July 28, 2018

Grading system: _____________________________________________________________

50% - Finals Aug. 11, 2018
50% - Pre-Finals (quizzes, recitation and exercises)

Email address: junbautista.arbitration@yahoo.com Aug. 18, 2018

Arbitration Period: 30 days award
Note: arbitration is not technically less expensive than litigation!
Why Arbitration?
Bare minimum qualifications in order to be an arbitrator: 1. ICC rules are more flexible than court rules
1. Impartiality – internal, i.e. open as to the merits
2. Independence – external, i.e. relationship with others Impartial Independence
Free from bias Free from any relation to the
Doctrine of separability – dispute resolution clause is separable from the parties
whole agreement such that termination of the agreement shall not defeat the
Internal External
purpose of the dispute resolution clause
Open minded to merits
2 kinds of mediation:
1. Adjudicative
2. Facultative Types of Mediation
1. Adjudicative
Hall Street case 2. Facilitative
 A case of arbitration then an appeal by litigation
Mediation Arbitration Litigation
 US SC: invalid appeal bc the arbitral award is already binding
 Sir: So what remedy is left? Annul the arbitral award! (actual term is Recommendation Award Judgment
“set aside the award”)
 Grounds for setting aside the award (attack its intrinsic validity):
o Lack of jurisdiction Private Not private mode
o Lack of impartiality of the judge or arbitrator
 Where do you go to set aside the arbitral award? Courts! But which Jurisdiction agreed by Jurisdiction by law
courts? parties

Importance of place of arbitration Some courts refuse or are not capable of giving interim reliefs if there is a
1. Determines which court has supervisory jurisdiction stipulation in the agreement between the parties that they chose arbitration
2. Determines the court which will have the power to set aside the as agreed mode of dispute resolution.
award
3. Determines the nationality of the award Doctrine of Separability provides that the illegality in the contract will not
 i.e. where the award will be enforced affect the arbitration clause because the illegality is in the contract and the
 NY Convention – signatory states have agreed as to the arbitration clause although embedded in the same instrument, is a different
enforceability of arbitral awards and independent agreement – provided that countries recognize power of
arbitration
Aug. 04, 2018

Place of Arbitration: (legal implication and importance)
1. Determines the court which has supervisory jurisdiction of award
2. Determines the court which has power to set aside award
3. Determines the nationality of the award
Parties to the New York Convention are mandated to recognize and
enforce awards of other state-parties.
Venue: Place of hearing
Case of Hall Street in re litigation as appeal mechanism of Arbitration
SIAC video: UN Convention on International Sale of Goods
Not all disputes can be subject to arbitration. Some issues cannot be made
subject of arbitration or any other alternative dispute resolution
1. RA 876 Section 3
2. Article 2035 of the New Civil Code or those that
cannot be subject to compromise
3. RA 9285 Section 6
Note: in these cases, civil liability arising from crime may be arbitrable.
Arbitration is where the parties agreed to bring the dispute to a neutral third
party whose arbitral award is binding on the parties.
1. Republic Act No. 9285 or Alternative Dispute Resolution Act of
2004
2. Republic Act No. 876 or Arbitration Law of 1953
3. Executive Order No. 1008 or Construction Industry Arbitration
Law (1985)
 Created the CIAC
4. AM 07-11-08-SC or Special Rules on ADR (2009)
Types of Arbitration in the Philippines
1. International Commercial Arbitration
 Governed by RA 9285
 Chapter 4, Sections 19-31 of RA 9285 governed International
Arbitration
 Section 21 of RA 9285 defined Commercial arbitration
o 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.
 Section 19 of RA 9285 provided for the adoption of the Model
Law on International Commercial Arbitration
o 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".
o Adopted UNCITRAL Model Law on Arbitration
(1985)
o However, in a case of Korea Technologies Co v.
Lerma, the SC said "as signatory of the UNCITRAL in
the New York Convention, the Philippines committed
itself to be bound by the Model Law" but the footnote
of such model law pertains to the 2006 UNCITRAL
Model Law and not the 1985 Model Law
 How was that even possible if law was passed
prior to the amendment of model law so how
come we adopt the recent???
