitration of Construction Disputes: Governing Law. - The arbitration of construction disputes shall be governed by Executive Order No. 1008, otherwise known as the Constitution Industry Arbitration Law. SEC. 35. Coverage of the Law. - Construction disputes which fall within the original and exclusive jurisdiction of the Construction Industry Arbitration Commission (the "Commission") shall include those between or among parties to, or who are otherwise bound by, an arbitration agreement, directly or by reference whether such parties are project owner, contractor, subcontractor, quantity surveyor, bondsman or issuer of an insurance policy in a construction project. The Commission shall continue to exercise original and exclusive jurisdiction over construction disputes although the arbitration is "commercial" pursuant to Section 21 of this Act. SEC. 36. Authority to Act as Mediator or Arbitrator. By written agreement of the parties to a dispute, an arbitrator may act as mediator and a mediator may act as arbitrator. The parties may also agree in writing that, following a successful mediation, the mediator shall issue the settlement agreement in the form of an arbitral award. SEC. 37. Appointment of Foreign Arbitrator. - The Construction Industry Arbitration Commission (CIAC) shall promulgate rules to allow for the appointment of a foreign arbitrator or coarbitrator or chairman of a tribunal a person who has not been previously accredited by CIAC: Provided, That:


(a) the dispute is a construction dispute in which one party is an international party

against a domestic arbitral award shall be disregarded by the regional trial court. B. FOREIGN ARBITRAL AWARDS

(b) the person to be appointed agreed to abide by the arbitration rules and policies of CIAC; (c) he/she is either coarbitrator upon the nomination of the international party; or he/she is the common choice of the two CIAC-accredited arbitrators first appointed one of whom was nominated by the international party; and (d) the foreign arbitrator shall be of different nationality from the international party. SEC. 38. Applicability to Construction Arbitration. The provisions of Sections 17 (d) of Chapter 2, and Section 28 and 29 of this Act shall apply to arbitration of construction disputes covered by this Chapter. SEC. 39. Court to Dismiss Case Involving a Construction Dispute. - A regional trial court which a construction dispute is filed shall, upon becoming aware, not later than the pretrial conference, that the parties had entered into an arbitration to be conducted by the CIAC, unless both parties, assisted by their respective counsel, shall submit to the regional trial court a written agreement exclusive for the Court, rather than the CIAC, to resolve the dispu te. CHAPTER 7 - JUDICIAL REVIEW OF ARBITRAL AWARDS A. DOMESTIC AWARDS SEC. 40. Confirmation of Award. - The confirmation of a domestic arbitral award shall be governed by Section 23 of R.A. 876. A domestic arbitral award when confirmed shall be enforced in the same manner as final and executory decisions of the Regional Trial Court. The confirmation of a domestic award sh all be made by the regional trial court in accordance with the Rules of Procedure to be promulgated by the Supreme Court. A CIAC arbitral award need not be confirmed by the regional trial court to be executory as provided under E.O. No. 1008. SEC. 41. Vacation Award. - A party to a domestic arbitration may question the arbitral award with the appropriate regional trial court in accordance with the rules of procedure to be promulgated by the Supreme Court only on those grounds enumerated in Section 25 of Republic Act No. 876. Any other ground raised

SEC. 42. Application of the New York Convention. The New York Convention shall govern the recognition and enforcement of arbitral awards covered by the said Convention. The recognition and enforcement of such arbitral awards shall be filled with regional trial court in accordance with the rules of procedure to be promulgated by the Supreme Court. Said procedural rules shall provide that the party relying on the award or applying for its enforcement shall file with the court the original or authenticated copy of the award and the arbitration agreement. If the award or agreement is not made in any of the official languages, the party shall supply a duly certified translation thereof into any of such languages. The applicant shall establish that the country in which foreign arbitration award was made is a party to the New York Convention. If the application for rejection or suspension of enforcement of an award has been made, the regional trial court may, if it considers it proper, vacate its decision and may also, on the application of the party claiming recognition or enforcement of the award, order the party to provide appropriate security. SEC. 43. Recognition and Enforcement of Foreign Arbitral Awards Not Covered by the New York Convention. - The recognition and enforcement of foreign arbitral awards not covered by the New York Convention shall be done in accordance with procedural rules to be promulgated by the Supreme Court. The Court may, grounds of comity and reciprocity, recognize and enforce a nonconvention award as a convention award. SEC. 44. Foreign Arbitral Award Not Foreign Judgment. - A foreign arbitral award when confirmed by a court of a foreign country, shall be recognized and enforced as a foreign arbitral award and not a judgment of a foreign court. A foreign arbitral award, when confirmed by the regional trial court, shall be enforced as a foreign arbitral award and not as a judgment of a foreign court. A foreign arbitral award, when confirmed by the regional trial court, shall be enforced in the same manner as final and executory decisions of courts of law of the Philippines.


SEC. 45. Rejection of a Foreign Arbitral Award. - A party to a foreign arbitration proceeding may oppose an application for recognition and enforcement of the arbitral award in accordance with the procedural rules to be promulgated by the Supreme Court only on those grounds enumerated under Article V of the New York Convention. Any other ground raised shall be disregarded by the regional trial court. SEC. 46. Appeal from Court Decisions on Arbitral Awards. - A decision of the regional trial court confirming, vacating, setting aside, modifying or correcting an arbitral award may be appealed to the Court of Appeals in accordance with the rules of procedure to be promulgated by the Supreme Court. The losing party who appeals from the judgment of the court confirming an arbitral award shall required by the appealant court to post counterbond executed in favor of the prevailing party equal to the amount of the award in accordance with the rules to be promulgated by the Supreme Court. SEC. 47. Venue and Jurisdiction. - Proceedings for recognition and enforcement of an arbitration agreement or for vacation, setting aside, correction or modification of an arbitral award, and any application with a court for arbitration assistance and supervision shall be deemed as special proceedings and shall be filled with the regional trial court (i) where arbitration proceedings are conducted; (ii) where the asset to be attached or levied upon, or the act to be enjoined is located; (iii) where any of the parties to the dispute resides or has his place of business; or (iv) in the National Judicial Capital Region, at the option of the applicant. SEC. 48. Notice of Proceeding to Parties. - In a special proceeding for recognition and enforcement of an arbitral award, the Court shall send notice to the parties at their address of record in the arbitration, or if any party cannot be served notice at such address, at such party's last known address. The notice shall be sent at least fifteen (15) days before the date set for the initial hearing of the application. CHAPTER 8 - MISCELLANEOUS PROVISIONS SEC. 49. Office for Alternative Dispute Resolution. There is hereby established the Office for Alternative Dispute Resolution as an attached agency to the Department of Justice (DOJ) which shall have a Secretariat to be headed by an executive director. The executive director shall be appointed by the President of the Philippines. The objective of the office are:

(a) to promote, develop and expand the use of ADR in the private and public sectors; and To assist the government to monitor, study and evaluate the use by the public and the private sector of ADR, and recommend to Congress needful statutory changes to develop. Strengthen and improve ADR practices in accordance with world standards. SEC. 50. Powers and Functions of the Office for Alternative Dispute Resolution. - The Office for Alternative Dispute Resolution shall have the following powers and functions: (a) To formulate standards for the training of the ADR practitioners and service providers; (b) To certify that such ADR practitioners and ADR service providers have undergone the professional training provided by the office; (c) To coordinate the development, implementation, monitoring, and evaluation of government ADR programs; (d) To charge fees for their services; and (e) To perform such acts as may be necessary to carry into effect the provisions of this Act. SEC. 51. Appropriations. - The amount necessary to carry out the provisions of this Act shall be included in the General Appropriations Act of the year following its enactment into law and thereafter. SEC. 52. Implementing Rules and Regulations (IRR). Within one (1) month after the approval of this Act, the secretary of justice shall convene a committee that shall formulate the appropriate rules and regulations necessary for the implementation of this Act. The committee, composed of representatives from: (a) the Department of Justice; (b) the Department of Trade and Industry; (c) the Department of the Interior and Local Government; (d) the president of the Integrated Bar of the Philippines; (e) A representative from the arbitration profession; and (f) A representative from the mediation profession; and (g) A representative from the ADR organizations


shall within three (3) months after convening, submit the IRR to the Joint Congressional Oversight Committee for review and approval. The Oversight Committee shall be composed of the chairman of the Senate Committee on Justice and Human Rights, chairman of the House Committee on Justice, and one (1) member each from the majority and minority of both Houses. The Joint Oversight Committee shall become functus officio upon approval of the IRR. SEC. 53. Applicability of the Katarungan Pambarangay. - This Act shall not be interpreted to repeal, amend or modify the jurisdiction of the Katarungan Pambarangay under Republic Act No. 7160, otherwise known as the Local Government Code of 1991. SEC. 54. Repealing Clause. - All laws, decrees, executive orders, rules and regulations which are inconsistent with the provisions of this Act are hereby repealed, amended or modified accordingly. SEC. 55. Separability Clause. - If for any reason reasons, any portion or provision of this Act shall held unconstitutional or invalid, all other parts provisions not affected shall thereby continue remain in full force and effect.

or be or to

SEC. 56. Effectivity. - This act shall take effect fifteen days (15) after its publication in at least two (2) national newspapers of general circulation.

3.3 REPUBLIC ACT NO. 876 ARBITRATION LAW OF THE PHILIPPINES AN ACT TO AUTHORIZE THE MAKING OF ARBITRATION AND SUBMISSION AGREEMENTS, TO PROVIDE FOR THE APPOINTMENT OF ARBITRATORS AND THE PROCEDURE FOR ARBITRATION IN CIVIL CONTROVERSIES, AND FOR OTHER PURPOSES Section 1. Short Title. - This Act shall be known as "The Arbitration Law." Section 2. Persons and matters subject to arbitration. Two or more persons or parties may submit to the arbitration of one or more arbitrators any controversy existing between them at the time of the submission and which may be the subject of an action, or the parties to any contract may in such contract agree to

settle by arbitration a controversy thereafter arising between them. Such submission or contract shall be valid, enforceable and irrevocable, save upon such grounds as exist at law for the revocation of any contract. Such submission or contract may include question arising out of valuations, appraisals or other controversies which may be collateral, incidental, precedent or subsequent to any issue between the parties. A controversy cannot be arbitrated where one of the parties to the controversy is an infant, or a person judicially declared to be incompetent, unless the appropriate court having jurisdiction approve a petition for permission to submit such controversy to arbitration made by the general guardian or guardian ad litem of the infant or of the incompetent. But where a person capable of entering into a submission or contract has knowingly entered into the same with a person incapable of so doing, the objection on the ground of incapacity can be taken only in behalf of the person so incapacitated. Section 3. Controversies or cases not subject to the provisions of this Act. - This Act shall not apply to controversies and to cases which are subject to the jurisdiction of the Court of Industrial Relations or which have been submitted to it as provided by Commonwealth Act Numbered One hundred and three, as amended. Section 4. Form of arbitration agreement. - A contract to arbitrate a controversy thereafter arising between the parties, as well as a submission to arbitrate an existing controversy shall be in writing and subscribed by the party sought to be charged, or by his lawful agent. The making of a contract or submission for arbitration described in section two hereof, providing for arbitration of any controversy, shall be deemed a consent of the parties to the jurisdiction of the Court of First Instance of the province or city where any of the parties resides, to enforce such contract or submission. Section 5. Preliminary procedure. - An arbitration shall be instituted by: (a) In the case of a contract to arbitrate future controversies by the service by either party upon the other of a demand for arbitration in accordance with the contract. Such demand shall be set forth the nature of the controversy, the amount involved, if any, and the relief sought, together with a true copy of the contract providing for arbitration. The demand shall be served upon any party either in person or by registered mail.


In the event that the contract between the parties provides for the appointment of a single arbitrator, the demand shall be set forth a specific time within which the parties shall agree upon such arbitrator. If the contract between the parties provides for the appointment of three arbitrators, one to be selected by each party, the demand shall name the arbitrator appointed by the party making the demand; and shall require that the party upon whom the demand is made shall within fifteen days after receipt thereof advise in writing the party making such demand of the name of the person appointed by the second party; such notice shall require that the two arbitrators so appointed must agree upon the third arbitrator within ten days from the date of such notice. (b) In the event that one party defaults in answering the demand, the aggrieved party may file with the Clerk of the Court of First Instance having jurisdiction over the parties, a copy of the demand for arbitration under the contract to arbitrate, with a notice that the original demand was sent by registered mail or delivered in person to the party against whom the claim is asserted. Such demand shall set forth the nature of the controversy, the amount involved, if any, and the relief sought, and shall be accompanied by a true copy of the contract providing for arbitration. (c) In the case of the submission of an existing controversy by the filing with the Clerk of the Court of First Instance having jurisdiction, of the submission agreement, setting forth the nature of the controversy, and the amount involved, if any. Such submission may be filed by any party and shall be duly executed by both parties. (d) In the event that one party neglects, fails or refuses to arbitrate under a submission agreement, the aggrieved party shall follow the procedure prescribed in subparagraphs (a) and (b) of this section. Section 6. Hearing by court. - A party aggrieved by the failure, neglect or refusal of another to perform under an agreement in writing providing for arbitration may petition the court for an order directing that such arbitration proceed in the manner provided for in such agreement. Five days notice in writing of the hearing of such application shall be served either personally or by registered mail upon the party in default. The court shall hear the parties, and upon being satisfied that the making of the agreement or such failure to comply therewith is not in issue, shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement. If the making of the agreement or default be in issue the court shall proceed to summarily hear such issue. If the finding be that no agreement in writing providing for arbitration was made, or that there is no default in the proceeding thereunder, the proceeding shall be dismissed. If the

finding be that a written provision for arbitration was made and there is a default in proceeding thereunder, an order shall be made summarily directing the parties to proceed with the arbitration in accordance with the terms thereof. The court shall decide all motions, petitions or applications filed under the provisions of this Act, within ten days after such motions, petitions, or applications have been heard by it. Section 7. Stay of civil action. - If any suit or proceeding be brought upon an issue arising out of an agreement providing for the arbitration thereof, the court in which such suit or proceeding is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration, shall stay the action or proceeding until an arbitration has been had in accordance with the terms of the agreement: Provided, That the applicant, for the stay is not in default in proceeding with such arbitration. Section 8. Appointment of arbitrators. - If, in the contract for arbitration or in the submission described in section two, provision is made for a method of naming or appointing an arbitrator or arbitrators, such method shall be followed; but if no method be provided therein the Court of First Instance shall designate an arbitrator or arbitrators. The Court of First Instance shall appoint an arbitrator or arbitrators, as the case may be, in the following instances: (a) If the parties to the contract or submission are unable to agree upon a single arbitrator; or (b) If an arbitrator appointed by the parties is unwilling or unable to serve, and his successor has not been appointed in the manner in which he was appointed; or (c) If either party to the contract fails or refuses to name his arbitrator within fifteen days after receipt of the demand for arbitration; or (d) If the arbitrators appointed by each party to the contract, or appointed by one party to the contract and by the proper Court, shall fail to agree up on or to select the third arbitrator. (e) The court shall, in its discretion appoint one or three arbitrators, according to the importance of the controversy involved in any of the preceding cases in which the agreement is silent as to the number of arbitrators. (f) Arbitrators appointed under this section shall either accept or decline their appointments within seven days


of the receipt of their appointments. In case of declination or the failure of an arbitrator or arbitrators to duly accept their appointments the parties or the court, as the case may be, shall proceed to appoint a substitute or substitutes for the arbitrator or arbitrators who decline or failed to accept his or their appointments. Section 9. Appointment of additional arbitrators. Where a submission or contract provides that two or more arbitrators therein designated or to be thereafter appointed by the parties, may select or appoint a person as an additional arbitrator, the selection or appointment must be in writing. Such additional arbitrator must sit with the original arbitrators upon the hearing. Section 10. Qualifications of arbitrators. - Any person appointed to serve as an arbitrator must be of legal age, in full-enjoyment of his civil rights and know how to read and write. No person appointed to served as an arbitrator shall be related by blood or marriage within the sixth degree to either party to the controversy. No person shall serve as an arbitrator in any proceeding if he has or has had financial, fiduciary or other interest in the controversy or cause to be decided or in the result of the proceeding, or has any personal bias, which might prejudice the right of any party to a fair and impartial award. No party shall select as an arbitrator any person to act as his champion or to advocate his cause. If, after appointment but before or during hearing, a person appointed to serve as an arbitrator shall discover any circumstances likely to create a presumption of bias, or which he believes might disqualify him as an impartial arbitrator, the arbitrator shall immediately disclose such information to the parties. Thereafter the parties may agree in writing: (a) to waive circumstances; or

the

presumptive

disqualifying

(b) to declare the office of such arbitrator vacant. Any such vacancy shall be filled in the same manner as the original appointment was made. Section 11. Challenge of arbitrators. - The arbitrators may be challenged only for the reasons mentioned in the preceding section which may have arisen after the arbitration agreement or were unknown at the time of arbitration.

arbitrator, or, any of them, if there be more than one, resides. While the challenging incident is discussed before the court, the hearing or arbitration shall be suspended, and it shall be continued immediately after the court has delivered an order on the challenging incident. Section 12. Procedure by arbitrators. - Subject to the terms of the submission or contract, if any are specified therein, are arbitrators selected as prescribed herein must, within five days after appointment if the parties to the controversy reside within the same city or province, or within fifteen days after appointment if the parties reside in different provinces, set a time and place for the hearing of the matters submitted to them, and must cause notice thereof to be given to ea ch of the parties. The hearing can be postponed or adjourned by the arbitrators only by agreement of the parties; otherwise, adjournment may be ordered by the arbitrators upon their own motion only at the hearing and for good and sufficient cause. No adjournment shall extend the hearing beyond the day fixed in the submission or contract for rendering the award, unless the time so fixed is extended by the written agreement of the parties to the submission or contract or their attorneys, or unless the parties have continued with the arbitration without objection to such adjournment. The hearing may proceed in the absence of any party who, after due notice, fails to be present at such hearing or fails to obtain an adjournment thereof. An award shall not be made solely on the default of a party. The arbitrators shall require the other party to submit such evidence as they may require for making an award. No one other than a party to said arbitration, or a person in the regular employ of such party duly authorized in writing by said party, or a practicing attorney-at-law, shall be permitted by the arbitrators to represent before him or them any party to the arbitration. Any party desiring to be represented by counsel shall notify the other party or parties of such intention at least five days prior to th e hearing. The arbitrators shall arrange for the taking of a stenographic record of the testimony when such a record is requested by one or more parties, and when payment of the cost thereof is assumed by such party or parties.

The challenge shall be made before them.

Persons having a direct interest in the controversy which is the subject of arbitration shall have the right to attend any hearing; but the attendance of any other person shall be at the discretion of the arbitrators.

If they do not yield to the challenge, the challenging party may renew the challenge before the Court of First Instance of the province or city in which the challenged

Section 13. Oath of arbitrators. - Before hearing any testimony, arbitrators must be sworn, by any officer authorized by law to administer an oath, faithfully and


fairly to hear and examine the matters in controversy and to make a just award according to the best of their ability and understanding. Arbitrators shall have the power to administer the oaths to all witnesses requiring them to tell the whole truth and nothing but the truth in any testimony which they may give in any arbitration hearing. This oath shall be required of every witness before any of his testimony is h eard. Section 14. Subpoena and subpoena duces tecum. Arbitrators shall have the power to require any person to attend a hearing as a witness. They shall have the power to subpoena witnesses and documents when the relevancy of the testimony and the materiality thereof has been demonstrated to the arbitrators. Arbitrators may also require the retirement of any witness during the testimony of any other witness. All of the arbitrators appointed in any controversy must attend all the hearings in that matter and hear all the allegations and proofs of the parties; but an award by the majority of them is valid unless the concurrence of all of them is expressly required in the submission or contract to arbitrate. The arbitrator or arbitrators shall have the power at any time, before rendering the award, without prejudice to the rights of any party to petition the court to take measures to safeguard and/or conserve any matter which is the subject of the dispute in arbitration. Section 15. Hearing by arbitrators. - Arbitrators may, at the commencement of the hearing, ask both parties for brief statements of the issues in controversy and/or an agreed statement of facts. Thereafter the parties may offer such evidence as they desire, and shall produce such additional evidence as the arbitrators shall require or deem necessary to an understanding and determination of the dispute. The arbitrators shall be the sole judge of the relevancy and materiality of the evidence offered or produced, and shall not be bound to conform to the Rules of Court pertaining to evidence. Arbitrators shall receive as exhibits in evidence any document which the parties may wish to submit and the exhibits shall be properly identified at the time of submission. All exhibits shall remain in the custody of the Clerk of Court during the course of the arbitration and shall be returned to the parties at the time the award is made. The arbitrators may make an ocular inspection of any matter or premises which are in dispute, but such inspection shall be made only in the presence of all parties to the arbitration, unless any party who shall have received notice thereof fails to appear, in which event such inspection shall be made in the absence of such party. Section 16. Briefs. - At the close of the hearings, the arbitrators shall specifically inquire of all parties whether they have any further proof or witnesses to present; upon the receipt of a negative reply from all parties, the arbitrators shall declare the hearing closed

unless the parties have signified an intention to file briefs. Then the hearing shall be closed by the arbitrations after the receipt of briefs and/or reply briefs. Definite time limit for the filing of such briefs must be fixed by the arbitrators at the close of the hearing. Briefs may filed by the parties within fifteen days after the close of the oral hearings; the reply briefs, if any, shall be filed within five days following such fifteen-day period. Section 17. Reopening of hearing. - The hearing may be reopened by the arbitrators on their own motion or upon the request of any party, upon good cause, shown at any time before the award is rendered. When hearings are thus reopened the effective date for the closing of the hearings shall be the date of the closing of the reopened hearing. Section 18. Proceeding in lieu of hearing. - The parties to a submission or contract to arbitrate may, by written agreement, submit their dispute to arbitration by other than 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. Parties may also submit a written argument. Each party shall provide all other parties to the dispute with a copy of all statements and documents submitted to the arbitrators. Each party shall have an opportunity to reply in writing to any other party's statements and proofs; but if such party fails to do so within seven days after receipt of such statements and proofs, he shall be deemed to have waived his right to reply. Upon the delivery to the arbitrators of all statements and documents, together with any reply statements, the arbitrators shall declare the proceedings in lieu of hearing closed. Section 19. Time for rendering award. - Unless the parties shall have stipulated by written agreement the time within which the arbitrators must render their award, the written award of the arbitrators shall be rendered within thirty days after the closing of the hearings or if the oral hearings shall have been waived, within thirty days after the arbitrators shall have declared such proceedings in lieu of hearing closed. This period may be extended by mutual consent of the parties.alf-itc Section 20. Form and contents of award. - The award must be made in writing and signed and acknowledged by a majority of the arbitrators, if more than one; and by the sole arbitrator, if there is only one. Each party shall be furnished with a copy of the award. The arbitrators in their award may grant any remedy or relief which they deem just and equitable and within the scope of the agreement of the parties, which shall


include, but not be limited to, the specific performance of a contract.

(b) That there was evident partiality or corruption in the arbitrators or any of them; or

In the event that the parties to an arbitration have, during the course of such arbitration, settled their dispute, they may request of the arbitrators that such settlement be embodied in an award which shall be signed by the arbitrators. No arbitrator shall act as a mediator in any proceeding in which he is acting as arbitrator; and all negotiations towards settlement of the dispute must take place without the presence of the arbitrators.

(c) That the arbitrators were guilty of misconduct in refusing to postpone the hearing upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; that one or more of the arbitrators was disqualified to act as such under section nine hereof, and wilfully refrained from disclosing such disqualifications or of any other misbehavior by which the rights of any party have been materially prejudiced; or

The arbitrators shall have the power to decide only those matters which have been submitted to them. The terms of the award shall be confined to su ch disputes.

(d) That the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final and definite award upon the subject matter submitted to them was not made.

The arbitrators shall have the power to assess in their award the expenses of any party against another party, when such assessment shall be deemed necessary. Section 21. Fees of arbitration. - The fees of the arbitrators shall be fifty pesos per day unless the parties agree otherwise in writing prior to the arbitration. Section 22. Arbitration deemed a special proceeding. Arbitration under a contract or submission shall be deemed a special proceeding, of which the court specified in the contract or submission, or if none be specified, the Court of First Instance for the province or city in which one of the parties resides or is doing business, or in which the arbitration was held, shall have jurisdiction. Any application to the court, or a judge thereof, hereunder shall be made in manner provided for the making and hearing of motions, except as otherwise herein expressly prov ided. Section 23. Confirmation of award. - At any time within one month after the award is made, any party to the controversy which was arbitrated may apply to the court having jurisdiction, as provided in section twenty-eight, for an order confirming the award; and thereupon the court must grant such order unless the award is vacated, modified or corrected, as prescribed herein. Notice of such motion must be served upon the adverse party or his attorney as prescribed by law for the service of such notice upon an attorney in action in the same court. Section 24. Grounds for vacating award. - In any one of the following cases, the court must make an order vacating the award upon the petition of any party to the controversy when such party proves affirmatively that in the arbitration proceedings: (a) The award was procured by corruption, fraud, or other undue means; or

Where an award is vacated, the court, in its discretion, may direct a new hearing either before the same arbitrators or before a new arbitrator or arbitrators to be chosen in the manner provided in the submission or contract for the selection of the original arbitrator or arbitrators, and any provision limiting the time in which the arbitrators may make a decision shall be deemed applicable to the new arbitration and to commence from the date of the court's order. Where the court vacates an award, costs, not exceeding fifty pesos and disbursements may be awarded to the prevailing party and the payment thereof may be enforced in like manner as the payment of costs upon the motion in an action. Section 25. Grounds for modifying or correcting award. - In any one of the following cases, the court must make an order modifying or correcting the award, upon the application of any party to the controversy which was arbitrated: (a) Where there was an evident miscalculation of figures, or an evident mistake in the description of any person, thing or property referred to in th e award; or (b) Where the arbitrators have awarded upon a matter not submitted to them, not affecting the merits of the decision upon the matter submitted; or (c) Where the award is imperfect in a matter of form not affecting the merits of the controversy, and if it had been a commissioner's report, the defect could have been amended or disregarded by the court. The order may modify and correct the award so as to effect the intent thereof and promote justice between the parties. Section 26. Motion to vacate, modify or correct award: when made. - Notice of a motion to vacate, modify or


correct the award must be served upon the adverse party or his counsel within thirty days after award is filed or delivered, as prescribed by law for the service upon an attorney in an action. Section 27. Judgment. - Upon the granting of an order confirming, modifying or correcting an award, judgment may be entered in conformity therewith in the court wherein said application was filed. Costs of the application and the proceedings subsequent thereto may be awarded by the court in its discretion. If awarded, the amount thereof must be included i n the judgment. Section 28. Papers to accompany motion to confirm, modify, correct, or vacate award. - The party moving for an order confirming, modifying, correcting, or vacating an award, shall at the time that su ch motion is filed with the court for the entry of judgment thereon also file the following papers with the Clerk of Cou rt; (a) The submission, or contract to arbitrate; the appointment of the arbitrator or arbitrators; and each written extension of the time, if any, within which to make the award. (b) A verified of the award. (c) Each notice, affidavit, or other paper used upon the application to confirm, modify, correct or vacate such award, and a copy of each of the court upon such application. The judgment shall be docketed as if it were rendered in an action. The judgment so entered shall have the same force and effect in all respects, as, and be subject to all the provisions relating to, a judgment in an action; and it may be enforced as if it had been rendered in the court in which it is entered. Section 29. Appeals. - An appeal may be taken from an order made in a proceeding under this Act, or from a judgment entered upon an award through certiorari proceedings, but such appeals shall be limited to questions of law. The proceedings upon such an appeal, including the judgment thereon shall be governed by the Rules of Court in so far as they are applicable. Section 30. Death of party. - Where a party dies after making a submission or a contract to arbitrate as prescribed in this Act, the proceedings may be begun or continued upon the application of, or notice to, his executor or administrator, or temporary administrator of his estate. In any such case, the court may issue an order extending the time within which notice of a motion to confirm, vacate, modify or correct an award

must be served. Upon confirming an award, where a party has died since it was filed or delivered, the court must enter judgment in the name of the original party; and the proceedings thereupon are the same as where a party dies after a verdict. Section 31. Repealing clause. - The provisions of chapters one and two, Title XIV, of the Civil Code shall remain in force. All other laws and parts of laws inconsistent with this Act are hereby repealed. If any provision of this Act shall be held invalid the remainder that shall not be affected thereby. Section 32. Effectivity. - This Act shall take effect six months after its approval.

3.4 A.M. No. 07-11-08-SC SPECIAL RULES OF COURT ON ALTERNATIVE DISPUTE RESOLUTION September 1, 2009 Acting on the recommendation of the Chairperson of the Sub-Committee on the Rules on Alternative Dispute Resolution submitting for this Court’s consideration and approval the proposed Special Rules of Court on Alternative Dispute Resolution, the Court Resolved to APPROVE the same. This Rule shall take effect on October 30, 2009 following its publication in three (3) newspapers of general circulation. SPECIAL RULES OF COURT ON ALTERNATIVE DISPUTE RESOLUTION PART I GENERAL PROVISIONS AND POLICIES RULE 1: GENERAL PROVISIONS Rule 1.1. Subject matter and governing rules.-The Special Rules of Court on Alternative Dispute Resolution (the "Special ADR Rules") shall apply to and govern the following cases: a. Relief on the issue of Existence, Validity, or Enforceability of the Arbitration Agreement; b. Referral to Alternative Dispute Resolution ("ADR"); c. Interim Measures of Protection; d. Appointment of Arbitrator; e. Challenge to Appointment of Arbitrator;


f. Termination of Mandate of Arbitrator;

or delivery receipt must state the circumstances of the attempted service and refusal or failure thereof.

g. Assistance in Taking Evidence; h. Confirmation, Correction or Vacation of Award in Domestic Arbitration; i. Recognition and Enforcement or Setting Aside of an Award in International Commercial Arbitration; j. Recognition and Enforcement of a Foreign Arbitral Award; k. Confidentiality/Protective Orders; and l. Deposit and Enforcement of Mediated Settlement Agreements.

(B) Notice.-Except for cases involving Referral to ADR and Confidentiality/Protective Orders made through motions, the court shall, if it finds the petition sufficient in form and substance, send notice to the parties directing them to appear at a particular time and date for the hearing thereof which shall be set no later than five (5) days from the lapse of the period for filing the opposition or comment. The notice to the respondent shall contain a statement allowing him to file a comment or opposition to the petition within fifteen (15) days from receipt of the notic e.

Rule 1.2. Nature of the proceedings.-All proceedings under the Special ADR Rules are special proceedings.

The motion filed pursuant to the rules on Referral to ADR or Confidentiality/Protective Orders shall be set for hearing by the movant and contain a notice of hearing that complies with the requirements under Rule 15 of the Rules of Court on motions.

Rule 1.3. Summary proceedings in certain cases.-The proceedings in the following instances are summary in nature and shall be governed by this provision:

(C) Summary hearing. - In all cases, as far as practicable, the summary hearing shall be conducted in one (1) day and only for purposes of clarifying facts.

a. Judicial Relief Involving the Issue of Existence, Validity or Enforceability of the Arbitration Agreement;

Except in cases involving Referral to ADR or Confidentiality/Protective Orders made through motions, it shall be the court that sets the petition for hearing within five (5) days from the lapse of the period for filing the opposition or comment.

b. Referral to ADR; c. Interim Measures of Protection; d. Appointment of Arbitrator; e. Challenge to Appointment of Arbitrator; f. Termination of Mandate of Arbitrator; g. Assistance in Taking Evidence; h. Confidentiality/Protective Orders; and i. Deposit and Enforcement of Mediated Settlement Agreements. (A) Service and filing of petition in summary proceedings.-The petitioner shall serve, either by personal service or courier, a copy of the petition upon the respondent before the filing thereof. Proof of service shall be attached to the petition filed in court. For personal service, proof of service of the petition consists of the affidavit of the person who effected service, stating the time, place and manner of the service on the respondent. For service by courier, proof of service consists of the signed courier proof of delivery. If service is refused or has failed, the affidavit

(D) Resolution. - The court shall resolve the matter within a period of thirty (30) days from the day of the hearing. Rule 1.4. Verification and submissions. -Any pleading, motion, opposition, comment, defense or claim filed under the Special ADR Rules by the proper party shall be supported by verified statements that the affiant has read the same and that the factual allegations therein are true and correct of his own personal knowledge or based on authentic records and shall contain as annexes the supporting documents. The annexes to the pleading, motion, opposition, comment, defense or claim filed by the proper party may include a legal brief, duly verified by the lawyer submitting it, stating the pertinent facts, the applicable law and jurisprudence to justify the necessity for the court to rule upon the issue raised. Rule 1.5. Certification Against Forum Shopping. - A Certification Against Forum Shopping is one made under oath made by the petitioner or movant: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or


claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein his aforementioned petition or motion has been filed. A Certification Against Forum Shopping shall be appended to all initiatory pleadings except a Motion to Refer the Dispute to Alternative Dispute Resolution. Rule 1.6. Prohibited submissions. - The following pleadings, motions, or petitions shall not be allowed in the cases governed by the Special ADR Rules and shall not be accepted for filing by the Clerk of Court:

initiatory pleadings shall be filed directly with the court. The court will then cause the initiatory pleading to be served upon the respondent by personal service or courier. Where an action is already pending, pleadings, motions and other papers shall be filed and/or served by the concerned party by personal service or courier. Where courier services are not available, resort to registered mail is allowed. (A) Proof of filing. - The filing of a pleading shall be proved by its existence in the record of the case. If it is not in the record, but is claimed to have been filed personally, the filing shall be proved by the written or stamped acknowledgment of its filing by the clerk of court on a copy of the same; if filed by courier, by the proof of delivery from the courier company.

a. Motion to dismiss; b. Motion for bill of particulars; c. Motion for new trial or for reopening of trial; d. Petition for relief from judgment; e. Motion for extension, except in cases where an exparte temporary order of protection h as been issued; f. Rejoinder to reply;

(B) Proof of service. - Proof of personal service shall consist of a written admission by the party served, or the official return of the server, or the affidavit of the party serving, containing a full statement of the date, place and manner of service. If the service is by courier, proof thereof shall consist of an affidavit of the proper person, stating facts showing th at the document was deposited with the courier company in a sealed envelope, plainly addressed to the party at his office, if known, otherwise at his residence, with postage fully pre-paid, and with instructions to the courier to immediately provide proof of delivery.

g. Motion to declare a party in default; and h. Any other pleading specifically disallowed under any provision of the Special ADR Rules. The court shall motu proprio order a pleading/motion that it has determined to be dilatory in nature be expunged from the records.

