1

BEFORE THE INTERNATIONAL COURT OF ARBITRATION OF THE

HONG KONG INTERNATIONAL ARBITRATION CENTRE

IN THE MATTER OF AN ARBITRATION OF

CASE NO. 15-NNNNN

BETWEEN

10

PAMPANGA ENERGY COMPANY

11

(Claimant)

12

13

V.

14

15

CONSTRUCTION COMPANY

16

(Respondent)

17

SEPTEMBER 13, 2015

1
2

Page 1 of 17

18STATEMENT OF THE

FACTS

19
20Pampanga
21of

Energy Corporation (PEC), a Philippine company, employed in October

2012, Construction Company (CC), also a Philippine company, to design,

22construct,

commission, test, complete and hand over the power station to it. In the

23engineering
24Philippine

procurement and construction contract, the substantive law of which is

law, the parties agreed to the following stipulations, among others:

25

(a) that any unresolved dispute shall be referred to and finally resolved by the

26

Hong Kong International Arbitration Centre (HKIAC), that the seat of

27

arbitration shall be Hong Kong, and that the agreement shall be governed by

28
29

the laws of Hong Kong.

(b) that the parties agree that Executive Order No. 1008 (Construction Industry

30

Arbitration Law), Republic Act No. 9285 (Alternative Dispute Resolution

31

Act of 2004) and any other laws prescribing a dispute resolution mechanism

32

contrary to that which is provided in this Agreement, shall not be applicable

33

and are hereby waived by the parties and shall not be invoked by them.

34Disputes

arose between the parties. On November 4, 2013, PEC commenced arbitration

35proceedings

against CC and filed a Notice of Arbitration with the HKIAC.

On

36November

18, 2013, CC commenced its own arbitration proceedings against PEC and

37submitted

its Request for Arbitration to the Construction Industry Arbitration

38Commission
39Trial

Court asking for an anti-suit injunction to be issued in relation to the HKIAC

40proceedings.
3
4

(CIAC); and on the same day filed a case before the Manila Regional

On November 25, 2013, the Manila RTC granted the anti-suit injunction.
Page 2 of 17

41On

November 29, 2013, CC served its answer to the HKIAC arbitration and contended

42that

the said arbitral tribunal did not have jurisdiction, and that the Manila RTC has

43already issued
44HKIAC

arbitral tribunal is now asking the parties for submissions relating to its

45jurisdiction
46position

an anti-suit injunction.

and the effect of the Manila RTCs anti-suit injunction.

Hence, this

paper.

47

48

INTRODUCTION

49
50Claimant
51submits

Pampanga Energy Company (Claimant, PEC) hereby respectfully

this Memorandum in Support of Jurisdiction in response to the request of the

52Honorable

Tribunal and the Opposition against its Jurisdiction filed by Respondent,

53Construction

Company. (Respondent, CC).

54
55Claimant
56its

Submission before this Honorable Tribunal, and will demonstrate that: (i) CIAC

57does
58the

will respond in detail below to the various arguments made by Respondent in

not possess exclusive jurisdiction over the case; (ii) this Tribunal may disregard

anti-injunction suit of the Regional Trial Court of Manila and (iii) this Tribunal has

59jurisdiction

over the arbitration proceedings.

60
61Claimant
62basic
5
6

will demonstrate that based on the record now before the Tribunal, and on

principles governing the interpretation of the statutory provisions and the

Page 3 of 17

63jurisprudence

at issue, the Tribunal should easily and expeditiously dispose of

64Respondents objections

and proceed to an examination of the merits of this dispute.

65
66REFUTATION

OF THE RESPONDENTS FALSE PREMISES

67

A. CIAC

68

DOES

NOT

POSSESS

SOLE

JURISDICTION

OVER

69

CONSTRUCTION DISPUTES WHERE PARTIES HAVE STIPULATED

70
71

AND FILED FOR ARBITRATION IN ANOTHER FORUM

72Respondent
73the

Philippines are within the original and exclusive jurisdiction of the Construction

74Industry
75to

first claims that any dispute arising from or connected with construction in

Arbitration Commission (CIAC) and that the only requirement for the CIAC

acquire jurisdiction is that the parties must agree to submit their dispute to voluntary

76arbitration.
77To

bolster their claims, Respondents cited several decisions by the Supreme Court of

78the

Philippines which, allegedly, vest sole jurisdiction of disputes arising from or in

79connection
80This
81on

is an unfortunate distortion of the rulings of the Supreme Court of the Philippines

the matter. A more careful and critical reading of the said cases, and indeed

82prevailing
83Claimant
84CIAC
7
8

with construction in the Philippines to the CIAC.