2. Domestic Arbitration
 Governed by RA 876
3. Construction Arbitration
 Governed by EO 1008
 Construction within the Philippines
According to Article I No. 3 of UNCITRAL Model Law of 1985, an
arbitration is international if:
A. The parties to an arbitration agreement have, at the time of the
conclusion of that agreement, their places of business in different
States;
B. One of the following places is situated outside the State 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 which
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
 Practice of Professions in the Philippines, is it limited to citizens of
the Philippines? Not all.
 Law, however, is limited to Filipino citizens
 Foreign lawyers can represent arbitration in the Philippines whether
such arbitration is international pursuant to Section 22 (RA 9285) or
domestic pursuant to Section 33(RA9285) but they are not allowed
for construction arbitration pursuant to Section 38 (RA9285).
o SEC. 22. Legal Representation in International
Arbitration. - In international arbitration 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.
o 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.
o 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.
 Practice of foreign lawyers is limited to arbitration only. They cannot
practice before any courts or quasi-judicial arbitration even if related
to the arbitration proceedings
 Appointment of foreign arbitrator is allowed for construction
arbitration under Section 37(RA9285) and for international
commercial arbitration under Rule 7.4 under Special Rules of
Court on ADR which provides that "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 of
arbitrator.”
o 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
(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.
o 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.
CIAC or Construction Industry Arbitration Commission is a government
body connected with the Department of Trade and Industry
~but actually it is not the CIAC which renders the award but the
arbitrators but whatever
Arbitral award for international commercial arbitration and domestic
arbitration cannot be made subject of appeal or certiorari pursuant to Rule
19.7 of Special Rules of Court on ADR, but those construction arbitration
under CIAC can be given relief or can be appealed or made subject of
certiorari under Rule 43 Rules of Court only for instances or grounds
provided under Section 24 of RA 876.
 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.
 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
(b) That there was evident partiality or corruption in the
arbitrators or any of them; or
(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
(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.
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.
Original and Exclusive jurisdiction of CIAC under EO 1008
 The parties must agree to voluntary submit the dispute to arbitration
Just because there is a construction does not mean that if there is a dispute,
it should go to CIAC.
Even if there is no express agreement or specified that it is CIAC, as long as
the issue involves construction projects within the Philippines and that
the parties agreed to submit themselves to voluntary arbitration even
without naming CIAC, the arbitration jurisdiction belong to CIAC because
EO 1008 provides that CIAC has original and exclusive jurisdiction over such
matter.
o Sec. 4. Jurisdiction. The CIAC shall have original and
exclusive jurisdiction over disputes arising from, or
connected with, contracts entered into by parties involved in
construction in the Philippines, whether the dispute arises
before or after the completion of the contract, or after the
abandonment or breach thereof. These disputes may involve
government or private contracts. For the Board to acquire
jurisdiction, the parties to a dispute must agree to submit
the same to voluntary arbitration.
China Jiang v. Rosal Infrastructure
o Rather it is plain and clear that as long as the parties agreed to
voluntary submit themselves to voluntary arbitration even if the
parties agreed and stipulated for another forum, the parties are
not precluded to submit the case to the CIAC because such
right is vested by law.
o But what if the parties stipulated that dispute shall be resolved by
ICC, and one of the parties went to ICC, can the other party
assail the jurisdiction of ICC since CIAC has original and
exclusive jurisdiction?
