ADR Class Notes
ADR Class Notes
ADR Class Notes
ADR:
1. Arbitration
2. Mediation
3. Early Neutral Evaluation – nonbinding assessment of a neutral third
party who has expertise in the subject matter (S3(n) 9285)
Pre-trial: not pre-trial as defined in ROC
o Sir: ADR is outside the court system; pre-trial simply
means before litigation, otherwise ADR would have
been made a part of ROC
4. Mini-Trial – private meeting wherein senior decision-makers of each
party discuss the evidence and negotiate towards a settlement
(S3(u) 9285); parties are able to formulate an informed judgment
and would act accordingly
2 JULY 2010
ADR
system for resolving disputes
outside of or alternative to the usual court system
neutral third party assists
ARBITRATION
only ADR mode that results into a final, binding executory award, which
may be enforced as in a final executory court order
o confirmation of an arbitral award shall be enforced in the same
manner as final and executory RTC decisions (S40 9285)
MEDIATION
Court-Referred: discovery of a pre-existing mediation agreement
o Art1159 CC: contracts have the force of law between the parties
o Waivable
Court-Annexed: mandatory
Procedure:
Arbitration Agreement > Dispute > Selection of Arbitrators > Arbitration
Proceedings
Dispute > Submission Agreement
> Award > Confirmation/Enforcement
16 JULY 2010
ARBITRATION
Q: Rule1.3 SADR says that the court must issue an order more or less
within 50 days from receipt of respondent (petition > receipt of
respondent > 15 days for respondent to comment > 1-day hearing after 5
days > submitted for resolution > 30 days to resolve). But RA876 S6 says
that all petitions, motions and applications filed under RA876 must be
decided within 10 days from hearing. Is this repealed? Can a procedural
law repeal a substantive law?
A: The 30-day rule under SADR controls. The 10-day rule under RA876 is a
procedural law, not substantive. Matters of procedure are under the
Supreme Court. (?)
Under RA876, there are 4 courses of action for the court in addressing a
Petition to Enforce Arbitration Agreement (w/n there is an arbitration
agreement + w/n there was default), which must be conducted
summarily:
1. if no arbitration agreement, dismiss
2. if no issue as to existence of agreement, court must determine w/n
there was default
3. if there was no default, dismiss
4. if there was default, order to proceed
If parties fail to agree on the time to make an award, the arbitral tribunal
will set the period in this stage.
Q: RA876 S11 says that while the challenge is before the court, the
arbitration proceedings shall be suspended. But under UNCITRAL Art13,
the tribunal may continue with the proceedings and make an award.
Which is controlling?
A: UNCITRAL Art13 through RA9285 repealed RA876 S11.
Step 4: Award
The time for rendering an award may be fixed by the parties. In the
absence of an agreement:
- if domestic: within 30 days
- if international commercial: as decided by the arbitral tribunal in
Step 2.1
Periods
Rule 1.3 SADR: petition > receipt of respondent > 15 days for respondent
to comment > 1-day hearing after 5 days > submitted for resolution > 30
days to resolve
- Exceptions:
1. Referral to ADR
o setting of hearing depends on party because said party may
decide waive ADR if he fails to invoke the arbitration clause
before the pre-trial conference
2. Protection Order
QUIZ (23 July 2010): fundamental doctrines already taken up; closed
notes
30 JULY 2010
CONFIDENTIALITY
COMPETENCE-COMPETENCE PRINCIPLE
Before the constitution of the arbitral tribunal, the court must exercise
judicial restraint and can only give prima facie decisions on the validity of
the arbitration agreement.
- Q: Will a court finding that an arbitration agreement is void or
otherwise incapable of being enforced bar the constitution of the
tribunal?
A: No, it does not prevent the parties from commencing arbitration.
o Q: But how, when the other party has already obtained a
favorable ruling against the enforcement of the arbitration
agreement?
A: Follow the regular procedure provided when other party
refuses to arbitrate.
o Q: What can the party who refuses to arbitrate do?