Philippine Jurisprudence however, will show the contrary.

respectfully submits that while the Philippine laws vests jurisdiction with the

by the mere fact that the parties agreed to submit themselves to arbitration, it
Page 4 of 17

85does

not mean that the alternative arbitral forum identified by the parties will be

86entirely precluded
87Thus,

from exercising jurisdiction.

said the Supreme Court of the Philippines in the case of China Chang v. Rosal:

88

Now that Section 1, Article III, as amended, is submitted to test in the

89

present petition, we rule to uphold its validity with full certainty.

90

However, this should not be understood to mean that the parties may

91

no longer stipulate to submit their disputes to a different forum or

92

arbitral body. Parties may continue to stipulate as regards their

93

preferred forum in case of voluntary arbitration, but in so doing, they

94

may not divest the CIAC of jurisdiction as provided by law.1 [emphasis

95

supplied]

96Further, in

the same case, the Court elucidated the true nature of CIACs jurisdiction.

97

When the law provides that the Board acquires jurisdiction when the

98

parties to the contract agree to submit the same to voluntary arbitration,

99

the law in effect, automatically gives the parties an alternative forum

100

before whom they may submit their disputes. That alternative forum is

101

the CIAC. This, to the mind of the Court, is the real spirit of E.O. No.

102

1008, as implemented by Section 1, Article III of the CIAC Rules.2

103

[emphasis supplied]

91 China Chang Jiang Energy Corporation (Philippines) v. Rosal Infrastructure

10Builders, G.R. No. 125706, 30 September 1996
112 Ibid
12
13

Page 5 of 17

104It

is therefore clear that the CIAC, far from being the automatic forum the parties must

105submit
106an

their disputes to, as Respondents would like the Tribunal to believe, is merely

alternative forum.

107Similarly, in
108the

High Court reiterated the ruling that the law does not preclude the parties from

109stipulating
110its

the case of Excellent Quality Apparel, Inc v. Win Multi Rich Builders, Inc.,

a preferred forum or arbitral body so long as they do not divest the CIAC of

jurisdiction.3

111Arbitration
112of

of a construction dispute in the Philippines is peculiar in that the presence

an arbitration clause in the construction agreement automatically vests the CIAC

113with

jurisdiction over the dispute even if the arbitration clause refers to a different

114institution

(e.g. HKIAC).

115However,

such reference to another institution does not mean that the other institution

116may not assume jurisdiction

117It

over the dispute.

only means that the parties are allowed a choice of arbitrator, namely the CIAC or

118the

named institution. It may be inferred from this and other previous Supreme Court

119decisions
120request

relating to construction disputes, that the institution where the notice or

for arbitration is first filed is the institution that shall have jurisdiction over the

121construction

dispute.4

143 Excellent Quality Apparel Inc v Win Multi Rich Builders Inc, G.R. No.
15175048, 10 February 2009
164 Page 69, The Baker & McKenzie International Arbitration Yearbook 2009
17
18
19

Page 6 of 17

122As

it appears on the records, Claimant commenced arbitration proceedings against CC

123on

November 04, 2013 and filed a Notice of Arbitration with this honorable Tribunal.

124It

was only on November 18, 2013 when CC commenced its own arbitration

125proceedings

against PEC and submitted its Request for Arbitration to the Construction

126Industry Arbitration

Commission.

127Assuming

that we may not waive the jurisdiction of the CIAC, notwithstanding the

128stipulation

of the parties, the fact that the Claimant has commenced arbitration

129proceedings
130CIAC,

clothed the HKIAC with jurisdiction.

131Another

defense raised by the Respondent is that since the contract involves the

132construction
133arbitration,
134E.O.

135In

before Respondent several days before the latter filed for arbitration in the

of a power station, notwithstanding that the parties agreed to a seat of

arbitrators have the responsibility to apply mandatory laws, in this case, the

1008, because public interest so requires.

truth however, public policy requires that the parties observe the arbitration

136arrangement

that they have agreed upon in their contract.