(C) Filing and service by electronic means and proof thereof. - Filing and service of pleadings by electronic transmission may be allowed by agreement of the parties approved by the court. If the filing or service of a pleading or motion was done by electronic transmission, proof of filing and service shall be made in accordance with the Rules on Electronic Evidence.

Rule 1.7. Computation of time. - In computing any period of time prescribed or allowed by the Special ADR Rules, or by order of the court, or by any applicable statute, the day of the act or event from which the designated period of time begins to run is to be excluded and the date of performance included. If the last day of the period, as thus computed, falls on a Saturday, a Sunday, or a legal holiday in the place where the court sits, the time shall not run until the next working day.

Rule 1.9. No summons. - In cases covered by the Special ADR Rules, a court acquires authority to act on the petition or motion upon proof of jurisdictional facts, i.e., that the respondent was furnished a copy of the petition and the notice of hearing.

Should an act be done which effectively interrupts the running of the period, the allowable period after such interruption shall start to run on the day after notice of the cessation of the cause thereof.

(B) Burden of proof. - The burden of showing that a copy of the petition and the notice of hearing were served on the respondent rests on the petitioner.

The day of the act that caused the interruption shall be excluded from the computation of the period. Rule 1.8. Service and filing of pleadings, motions and other papers in non-summary proceedings. - The

(A) Proof of service. - A proof of service of the petition and notice of hearing upon respondent shall be made in writing by the server and shall set forth the manner, place and date of service.

The technical rules on service of summons do not apply to the proceedings under the Special ADR Rules. In instances where the respondent, whether a natural or a juridical person, was not personally served with a copy of the petition and notice of hearing in the proceedings contemplated in the first paragraph of


Rule 1.3 (B), or the motion in proceedings contemplated in the second paragraph of Rule 1.3 (B), the method of service resorted to must be such as to reasonably ensure receipt thereof by the respondent to satisfy the requirement of due process. Rule 1.10. Contents of petition/motion. - The initiatory pleading in the form of a verified petition or motion, in the appropriate case where court proceedings have already commenced, shall include the names of the parties, their addresses, the necessary allegations supporting the petition and the relief(s) sought. Rule 1.11. Definition. - The following terms shall have the following meanings: a. "ADR Laws" refers to the whole body of ADR laws in the Philippines. b. "Appointing Authority" shall mean the person or institution named in the arbitration agreement as the appointing authority; or the regular arbitration institution under whose rule the arbitration is agreed to be conducted. Where the parties have agreed to submit their dispute to institutional arbitration rules, and unless they have agreed to a different procedure, they shall be deemed to have agreed to procedure under such arbitration rules for the selection and appointment of arbitrators. In ad hoc arbitration, the default appointment of arbitrators shall be made by the National President of the Integrated Bar of the Philippines or his duly authorized representative. c. "Authenticate" means to sign, execute or use a symbol, or encrypt a record in whole or in part, intended to identify the authenticating party and to adopt, accept or establish the authenticity of a record or term. d. "Foreign Arbitral Award" is one made in a country other than the Philippines. e. "Legal Brief" is a written legal argument submitted to a court, outlining the facts derived from the factual statements in the witness’s statements of fact and citing the legal authorities relied upon by a party in a case submitted in connection with petitions, counterpetitions (i.e., petitions to vacate or to set aside and/or to correct/modify in opposition to petitions to confirm or to recognize and enforce, or petitions to confirm or to recognize and enforce in opposition to petitions to vacate or set aside and/or correct/modify), motions, evidentiary issues and other matters that arise during the course of a case. The legal brief shall state the applicable law and the relevant jurisprudence and the legal arguments in support of a party’s position in the case.

f. "Verification" shall mean a certification under oath by a party or a person who has authority to act for a party that he has read the pleading/motion, and that he certifies to the truth of the facts stated therein on the basis of his own personal knowledge or authentic documents in his possession. When made by a lawyer, verification shall mean a statement under oath by a lawyer signing a pleading/motion for delivery to the Court or to the parties that he personally prepared the pleading/motion, that there is sufficient factual basis for the statements of fact stated therein, that there is sufficient basis in the facts and the law to support the prayer for relief therein, and that the pleading/motion is filed in good faith and is not interposed for delay.

Rule 1.12. Applicability of Part II on Specific Court Relief. - Part II of the Special ADR Rules on Specific Court Relief, insofar as it refers to arbitration, shall also be applicable to other forms of ADR. Rule 1.13. Spirit and intent of the Special ADR Rules. – In situations where no specific rule is provided under the Special ADR Rules, the court shall resolve such matter summarily and be guided by the spirit and intent of the Special ADR Rules and the ADR Laws. RULE 2: STATEMENT OF POLICIES Rule 2.1. General policies. - It is the policy of the State to actively promote the use of various modes of ADR and to respect party autonomy or the freedom of the parties to make their own arrangements in the resolution of disputes with the greatest cooperation of and the least intervention from the courts. To this end, the objectives of the Special ADR Rules are to encourage and promote the use of ADR, particularly arbitration and mediation, as an important means to achieve speedy and efficient resolution of disputes, impartial justice, curb a litigious culture and to de-clog court dockets. The court shall exercise the power of judicial review as provided by these Special ADR Rules. Courts shall intervene only in the cases allowed by law or these Special ADR Rules. Rule 2.2. Policy on arbitration.- (A) Where the parties have agreed to submit their dispute to arbitration, courts shall refer the parties to arbitration pursuant to Republic Act No. 9285 bearing in mind that such arbitration agreement is the law between the parties and that they are expected to abide by it in good faith. Further, the courts shall not refuse to refer parties to arbitration for reasons including, but not limited to, the following: a. The referral tends to oust a court of its jurisdiction;


b. The court is in a better position to resolve the dispute subject of arbitration; c. The referral would result in multiplicity of suits; d. The arbitration proceeding has not commenced; e. The place of arbitration is in a foreign country; f. One or more of the issues are legal and one or more of the arbitrators are not lawyers; g. One or more of the arbitrators are not Philippine nationals; or h. One or more of the arbitrators are alleged not to possess the required qualification under the arbitration agreement or law. (B) Where court intervention is allowed under ADR Laws or the Special ADR Rules, courts shall not refuse to grant relief, as provided herein, for any of the following reasons: a. Prior to the constitution of the arbitral tribunal, the court finds that the principal action is the subject of an arbitration agreement; or b. The principal action is already pending before an arbitral tribunal. The Special ADR Rules recognize the principle of competence-competence, which means that the arbitral tribunal may initially rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement or any condition precedent to the filing of a request for arbitration. The Special ADR Rules recognize the principle of separability of the arbitration clause, which means that said clause shall be treated as an agreement independent of the other terms of the contract of which it forms part. A decision that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. Rule 2.3. Rules governing arbitral proceedings. - The parties are free to agree on the procedure to be followed in the conduct of arbitral proceedings. Failing such agreement, the arbitral tribunal may conduct arbitration in the manner it considers appropriate. Rule 2.4. Policy implementing competencecompetence principle. - The arbitral tribunal shall be accorded the first opportunity or competence to rule on the issue of whether or not it has the competence or jurisdiction to decide a dispute submitted to it for decision, including any objection with respect to the

existence or validity of the arbitration agreement. When a court is asked to rule upon issue/s affecting the competence or jurisdiction of an arbitral tribunal in a dispute brought before it, either before or after the arbitral tribunal is constituted, the court must exercise judicial restraint and defer to the competence or jurisdiction of the arbitral tribunal by allowing the arbitral tribunal the first opportunity to rule upon such issues. Where the court is asked to make a determination of whether the arbitration agreement is null and void, inoperative or incapable of being performed, under this policy of judicial restraint, the court must make no more than a prima facie determination of that issue. Unless the court, pursuant to such prima facie determination, concludes that the arbitration agreement is null and void, inoperative or incapable of being performed, the court must suspend the action before it and refer the parties to arbitration pursuant to the arbitration agreement. Rule 2.5. Policy on mediation. - The Special ADR Rules do not apply to Court-Annexed Mediation, which shall be governed by issuances of the Supreme Court. Where the parties have agreed to submit their dispute to mediation, a court before which that dispute was brought shall suspend the proceedings and direct the parties to submit their dispute to private mediation. If the parties subsequently agree, however, they may opt to have their dispute settled through Court-Annexed Mediation. Rule 2.6. Policy on Arbitration-Mediation or Mediation-Arbitration. - No arbitrator shall act as a mediator in any proceeding in which he is acting as arbitrator; and all negotiations towards settlement of the dispute must take place without the presence of that arbitrator. Conversely, no mediator shall act as arbitrator in any proceeding in which he acted as mediator. Rule 2.7. Conversion of a settlement agreement to an arbitral award. - Where the parties to mediation have agreed in the written settlement agreement that the mediator shall become the sole arbitrator for the dispute or that the settlement agreement shall become an arbitral award, the sole arbitrator shall issue the settlement agreement as an arbitral award, which shall be subject to enforcement under the law. PART II SPECIFIC COURT RELIEF RULE 3: JUDICIAL RELIEF INVOLVING THE ISSUE OF EXISTENCE, VALIDITY AND ENFORCEABILITY OF THE ARBITRATION AGREEMENT


Rule 3.1. When judicial relief is available. - The judicial relief provided in Rule 3, whether resorted to before or after commencement of arbitration, shall apply only when the place of arbitration is in the Philippines.

Rule 3.8. Court action. - In resolving the petition, the court must exercise judicial restraint in accordance with the policy set forth in Rule 2.4, deferring to the competence or jurisdiction of the arbitral tribunal to rule on its competence or jurisdiction.

A. Judicial Relief before Commencement of Arbitration Rule 3.2. Who may file petition. - Any party to an arbitration agreement may petition the appropriate court to determine any question concerning the existence, validity and enforceability of such arbitration agreement serving a copy thereof on the respondent in accordance with Rule 1.4 (A). Rule 3.3. When the petition may be filed. - The petition for judicial determination of the existence, validity and/or enforceability of an arbitration agreement may be filed at any time prior to the commencement of arbitration. Despite the pendency of the petition provided herein, arbitral proceedings may nevertheless be commenced and continue to the rendition of an award, while the issue is pending before the court. Rule 3.4. Venue. - A petition questioning the existence, validity and enforceability of an arbitration agreement may be filed before the Regional Trial Court of the place where any of the petitioners or respondents has his principal place of business or residence. Rule 3.5. Grounds. - A petition may be granted only if it is shown that the arbitration agreement is, under the applicable law, invalid, void, unenforceable or inexistent. Rule 3.6. Contents of petition. - The verified petition shall state the following: a. The facts showing that the persons named as petitioner or respondent have legal capacity to sue or be sued; b. The nature and substance of the dispute between the parties; c. The grounds and the circumstances relied upon by the petitioner to establish his position; and d. The relief/s sought. Apart from other submissions, the petitioner must attach to the petition an authentic copy of the arbitration agreement. Rule 3.7. Comment/Opposition.-The comment/opposition of the respondent must be filed within fifteen (15) days from service of the petition.

Rule 3.9. No forum shopping. - A petition for judicial relief under this Rule may not be commenced when the existence, validity or enforceability of an arbitration agreement has been raised as one of the issues in a prior action before the same or another court. Rule 3.10. Application for interim relief. - If the petitioner also applies for an interim measure of protection, he must also comply with the requirements of the Special ADR Rules for the application for an interim measure of protection. Rule 3.11. Relief against court action. - Where there is a prima facie determination upholding the arbitration agreement.-A prima facie determination by the court upholding the existence, validity or enforceability of an arbitration agreement shall not be subject to a motion for reconsideration, appeal or certiorari. Such prima facie determination will not, however, prejudice the right of any party to raise the issue of the existence, validity and enforceability of the arbitration agreement before the arbitral tribunal or the court in an action to vacate or set aside the arbitral award. In the latter case, the court’s review of the arbitral tribunal’s ruling upholding the existence, validity or enforceability of the arbitration agreement shall no longer be limited to a mere prima facie determination of such issue or issues as prescribed in this Rule, but shall be a full review of such issue or issues with due regard, however, to the standard for review for arbitral awards prescribed in these Special ADR Rules. B. Judicial Relief after Arbitration Commences Rule 3.12. Who may file petition. - Any party to arbitration may petition the appropriate court for judicial relief from the ruling of the arbitral tribunal on a preliminary question upholding or declining its jurisdiction. Should the ruling of the arbitral tribunal declining its jurisdiction be reversed by the court, the parties shall be free to replace the arbitrators or any one of them in accordance with the rules that were applicable for the appointment of arbitrator sought to be replaced. Rule 3.13. When petition may be filed. - The petition may be filed within thirty (30) days after having received notice of that ruling by the arbitral tribunal. Rule 3.14. Venue. - The petition may be filed before the Regional Trial Court of the place where arbitration is


taking place, or where any of the petitioners or respondents has his principal place of business or residence. Rule 3.15. Grounds. - The petition may be granted when the court finds that the arbitration agreement is invalid, inexistent or unenforceable as a result of which the arbitral tribunal has no jurisdiction to resolve the dispute. Rule 3.16. Contents of petition. - The petition shall state the following: a. The facts showing that the person named as petitioner or respondent has legal capacity to sue or be sued; b. The nature and substance of the dispute between the parties; c. The grounds and the circumstances relied upon by the petitioner; and d. The relief/s sought. In addition to the submissions, the petitioner shall attach to the petition a copy of the request for arbitration and the ruling of the arbitral tribunal. The arbitrators shall be impleaded as nominal parties to the case and shall be notified of the progress of the case. Rule 3.17. Comment/Opposition. The comment/opposition must be filed within fifteen (15) days from service of the petition. Rule 3.18. Court action. - (A) Period for resolving the petition.- The court shall render judgment on the basis of the pleadings filed and the evidence, if any, submitted by the parties, within thirty (30) days from the time the petition is submitted for resolution. (B) No injunction of arbitration proceedings. - The court shall not enjoin the arbitration proceedings during the pendency of the petition. Judicial recourse to the court shall not prevent the arbitral tribunal from continuing the proceedings and rendering its award. (C) When dismissal of petition is appropriate. - The court shall dismiss the petition if it fails to comply with Rule 3.16 above; or if upon consideration of the grounds alleged and the legal briefs submitted by the parties, the petition does not appear to be prima facie meritorious.

Rule 3.19. Relief against court action. - The aggrieved party may file a motion for reconsideration of the order of the court. The decision of the court shall, however, not be subject to appeal. The ruling of the court affirming the arbitral tribunal’s jurisdiction shall not be subject to a petition for certiorari. The ruling of the court that the arbitral tribunal has no jurisdiction may be the subject of a petition for certiorari. Rule 3.20. Where no petition is allowed. - Where the arbitral tribunal defers its ruling on preliminary question regarding its jurisdiction until its final award, the aggrieved party cannot seek judicial relief to question the deferral and must await the final arbitral award before seeking appropriate judicial recourse. A ruling by the arbitral tribunal deferring resolution on the issue of its jurisdiction until final award, shall not be subject to a motion for reconsideration, appeal or a petition for certiorari. Rule 3.21. Rendition of arbitral award before court decision on petition from arbitral tribunal’s preliminary ruling on jurisdiction. - If the arbitral tribunal renders a final arbitral award and the Court has not rendered a decision on the petition from the arbitral tribunal’s preliminary ruling affirming its jurisdiction, that petition shall become ipso facto moot and academic and shall be dismissed by the Regional Trial Court. The dismissal shall be without prejudice to the right of the aggrieved party to raise the same issue in a timely petition to vacate or set aside the award. Rule 3.22. Arbitral tribunal a nominal party. - The arbitral tribunal is only a nominal party. The court shall not require the arbitral tribunal to submit any pleadings or written submissions but may consider the same should the latter participate in the proceedings, but only as nominal parties thereto. RULE 4: REFERRAL TO ADR Rule 4.1. Who makes the request. - A party to a pending action filed in violation of the arbitration agreement, whether contained in an arbitration clause or in a submission agreement, may request the court to refer the parties to arbitration in accordance with such agreement. Rule 4.2. When to make request. - (A) Where the arbitration agreement exists before the action is filed. The request for referral shall be made not later than the pre-trial conference. After the pre-trial conference, the court will only act upon the request for referral if it is made with the agreement of all parties to the case. (B) Submission agreement. - If there is no existing arbitration agreement at the time the case is filed but the parties subsequently enter into an arbitration


agreement, they may request the court to refer their dispute to arbitration at any time during the proceedings.

b. Not all of the parties to the civil action are bound by the arbitration agreement and referral to arbitration would result in multiplicity of suits;

Rule 4.3. Contents of request. - The request for referral shall be in the form of a motion, which shall state that the dispute is covered by an arbitration agreement.

c. The issues raised in the civil action could be speedily and efficiently resolved in its entirety by the court rather than in arbitration;

Apart from other submissions, the movant shall attach to his motion an authentic copy of the arbitration agreement.

d. Referral to arbitration does not appear to be the most prudent action; or

The request shall contain a notice of hearing addressed to all parties specifying the date and time when it would be heard. The party making the request shall serve it upon the respondent to give him the opportunity to file a comment or opposition as provided in the immediately succeeding Rule before the hearing. Rule 4.4. Comment/Opposition. The comment/opposition must be filed within fifteen (15) days from service of the petition. The comment/opposition should show that: (a) there is no agreement to refer the dispute to arbitration; and/or (b) the agreement is null and void; and/or (c) the subject-matter of the dispute is not capable of settlement or resolution by arbitration in accordance with Section 6 of the ADR Act. Rule 4.5. Court action. - After hearing, the court shall stay the action and, considering the statement of policy embodied in Rule 2.4, above, refer the parties to arbitration if it finds prima facie, based on the pleadings and supporting documents submitted by the parties, that there is an arbitration agreement and that the subject-matter of the dispute is capable of settlement or resolution by arbitration in accordance with Section 6 of the ADR Act. Otherwise, the court shall continue with the judicial proceedings. Rule 4.6. No reconsideration, appeal or certiorari. - An order referring the dispute to arbitration shall be immediately executory and shall not be subject to a motion for reconsideration, appeal or petition for certiorari. An order denying the request to refer the dispute to arbitration shall not be subject to an appeal, but may be the subject of a motion for reconsideration and/or a petition for certiorari. Rule 4.7. Multiple actions and parties. - The court shall not decline to refer some or all of the parties to arbitration for any of the following reasons: a. Not all of the disputes subject of the civil action may be referred to arbitration;

e. The stay of the action would prejudice the rights of the parties to the civil action who are not bound by the arbitration agreement. The court may, however, issue an order directing the inclusion in arbitration of those parties who are not bound by the arbitration agreement but who agree to such inclusion provided those originally bound by it do not object to their inclusion. Rule 4.8. Arbitration to proceed.- Despite the pendency of the action referred to in Rule 4.1, above, arbitral proceedings may nevertheless be commenced or continued, and an award may be made, while the action is pending before the court. RULE 5: INTERIM MEASURES OF PROTECTION Rule 5.1. Who may ask for interim measures of protection. - A party to an arbitration agreement may petition the court for interim measures of protection. Rule 5.2. When to petition. - A petition for an interim measure of protection may be made (a) before arbitration is commenced, (b) after arbitration is commenced, but before the constitution of the arbitral tribunal, or (c) after the constitution of the arbitral tribunal and at any time during arbitral proceedings but, at this stage, only to the extent that the arbitral tribunal has no power to act or is unable to act effectively. Rule 5.3. Venue. - A petition for an interim measure of protection may be filed with the Regional Trial Court, which has jurisdiction over any of the following places: a. Where the principal place of business of any of the parties to arbitration is located; b. Where any of the parties who are individuals resides; c. Where any of the acts sought to be enjoined are being performed, threatened to be performed or not being performed; or d. Where the real property subject of arbitration, or a portion thereof is situated.


Rule 5.4. Grounds. - The following grounds, while not limiting the reasons for the court to grant an interim measure of protection, indicate the nature of the reasons that the court shall consider in granting the relief: a. The need to prevent irreparable loss or injury; b. The need to provide security for the performance of any obligation;

an urgent need to either (a) preserve property, (b) prevent the respondent from disposing of, or concealing, the property, or (c) prevent the relief prayed for from becoming illusory because of prior notice, and the court finds that the reason/s given by the petitioner are meritorious. Rule 5.8. Comment/Opposition. The comment/opposition must be filed within fifteen (15) days from service of the petition. The opposition or comment should state the reasons why the interim measure of protection should not be granted.

c. The need to produce or preserve evidence; or d. The need to compel any other appropriate act or omission. Rule 5.5. Contents of the petition. - The verified petition must state the following: a. The fact that there is an arbitration agreement; b. The fact that the arbitral tribunal has not been constituted, or if constituted, is unable to act or would be unable to act effectively; c. A detailed description of the appropriate relief sought; d. The grounds relied on for the allowance of the petition Apart from other submissions, the petitioner must attach to his petition an authentic copy of the arbitration agreement. Rule 5.6. Type of interim measure of protection that a court may grant.- The following, among others, are the interim measures of protection that a court may grant: a. Preliminary injunction directed against a party to arbitration; b. Preliminary attachment against property or garnishment of funds in the custody of a bank or a third person;

Rule 5.9. Court action. - After hearing the petition, the court shall balance the relative interests of the parties and inconveniences that may be caused, and on that basis resolve the matter within thirty (30) days from (a) submission of the opposition, or (b) upon lapse of the period to file the same, or (c) from termination of the hearing that the court may set only if there is a need for clarification or further argument. If the other parties fail to file their opposition on or before the day of the hearing, the court shall motu proprio render judgment only on the basis of the allegations in the petition that are substantiated by supporting documents and limited to what is prayed for therein. In cases where, based solely on the petition, the court finds that there is an urgent need to either (a) preserve property, (b) prevent the respondent from disposing of, or concealing, the property, or (c) prevent the relief prayed for from becoming illusory because of prior notice, it shall issue an immediately executory temporary order of protection and require the petitioner, within five (5) days from receipt of that order, to post a bond to answer for any damage that respondent may suffer as a result of its order. The exparte temporary order of protection shall be valid only for a period of twenty (20) days from the service on the party required to comply with the order. Within that period, the court shall: a. Furnish the respondent a copy of the petition and a notice requiring him to comment thereon on or before the day the petition will be heard; and

c. Appointment of a receiver; d. Detention, preservation, delivery or inspection of property; or, e. Assistance in the enforcement of an interim measure of protection granted by the arbitral tribunal, which the latter cannot enforce effectively. Rule 5.7. Dispensing with prior notice in certain cases. - Prior notice to the other party may be dispensed with when the petitioner alleges in the petition that there is

b. Notify the parties that the petition shall be heard on a day specified in the notice, which must not be beyond the twenty (20) day period of the effectivity of the exparte order. The respondent has the option of having the temporary order of protection lifted by posting an appropriate counter-bond as determined by the court. If the respondent requests the court for an extension of the period to file his opposition or comment or to reset


the hearing to a later date, and such request is granted, the court shall extend the period of validity of the exparte temporary order of protection for no more than twenty days from expiration of the original period. After notice and hearing, the court may either grant or deny the petition for an interim measure of protection. The order granting or denying any application for interim measure of protection in aid of arbitration must indicate that it is issued without prejudice to subsequent grant, modification, amendment, revision or revocation by an arbitral tribunal. Rule 5.10. Relief against court action. - If respondent was given an opportunity to be heard on a petition for an interim measure of protection, any order by the court shall be immediately executory, but may be the subject of a motion for reconsideration and/or appeal or, if warranted, a petition for certiorari. Rule 5.11. Duty of the court to refer back. - The court shall not deny an application for assistance in implementing or enforcing an interim measure of protection ordered by an arbitral tribunal on any or all of the following grounds: a. The arbitral tribunal granted the interim relief ex parte; or b. The party opposing the application found new material evidence, which the arbitral tribunal had not considered in granting in the application, and which, if considered, may produce a different result; or c. The measure of protection ordered by the arbitral tribunal amends, revokes, modifies or is inconsistent with an earlier measure of protection issued by the court. If it finds that there is sufficient merit in the opposition to the application based on letter (b) above, the court shall refer the matter back to the arbitral tribunal for appropriate determination. Rule 5.12. Security. - The order granting an interim measure of protection may be conditioned upon the provision of security, performance of an act, or omission thereof, specified in the order. The Court may not change or increase or decrease the security ordered by the arbitral tribunal. Rule 5.13. Modification, amendment, revision or revocation of court’s previously issued interim measure of protection. - Any court order granting or denying interim measure/s of protection is issued without prejudice to subsequent grant, modification, amendment, revision or revocation by the arbitral tribunal as may be warranted.

An interim measure of protection issued by the arbitral tribunal shall, upon its issuance be deemed to have ipso jure modified, amended, revised or revoked an interim measure of protection previously issued by the court to the extent that it is inconsistent with the subsequent interim measure of protection issued by the arbitral tribunal. Rule 5.14. Conflict or inconsistency between interim measure of protection issued by the court and by the arbitral tribunal. - Any question involving a conflict or inconsistency between an interim measure of protection issued by the court and by the arbitral tribunal shall be immediately referred by the court to the arbitral tribunal which shall have the authority to decide such question. Rule 5.15. Court to defer action on petition for an interim measure of protection when informed of constitution of the arbitral tribunal. - The court shall defer action on any pending petition for an interim measure of protection filed by a party to an arbitration agreement arising from or in connection with a dispute thereunder upon being informed that an arbitral tribunal has been constituted pursuant to such agreement. The court may act upon such petition only if it is established by the petitioner that the arbitral tribunal has no power to act on any such interim measure of protection or is unable to act thereon effectively. Rule 5.16. Court assistance should arbitral tribunal be unable to effectively enforce interim measure of protection. - The court shall assist in the enforcement of an interim measure of protection issued by the arbitral tribunal which it is unable to effectively enforce. RULE 6: APPOINTMENT OF ARBITRATORS Rule 6.1. When the court may act as Appointing Authority. - The court shall act as Appointing Authority only in the following instances: a. Where any of the parties in an institutional arbitration failed or refused to appoint an arbitrator or when the parties have failed to reach an agreement on the sole arbitrator (in an arbitration before a sole arbitrator) or when the two designated arbitrators have failed to reach an agreement on the third or presiding arbitrator (in an arbitration before a panel of three arbitrators), and the institution under whose rules arbitration is to be conducted fails or is unable to perform its duty as appointing authority within a reasonable time from receipt of the request for appointment;


b. In all instances where arbitration is ad hoc and the parties failed to provide a method for appointing or replacing an arbitrator, or substitute arbitrator, or the method agreed upon is ineffective, and the National President of the Integrated Bar of the Philippines (IBP) or his duly authorized representative fails or refuses to act within such period as may be allowed under the pertinent rules of the IBP or within such period as may be agreed upon by the parties, or in the absence thereof, within thirty (30) days from receipt of such request for appointment; c. Where the parties agreed that their dispute shall be resolved by three arbitrators but no method of appointing those arbitrators has been agreed upon, each party shall appoint one arbitrator and the two arbitrators thus appointed shall appoint a third arbitrator. If a party fails to appoint his arbitrator within thirty (30) days of receipt of a request to do so from the other party, or if the two arbitrators fail to agree on the third arbitrator within a reasonable time from their appointment, the appointment shall be made by the Appointing Authority. If the latter fails or refuses to act or appoint an arbitrator within a reasonable time from receipt of the request to do so, any party or the appointed arbitrator/s may request the court to appoint an arbitrator or the third arbitrator as the case may be. Rule 6.2. Who may request for appointment. - Any party to an arbitration may request the court to act as an Appointing Authority in the instances specified in Rule 6.1 above. Rule 6.3. Venue. - The petition for appointment of arbitrator may be filed, at the option of the petitioner, in the Regional Trial Court (a) where the principal place of business of any of the parties is located, (b) if any of the parties are individuals, where those individuals reside, or (c) in the National Capital Region. Rule 6.4. Contents of the petition. -The petition shall state the following: a. The general nature of the dispute; b. If the parties agreed on an appointment procedure, a description of that procedure with reference to the agreement where such may be found; c. The number of arbitrators agreed upon or the absence of any agreement as to the number of arbitrators; d. The special qualifications that the arbitrator/s must possess, if any, that were agreed upon by the parties;

e. The fact that the Appointing Authority, without justifiable cause, has failed or refused to act as such within the time prescribed or in the absence thereof, within a reasonable time, from the date a request is made; and f. The petitioner is not the cause of the delay in, or failure of, the appointment of the arbitrator. Apart from other submissions, the petitioner must attach to the petition (a) an authentic copy of the arbitration agreement, and (b) proof that the Appointing Authority has been notified of the filing of the petition for appointment with the court. Rule 6.5. Comment/Opposition. The comment/opposition must be filed within fifteen (15) days from service of the petition. Rule 6.6. Submission of list of arbitrators. - The court may, at its option, also require each party to submit a list of not less than three (3) proposed arbitrators together with their curriculum vitae. Rule 6.7. Court action. - After hearing, if the court finds merit in the petition, it shall appoint an arbitrator; otherwise, it shall dismiss the p etition. In making the appointment, the court shall have regard to such considerations as are likely to secure the appointment of an independent and impartial arbitrator. At any time after the petition is filed and before the court makes an appointment, it shall also dismiss the petition upon being informed that the Appointing Authority has already made the appointment. Rule 6.8. Forum shopping prohibited. - When there is a pending petition in another court to declare the arbitration agreement inexistent, invalid, unenforceable, on account of which the respondent failed or refused to participate in the selection and appointment of a sole arbitrator or to appoint a partynominated arbitrator, the petition filed under this rule shall be dismissed. Rule 6.9. Relief against court action. - If the court appoints an arbitrator, the order appointing an arbitrator shall be immediately executory and shall not be the subject of a motion for reconsideration, appeal or certiorari. An order of the court denying the petition for appointment of an arbitrator may, however, be the subject of a motion for reconsideration, appeal or certiorari. RULE 7: CHALLENGE TO APPOINTMENT OF ARBITRATOR


Rule 7.1. Who may challenge. - Any of the parties to an arbitration may challenge an arbitrator. Rule 7.2. When challenge may be raised in court. When an arbitrator is challenged before the arbitral tribunal under the procedure agreed upon by the parties or under the procedure provided for in Article 13 (2) of the Model Law and the challenge is not successful, the aggrieved party may request the Appointing Authority to rule on the challenge, and it is only when such Appointing Authority fails or refuses to act on the challenge within such period as may be allowed under the applicable rule or in the absence thereof, within thirty (30) days from receipt of the request, that the aggrieved party may renew the challenge in court. Rule 7.3. Venue. - The challenge shall be filed with the Regional Trial Court (a) where the principal place of business of any of the parties is located, (b) if any of the parties are individuals, where those individuals reside, or (c) in the National Capital Region. Rule 7.4. Grounds. - An arbitrator may be challenged on any of the grounds for challenge provided for in Republic Act No. 9285 and its implementing rules, Republic Act No. 876 or the Model Law. The nationality or professional qualification of an arbitrator is not a ground to challenge an arbitrator unless the parties have specified in their arbitration agreement a nationality and/or professional qualification for appointment as arbitrator.

Rule 7.6. Comment/Opposition. - The challenged arbitrator or other parties may file a comment or opposition within fifteen (15) days from service of the petition. Rule 7.7. Court action. - After hearing, the court shall remove the challenged arbitrator if it finds merit in the petition; otherwise, it shall dismiss the petition. The court shall allow the challenged arbitrator who subsequently agrees to accept the challenge to withdraw as arbitrator. The court shall accept the challenge and remove the arbitrator in the following cases: a. The party or parties who named and appointed the challenged arbitrator agree to the challenge and withdraw the appointment. b. The other arbitrators in the arbitral tribunal agree to the removal of the challenged arbitrator; and c. The challenged arbitrator fails or refuses to submit his comment on the petition or the brief of legal arguments as directed by the court, or in such comment or legal brief, he fails to object to his removal following the challenge. The court shall decide the challenge on the basis of evidence submitted by the parties.

Rule 7.5. Contents of the petition. - The petition shall state the following:

The court will decide the challenge on the basis of the evidence submitted by the parties in the following instances:

a. The name/s of the arbitrator/s challenged and his/their address;

a. The other arbitrators in the arbitral tribunal agree to the removal of the challenged arbitrator; and

b. The grounds for the challenge;

b. If the challenged arbitrator fails or refuses to submit his comment on the petition or the brief of legal arguments as directed by the court, or in such comment or brief of legal arguments, he fails to object to his removal following the challenge.

c. The facts showing that the ground for the challenge has been expressly or impliedly rejected by the challenged arbitrator/s; and d. The facts showing that the Appointing Authority failed or refused to act on the challenge. The court shall dismiss the petition motu proprio unless it is clearly alleged therein that the Appointing Authority charged with deciding the challenge, after the resolution of the arbitral tribunal rejecting the challenge is raised or contested before such Appointing Authority, failed or refused to act on the challenge within thirty (30) days from receipt of the request or within such longer period as may apply or as may have been agreed upon by the parties.