New York Convention
 Provides for recognition and enforcement of Foreign Arbitral Awards
and those provided under Article 2(1) and 2(3)
 Article 2 does not just deal with foreign arbitral awards but also to
arbitration clause
o Article II
1. Each Contracting State shall recognize an
agreement in writing under which the parties
undertake to submit to arbitration all or any
differences which have arisen or which may arise
between them in respect of a defined legal
relationship, whether contractual or not,
concerning a subject matter capable of settlement
by arbitration
2. The term “agreement in writing” shall include an
arbitral clause in a contract or an arbitration
agreement, signed by the parties or contained in
an exchange of letters or telegrams
3. The court of a Contracting State, when seized of
an action in a matter in respect of which the
parties have made an agreement within the
meaning of this article, shall, at the request of one
of the parties, refer the parties to arbitration,
unless it finds that the said agreement is (a) null
 and void, (b) inoperative or (c) incapable of
being performed
 Article 2(3) is important because a party may ask the court to refer
the parties for arbitration pursuant to their arbitration agreement and
the courts are mandated to do what was requested unless such
arbitration agreement is:
o (i) Null and void such as those where the subject pertains to
those disputes that cannot be subject of arbitration
o (ii) Inoperative
o (iii) Incapable of being performed
Domestic award
 If place of arbitration is the same as the place of enforcement
 If a party has a foreign arbitral award in a country which is a
signatory of the New York Convention then that party can enforce
such award on that country
In litigation cases, Section 48 of Rule 40 of Rules of Court (???) provides
for effect of foreign judgments or final orders but in either case, a party can
question the findings of the foreign court or that said judgments or final
orders may be repelled by evidence of:
1. Want of jurisdiction
2. Want of notice to the party
3. Collusion
4. Fraud
5. Clear mistake of law or fact.
Similarly, Article V of the New York Convention provided that recognition
and enforcement of the award may be refused, at the request of the party
against whom it is invoked, if there is:
a. Proof of incapacity
b. Invalid arbitration
c. Due process violation
d. No jurisdiction or lack of jurisdiction
e. Did not follow the arbitral procedure
f. Not yet binding or has set aside
g. Arbitrability
h. Contrary to public policy.
Article V
1. Recognition and enforcement of the award may be refused, at the
request of the party against whom it is invoked, only if that party
furnishes to the competent authority where the recognition and
enforcement is sought, proof that:
(a) The parties to the agreement referred to in article II were,
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 the arbitrator or of the
arbitration proceedings or was otherwise unable to present
his case; or
(c) The award deals with a difference not contemplated by or
not falling 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 authority 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 took place;
or
(e) The award has not yet become binding on the parties, or has
been set aside or suspended by a competent authority of the
country in which, or under the law of which, that award was
made
2. Recognition and enforcement of an arbitral award may also be
refused if the competent authority in the country where recognition
and enforcement is sought finds that:
(a) The subject matter of the difference is not capable of
settlement by arbitration under the law of that country; or
(b) The recognition or enforcement of the award would be
contrary to the public policy of that country
Also, Article 34 of the UNCITRAL provides for the same to wit:
Article 34. Application for setting aside as exclusive recourse against arbitral
award
(1) Recourse to a court against an arbitral award may be made only by an
application for setting aside in accordance with paragraphs (2) and (3) of this
article.
(2) An arbitral award may be set aside by the court specified in article 6 only
if:
(a) the party making the application furnishes proof that:
 (i) a party to the arbitration agreement referred to in article 7 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 this State; or
(ii) the party making the application was not given proper no- tice 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 sub- mission 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 proce- dure
was not in accordance with the agreement of the par- ties, unless such
agreement was in conflict with a provision of this Law from which the
parties cannot derogate, or, failing such agreement, was not in
accordance with this Law; or
(b) the court finds that:
(i) the subject-matter of the dispute is not capable of settlement by
arbitration under the law of this State; or
(ii) the award is in conflict with the public policy of this State.
(3) 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 33, from the
date on which that request had been disposed of by the arbitral tribunal.
(4) 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
Sept. 01, 2018
Places involved in investment treaty arbitration cases:
1. MRT
2. Laguna Lake
3. NAIA Terminal 3
 Who built it? Not the gov’t! non-gov’t entity built it. Why not?
Bc gov’t has no funds! So they used BOT program (build-
operate-transfer)
 Two ways to get public infrastructure projects:
o Procurement law – if a gov’t wants something
done, they must undergo a public bidding
o Swiss Challenge – different model from
procurement; e.g. Bulacan Airport proposal; such
proposal is not from the gov’t but from Ramon Ang
of San Miguel (purely private initiative)
 Concession agreement in the 90s to build the NAIA Terminal
3. What happened? It was cancelled due to an anomaly in
the award of the project; who cancelled it? The gov’t.