137
138Once

arbitration has been agreed upon, the parties must perform their agreement as

139required

under the principle of pacta sunt servanda.5 Transnational public policy

140precludes

a party to that agreement from subsequently relying on a change in the

205 According to Conde Silva, the principle of pacta sunt servanda has been
21included in the notion of public policy by several authors. He cited P. Mayer
22and A. Sheppard, Final ILA Report on Public Policy as a Bar to Enforcement
23of International Arbitral Awards, commentary to Recommendation 1(e),
2419(2) Arb Int 249 - 263 (2003) at p. 256.
25
Page 7 of 17
26

141national

law, immunity from suit a unilateral repudiation of the contract or some other

its own wit.6

142act of
143

B. LEX ARBITRI IS HONG KONG LAW

144
145

146Respondent
147issued
148the

by the Manila Regional Court. To buttress their argument, Respondent points to

Arbitration Ordinance of Hong Kong (CAP 609) to categorically state that relief

149granted
150This
151of

the factual circumstances surrounding the present case.

153grant

45 of the Arbitration Ordinance grants the Hong Kong courts the power to

interim measures in relation to any arbitral proceedings that have been or are to

commenced in or outside Hong Kong, subject to specific conditions. It does not

155state
156on

by courts outside Hong Kong should be respected.

is an unfortunate misreading of the Arbitration Ordinance, and a misappreciation

152Section

154be

would have this honorable Tribunal recognize the anti-suit injunction order

that interim measures or relief granted by foreign courts are automatically binding

Hong Kong Courts, let alone on the Honorable Tribunal.7

157This

brings us to the more important point on this matter, and that is that the parties

158have

provided for a seat of arbitration, as evidenced by Clause 31.1 of the Engineering

159Procurement and

Construction Contract:

276 See discussion in G.J. Conde e Silva, Transnational Public Policy in

28International Arbitration, Queen Mary Research Online, available at <
29http://qmro.qmul.ac.uk/jspui/handle/123456789/1717>
307 Sec. 45 of Arbitration Ordinance (CAP 609)
31
32

Page 8 of 17

160

31.1 Any unresolved dispute shall be referred to and finally resolved by

161

arbitration administered by the Hong Kong International Arbitration

162

Centre under the Rules, except as the Rules may be modified herein.

163

The arbitration proceedings shall be conducted, and the award shall be

164

rendered, in the English language. The seat of arbitration shall be Hong

165

Kong.

166Further,
167their

under clause 31.2, the Parties have stipulated that the Arbitration clause and

agreement to arbitrate herein shall be governed by the laws of Hong Kong.

168Choosing
169of

the seat of the arbitration is important because generally, the arbitration law

the arbitral situs will be the law that governs the arbitration (the lex arbitri).8

170The

Geneva Protocol on Arbitration Clauses 1923 illustrated an early international

171view

that the law applicable to the arbitration should be that of the arbitral seat: it

172shall

be governed by the will of the parties and by the law of the country in whose

173territory the arbitration

174The
175of

takes place.9

lex arbitri, which translates to the law of arbitration, is concerned with the totality

national law provisions that apply generally to arbitrations in each country.10

176Greenberg,

Kee and Weeramantry describe this as a body of law which:

338 Moses, M. (2012). The principles and practice of international commercial

34arbitration (2nd ed.). Cambridge: Cambridge University Press.
359 Article 2, Geneva Protocol on Arbitration
3610 Henderson, A. (2014). Lex Arbitri, Procedural Law and the Seat of Arbitration.
37Singapore Academy of Law Journal, 26 SAcLJ, 887-887.
38
39
Page 9 of 17
40

177

legitimizes and provides a general legal framework for international

178

arbitration. The relevant law might itself be found in an independent

179

statute on international arbitration or it might be a chapter in another

180

law, such as a civil procedure code or a law also governing domestic

181

arbitration. It can also include other statutes and codes (even those not

182

specifically dealing with arbitration), and case law which relates to the

183

basic legal framework of international arbitrations seated there.11

184Among

other things, lex arbitri will provide for the external relationship between the

185arbitration
186as

and the courts, whose powers may be both supportive and supervisory, such

grant of interim relief, procuring evidence from third parties and securing the

187attendance of
188An

witnesses, the removal of arbitrators and the setting aside of awards.12

agreement as to the seat of an arbitration brings in the law of that country as the

189curial law

and is analogous to an exclusive jurisdiction clause.13

190Not

only is there agreement to the curial law of the seat, but also to the courts of the

191seat

having supervisory jurisdiction over the arbitration, so that, by agreeing to the seat,

192the

parties agree that any challenge to an interim or final award is to be made only in