Rule 7.8. No motion for reconsideration, appeal or certiorari. - Any order of the court resolving the petition shall be immediately executory and shall not be the subject of a motion for reconsideration, appeal, or certiorari. Rule 7.9. Reimbursement of expenses and reasonable compensation to challenged arbitrator. - Unless the bad faith of the challenged arbitrator is established with reasonable certainty by concealing or failing to disclose a ground for his disqualification, the challenged arbitrator shall be entitled to reimbursement of all reasonable expenses he may have incurred in attending to the arbitration and to a


reasonable compensation for his work on the arbitration. Such expenses include, but shall not be limited to, transportation and hotel expenses, if any. A reasonable compensation shall be paid to the challenged arbitrator on the basis of the length of time he has devoted to the arbitration and taking into consideration his stature and reputation as an arbitrator. The request for reimbursement of expenses and for payment of a reasonable compensation shall be filed in the same case and in the court where the petition to replace the challenged arbitrator was filed. The court, in determining the amount of the award to the challenged arbitrator, shall receive evidence of expenses to be reimbursed, which may consist of air tickets, hotel bills and expenses, and inland transportation. The court shall direct the challenging party to pay the amount of the award to the court for the account of the challenged arbitrator, in default of which the court may issue a writ of execution to enforce the award. RULE 8: TERMINATION OF THE MANDATE OF ARBITRATOR Rule 8.1. Who may request termination and on what grounds.- Any of the parties to an arbitration may request for the termination of the mandate of an arbitrator where an arbitrator becomes de jure or de facto unable to perform his function or for other reasons fails to act without undue delay and that arbitrator, upon request of any party, fails or refuses to withdraw from his office. Rule 8.2. When to request. - If an arbitrator refuses to withdraw from his office, and subsequently, the Appointing Authority fails or refuses to decide on the termination of the mandate of that arbitrator within such period as may be allowed under the applicable rule or, in the absence thereof, within thirty (30) days from the time the request is brought before him, any party may file with the court a petition to terminate the mandate of that arbitrator. Rule 8.3. Venue. - A petition to terminate the mandate of an arbitrator may, at that petitioner’s option, be filed with the Regional Trial Court (a) where the principal place of business of any of the parties is located, (b) where any of the parties who are individuals resides, or (c) in the National Capital Region. Rule 8.4. Contents of the petition. - The petition shall state the following: a. The name of the arbitrator whose mandate is sought to be terminated; b. The ground/s for termination;

c. The fact that one or all of the parties had requested the arbitrator to withdraw but he failed or refused to do so; d. The fact that one or all of the parties requested the Appointing Authority to act on the request for the termination of the mandate of the arbitrator and failure or inability of the Appointing Authority to act within thirty (30) days from the request of a party or parties or within such period as may have been agreed upon by the parties or allowed under the applicable rule. The petitioner shall further allege that one or all of the parties had requested the arbitrator to withdraw but he failed or refused to do so. Rule 8.5. Comment/Opposition. The comment/opposition must be filed within fifteen (15) days from service of the petition. Rule 8.6. Court action. - After hearing, if the court finds merit in the petition, it shall terminate the mandate of the arbitrator who refuses to withdraw from his office; otherwise, it shall dismiss the petition. Rule 8.7. No motion for reconsideration or appeal. Any order of the court resolving the petition shall be immediately executory and shall not be subject of a motion for reconsideration, appeal or petition for certiorari. Rule 8.8. Appointment of substitute arbitrator. Where the mandate of an arbitrator is terminated, or he withdraws from office for any other reason, or because of his mandate is revoked by agreement of the parties or is terminated for any other reason, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced. RULE 9: ASSISTANCE IN TAKING EVIDENCE Rule 9.1. Who may request assistance. - Any party to an arbitration, whether domestic or foreign, may request the court to provide assistance in taking evidence. Rule 9.2. When assistance may be sought. - Assistance may be sought at any time during the course of the arbitral proceedings when the need arises. Rule 9.3. Venue. - A petition for assistance in taking evidence may, at the option of the petitioner, be filed with Regional Trial Court where (a) arbitration proceedings are taking place, (b) the witnesses reside or may be found, or (c) where the evidence may be found.


Rule 9.4. Ground. - The court may grant or execute the request for assistance in taking evidence within its competence and according to the rules of evidence. Rule 9.5. Type of assistance. - A party requiring assistance in the taking of evidence may petition the court to direct any person, including a representative of a corporation, association, partnership or other entity (other than a party to the ADR proceedings or its officers) found in the Philippines, for any of the following: a. To comply with a subpoena ad testificandum and/or subpoena duces tecum; b. To appear as a witness before an officer for the taking of his deposition upon oral examination or by written interrogatories; c. To allow the physical examination of the condition of persons, or the inspection of things or premises and, when appropriate, to allow the recording and/or documentation of condition of persons, things or premises (i.e., photographs, video and other means of recording/documentation); d. To allow the documents; and

examination

and

copying

of

e. To perform any similar acts. Rule 9.6. Contents of the petition. - The petition must state the following: a. The fact that there is an ongoing arbitration proceeding even if such proceeding could not continue due to some legal impediments; b. The arbitral tribunal ordered the taking of evidence or the party desires to present evidence to the arbitral tribunal; c. Materiality or relevance of the evidence to be taken; and d. The names and addresses of the intended witness/es, place where the evidence may be found, the place where the premises to be inspected are located or the place where the acts required are to be done. Rule 9.7. Comment/Opposition. The comment/opposition must be filed within fifteen (15) days from service of the petition. Rule 9.8. Court action. - If the evidence sought is not privileged, and is material and relevant, the court shall grant the assistance in taking evidence requested and

shall order petitioner to pay costs attendant to such assistance. Rule 9.9. Relief against court action. - The order granting assistance in taking evidence shall be immediately executory and not subject to reconsideration or appeal. If the court declines to grant assistance in taking evidence, the petitioner may file a motion for reconsideration or appeal. Rule 9.10. Perpetuation of testimony before the arbitral tribunal is constituted. - At anytime before arbitration is commenced or before the arbitral tribunal is constituted, any person who desires to perpetuate his testimony or that of another person may do so in accordance with Rule 24 of the Rules of Court. Rule 9.11. Consequence of disobedience. - The court may impose the appropriate sanction on any person who disobeys its order to testify when required or perform any act required of him. RULE 10: ORDERS

CONFIDENTIALITY/PROTECTIVE

Rule 10.1. Who may request confidentiality. - A party, counsel or witness who disclosed or who was compelled to disclose information relative to the subject of ADR under circumstances that would create a reasonable expectation, on behalf of the source, that the information shall be kept confidential has the right to prevent such information from being further disclosed without the express written consent of the source or the party who made the disclosure. Rule 10.2. When request made. - A party may request a protective order at anytime there is a need to enforce the confidentiality of the information obtained, or to be obtained, in ADR proceedings. Rule 10.3. Venue. - A petition for a protective order may be filed with the Regional Trial Court where that order would be implemented. If there is a pending court proceeding in which the information obtained in an ADR proceeding is required to be divulged or is being divulged, the party seeking to enforce the confidentiality of the information may file a motion with the court where the proceedings are pending to enjoin the confidential information from being divulged or to suppress confidential information. Rule 10.4. Grounds. - A protective order may be granted only if it is shown that the applicant would be materially prejudiced by an unauthorized disclosure of the information obtained, or to be obtained, during an ADR proceeding.


Rule 10.5. Contents of the motion or petition. - The petition or motion must state the following: a. That the information sought to be protected was obtained, or would be obtained, during an ADR proceeding; b. The applicant would be materially prejudiced by the disclosure of that information; c. The person or persons who are being asked to divulge the confidential information participated in an ADR proceedings; and d. The time, date and place when the ADR proceedings took place. Apart from the other submissions, the movant must set the motion for hearing and contain a notice of hearing in accordance with Rule 15 of the Rules of Court. Rule 10.6. Notice. - Notice of a request for a protective order made through a motion shall be made to the opposing parties in accordance with Rule 15 of the Rules of Court. Rule 10.7. Comment/Opposition. The comment/opposition must be filed within fifteen (15) days from service of the petition. The opposition or comment may be accompanied by written proof that (a) the information is not confidential, (b) the information was not obtained during an ADR proceeding, (c) there was a waiver of confidentiality, or (d) the petitioner/movant is precluded from asserting confidentiality. Rule 10.8. Court action. - If the court finds the petition or motion meritorious, it shall issue an order enjoining a person or persons from divulging confidential information. In resolving the petition or motion, the courts shall be guided by the following principles applicable to all ADR proceedings: Confidential information shall not be subject to discovery and shall be inadmissible in any adversarial proceeding, whether judicial or quasi judicial. However, evidence or information that is otherwise admissible or subject to discovery does not become inadmissible or protected from discovery solely by reason of its use th erein. For mediation proceedings, the court shall be further guided by the following principles: a. Information obtained through mediation shall be privileged and confidential.

b. A party, a mediator, or a nonparty participant may refuse to disclose and may prevent any other person from disclosing a mediation communication. c. In such an adversarial proceeding, the following persons involved or previously involved in a mediation may not be compelled to disclose confidential information obtained during the mediation: (1) the parties to the dispute; (2) the mediator or mediators; (3) the counsel for the parties: (4) the nonparty participants; (5) any persons hired or engaged in connection with the mediation as secretary, stenographer; clerk or assistant; and (6) any other person who obtains or possesses confidential information by reason of his/ her profession. d. The protection of the ADR Laws shall continue to apply even if a mediator is found to have failed to act impartially. e. A mediator may not be called to testify to provide information gathered in mediation. A mediator who is wrongfully subpoenaed shall be reimbursed the full cost of his attorney fees and related expenses. Rule 10.9. Relief against court action. - The order enjoining a person or persons from divulging confidential information shall be immediately executory and may not be enjoined while the order is being questioned with the appellate courts. If the court declines to enjoin a person or persons from divulging confidential information, the petitioner may file a motion for reconsideration or app eal. Rule 10.10. Consequence of disobedience. - Any person who disobeys the order of the court to cease from divulging confidential information shall be imposed the proper sanction by the court. RULE 11: CONFIRMATION, VACATION OF AWARD ARBITRATION

CORRECTION OR IN DOMESTIC

Rule 11.1. Who may request confirmation, correction or vacation. - Any party to a domestic arbitration may petition the court to confirm, correct or vacate a domestic arbitral award. Rule 11.2. When to request correction/modification or vacation. -

confirmation,

(A) Confirmation. - At any time after the lapse of thirty (30) days from receipt by the petitioner of the arbitral award, he may petition the court to confirm that award.


(B) Correction/Modification. - Not later than thirty (30) days from receipt of the arbitral award, a party may petition the court to correct/modify that award. (C) Vacation. - Not later than thirty (30) days from receipt of the arbitral award, a party may petition the court to vacate that award. (D) A petition to vacate the arbitral award may be filed, in opposition to a petition to confirm the arbitral award, not later than thirty (30) days from receipt of the award by the petitioner. A petition to vacate the arbitral award filed beyond the reglementary period shall be dismissed. (E) A petition to confirm the arbitral award may be filed, in opposition to a petition to vacate the arbitral award, at any time after the petition to vacate such arbitral award is filed. The dismissal of the petition to vacate the arbitral award for having been filed beyond the reglementary period shall not result in the dismissal of the petition for the confirmation of such arbitral award. (F) The filing of a petition to confirm an arbitral award shall not authorize the filing of a belated petition to vacate or set aside such award in opposition thereto. (G) A petition to correct an arbitral award may be included as part of a petition to confirm the arbitral award or as a petition to confirm that award. Rule 11.3. Venue. - The petition for confirmation, correction/modification or vacation of a domestic arbitral award may be filed with Regional Trial Court having jurisdiction over the place in which one of the parties is doing business, where any of the parties reside or where arbitration proceedings were conducted.

e. The arbitral 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. The award may also be vacated on any or all of the following grounds: a. The arbitration agreement did not exist, or is invalid for any ground for the revocation of a contract or is otherwise unenforceable; or b. A party to arbitration is a minor or a person judicially declared to be incompetent. The petition to vacate an arbitral award on the ground that the party to arbitration is a minor or a person judicially declared to be incompetent shall be filed only on behalf of the minor or incompetent and shall allege that (a) the other party to arbitration had knowingly entered into a submission or agreement with such minor or incompetent, or (b) the submission to arbitration was made by a guardian or guardian ad litem who was not authorized to do so by a competent court. In deciding the petition to vacate the arbitral award, the court shall disregard any other ground than those enumerated above. (B) To correct/modify an arbitral award. - The Court may correct/modify or order the arbitral tribunal to correct/modify the arbitral award in the following cases: a. Where there was an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in th e award;

Rule 11.4. Grounds. - (A) To vacate an arbitral award. The arbitral award may be vacated on the following grounds:

b. Where the arbitrators have awarded upon a matter not submitted to them, not affecting the merits of the decision upon the matter submitted;

a. The arbitral award was procured corruption, fraud or other undue means;

through

c. Where the arbitrators have omitted to resolve an issue submitted to them for resolution; or

b. There was evident partiality or corruption in the arbitral tribunal or any of its members;

d. Where the award is imperfect in a matter of form not affecting the merits of the controversy, and if it had been a commissioner’s report, the defect could have been amended or disregarded by the Court.

c. The arbitral tribunal was guilty of misconduct or any form of misbehavior that has materially prejudiced the rights of any party such as refusing to postpone a hearing upon sufficient cause shown or to hear evidence pertinent and material to the controversy; d. One or more of the arbitrators was disqualified to act as such under the law and willfully refrained from disclosing such disqualification; or

Rule 11.5. Form of petition. - An application to vacate an arbitral award shall be in the form of a petition to vacate or as a petition to vacate in opposition to a petition to confirm the same award. An application to correct/modify an arbitral award may be included in a petition to confirm an arbitral


award or in a petition to vacate in opposition to confirm the same award. When a petition to confirm an arbitral award is pending before a court, the party seeking to vacate or correct/modify said award may only apply for those reliefs through a petition to vacate or correct/modify the award in opposition to the petition to confirm the award provided that such petition to vacate or correct/modify is filed within thirty (30) days from his receipt of the award. A petition to vacate or correct/modify an arbitral award filed in another court or in a separate case before the same court shall be dismissed, upon appropriate motion, as a violation of the rule against forum-shopping. When a petition to vacate or correct/modify an arbitral award is pending before a court, the party seeking to confirm said award may only apply for that relief through a petition to confirm the same award in opposition to the petition to vacate or correct/modify the award. A petition to confirm or correct/modify an arbitral award filed as separate proceeding in another court or in a different case before the same court shall be dismissed, upon appropriate motion, as a violation of the rule against forum shopping. As an alternative to the dismissal of a second petition for confirmation, vacation or correction/modification of an arbitral award filed in violation of the non-forum shopping rule, the court or courts concerned may allow the consolidation of the two proceedings in one court and in one case. Where the petition to confirm the award and petition to vacate or correct/modify were simultaneously filed by the parties in the same court or in different courts in the Philippines, upon motion of either party, the court may order the consolidation of the two cases before either court. In all instances, the petition must be verified by a person who has knowledge of the jurisdictional facts. Rule 11.6. Contents of petition. - The petition must state the following: a. The addresses of the parties and any change thereof; b. The jurisdictional issues raised by a party during arbitration proceedings; c. The grounds relied upon by the parties in seeking the vacation of the arbitral award whether the petition is a petition for the vacation or setting aside of the arbitral award or a petition in opposition to a petition to confirm the award; and

d. A statement of the date of receipt of the arbitral award and the circumstances under which it was received by the petitioner. Apart from other submissions, the petitioner must attach to the petition the following: a. An authentic copy of the arbitration agreement; b. An authentic copy of the arbitral award; c. A certification against forum shopping executed by the applicant in accordance with Section 5 of Rule 7 of the Rules of Court; and d. An authentic copy or authentic copies of the appointment of an arbitral tribunal. Rule 11.7. Notice. - Upon finding that the petition filed under this Rule is sufficient both in form and in substance, the Court shall cause notice and a copy of the petition to be delivered to the respondent allowing him to file a comment or opposition thereto within fifteen (15) days from receipt of the petition. In lieu of an opposition, the respondent may file a petition in opposition to the petition. The petitioner may within fifteen (15) days from receipt of the petition in opposition thereto file a reply. Rule 11.8. Hearing. - If the Court finds from the petition or petition in opposition thereto that there are issues of fact, it shall require the parties, within a period of not more than fifteen (15) days from receipt of the order, to simultaneously submit the affidavits of all of their witnesses and reply affidavits within ten (10) days from receipt of the affidavits to be replied to. There shall be attached to the affidavits or reply affidavits documents relied upon in support of the statements of fact in such affidavits or reply affidavits. If the petition or the petition in opposition thereto is one for vacation of an arbitral award, the interested party in arbitration may oppose the petition or the petition in opposition thereto for the reason that the grounds cited in the petition or the petition in opposition thereto, assuming them to be true, do not affect the merits of the case and may be cured or remedied. Moreover, the interested party may request the court to suspend the proceedings for vacation for a period of time and to direct the arbitral tribunal to reopen and conduct a new hearing and take such other action as will eliminate the grounds for vacation of the award. The opposition shall be supported by a brief of legal arguments to show the existence of a sufficient legal basis for the opposition. If the ground of the petition to vacate an arbitral award is that the arbitration agreement did not exist, is


invalid or otherwise unenforceable, and an earlier petition for judicial relief under Rule 3 had been filed, a copy of such petition and of the decision or final order of the court shall be attached thereto. But if the ground was raised before the arbitral tribunal in a motion to dismiss filed not later than the submission of its answer, and the arbitral tribunal ruled in favor of its own jurisdiction as a preliminary question which was appealed by a party to the Regional Trial Court, a copy of the order, ruling or preliminary award or decision of the arbitral tribunal, the appeal therefrom to the Court and the order or decision of the Court shall all be attached to the petition. If the ground of the petition is that the petitioner is an infant or a person judicially declared to be incompetent, there shall be attached to the petition certified copies of documents showing such fact. In addition, the petitioner shall show that even if the submission or arbitration agreement was entered into by a guardian or guardian ad litem, the latter was not authorized by a competent court to sign such the submission or arbitration agreement. If on the basis of the petition, the opposition, the affidavits and reply affidavits of the parties, the court finds that there is a need to conduct an oral hearing, the court shall set the case for hearing. This case shall have preference over other cases before the court, except criminal cases. During the hearing, the affidavits of witnesses shall take the place of their direct testimonies and they shall immediately be subject to cross-examination thereon. The Court shall have full control over the proceedings in order to ensure that the case is heard without undue delay. Rule 11.9. Court action. - Unless a ground to vacate an arbitral award under Rule 11.5 above is fully established, the court shall confirm the award . An arbitral award shall enjoy the presumption that it was made and released in due course of arbitration and is subject to confirmation by the court In resolving the petition or petition in opposition thereto in accordance with these Special ADR Rules, the court shall either confirm or vacate the arbitral award. The court shall not disturb the arbitral tribunal’s determination of facts and/or interpretation of law. In a petition to vacate an award or in petition to vacate an award in opposition to a petition to confirm the award, the petitioner may simultaneously apply with the Court to refer the case back to the same arbitral tribunal for the purpose of making a new or revised award or to direct a new hearing, or in the appropriate case, order the new hearing before a new arbitral tribunal, the members of which shall be chosen in the

manner provided in the arbitration agreement or submission, or the law. In the latter case, any provision limiting the time in which the arbitral tribunal may make a decision shall be deemed applicable to the new arbitral tribunal. In referring the case back to the arbitral tribunal or to a new arbitral tribunal pursuant to Rule 24 of Republic Act No. 876, the court may not direct it to revise its award in a particular way, or to revise its findings of fact or conclusions of law or otherwise encroach upon the independence of an arbitral tribunal in the making of a final award. RULE 12: RECOGNITION AND ENFORCEMENT OR SETTING ASIDE OF AN INTERNATIONALCOMMERCIAL ARBITRATION AWARD Rule 12.1. Who may request recognition and enforcement or setting aside. - Any party to an international commercial arbitration in the Philippines may petition the proper court to recognize and enforce or set aside an arbitral award. Rule 12.2. When to file petition. - (A) Petition to recognize and enforce. - The petition for enforcement and recognition of an arbitral award may be filed anytime from receipt of the award. If, however, a timely petition to set aside an arbitral award is filed, the opposing party must file therein and in opposition thereto the petition for recognition and enforcement of the same award within the period for filing an opposition. (B) Petition to set aside. - The petition to set aside an arbitral award may only be filed within three (3) months from the time the petitioner receives a copy thereof. If a timely request is made with the arbitral tribunal for correction, interpretation or additional award, the three (3) month period shall be counted from the time the petitioner receives the resolution by the arbitral tribunal of that request. A petition to set aside can no longer be filed after the lapse of the three (3) month period. The dismissal of a petition to set aside an arbitral award for being time barred shall not automatically result in the approval of the petition filed therein and in opposition thereto for recognition and enforcement of the same award. Failure to file a petition to set aside shall preclude a party from raising grounds to resist enforcement of the award. Rule 12.3. Venue. - A petition to recognize and enforce or set aside an arbitral award may, at the option of the petitioner, be filed with the Regional Trial Court: (a) where arbitration proceedings were conducted; (b) where any of the assets to be attached or levied upon is


located; (c) where the act to be enjoined will be or is being performed; (d) where any of the parties to arbitration resides or has its place of business; or (e) in the National Capital Judicial Region. Rule 12.4. Grounds to set aside or resist enforcement. The court may set aside or refuse the enforcement of the arbitral award only if: a. The party making the application furnishes proof that: (i). A party to the arbitration agreement was under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereof, under Philippine law; or (ii). The party making the application to set aside or resist enforcement was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iii). The award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration; provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside or only that part of the award which contains decisions on matters submitted to arbitration may be enforced; or (iv). The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of Philippine law from which the parties cannot derogate, or, failing such agreement, was not in accordance with Philippine law; b. The court finds that: (i). The subject-matter of the dispute is not capable of settlement by arbitration under the law of the Philippines; or (ii). The recognition or enforcement of the award would be contrary to public policy. In deciding the petition, the Court shall disregard any other ground to set aside or enforce the arbitral award other than those enumerated above. The petition to set-aside or a pleading resisting the enforcement of an arbitral award on the ground that a party was a minor or an incompetent shall be filed only on behalf of the minor or incompetent and shall allege

that (a) the other party to arbitration had knowingly entered into a submission or agreement with such minor or incompetent, or (b) the submission to arbitration was made by a guardian or guardian ad litem who was not authorized to do so by a competent court. Rule 12.5. Exclusive recourse against arbitral award. Recourse to a court against an arbitral award shall be made only through a petition to set aside the arbitral award and on grounds prescribed by the law that governs international commercial arbitration. Any other recourse from the arbitral award, such as by appeal or petition for review or petition for certiorari or otherwise, shall be dismissed by the court. Rule 12.6. Form. - The application to recognize and enforce or set aside an arbitral award, whether made through a petition to recognize and enforce or to set aside or as a petition to set aside the award in opposition thereto, or through a petition to set aside or petition to recognize and enforce in opposition thereto, shall be verified by a person who has personal knowledge of the facts stated therein. When a petition to recognize and enforce an arbitral award is pending, the application to set it aside, if not yet time-barred, shall be made through a petition to set aside the same award in the same proceedings. When a timely petition to set aside an arbitral award is filed, the opposing party may file a petition for recognition and enforcement of the same award in opposition thereto. Rule 12.7. Contents of petition. - (A) Petition to recognize and enforce. - The petition to recognize and enforce or petition to set aside in opposition thereto, or petition to set aside or petition to recognize and enforce in opposition thereto, shall state the following: a. The addresses of record, or any change thereof, of the parties to arbitration; b. A statement that the arbitration agreement or submission exists; c. The names of the arbitrators and proof of their appointment; d. A statement that an arbitral award was issued and when the petitioner received it; and e. The relief sought. Apart from other submissions, the petitioner shall attach to the petition the following: a. An authentic copy of the arbitration agreement;


b. An authentic copy of the arbitral award; c. A verification and certification against forum shopping executed by the applicant in accordance with Sections 4 and 5 of Rule 7 of the Rules of Court; and d. An authentic copy or authentic copies of the appointment of an arbitral tribunal. (B) Petition to set aside. - The petition to set aside or petition to set aside in opposition to a petition to recognize and enforce an arbitral award in international commercial arbitration shall have the same contents as a petition to recognize and enforce or petition to recognize and enforce in opposition to a petition to set aside an arbitral award. In addition, the said petitions should state the grounds relied upon to set it aside. Further, if the ground of the petition to set aside is that the petitioner is a minor or found incompetent by a court, there shall be attached to the petition certified copies of documents showing such fact. In addition, the petitioner shall show that even if the submission or arbitration agreement was entered into by a guardian or guardian ad litem, the latter was not authorized by a competent court to sign such the submission or arbitration agreement. In either case, if another court was previously requested to resolve and/or has resolved, on appeal, the arbitral tribunal’s preliminary determination in favor of its own jurisdiction, the petitioner shall apprise the court before which the petition to recognize and enforce or set aside is pending of the status of the appeal or its resolution. Rule 12.8. Notice. - Upon finding that the petition filed under this Rule is sufficient both in form and in substance, the court shall cause notice and a copy of the petition to be delivered to the respondent directing him to file an opposition thereto within fifteen (15) days from receipt of the petition. In lieu of an opposition, the respondent may file a petition to set aside in opposition to a petition to recognize and enforce, or a petition to recognize and enforce in opposition to a petition to set aside. The petitioner may within fifteen (15) days from receipt of the petition to set aside in opposition to a petition to recognize and enforce, or from receipt of the petition to recognize and enforce in opposition to a petition to set aside, file a reply. Rule 12.9. Submission of documents. - If the court finds that the issue between the parties is mainly one of law, the parties may be required to submit briefs of legal arguments, not more than fifteen (15) days from

receipt of the order, sufficiently discussing the legal issues and the legal basis for the relief prayed for by each of them. If the court finds from the petition or petition in opposition thereto that there are issues of fact relating to the ground(s) relied upon for the court to set aside, it shall require the parties within a period of not more than fifteen (15) days from receipt of the order simultaneously to submit the affidavits of all of their witnesses and reply affidavits within ten (10) days from receipt of the affidavits to be replied to. There shall be attached to the affidavits or reply affidavits, all documents relied upon in support of the statements of fact in such affidavits or reply affidavits. Rule 12.10. Hearing. - If on the basis of the petition, the opposition, the affidavits and reply affidavits of the parties, the court finds that there is a need to conduct an oral hearing, the court shall set the case for hearing. This case shall have preference over other cases before the court, except criminal cases. During the hearing, the affidavits of witnesses shall take the place of their direct testimonies and they shall immediately be subject to cross-examination thereon. The court shall have full control over the proceedings in order to ensure that the case is heard with out undue delay. Rule 12.11. Suspension of proceedings to set aside. The court when asked to set aside an arbitral award may, where appropriate and upon request by a party, suspend the proceedings for a period of time determined by it to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal’s opinion will eliminate the grounds for setting aside. The court, in referring the case back to the arbitral tribunal may not direct it to revise its award in a particular way, or to revise its findings of fact or conclusions of law or otherwise encroach upon the independence of an arbitral tribunal in the making of a final award. The court when asked to set aside an arbitral award may also, when the preliminary ruling of an arbitral tribunal affirming its jurisdiction to act on the matter before it had been appealed by the party aggrieved by such preliminary ruling to the court, suspend the proceedings to set aside to await the ruling of the court on such pending appeal or, in the alternative, consolidate the proceedings to set aside with the earlier appeal. Rule 12.12. Presumption in favor of confirmation. - It is presumed that an arbitral award was made and released in due course and is subject to enforcement by the court, unless the adverse party is able to establish a ground for setting aside or not enforcing an arbitral award.


Rule 12.13. Judgment of the court. - Unless a ground to set aside an arbitral award under Rule 12.4 above is fully established, the court shall dismiss the petition. If, in the same proceedings, there is a petition to recognize and enforce the arbitral award filed in opposition to the petition to set aside, the court shall recognize and enforce the award. In resolving the petition or petition in opposition thereto in accordance with the Special ADR Rules, the court shall either set aside or enforce the arbitral award. The court shall not disturb the arbitral tribunal’s determination of facts and/or interpretation of law. Rule 12.14. Costs. - Unless otherwise agreed upon by the parties in writing, at the time the case is submitted to the court for decision, the party praying for recognition and enforcement or setting aside of an arbitral award shall submit a statement under oath confirming the costs he has incurred only in the proceedings for such recognition and enforcement or setting aside. The costs shall include the attorney’s fees the party has paid or is committed to pay to his counsel of record. The prevailing party shall be entitled to an award of costs, which shall include reasonable attorney’s fees of the prevailing party against the unsuccessful party. The court shall determine the reasonableness of the claim for attorney’s fees. RULE 13: RECOGNITION AND ENFORCEMENT OF A FOREIGN ARBITRAL AWARD Rule 13.1. Who may request recognition and enforcement. - Any party to a foreign arbitration may petition the court to recognize and enforce a foreign arbitral award. Rule 13.2. When to petition. - At any time after receipt of a foreign arbitral award, any party to arbitration may petition the proper Regional Trial Court to recognize and enforce such award. Rule 13.3. Venue. - The petition to recognize and enforce a foreign arbitral award shall be filed, at the option of the petitioner, with the Regional Trial Court (a) where the assets to be attached or levied upon is located, (b) where the act to be enjoined is being performed, (c) in the principal place of business in the Philippines of any of the parties, (d) if any of the parties is an individual, where any of those individuals resides, or (e) in the National Capital Judicial Region. Rule 13.4. Governing law and grounds to refuse recognition and enforcement. - The recognition and enforcement of a foreign arbitral award shall be

governed by the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention") and this Rule. The court may, upon grounds of comity and reciprocity, recognize and enforce a foreign arbitral award made in a country that is not a signatory to the New York Convention as if it were a Convention Award. A Philippine court shall not set aside a foreign arbitral award but may refuse it recognition and enforcement on any or all of the following grounds: a. The party making the application to refuse recognition and enforcement of the award furnishes proof that: (i). A party to the arbitration agreement was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereof, under the law of the country where the award was made; or (ii). The party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iii). The award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration; provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside; or (iv). The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where arbitration took place; or (v). The award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which that award was made; or b. The court finds that: (i). The subject-matter of the dispute is not capable of settlement or resolution by arbitration under Philippine law; or (ii). The recognition or enforcement of the award would be contrary to public policy.


The court shall disregard any ground for opposing the recognition and enforcement of a foreign arbitral award other than those enumerated above. Rule 13.5. Contents of petition. - The petition shall state the following: a. The addresses of the parties to arbitration; b. In the absence of any indication in the award, the country where the arbitral award was made and whether such country is a signatory to the New York Convention; and c. The relief sought. Apart from other submissions, the petition shall have attached to it the following: a. An authentic copy of the arbitration agreement; and b. An authentic copy of the arbitral award. If the foreign arbitral award or agreement to arbitrate or submission is not made in English, the petitioner shall also attach to the petition a translation of these documents into English. The translation shall be certified by an official or sworn translator or by a diplomatic or consular agent. Rule 13.6. Notice and opposition. - Upon finding that the petition filed under this Rule is sufficient both in form and in substance, the court shall cause notice and a copy of the petition to be delivered to the respondent allowing him to file an opposition thereto within thirty (30) days from receipt of the notice and petition. Rule 13.7. Opposition. - The opposition shall be verified by a person who has personal knowledge of the facts stated therein. Rule 13.8. Submissions. - If the court finds that the issue between the parties is mainly one of law, the parties may be required to submit briefs of legal arguments, not more than thirty (30) days from receipt of the order, sufficiently discussing the legal issues and the legal bases for the relief prayed for by each other. If, from a review of the petition or opposition, there are issues of fact relating to the ground/s relied upon for the court to refuse enforcement, the court shall, motu proprio or upon request of any party, require the parties to simultaneously submit the affidavits of all of their witnesses within a period of not less than fifteen (15) days nor more than thirty (30) days from receipt of the order. The court may, upon the request of any party, allow the submission of reply affidavits within a period of not less than fifteen (15) days nor more than thirty (30) days from receipt of the order granting said

request. There shall be attached to the affidavits or reply affidavits all documents relied upon in support of the statements of fact in such affidavits or reply affidavits. Rule 13.9. Hearing. - The court shall set the case for hearing if on the basis of the foregoing submissions there is a need to do so. The court shall give due priority to hearings on petitions under this Rule. During the hearing, the affidavits of witnesses shall take the place of their direct testimonies and they shall immediately be subject to cross-examination. The court shall have full control over the proceedings in order to ensure that the case is heard without undue delay. Rule 13.10. Adjournment/deferment of decision on enforcement of award. - The court before which a petition to recognize and enforce a foreign arbitral award is pending, may adjourn or defer rendering a decision thereon if, in the meantime, an application for the setting aside or suspension of the award has been made with a competent authority in the country where the award was made. Upon application of the petitioner, the court may also require the other party to give suitable security. Rule 13.11. Court action. - It is presumed that a foreign arbitral award was made and released in due course of arbitration and is subject to enforcement by the cou rt. The court shall recognize and enforce a foreign arbitral award unless a ground to refuse recognition or enforcement of the foreign arbitral award under this rule is fully established. The decision of the court recognizing and enforcing a foreign arbitral award is immediately executory. In resolving the petition for recognition and enforcement of a foreign arbitral award in accordance with these Special ADR Rules, the court shall either [a] recognize and/or enforce or [b] refuse to recognize and enforce the arbitral award. The court shall not disturb the arbitral tribunal’s determination of facts and/or interpretation of law. Rule 13.12. Recognition and enforcement of nonconvention award. - The court shall, only upon grounds provided by these Special ADR Rules, recognize and enforce a foreign arbitral award made in a country not a signatory to the New York Convention when such country extends comity and reciprocity to awards made in the Philippines. If that country does not extend comity and reciprocity to awards made in the Philippines, the court may nevertheless treat such award as a foreign judgment enforceable as such under Rule 39, Section 48, of the Rules of Court.