A: Go to the arbitral tribunal to question its jurisdiction or get
an injunction. Another remedy is to file a motion for contempt.
Sir: This does not constitute contempt because it is an
exercise of a legal right. SADR also provides that no
injunction shall be issued against arbitration.
- Q: Where does the prima facie nature come in?
A: The same issue may be resurrected in the arbitral forum and the
tribunal’s ruling will replace that of the court.
PRINCIPLE OF SEPARABILITY
A finding that the container contract is void does not invalidate the
arbitration clause and vice-versa. (UNICTRAL and SADR)
Q: What is the effect on the arbitral tribunal if the ruling of the court is
that the container contract and arbitration clause are both void?
A: This will not prevent commencement of arbitration. The court decision
on the validity of the arbitration clause is only prima facie.
Q: Can the court threaten the arbitrators with contempt of court if they
proceed?
A: No.
MULTIPLE PARTIES
Q: If there are multiple parties to a case, not all of which are bound by the
arbitration clause, will that prevent arbitration from going forward?
A: No.
Q: Will this result in a multiplicity of suits?
A: Yes, but under SADR, the fact that it will result in a multiplicity of suits
will not prevent arbitration.
6 AUGUST 2010
Example:
May 6: prima facie ruling of the court that arbitration clause is void
August 6: commencement of arbitration
- This is valid because the court’s ruling is only prima facie.
13 AUGUST
CALIFORNIA V. PIONEER
Q: Can you be bound by arbitration through subrogation?
A: The court did not make a pronouncement. It only held that the basis of
the CA ruling was incorrect when it used Pan Malayan. Pan Malayan did
not discuss the issue of arbitration but was about the consequences of
subrogation and the rights that the insurer acquires.
Q: If a subrogee is bound, what about the issue of consent of the parties?
A:
Q: What is the implication of Art 1311 CC (Contracts take effect only
between the parties, their assigns and heirs, except in case where the
rights and obligations arising from the contract are not transmissible by
their nature, or by stipulation or by provision of law. The heir is not liable
beyond the value of the property he received from the decedent. If a
contract should contain some stipulation in favor of a third person, he may
demand its fulfillment provided he communicated his acceptance to the
obligor before its revocation. A mere incidental benefit or interest of a
person is not sufficient. The contracting parties must have clearly and
deliberately conferred a favor upon a third person.)
A:
Q: Assignment = subrogation?
A:
BLOOMFIELD V. CA
Q: Can a party be bound by an arbitration clause by statutory condition?
A: Yes. SC held that parties should have resorted to arbitration provided
in the RA.
Q: But is the legal provision the court cited an arbitration clause
(arbitrator shall be the alumni association)?
A: The mechanism of appointment of arbitrator does not matter because
the court may fix under S8 876.
- issues: consent and vagueness
ASSOCIATED BANK V. CA
Q: According to SC, what was the significance of a bank participating with
the operations of PCHC?
A: Participation to PCHC clearing is tantamount to written and subscribed
consent.
20 AUGUST
The fact that an arbitrator rules against the interest of a party is not equal
to partiality.
GONZALES V. CLIMAX
- Doctrine of Separability
- Arbitration clause is independent from the container contract and unless
the validity of the arbitration clause is also questioned, the court has no
jurisdiction. (Art16 UNCITRAL)
Art 2045 CC: Any clause giving one of the parties power to choose more
arbitrators than the other is void and of no effect.
MAGELLAN V. ZOSA
BF V. CA
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. (Art 7 UNCITRAL)
27 AUGUST 2010
Q: What is the difference of judicial relief before and judicial relief after?
Q: What if the court already declared the arb clause void? Try to factor in
Art 5 CC?
3 SEPTEMBER
MULTIPLE PARTIES
o Toyota: Arb agreement should be upheld despite presence of third
parties.
o Salas: Arb agreement binds only parties, assigns and heirs. Lot buyers
are not bound.
o Del Monte: Presence of multiple (third) parties removes the dispute
from arbitration when there is already a pending case involving third
parties.
o SC held that arb clause is valid and dispute is arbitrable.