193the

courts of the place designated as the seat of the arbitration.14

4111 Supra note 10, citing: Greenberg, S., Kee, C., & Weeramantry, J. (2011).
42International Commercial Arbitration: An Asia-Pacific Perspective. Cambridge:
43Cambridge University Press.
4412 Supra note 10
4513 Roger Shahshoua, Rodemadan Holdings Limited, Stancroft Trust Limited
46v. Mukesh Sharma, Neutral Citation Number: [2009] EWHC 957 (Comm), 5
47July 2009
4814 Ibid
49
50

Page 10 of 17

194Therefore,
195Regional
196above,

Trial Court is of no moment as regards the HKIAC. As per the discussion

this Tribunal may validly disregard the same as it is not a court of the seat of

197arbitration
198so,

it is submitted that the anti-suit injunction order issued by the Manila

which issued the anti-suit injunction. Only the Courts of Hong Kong may do

since the seat of arbitration is Hong Kong, and not the Philippines.

199
200ARGUMENTS

FOR JURISDICTION

201

A. THE HKIAC IS EMPOWERED TO DETERMINE ITS JURISDICTION

202

203Claimants
204its

submit that the HKIAC Tribunal is entitled to hear the dispute and determine

own jurisdiction because of the doctrine of Kompetenz/Kompetenz.

205
206Arbitral tribunals

can rule on their own jurisdiction under the doctrine of

207Kompetenz/Kompetenz
208by the

or competence-competence. The principle was first established

International Court of Justice to prevent national courts from interfering with its

209jurisdiction.15 It

is a customary rule, which has the character of necessity, derived from

210the

jurisdictional nature of the arbitration, confirmed by case law more than 100 years

211old

and recognized unanimously by the writings of legal scholars.16

5115 Affaire Nottebohm (Liechtenstein v. Guatemala), in ICJ (1953), and Art.

5235(6) in the The Statute of the International Court of Justice: in the event of
53a dispute as to whether the court has jurisdiction, the matter shall be
54settled by the decision of the Court.
5516 Supra Note 6, citing: Texaco Overseas Petroleum Company v The
56Government of the Libyan Arab Republic, 104 Clunet 350-389 (1977)
57
Page 11 of
58

17

212
213The
214a

principle implies that the arbitral tribunal, rather than a national court, must decide

dispute concerning its jurisdiction. This has led several arbitration tribunals to uphold

215the

power to determine their own jurisdiction as a rule of international arbitration from

216which

no derogation is permitted.

217
218The

doctrine of competence-competence is supported by Article 16.1 of the

219UNCITRAL Model

Law.

220
221

The arbitral tribunal may rule on its own jurisdiction, including any

222

objections with respect to the existence or validity of the arbitration

223

agreement. For that purpose, an arbitration clause which forms part of a

224

contract shall be treated as an agreement independent of the other terms

225

of the contract. A decision by the arbitral tribunal that the contract is null

226

and void shall not entail ipso jure the invalidity of the arbitration

227

clause. [emphasis supplied]

228
229This

same doctrine has been made enforceable in Hong Kongs jurisdiction, under

230Section
231the

34 of the Arbitration Ordinance which essentially reproduced Article 16.1 of

UNCITRAL Model Law.

232

59
60

Page 12 of 17

233Conde

e Silva (2007), observed the controlling features of the doctrine of competence-

234competence

succinctly in his analysis of the Deutsche Schachtbau (DST) v Rakoil 17,

235where
236the

defendant was precluded from relying on an action instituted in the courts of Was

237Al Kaimah

to decide the jurisdiction of the tribunal.

238
239The

dispute concerned a concession agreement concluded between the government of

240Was

Al Khaimah and an exploration company to explore for oil and gas in the

241territorial
242Was

waters of Was Al Khaimah. In April 1979, defendants filed a suit with the

Al Kaimah court against DST and the original operator requesting that the

243agreements

be set aside and that DST and the original operator be restrained from

244continuing

with the reference to arbitration. The court issued an order to that effect.