PART III PROVISIONS SPECIFIC TO MEDIATION RULE 14: GENERAL PROVISIONS Rule 14.1. Application of the rules on arbitration. Whenever applicable and appropriate, the pertinent rules on arbitration shall be applied in proceedings before the court relative to a dispute subject to mediation. RULE 15: DEPOSIT AND ENFORCEMENT OF MEDIATED SETTLEMENT AGREEMENTS Rule 15.1. Who makes a deposit. - Any party to a mediation that is not court-annexed may deposit with the court the written settlement agreement, which resulted from that mediation. Rule 15.2. When deposit is made. - At any time after an agreement is reached, the written settlement agreement may be deposited. Rule 15.3. Venue. - The written settlement agreement may be jointly deposited by the parties or deposited by one party with prior notice to the other party/ies with the Clerk of Court of the Regional Trial Court (a) where the principal place of business in the Philippines of any of the parties is located; (b) if any of the parties is an individual, where any of those individuals resides; or (c) in the National Capital Judicial Region. Rule 15.4. Registry Book. - The Clerk of Court of each Regional Trial Court shall keep a Registry Book that shall chronologically list or enroll all the mediated settlement agreements/settlement awards that are deposited with the court as well as the names and address of the parties thereto and the date of enrollment and shall issue a Certificate of Deposit to the party that made the deposit. Rule 15.5. Enforcement of mediated settlement agreement. - Any of the parties to a mediated settlement agreement, which was deposited with the Clerk of Court of the Regional Trial Court, may, upon breach thereof, file a verified petition with the same court to enforce said agreement. Rule 15.6. Contents of petition. - The verified petition shall: a. Name and designate, as petitioner or respondent, all parties to the mediated settlement agreement and those who may be affected by it; b. State the following: (i). The addresses of the petitioner and respondents; and

(ii). The ultimate facts that would show that the adverse party has defaulted to perform its obligation under said agreement; and c. Have attached to it the following: (i). An authentic copy of the mediated settlement agreement; and (ii). Certificate of Deposit showing that the mediated settlement agreement was deposited with the Clerk of Court. Rule 15.7. Opposition. - The adverse party may file an opposition, within fifteen (15) days from receipt of notice or service of the petition, by submitting written proof of compliance with the mediated settlement agreement or such other affirmative or negative defenses it may have. Rule 15.8. Court action. - After a summary hearing, if the court finds that the agreement is a valid mediated settlement agreement, that there is no merit in any of the affirmative or negative defenses raised, and the respondent has breached that agreement, in whole or in part, the court shall order the enforcement thereof; otherwise, it shall dismiss the petition. PART IV PROVISIONS SPECIFIC ARBITRATION

TO

CONSTRUCTION

RULE 16: GENERAL PROVISIONS Rule 16.1. Application of the rules on arbitration. Whenever applicable and appropriate, the rules on arbitration shall be applied in proceedings before the court relative to a dispute subject to construction arbitration. RULE 17: REFERRAL TO CIAC Rule 17.1. Dismissal of action. - A Regional Trial Court before which a construction dispute is filed shall, upon becoming aware that the parties have entered into an arbitration agreement, motu proprio or upon motion made not later than the pre-trial, dismiss the case and refer the parties to arbitration to be conducted by the Construction Industry Arbitration Commission (CIAC), unless all parties to arbitration, assisted by their respective counsel, submit to the court a written agreement making the court, rather than the CIAC, the body that would exclusively resolve the dispute. Rule 17.2. Form and contents of motion. - The request for dismissal of the civil action and referral to arbitration shall be through a verified motion that shall (a) contain a statement showing that the dispute is a


construction dispute; and (b) be accompanied by proof of the existence of the arbitration agreement. If the arbitration agreement or other document evidencing the existence of that agreement is already part of the record, those documents need not be submitted to the court provided that the movant has cited in the motion particular references to the records where those documents may be found. The motion shall also contain a notice of hearing addressed to all parties and shall specify the date and time when the motion will be heard, which must not be later than fifteen (15) days after the filing of the motion. The movant shall ensure receipt by all parties of the motion at least three days before the date of the hearing. Rule 17.3. Opposition. - Upon receipt of the motion to refer the dispute to arbitration by CIAC, the other party may file an opposition to the motion on or before the day such motion is to be heard. The opposition shall clearly set forth the reasons why the court should not dismiss the case. Rule 17.4. Hearing. - The court shall hear the motion only once and for the purpose of clarifying relevant factual and legal issues. Rule 17.5. Court action. - If the other parties fail to file their opposition on or before the day of the hearing, the court shall motu proprio resolve the motion only on the basis of the facts alleged in the motion.

b. Not all of the parties to the civil action are bound by the arbitration agreement and referral to arbitration would result in multiplicity of suits; c. The issues raised in the civil action could be speedily and efficiently resolved in its entirety by the Court rather than in arbitration; d. Referral to arbitration does not appear to be the most prudent action; or e. Dismissal of the civil action would prejudice the rights of the parties to the civil action who are not bound by the arbitration agreement. The court may, however, issue an order directing the inclusion in arbitration of those parties who are bound by the arbitration agreement directly or by reference thereto pursuant to Section 34 of Republic Act No. 9285. Furthermore, the court shall issue an order directing the case to proceed with respect to the parties not bound by the arbitration agreement. Rule 17.8. Referral - If the parties manifest that they have agreed to submit all or part of their dispute pending with the court to arbitration by CIAC, the court shall refer them to CIAC for arbitration. PART V PROVISIONS SPECIFIC TO OTHER FORMS OF ADR RULE 18: GENERAL PROVISIONS

After hearing, the court shall dismiss the civil action and refer the parties to arbitration if it finds, based on the pleadings and supporting documents submitted by the parties, that there is a valid and enforceable arbitration agreement involving a construction dispute. Otherwise, the court shall proceed to hear the case.

Rule 18.1. Applicability of rules to other forms of ADR. - This rule governs the procedure for matters brought before the court involving the following forms of ADR: a. Early neutral evaluation; b. Neutral evaluation;

All doubts shall be resolved in favor of the existence of a construction dispute and the arbitration agreement.

c. Mini-trial;

Rule 17.6. Referral immediately executory. - An order dismissing the case and referring the dispute to arbitration by CIAC shall be immediately executory.

d. Mediation-arbitration;

Rule 17.7. Multiple actions and parties. - The court shall not decline to dismiss the civil action and make a referral to arbitration by CIAC for any of the following reasons:

f. Any other ADR form.

a. Not all of the disputes subject of the civil action may be referred to arbitration;

e. A combination thereof; or

Rule 18.2. Applicability of the rules on mediation. - If the other ADR form/process is more akin to mediation (i.e., the neutral third party merely assists the parties in reaching a voluntary agreement), the herein rules on mediation shall apply. Rule 18.3. Applicability of rules on arbitration.-If the other ADR form/process is more akin to arbitration


(i.e., the neutral third party has the power to make a binding resolution of the dispute), the herein rules on arbitration shall apply. Rule 18.4. Referral. - If a dispute is already before a court, either party may before and during pre-trial, file a motion for the court to refer the parties to other ADR forms/processes. At any time during court proceedings, even after pre-trial, the parties may jointly move for suspension of the action pursuant to Article 2030 of the Civil Code of the Philippines where the possibility of compromise is shown. Rule 18.5. Submission of settlement agreement. Either party may submit to the court, before which the case is pending, any settlement agreement following a neutral or an early neutral evaluation, mini-trial or mediation-arbitration. PART VI MOTION FOR RECONSIDERATION, APPEAL AND CERTIORARI RULE 19: MOTION FOR APPEAL AND CERTIORARI

RECONSIDERATION,

j. Setting aside an international commercial arbitral award; k. Dismissing the petition to set aside an international commercial arbitral award, even if the court does not recognize and/or enforce the same; l. Recognizing and/or enforcing, or dismissing a petition to recognize and/or enforce an international commercial arbitral award; m. Declining a request for assistance in taking evidence; n. Adjourning or deferring a ruling on a petition to set aside, recognize and/or enforce an international commercial arbitral award; o. Recognizing and/or enforcing a foreign arbitral award, or refusing recognition and/or enforcement of the same; and p. Granting or dismissing a petition to enforce a deposited mediated settlement agreement.

A. MOTION FOR RECONSIDERATION

No motion for reconsideration shall be allowed from the following rulings of the Regional Trial Court:

Rule 19.1. Motion for reconsideration, when allowed. A party may ask the Regional Trial to reconsider its ruling on the following:

a. A prima facie determination upholding the existence, validity or enforceability of an arbitration agreement pursuant to Rule 3.1 (A);

a. That the arbitration agreement is inexistent, invalid or unenforceable pursuant to Rule 3.10 (B);

b. An order referring the dispute to arbitration; c. An order appointing an arbitrator;

b. Upholding or reversing the arbitral tribunal’s jurisdiction pursuant to Rule 3.19;

d. Any ruling on the challenge to the appointment of an arbitrator;

c. Denying a request to refer the parties to arbitration; d. Granting or denying a party an interim measure of protection;

e. Any order resolving the issue of the termination of the mandate of an arbitrator; and f. An order granting assistance in taking evidence.

e. Denying a petition for the appointment of an arbitrator; f. Refusing to grant assistance in takin g evidence; g. Enjoining or refusing to enjoin a person from divulging confidential information; h. Confirming, vacating or correcting a domestic arbitral award; i. Suspending the proceedings to set aside an international commercial arbitral award and referring the case back to the arbitral tribunal;

Rule 19.2. When to move for reconsideration. - A motion for reconsideration may be filed with the Regional Trial Court within a non-extendible period of fifteen (15) days from receipt of the questioned ruling or order. Rule 19.3. Contents and notice. - The motion shall be made in writing stating the ground or grounds therefor and shall be filed with the court and served upon the other party or parties. Rule 19.4. Opposition or comment. - Upon receipt of the motion for reconsideration, the other party or parties shall have a non-extendible period of fifteen (15) days to file his opposition or comment.


Rule 19.5. Resolution of motion. - A motion for reconsideration shall be resolved within thirty (30) days from receipt of the opposition or comment or upon the expiration of the period to file such opposition or comment. Rule 19.6. No second motion for reconsideration. - No party shall be allowed a second motion for reconsideration.

and law, as the court cannot substitute its judgment for that of the arbitral tribunal. Rule 19.11. Rule on judicial review of foreign arbitral award. - The court can deny recognition and enforcement of a foreign arbitral award only upon the grounds provided in Article V of the New York Convention, but shall have no power to vacate or set aside a foreign arbitral award. C. APPEALS TO THE COURT OF APPEALS

B. GENERAL CERTIORARI

PROVISIONS

ON

APPEAL

AND

Rule 19.7. No appeal or certiorari on the merits of an arbitral award. - An agreement to refer a dispute to arbitration shall mean that the arbitral award shall be final and binding. Consequently, a party to an arbitration is precluded from filing an appeal or a petition for certiorari questioning the merits of an arbitral award.

Rule 19.12. Appeal to the Court of Appeals. - An appeal to the Court of Appeals through a petition for review under this Special Rule shall only be allowed from the following final orders of the Regional Trial Court: a. Granting or denying an interim measure of protection; b. Denying a petition for appointment of an arbitrator;

Rule 19.8. Subject matter and governing rules. - The remedy of an appeal through a petition for review or the remedy of a special civil action of certiorari from a decision of the Regional Trial Court made under the Special ADR Rules shall be allowed in the instances, and instituted only in the manner, provided under this Rule.

c. Denying a petition for assistance in taking evidence;

Rule 19.9. Prohibited alternative remedies. - Where the remedies of appeal and certiorari are specifically made available to a party under the Special ADR Rules, recourse to one remedy shall preclude recourse to the other.

f. Setting aside an international commercial arbitration award;

Rule 19.10. Rule on judicial review on arbitration in the Philippines. - As a general rule, the court can only vacate or set aside the decision of an arbitral tribunal upon a clear showing that the award suffers from any of the infirmities or grounds for vacating an arbitral award under Section 24 of Republic Act No. 876 or under Rule 34 of the Model Law in a domestic arbitration, or for setting aside an award in an international arbitration under Article 34 of the Model Law, or for such other grounds provided under these Special Rules. If the Regional Trial Court is asked to set aside an arbitral award in a domestic or international arbitration on any ground other than those provided in the Special ADR Rules, the court shall entertain such ground for the setting aside or non-recognition of the arbitral award only if the same amounts to a violation of public policy. The court shall not set aside or vacate the award of the arbitral tribunal merely on the ground that the arbitral tribunal committed errors of fact, or of law, or of fact

d. Enjoining or refusing to enjoin a person from divulging confidential information; e. Confirming, vacating or correcting/modifying a domestic arbitral award;

g. Dismissing the petition to set aside an international commercial arbitration award even if the court does not decide to recognize or enforce such award; h. Recognizing and/or enforcing an international commercial arbitration award; i. Dismissing a petition to enforce an international commercial arbitration award; j. Recognizing and/or enforcing a foreign arbitral award; k. Refusing recognition and/or enforcement of a foreign arbitral award; l. Granting or dismissing a petition to enforce a deposited mediated settlement agreement; and m. Reversing the ruling of the arbitral tribunal upholding its jurisdiction. Rule 19.13. Where to appeal. - An appeal under this Rule shall be taken to the Court of Appeals within the period and in the manner herein provided.


Rule 19.14. When to appeal. - The petition for review shall be filed within fifteen (15) days from notice of the decision of the Regional Trial Court or the denial of the petitioner’s motion for reconsideration. Rule 19.15. How appeal taken. - Appeal shall be taken by filing a verified petition for review in seven (7) legible copies with the Court of Appeals, with proof of service of a copy thereof on the adverse party and on the Regional Trial Court. The original copy of the petition intended for the Court of Appeals shall be marked original by the petitioner. Upon the filing of the petition and unless otherwise prescribed by the Court of Appeals, the petitioner shall pay to the clerk of court of the Court of Appeals docketing fees and other lawful fees of P3,500.00 and deposit the sum of P500.00 for costs. Exemption from payment of docket and other lawful fees and the deposit for costs may be granted by the Court of Appeals upon a verified motion setting forth valid grounds therefor. If the Court of Appeals denies the motion, the petitioner shall pay the docketing and other lawful fees and deposit for costs within fifteen days from the notice of the denial. Rule 19.16. Contents of the Petition. - The petition for review shall (a) state the full names of the parties to the case, without impleading the court or agencies either as petitioners or respondent, (b) contain a concise statement of the facts and issues involved and the grounds relied upon for the review, (c) be accompanied by a clearly legible duplicate original or a certified true copy of the decision or resolution of the Regional Trial Court appealed from, together with certified true copies of such material portions of the record referred to therein and other supporting papers, and (d) contain a sworn certification against forum shopping as provided in the Rules of Court. The petition shall state the specific material dates showing that it was filed within the period fixed herein. Rule 19.17. Effect of failure to comply with requirements. - The court shall dismiss the petition if it fails to comply with the foregoing requirements regarding the payment of the docket and other lawful fees, the deposit for costs, proof of service of the petition, the contents and the documents, which should accompany the petition. Rule 19.18. Action on the petition. - The Court of Appeals may require the respondent to file a comment on the petition, not a motion to dismiss, within ten (10) days from notice, or dismiss the petition if it finds, upon consideration of the grounds alleged and the legal briefs submitted by the parties, that the petition does not appear to be prima facie meritorious.

Rule 19.19. Contents of Comment. - The comment shall be filed within ten (10) days from notice in seven (7) legible copies and accompanied by clearly legible certified true copies of such material portions of the record referred to therein together with other supporting papers. The comment shall (a) point out insufficiencies or inaccuracies in petitioner’s statement of facts and issues, and (b) state the reasons why the petition should be denied or dismissed. A copy thereof shall be served on the petitioner, and proof of such service shall be filed with the Court of A ppeals. Rule 19.20. Due course. - If upon the filing of a comment or such other pleading or documents as may be required or allowed by the Court of Appeals or upon the expiration of the period for the filing thereof, and on the basis of the petition or the records, the Court of Appeals finds prima facie that the Regional Trial Court has committed an error that would warrant reversal or modification of the judgment, final order, or resolution sought to be reviewed, it may give due course to the petition; otherwise, it shall dismiss the same. Rule 19.21. Transmittal of records. - Within fifteen (15) days from notice that the petition has been given due course, the Court of Appeals may require the court or agency concerned to transmit the original or a legible certified true copy of the entire record of the proceeding under review. The record to be transmitted may be abridged by agreement of all parties to the proceeding. The Court of Appeals may require or permit subsequent correction of or addition to the record. Rule 19.22. Effect of appeal. - The appeal shall not stay the award, judgment, final order or resolution sought to be reviewed unless the Court of Appeals directs otherwise upon such terms as it may deem just. Rule 19.23. Submission for decision. - If the petition is given due course, the Court of Appeals may set the case for oral argument or require the parties to submit memoranda within a period of fifteen (15) days from notice. The case shall be deemed submitted for decision upon the filing of the last pleading or memorandum required by the Court of Appeals. The Court of Appeals shall render judgment within sixty (60) days from the time the case is submitted for decision. Rule 19.24. Subject of appeal restricted in certain instance. - If the decision of the Regional Trial Court refusing to recognize and/or enforce, vacating and/or setting aside an arbitral award is premised on a finding of fact, the Court of Appeals may inquire only into such fact to determine the existence or non-existence of the specific ground under the arbitration laws of the Philippines relied upon by the Regional Trial Court to


refuse to recognize and/or enforce, vacate and/or set aside an award. Any such inquiry into a question of fact shall not be resorted to for the purpose of substituting the court’s judgment for that of the arbitral tribunal as regards the latter’s ruling on the merits of the controversy. Rule 19.25. Party appealing decision of court confirming arbitral award required to post bond. - The Court of Appeals shall within fifteen (15) days from receipt of the petition require the party appealing from the decision or a final order of the Regional Trial Court, either confirming or enforcing an arbitral award, or denying a petition to set aside or vacate the arbitral award to post a bond executed in favor of the prevailing party equal to the amount of the award. Failure of the petitioner to post such bond shall be a ground for the Court of Appeals to dismiss th e petition. D. SPECIAL CIVIL ACTION FOR CERTIORARI Rule 19.26. Certiorari to the Court of Appeals. - When the Regional Trial Court, in making a ruling under the Special ADR Rules, has acted without or in excess of its jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law, a party may file a special civil action for certiorari to annul or set aside a ruling of the Regional Trial Court. A special civil action for certiorari may be filed against the following orders of the court. a. Holding that the arbitration agreement is inexistent, invalid or unenforceable; b. Reversing the arbitral tribunal’s determination upholding its jurisdiction;

preliminary

c. Denying the request to refer the dispute to arbitration; d. Granting or refusing an interim relief; e. Denying a petition for the appointment of an arbitrator; f. Confirming, vacating or correcting a domestic arbitral award; g. Suspending the proceedings to set aside an international commercial arbitral award and referring the case back to the arbitral tribunal; h. Allowing a party to enforce an international commercial arbitral award pending appeal;

i. Adjourning or deferring a ruling on whether to set aside, recognize and or enforce an international commercial arbitral award; j. Allowing a party to enforce a foreign arbitral award pending appeal; and k. Denying a petition for assistance in taking evidence. Rule 19.27. Form. - The petition shall be accompanied by a certified true copy of the questioned judgment, order or resolution of the Regional Trial Court, copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification of non-forum shopping as provided in the Rules of Court. Upon the filing of the petition and unless otherwise prescribed by the Court of Appeals, the petitioner shall pay to the clerk of court of the Court of Appeals docketing fees and other lawful fees of P3,500.00 and deposit the sum of P500.00 for costs. Exemption from payment of docket and other lawful fees and the deposit for costs may be granted by the Court of Appeals upon a verified motion setting forth valid grounds therefor. If the Court of Appeals denies the motion, the petitioner shall pay the docketing and other lawful fees and deposit for costs within fifteen days from the notice of the denial. Rule 19.28. When to file petition. - The petition must be filed with the Court of Appeals within fifteen (15) days from notice of the judgment, order or resolution sought to be annulled or set aside. No extension of time to file the petition shall be allowed. Rule 19.29. Arbitral tribunal a nominal party in the petition. - The arbitral tribunal shall only be a nominal party in the petition for certiorari. As nominal party, the arbitral tribunal shall not be required to submit any pleadings or written submissions to the court. The arbitral tribunal or an arbitrator may, however, submit such pleadings or written submissions if the same serves the interest of justice. In petitions relating to the recognition and enforcement of a foreign arbitral award, the arbitral tribunal shall not be included even as a nominal party. However, the tribunal may be notified of the proceedings and furnished with court processes. Rule 19.30. Court to dismiss petition. - The court shall dismiss the petition if it fails to comply with Rules 19.27 and 19.28 above, or upon consideration of the ground alleged and the legal briefs submitted by the parties, the petition does not appear to be prima facie meritorious. Rule 19.31. Order to comment. - If the petition is sufficient in form and substance to justify such


process, the Court of Appeals shall immediately issue an order requiring the respondent or respondents to comment on the petition within a non-extendible period of fifteen (15) days from receipt of a copy thereof. Such order shall be served on the respondents in such manner as the court may direct, together with a copy of the petition and any annexes thereto.

b. Erred in upholding a final order or decision despite the lack of jurisdiction of the court that rendered such final order or decision;

Rule 19.32. Arbitration may continue despite petition for certiorari. - A petition for certiorari to the court from the action of the appointing authority or the arbitral tribunal allowed under this Rule shall not prevent the arbitral tribunal from continuing the proceedings and rendering its award. Should the arbitral tribunal continue with the proceedings, the arbitral proceedings and any award rendered therein will be subject to the final outcome of the pending petition for certiorari.

d. Committed an error so egregious and harmful to a party as to amount to an undeniable excess of jurisdiction.

Rule 19.33. Prohibition against injunctions. - The Court of Appeals shall not, during the pendency of the proceedings before it, prohibit or enjoin the commencement of arbitration, the constitution of the arbitral tribunal, or the continuation of arbitration. Rule 19.34. Proceedings after comment is filed. - After the comment is filed, or the time for the filing thereof has expired, the court shall render judgment granting the relief prayed for or to which the petitioner is entitled, or denying the same, within a non-extendible period of fifteen (15) days. Rule 19.35. Service and enforcement of order or judgment. - A certified copy of the judgment rendered in accordance with the last preceding section shall be served upon the Regional Trial Court concerned in such manner as the Court of Appeals may direct, and disobedience thereto shall be punished as contempt. E. APPEAL BY CERTIORARI TO THE SUPREME COURT Rule 19.36. Review discretionary. - A review by the Supreme Court is not a matter of right, but of sound judicial discretion, which will be granted only for serious and compelling reasons resulting in grave prejudice to the aggrieved party. The following, while neither controlling nor fully measuring the court's discretion, indicate the serious and compelling, and necessarily, restrictive nature of the grounds that will warrant the exercise of the Supreme Court’s discretionary powers, when the Court of App eals: a. Failed to apply the applicable standard or test for judicial review prescribed in these Special ADR Rules in arriving at its decision resulting in substantial prejudice to the aggrieved party;

c. Failed to apply any provision, principle, policy or rule contained in these Special ADR Rules resulting in substantial prejudice to the aggrieved party; and

The mere fact that the petitioner disagrees with the Court of Appeals’ determination of questions of fact, of law or both questions of fact and law, shall not warrant the exercise of the Supreme Court’s discretionary power. The error imputed to the Court of Appeals must be grounded upon any of the above prescribed grounds for review or be closely analogous thereto. A mere general allegation that the Court of Appeals has committed serious and substantial error or that it has acted with grave abuse of discretion resulting in substantial prejudice to the petitioner without indicating with specificity the nature of such error or abuse of discretion and the serious prejudice suffered by the petitioner on account thereof, shall constitute sufficient ground for the Supreme Court to dismiss outright the petition. Rule 19.37. Filing of petition with Supreme Court. - A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals issued pursuant to these Special ADR Rules may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law, which must be distinctly set forth. Rule 19.38. Time for filing; extension. - The petition shall be filed within fifteen (15) days from notice of the judgment or final order or resolution appealed from, or of the denial of the petitioner's motion for new trial or reconsideration filed in due time after notice of the judgment. On motion duly filed and served, with full payment of the docket and other lawful fees and the deposit for costs before the expiration of the reglementary period, the Supreme Court may for justifiable reasons grant an extension of thirty (30) days only within which to file the petition. Rule 19.39. Docket and other lawful fees; proof of service of petition. - Unless he has theretofore done so or unless the Supreme Court orders otherwise, the petitioner shall pay docket and other lawful fees to the clerk of court of the Supreme Court of P3,500.00 and deposit the amount of P500.00 for costs at the time of the filing of the petition. Proof of service of a copy


thereof on the lower court concerned and on the adverse party shall be submitted together with the petition. Rule 19.40. Contents of petition. - The petition shall be filed in eighteen (18) copies, with the original copy intended for the court being indicated as such by the petitioner, and shall (a) state the full name of the appealing party as the petitioner and the adverse party as respondent, without impleading the lower courts or judges thereof either as petitioners or respondents; (b) indicate the material dates showing when notice of the judgment or final order or resolution subject thereof was received, when a motion for new trial or reconsideration, if any, was filed and when notice of the denial thereof was received; (c) set forth concisely a statement of the matters involved, and the reasons or arguments relied on for the allowance of the petition; (d) be accompanied by a clearly legible duplicate original, or a certified true copy of the judgment or final order or resolution certified by the clerk of court of the court a quo and the requisite number of plain copies thereof, and such material portions of the record as would support the petition; and (e) contain a sworn certification against forum shopping. Rule 19.41. Dismissal or denial of petition. - The failure of the petitioner to comply with any of the foregoing requirements regarding the payment of the docket and other lawful fees, deposit for costs, proof of service of the petition, and the contents of and the documents which should accompany the petition shall be sufficient ground for the dismissal thereof. The Supreme Court may on its own initiative deny the petition on the ground that the appeal is without merit, or is prosecuted manifestly for delay, or that the questions raised therein are too insubstantial to require consideration. Rule 19.42. Due course; elevation of records. - If the petition is given due course, the Supreme Court may require the elevation of the complete record of the case or specified parts thereof within fifteen (15) days from notice. PART VII FINAL PROVISIONS RULE 20: FILING AND DEPOSIT FEES Rule 20.1. Filing fee in petitions or counter-petitions to confirm or enforce, vacate or set aside arbitral award or for the enforcement of a mediated settlement agreement. - The filing fee for filing a petition to confirm or enforce, vacate or set aside an arbitral award in a domestic arbitration or in an international commercial arbitration, or enforce a mediated settlement agreement shall be as follows:

PhP 10,000.00 - if the award does not exceed PhP 1,000,000.00 PhP 20,000.00 - if the award does not exceed PhP 20,000,000.00 PhP 30,000.00 - if the award does not exceed PhP 50,000,000.00 PhP 40,000.00 - if the award does not exceed PhP 100,000,000.00 PhP 50,000.00 100,000,000.00

-

if

the

award

exceeds

PhP

The minimal filing fee payable in "all other actions not involving property" shall be paid by the petitioner seeking to enforce foreign arbitral awards under the New York Convention in the Philippines. Rule 20.2. Filing fee for action to enforce as a counterpetition. - A petition to enforce an arbitral award in a domestic arbitration or in an international commercial arbitration submitted as a petition to enforce and/or recognize an award in opposition to a timely petition to vacate or set aside the arbitral award shall require the payment of the filing fees prescribed in Rule 20.1 above. Rule 20.3. Deposit fee for mediated settlement agreements. - Any party to a mediated settlement agreement who deposits it with the clerk of court shall pay a deposit fee of P500.00. Rule 20.4. Filing fee for other proceedings. - The filing fee for the filing of any other proceedings, including applications for interim relief, as authorized under these Special Rules not covered under any of the foregoing provisions, shall be P10,000.00. RULE 21: COSTS Rule 21.1. Costs. - The costs of the ADR proceedings shall be borne by the parties equally unless otherwise agreed upon or directed by the arbitrator or arbitral tribunal. Rule 21.2. On the dismissal of a petition against a ruling of the arbitral tribunal on a preliminary question upholding its jurisdiction. - If the Regional Trial Court dismisses the petition against the ruling of the arbitral tribunal on a preliminary question upholding its jurisdiction, it shall also order the petitioner to pay the respondent all reasonable costs and expenses incurred in opposing the petition. "Costs" shall include reasonable attorney’s fees. The court shall award costs upon application of the respondent after the petition is denied and the court


finds, based on proof submitted by respondent, that the amount of costs incurred is reasonable. Rule 21.3. On recognition and enforcement of a foreign arbitral award. - At the time the case is submitted to the court for decision, the party praying for recognition and enforcement of a foreign arbitral award shall submit a statement under oath confirming the costs he has incurred only in the proceedings in the Philippines for such recognition and enforcement or setting-aside. The costs shall include attorney’s fees the party has paid or is committed to pay to his counsel of record. The prevailing party shall be entitled to an award of costs which shall include the reasonable attorney’s fees of the prevailing party against the unsuccessful party. The court shall determine the reasonableness of the claim for attorney’s fees. Rule 21.4. Costs. - At the time the case is submitted to the court for decision, the party praying for confirmation or vacation of an arbitral award shall submit a statement under oath confirming the costs he has incurred only in the proceedings for confirmation or vacation of an arbitral award. The costs shall include the attorney’s fees the party has paid or is committed to pay to his counsel of record. The prevailing party shall be entitled to an award of costs with respect to the proceedings before the court, which shall include the reasonable attorney’s fees of the prevailing party against the unsuccessful party. The court shall determine the reasonableness of the claim for attorney’s fees. Rule 21.5. Bill of Costs. - Unless otherwise agreed upon by the parties in writing, at the time the case is submitted to the court for decision, the party praying for recognition and enforcement or for setting aside an arbitral award shall submit a statement under oath confirming the costs he has incurred only in the proceedings for such recognition and enforcement or setting-aside. The costs shall include attorney’s fees the party has paid or is committed to pay to his counsel of record. The prevailing party shall be entitled to an award of costs, which shall include reasonable attorney’s fees of the prevailing party against the unsuccessful party. The court shall determine the reasonableness of the claim for attorney’s fees. Rule 21.6. Government’s exemption from payment of fees. - The Republic of the Philippines, its agencies and instrumentalities are exempt from paying legal fees provided in these Special ADR Rules. Local governments and government controlled corporation with or with or without independent charters are not exempt from paying such fees.

RULE 22: APPLICABILITY OF THE RULES OF COURT Rule 22.1. Applicability of Rules of Court. - The provisions of the Rules of Court that are applicable to the proceedings enumerated in Rule 1.1 of these Special ADR Rules have either been included and incorporated in these Special ADR Rules or specifically referred to herein. In connection with the above proceedings, the Rules of Evidence shall be liberally construed to achieve the objectives of the Special ADR Rules. RULE 23: SEPARABILITY Rule 23.1. Separability Clause. - If, for any reason, any part of the Special ADR Rules shall be held unconstitutional or invalid, other Rules or provisions hereof which are not affected thereby, shall continue to be in full force and effect. RULE 24: TRANSITORY PROVISIONS Rule 24.1. Transitory Provision. - Considering its procedural character, the Special ADR Rules shall be applicable to all pending arbitration, mediation or other ADR forms covered by the ADR Act, unless the parties agree otherwise. The Special ADR Rules, however, may not prejudice or impair vested rights in accordance with law. RULE 25: ONLINE DISPUTE RESOLUTION Rule 25.1. Applicability of the Special ADR Rules to Online Dispute Resolution. - Whenever applicable and appropriate, the Special ADR Rules shall govern the procedure for matters brought before the court involving Online Dispute Resolution. Rule 25.2. Scope of Online Dispute Resolution. Online Dispute Resolution shall refer to all electronic forms of ADR including the use of the internet and other web or computed based technologies for facilitating ADR. RULE 26: EFFECTIVITY Rule 26.1. Effectivity. - The Special ADR Rules shall take effect fifteen (15) days after its complete publication in two (2) newspapers of general circulation.

RULE A: GUIDELINES FOR THE RESOLUTION OF ISSUES RELATED TO ARBITRATION OF LOANS SECURED BY COLLATERAL


Rule A.1. Applicability of an arbitration agreement in a contract of loan applies to the accessory contract securing the loan. - An arbitration agreement in a contract of loan extends to and covers the accessory contract securing the loan such as a pledge or a mortgage executed by the borrower in favor of the lender under that contract of loan. Rule A.2. Foreclosure of pledge or extra-judicial foreclosure of mortgage not precluded by arbitration. The commencement of the arbitral proceeding under the contract of loan containing an arbitration agreement shall not preclude the lender from availing himself of the right to obtain satisfaction of the loan under the accessory contract by foreclosure of the thing pledged or by extra-judicial foreclosure of the collateral under the real estate mortgage in accordance with Act No. 3135. The lender may likewise institute foreclosure proceedings against the collateral securing the loan prior to the commencement of the arbitral proceeding. By agreeing to refer any dispute under the contract of loan to arbitration, the lender who is secured by an accessory contract of real estate mortgage shall be deemed to have waived his right to obtain satisfaction of the loan by judicial foreclosure. Rule A.3. Remedy of the borrower against an action taken by the lender against the collateral before the constitution of the arbitral tribunal. - The borrower providing security for the payment of his loan who is aggrieved by the action taken by the lender against the collateral securing the loan may, if such action against the collateral is taken before the arbitral tribunal is constituted, apply with the appropriate court for interim relief against any such action of the lender. Such interim relief may be obtained only in a special proceeding for that purpose, against the action taken by the lender against the collateral, pending the constitution of the arbitral tribunal. Any determination made by the court in that special proceeding pertaining to the merits of the controversy, including the right of the lender to proceed against the collateral, shall be only provisional in nature. After the arbitral tribunal is constituted, c onstituted, the court shall stay its proceedings and defer to the jurisdiction of the arbitral tribunal over the entire controversy including any question regarding the right of the lender to proceed against the collateral.

Rule A.4. Remedy of borrower against action taken by the lender against the collateral after the arbitral tribunal has been constituted. - After the arbitral tribunal is constituted, the borrower providing security for the payment of his loan who is aggrieved by the

action taken by the lender against the collateral securing the loan may apply to the arbitral tribunal for relief, including a claim for damages, against such action of the lender. An application to the court may also be made by the borrower against any action taken by the lender against the collateral securing the loan but only if th e arbitral tribunal cannot act effectively to prevent an irreparable injury to the rights of such borrower during the pendency of the arbitral proceeding. An arbitration agreement in a contract of loan precludes the borrower therein providing security for the loan from filing and/or proceeding with any action in court to prevent the lender from foreclosing the pledge or extra-judicially foreclosing the mortgage. If any such action is filed in court, the lender shall have the right provided in the Special ADR Rules to have such action stayed on account of the arbitration agreement. Rule A.5. Relief that may be granted by the arbitral tribunal. - The arbitral tribunal, in aid of the arbitral proceeding before it, may upon submission of adequate security, suspend or enjoin the lender from proceeding against the collateral securing the loan pending final determination by the arbitral tribunal of the dispute brought to it for decision under such contract of loan. The arbitral tribunal shall have the authority to resolve the issue of the validity of the foreclosure of the thing pledged or of the extrajudicial foreclosure of the collateral under the real estate mortgage if the same has not yet been foreclosed or confirm the validity of such foreclosure if made before the rendition of the arbitral award and had not been enjoined. Rule A.6. Arbitration involving a third-party provider of security. - An arbitration agreement contained in a contract of loan between the lender and the borrower extends to and covers an accessory contract securing the loan, such as a pledge, mortgage, guaranty or suretyship, executed by a person other than the borrower only if such third-party third-p arty securing the loan has agreed in the accessory contract, either directly or by reference, to be bound by such arbitration agreement. Unless otherwise expressly agreed upon by the thirdparty securing the loan, his agreement to be bound by the arbitration agreement in the contract of loan shall pertain to disputes arising from or in connection with the relationship between the lender and the borrower as well as the relationship between the lender and such third-party including the right of the lender to proceed against the collateral securing the loan, but shall exclude disputes pertaining to the relationship exclusively between the borrower and the provider of


security such as that involving a claim by the provider of security for indemnification against the borrower. In this multi-party arbitration among the lender, the borrower and the third party securing the loan, the parties may agree to submit to arbitration before a sole arbitrator or a panel of three arbitrators to be appointed either by an Appointing Authority designated by the parties in the arbitration agreement or by a default Appointing Authority under the law. In default of an agreement on the manner of appointing arbitrators or of constituting the arbitral tribunal in such multi-party arbitration, the dispute shall be resolved by a panel of three arbitrators to be designated by the Appointing Authority under the law. But even in default of an agreement on the manner of appointing an arbitrator or constituting an arbitral tribunal in a multi-party arbitration, if the borrower and the third party securing the loan agree to designate a common arbitrator, arbitration shall be decided by a panel of three arbitrators: one to be designated by the lender; the other to be designated jointly by the borrower and the provider of security who have agreed to designate the same arbitrator; and a third arbitrator who shall serve as the chairperson c hairperson of the arbitral panel to be designated by the two party-designated arbitrators.