 This is actually transpo case Agan vs PIATCO
 Concession agreement was cancelled bc PIATCO was a
disqualified bidding for not being able to prove its financial
capacity
 However, by the time it was cancelled, NAIA was already
almost finished!
 The concession agreement provided for two arbitration
clauses: (1) for construction dispute (CIAC); and (2) non-
construction (SIAC)
 It’s not a construction issue bc the issue is WON the gov’t is
correct in invalidating the contract
 In the bidding for Cebu Mactan Airport, all the PH
conglomerates had foreign airport partners. Why? Technical
expertise! The foreign companies are really in the business
of building airports (e.g.
 How do airports earn money? Principally from commercial
businesses inside the airports (lease of commercial areas in
the airports), minor lang yung sa airline companies
 Fraport – German airline construction company which is a
shareholder of PIATCO; can it invoke the concession
agreement? No, it is not a party! PIATCO has a separate
personality! But how was it able to initiate arbitration
proceedings? Thru treaty! (Germany-PH bilateral investment
treaty)
o Under said treaty, both countries promised that
investors of one country in the other country will
be given certain protections; one of these is in the
case of dispute, we can go to arbitration (Art. 9 of
the treaty)
o Hence, even if Fraport is not a party of the treaty,
Fraport can invoke the said treaty
o Fraport has two choices:
1. Court of PH
2. ICSID
o Where do you think Fraport will go? ICSID
(International Center for Settlement of Investment
Disputes)! Bc going to PH Courts would be
suicide. PH Supreme Court already declared the
concession contracts invalid
o What’s the cause of action of Fraport? Breach of
treaty obligation of PH!
o So even if you are not a party in an agreement in a
gov’t contract, you can still go to arbitration if you
can find such clause in an investment treaty
between your state and the other state
o PH has 31 bilateral investment treaties with other
countries. It has none with the US
o There are 5 known investment treaty cases in
which the PH is part of:
1. SGS vs PH
2. Fraport AG vs PH = Germany vs PH
3. Baggerwerken se Cloedt en Zoon vs PH =
Belgium + PH
o Laguna Lake dredging project
o Project of Gloria but was cancelled
by Pnoy Admin
o Baggerwerken got $16M
o Really bad because PH cancelled
the contract only bc made by
previous admin; it was ordered to
pay $16M and was not even able to
get any tangible benefit!!!
o PH hasn’t paid Baggerwerken yet
4. Shell PH Exploration BV vs PH =
Netherlands vs PH
o Malampaya is a gas field Northwest
of Palawan
o Batangas has 3 gas power plants
which were built by virtue of the
discovery of the Malampaya gas
field
o Two kilometers deep underwater
o Concession agreement granted by
the gov’t to Shell which gives it the
right to explore natural resources of
PH (recall Consti law)
o This agreement was entered into
before Malampaya was found! In the
1970s during the oil crisis in the
Middle East. The gov’t decided that
we should look for oil here in our
country; but we don’t have the
expertise! So it goes to big private
oil companies
o So what motivated Shell to agree
despite the risk that there might not
be any gas field to be found? Tax
assumption vs tax exemption
o Tax assumption – tax assumed by
the gov’t
o Tax exemption – no liability at all
o The concession agreement included
tax assumption that DOE will pay for
the taxes
o Dispute refers to claim of the gov’t
for income taxes amounting to
Php53B
o COA imposed the tax claim; COA
said it was not allowed under the
law; but Shell was invoking the tax
assumption provision in the
agreement
o Can PIATCO invoke the investment
treaty? No, bc it is not a German
corporation
o Can Fraport invoke the concession
agreement? No, it is not a party
o What happened in this case? It took
eight years but Fraport lost
o The case was dismissed for lack of
jurisdiction bc the treaty says that
the investment in the host country
must be in accordance with the laws
of the host state
o The problem Fraport had was that
the PH contended that the
investment made by Fraport in the
PH was not in accordance with PH
laws; the gov’t discovered that
Fraport investment in PIATCO
exceeded the 40% investment limit
(it actually reached 60% through
 secret agreements with PIATCO);
hence it was a violation of the Anti-
Dummy Law
o Setting aside of decision by losing
party is “annulment of judgment” in
ICSID
o ICSID’s Washington Convention of
1965 has no grounds for setting
aside the judgment under Art. 54(1)
of ICSID Convention unlike NY
Convention, which has seven! No
defenses here! This is one of the
advantages in getting an ICSID
award (high chance of
enforceability); ICSID awards are
really public and high profile so
sometimes governments who are
found liable are forced to pay
o ICSID – part of the World Bank;
located in Washington, DC
o ICSID Convention – 153
signatories; no place of
arbitration in ICSID bc
that concept is strictly in
NY Convention only;
hence, consequence is
that no court has
supervision over such
case(hence, Washington,
DC courts has no
supervisory powers over
an annulment case);
ICSID Annulment
Committee (3 members)
will decide whether the
grounds for annulment
are valid; req’t: the parties
must be from signatory
states for ICSID
convention
o Additional Facility (non-
ICSID Convention); if the
any of the parties or both
are non-signatories; ex.