245Considering

the court order, the tribunal found that the action instituted in the courts of

246Was

Al Khaimah could not stay the jurisdiction of the arbitration tribunal to proceed

247with

the arbitration and to award on the merits of the case.18

248
249Similarly, in

Salini Construttori S.P.A v. The Federal Democratic Republic of Ethiopia,

250the

tribunal ousted the effects of an injunction by the Supreme Court of Ethiopia to stay

251the

arbitral proceedings, pursuant to the code of civil procedure of that state. In the

252award

the tribunal held that it was

253
6117 Supra note 6, citing: ICC Case No. 3572 Final Award of 1982 Deutsche
62Schachtbau- und Tiefbohr GmbH v. Rakoil
6318 Supra note 6
64
65

Page 13 of 17

254

Not bound to suspend the proceedings as a result of the particular

255

injunctions issued by the Supreme Court and the First Instance Court

256

and that, in the particular circumstances of the case, it is under a duty

257

to proceed with the arbitration. [emphasis supplied]

258
259According

to the arbitrators, the Ethiopian courts would be in "clear breach of the

260fundamental

principle of competence-competence" if it obliged the tribunal to stay its

261proceedings

in deference to court proceedings specifically instituted to determine the

262tribunal's
263To

jurisdiction.19

decide otherwise, the tribunal added, would have serious consequences to

264international
265the
266to

arbitration, creating an intolerable precedent to parties attempting to avoid

effects of the arbitration agreement.20 In certain circumstances, it may be necessary

decline to comply with an order issued by a court of the seat, in the fulfilment of

267the

Tribunal's larger duty to the parties.21 Especially, if the order is one issued by a

268court

not of the seat as in the case of PEC and CC.

269Based

on the foregoing, it is clear that the doctrine of competence-competence has

270found

its way not only in international and national laws, but also in the decisions of

271courts

of law, and alternative forums such as arbitral tribunals.

272
6619 Salini Construttori S.P.A v. The Federal Democratic Republic of Ethiopia,
67Addis Ababa Water and Sewerage Authority, ICC Arbitration No.
6810623/AER/ACS, December 2001
6920 Supra note 6
7021 Supra note 19
71
72

Page 14 of 17

273Thus,

the Tribunal is, beyond any iota of doubt, capable of determining and

274establishing
275commenced

its own competence to exercise jurisdiction over the arbitral action

by the Claimant before it on November 04, 2013.

276
277
278

B. HKIAC WAS CLOTHED WITH JURISDICTION THE MOMENT

CLAIMANT FILED NOTICE OF ARBITRATION

279
280
281It

bears emphasizing that Claimant commenced arbitration proceedings against CC and

282filed

a Notice of Arbitration with the Hong Kong International Arbitration Centre on

283November

04, 2013, there being no showing that there was a deficiency or failure in

284compliance with

the requirements dictated by the HKIAC Rules.

285
286Under

HKIAC Rules, the arbitration is deemed to commence on the date a copy of the

287Notice of Arbitration

is received by the HKIAC.22

288
289Therefore,
290moment

Claimant posits that jurisdiction has been vested with the HKIAC, the

it received a copy of the notice of arbitration, as that commences the arbitral

291proceedings.
292
293
294
295
7322 Article 4.2 HKIAC Rules
74
75

Page 15 of 17

296RELIEF
297
298It

is finally submitted that while the law confers jurisdiction, the parties are allowed to

299choose

the law, and thus the jurisdiction, that will govern their contracts or agreements,

300and

resolve disputes arising therefrom. Claimant reasserts, as it appears on the records

301and

verily on its submissions before this Tribunal, that the parties have validly agreed

302on

a specific forum, and that after Claimant has satisfactorily complied with the rules

303of

the HKIAC, it is the Hong Kong International Arbitration Centre which thus

304exercises

jurisdiction over the dispute between PEC and CC.

305
306In

consideration of the aforesaid discussions, Claimant respectfully prays that the

307opposition

and objections of the Respondents against the Tribunals jurisdiction be

308dismissed;

that the Tribunal disregard the anti-injunction suit filed by the Manila

309Regional

Trial Court, which is a court not belonging to the seat of arbitration, and that

310the Tribunal

proceed to the resolution of the arbitral proceedings commenced.

311
312
313
314DATED:

13 September 2015 CRUZ ESTEBAN LAW OFFICE

315

(Sgd.) Frances Jo Lovelyn S. Cruz

316

(Sgd.) Abriam Josh D. Esteban

317
318
319
76
77

NAMES OF COUNSEL
Page 16 of 17

320

(Counsel for Claimant)

321

322
323

Rm 212, AUF Professional School,

Highway,Angeles City, Philippines 2009

324

yayin_29@yahoo.com

325

fax: 63-45-3228027

326

telephone: 63-45-4580188

78
79

Mac-Arthur

abree_esteban@yahoo.com

Page 17 of 17