Pursuant to Section 52 of republic Act No. 9285, otherwise known as the alternative Dispute Resolution Act of 2004" ("ADR Act"), the following Rules and Regulations (these "Rules") are hereby promulgated to implement the provisions of the ADR Act: Chapter 1 GENERAL PROVISIONS RULE 1 – Policy and Application Article 1.1 Purpose. These Rules are promulgated to prescribe the procedures and guidelines for the implementation of the ADR Act. Article 1.2 Declaration of policy. It is the policy of the State: (a) To promote party autonomy in the resolution of disputes or the freedom of the parties to make their own arrangements to resolve their disputes; (b) To encourage and actively promote the use of Alternative Dispute Resolution ("ADR") as an important means to achieve speedy and impartial justice and declog court dockets; (c) To provide means for the use of ADR as an efficient tool and an alternative procedure for the resolution of appropriate cases; and

3.5 DEPARTMENT CIRCULAR NO. 98 IMPLEMENTING RULES AND IMPLEMENTING REGULATIONS OF THE ALTERNATIVE DISPUTE RESOLUTION RESOLUTION ACT OF 2004.

Whereas, pursuant to Section 52 of Republic Act No. 9285, otherwise known as the "Alternative Dispute Resolution Act of 2004" (ADR Act"), the Secretary of Justice is directed to convene a Committee for the formulation of the appropriate rules and regulations necessary for the implementation of the ADR Ac t;

(d) To enlist active private sector participation in the settlement of disputes through ADR Article 1.3 Exception to the Application of the ADR Act. The provisions of the ADR Act shall not apply to the resolution or settlement of the following: (a) labor disputes covered by Presidential Decree No. 442, otherwise known as the "Labor Code of the Philippines, as a amended", and its Implementing Rules and Regulations; (b) the civil status of persons;

Whereas, the committee was composed of representatives from the Department of Justice, the Department of Trade and Industry, the Department of the Interior and Local Government, the President of the Integrated Bar of the Philippines, a representative from the ADR organizations. Wherefore, the following rules and regulations are hereby adopted as the Implementing Rules and Regulations of Republic Act no.9285. IMPLEMENTING RULES AND REGULATIONS OF THE ALTERNATIVE DISPUTE RESOLUTION ACT OF 2004 (R.A No. 9285)

(c) the validity of marriage; (d) any ground for legal separation; (e) the jurisdiction of courts; (f) future legitimate; (g) criminal liability; (h) those disputes compromised; and

which

by

law

cannot

(i) disputes referred to court-annexed mediation.

be


Article 1.4. Electronic Signature and an d E-Commerce E -Commerce Act. The provisions of the Electronic Signature and ECommerce Act, and its implementing Rules and Regulations shall apply to proceedings contemplated in the ADR Act. Article 1.5. Liability of ADR Providers/Practitioners. The ADR provides /practitioners shall have the same civil liability for acts done in the performance of their official duties as that of public officers as provided in Section 38 (1), Chapter 9, Book 1 of the Administrative Code of 1987, upon a clear showing of bad faith, malice or gross negligence. RULE 2- Definition of Terms Article 1.6 Definition of Terms. For purposes of these Rules, the terms shall be defined as follows: A. Terms Applicable to All Chapters 1. ADR Provider means the Institutions or persons accredited as mediators, conciliators, arbitrators, neutral evaluators or any person exercising similar functions in any Alternative dispute resolution system. This is without prejudice to the rights of the parties to choose non-accredited individuals to act as mediator, conciliator, arbitrator or neutral evaluator of their dispute. 2. Alternative Dispute Resolution System means any process or procedures used to resolve a dispute or controversy, other than by adjudication of a presiding judge of a court or an officer of a government agency, as defined in the ADR Act, in which neutral third person participates to assist in the resolution of issues, Including arbitration, mediation, conciliation, early neutral evaluation, mini-trial or any combination thereof. 3. Arbitration means a voluntary dispute resolution process in which one or more arbitrators, appointed in accordance with the agreement of the parties or these Rules, resolve a dispute by rendering an award.

6. Award means any partial or final decision by an arbitrator in resolving the issue or controversy. 7. Confidential Information means any information, relative to the subject of mediation or arbitration, expressly intended by the source not to disclosed, or obtained under circumstances that would create reasonable expectation on behalf of the source that the information shall not be disclosed. It shall include: (a) communication, oral or written, made in a dispute resolution proceeding, including any memoranda, notes or work product of the neutral party or non-party participant; (b) an oral or written statement made or which occurs during mediation or for purposes of considering, conducting, participating, initiating, continuing or reconvening mediation or retaining a mediator; and (c) pleadings, motions, manifestations, witness statements, reports filed or submitted in arbitration or for expert evaluation. 8. Counsel means a lawyer duly admitted to the practice of law in the Philippines and in good standing who represents a party in any ADR process. 9. Court means Regional Trial Court Except insofar as otherwise defined under Model Law. 10. Government Agency means any governmental entity, office or officer, other than a court that is vested by law with quasi-judicial power or the power to resolve or adjudicate disputes involving the government, its agencies and instrumentalities or private persons. 11. Model Law means the Model on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law on 21 June 1985. 12. Proceedings means judicial, administrative or other adjudicative process, including related pre-hearing or post hearing motions, conferences and discovery.

4. Arbitration Agreement means agreement by the parties to submit to arbitration all or 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 an arbitration clause in a contract or in the form of a separate agreement.

14. Roster means a list of persons qualified to provide ADR services as neutrals or to serve as arbitrators. arbitrators.

5. Authenticate means to sign, execute, adopt a symbol or encrypt a record or establish the authenticity of a record or term.

15. Special ADR Rules means the Special Rules of Court on Alternative Dispute Resolution issued by the Supreme Court on September 1, 2009.

13. Record means information written on a tangible medium or stored in an electronic or other similar medium, retrievable in a perceivable form.

B. Terms and Applicable to the Chapter Chap ter Mediation


1. Ad hoc Mediation means any mediation other than institutional or court-annexed. 2. Institutional Mediation means any mediation process conducted under the rules of a mediation institution. 3. Court-Annexed Mediation means mediation process conducted under the auspices of the court and in accordance with Supreme Court approved guidelines, after such court has acquired jurisdiction of the dispute. 4. Court-Referred Mediation means mediation ordered by a court to be conducted in accordance with the agreement of the parties when an action is prematurely commenced in violation of such agreement. 5. Certified Mediator means a mediator certified by the Office for ADR as having successfully completed its regular professional training program. 6. Mediation means a voluntary process in which a mediator, selected by the disputing party voluntary agreement regarding a dispute. 7. Mediation Party means a person who participates in a mediation and whose consent is necessary to resolve the dispute. 8. Mediator means a person p erson who conducts mediation. 9. Non-Party Participant means a person, other than a party or mediator, who participates in a mediation proceeding as a witness, resource person or expert. C. Terms Applicable to the Chapter on International Commercial Arbitration 1. Appointing Authority as used in the Model Law shall mean the person or institution named in the arbitration agreement as the appointing authority; or the regular arbitration institution under whose rules the arbitration is agreed to be conducted. Where the parties have agreed to submit their dispute to institutional arbitration rules and unless they have agreed to a different procedure, they shall be deemed to have agreed to the procedure under such arbitration rules for the selection and appointment of arbitrators. In ad hoc arbitration, the default appointment of an arbitrator shall be made by the National President of the Integrated Bar of the Philippines (IBP) or his /her duly authorized representative. 2. Arbitral Tribunal (under the Model Law) means a sole arbitrator or a panel of arbitrators.

3. Arbitration means any arbitration whether or not administered by a permanent arbitration institution. 4. Commercial Arbitration means an arbitration that covers matters arising from all relationships of a commercial nature, whether contractual or not. Relationships of a commercial nature include, but are not limited to, the following commercial transactions: any trade transaction for the supply or exchange of goods or services; distribution agreements; construction of works; commercial representation or agency; factoring; leasing; consulting; engineering; licensing; investment; financing; banking; insurance; joint venture and other forms of industrial or business cooperation; carriage of goods or passengers by air, sea rail or road. 5. Convention Award means a foreign arbitral award in a Convention State. 6. Convention State means a state that is a member of the New York Convention. 7. Court (under the Model Law) means a body or organ of the judicial system of the Philippines (i.e., the Regional Trial Court, Court of Appeals and Supreme Court). 8. International Arbitration means an arbitration where: (a) the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in different states; or (b) one of the following places is situated outside the Philippines in which the parties have their places of business: (i) the place of arbitration if determined in, or pursuant to , the arbitration agreement; (ii) any place where a substantial part of the obligations of the commercial relationship is to be performed or the place with the subject matter of the dispute is most closely connected; or (c) the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country. For this purpose: (a) if a party has more than one place of business, the place of business is that which has the closest relationship to the arbitration agreement; (b) if a party does not have a place of business, reference is to be made to his/her habitual residence.


9. New York Convention means the United Nations Convention of the Recognition and Enforcement of Foreign Arbitral Awards approved in 1958 and ratified by the Philippine Senate under Senate Resolution No.71. 10. Non-Convention Award means a foreign arbitral ward made in a state, which is not a Convention State. 11. Non-Convention State means a state that is not a member of the New York Convention. D. Terms Applicable to the Chapter on Domestic Arbitration 1. Ad hoc Arbitration means arbitration administered by an arbitrator and/or the parties themselves. An arbitration administered by an institution shall be regarded as ad hoc arbitration if such institution is not a permanent or regular arbitration institution in the Philippines. 2. Appointing Authority in Ad Hoc Arbitration means, in the absence of an agreement, the National President of the IBP or his/her duly authorized representative. 3. Appointing Authority Guidelines means the set of rules approved or adopted by an appointing authority for the making of a Request for Appointment, Challenge, termination of the Mandate of Arbitrator/s and for taking action thereon. 4. Arbitration means a voluntary dispute resolution process in which one or more arbitrators, Appointed in accordance with the agreement of the parties or these Rules, resolve a dispute by rendering an award. 5. Arbitral Tribunal means a sole arbitrator or a panel, board or committee of arbitrators. 6. Claimant means a person/s with a claim against another and who commence/s arbitration against the latter. 7. Court means, unless otherwise specified in these Rules, a Regional Trial Court. 8. Day means calendar day. 9. Domestic Arbitration means arbitration that is not international as defined in Article 1(3) of the Mode Law. 10. Institutional Arbitration means arbitration administered by an entity, which is registered as a domestic corporation with the Securities and Exchange Commission (SEC) and engaged in. among others,

arbitration of disputes in the Philippines on a regular and permanent basis. 11. Request for Appointment means the letter-request to the appointing authority of either or both parties for the appointment of arbitrator/s or of the two arbitrators first appointed by the parties for the appointment of the third member of an arbitral tribunal. 12. Representative is a person duly authorized in writing by a party to a dispute, who could be a counsel, a person in his/her employ or any other person of his/her choice, duly authorized to represent said party in the arbitration proceedings. 13. Respondent means the person/s against whom the claimant commence/s arbitration. 14. Written communication means the pleading, motion, manifestation, notice, order, award and any other document or paper submitted or filed with the arbitral tribunal or delivered to a party. E. Terms Applicable to the Chapter on Other ADR Forms 1. Early Neutral Evaluation means an ADR process wherein parties and their lawyers are brought together early in the pre-trial phase to present summaries of their cases and to receive a non-binding assessment by an experienced neutral person, with expertise in the subject matter or substance of the dispute. 2. Mediation-Arbitration or Med-Arb is a two-step dispute resolution process involving mediation and then followed by arbitration. 3. Mini-trial means a structured dispute resolution method in which the merits of a case are argued before a panel comprising of senior decision-makers, with or without the presence of a neutral third person, before which the parties seek a negotiated settlement. CHAPTER 2 THE OFFICE RESOLUTION

FOR

ALTERNATIVE

DISPUTE

RULE 1- Office for Alternative Dispute Resolution (OADR) Article 2.1. Establishment of the Office for Alternative Dispute Resolution. There is hereby established the OADR as an agency attached to the Department of Justice. It shall have a Secretariat and shall be headed by an Executive Director, who shall be appointed by the President of the Philippines, taking into consideration the recommendation of the Secretary of Justice.


Article 2.2. Powers of the OADR. The OADR shall have the following powers; (a) To act as appointing authority of mediators and arbitrators when the parties agree in writing that it shall be empowered to do so; (b) To conduct seminars, symposia, conferences and other public fora and publish proceedings of said activities and relevant materials/information that would promote, develop and expand the use of ADR; (c) To establish an ADR library or resource center where ADR laws, rules and regulation, jurisprudence, books, articles and other information about ADR in the Philippines and elsewhere may be stored and accessed; (d) To establish training programs for ADR providers/practitioners, both in the public and private sectors; and to undertake periodic and continuing training programs for arbitration and mediation and charge fees on participants. It may do so in conjunction with or in cooperation with the IBP, private ADR organizations, and local and foreign government offices and agencies and international organizations; (e) To certify those who have successfully completed the regular professional training programs provided by the OADR; (f) To charge for services rendered such as, among others, for training and certifications of ADR providers; (g) To accept donations, grants and other assistance from local and foreign sources; and (h) To exercise such other powers as may be necessary and proper to carry into effect the provisions of the ADR Act. Article 2.3. Functions of the OADR. The OADR shall have the following functions; (a) To promote, develop and expand the use of ADR in the private and public sectors through information, education and communication; (b) To monitor, study and evaluate the use of ADR by the private and public sectors for purposes of, among others, policy formulation; (c) To recommend to Congress needful statutory changes to develop, strengthen and improve ADR practices in accordance with international professional standards;

(d) To make studies on and provide linkages for the development, implementation, monitoring and evaluation of government and private ADR programs and secure information about their respective administrative rules/procedures, problems encountered and how they were resolved; (e) To compile and publish a list or roster of ADR providers/practitioners, who have undergone training by the OADR, or by such training providers/institutions recognized or certified by the OADR as performing functions in any ADR system. The list or roster shall include the addresses, contact numbers, e-mail addresses, ADR service/s rendered (e.g. arbitration, mediation) and experience in ADR of the ADR providers/practitioners; (f) To compile a list or roster of foreign or international ADR providers/practitioners. The list or roster shall include the addresses, contact numbers, e-mail addresses, ADR service/s rendered (e.g. arbitration, mediation) and experience in ADR of the ADR providers/practitioners; and (g) To perform such other functions as may be assigned to it. Article 2.4. Divisions of the OADR. The OADR shall have the following staff and service divisions, among others: (a) Secretariat – shall provide necessary support and discharge such other functions and duties as may be directed by the Executive Director. (b) Public information and Promotion Division – shall be charged with the dissemination of information, the promotion of the importance and public acceptance of mediation, conciliation, arbitration or any combination thereof and other ADR forms as a means of achieving speedy and efficient means of resolving all disputes and to help in the promotion, development and expansion of the use of ADR. (c) Training Division – shall be charged with the formulation of effective standards for the training of ADR practitioners; conduct of training in accordance with such standards; issuance of certifications of training to ADR practitioners and ADR service providers who have undergone the professional training provided by the OADR; and the coordination of the development, implementation, monitoring and evaluation of government and private sector ADR programs. (d) Records and Library Division – shall be charged with the establishment and maintenance of a central repository of ADR laws, rules and regulations,


jurisprudence, books, articles, and other information about ADR in the Philippines and elsewhere. RULE 2 – The Advisory Council Article 2.5. Composition of the Advisory Council. There is also created an Advisory Council composed of a representative from each of the following: (a) Mediation profession; (b) Arbitration profession;

requests, not later than the pre-trial conference or upon the request of both parties thereafter, to refer the parties to mediation in accordance with the agreement of the parties. RULE 2- Selection of a Mediator Article 3.3. Freedom to Select mediator. The parties have the freedom to select mediator. The parties may request the OADR to provide them with a list or roster or the resumes of its certified mediators. The OADR may be requested to inform the mediator of his/her selection.

(c) ADR organizations;

(e) Academe.

Article 3.4. Replacement of Mediator. If the mediator selected is unable to act as such for any reason, the parties may, upon being informed of such fact, select another mediator.

The members of the Council, who shall be appointed by the Secretary of Justice upon the recommendation of the OADR Executive Director, shall choose a Chairman from among themselves.

Article 3.5. Refusal or Withdrawal of Mediator. A mediator may refuse from acting as such, withdraw or may be compelled to withdraw from mediator proceedings under the following circumstances:

Article 2.6. Role of the Advisory Council. The Advisory Council shall advise the Executive Director on policy, operational and other relevant matters. The Council shall meet regularly, at least once every two (2) months, or upon call by the Executive Director.

(a) If any of the parties so requests the mediator to withdraw;

(d) IBP; and

CHAPTER 3 MEDIATION RULE 1 – General Provisions Article 3.1. Scope of Application. These Rules apply to voluntary mediation, whether ad hoc or institutional, other than court-annexed mediation and only in default of an agreement of the parties on the applicable rules. These Rules shall also apply to all cases pending before an administrative or quasi-judicial agency that are subsequently agreed upon by the parties to be referred to mediation. Article 3.2. Statement of Policy. In applying and construing the provisions of these Rules, consideration must be given to the need to promote candor of parties and mediators through confidentiality of the mediation process, the policy of fostering prompt, economical and amicable resolution of disputes in accordance with principles of integrity of determination by the parties and the policy that the decision-making authority in the mediation process rests with the parties. A party may petition a court before which an action is prematurely brought in a matter which is the subject of a mediation agreement, if at least one party so

(b) The mediator does not have the qualifications, training and experience to enable him/her to meet the reasonable expectations of the parties; (c) Where the mediator's impartially is in question; (d) If continuation of the process would violate any ethical standards; (e) If the safety of any of the parties would be jeopardized; (f) If the mediator is unable to provide effective services; (g) In case of conflict of interest; and (h) In any of the following instances, if the mediator is satisfied that: (i) one or more of the parties is/are not acting in good faith; (ii) the parties' agreement would be illegal or involve the commission of a crime; (iii) continuing the dispute resolution would give rise to an appearance of impropriety; (iv) continuing with the process would cause significant harm to a non-participating person or to the public; or


(v) continuing discussion would not be in the best interest of the parties, their minor children or the dispute resolution process. RULE 3 – Ethical Conduct of a Mediator Article 3.6 Competence. It is not required that a mediator shall have special qualifications by background or profession unless the special qualifications of a mediator shall : (a) maintain the continually upgrade professional competence in mediation skills;

sessions or caucuses that the mediator holds with a party. Article 3.9. Consent and Self-Determination. (a) A mediator shall make reasonable efforts to ensure that each party understands the nature and character of the mediation proceeding including private caucuses, the issues, the available options, the alternatives to nonsettlement, and that each party is free and able to make whatever choices he/she desires regarding participation in mediation generally and regarding specific settlement options.

his/her

(b) ensure that his/her qualifications, training and experience are known to and accepted by the parties; and (c) serve only when his/her qualifications, training and experience enable him/her to meet the reasonable expectations of the parties and shall not hold himself/herself out or give the impression that he/she does not have.

If a mediator believes that a party, who is not represented by counsel, is unable to understand, or fully participate, the mediation proceedings for any reason, a mediator may either: (i) limit the scope of the mediation proceedings in a manner consistent with the party's ability to participate, and/or recommend that the party obtain appropriate assistance in order to continue with the process; or (ii) terminate the mediation proceedings.

Upon the request of a mediation party, an individual who is requested to serve as mediator shall disclose his/her qualifications to mediate a dispute. Article 3.7 Impartially. A mediator shall maintain impartiality. (a) Before accepting a mediation, an individual who is requested to serve as a mediator shall: (i) make an inquiry that is reasonable under the circumstances to determine whether there are known facts that a reasonable individual would consider likely to affect the impartiality of the mediator, including a financial or personal interest in the outcome of the mediation and any existing or past relationship with a party of foreseeable participant in the mediation; and (ii) disclose to the mediation parties any such fact known or learned as soon as practical before accepting a mediation. (b) If a mediator learns any fact described in paragraph (a) of this Article after accepting a mediation, the mediator shall disclose it as soon as practicable to the mediation parties. Article 3.8. Confidentiality. A mediator shall keep in utmost confidence all confidential information obtained in the course of the mediation process. A mediator shall discuss issues of confidentiality and the extent of confidentiality provided in any private

(b) A mediator shall recognize and put in mind that the primary responsibility of resolving a dispute and the shaping of a voluntary and uncoerced settlement rests with the parties. Article 3.10. Separation of Mediation from Counseling and Legal Advice. (a) Except in evaluative mediation or when the parties so request, a mediator shall: (i) refrain from giving legal or technical advice and otherwise engaging in counseling or advocacy; and (ii) abstain from expressing his/her personal opinion on the rights and duties of the parties and the merits of any proposal made. (b) Where appropriate and where either or both parties are not represented by counsel, a mediator shall; (i) recommend that the parties seek outside professional advice to help them make informed decision and to understand the implication of any proposal; and (ii) suggest that the parties seek independent legal and/or technical advice before a settlement agreement is signed. (c) without the consent of al parties, and for a reasonable time under the particular circumstance, a mediator who also practices another profession shall not establish a professional relationship in that other


profession with one of the parties, or any person or entity, in a substantially and factually related matter. Article 3.11. Charging of Fees. (a) A mediator shall fully disclose and explain to the parties the basis of cost, fees and charges. (b) The mediator who withdraws from the mediation shall return to the parties any unearned fee and unused deposit. (c) A mediator shall not enter into a fee agreement, which is contingent upon the results of the mediation or the amount of the settlement. Article 3.12 Promotion of Respect and Control of Abuse of Process. The mediatorcle 3.12 Promotion of Respect and Control of Abuse of Process. of the settle mentcost ablish a professional relationship I shall encourage mutual respect between the parties, and shall take reasonable steps, subject to the principle of self-determination, to limit abuses of the mediation process. Article 3.13. Solicitation or Acceptance of any Gift. No mediator or any member of a mediator’s immediate family or his/her agent shall request, solicit, receive or accept any gift or any type of compensation other than the agreed fee and expenses in connection with any matter coming before the mediator. RULE 4 – Role of Parties and their Counsels Article 3.14. Designation of Counsel or Any Person to Assist Mediation. Except as otherwise provided by the ADR Act or by these Rules, a party may designate a lawyer or any other person to provide assistance in the mediation. A waiver of this right shall be made in writing by the party waiving it. A waiver of participation or legal representation may be rescinded at any time. Article 3.15. Role of Counsel. (a) The lawyer shall view his/her role in the mediation as a collaborator with the other lawyer in working together toward the common goal of helping their clients resolve their differences to their mutual advantage. (b) The lawyer shall encourage and assist his/her client to actively participate in positive discussions and cooperate in crafting an agreement to resolve their dispute. (c) The lawyer must assist his/her client to comprehend and appreciate the mediation process and its benefits, as well as the client’s greater personal responsibility for the success of mediation in resolving the dispute.

(d) In preparing for participation in mediation, the lawyer shall confer and discuss with his/her client the following: (i) The mediation process as essentially a negotiation between the parties assisted by their respective lawyers, and facilitated by a mediator, stressing it its difference from litigation, its advantages and benefits, the clients heightened role in mediation and responsibility for its success and explaining the role of the lawyer in mediation proceedings, (ii) The substance of the upcoming mediation such as; (aa) The substantive issues involved in the dispute and their prioritization in terms of importance to his/her client’s real interests and needs. (bb) The study of other party’s position in relation to the issues with a view to understanding the underlying interests, fears, concerns and needs; (cc) The information or facts to be gathered or sought from the other side or to be exchanged that are necessary for informed decision-making; (dd) The possible options for settlement but stressing the need to be open-minded about other possibilities; and (ee) The best, worst and most likely alternative to a non-negotiated settlement. Article 3.16. Other Matters which the Counsel shall do to Assist Mediation. The lawyer; (a) shall give support to the mediator so that his/her client will fully understand the rules and processes of mediation; (b) shall impress upon his/her client the importance of speaking for himself/herself and taking responsibility for making decisions during the negotiations within the mediation process.; (c) may ask for a recess in order to give advice or suggestions to his/her client in private, if he/she perceives that his/her client is unable to bargain effectively; (d) shall assist his/her client and the mediator put in writing the terms of the settlement agreement that the parties have entered into. That lawyers shall see to it that the terms of the settlement agreement are not contrary to law, morals, good customs, public order or public policy. RULE 5 – Conduct of Mediation


Article 3.17. Articles to be Considered in the Conduct of Mediation. (a) The mediator shall not make untruthful or exaggerated claims about the dispute resolution process, its costs and benefits, its outcome or the mediator’s qualifications and abilities during the entire mediation process. (b) The mediator shall held the parties reach a satisfactory resolution to their dispute but has no authority to impose a settlement on the parties. (c) The parties shall personally appear for mediation and may be assisted by a lawyer. A party maybe represented by an agent who must have full authority to negotiate and settle the dispute. (d) The mediation process shall, in general, consists of the following stages: (i) opening statement of the mediator (ii) individual narration by the parties; (iii) exchange by the parties;

dispute to mediation by an institution shall include an agreement to be bound by the internal mediation and administrative policies of such institution. Further, an agreement to submit a dispute to mediation under institutional mediation rules shall be deemed to include an agreement to have such rules govern the mediation of the dispute and for the mediator, the parties, their respective counsels and non-party participants to abide by such rules. RULE 8 – Enforcement of Mediated Settlement Agreement Article 3.20. Operative Principles to Guide Mediation. The mediation shall be guided by the following operative principles: (a) A settlement agreement following successful mediation shall be prepared by the parties with the assistance of their respective counsels. If any, and by the mediator. The parties and their respective counsels shall endeavor to make the terms and condition of the settlement agreement complete and to make adequate provision for the contingency of breach to avoid conflicting interpretations of the agreement.

(iv) summary of issues; (v) generation and evaluation of options; and (vi) closure (e) The mediation proceeding shall be held in private. Person, other than the parties, their representatives and mediator, may attend only with the consent of all the parties, (f) the mediation shall be closed: (i) by the execution of a settlement agreement by the parties; (ii) by the withdrawal of any party from mediation; and (iii) by the written declaration of the mediator that any further effort at mediation would not be helpful RULE 6 – Place of Mediation Article 3.18. Agreement of Parties on the Place of Mediation. The parties are free to agree on the place of mediation. Failing such agreement, the place of mediation shall be any place convenient and appropriate to all parties. RULE 7 – Effect of Agreement to Submit Dispute to Mediation Under Institutional Rules Article 3.19 Agreement to Submit a Dispute to Mediation by an Institution. An agreement to submit a

(b) The parties and their respective counsels, if any, shall sign the settlement agreement. The mediator shall certify that he/she explained the contents of the settlement agreement to the parties in a language known to them. (c) If the parties agree, the settlement agreement may be jointly deposited by the parties or deposited by one party with prior notice to the other party/ties with the Clerk of Court of the Regional Trial Court (a) where the principal place of business in the Philippines of any of the parties is located; (b) if any of the parties is an individual, where any of those individuals resides; or (c) in the National Capital Judicial Region. Where there is a need to enforce the settlement agreement, a petition may be filed by any of the parties with the same court in which case, the court shall proceed summarily to hear the petition, in accordance with the Special ADR Rules. (d) The parties may agree in the settlement agreement that the mediator shall become a sole arbitrator for the dispute and shall treat the settlement agreement as an arbitral award which shall be subject to enforcement under Republic Act No. 876, otherwise know as "The Arbitration Law", notwithstanding the provisions of Executive Order No. 1008, s. 1985, other wise known as the "Construction Industry Arbitration Law" for mediated disputes outside the Construction Industry Arbitration Commission. RULE 9 – Confidentiality of Information


Article 3.21. Confidentiality of Information. Information obtained through mediation proceedings shall be subject to the following principles and guidelines: (a) Information obtained through mediation shall be privileged and confidential (b) A party, mediator, or non-party participant may refuse to disclose and may prevent any other person from disclosing a confidential information. (c) Confidential information shall not be subject to discovery and shall be inadmissible in any adversarial proceeding, whether judicial or quasi-judicial. However, evidence or information that is otherwise admissible or subject to discovery does not become inadmissible or protected from discovery solely by reason of its use in a mediation. (d) In such an adversarial proceeding, the following persons involved or previously involved in a mediation may not be compelled to disclosed confidential information obtained during the mediation: (i) the parties to the dispute; (ii) the mediator or mediators;

participant if the information is provided by such nonparty participant. (c) A person who discloses confidential information shall be precluded from asserting the privilege under Article 3.21 (Confidentiality of Information) to bar disclosure of the rest of the information necessary to a complete understanding of the previously disclosed information. If a person suffers loss or damage as a result of the disclosure of the confidential information, he/she shall be entitled to damages in a judicial proceeding against the person who made the disclosure. (d) A person who discloses or makes a representation about a mediation is precluded from asserting the privilege mentioned in Article 3.21 to the extent that the communication prejudices another person in the proceeding and it is necessary for the person prejudiced to respond to the representation or disclosure. Article 3.23. Exceptions to the Privilege of Confidentiality of information. (a) There is no privilege against disclosure under Article 3.21 in the following instances: (i) in an agreement evidenced by a authenticated by all parties to the agreement;

record

(iii) the counsel for the parties; (iv) the non-party participants

(ii) available to the public or made during a session of a mediation which is open, or is required by law to be open, to the public;

(v) any person hired or engaged in connection with the mediation as secretary, stenographer, clerk or assistant; and

(iii) a threat or statement of a plan to inflict bodily injury or commit a crime of violence;

(vi) any other person who obtains or possesses confidential information by reason of his/her profession.

(iv) intentionally used to plan a crime, attempt to commit, or commit a crime, or conceal an ongoing crime or criminal activity.

(e) The protections of the ADR Act shall continue to apply even if a mediator is found to have failed to act impartially.

(v) sought or offered to prove or disprove abuse, neglect, abandonment or exploitation in a proceeding in which a public agency is protecting the interest of an individual protected by law; but this exception does not apply where a child protection matter is referred to mediation by a court or where a public agency participates in the child protection mediation;

(f) A mediator may not be called to testify to provide confidential information gathered in mediation. A mediator who is wrongfully subpoenaed shall be reimbursed the full cost of his/her attorney’s fees and related expenses. Article 3.22. Waiver of Confidentiality. (a) A privilege arising from the confidentiality of information may be waived in a record or orally during a proceeding by the mediator and the mediation parties. (b) With the consent of the mediation parties, a privilege arising from the confidentiality of information may likewise be waived by a non-party

(vi) sought or offered to prove or disapprove a claim or complaint of professional misconduct or malpractice filed against a party, non-party participant, or representative of a party based on conduct occurring during a mediation. (b) If a court or administrative agency finds, after a hearing in camera, that the party seeking discovery of the proponent of the evidence has shown that the evidence is not otherwise available, that there is a need


for the evidence that substantially outweighs the interest in protecting confidentially, and the mediation communication is sought or offered in:

applicable internal rules of the mediation service providers under whose rules the mediation is conducted.

(i) a court proceeding involving a crime or felony; or

(b) A mediation service provider may determine such mediation fee as is reasonable taking into consideration the following factors, among others:

(ii) a proceeding to prove a claim or defense that under the law is sufficient to reform or avoid a liability on a contract arising out of the mediation.

(i) the complexity of the case;

(c) A mediator may not be compelled to provide evidence of a mediation communication or testify in such proceeding.

(ii) the number of hours spent in mediation; and

(d) If a mediation communication is not privileged under an exception in sub-section (a) or (b) hereof, only the portion of the communication necessary for the application of the exception for non-disclosure may be admitted. The admission of a particular evidence for the limited purpose of an exception does not render that evidence, or any other mediation communication, admissible for any other purpose.

CHAPTER 4 INTERNATIONAL COMMERCIAL ARBITRATION

Article 3.24. Non-Reporting or Communication by Mediator. A mediator may not make a report, assessment, evaluation, recommendation, finding or other communication regarding a mediation to a court or agency or other authority that may make a ruling on a dispute that is the subject of a mediation, except: (a) to state that the mediation occurred or has terminated, or where a settlement was reached; or (b) as permitted to be disclosed under Article 3.23 (Exception to the Privilege of Confidentiality of Information). The parties may, by an agreement in writing, stipulate that the settlement agreement shall be sealed and not disclosed to any third party including the court. Such stipulation, however, shall not apply to a proceeding to enforce or set aside the settlement agreement. RULE 10 – Fees and Cost of Mediation Article 3.25. Fees and Cost of Ad hoc Mediation. In ad hoc mediation, the parties are free to make their own arrangement as to mediation cost and fees. In default thereof, the schedule of cost and fees to be approved by the OADR shall be followed. Article 3.26. Fees and Cost of Institutional Mediation. (a) In institutional mediation, mediation cost shall include the administrative charges of the mediation institution under which the parties have agreed to be bound, mediator’s fees and associated expenses, if any. In default of agreement of the parties as to the amount and manner of payment of mediation’s cost and fees, the same shall be determined in accordance with the

(iii) the training, experience and stature of mediators.