NAFTA (North American
Free Trade Agreement)
cases; members are US,
Canada and Mexico;
NAFTA provides that
NAFTA cases will
proceed according to
ICSID Convention, but
Canada and Mexico were
not signatories to ICSID
o Fraport, when it lost, had to go
through the annulment committee;
their main ground was violation of
due process. Theory of Fraport: in
ruling that it violated the Anti-
Dummy Law, the Tribunal did not
give it the chance to challenge the
evidence! The committee agreed
with Fraport; so, you have the
Fraport II case
o Fraport II case: the second new
tribunal gave Fraport the chance to
challenge the evidence; but it
dismissed the claim under the same
ground
o PIATCO also lost in the Singapore
case against PH gov’t
o Who is operating Terminal 3? MIAA
(Manila International Airport
Authority); what do you call it?
Expropriation! While the arbitration
proceedings are ongoing, there
were also expropriation proceedings
ongoing in PH courts
o PH paid PIATCO at least $500M
o Akala ko ba void yung concession
agreement? So how can PIATCO
get its money? Quantum Meruit!
Even if the contract is illegal, you
can claim back at least the cost!
(like unjust enrichment); technically
they did not earn money by
operating Terminal 3 but strictly,
 they earned money through the  Both applied for rate increase with MWSS; MWSS denied it so the
interest two went to arbitration separately
o Expenses of PH in Fraport I and II  Weirdly, Maynilad won but Manila Water lost; Maynilad’s legal team
cases reached P58M was Sycip Salazar while Manila Water had PBR law firm
5. Elliott BV vs PH (withdrawn)  Why? Maynilad filed the case first
 MWSS refused to comply with the arbitral award but Maynilad and
Yukos Company Arbitration – largest arbitration case concerning damages Manila Water had government guarantees; but regardless, DOF
(US$50M) refused to pay too; so Maynilad initiated arbitration proceedings
against the government in Singapore
Philip Morris vs Australia and Uruguay (2 separate cases)  Maynilad did not enforce the Singapore arbitral award in favor of
o Packaging of cigarette boxes are required to contain graphic health them; but the government has filed an action to set aside the
warnings Singapore arbitral award (not appeal, if for losing party), which is still
o Philip Morris contends that the regulation interferes with its branding pending
o WON the regulations are proportionate or non-discriminatory
o No question that governments can pass graphic health warning PH Competition Law
measures  RA 10667
o Does the regulation harm the investment?  Prevents collusion between competitors, which may result to a cartel
o As to Australia, the case was dismissed for lack of jurisdiction; Philip law
Morris is guilty of abuse of process
 Mentioned in IPL (recall!!)
o As to Uruguay, tribunal said it has jurisdiction but it ruled that
 PH Competition Commission
Uruguay did not violate the investment treaty. It was a reasonable
exercise of police power.
