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Involved in Arbitration / ADR? We know the different processes. We can help you dissect and analyze them, refine and combine them, create hybrid procedures to make them suitable for particular relationships, as well as develop strategies and point you to the right direction.
There
called
(traditional/agreement
In contrast, in statute based arbitrations the arbitrator or arbitrators derive their powers from the authorities of a State.
ARBITRATION
Contractual Nature
Arbitration is a creature of contract, not of law. It is based on the contract principle of party autonomy or the will of the parties, expressed as the freedom to contract.
ARBITRATION
Tribunal an Instrumentality of the Parties
In arbitration the parties create their own tribunal. They appoint their judges, craft the procedure; agree on several categories of choice. As creators they own the tribunal; as owners and creators they can shape the tribunal to what they want it to be. As owners and creators they pay the expenses of the tribunal that they created. The arbitrators are akin to temporary employees whose job description is to resolve the dispute between the parties.
ARBITRATION
Award a Product of Dispute Resolution
Process; Need for Confirmation/Recognition
A vacated award x x x was an international award which was not integrated in the legal system of that State x x x (Hilmarton v OTV, 1994 BULL CIV. A, No. 104, Court de Cassation, March 23, 1994. From Carbonneu).
ARBITRATION
Principle of Finality of Award is
Contractual x x x arbitrators are judges chosen by the parties to decide the matters submitted to . them, finally and without appeal x x x (Burchell v Marsh, 58 U.S.. 344, 15 L.Ed. 96 (1854).
The essence of the arbitration process is that an arbitral award shall put the dispute to rest x x x. Arbitral finality is a core component of the parties agreement to submit to arbitration. Thus, an arbitration
ARBITRATION
Validity Issues: Award is Treated Just Like
a Contractual Stipulation
An award is ignored or vacated if bad; recognized or confirmed and enforced if good; subject to the principle of separability.
An added saving grace is referral back to the Tribunal which was introduced by
and craft procedure heavily curtailed Tribunal an instrumentality of Government Resultant award deemed integrated into the legal system No agreement exists that the award is final, hence a merits review is available
Development Corporation, G.R. No. 163582, 9 August 2010 No. 167022, 4 April 2011
The ruling implied that the parties can increase or decrease by contract the jurisdiction of the CIAC.
SECRET EVIDENCE
In arbitration (agreement based), the use by the
Tribunal of so-called secret evidence in deciding a dispute results to due process and right to be heard issues, hence providing for a ground to vacate the award.
SECRET EVIDENCE
When the Tribunal used its legal or
technical expertise in deciding a dispute instead of just relying on the evidence on record, then the Tribunal is said to have used its expertise in deciding the dispute. In effect, it used secret evidence
SECRET EVIDENCE
The use by the Tribunal of secret evidence may
result to due process and right to be heard issues, hence providing for a ground to vacate the award. pertinent and material to the controversy in domestic arbitration (R.A. 876 Sec. 24) or a party being otherwise unable to present his case in international arbitration (Model Law Art. 34.2 (ii)). Similar provisions in R.A. 9285 and New York Convention
Examples
SECRET EVIDENCE
In a dispute then before us, we were
confronted with a situation where we may have to use secret evidence in deciding an issue.
Details
SECRET EVIDENCE
We have no problem about using secret
evidence because the issue is legal, not technical. CIAC awards are appealable on issues of law and we can expect the reviewing authority, the Court of Appeals, to use its legal expertise in deciding the matter.
SECRET EVIDENCE
While we may use secret evidence on legal
issues because we may take judicial notice of laws, we would have a problem if the issue then before us were technical rather than legal. No rule exists in the Rules of Court to the effect that we may take judicial notice of technical matters.
SECRET EVIDENCE
The issue, then, that we should consider:
Can we use secret evidence in deciding technical issues?
INCORPORATION CLAUSES
Another issue that we encountered refers
to the incorporation in a contract of an arbitration agreement contained in another instrument.
Details
INCORPORATION CLAUSES
In the Philippines and by a 1990 jurisprudence, a general
incorporation clause in a incorporate an arbitration another instrument. contract will suffice agreement contained to in
Clearly, the Bill of Lading incorporates by reference the terms of the Charter Party. x x x. This should include the provision on arbitration even without a specific stipulation to that effect. (National Union Fire Insurance Company of Pittsburg, PA/American International Underwriter (Phil.) Inc., vs. Stolt-Nielsen Philippines, Inc. and Court of Appeals, G.R. No. 87958, April 26, 1990, on page 2).
INCORPORATION CLAUSES
The rule outside the Philippines is different.
The liberal view is that a mere reference to a contract containing an arbitration clause would not of itself be sufficient to incorporate and arbitration clause.
The strict view, said to be the prevalent view, requires a specific reference to an arbitration clause for an arbitration agreement to be validly incorporated by reference.
INCORPORATION CLAUSES
Reasons for requiring specificity:
Autonomy of arbitration clauses Arbitration clauses amount to a waiver of the right to go court, hence the waiver must be clear Arbitration clauses are merely ancilliary or collateral, hence not germane, to the main contract With respect to transferable documents of title, the transferee could not reasonably be assumed to know that the incorporated instrument has an arbitration clause (innumerable foreign cases).