RULE 1 – General Provisions Article 4.1. Scope of Application. (a) This Chapter applies to international commercial arbitration, subject to any agreement in force between the Philippines and other state or states. (b) This Chapter applies only if the place or seat of arbitration is the Philippines and in default of any agreement of the parties on the applicable rules. (c) This Chapter shall not affect any other law of the Philippines by virtue of which certain disputes may not be submitted to arbitration or may be submitted to arbitration only according to provisions other than those of the ADR Act. Article 4.2. Rules of Interpretation. (a) International commercial arbitration shall be governed by the Model Law on International Commercial Arbitration. (b) In interpreting this Chapter, regard shall be had to the international origin of the Model Law and to the need for uniformity in its interpretation. Resort may be made to the travaux preparatoires and the Report of the Secretary-General of the United Nations Commission on International Trade Law dated March 1985 entitled, "International Commercial Arbitration: Analytical Commentary on Draft Text identified by reference number A/CN. 9/264". (c) Moreover, in interpreting this Chapter, the court shall have due regard to the policy of the law in favor of arbitration and the policy of the Philippines to actively promote party autonomy in the resolution of disputes or the freedom of the parties to make their own arrangement to resolve their dispute. (d) Where a provision of this Chapter, except the Rules applicable to the substance of the dispute, leaves the parties free to determine a certain issue, such freedom includes the right of the parties to authorize a third


party, including determination.

an

institution,

to

make

that

(e) Where a provision of this Chapter refers to the fact that the parties have agreed or that they may agree or in any other way refers to an agreement of the parties, such agreement includes any arbitration rules referred to in that agreement. (f) Where a provision of this Chapter, other than in paragraph (a) of Article 4.25 (Default of a Party) and paragraphs (b) (i) of Article 4.32 (Termination of Proceedings), refers to a claim, it also applies to a counter-claim, and where it refers to a defense, it also applies to a defense to such counter-claim. Article 4.3. Receipt of Written Communications. (a) Unless otherwise agreed by the parties: (i) any written communication is deemed to have been received if it is delivered to the addressee personally or at his/her place of business, habitual residence or mailing address; if none of these can be found after making a reasonable inquiry, a written communication is deemed to have been received if it is sent to the addressee’s last known place of business, habitual residence or mailing address by registered letter or any other means which provides a record of the attempt to deliver it; (ii) the communication is deemed to have been received on the day it is so delivered. (b) The provisions of this Article do not apply to communications in court proceedings, which shall be governed by the Rules of Court. Article 4.4. Waiver of Right to Object. Any party who knows that any provision of this Chapter from which the parties may derogate or any requirement under the arbitration agreement has not been complied with and yet proceeds with the arbitration without stating the objections for such non-compliance without undue delay or if a time limit is provided therefor, within such period of time, shall be deemed to have waived the right to object. Article 4.5. Extent of Court Intervention. In matters governed by this Chapter, no court shall intervene except where so provided in the ADR Act. Resort to Philippine courts for matters within the scope of the ADR Act shall be governed by the Special ADR Rules.

and paragraph (a) of Article 4.14 (Failure or Impossibility to Act) shall be performed by the appointing authority as defined in Article 1.6 C1, unless the latter shall fail or refuse to act within thirty (30) days from receipt of the request in which case the applicant may renew the application with the court. The appointment of an arbitrator is not subject to appeal or motion for reconsideration. (b) The functions referred to in paragraph (c) of Article 4.16 (c) (Competence of Arbitral Tribunal to Rule on its Jurisdiction), second paragraph of Article 4.34 (Application for Setting Aside an Exclusive Recourse Against Arbitral Award), Article 4.35 (Recognition and Enforcement), Article 4.38 (Venue and Jurisdiction), shall be performed by the appropriate Regional Trial Court. (c) A Court may not refuse to grant, implement or enforce a petition for an interim measure, including those provided for in Article 4.9 (Arbitration Agreement and Interim Measures by Court), Article 4. 11 (Appointment of Arbitrators), Article 4.13 (Challenge Procedure), Article 4,27 (Court Assistance in Taking Evidence), on the sole ground that the Petition is merely an ancillary relief and the principal action is pending with the arbitral tribunal. RULE 2- Arbitration Agreement Article 4.7 Definition and Form of Arbitration Agreement. The Arbitration agreement, as defined in Articles 1.6 A4, shall be in writing. An agreement is in writing if it is contained in a document signed by the parties or in an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement, or in an exchange of statements of claim and defense in which the existence of an agreement, or in an exchange of statements of claim and defense in which the existence of an agreement is alleged by one party and not denied by another. The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement provided that the contracts is writing and the reference is such as to make that clause part of the contract.

Article 4.6. Court or Other Authority for Certain Functions of Arbitration Assistance and Supervision.

Article 4.8 Arbitration Agreement and Substantive Claim Before Court. (a) A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if at least one party so requests of both parties thereafter, refer the parties to arbitration unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed.

(a) The functions referred to in paragraphs (c) and (d) of Article 4.11 (Appointment of Arbitrators) and paragraph (c) of Article 4.13 (Challenge Procedure)

(b) Where an action referred to in the previous paragraph has been brought , arbitral proceedings may nevertheless be commenced or continued, and an


award may be made, while the issue is pending before the court.

days of their appointment shall be made, upon request of a party, by the appointing authority;

(c) Where the action is commenced by or against multiple parties, one or more of whom are parties to an arbitration agreement, the court shall refer to arbitration those parties who are bound by the arbitration agreement although the civil action may continue as to those who are not bound by such arbitration agreement.

(ii) in an arbitration with a sole arbitrator, if the parties are unable to agree on the arbitrator, he/she shall be appointed, upon request of a party, by the appointing authority.

Article 4.9 Arbitration Agreement and Interim Measures by Court. (a) It is not incompatible with an arbitration agreement for a party to request from a court, before the constitution of the arbitral tribunal or during arbitral proceedings, an interim measure of protection and for a court to grant such measure.

(i) a party fails to act as required under such procedure, or

(b) To the extent that the arbitral tribunal has no power to act or is unable to act effectively, a request for interim measure of protection, or modification thereof as provided for, and in the manner indicated in , Article 4.17 (Power of Tribunal to Order Interim Measures ), may be made with the court.

(iii) a third party, including an institution, fails to perform any function entrusted to it under such procedure,

The rules of interim or provisional relief provided for in paragraph ( c ) of Article 4.17 of these Rules shall be observed. A party may bring a petition under this Article before the court in accordance with the Rules of Court or the Special ADR Rules. RULE 3 – Composition of Arbitral Tribunal Article 4.10 Number of Arbitrators. The parties are free to determine the number of arbitrators Failing such determination, the number of arbitrators shall be three (3). Article 4.11. Appointment of Arbitrators. (a) No person shall be produced by reason of his/her nationality from acting as an arbitrator, unless otherwise agreed by the parties. (b) The parties are free to agree on a procedure of appointing the arbitrator or arbitrators, subject to provisions of paragraphs (d) and (e) of this Article.

(d) Where, under an appointment procedure agreed upon the parties,

(ii) the parties , or two arbitrators, are unable to reach an agreement expected of them under such procedure, or

Any party may request the appointing authority to take the necessary measure to appoint an arbitrator, unless the agreement on the appointment procedure provides other means for securing the appointment. (e) A decision on a matter entrusted by paragraphs (c) and (d) of this to the appointing authority shall be immediate executory and not be subject to a motion for reconsideration or appeal. The appointing authority shall have in appointing an arbitrator, due regard to any qualifications required of the arbitrator by the agreement of the parties and to such considerations as are likely to secure the appointment of an independent and impartial arbitrator and, in the case of a sole or third arbitrator , shall take into account as well the advisability of appointing an arbitrator of a nationality other than the Rules of Court of the Special ADR Rules. Article 4.12 Grounds for Challenge. (a) When a person is approached in connection with his/her possible appointment as an arbitrator, he/she impartiality or independence. An arbitrator, from the time of his/her appointment and throughout the arbitral proceedings shall, without delay, disclose any such circumstance to the parties unless they have already been informed of them him/her.

(c) Failing such agreement: (i) in an arbitration with three (3 ) arbitrators, each party shall appoint one arbitrator, and the two (2) arbitrators thus appointed shall appoint the third arbitrator; if any party fails to appoint the arbitrator within thirty (30) days of receipt of a request to do so from the other party, or if the two (2) arbitrators fail to agree on the third arbitrator within thirty days (30)

(b) An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to his/her impartiality or independence, or if he/she does not possess qualifications agreed to by the parties. A party may challenge an arbitrator appointed by him/her, or in whose appointment he/she has participated, only for reasons of which he/she becomes aware after the appointment has been made.


Article 4.13. Challenge Procedure. (a) The parties are free to agree on a procedure for challenging an arbitrator, subject to the provisions of this Article. (b) Failing such agreement, a party who intends to challenge an arbitrator shall, within fifteen (15) days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in paragraph (b) of Article 4.12 (Grounds for Challenge,) send a written statement of the reasons for the challenge to the arbitral tribunal. Unless the challenged arbitrator withdraws from his/her office or the other party agrees to the challenged arbitrator withdraws from his/her office or the party agrees to the challenge, the arbitral tribunal shall decide on the challenge. (c) If a challenge under any procedure agreed upon by the parties or under the procedure of paragraph (b) of this Article is not successful, the challenging party may request the appointing authority, within thirty (30) days after having received notice of the decision rejecting the challenge, to decide on the challenge, which decision shall be immediately executory and not subject to motion for reconsideration or appeal. While such a request is pending, the arbitral tribunal, including the challenged arbitrator, may continue the arbitral proceedings and make an award. A party may bring a petition under this Article before the court in accordance with the Rules of Court or the Special ADR Rules. Article 4.14. Failure or Impossibility to Act. (a) If an arbitrator becomes de jure or de facto unable to perform his/her functions or for other reasons fails to act without undue delay, his/her mandate terminates if he/she withdraws from his/her office or if the parties agree on the termination. Otherwise, if the controversy remains concerning any of these grounds, any party may request the appointing authority to decide on the termination of the mandate, which decision shall be immediately executory and not subject for motion for reconsideration or appeal. (b) If, under this Article or paragraph (b) of Article 4.13 (Challenge Procedure), an arbitrator withdraws from his/her office or a party agrees for termination of the mandate of an arbitrator, this does not imply acceptance of the validity of any ground referred to in this Article or in paragraph (b) of Article 4.12 (Grounds for Challenge). Article 4.15. Appointment of Substitute Arbitrator. Where the mandate of an arbitrator terminates under Articles 4.13 (Challenge Procedure) and 4.14 (Failure or Impossibility to Act) or because of his/her withdrawal from office for any other reason or because

of the revocation of his/her mandate, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced. RULE 4 – Jurisdiction of Arbitral Tribunal Article 4.16. Competence of Arbitral Tribunal to Rule on its Jurisdiction. (a) The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement or any condition precedent to the filing of the request for arbitration. For that purpose, an arbitration clause, which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. (b) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defense (I.e., in an Answer or Motion to Dismiss). A party is not p recluded from raising such plea by the fact that he/she has appointed, or participated in the appointment of, an arbitrator. A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. The arbitral tribunal may, in either case, admit a later plea if it considers the delay justified. (c) The arbitral tribunal may rule on a plea referred to in paragraph (b) of this Article either as a preliminary question or in an award on the merits. If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within thirty (30) days after having received notice of that ruling, the Regional Trial Court to decide the matter, which decision shall be immediately executory and not subject to motion for reconsideration or appeal. While such a request is pending, the arbitral tribunal may contribute the arbitral proceedings and make an award. Article 4.17. Power of Arbitral Tribunal to Order Interim Measures. (a) Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of the party, order any party to take such interim measures of protection as the arbitral tribunal may consider necessary in respect of the subject to matter of the dispute following paragraph (c) of this Article. Such interim measures may include, but shall not be limited to, preliminary injunction directed against a party, appointment of receivers, or detention, preservation, inspection of property that is the subject of the dispute in arbitration.


(b) After constitution of the arbitral tribunal, and during arbitral proceeding, a request for interim measures of protection, or modification thereof shall be made with the arbitral tribunal. The arbitral tribunal is deemed constituted when the sole arbitrator or the third arbitrator, who has been nominated, has accepted the nomination and written communication of said nomination and acceptance has been received by the party making the request. (c) The following rules on interim or provisional relief shall be observed: (i) Any party may request that the interim or provisional relief shall be observed: (ii) Such relief may be granted: (aa) To prevent irreparable loss or injury; (bb) To provide security for the performance of an obligation; (cc) To produce or preserve evidence (dd) To compel any other appropriate acts or omissions. (iii) The order granting provisional relief may be conditioned upon the provision of security or any act or omission specified in order. (iv) Interim or provisional relief is requested by written application transmitted by reasonable means to the arbitral tribunal and the party against whom relief is sought, describing in appropriate details of the precise relief, the party against whom the relief is requested, the ground for the relief, and the evidence, supporting the request. (v) The order granting or denying an application for the interim relief shall be binding upon the parties. (vi) Either party may apply with the court for assistance in implementing or enforcing an interim measure ordered by an arbitral tribunal. (vii) A party who does not comply with the order shall be liable for all damages, resulting from noncompliance, including all expenses, and reasonable attorney's fees, paid in obtaining the order's judicial enforcement. RULE 5 – Conduct of Arbitral Proceedings Article 4.18. Equal Treatment of Parties. The parties shall be treated with equality and each shall be given a full opportunity of presenting his/her case.

Article 4.19. Determination of the Rules of Procedure. (a) Subject to the provisions of this Chapter, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the p roceedings. (b) Falling such agreement, the arbitral tribunal may, subject to this Chapter, conduct the arbitration in such manner as it considers appropriate. Unless the arbitral tribunal considers it inappropriate, the UNCITRAL Arbitration Rules adopted by the UNCITRAL on 28 April 1976 and the UN General Assemble on 15 December 1976 shall apply subject to the following clarification: All references to the "Secretary-General of the Permanent Court of Arbitration at the Hague" shall be deemed to refer to the appointing authority. (c) The power conferred upon the arbitral tribunal includes the power to determine the admissibility, relevance, materiality and weight of any evidence. Article 4.20. Place of Arbitration. (a) The parties are free to agree on the place of arbitration. Failing such agreement, the place of arbitration shall be in Metro Manila unless the arbitral tribunal, having regard to the circumstances of the case, including the convenience of the parties, shall decide on a different place of arbitration. (b) Notwithstanding the rule stated in paragraph (a) of this provision, the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of goods, other property or documents. Article 4.21. Commencement of Arbitral Proceedings. Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. Article 4.22. Language. (a) The parties are free to agree on the language or languages to be used in the arbitral proceedings. Failing such agreement, the language to be used shall be English. This agreement, unless otherwise specified therein, shall apply to any written statement by a party, any hearing and any award, decision or other communication by the arbitral tribunal. (b) The arbitral tribunal may order that any documentary evidence shall be accompanied by a translation into the language or languages agreed upon by the parties or determined by the arbitral tribunal in accordance with paragraph (a) of this Article.


Article 4.23 Statements of Claim and Defense. (a) Within the period of time agreed by the parties or determined by the arbitral tribunal, the claimant shall state the facts supporting his/her/its claim, the points at issue and the relief or remedy sought, and the respondent shall state his/her/its defense in respect of these particulars, unless the parties have otherwise agreed as to the required elements of such statements. The parties may submit with their statements, all documents they consider to be relevant or may add a reference to the documents or other evidence they will submit. (b) Unless otherwise agreed by the parties, either party may amend or supplement his/her claim or defense during the course of the arbitral proceedings, unless the arbitral tribunal considers it inappropriate to allow such amendment having regard to the delay in making it. Article 4.24 Hearing and Written Proceedings. (a) Subject to any contrary agreement by the parties, the arbitral 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 at an appropriate stage of the proceedings, if so requested by a party. (b) The parties shall be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the purposes of inspection goods, other property or documents. (c) All statements, documents or other information supplied to the arbitral by one party shall be communicated to the other party. Also, an expert report or evidentiary document on which the arbitral tribunal may rely in making its decision shall be communicated to the parties. Article 4.25 Default of a Party. Unless otherwise agreed by the parties, if, without, showing sufficient cause, (a) the claimant fails to communicate his statement of claim in accordance with paragraph (a) Article 4.23 (Statement of Claim and Defense), the arbitral tribunal shall terminate the proceedings; (b) the respondent fails to communicate his/her/its statement of defense in accordance with paragraph (a) Article 4.23 (Statement of Claim and Defense), the arbitral tribunal shall continue the proceedings without treating such failure in itself as an admission of the claimant’s allegations. (c) any party’s fails to appear at a hearing or to produce documentary evidence, the arbitral tribunal may

continue the proceedings and make the award on the evidence before it. Article 4.26. Expert Appointed by the Arbitral Tribunal. Unless otherwise agreed by the parties, the arbitral tribunal, (a) may appoint one or more experts to report to it on specific issues to be determined by the arbitral tribunal; or (b) may require a party to give the expert any relevant information or to produce, or to provide access to, any relevant documents, goods or other property for his/her inspection. Unless otherwise agreed by the parties, if a party so requests or if the arbitral tribunal considers it necessary, the expert shall, after delivery of his/her written or oral report, participate in a hearing where the parties have the opportunity to put questions to him and to present expert witnesses in order to testify on the points at issue. Article 4.27. Court Assistance in Taking Evidence. The arbitral tribunal or a party with the approval of the arbitral tribunal may request from a court of the Philippines assistance in taking evidence. The court may execute the request within its competence and according to its rules on taking evidence. The arbitral tribunal shall have the power to require any person to attend a hearing as a witness. The arbitral tribunal shall have the power to subpoena witnesses and documents when the relevancy of the testimony and the materiality thereof has been demonstrated to it. The arbitral tribunal may also require the retirement of any witness during the testimony of any other witness. A party may bring a petition under this Section before the court in accordance with the Rules of Court or the Special ADR Rules. Article 4.28. Rules Applicable to the Substance of Dispute. (a) The arbitral tribunal shall decide the dispute in accordance with such rules of law as are chosen by the parties as applicable to the substance of the dispute. Any designation of the law or legal system of a given state shall be construed, unless otherwise expressed, as directly referring to the substantive law of that state and not its conflict of laws rules. (b) Failing any designation by the parties, the arbitral tribunal shall apply the law determined by the conflict of laws rules, which it considers applicable.


(c) The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorized it to do so. (d) In all cases, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction. Article 4.29. Decision-Making by Panel of Arbitrators. In arbitral proceedings with more than one arbitrator, any decision of the arbitral tribunal shall be made, unless otherwise agreed by other parties, by a majority of all its members. However, questions of procedure may be decided by a presiding arbitrator , if so authorized by the parties or all members of the arbitral tribunal. Article 4.30. Settlement. If, during arbitral proceedings, the parties settle the dispute, the arbitral tribunal shall terminate the proceedings and, if requested by the parties and not objected to by the arbitral tribunal, record the settlement in the form of an arbitral award on agreed terms. An award on agreed terms shall be made in accordance with the provisions of Article 4.31 (Form and Contents of Award), and shall state that it is an award. Such an award has the same status and effect as any other award on the merits of the case. Article 4.31. Form and Contents of Award. (a) The award shall be made in writing and shall be signed by the arbitrator or arbitrators. In arbitral proceedings with more than one arbitrator, the signatures of the majority of all members of the arbitral tribunal shall suffice, provided that the reason for any omitted signature is stated. (b) The award shall state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given or the award is an award on agreed terms under paragraph (a) of Article 4.20 (Place of Arbitration). (c) The award shall state its date and the place of arbitration as determined in accordance with paragraph (a) of this Article. The award shall be deemed to have been made at that place. (d) After the award is made, a copy signed by the arbitrators in accordance with paragraph (a) of this Article shall be delivered. to each party. Article 4.32. Termination of Proceedings. (a) The arbitral proceedings are terminated by the final award or by an order of the arbitral tribunal in accordance with paragraph (b) of this Article. (b) The arbitral

tribunal shall issue an order for the termination of the arbitral proceedings when: (i) The claimant withdraws his/her/its claim, unless the respondent objects thereto and the arbitral tribunal recognized a legitimate interest on his/her/its part in obtaining a final settlement of the dispute; (ii) The parties proceedings;

agree

the

termination

of

the

(iii) The arbitral tribunal finds that the continuation of the proceedings has for any other reason become unnecessary or impossible. (c) The mandate of the arbitral tribunal ends with termination of the arbitral proceedings subject to the provisions of Articles 4.33 (Correction and Interpretation of Award, Additional Award) and paragraph (d) of Articles 4.34 (Application for Setting Aside an Exclusive Recourse against Arbitral Award). (d) Notwithstanding the foregoing, the arbitral tribunal may, for special reasons, reserve in the final award or order, a hearing to quantity costs and determine which party shall bear the costs or the division thereof as may be determined to be equitable. Pending determination of this issue, the award shall not be deemed final for purposes of appeal ,vacation, correction, or any post-award proceedings. Article 4.33. Correction and Interpretation of Award, Additional Award. (a) Within thirty (30) days from receipt of the award, unless another period of time has been agreed upon by the parties: (i) A party may, with notice to the other party, request the arbitral tribunal to correct in the award any errors in computation, any clerical or typographical errors or any errors of similar nature; (ii) A party may, it so agreed by the parties and with notice to the other party, request the arbitral tribunal to give an interpretation of a specific point or part of the award. (b) If the arbitral tribunal considers the request to be justified, It shall make the correction or give the interpretation within thirty (30) days from receipt of the request. The interpretation shall form part of the award. (c) The arbitral tribunal may correct any error of the type referred to in paragraph (a) of this Article on its own initiative within thirty (30) day from the date of the award (d) Unless otherwise agreed by the parties, a party may, with notice to the other party, request, within


thirty (30) days receipt of the award, the arbitral tribunal to make an additional award as to claims presented in the arbitral proceedings but omitted from the award. If the arbitral tribunal considers the request to be justified, it shall make the additional award within sixty (60) days (e) The arbitral tribunal may extend, if necessary, the period of time within which it shall make a correction interpretation or an additional award under paragraphs (a) and (b) of this Article. (f) The provisions of Article 4.31 (Form and Contents of Award) shall apply to a correction or interpretation of the award or to an additional award. Article 4.34. Aplication for Setting Aside an Exclusive Recourse against Arbitral Award. (a) Recourse to a court against an arbitral award may be made only by application for setting aside in accordance with second and third paragraphs of this Article. (b) An arbitral award may be set aside by the Regional Trial Court only If: (i) the party making the application furnishes proof that:

(aa) the subject-matter of the dispute is not capable of settlement by arbitration under the law of the Philippines; or (bb) the award is in conflict with the public policy of the Philippines. (c) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the award or, If a request had been made under Article 4.33 (Correction and Interpretation of Award, Additional Award) from the date on which that request has been disposed of by the Arbitral tribunal (d) The court, when asked to set aside an award, may, where appropriate and so requested by a party, suspend the setting aside proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity resume the arbitral proceedings or take such other action as in the arbitral tribunal's opinion will eliminate the grounds for setting aside. (e) A party may bring a petition under this Article before the court in accordance with the Special ADR Rules. RULE 6 – Recognition and Enforcement of Awards

(aa) a party to the arbitration agreement was under some incapacity ; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the Philippines; or (bb) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (cc) the award deals with a dispute not contemplated by or not failing within the terms of the submission to arbitration, or contains, decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only the part of the award which contains decisions on matters not submitted to arbitration may be set aside; or (dd) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of ADR Act from which the parties cannot derogate, or, falling such agreement, was not in accordance with ADR Act; or (ii) the Court finds that:

Article 4.35. Recognition and Enforcement. (a) A foreign arbitral award shall be recognized as binding and, upon petition in writing to the regional trial Court, shall be enforced subject to the provisions of this Article and of Article 4.36 (Grounds for Refusing Recognition or Enforcement). (b) The petition for recognition and enforcement of such arbitral awards shall be filled with the Regional trial Court In accordance with Special ADR Rules. (i) Convention Award - The New York Convention shall govern the recognition and enforcement of arbitral awards covered by said Convention. The petitioner shall establish that the country in which the foreign arbitration award was made is a party to the New York Convention (ii) Non-Convention Award – The recognition and enforcement of foreign arbitral awards not covered by the New York Convention shall be done in accordance with procedural rules to be promulgated by the Supreme Court. The court may, on grounds of comity and reciprocity, recognize and enforce a nonconvention award as a convention award. (c) The party relying on an award or applying for its enforcement shall file with the Regional Trial Court the


original or duly authenticated copy of the award and the original arbitration agreement or a duly authenticated copy thereof. If the award or agreement is not made in an official language of the Philippines, the party shall supply a duly certified translation thereof into such language. (d) A foreign arbitral award when confirmed by a court of a foreign country, shall be recognized and enforced as a foreign arbitral award and not as a judgment of a foreign court. (e) A foreign arbitral award when confirmed by the Regional Trial Court, shall be enforced in the same manner as final and executory decisions of courts of law of the Philippines. (f) If the Regional Trial Court has recognized the arbitral award but an application for rejection and/or) suspension of enforcement of that award is subsequently made, the Regional Trial Court may, if it considers the application to be proper, vacate or suspend the decision to enforce that award and may also, on the application of the party claiming recognition or enforcement of that award, order the other party seeking rejection or suspension to provide appropriate security. Article 4.36. Grounds for Refusing Recognition or Enforcement. A CONVENTION AWARD. Recognition or enforcement of an arbitral award, made in a state, which is a party to the New York Convention, may be refused, at the request of the party against whom it is provoked, only if the party furnishes to the Regional Trial Court proof that: (a) The parties to the arbitration agreement are, under the law applicable to them, under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or; failing any indication thereon, under the law of the country where the award was made; or (b) the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise in able to present his case; or (c) the award deals with dispute not contemplated by or not failing within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration; provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains

decisions on matters submitted to arbitration may be recognized and enforced; or (d) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration too place; or (e) the award has not become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, that award was made. Recognition and enforcement of an arbitral award may also be refused if the Regional Trial Court where recognition and enforcement is sought finds that: (a) the subject-matter of the dispute is not capable of settlement by arbitration under the law of Philippines; or (b) the recognition or enforcement of the award would be contrary to the public policy of the Philippines. A party to a foreign arbitration proceeding may op pose an application for recognition and enforcement of the arbitral award in accordance with the Special ADR Rules only on the grounds enumerated under paragraph (a) and (c) of Article 4.35 (Recognition and Enforcement). Any other ground raised shall be disregarded by the Regional Trial Court. B. NON-CONVENTION AWARD. (a) A foreign arbitral award rendered in a state which is not a party to the New York Convention will be recognized upon proof of the existence of comity and reciprocity and may be treated as a convention award. If not so treated and if no comity or reciprocity exists, the non-convention award cannot be recognized and/or enforced but may be deemed as presumptive evidence of a right as between the parties in accordance with Section 48 of the Rules of Court. (b) If the Regional Trial Court has recognized the arbitral award but a petition for suspension of enforcement of that award is subsequently made, the Regional Trial Court may, if it considers the petition to be proper, suspend the proceedings to enforce the award, and may also, on the application of the party claiming recognition or enforcement of that award, order the other party seeking suspension to provide appropriate security. (c) If the petition for recognition or enforcement of the arbitral award is filed by a party and a counter-petition for the rejection of the arbitral award is filed by the other party, the Regional Trial Court may, if it


considers the counter-petition to be proper but the objections thereto may be rectified or cured, remit the award to the arbitral tribunal for appropriate action and in the meantime suspend the recognition and enforcement proceedings and may also on the application of the petitioner order the counterpetitioner to provide appropriate security. Article 4.37. Appeal from Court Decision on Arbitral Awards. A decision of the Regional Trial Court recognizing, enforcing, vacating or setting aside an arbitral award may be appealed to the Court of Appeals in accordance with the rules of procedure to be promulgated by the Supreme Court.

Article 4.40. Legal Representation in International Commercial Arbitration. In international commercial arbitration conducted in the Philippines, a party may be represented by any person of his/her choice: Provided, that such representative, unless admitted to the practice of law in the Philippines, shall not be authorized to appear as counsel in any Philippine court or any other quasi-judicial body whether or not such appearance is in relation to the arbitration in which he/she appears. Article 4.41. Confidentially of Arbitration Proceedings. The arbitration proceedings, including the records, evidence and the arbitral award, shall be considered confidential and shall not be poolside except:

The losing party who appeals from the judgment of the court recognizing and enforcing an arbitral award shall be required requ ired by the Court of Appeals to post a counterc ounter bond executed if i f favor of the prevailing party p arty equal to the amount of the award in accordance with the Special ADR Rules.

(b) for the limited purpose of disclosing to the court relevant documents in cases where resort to the court is allowed herein.

Any stipulation by the parties that the arbitral tribunal’s award or decision shall be final, and therefore not appealable, is valid. Such stipulation carries with it a waiver of the right to appeal from an arbitral award but without prejudice to judicial review by way of certiorari under Rule 65 of the Rules of Court.

Provided, however, that the court in which the action or the appeal is pending p ending may issue a protective order to prevent or prohibit disclosure of documents or information containing secret processes, developments, research and other information where it is shown that the applicant shall be materially prejudiced by an authorized disclosure thereof.

Article 4.38. Venue and Jurisdiction. Proceedings for recognition and enforcement of an arbitration agreement or for vacation or setting aside of an arbitral award, and any application with a court for arbitration assistance and supervision, except appeal, shall be deemed as special proceedings and shall be filed with the Regional Trial Court where:

Article 4.42. Summary nature of proceedings before the court. A petition for recognition and enforcement of awards brought before the court shall be heard and dealt with summarily in accordance with the Special ADR Rules.

(a) the arbitration proceedings are conducted; c onducted; (b) where the asset to be attached or levied upon, or the act to be enjoined enjoin ed is located; (c) where any of the parties to the dispute resides or has its place of business; or (d) in the National Capital Judicial Region at the option of the applicant. Article 4.39. Notice of Proceedings to Parties. In a special proceeding for recognition and enforcement of an arbitral award, the court shall send notice to the parties at their address of record in the arbitration, or if any party cannot be served notice at such address, at such party’s last known address. address. The notice shall be sent at least fifteen (15) days before the date set for the initial hearing of the application.

(a) with the consent of the parties; or

Article 4.43. Death of a Party. Where W here a party dies after making a submission or a contract to arbitrate as prescribed in these Rules, the proceedings may be begun or continued upon the application of, or notice to, his/her executor or administrator, or temporary administrator of his/her estate. In any such case, the court may issue an order extending the time within which notice of a motion to recognize or vacate an award must be served. Upon recognizing an award, where a party has died since it was filed or delivered, the court must enter judgement in the name of the original party; and the proceedings thereupon are the same as where a party dies after a verdict. Article 4.44. Multi-Party Arbitration. When a single arbitration involves more than two parties, the foregoing rules, to the extent possible, shall be used, subject to such modifications consistent with this Chapter as the arbitral tribunal shall deem appropriate to address possible complexities of a multi-party arbitration.


Article 4.45. Consolidation of Proceedings and Concurrent Hearings. – The parties and the arbitral tribunal may agree – (a) that the arbitration proceedings shall be consolidated with other arbitration proceedings; or (b) that concurrent hearings shall be held, on such terms as may be agreed. Unless the parties agree to confer such power on the arbitral tribunal, the tribunal has no power to order consolidation of arbitration proceedings or concurrent hearings. Article 4.46. Costs. (a) The arbitral tribunal shall fix the costs of arbitration in its award. The term "costs" include only: (i) The fees of the arbitral tribunal to be stated separately as to each arbitrator and to be fixed by the tribunal itself in accordance with the paragraph (b) of this Article; (ii) The travel and other expenses incurred by the arbitrators;

furnish a statement setting forth the basis for establishing fees which is customarily followed in international cases in which the authority appoints arbitrators. If the appointing authority consents to provide such a statement, the arbitral tribunal, in fixing its fees, shall take such information into account to the extent that it considers appropriate in the circumstances of the case. (c) In cases referred to in the second and third subparagraphs of paragraph (b) of this Article, when a party so requests and the appointing authority consents to perform the function, the arbitral tribunal shall fix its fees only after consultation with the appointing authority which may make any comment it deems appropriate to the arbitral tribunal concerning the fees. (d) Except as provided in the next sub-paragraph of this paragraph, the costs of arbitration shall, in principle, be borne by the unsuccessful party. However, the arbitral tribunal may apportion each of such costs between the parties if it determines that apportionment is reasonable, taking into account the circumstances of the case.

(iv) The travel and other expenses of witnesses to the extent such expenses are approved by the arbitral tribunal;

With respect to the costs of legal representation and assistance referred to in paragraph (c) of paragraph (a) (iii) of this Article, the arbitral tribunal, taking into account the circumstances of the case, shall be free to determine which party shall bear such costs or may apportion such costs between the parties if it determines that appointment is reasonable.

(v) The costs for legal representation and assistance of the successful party if such costs were claimed during the arbitral proceedings, and only to the extent that the arbitral tribunal determines that the amount of such costs is reasonable;

When the arbitral tribunal issues an order for the termination of the arbitral proceedings or makes an award on agreed terms, it shall fix the costs of arbitration referred to in paragraphs (b), (c) and (d) of this Article in the context of that order or award.

(v1) Any fees and expenses of the appointing authority.

(e) The arbitral tribunal, on its establishment, may request each party to deposit an equal amount as an advance for the costs referred to in paragraphs (i), (ii) and (iii) of paragraph (a) of this Article.

(iii) The costs of expert advice and of other assistance required by the arbitral tribunal;

(b) The fees of the arbitral tribunal shall be reasonable in amount, taking into account the amount in dispute, the complexity of the subject matter, the time spent by the arbitrators and any other relevant circumstances of the case. If an appointing authority has been agreed upon by the parties and if such authority has issued a schedule of fees for arbitrators in international cases which it administers, the arbitral tribunal in fixing its fees shall take that schedule of fees into account to the extent that it considers appropriate in the circumstances of the case. If such appointing authority has not issued a schedule of fees for arbitrators in international cases, any party may, at any time request the appointing authority to

During the course of the arbitral proceedings, the arbitral tribunal may request supplementary deposits from the parties. If an appointing authority has been agreed upon by the parties and when a party so requests and the appointing authority consents to perform the function, the arbitral tribunal shall fix the amounts of any deposits or supplementary deposits only after consultation with the appointing authority which may make any comments to the arbitral tribunal which it deems appropriate concerning the amount of such deposits and supplementary deposits.


If the required deposits are not paid in full within thirty (30) days after receipt of the request, the arbitral tribunal shall so inform the parties in order that the required payment may be made. If such payment is not made, the arbitral tribunal may order the suspension or termination of the arbitral proceedings. After the award has been made, the arbitral tribunal shall render an accounting to the parties of the deposits received and return any unexpended balance to the parties. CHAPTER 5 DOMESTIC ARBITRATION RULE 1 – General Provisions Article 5.1. Scope of Application. (a) Domestic arbitration, which is not international as defined in paragraph C8 of Article 1.6 shall continue to be governed by Republic Act No. 876, otherwise known as "The Arbitration Law", as amended by the ADR Act. Articles 8, 10, 11, 12, 13, 14, 18 and 19 and 29 to 32 of the Model Law and Sections 22 to 31 of the ADR Act are specifically applicable to domestic arbitration. In the absence of a specific applicable provision, all other rules applicable to international commercial arbitration may be applied in a suppletory manner to domestic arbitration. (b) This Chapter shall apply to domestic arbitration whether the dispute is commercial, as defined in Section 21 of the ADR Act, or non-commercial, by an arbitrator who is a private individual appointed by the parties to hear and resolve their dispute by rendering an award; Provided that, although a construction dispute may be commercial, it shall continue to be governed by E.O. No. 1008, s.1985 and the rules promulgated by the Construction Industry Arbitration Commission. (c) Two or more persons or parties may submit to arbitration by one or more arbitrators any controversy existing between them at the time of the submission and which may be the subject of an action; or the parties to any contract may in such contract agree to settle by arbitration a controversy thereafter arising between them. Such submission or contract shall be valid, enforceable and irrevocable, save upon such grounds as exist at law for the revocation of any contract. Such submission or contract may include questions arising out of valuations, appraisals or other controversies which may be collateral, incidental, precedent or subsequent to any dispute between the parties.