Some arbitration institutions:
1. ICC – International Chamber of Commerce
Vatenfell case
2. ICSID – International Center for Settlement of Investment Disputes
o Swedish energy company which was constructing a nuclear power
3. HKIAC – Hong Kong International Arbitration Center
plant in Germany
4. PDRCI
o Midway, Germany decided that it no longer wanted a nuclear power
5. SIAC
plant
6. CAS
7. WIPO
8. CIETAC
9. CIAC
UNCITRAL – UN Commission on Trade Law; PH adopted 1985 and not 2006
10. PCA
UNCITRAL Arbitration Rules:
Groupwork:
 UNCITRAL Arbitration Rules 1976
o Make an “advertisement”
 UNCITRAL Arbitration Rules 2010 o Should be short
o Target market is a Filipino, either a commercial person or a lawyer
Model Law vs Arbitration Rules o The ad must respond to the target market
o Not required to appear in the video; it could just be animation; just be
NAWASA case creative!
 NAWASA gave concessions to Maynilad and Manila Water to o Five weeks from Sept. 01, 2018 = Oct. 6, 2018 11:59PM is the
provide water services to specified zones in Manila deadline
 Two identical but separate concession agreements which provided
for arbitration (MWSS and Maynilad + MWSS and Manila Water)
 o Final product will be a commercial in video form; send google drive (2) The arbitration agreement shall be in writing. An agreement is in writing if it is contained
link in a document signed by the parties or in an exchange of letters, telex, telegrams or other
o Email address: junbautista.hk@gmail.com means of telecommunication which provide a record of the agreement, or in an exchange of
statements of claim and defence in which the existence of an agreement is alleged by one party
o Equivalent to at least 7 quizzes/recitation
and not denied by another. 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
October 20, 2018 reference is such as to make that clause part of the contract.

SIAC Model Arbitration Clause o It provides for the kinds of writing:

 Part of a contract or a stipulation in a contract  Letters
 Pre-dispute  Telex
 Telegram
Two types of arbitration agreements:  Estoppel – one party claims and the other party
1. Pre-dispute – Concluded before a dispute arises (pre-agreed does not deny
prior to a dispute) – 80%  Incorporation by reference – e.g. contract of
2. Post-dispute – Agreed after the dispute has arisen (submission affreightment with arbitration clause is incorporated
agreements) – 10 to 20% to a bill of lading by incorporation
 But in Model Law 2006:
 Why is the first type so prevalent? Bc you would want to maintain CHAPTER II. ARBITRATION AGREEMENT
relationships; to resolve the dispute in a fair and efficient manner
 Can you have an oral contract? Yes, but what is the problem? Option I
Enforceability under the Statute of Frauds; what is the exception to
the Statute of Frauds? (1) “Arbitration agreement” is an agreement by the parties to submit to arbitration all
 How do you normally enforce an oral contract? Agreements which or certain disputes which have arisen or which may arise between them in respect of
are partially performed, e.g. sale with partial delivery a defined legal relationship, whether contractual or not. An arbitration agreement
 What about arbitration agreements, should it be in writing? may be in the form of an arbitration clause in a contract or in the form of a separate
 Let’s review the ADR laws: agreement.
o RA 876
 Domestic . (2) The arbitration agreement shall be in writing. 

o RA 9285
 Coverage: (3) An arbitration agreement is in writing if its content is recorded in any 

 International
 Domestic form, whether or not the arbitration agreement or contract has been con- cluded
 Construction orally, by conduct, or by other means.
 Annex is UNCITRAL Model Law of 1985
o EO 1008 (4) The requirement that an arbitration agreement be in writing is met by an
 Construction electronic communication if the information contained therein is acces- sible so as to
 In RA 9285, Art. 7 (2) of the Model Law, arbitration agreement must be useable for subsequent reference; “electronic communica- tion” means any
be in writing communication that the parties make by means of data messages; “data message”
Article 7. Definition and form of arbitration agreement means information generated, sent, received or stored by electronic, magnetic,
optical or similar means, including, but not limited to, electronic data interchange
(1) "Arbitration agreement" is an agreement by the parties to submit to arbitration all or (EDI), electronic mail, telegram, telex or telecopy.
