attorney;Scope of Application.

This law applies to international commercial arbitration.

The Model Law definition of “international commercial arbitration” includes situations in which the parties have their place of business in different states, or in which the place of arbitration or performance is a state different than that of the parties’ place of business.

B) Qualifications of Arbitrators

Republic Act No. 876 differs from the Model Law with respect to the requirements of the persons acting as arbitrators. Under the latter, there are no specific requirements that ought to be possessed by the arbitrator as the parties are free to agree on his qualifications. Under the Philippine Arbitration Law, on the other hand, the minimum requirements for the appointment of a person as an arbitrator are that he be of legal age, in full enjoyment of his civil rights and must know how to read and write. An arbitrator is to be neutral and impartial. No party shall select as arbitrator any person to act as his champion or to advocate his cause. A ground for the disqualification of an arbitrator is his personal bias which might prejudice the right of a party to a fair and impartial award. This bias is presumed where the arbitrator is related by blood or marriage to a party within the sixth degree; or where he has financial, fiduciary or other interest in the controversy or cause to be decided or in the result of the proceeding. Under the Model Law, a person may be precluded by a reason of his nationality from acting as an arbitrator, if such is agreed upon by the parties (Art. 11).

C) Court Intervention

The present Philippine Arbitration Law also differs from the Model Law on the aspect of court intervention. Republic Act No. 876 allows broad intervention by the courts. It allows the courts to intervene in proceedings and on the ground of grave abuse of discretion committed by the Ar Tribunal and other grounds. In the case of Chung Industries, Inc. vs. Court of Appeals (206 545) involving a special civil action of certiorari, it was held that the Supreme Court will not engage in a review of the facts found nor even of the law as interpreted or applied by the arbitrator, unless there be on the part of the arbitrator a grave abuse of discretion or that he has acted without or in excess of jurisdiction. There will be a judicial review of the award:

(1) When the supposed errors of fact or of law are so patent, gross and prejudicial to a party. (Chung Industries, Inc. vs. Court of Appeals, 206 545).

(2) When the arbitrator failed to apply the agreement of the parties the breach of which gave rise to the dispute submitted to arbitration. (Chung , Inc. vs. Court of Appeals, 206 545).

(3) When the arbitrator gave one party unjustified extra compensation for certain items of work. (Chung Industries, Inc. vs. Court of Appeals, 206 S545).

(4) When one party has been deprived of a fair opportunity to present his position before the tribunal. (Hi Precision Steel Center, Inc. vs. Kim Steel Builders, Dec. 13, 1993).

(5) When the award was obtained through fraud or corruption of the arbitrator, or there was evident partiality of the arbitrator, or the arbitrator was guilty of misconduct, or that the arbitrator exceed his powers. (Hi Precision Steel Center, Inc. vs. Kim Steel Builders, Dec. 13, 1993).

On the other hand, Article 5 of the Model Law expressly states that no court shall intervene except where so provided in the law. The only way to question the award or action of the tribunal will be an application for setting aside the award on the grounds provided for in Article 34 of the said law. The award may be set aside by the court only if:

a) the party to the arbitration agreement was under some incapacity;

b) the party was unable to present his case; or

c) the award was beyond the terms of the submission to arbitration; or

d) the composition of the procedure was not in accordance with the agreement of the parties.

e) the court finds the subject-matter of the dispute is not capable of settlement by arbitration under the law of this State; or

f) the award is in conflict with the public policy of the state.

Further, judicial intervention is limited to those aspects relating to the processes, e.g., the issuance of provisional relief pending proceedings, assistance in the taking of evidence, and enforcement of awards. The Model Law limits judicial review in recognition of the limited connection of international commercial arbitration to any particular domestic legal system. There is, therefore, no provision for appeal to the courts on substantive matters. Recourse is limited to an application for setting aside the award. Under the Philippine Arbitration Law, appeal may be taken from a judgment or order confirming the award, or vacating or modifying it, through a certiorari on questions of law. Judicial review of an award may be made by petition under Rule 65 to the Court of Appeals. Although the parties may stipulate that the arbitrator’s decision or award shall be final, it has been held in the case of Chung that the finality of the arbitrator’s award is not absolute.

D) Status of Arbitration Proceedings

The Philippine Arbitration Law also differs from the Model Law with respect to the status of the arbitration proceedings when an action is brought before the courts. Under the former, a party to an arbitration proceeding which questions its actions may go to court and secure a temporary injunction prohibiting the tribunal from proceeding with the arbitration until the court has ruled on the action. On the other hand, under the Model Law where an action has been brought before a court, proceedings may nevertheless be commenced or continued, and an award may be made, while the issue is pending before the court (Article 8, par.2).

E) Disclosure Requirement

Another aspect wherein the Philippine Arbitration Law differs from the Model Law is on the disclosure obligations of the arbitrators. Under the former, no person shall serve as an arbitrator if he has financial, fiduciary or other interest in the controversy or has a personal bias, which might prejudice the right of any party to a fair and impartial award (Section 10). This, however, does not require prior disclosure as in the Model Law. Under the Model Law, 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 proceedings, shall without delay disclose any such circumstances to the parties unless they have already been informed of them by him (Article 12, par. 1).


F) Place of Arbitration

With respect to the designation of the place of arbitration there exists a marked difference between the Philippine Arbitration Law and the Model Law. The former does not provide for rules on the designation of the place of arbitration, whereas the latter provides that where the parties have failed to agree on the place of arbitration, the place shall be determined by the tribunal having regard to the circumstances of the case, including the convenience of the parties. It further provides that the tribunal may meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts of the parties, or for an inspection of goods, other property or documents. Under the Model Law, the parties are given broad autonomy. Aside from the place of arbitration, the parties can select their own rules of procedure, including the number of arbitrators, the language of the proceeding, and the type of hearing which may either be an oral or written presentation. Subject to certain mandatory provisions, the parties are free to determine the procedure to be followed by the tribunal in conducting the proceedings. They may do so by reference to a set of institutional or ad hoc arbitration rules, or by developing specific procedural rules tailored to their particular needs.

G) Applicable Law

Another area of difference between the two laws is the designation of the particular law to govern the dispute. The Philippine Arbitration Law does not specify the procedure for determining the law to govern the case. This is in marked contrast with the Model Law which provides that the tribunal shall decide the dispute in accordance with such rules of law as are chosen by the parties. This authorizes the parties to select not only a particular jurisdiction’s law, but the laws of several jurisdictions, or even general international legal principles. Failing any designation by the parties, the tribunal shall apply the law determined by the conflict of laws rules which it considers applicable. In all cases, the tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction (Article 28).

H) Correction or Interpretation of Award

The Philippine Arbitration Law can be considered deficient for the reason that it does not extend to the tribunal the right to correct or modify its award as first resort, unlike the Model Law which authorizes the parties to apply to the tribunal for correction or modification of the award. Article 33 of which provides that:

Within thirty days of receipt of the award, unless another period of time has been agreed upon by the parties, a party, with notice to the other party, may request the tribunal to correct in the award any errors in computation, any clerical or typographical errors or any errors of similar nature.

The Model Law, in addition, allows the parties to request the tribunal to give an interpretation of a specific point or part of the award. The same article gives the parties the opportunity to request from the tribunal additional awards as to claims presented in the proceedings but omitted from the award.