A controversy cannot be arbitrated where one of the parties to the controversy is an infant, or a person judicially declared to be incompetent, unless the appropriate court having jurisdiction approved a petition for permission to submit such controversy to arbitration made by the general guardian or guardian ad litem of the infant or of the incompetent. But where a person capable of entering into a submission or contract has knowingly entered into the same with a person incapable of so doing, the objection on the ground of incapacity can be taken only in behalf of the person so incapacitated. Article 5.2. Delivery and Receipt of Written Communications. (a) Except as otherwise agreed by the parties, a written communication from one party to the other or to the arbitrator or to an arbitration institution or from the arbitrator or arbitration institution to the parties shall be delivered to the addressee personally, by registered mail or by courier service. Such communication shall be deemed to have been received on the date it is delivered at the addressee’s address of record, place of business, residence or last known address. The communication, as appropriate, shall be delivered to each party to the arbitration and to each arbitrator, and, in institutional arbitration, one copy to the administering institution. (b) During the arbitration proceedings, the arbitrator may order a mode of delivery and a rule for receipt of written communications different from that provided in paragraph (a) of this Article. (c) If a party is represented by counsel or a representative, written communications for that party shall be delivered to the address of record of such counsel or representative. (d) Except as the parties may agree or the arbitrator may direct otherwise, a written communication may be delivered by electronic mail or facsimile transmission or by such other means that will provide a record of the sending and receipt thereof at the recipient’s mailbox (electronic inbox). Such communication shall be deemed to have been received on the same date of its transmittal and receipt in the mailbox (electronic inbox). Article 5.3. Waiver of Right to Object. (a) A party shall be deemed to have waived his right to object to noncompliance with any non-mandatory provision of these Rules (from which the parties may derogate) or any requirement under the arbitration agreement when: (i) he/she/it knows of such non-compliance; and (ii) proceeds with the arbitration without stating his/her/its objections to such non-compliance without


undue delay or if a time-limit is provided therefor, within such period of time. (b) If an act is required or allowed to be done under this Chapter, unless the applicable rule or the agreement of the parties provides a different period for the act to be done, it shall be done within a period of thirty (30) days from the date when such act could have been done with legal effect. Article 5.4. Extent of Court Intervention. In matters governed by this Chapter, no court shall intervene except in accordance with the Special ADR Rules. Article 5.5. Court or Other Authority for Certain Functions of Arbitration Assistance and Supervision. The functions referred to in paragraphs (c) and (d) of Article 5.10 (Appointment of Arbitrators), paragraph (a) of Article 5.11 (Grounds for Challenge), and paragraph (a) of Article 5.13 (Failure or Impossibility to Act), shall be performed by the appointing authority, unless the latter shall fail or refuse to act within thirty (30) days from receipt of the request in which case, the applicant may renew the application with the court. RULE 2 – Arbitration Agreement Article 5.6. Form of Arbitration Agreement. An arbitration agreement shall be in writing. An agreement is in writing if it is contained in a document signed by the parties or in an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement, or in an exchange of statements of claim and defense in which the existence of an agreement is alleged by one party and not denied by the other. 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 reference is such as to make that clause part of the contract. Article 5.7. Arbitration Agreement and Substantive Claim Before Court. (a) A party to an action may request the court before which it is pending to stay the action and to refer the dispute to arbitration in accordance with their arbitration agreement not later than the pre-trial conference. Thereafter, both parties may make a similar request with the court. The parties shall be referred to arbitration unless the court finds that the arbitration agreement is null and void, inoperative or incapable of being performed. (b) Where an action referred to in paragraph (a) of this Article has been brought, arbitral proceedings may nevertheless be commenced or continued, and an award may be made, while the issue is pending before the court.

(c) Where the action is commenced by or against multiple parties, one or more of whom are parties to an arbitration agreement, the court shall refer to arbitration those parties who are bound by the arbitration agreement although the civil action may continue as to those who are not bound by such arbitration agreement. Article 5.8. Arbitration Agreement and Interim Measures by Court. (a) It is not incompatible with an arbitration agreement for a party to request from a court, before the constitution of the arbitral tribunal or during arbitral proceedings, an interim measure of protection and for a court to grant such measure. (b) After the constitution of the arbitral tribunal and during arbitral proceedings, a request for an interim measure of protection, or modification thereof, may be made with the arbitral tribunal or to the extent that the arbitral tribunal has no power to act or is unable to act effectively, the request may be made with the court. (c) The following rules on interim or provisional relief shall be observed: (i) Any party may request that interim or provisional relief be granted against the adverse party. (ii) Such relief may be granted: (aa) To prevent irreparable loss or injury; (bb) To provide security for the performance of an obligation; (cc) To produce or preserve evidence; or (dd) To compel any other appropriate act or omissions. (iii) The order granting provisional relief may be conditioned upon the provision of security or any act or omission specified in the order. (iv) Interim or provisional relief is requested by written application transmitted by reasonable means to the arbitral tribunal and the party against whom relief is sought, describing in appropriate detail of the precise relief, the party against whom the relief is requested, the ground for the relief, and the evidence supporting the request. (v) The order either grating or denying an application for interim relief shall be binding upon the parties. (vi) Either party may apply with the court for assistance in implementing or enforcing an interim measure ordered by an arbitral tribunal.


(vii) A party who does not comply with the order shall be liable for all damages, resulting from noncompliance, including all expenses, and reasonable attorney’s fees, paid in obtaining the order’s judicial enforcement. (d) Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order any party to take such interim measures of protection as the arbitral tribunal may consider necessary in respect of the subject matter of the dispute following the Rules in this Article. Such interim measures may include but shall not be limited to preliminary injunction directed against a party, appointment of receivers or detention, preservation, inspection of property that is the subject of the dispute in arbitration. Either party may apply with the court for assistance in implementing or enforcing an interim measure ordered by an arbitral tribunal.

their appointment, the appointment shall be made, upon request of a party, by the appointing authority; (ii) in an arbitration with a sole arbitrator, if the parties are unable to agree on the arbitrator, he/she shall be appointed, upon request of a party, by the appointing authority. (d) Where, under an appointment procedure agreed upon by the parties, (i) a party fails to act or appoint an arbitrator as required under such procedure, or (ii) the parties, or two (2) arbitrators, are unable to appoint an arbitrator or reach an agreement expected of them under such procedure, or

RULE 3. Composition of Arbitral Tribunal

(iii) a third party, including an institution, fails to appoint an arbitrator or to perform any function entrusted to it under such procedure, or

Article 5.9. Number of Arbitrators. The parties are free to determine the number of arbitrators. Failing such determination, the number of arbitrators shall be three (3).

(iv) The multiple claimants or the multiple respondents is/are unable to appoint its/their respective arbitrator, any party may request the appointing authority to appoint an arbitrator.

Article 5.10. Appointment of Arbitrators. (a) Any person appointed to serve as an arbitrator must be of legal age, in full enjoyment of his/her civil rights and knows how to read and write. No person appointed to serve as an arbitrator shall be related by blood or marriage within the sixth degree to either party to the controversy. No person shall serve as an arbitrator in any proceeding if he/she has or has had financial, fiduciary or other interest in the controversy or cause to be decided or in the result of the proceeding, or has any personal bias, which might prejudice the right of any party to a fair and impartial award.

In making the appointment, the appointing authority shall summon the parties and their respective counsel to appear before said authority on the date, time and place set by it, for the purpose of selecting and appointing a sole arbitrator. If a sole arbitrator is not appointed in such meeting, or the meeting does not take place because of the absence of either or both parties despite due notice, the appointing authority shall appoint the sole arbitrator.

No party shall select as an arbitrator any person to act as his/her champion or to advocate his/her cause. (b) The parties are free to agree on a procedure of appointing the arbitrator or arbitrators. If, in the contract for arbitration or in the submission, a provision is made for a method of appointing an arbitrator or arbitrators, such method shall be followed. (c) Failing such agreement, (i) in an arbitration with three (3) arbitrators, each party shall appoint one (1) arbitrator, and the two (2) arbitrators thus appointed shall appoint the third arbitrator; if a party fails to appoint the arbitrator within thirty (30) days of receipt of a request to do so from the other party, or if the two arbitrators fail to agree on the third arbitrator within thirty (30) days of

(e) If the default appointment of an arbitrator is objected to by a party on whose behalf the default appointment is to be made, and the defaulting party requests the appointing authority for additional time to appoint his/her arbitrator, the appointing authority, having regard to the circumstances, may give the requesting party not more than thirty (30) days to make the appointment. If the objection of a party is based on the ground that the party did not fail to choose and appoint an arbitrator for the arbitral tribunal, there shall be attached to the objection the appointment of an arbitrator together with the latter’s acceptance thereof and curriculum vitae. Otherwise, the appointing authority shall appoint the arbitrator for that party. (f) In making a default appointment, the appointing authority shall have regard to such considerations as are likely to secure the appointment of an independent and impartial arbitrator. In order to achieve speedy and impartial justice and to moderate the cost of


arbitration, in choosing an arbitrator, the appointing authority shall give preference to a qualified person who has a place of residence or business in the same general locality as the agreed venue of the arbitration and who is likely to accept the arbitrator’s fees agreed upon by the parties, or as fixed in accordance either with the internal guidelines or the Schedule of Fees approved by the administering institution or by the appointing authority. (g) The appointing authority shall give notice in writing to the parties of the appointment made or its inability to comply with the Request for Appointment and the reasons why it is unable to do so, in which later case, the procedure described under Article 5.5 (Court or Other Authority for Certain Functions of arbitration Assistance and Supervision) shall apply. (h) A decision on a matter entrusted by this Article to the appointing authority shall be immediately executory and not subject to appeal or motion for reconsideration. The appointing authority shall be deemed to have been given by the parties discretionary authority in making the appointment but in doing so, the appointing authority shall have due regard to any qualification or disqualification of an arbitrator/s under paragraph (a) of Article 5.10 (Appointment of Arbitrators) as well as any qualifications required of the arbitrator/s by the agreement of the parties and to such considerations as are likely to secure the appointment of an independent and impartial arbitrator. (i) The chairman of the arbitral tribunal shall be selected in accordance with the agreement of the parties and/or the rules agreed upon or, in default thereof, by the arbitrators appointed. (j) Any clause giving one of the agreement, if otherwise valid, shall be construed as permitting the appointment of one (1) arbitrator by all claimants and one (1) arbitrator by all respondents. The third arbitrator shall be appointed as provided above.

(ii) the name/s and curricula vitae of the appointed arbitrator/s; (iii) the acceptance of his/her/its appointment of the appointed arbitrator/s; (iv) any qualification or disqualification of the arbitrator as provided in the arbitration agreement; (v) an executive summary of the dispute which should indicate the nature of the dispute and the parties thereto; (vi) principal office and officers of a corporate party; (vii) the person/s appearing as counsel for the party/ies; and (viii) information about arbitrator’s fees where there is an agreement between the parties with respect thereto. In institutional arbitration, the request shall include such further information or particulars as the administering institution shall require. (m) A copy of the Request for Appointment shall be delivered to the adverse party. Proof of such delivery shall be included in, and shall form part of, the Request for Appointment filed with the appointing authority. (n) A party upon whom a copy of the Request for Appointment is communicated may, within seven (7) days of its receipt, file with the appointing authority his/her/its objection/s to the Request or ask for an extension of time, not exceeding thirty (30) days from receipt of the request, to appoint an arbitrator or act in accordance with the procedure agreed upon or provided by these Rules.

If all the claimants or all the respondents cannot decide among themselves on an arbitrator, the appointment shall be made for them by the appointing authority.

Within the aforementioned periods, the party seeking the extension shall provide the appointing authority and the adverse party with a copy of the appointment of his/her arbitrator, the latter’s curriculum vitae, and the latter’s acceptance of the appointment. In the event that the said party fails to appoint an arbitrator within said period, the appointing authority shall make the default appointment.

(k) The appointing authority may adopt Guidelines for the making of a Request for Appointment.

(o) An arbitrator, in accepting an appointment, shall include, in his/her acceptance letter, a statement that:

(l) Except as otherwise provided in the Guidelines of the appointing authority, if any, a Request for Appointment shall include, as applicable, the following:

(i) he/she agrees to comply with the applicable law, the arbitration rules agreed upon by the parties, or in default thereof, these Rules, and the Code of Ethics for Arbitrators in Domestic Arbitration, if any;

(i) the demand for arbitration;

(ii) he/she accepts as compensation the arbitrator’s fees agreed upon by the parties or as determined in


accordance with the rules agreed upon by the parties, or in default thereof, these Rules; and (iii) he agrees to devote as much time and attention to the arbitration as the circumstances may require in order to achieve the objective of a speedy, effective and fair resolution of the dispute. Article 5.11. Grounds for Challenge. (a) When a person is approached in connection with his/her possible appointment as an arbitrator, he/she shall disclose any circumstance likely to give rise to justifiable doubts as to his/her impartiality, independence, qualifications and disqualifications. An arbitrator, from the time of his/her appointment and throughout the arbitral proceedings, shall without delay, disclose any such circumstances to the parties unless they have already been informed of them by him/her. A person, who is appointed as an arbitrator notwithstanding the disclosure made in accordance with this Article, shall reduce the disclosure to writing and provide a copy of such written disclosure to all parties in the arbitration. (b) An arbitrator may be challenged only if: (i) circumstances exist that give rise to justifiable doubts as to his/her impartiality or i ndependence; (ii) he/she does not possess qualifications as provided for in this Chapter or those agreed to by the parties; (iii) he/she is disqualified to act as arbitration under these Rules; (iv) he refuses to respond to questions by a party regarding the nature and extent of his professional dealings with a party or its counsel. (c) If, after appointment but before or during hearing, a person appointed to serve as an arbitrator shall discover any circumstances likely to create a presumption of bias, or which he/she believes might disqualify him/her as an impartial arbitrator, the arbitrator shall immediately disclose such information to the parties. Thereafter, the parties may agree in writing: (i) to waive the circumstances; or

presumptive

presumption of bias, he/she shall immediately disclose those circumstances to the parties. A written disclosure is not required where it is made during the arbitration and it appears in a written record of the arbitration proceedings. (e) An arbitrator who has or has had financial or professional dealings with a party to the arbitration or to the counsel of either party shall disclose in writing such fact to the parties, and shall, in good faith, promptly respond to questions from a party regarding the nature, extent and age of such financial or professional dealings. Article 5.12. Challenge Procedure. (a) The parties are free to agree on a procedure for challenging an arbitrator, subject to the provisions of paragraph (c) of this Article. (b) Failing such agreement, a party who intends to challenge an arbitrator shall, within fifteen (15) days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstance referred to in paragraph (b) of Article 5.11 (Grounds for Challenge), send a written statement of the reasons for the challenge to the arbitral tribunal. Unless the challenged arbitrator withdraws from his/her office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge. (c) If a challenge under any procedure agreed upon by the parties or under the procedure of paragraph (b) of this Article in not successful, the challenging party may request the appointing authority, within thirty (30) days after having received notice of the decision rejecting the challenge, to decide on the challenge, which decision shall be immediately executory and not subject to appeal or motion for reconsideration. While such a request is pending, the arbitral tribunal, including the challenged arbitrator, may continue the arbitral proceedings and make an award. (d) If a request for inhibition is made, it shall be deemed as a challenge. (e) A party may challenge an arbitrator appointed by him/her/it, or in whose appointment he/she/it has participated, only for reasons of which he/she/it becomes aware after the appointment has been made.

disqualifying

(ii) to declare the office of such arbitrator vacant. Any such vacancy shall be filed in the same manner the original appointment was made. (d) After initial disclosure is made and in the course of the arbitration proceedings, when the arbitrator discovers circumstances that are likely to create a

(f) The challenge shall be in writing and it shall state specific facts that provide the basis for the ground relied upon for the challenge. A challenge shall be made within fifteen (15) days from knowledge by a party of the existence of a ground for a challenge or within fifteen (15) days from the rejection by an arbitrator of a part y’s request for his/her inhibition.


(g) Within fifteen (15) days of receipt of the challenge, the challenged arbitrator shall decide whether he/she shall accept the challenge or reject it. If he/she accepts the challenge, he/she shall voluntarily withdraw as arbitrator. If he/she rejects it, he/she shall communicate, within the same period of time, his/her rejection of the challenge and state the facts and arguments relied upon for such rejection. (h) An arbitrator who does not accept the challenge shall be given an opportunity to be heard. (i) Notwithstanding the rejection of the challenge by the arbitrator, the parties may, within the same fifteen (15) day period, agree to the challenge. (j) In default of an agreement of the parties to agree on the challenge thereby replacing the arbitrator, the arbitral tribunal shall decide on the challenge within thirty (30) days from receipt of the challenge. (k) If the challenge procedure as agreed upon by the parties or as provided in this Article is not successful, or a party or the arbitral tribunal shall decline to act, the challenging party may request the appointing authority in writing to decide on the challenge within thirty (30) days after having received notice of the decision rejecting the challenge. The appointing authority shall decide on the challenge within fifteen (15) days from receipt of the request. If the appointing authority shall fail to act on the challenge within thirty (30) days from the date of its receipt or within such further time as it may fix, with notice to the parties, the requesting party may renew the request with the court. The request made under this Article shall include the challenge, the reply or explanation of the challenged arbitrator and relevant communication, if any, from either party, or from the arbitral tribunal. (n) Every communication required or agreement made under this Article in respect of a challenge shall be delivered, as appropriate, to the challenged arbitrator, to the parties, to the remaining members of the arbitral tribunal and to the institution administering the arbitration, if any. (m) A challenged arbitrator shall be replaced if: (i) he/she withdraws as arbitrator, or (ii) the parties agree in writing to declare the office of arbitrator vacant, or (iii) the arbitral tribunal decides the challenge and declares the office of the challenged arbitrator vacant, or

(iv) the appointing authority decides the challenge and declares the office of the challenged arbitrator vacant, or (v) in default of the appointing authority, the court decides the challenge and declares the office of the challenged arbitrator vacant. (n) The decision of the parties, the arbitral tribunal, the appointing authority, or in proper cases, the court, to accept or reject a challenge is not subject to appeal or motion for reconsideration. (o) Until a decision is made to replace the arbitrator under this Article, the arbitration proceeding shall continue notwithstanding the challenge, and the challenged arbitrator shall continue to participate therein as an arbitrator. However, if the challenge incident is raised before the court, because the parties, the arbitral tribunal or appointing authority failed or refused to act within the period provided in paragraphs (j) and (k) of this Article, the arbitration proceeding shall be suspended until after the court shall have decided the incident. The arbitration shall be continued immediately after the court has delivered an order on the challenging incident. If the court agrees that the challenged arbitrator shall be replaced, the parties shall immediately replace the arbitrator concerned. (p) The appointment of a substitute arbitrator shall be made pursuant to the procedure applicable to the appointment of the arbitrator being replaced. Article 5.13. Failure or Impossibility to Act. (a) If an arbitrator becomes de jure or de facto unable to perform his/her functions or for other reasons fails to act without undue delay, his/her mandate terminates if he/she withdraws from his/her office or if the parties agree on the termination. Otherwise, if a controversy remains concerning any of these grounds, any party may request the appointing authority to decide on the termination of the mandate, which decision shall be immediately executory and not subject to appeal or motion for reconsideration. (b) If, under this Article or Article 5.12 (Challenge Procedure), an arbitrator withdraws from his/her office or a party agrees to the termination of the mandate of an arbitrator, this does not imply acceptance Of the validity of any ground referred to in this Article 5.12. Article 5.14. Appointment of Substitute Arbitrator. Where the mandate of an arbitrator terminates under Articles 5.12 (Challenge Procedure) or 5.13 (Failure or Impossibility) or because of his withdrawal from office for any other reason or because of the revocation of his mandate by agreement of the parties or in any other


case of termination of his/her mandate, a substitute arbitrator shall be appointed according to the rules applicable to the arbitrator being replaced. RULE 4 – Jurisdiction of Arbitral Tribunal Article 5.15 Competence of Arbitral Tribunal to Rule on its Jurisdiction. (a) When a demand for arbitration made by a party to a dispute is objected to by the adverse party, the arbitral tribunal shall, in the first instance, resolve the objection when made on any of the following grounds: (i) the arbitration agreement is in existent, void, unenforceable or not binding upon a person for any reason, including the fact that the adverse party is not privy to said agreement; or (ii) the dispute is not arbitrable or is outside the scope of the arbitration agreement; or (iii) the dispute is under the original and exclusive jurisdiction of a court or quasi-judicial body, (b) If a party raises any of the grounds for objection, the same shall not preclude the appointment of the arbitrator/s as such issue is for the arbitral tribunal to decide. The participation of a party in the selection and appointment of an arbitrator and the filling of appropriate pleadings before the arbitral tribunal to question its jurisdiction shall not be construed as a submission to the jurisdiction of the arbitral tribunal or of a waiver of his/her/its right to assert such grounds to challenge the jurisdiction of the arbitral tribunal or the validity of the resulting award. (c) The respondent in the arbitration may invoke any such grounds to question before the court the existence, validity, or enforceability of the arbitration agreement, or the propriety of the arbitration, or the jurisdiction of the arbitrator and invoke the pendency of such action as ground for suspension of the arbitration proceeding. The arbitral tribunal, having regard to the circumstances of the case, and the need for the early and expeditious settlement of the dispute, in light of the facts and arguments raised to question its jurisdiction, may decide either to suspend the arbitration until the court has made a decision on the issue or continue with arbitration. (d) If a dispute is, under an arbitration agreement, to be submitted to arbitration, but before arbitration is commenced or while it is pending, a party files an action before the court which embodies or includes as a cause of action the dispute that is to be submitted to arbitration the filling of such action shall not prevent the commencement of the arbitration or the

continuation of the arbitration until the award is issued. Article 5.16 Power of Arbitral Tribunal to Order Interim Measures. (a) Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order any party to take such interim measures of protection as the arbitral tribunal may consider necessary in respect of the subject matter of the dispute following the rules in this Article. Such interim measures may include, but shall not be limited to preliminary injunction directed against a party, appointment of receivers or detention preservation, inspection of property that is the subject of the dispute in arbitration. (b) After the constitution of the arbitral tribunal, and during arbitral proceedings, a request for interim measures of protection, or modification thereof, shall be made with the arbitral tribunal. The arbitral tribunal is deemed constituted when the s ole arbitrator or the third arbitrator, who has been nominated, has accepted the nomination and written communication of said nomination and acceptance has been received by the party making the request. (c) The following rules on interim or provisional relief shall be observed: (i) Any party may request that the provisional or interim relief be granted against the adverse party. (ii) Such relief may be granted: (aa) To prevent irreparable loss or injury; (bb) To provide security for the performance of an obligation; (cc) To produce or preserve evidence; or (dd) To compel any other appropriate act or omissions. (iii) The order granting provisional relief may be conditioned upon the provision of security or any act or omission specified in the order. (iv) Interim or provisional relief is requested by written application transmitted by reasonable means to the arbitral tribunal and the party against whom relief is sought, describing in appropriate detail the precise relief, the party against whom the relief is requested, the ground for the relief and the evidence supporting the request. (v) The order either granting or denying an application for interim relief shall be binding upon the parties.


(vi) Either party may apply with the court for assistance in implementing or enforcing an interim measure ordered by an arbitral tribunal. (vii) A party who does not comply with the order shall be liable for all damages, resulting from noncompliance, including all expenses, and reasonable attorney’s fee paid in obtaining the order’s judicial enforcement. RULE 5 – Conduct of Arbitral Proceedings Article 5.17. Equal Treatment of Parties. The parties shall be treated with equally and each party shall be given a full opportunity of presenting his/her/its case. Article 5.18 Determination of Rules of Procedure. (a) Subjected to the provisions of these Rules, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings. (b) Failing such agreement, the arbitral tribunal may subject to the provision of the ADR Act, conduct the arbitration in such manner as it considers appropriate. The power conferred upon the arbitral tribunal includes the power to determine admissibility, relevance, materially and weight of evidence. Article 5.19 Place of Arbitration. (a) The parties are free to agree on the place of arbitration. Failing such agreement, the place of arbitration shall be in Metro Manila unless the arbitral tribunal, having regard to the circumstances of the case, including the convenience of the parties, shall decide on a different place of arbitration. (b) The arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of goods, other property or documents. Article 5.20 Commencement of Arbitral Proceedings (a) Where there is a prior arbitration agreement between the parties, arbitration is deemed commenced as follows: (i) In institutional arbitration is commenced in accordance with the arbitration rules of the institution agreed upon by the parties. (ii) In ad hoc arbitration, arbitration is commenced by the claimant upon delivering to the respondent a demand for arbitration. A demand may be in any form stating: (aa) the name, address and description of each of the parties;

(bb) a description of the nature and circumstances of the dispute giving rise to the claim; (cc) a statement of the relief sought, including the amount of the claim; (dd) the relevant agreements, if any, including the arbitration agreement, a copy of which shall be attached; and (ee) appointment of arbitrators and / or demand to appoint. (b) If the arbitration agreement provides for the appointment of a sole arbitrator, the demand shall include an invitation of the claimant to the respondent to meet and agree upon such arbitrator, the place, time and date stated therein which shall not be less than thirty (30) days from receipt of the demand. (c) If the arbitration agreement provides for the establishment of an arbitral tribunal of three (3) arbitrators, the demand shall name the arbitrator appointed by the claimant. It shall include the curriculum vitae of the arbitrator appointed by the claimant and the latter’s acceptance of the appointment. (d) Where there is no prior arbitration agreement, arbitration may be initiated by one party through a demand upon the other to submit their dispute to arbitration. Arbitration shall be deemed commenced upon the agreement by the other party to submit the dispute to arbitration. (e) The demand shall required the respondent to name his/her/its/ arbitrator within a period which shall not be less than fifteen (15) days from receipt of the demand. This period may be extended by agreement of the parties. Within said period, the respondent shall give a written notice to the claimant of the appointment of the respondent’s arbitrator and attach to the notice the arbitrator’s curriculum vitae and the latter’s acceptance of the appointment. Article 5.21 Language (a) The parties are free to agree on the language or languages to be used in the arbitral proceedings. Failing such agreement, the language to be used shall be English or Filipino. The language/s agreed, unless otherwise specified therein, shall be in all hearings and all written statements, orders or other communication by the parties and the arbitral tribunal. (b) The arbitral tribunal may order that any documentary evidence shall be accompanied by a translation into the language or languages agreed upon by the parties in accordance with paragraph (a) of this Article.


Article 5.22 Statement of Claim and Defense (a) Within the period of time agreed by the parties or determined by the arbitral tribunal, the claimant shall state the facts supporting his/her/its claim, the points at issue and the relief or remedy sought, and the respondent shall state his/her defense in respect of these particulars, unless the parties may have otherwise agreed as to the required elements of such statements. The parties may submit with their statements all documents they consider to be relevant or may add a reference to the documents or other evidence they will submit. (b) Unless otherwise agreed by the parties, either party may amend or supplement his/her/its claim or defense during the course of the arbitral proceedings, unless the arbitral tribunal considers it inappropriate to allow such amendments having regard to the delay in making it. Article 5.23 Hearing and Written Proceedings (a) In ad hoc arbitration, the procedure determined by the arbitrator, with the agreement of the parties, shall be followed. In institutional arbitration, the applicable rules of procedure of the arbitration ins titution shall be followed. In default of agreement of the parties, the arbitration procedure shall be as provided in this Chapter. (b) Within thirty (30) days from the appointment of the arbitrator or the constitution of an arbitral tribunal, the arbitral tribunal shall call the parties and their respective counsels to a pre-hearing conference to discuss the following matters: (i) The venue or place/s where the arbitration proceeding may be conducted in an office space, a business center, a function room or any suitable place agreed upon by the parties and the arbitral tribunal, which may vary per session/hearing/conference; (ii) The manner of recording the proceedings; (iii) The periods for the communication of the statement of claims with or without counterclaims, and answer to the counterclaim/s and the form and contents of such pleadings. (iv) The definition of the issues submitted to the arbitral tribunal for determination and the summary of the claims and counterclaims of the parties; (v) The manner by which evidence may be offered if an oral hearing is required, the submission of sworn written statements in lieu of oral testimony, the crossexamination and further examination of witnesses; (vi) The delivery of certain types of communications such as pleadings, terms of reference, order granting

interim relief, final award and the like that, if made by electronic or similar means, shall require further confirmation in the form of a hard copy or hard copies delivered personally or by registered post. (vii) The issuance of subpoena or subpoena duces tecum by the arbitral tribunal to compel the production of evidence if either party shall or is likely to request it; (viii) The manner by which expert testimony will be received if a party will or is likely to request the arbitral tribunal to appoint one or more experts, and in such case, the period for the submission to the arbitrator by the requesting party of the proposed terms of reference for the expert, the fees to be paid, the manner of payment to the expert and the deposit by the parties or the requesting party of such amount necessary to cover all expenses associated with the referral of such issues to the expert before the expert is appointed; (ix) The possibility of either party applying for an order granting interim relief either with arbitral tribunal or with the court, and, in such case, the nature of the relief to be applied for; (x) The possibility of a site or ocular inspection, the purpose of such inspection, and in such case, the date, place and time of the inspection and the manner of conducting it, and the sharing and deposit of any associated fees and expenses; (xi) The amount to be paid to the arbitral tribunal as fees and the associated costs, charges and expenses of arbitration and the manner and timing of such payments; and (xii) Such other relevant matters as the parties and the arbitral tribunal may consider necessary to provide for a speedy and efficient arbitration of the dispute. (c) To the extent possible, the arbitral tribunal and the parties shall agree upon any such matters and in default of agreement, the arbitral tribunal shall have the discretion and authority to make the decision, although in making decision, regard shall be given to the views expressed by both parties. (d) The arbitral tribunal shall, in consultation with the parties, fix the date/s and the time of hearing, regard being given to the desirability of conducting and concluding an arbitration without undue delay. (e) The hearing set shall not be postponed except with the conformity of the arbitrator and the parties and only for a good and sufficient cause. The arbitral tribunal may deny a request to postpone or to cancel a scheduled hearing on the ground that a party has


requested or is intending to request from the court or from the arbitrator an order granting interim relief. (f) A party may, during the proceedings, represent himself/herself/itself or through a representative, at such hearing. (g) The hearing may proceed in the absence of a party who fails to obtain an adjournment thereof or who, despite due notice, fails to be present, by himself/herself/itself or through a representative, at such hearing. (h) Only parties, their respective representatives, the witnesses and the administrative staff of the arbitral tribunal shall have the right to be present if the parties, upon being informed of the presence of such person and the reason for his/her presence, interpose no objection thereto.

(p) After a hearing is declared closed, no further motion or manifestation or submission may be allowed except for post-hearing briefs and reply briefs that the parties have agreed to submit within a fixed period after the hearing is declared closed, or when the arbitral tribunal, motu proprio or upon request of a party, allows the reopening of the hearing. (q) Decisions on interlocutory matters shall be made by the sole arbitrator or by the majority of the arbitral tribunal. The arbitral tribunal may authorized its chairman to issue or release, on behalf of the arbitral tribunal, its decision on interlocutory matters. (r) Except as provide in section 17 (d) of the ADR Act. No arbitrator shall act as a mediator in a any proceeding in which he/she is acting as arbitrator even if requested by the parties; and all negotiations.

(i) Issues raised during the arbitration proceeding relating to (a) the jurisdiction of the arbitral tribunal over one or more of the claims or counter claims, or (b) the arbitrability of a particular claim or counter claim, shall be resolved by the arbitral tribunal as threshold issues, if the parties so request, unless they are intertwined with factual issues that they cannot be resolved ahead of the hearing on the merits of the dispute.

(s) Before assuming the duties of his/her office, an arbitrator must be sworn by any officer authorized by law to administer an oath or be required to make an affirmation to faithfully and fairly hear and examine the matters in controversy and make a just award according to the best his/her ability and understanding. A copy of the arbitrator's oath or affirmation shall be furnished each party to the arbitration.

(j) Each witness shall, before giving testimony, be required to take an oath/ affirmation before the arbitral tribunal, to tell the whole truth and nothing but the truth during the hearing.

(t) Either party may object to the commencement or continuation of an arbitration proceeding unless the arbitrator takes an oath or affirmation as required in this chapter. If the arbitrator shall refuse to take an oath or affirmation as required by law and this rule, he/she shall be replaced. The failure to object to the absence of an oath or affirmation shall be deemed a waiver of such objection and the proceedings shall continue in due course and may not later be used as a ground to invalidate the proceedings.

(k) The arbitral tribunal shall arrange for the transcription of the recorded testimony of each witness and require each party to share the cost of recording and transcription of the testimony of each witness. (l) Each party shall provide the other party with a copy of each statement or document submitted to the arbitral tribunal and shall have an opportunity to reply in writing to the other party's statements and proofs. (m) The arbitral tribunal may require the parties to produce such other documents or provide such information as in its judgment would be necessary for it to render a complete, fair and impartial award. (n) The arbitral tribunal shall receive as evidence all exhibits submitted by a party properly marked and identified at the time of submission. (o) At the close of the hearing, the arbitral tribunal shall specifically inquire of all parties whether they have further proof or witnesses to present; upon receiving a negative reply, the arbitral tribunal shall declare the hearing closed.