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 (5) Furthermore, an arbitration agreement is in writing if it is contained in an
an arbitration clause in a contract or in the form of a separate agreement.
exchange of statements of claim and defence in which the existence of an agreement
is alleged by one party and not denied by the other.
(6) The reference in a contract to any document containing an arbitration clause
constitutes an arbitration agreement in writing, provided that the ref- erence is such
as to make that clause part of the contract.
Option II
Article 7. Definition of arbitration agreement
(As adopted by the Commission at its thirty-
ninth session, in 2006
“Arbitration agreement” is an agreement by the parties to submit to arbitra- tion all
or certain disputes which have arisen or which may arise between them in respect of
a defined legal relationship, whether contractual or not.
 But note that we have not yet adopted the 2006 Model Law so
we are still with the 1985 Model Law
 What if you have an arbitration agreement but the other party
instead goes to litigation? In New York Convention:
Article II
3. The court of a Contracting State, when seized of an action in a matter in
respect of which the parties have made an agreement within the meaning of
this article, shall, at the request of one of the parties, refer the parties to
arbitration, unless it finds that the said agreement is null and void,
inoperative or incapable of being performed
 See Rule 4.6 of ADR Rules – no reconsideration, appeal or
certiorari
 Scenario: one party files action in the RTC, the other party can
ask the court to refer the matter to arbitration OR he can say,
let’s proceed
 What happens when the other party says “let’s proceed”?
waiver of the arbitration clause; he has to raise it at the earliest
opportunity
Let’s go back to the SIAC Model Arbitration Clause
 PIATCO case
o Who invalidated the concession agreement? PH
courts bc illegal so contract is null and void
o When PIATCO sued PH on ground of the
arbitration clause, isn’t that clause also now already
null and void? No, doctrine of separability so that
the other party cannot escape the obligation of
going through arbitration
Article 16. Competence of arbitral tribunal to rule on its jurisdiction
(1) The arbitral tribunal may rule on its own jurisdiction, including any
objections with respect to the existence or validity of the arbitration agreement.
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 con- tract. A
decision by the arbitral tribunal that the contract is null and void shall not entail
ipso jure the invalidity of the arbitration clause.
 What should the court do if the party invokes that the
contract is null and void, inoperative or incapable of being
performed? See tension between Art. 16 of Model Law
1985 vs Art. II (3) of NY Convention
o Prima facie – “on its face”
 Used by courts to resolve the conflict
between the two provisions
 If the contract on its face is null and void or
incapable of being performed, then go na
tayo sa litigation
 But if on its face, there appears to be a valid
arbitration clause, then the court has to refer
the case to arbitration
 They use the standard of preponderance of
evidence since it is a civil matter
o Ranking:
1. Prima facie – actually lowest
2. Admin cases – substantial evidence
 Civil cases – preponderance of evidence
3.
Crim cases – beyond reasonable doubt
4.
 In the SIAC movie, the tribunal bifurcated the case
o Jurisdiction
o Merits
 Does the tribunal always have to bifurcate? No, especially
when the issue of jurisdiction is linked with the merits
 Where do you look when you want to appeal the ruling on
jurisdiction? Rule 19.1 of ADR Rules of Court
 What if the Court refers the case to arbitration. Then, the
arbitral tribunal bifurcates the case then it rules that it has
jurisdiction. Can the other party question the ruling of the
tribunal on the jurisdiction? Can he go to Court and
challenge the ruling of the tribunal immediately?
 Determine where the place of arbitration is! See Rule 3.12
of ADR
 Pending the ruling of the court on the jurisdiction of the
arbitral tribunal, can the party questioning the arbitral
tribunal’s jurisdiction stop the arbitral tribunal from
proceeding? See Rule 3.18 of ADR Rules (no injunction of
arbitration proceedings)
Doctrine of competence competence – the arbitral tribunal can rule
on its own jurisdiction
 1985 MODEL LAW:
CHAPTER IV. JURISDICTION OF ARBITRAL TRIBUNAL
Article 16. Competence of arbitral tribunal to rule on its jurisdiction
(3) The arbitral tribunal may rule on a plea referred to in paragraph (2) 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 days after
having received notice of that ruling, the court specified in article 6 to decide the matter,
which decision shall be subject to no appeal; while such a request is pending, the arbitral
tribunal may continue the arbitral proceedings and make an award.