However, it would defeat the purpose of expeditious
determination of the case if arbitration would commence in lieu
of the court action.
o Q: How do you address the argument that the ground for the civil
action is Art 21 CC?
A: The acts complained of fall under the contractual
relationship. Art 21 speaks of damage or loss. The alleged
damage arose from the transaction contemplated by the
distributorship agreement. The agreement established
their legal relationship.
o Sir: Bad precedent because the third parties are not even real
parties in interest, yet the court opted to disregard the
arbitration clause. This is why S25 RA 9285 was created.
o RA 9285 S25: Civil action continues as to those not bound by
arbitration agreement.
KOREA V. LERMA: Art 1191 CC states that if a party wants to rescind and
the other party does not oppose, then the contract is rescinded. SC
however held that a party cannot unilaterally rescind a contract because
of the presence of an arbitration clause. The underlying basis is the
doctrine of separability. If the container contract is rescinded for being
void, it does not mean that the arbitration clause is also void.
- Q: Is this judicial legislation since SC declared that Art 1191 does
not apply if there is an arbitration clause?
o A: Only gives effect to UNCITRAL and Civil Code.
HOME BANKERS V. CA: S14 of RA876 states that a party has the right to
petition the court to take measures to safeguard and/or conserve any
matter subject of the arbitration.
17 SEPTEMBER
Q: What happens to the interim relief granted by the court after the
constitution of the tribunal? Does the tribunal have any power over the
interim relief granted by the court?
A: 5.13 SADR: Interim order by the court is issued without prejudice to a
subsequent grant, modification, amendment, revocation or revision by the
tribunal.
Q: One party appointed an arbitrator. Second party did not. What must be
done in order to proceed?
A: In ad hoc arbitration, party must first ask IBP president or his duly
authorized representative to appoint. If the latter fails, neglects or refuses
within 30d, file Petition for Appointment with the court. (6.1.b SADR)
- S26 9285: in ad hoc arbitration, default appointment shall be made
by IBP president
- Q: Can IBP president appoint the third arbitrator?
A:
CHUNG FU V. CA: SC held that arbitral award is not beyond the power of
judicial review.
ADAMSON V. CA:
Q: Can a court, after vacating an award, reverse the arbitral award? What
action should a court take after vacating an award?
A: The court can only set aside. In referring the case back to the tribunal
or a new tribunal, the court may not direct it to revise its award in a
particular way or otherwise encroach upon the independence of the
tribunal (11.9 SADR).
ICC RULES
Procedure:
1. Arbitration Clause
2. Dispute
3. Request for arbitration to the ICA
4. Claimant deposits non-refundable amount ($2500)
5. Notice to respondent
6. ICC computes sum in dispute to get arbitration cost
7. Parties pay arbitration cost
a. If one party refuses to pay, claimant shoulders
i. If claimant refuses to shoulder, proceedings would be
suspended
ii. If claimant cannot shoulder
8. Constitution of Arbitral Tribunal (number and manner of
appointment agreed by parties; only when there is no agreement
will the ICC rules be followed)
a. Sole arbitrator > ICC appoints
b. Three > each party nominates one, ICC appoints Chair
c. No agreement as to number > ICC appoints one, unless
complexities of the case require three
9. ICC confirms nomination of arbitrators
10. Parties notified by Sec of composition
a. If there is challenge > written statement and reasons
b. ICC decides challenge
11. Terms of Reference
a. Must be confirmed by the ICC
12. Hearing
13. Award
a. Must be confirmed by ICC
Q: May the award be appealed after confirmation despite
Art 28.6 (deemed to have waived their right to any form of
recourse insofar as such waiver can validly be made)?
A: Under SADR, no appeal. But without SADR, Sir still thinks
right to appeal is waived under ICC rules. Arb clause is a
contract in itself under Art1159 CC (contractual obligations
= force of law). ICC Rules becomes part of the contract.
“Any form of recourse” includes appeal.
Q: Is this contrary to public policy?
A: Sir thinks no, as appeal may be waived because it is a
statutory privilege.