(u) the arbitral tribunal shall have the power to administer oaths to, or require affirmation from, all witnesses directing them to tell the truth, the whole truth and nothing but the truth in any testimony, oral or written, which they may give or offer in any arbitration hearing. The oath or affirmation shall be required of every witness before his/her testimony, oral or written, is heard or considered. (v) the arbitral tribunal shall have the power to required any person to attend a hearing as a witness. It shall have the power to subpoena witnesses, to testify and/or produce documents when the relevancy and materiality thereof has been shown to the arbitral tribunal. The arbitral tribunal may also require the exclusion of any witness during the testimony of any other witness. Unless the parties otherwise agree, all


the arbitrators in any controversy must attend all the hearings and hear the evidence of the parties. Article 5.24 Power of Arbitral Tribunal to Order Interim Muslim. ( a ) unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party and in accordance with the this Article, order any party to take such interim measures of protection as the arbitral tribunal may consider necessary in respect of the subject matter of the dispute of the procedure, Such interim measures may include, but shall not be limited, to preliminary injunction directed against a party, appointment of receivers or detention of property that is the subject of the dispute in arbitration or its preservation or inspection. (b) After the constitution of the arbitral tribunal, and during the arbitration proceedings, a request for interim measures of protection, or modification thereof, may be made with the arbitral tribunal. The arbitral tribunal is deemed constituted when the sole arbitrator or the third arbitrator, who has been nominated, has accepted the nomination and written communication of said nomination and acceptance has been received by the party making the request. (c) The following rules on interim or provisional relief shall be observed: (i) Any party may request that provisional or interim relief be granted against the adverse party. (ii) Such relief may be granted: (aa) To prevent irreparable loss or injury; (bb) To provide security for the performance of an obligation; (cc) To produce or preserve evidence; or (dd) To compel any other appropriate act or omissions. (iii) The order granting provisional relief may be conditioned upon the provision of security or any act or omission specified in the order. (iv) Interim provisional relief is requested by written application transmitted by reasonable means to the arbitral tribunal and the party against whom relief is sought, describing in appropriate detail of the precise relief, the party against whom relief is requested the ground for the relief, and the evidence supporting the request. (v) The order either granting or denying an application for interim relief shall be binding upon the parties.

(vi) Either party may apply with the court for assistance in implementing or enforcing an interim measure ordered by an arbitral tribunal. (vii) A party who does not comply with the order shall be liable for all damages, resulting from noncompliance, including all expenses, and reasonably attorney’s fees, paid in obtaining the order’s judicial enforcement. (d) The arbitral tribunal shall be have the power at any time, before rendering the award, without prejudice to the rights of any party to petition the court to take measures to safeguard an/or conserve any matter which is the subject of the dispute in arbitration. Article 5.25. Default of a Party. Unless otherwise agreed by the parties, if, without showing sufficient causes. (a) the claimant fails to communicate his/her/its statement of claim in accordance with paragraph (a) of Article 5.22(Statement of Claim and Defense), the arbitral tribunal shall terminate the proceedings; (b) ]the respondent fails to communicate his/her/its statement of defense in accordance with paragraph (a) of Article 5.22 (Statements of Claim and Defense), the arbitral tribunal shall continue the proceedings without treating such failure in itself as an admission of the claimant’s allegations; (c) any party fails to appear at a hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the award based on the evidence before it. Article 5.26. Expert Appointed by the Arbitral Tribunal. (a) Unless otherwise agreed by the parties, the arbitral tribunal, (i) may appoint one or more experts to report to it on specific issues to be determined by the arbitral tribunal; or (ii) may require a party to give the expert any relevant information or to produce, or to provide access to, any relevant documents, goods or other property for his/her inspection. (b) Unless otherwise agreed by the parties, if a party so request or if the arbitral tribunal considers it necessary, the expert shall, after delivery of his/her written or oral report, participate in a hearing where the parties have the opportunity to put questions to him/her and to present expert witnesses in order to testify on the points at issue.


(c) upon agreement of the parties, the finding of the expert engaged by the arbitral tribunal on the matter/s referred to him shall be binding upon the parties and the arbitral tribunal. Article 5.27. Court Assistance in Taking Evidence and Other Matters. (a) The arbitral tribunal or a party, with the approval of the arbitral tribunal may request from a court, assistance in taking evidence such as the issuance of subpoena ad testificandum and subpoena duces tecum, deposition taking, site or ocular inspection, and physical examination of properties. The court may grant the request within its competence and according to its rules on taking evidence. (b) The arbitral tribunal or a party to the dispute interested in enforcing an order of the arbitral tribunal may request from a competent court, assistance in enforcing orders of the arbitral tribunal, including but not limited, to the following: (i) Interim or provision relief; (ii) Protective orders with respect to confidentiality; (iii) Orders of the arbitral tribunal pertaining to the subject matter of the dispute that may affect third persons and/or their properties; and/or (iv) Examination of debtors. Article 5.28 Rules Applicable to the Substance of Dispute. (a) The arbitral tribunal shall decide the dispute in accordance with such law as is chosen by the parties, In the absence of such agreement, Philippine law shall apply. (b) The arbitral tribunal may grant any remedy or relief which it deems just and equitable and within the scope of the agreement of the parties, which shall include, but not be limited to, the specific performance of a contract. (c) In all cases, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction. Article 5.29. Decision Making by the Arbitral Tribunal. (a) The arbitration proceedings with more than one arbitrator, any decision of the arbitral tribunal shall be made, unless otherwise agreed by the parties, by a majority of all its members, However questions of procedure may be decided by the chairman of the arbitral tribunal, if so authorized by the parties or all members of the arbitral tribunal. (b) Unless otherwise agreed upon by the parties, the arbitral tribunal shall render its written award within

thirty (30) days after the closing of all hearings and/or submission of the parties’ respective briefs or if the oral hearings shall have been waived, within thirty(30) days after the arbitral tribunal shall have declared such proceedings in lieu of hearing closed. This period may be further extended by mutual consent of the parties. Article 5.30 Settlement. (a) if, during arbitral proceedings, the parties settle the dispute, the arbitral tribunal, record the settlement in the form of an arbitral award on agreed terms, consent award or award based on compromise. (b) An award as rendered above shall be made in accordance with the provisions of Article 5.31 (Form and Contents of Award) and shall state that it is an award. Such an award has the same status and effect as any other award on the merits of the case. Article 5.31. Form and Contents of Award. (a) The award shall be made in writing and shall be signed by the arbitral tribunal. In arbitration proceedings with more than one arbitrator, the signatures of the majority of all members of the arbitral tribunal shall suffice, provided that the reason for any omitted signature us stated. (b) The award shall state the reasons upon which is based, unless the parties have agreed that no reasons are to be given or the award on agreed terms, consent award based on compromise under Article 5.30 (Settlement). (c) The award shall state its date and the placed of arbitration as determined in accordance with the paragraph (a) of Article 5.19 (Place of Arbitration). The award shall be deemed to have made at that place. (d) After the award is made, a copy signed by the arbitrators in accordance with the paragraph (a) of this Article shall be delivered to each party. (e) The award of the arbitral tribunal need not be acknowledged, sworn to under oath, or affirmed by the arbitral tribunal unless so required on writing by the parties. If despite such requirement, the arbitral tribunal shall fail to do as required, the parties may, within thirty days from the receipt of said award, request the arbitral tribunal to supply the omission. The failure of the parties to make an objection or make such request within the said period shall be deemed a waiver or such requirement and may no longer be raised as a ground to invalidate the award. Article 5.32. Termination of Proceedings. (a) The arbitration proceedings are terminated by the final award or by an order of the arbitral tribunal in accordance with paragraph (b) of this Article.


(b) The arbitral tribunal shall issue an order for the termination of the arbitration proceedings when: (i) The claimant withdraws his claim, unless the respondents objects thereto for the purpose of prosecuting his counterclaims in the same proceedings of the arbitral tribunal recognizes a legitimate interest on his part in obtaining a final settlement of the dispute; or (ii) The parties agree on the termination of the proceedings; or (iii) The arbitral tribunal finds that the continuation of the proceedings has for any other reason before unnecessary or impossible; or (iv) The required deposits are not paid in full in accordance with paragraph (d) of Article 5.46 (Fees and Costs). (c) The mandate of the arbitral tribunal ends with the termination of the arbitration proceedings, subject to the provisions of Article 5.33 (Correction and Interpretation of Award) and Article 5.34 (Application for Settings Aside in Exclusive Recourse Against the Arbitral Award). (d) Except as otherwise provided in the arbitration agreement, no motion for reconsideration correction and interpretation of award or additional award shall be with the arbitral tribunal. The arbitral tribunal, by releasing its final award, loses jurisdiction over the dispute and the parties to the arbitral tribunal, by releasing its final award, loses jurisdiction over the dispute and the parties to the arbitration. However, where is shown that the arbitral tribunal failed to resolved an issue. Submitted to him or determination a verified motion to complete a final award may be made within thirty(30) days from its receipt. (e) Notwithstanding the foregoing, the arbitral tribunal may for special reason, reserved in the final award in order a hearing to quantity costs and determine which party shall bear the costs or apportionment thereof as may be determined to be a equitable. Pending determination of this issue, the award shall not be deemed final for purposes of appeal, vacations, correction, or any post-award proceedings. Article 5.33. Correction and Interpretation of Award, Additional Award. (a) Within thirty (30) days from receipt of the award, unless another period of time has been agreed upon by the parties. (i) A party may, with notice to the other party, the arbitral tribunal to correct in the awards any errors in computation, any clerical or typographical errors or any errors similar nature

(ii) If so agreed by the parties, with notice to the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award. If the arbitral tribunal considers the request to be justified, it shall make the connection or give the interpretation within thirty (30) days from receipt of the request. The interpretation shall form part of the award. (b) The arbitral tribunal may correct any errors of the type referred to in paragraph (a) of this Article on its own initiative within thirty (30) days of the date of the award. (c) Unless otherwise agreed by the parties, a party may, with notice to the other party, may request within thirty (30) days of receipt of the award, the arbitral tribunal to make an additional award as to claims presented in the arbitral proceedings but omitted from the award., If the arbitral tribunal considers the request to be justified, it shall make the additional award within sixty (60) days. (d) The arbitral tribunal may extend, if necessary, the period of time within which it shall make a correction, interpretation or an additional award under paragraphs (a) and (c) of this Article. (e) The provisions of Article 5.31 (Form and Contents of Award) shall apply to a correction or interpretation of the award to an additional award. Article 5.34. Application for Setting Aside an Exclusive Recourse against Arbitral Award. The court when asked to set aside an award, may, where appropriate and so requested by a party, suspend the setting aside proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal’s opinion will eliminate the grounds for setting aside an award. Article 5.35. Grounds to Vacate an Arbitral Award. (a) The arbitral award may be questioned, vacated or set aside by the appropriate court in accordance with the Special ADR Rules only on the following grounds: (i) The arbitral award was procured by corruption, fraud or other undue means; or (ii) There was evident partially or corruption in the arbitral tribunal or any of its members; or (iii) The arbitral tribunal was guilty of misconduct or any form of misbehavior that has materially prejudiced the rights of any party such as refusing to postpone the


hearing upon sufficient cause shown or to hear evidence pertinent and material to the controversy; or

judgment. Judgment will be enforced like court judgments.

(iv) One or more of the arbitrators was disqualified to act as such under this Chapter and willfully refrained from disclosing such disqualification ; or

Article 5.38. Appeal. A decision of the court confirming, vacating, setting aside, modifying or correcting an arbitral award may be appealed to the Court of Appeals in accordance with Special ADR Rules.

(v) The arbitral tribunal exceeded its powers, or so imperfectly executed them, such that a complete, final and definite award upon the subject matter submitted to it was not made. Any other ground raised to question, vacate or set aside the arbitral award shall be disregarded by the court. (b) Where a petition to vacate or set aside an award is filed, the petitioner may simultaneously, or the oppositor may in the alternative, petition the court to remit the case to the same arbitral tribunal for the purpose of making a new or revised final and definite award or to direct a new hearing before the same or new arbitral tribunal, the members of which shall be chosen in the manner originally provided in the arbitration agreement or submission. In the latter case, any provision limiting the time In which the arbitral tribunal may make a decision shall be deemed applicable to the new arbitral tribunal and to commence from the date of the court’s order. (c) Where a party files a petition with the court to vacate or set aside an award by reason of omission/s that do not affect the merits of the case and may be cured or remedied, the adverse party may oppose that petition and instead request the court to suspend the vacation or setting aside the proceedings for a period of time to give the arbitral tribunal an opportunity to cure or remedy the award or resume the arbitration proceedings or take such other action as will eliminate the grounds for vacation or setting aside. RULE 6 – Recognition and Enforcement of Awards Article 5.36. Confirmation of Award. The party moving for an order confirming, modifying, correcting, or vacating an award, shall, at the time that such motion is filled with the court for the entry of judgment thereon, also file the original or verified copy of the award, the arbitration or settlement agreement, and such papers as may be required by the Special ADR Rules. Article 5.37. Judgment. Upon the grant of an order confirming, modifying or correcting an award, judgment may be entered in conformity therewith in the court where said application is filed. Costs of the application and the proceedings subsequent thereto may be awarded by the court In its discretion. If awarded, the amount thereof must be included in the

The losing party who appeals from the judgment of the Court confirming an arbitral award shall be required by the Court of Appeals to post a counter-bond executed in favor of the prevailing party equal to the amount of the award in accordance with the Special ADR Rules. Article 5.39. Venue and Jurisdiction. Proceedings for recognition and enforcement of an arbitration agreement or for vacation or setting aside of an arbitral award, and any application with a court for arbitration assistance and supervision, except appeal, shall be deemed as special proceedings and shall be filed with the court (a) where the arbitration proceedings are c onducted; (b) where the asset to be attached or levied upon, or the act to be enjoined is located; (c) where any of the parties to the dispute resides or has its place of business; or (d) in the National Capital Judicial Region at the option of the applicant. Article 5.40. Notice of Proceedings to Parties. In a special proceeding for recognition and enforcement of an arbitral award, the court shall send notice to the parties at their address of record in the arbitration, or if any party cannot be served notice at such address, at such party’s last known address. The notice shall be sent in at least fifteen (15) days before the date set for the initial hearing of the application. Article 5.41. Legal Representation in Domestic Arbitration. (a) In domestic arbitration conducted in the Philippines, a party may be represented by any person of his/her/its choice: Provided, that such representative, unless admitted to the practice of law in the Philippines, shall not be authorized to appear as counsel in any Philippine Court, or any other quasi judicial body whether or such appearance is in relation to the arbitration in which he/she appears. (b) No arbitrator shall act as mediator in any proceeding in which he/she is acting as arbitrator and all negotiations towards settlement of the dispute must take without the presence of the arbitrators.


Article 5.42. Confidentially of Arbitration Proceedings. The arbitration proceedings, including the records, evidence and the arbitral award and other confidential information, shall be considered privileged and confidential and shall not be published except –

Article 5.45. Consolidation of Proceedings and Concurrent Hearings. The parties may agree that -

(1) with consent of the parties; or

(b) that concurrent hearings shall be held, on such terms as may be agreed.

(2) for the limited purpose of disclosing to the court relevant documents in cases where resort to the court is allowed herein: Provided, however, that the court in which the action or the appeal is pending may issue a protective order to prevent or prohibit disclosure of documents or information containing secret processes, developments, research and other information wh ere it is shown that the applicant shall be materially prejudiced by an authorized disclosure thereof. Article 5.43. Death of a Party. Where a party dies after making a submission or a contact to arbitrate as prescribed in these Rules, the proceeding may be begun or continued upon the application of, or notice to, his/her executor or administrator, or to temporary administrator of his/her estate. In any such case, the court may issue an order extending the time within which notice of a motion to recognize or vacate an award must be served. Upon recognizing an award, where a party has died since it was filed or delivered, the court must enter judgment in the name of the original party; and the proceedings thereupon are the same as where a party dies after a verdict. Article 5.44. Multi-Party Arbitration. (a)Wh en a single arbitration involves more than two parties, these Rules, to the extent possible, shall be used subject to such modifications consistent with Articles 5.17 (Equal Treatment of Parties) and 5.18 (Determination of Rules of Procedure) as the arbitral tribunal shall deem appropriate to address possible complexities of a multi-party arbitration. (b) When a claimant includes persons who are not parties to or otherwise bound by the arbitration agreement , directly or by reference, between him/her and the respondent as additional claimants or the additional respondents unless not later than the date communicating his/her answer to the request for arbitration, either by motion or by a special defense in his answer, he objects, on jurisdictional grounds, to the inclusion of such additional respondents. The additional respondents shall be deemed to have consented to their inclusion in the arbitration unless, not later than the date of communicating their answer to the request for arbitration, wither by motion or a special defense in their answer, they object, on jurisdictional grounds, to their inclusion.

(a) the arbitration proceedings shall be consolidated with other arbitration proceedings; or

Unless the parties agree to confer such power on the arbitral tribunal, the tribunal has no power to order consolidation of arbitration proceedings or concurrent hearings. Article 5.46. Fees and Costs. (a) The fees of the arbitrators shall be agreed upon by the parties and the arbitrator/s in writing prior to the arbitration. In default of agreement of the parties as to the amount and manner of payment of arbitrator’s fees, the arbitrator’s fees shall be determined in accordance with the applicable internal rules of the regular arbitration institution under whose rules he arbitration is conducted; or in ad hoc arbitration, the Schedule of Fees approved by the IBP, If any, or in default thereof, the Schedule of Fees that may be approved by the OADR. (b) In addition to arbitrator’s fees, the parties shall be responsible for the payment of the administrative fees of an arbitration institution administering an arbitration and cost of arbitration. The latter shall include, as appropriate, the fees of an expert appointed by the arbitral tribunal, the expenses for conducting a site inspection, the use of a room where arbitration proceedings shall be or have been conducted, the expenses for the recording and transcription of the arbitration proceedings. (c) The arbitral tribunal shall fix the costs of arbitration in its award. The term "costs" include only: (i) The fees of the arbitral tribunal to be stated separately as to each arbitrator and to be fixed by the arbitral tribunal itself in accordance with this Article; (ii) The travel and other expenses incurred by the arbitrators; (iii) The costs of expert advice and of other assistance required by the arbitral tribunal, such as site inspection and expenses for the recording and transcription of the arbitration proceedings; (iv) The travel and other expenses of witnesses to the extent such expenses are provided by the arbitral tribunal;


(v) The costs for legal representation and assistance of the successful party if such costs were claimed during the arbitral proceedings, and only to the extent that the arbitral tribunal determines that the amount of such costs is reasonable; (vi) Any fees and expenses of the appointing authority. (d) The fees of the arbitral tribunal shall be reasonable in amount, taking into account the amount in dispute, the complexity of the subject matter, the time spent by the arbitrators and any other relevant circumstances of the case. If an appointing authority has been agreed upon by the parties and if such appointing authority has issued a schedule of fees for arbitrators in domestic cases which it administers, the arbitral tribunal, in fixing its fees shall take that schedule of fees into account to the extent that it considers appropriate in the circumstances of the case. If such appointing authority has not issued a schedule of fees for arbitrators in international cases, any party may, at any time request the appointing authority to furnish a statement setting forth the basis for establishing fees which is customarily followed in international cases in which the authority appoints arbitrators. If the appointing authority consents to provide such a statement, the arbitral tribunal, in fixing its fees shall take such information into account to the extent that it considers appropriate in the circumstances of the case. In cases referred to in paragraph (d) of this Article, when a party so requests and the appointing authority consents to perform the function, the arbitral tribunal shall fix its fees only after consultation with the appointing authority which may make any comment it deems appropriate to the arbitral tribunal concerning the fees. (e) Except as provided in the next paragraph, the costs of arbitration shall, in principle, be borne by the unsuccessful party. However, the arbitral tribunal may apportion each of such costs between the parties if it determines that apportionment is reasonable, taking into account the circumstances of the case. With respect to the costs of legal representation and assistance referred to in paragraph (c) (iii) of this Article, the arbitral tribunal, taking into account the circumstances of the case, shall be free to determine which party shall bear such costs or may apportion such costs between the parties if it determines that appointment is reasonable. When the arbitral tribunal issues an order for the termination of the arbitral proceedings or makes an

award on agreed terms, it shall fix the costs of arbitration referred to in paragraph (a) of this Article in the context of that order or award. (e) Except as otherwise agreed by the parties, no additional fees may be charged by the arbitral tribunal for interpretation or correction or completion of its award under these Rules. (f) The arbitral tribunal, on its establishment, may request each party to deposit an equal amount as an advance for the costs referred to in paragraphs (i), (ii) and (iii) of paragraph (c) of this Article. During the course of the arbitral proceedings, the arbitral tribunal may request supplementary deposits from the parties. If an appointing authority has been agreed upon by the parties, and when a party so requests and the appointing authority consents to perform the function, the arbitral tribunal shall fix the amounts of any deposits or supplementary deposits only after consultation with the appointing authority which may make any comments to the arbitral tribunal which it deems appropriate concerning the amount of such deposits and supplementary deposits. If the required deposits are not paid in full within thirty (30) days after receipt of the request, the arbitral tribunal shall so inform the parties in order that one of them may make the required payment within such a period or reasonable extension thereof as may be determined by the arbitral tribunal. If such payment is not made, the arbitral tribunal may order the termination of the arbitral proceedings. After the award has been made, the arbitral tribunal shall render an accounting to the parties of the deposits received and return any unexpended balance to the parties. CHAPTER 6 ARBITRATION OF CONSTRUCTION DISPUTES The Construction Industry Arbitration Commission (CIAC), which has original and exclusive jurisdiction over arbitration of construction disputes pursuant to Executive Order No. 1008, s. 1985, otherwise known as the "Construction Industry Arbitration Law", shall promulgate the Implementing Rules and Regulations governing arbitration of construction disputes, incorporating therein the pertinent provisions of the ADR Act. CHAPTER 7 OTHER ADR FORMS RULE 1 – General Provisions


Article 7.1. Scope of Application and General Principles. Except as otherwise agreed, this Chapter shall apply and supply the deficiency in the agreement of the parties for matters involving the following forms of ADR: (a) early neutral evaluation;

(i) The desired qualification of the neutral third person; (ii) The manner of his/her selection; (iii) The appointing authority (not IBP) who shall have the authority to make the appointment of a neutral third person; or

(b) neutral evaluation; (c) mini-trial; (d) mediation-arbitration; (e) a combination thereof; or (f) any other ADR form. Article 7.2. Applicability of the Rules on Mediation. If the other ADR form/process is more akin to arbitration (i.e., the neutral third-person merely assists the parties in reaching a voluntary agreement), Chapter 3 governing Mediation shall have suppletory application to the extent that it is not in conflict with the agreement of the parties or this Chapter. Article 7.3. Applicability of the Rules on Arbitration. If the other ADR form/process is more akin to arbitration (i.e., the neutral third-person has the power to make a binding resolution of the dispute), Chapter 5 governing Domestic Arbitration shall have suppletory application to the extent that it is not in conflict with the agreement of the parties or this Chapter. Article 7.4. Referral. If a dispute is already before a court, either party may, before and during pre-trial, file a motion for the court to refer the parties to other ADR forms/processes. However, at any time during court proceedings, even after pre-trial, the parties may jointly move for suspension/dismissal of the action pursuant to Article 2030 of the Civil Code of the Philippines. Article 7.5. Submission of Settlement Agreement. Either party may submit to the court before which the case is pending any settlement agreement following a neutral or an early neutral evaluation, mini-trial or mediation-arbitration. RULE 2 – Neutral or Early Neutral Evaluation Article 7.6. Neutral or Early Neutral Evaluation. (a) The neutral or early neutral evaluation shall be governed by the rules and procedure agreed upon by the parties. In the absence of said agreement, this Rule shall apply. (b) If the parties cannot agree on, or fail to provide for:

(iv) If despite agreement on the foregoing and the lapse of the period of time stipulated for the appointment, the parties are unable to select a neutral third person or appointing authority, then, either party may request the default appointing authority, as defined under paragraph C1 of Article (Definition of Terms), to make the appointment taking into consideration the nature of the dispute and the experience and expertise of the neutral third person. (c) The parties shall submit and exchange position papers containing the issues and statement of the relevant facts and appending supporting documents and affidavits of witnesses to assist the neutral third person in evaluating or assessing the dispute. (d) The neutral third person may request either party to address additional issues that he/she may consider necessary for a complete evaluation/assessment of the dispute. (e) The neutral third person may structure the evaluation process in any manner he/she deems appropriate. In the course thereof, the neutral third person may identify areas of agreement, clarify the issues, define those that are contentious, and encourage the parties to agree on a definition of issues and stipulate on facts or admit the genuineness and due execution of documents. (f) The neutral third person shall issue a written evaluation or assessment within thirty (30) days from the conclusion of the evaluation process. The opinion shall be non-binding and shall set forth how the neutral third person would have ruled had the matter been subject to a binding process. The evaluation or assessment shall indicate the relative strengths and weakness of the positions of the parties, the basis for the evaluation or assessment, and an estimate, when feasible, of the amount for which a party may be liable to the other if the dispute were made subject to a binding process. (g) There shall be no ex-parte communication between the neutral third person and any party to dispute without the consent of all parties. (h) All papers and written presentations communicated to the neutral third person, including


any paper prepared by a party to be communicated to the neutral third person or to the other party as part of the dispute resolution process, and the neutral third person’s written non-binding assessment or evaluation, shall be treated as confidential.

At the end of each presentation, rebuttal or surrebuttal, the mini-trial panel member/s may ask clarificatory questions from any of the presentors.

RULE 3 – Mini-Trial

(g) After the mini-trial, the mini-trial panel members shall negotiate a settlement of the dispute by themselves.

Article 7.7. Mini-Trial. (a) A mini-trial shall be governed by the rules and procedure agreed upon by the parties. In the absence of said agreement, this Rule shall apply. (b) A mini-trial shall be conducted either as: (i) a separate dispute resolution process; or (ii) a continuation of mediation, neutral or early neutral evaluation or any other ADR process. (c) The parties may agree that a mini-trial be conducted with or without the presence and participation of a neutral third person. If a neutral third person is agreed upon and chosen, he/she shall preside over the mini-trial. The parties may agree to appoint one or more (but equal in number per party) senior executive/s, on its behalf, to sit as mini-trial panel members. (d) The senior executive/s chosen to sit as mini-trial panel members must be duly authorized to negotiate and settle the dispute with the other party. The appointment of a mini-trial panel member/s shall be communicated to the other party. This appointment shall constitute a representation to the other party that the mini-trial panel member/s has/have the authority to enter into a settlement agreement binding upon the principal without any further action or ratification by the latter. (e) Each party shall submit a brief executive summary of the dispute in sufficient copies as to provide one copy to each mini-trial panel member and to the adverse party. The summary shall identify the specific factual or legal issue or issues. Each party may attach to the summary a more exhaustive recital of the facts of the dispute and the applicable law and jurisprudence. (f) At the date time and place agreed upon, the parties shall appear before the mini-trial panel members. The lawyer of each party and/or authorized representative shall present his/her case starting with the claimant followed by the respondent. The lawyer and/or representative of each party may thereafter offer rebuttal or sur-rebuttal arguments. Unless the parties agree on a shorter or longer period, the presentation-in-chief shall be made, without interruption, for one hour and the rebuttal or surrebuttal shall be thirty (30) minutes.

In cases where a neutral third person is appointed, the neutral third person shall assist the proceedings shall be governed by Chapter 3 of Mediation. RULE 4 – Mediation-Arbitration Article 7.8. Mediation– Arbitration (a) A Mediation Arbitration shall be governed by the rules and procedure agreed upon by the parties, In the absence of said agreement, Chapter 5 on Mediation shall first apply and thereafter, Chapter 5 on Domestic Arbitration. (b) No Person shall having been engage and having acted as mediator of a dispute between the parties, following a failed mediation, act as arbitrator of the same dispute, unless the parties, in a written agreement, expressly authorize the mediator to hear and decide the case as an arbitrator (c) The mediator who becomes an arbitrator pursuant to this Rule shall make an appropriate disclosure to the parties as if the arbitration proceeding had commenced and will proceed as a new dispute resolution process, and shall, before entering upon his/her duties, executive the appropriate oath or affirmation of office as arbitrator in accordance with these Rules. RULE 5- Costs and Fees Article 7.9 Costs and Fees. (a) Before entering his/her duties as ADR Provider , he/she shall agree with the parties on the cost of the ADR procedure, the fees to be paid and manner of payment for his her services. (b) n the absence of such agreement, the fees for the services of the ADR provider/practitioner shall be determined as follows: (i) If the ADR procedure is conducted under the rules and/or administered by an institution regularly providing ADR services to the general public, the fees of the ADR professional shall be determined in accordance with schedule of fees approved by such institution, if any; (ii) In ad hoc ADR, the fees shall be determined in accordance with the schedule of fees approved by the OADR;


(iii) In the absence of a schedule of fees approved by the ADR institution or by the OADR, the fees shall be determined by the ADR institution or by the OADR, as the case may be, and complexity of the process, the amount in dispute and the professional standing of the ADR professional. (c) A contingency fee arrangement shall not be allowed. The amount that may be allowed to an ADR professional may not be made dependent upon the success of his/her effort in helping the parties to settle their dispute. CHAPTER 8 MISCELLANEOUS PROVISION Article 8.1. Amendments. These Rules or any portion hereof may be amended by the Secretary of Justice. Article 8.2 Separability Clause. If any part, article or provision of these Rules are declared invalid or unconstitutional, the other parts hereof not affected thereby shall remain valid. Article 8.3 Funding. The heads of department and agencies concerned, especially the Department of Justice, insofar as the funding requirements of the OADR is concerned, shall immediately include in their annual appropriation the funding necessary to implement programs and extend services required by the ADR Act and these Rules. Article 8.4 Transitory Provisions. Considering the procedural character of the ADR Act and these Rules, the provisions of these Rules shall be applicable to all pending arbitration, mediation or other ADR forms covered by the ADR Act if the parties agree.

Article. 8.5 Effectivity Clause. These Rules shall take effect fifteen (15) days after the completion of its publication in at least two (2) national newspapers of general circulation. APPROVED. December 4, 2009

3.6 OTHER SC ISSUANCES ON ADR

3.7 JUDICIAL DISPUTE RESOLUTION

Judicial dispute resolution (JDR) In En Banc A.M. No. 04-1-12-SC-PhilJA , August 29, 2006, “ Re: PhiLJA Resolution No. 06-22, re: Revised Guidelines for the Implementation of an Enhanced Pre-Trial Proceeding under the JURIS Project, as Amended” , the Philippine Supreme Court adopted the rules of the new judicial dispute resolution (JDR) system of the Philippines (described as an “enhanced pre-trial proceeding”) under its on-going JURIS Project. The Court has piloted the new concept in selected trial courts in the Philippines which are called “JURI S model courts” . As an explanatory note, the Court noted that despite the priority given by Rule 18 of the Rules of Court (“pre-trial”), as amended, for the amicable settlement of cases, “most trial judges go through the function of exploring settlement perfunctorily for various reasons, including fear of being disqualified if he goes into the process more intensively”. In general, the concept is that “mediatable cases” are referred to Court-Annex Mediation (CAM) for mediation under accredited mediators in the Philippine Mediation Center (PMC) and subsequently referred to Judicial Dispute Resolution (JDR) “ for further mediation by the judges” if it is not resolved under CAM. If the case is still not settled in JDR, “the case is transferred to the pairing court to proceed with trial” . The judge conducting the JDR is called the JDR judge instead of pre-trial judge because under the revised guidelines, pre-trial proper is resumed after JDR, but this time, to be conducted by the trial judge instead of the judge who conducted JDR . A case may be referred to JDR “even after conclusion of the pre-trial and during the trial itself ”. The JDR judge “may preside over the trial proceedings upon joint request of both parties”. A limited period is imposed for settlement of JDR cases, i.e., thirty (30) days for first level courts and sixty (60) days for regional trial courts. These periods may be extended upon the discretion of the JDR ju dge.


Where settlement on the civil aspect has been reached in criminal cases covered by mediation but the period of payment in accordance with the terms of settlement exceeds one (1) year, the case may be archived upon motion of the prosecution with concurrence of the private complainant and approval by the judge. The civil aspect of theft, under Art. 308 of the Revised Penal Code, is now part of the cases for referral to mediation. The concept is that the JDR judge acts as “the mediator, the conciliator, early neutral evaluator, or a combination of any of the above” .

Whatever the result of the mediation may be, the case is always returned to the originating court for appropriate action - either for the approval of the compromise agreement or for trial, as the case may be. In Family Courts, due to the special nature of a family dispute for which specialized family courts have been designated, parties may file a joint motion requesting that the case be tried by said special court despite the judge thereon having been the JDR judge. However, if there is another family court in the same JURIS site, “the trial judge shall be that of the family court which did not conduct JDR proceedings”.

As a mediator and conciliator, the judge facilitates the settlement discussions between parties and tries to reconcile their differences. As a neutral evaluator, the judge assesses the relative strengths and weaknesses of each party's case and makes a non-binding and impartial evaluation of the chances of each party's success in the case. On the basis of his neutral evaluation, the judge persuades the parties to reconsider their prior reluctance to settle their case amicably. Judicial proceedings shall be divided into two stages: (1) from the filing of a complaint, to the conduct of CAM and JDR during the pre-trial stage , and (2) pretrial proper to trial and judgment. The judge to whom the case has been originally raffled shall preside over the first stage. He shall be called the JDR judge. The concept is that the parties will be “more spontaneous once they are assured that the JDR judge will not be the one to try the case”. As such, the general rule is that “the JDR Judge shall not preside over the trial of the same case when mediation did not succeed”.

In Commercial Courts, the JDR shall be conducted by the pair judge of the commercial court. Where JDR does not succeed, “the judge of the commercial court shall be the trial judge”. Cases may be referred to JDR even during the trial stage upon joint motion of the parties. If the motion is granted, the JDR shall be conducted by the pairing judge in multiple sala courts, or in single sala courts, by the nearest court (or pair court, if any). Whatever the result of the JDR may be, the case is “always returned to the originating court for appropriate action - either for the approval of the compromise agreement or for trial, as the case may be”. To safeguard the confidentiality of mediation proceedings, the JDR judge shall not pass on any information obtained in the course of conciliation, early neutral evaluation, or mediation to the trial judge or to any other person. All JDR conferences shall be conducted in private.

In multiple sala courts, if the case is not resolved during JDR, it shall be raffled to another branch, where the rest of the judicial proceedings up to judgment shall be held. The judge for that stage shall be called the trial judge. Any incidents or motions filed during the first stage shall be dealt with by the JDR judge at his discretion. In single sala courts, the case shall be transferred for mediation to the nearest court (or pair court, if any), since “only mediation is involved”.

The JDR judge may, however, “confer in confidence with the mediator who previously mediated the case, merely for the purpose of determining unresolved issues”. The pilot-test shall apply to the following cases: (1) All civil cases, settlement of estates, and cases covered by the Rule on Summary Procedure, except those which by law may not be compromised;

Alternative Dispute Resolution Notes for Arellano University School of Law

Recommend Documents