INCORPORATION CLAUSES
Cases (some only; there are more)
Carob Ind. Pty. Ltd. v Simto Pty. Ltd (1996) TW Thomas & Co. Ltd. V Portsea Steamship Co. Ltd (1912) Aughton Ltd. V MF Kent Services Ltd (1991) Roche Products Ltd v Freeman Process Systems Ltd (1975) Lexair Ltd v Edgar W. Taylor Ltd (1993) Quantas Airways v Dillingham Corp (1985)
INCORPORATION CLAUSES
The strict view the incorporation must be
specific was uniformly applied to documents of title and insurance contracts with incorporation clauses The liberal view is being applied, by jurisprudence, to other contracts.
[I]t is (still) a matter of construing each individual contract to determine whether or not it was contractually agreed the disputes should be resolved by way of arbitration. (Carob Industries v Simto, others).
INCORPORATION CLAUSES
Philippine Arbitration Law mutated in 2004
with the passage of R.A. 9285.
INCORPORATION CLAUSES
Model Law (1985) Chapter II Art. 7 (2) states in
its last sentence:
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. (Capitals provided).
INCORPORATION CLAUSES
With the change in the law, it is now reasonable to assume that, at least in international arbitration, there would be a change in the prevailing jurisprudence involving incorporation clauses.
In interpreting the Model law, regard shall be had to its international origin and to the need for uniformity in its interpretation x x x. (Model Law Sec. 20)
INCORPORATION CLAUSES
Model Law Art. 7 was not one of the provisions
made applicable to our domestic arbitration law. Arts. 8, 10, 11, 12, 13, 14, 18 and 19 and 29 to 32 of the Model Law and Sections 22 to 31 of the preceding Chapter 4 shall apply to domestic arbitration. (R.A. 9285 Sec. 33).
INCORPORATION CLAUSES
I submit that it would be absurd if we were to
retain the prevailing rule if the arbitration were domestic, and adopt the new rule as provided for in the Model law if the arbitration were international.
INCORPORATION CLAUSES
The issues are submitted for your kind consideration.
GLOBAL CLAIMS
A third issue that we encountered refers
to global claims.
GLOBAL CLAIMS
Concept
If losses and expenses result from delay/s and/or disruption/s caused by a number of different events in such a way that it is impossible to separate out the consequences of each of those events, the contractor does not need to establish causal links between individual events and particular loss if he can demonstrate that all of the events relied upon are in law the responsibility of the employer (Laing Management (Scotland) Ltd v John Doyle Construction Ltd, Building Law Reports (2004) p 296. Global Claims are known as Total Loss Claims in the United States.
GLOBAL CLAIMS
Rationale (from Laing)
Normally, individual causal links must be demonstrated between each of the events for which the employer is responsible and particular items of loss and expense. Frequently, however, the loss and expense results from delay and disruption caused by a number of different events, in such a way that it is impossible to separate out the consequences of each of those events. x x x the events may interact in such a way as to produce a cumulative effect x x x
GLOBAL CLAIMS
Essence and Nature of a Global Claim
If all of the causative events are matters for which the employer is responsible, any loss and expense that is caused by those events and no others must necessarily be the responsibility of the employer Hence, it is not necessary for the claiming party to demonstrate causal links between individual events and particular heads of loss. (from Laing)
GLOBAL CLAIMS
Example (from Laing):
A common example occurs when a contractor contends that delay and disruption have resulted from a combination of the late provision of drawings and information and design changes instructed on the employers behalf; in such a case all of the matters relied on are the legal responsibility of the employer. x x x it is impractical to disentangle that part of the loss which is attributable to each head of claim.
GLOBAL CLAIMS
In the dispute then before us, we have to
deal with several so-called modified global claims, that is, separate composite losses arising out of separate sets of several alleged breaches.
GLOBAL CLAIMS
Fortunately for us, we were saved from
dealing directly with the issue on whether or not to allow a global claim. We found that the party who made the global claims was responsible for some events that caused the damages, hence the global claims could not succeed.
GLOBAL CLAIMS
What we did, instead, was to rely on the
provisions of law on temperate and moderate damages. Doing so is compatible with the rules involving global claims and also with Philippine law. That is, asserting a global claim will not deprive the Tribunal of its jurisdiction to make the necessary assessment, based on the concept of reasonableness and apportionment as far as practicable.
GLOBAL CLAIMS
The issue then: are we to allow the
assertion of global claims?
On one hand, the claim may appear to be inconsistent with the cause and effect concept of damages under Philippine law.
GLOBAL CLAIMS
Are we to allow global claims?
On the other hand, asserting a global claim will not violate the proposition that there should be a cause and effect link between the breaches and the loss. The claimant will still have to allege and prove that the other party committed several breaches and that the claimant suffered loss and damage as a result. However, due to the interaction and complexity of the several breaches, it may be difficult, if not impossible, to identify which loss could be attributed to each breach.
GLOBAL CLAIMS
Parting Shot: In a way, the following provisions
If the person obliged to do something fails to do it, the same shall be executed at his cost (NCC Art. 1167).
The same rule shall be observed if he does it in contravention of the tenor of the obligation. Furthermore, it may be decreed that what has been poorly done be undone. (NCC Art. 1168).
GLOBAL CLAIMS
The issue is submitted for your kind
consideration.
ISSUES
Our position on how CIAC jurisdiction is to be
determined. Our position on the use of secret evidence, with particular emphasis on technical matters. Our position on incorporation clauses. Our position on the assertion of global claims.
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