Note: if the arbitral tribunal rules that it has no jurisdiction, the
aggrieved party cannot go to court to question that ruling
Governing law
 Law of the jurisdiction which determines the rights and
obligations of the parties
 How many contracts? Two; 1 for main agreement and other
one for the arbitration agreement
 The governing law clause is usually found in the main
agreement
 But bc of the doctrine of separability, you can have another
governing law clause found in the arbitration agreement
 If the parties do not specify a governing law clause in the
arbitration agreement, which governing law clause would apply
but main agreement says the governing law is NY law while
the seat of arbitration is HK?
 The governing law will be determined by the parties’ intent;
three possibilities
o HK – seat of arbitration
o NY – governing law in main agreement
o Law x – something else
 In PH, no decisive case yet as to which governing law applies
 In Singapore, the seat of arbitration is the one that applies
 Scenario:
o Main agreement – construction agreement; governed by
PH (i.e. CIAC)
o Arbitration agreement – governed by Singapore law
(ICC), seat is HK
o But the question is, can the parties exclude the
jurisdiction of the CIAC? IDK, no SC ruling yet
 Scenario:
o Main agreement: to deliver coffee beans from Batangas
to Bali
o Governing law in main agreement: PH, Indonesian law,
something else
o Can the “something else” be international law? In
theory, yes. But if there is a dispute, what will apply?
It’s a term that is too vague
 o Int’l law as governing law is only advisable if the other
party is a State or a State-owned corp bc you don’t want
to necessarily agree to be governed by their law since
they could easily change their law to favor them
o Remedy: agree to have the primary governing law to be
int’l law while domestic law only as secondary so the
State must act in accordance with int’l law (i.e. the
State cannot change its laws unjustly to prejudice you)
Choice of Law
 Under PH law, parties can choose which law will govern so
long as not contrary to morals, public order or public policy,
etc. but such law must have substantial connection to the
transaction
 But in practice, the neutral law may not be substantially
connected to the transaction
Incoterms
 Set of rules which define the responsibilities of sellers and
buyers for the delivery of goods under sales contracts
 Published by ICC and widely used in commercial transactions
 Can be used as governing law even if not municipal law
 Can “equity” be used as governing law? In theory yes but you
are giving the arbitrators too much discretion
Let’s go back to PIATCO diagram
 Can a non-party to the arbitration contract be a party in the
arbitration? GR: No; XPNs:
1. Stipulation pour autrui (3rd party beneficiary)
2. Assignment
3. Subrogation
4. Successors/mergers
5. Piercing the veil
Considerations for Choosing the Seat of Arbitration
 One of the benefits of choosing arbitration is that the parties
can choose who can be the decision makers, i.e. arbitrators
 Only qualification of an arbitrator: impartiality and
independence
Under Model Law of 1985:
Article 12. Grounds for challenge
(1) When a person is approached in connection with his possible appointment as an arbitrator,
he shall disclose any circumstances likely to give rise to justifiable doubts as to his
impartiality or independence. An arbitrator, from the time of his 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.
(2) An arbitrator may be challenged only if circumstances exist that give rise to justifiable
doubts as to his impartiality or independence, or if he does not possess qualifications agreed to
by the parties. A party may challenge an arbitrator appointed by him, or in whose appointment
he has participated, only for reasons of which he becomes aware after the appointment has
been made.
How to check if the arbitrator is impartial or independent => Ask if he
has relationship with either of the parties
 Test: likelihood that justifiable doubts will arise as to his
impartiality or independence
 IBA Guidelines of Conflict of Interest
o Red
 Two kinds
 Non-waivable
 Waivable
o Orange
o Green
 Need not be disclosed
 Examples:
