Professional Documents
Culture Documents
Concept
Simply, it is an agreement between two or more persons referring a future or
present controversy or controversies to arbitration for resolution
Types
Arbitration Clause a clause in a wider contract, referring future disputes to
arbitration
Submission Agreements refer existing disputes
Form
Must be in writing
- note that the meaning of in writing has evolved
The Important Choices:
- The place or seat of arbitration
- The types of arbitration
- The governing law of the contract
- The number of arbitrators
- The language of arbitration
CHOICES: The place or seat of arbitration
The Model Law view is that an arbitration must be juridically rooted in a particular
jurisdiction and must be conducted under that jurisdictions arbitration law.
The arbitration law provides the framework for arbitration, but not the procedure
which is left to the parties.
A delocalized arbitration, or one without a seat, would most likely not be
enforced .
This choice will impact on three stages of the arbitration:
1. Recognition of the arbitration agreement a country may have entered into
treaties involving arbitration. The more successful is the New York Convention of
1958.
2. Proceedings dependent on the law of the place
3. Recognition of enforcement of the award same as item one
CHOICES: Type of Arbitration
a. ad hoc do it yourself arbitration. The parties will have to make their own rules
b. Institutional administered by an arbitral institution, usually under its own rules
- fully administered. Example: ICC arbitration
- partly administered. Example: PDRCI & HKIAC arbitrations.
NOTES: HKIAC recently promulgated rules for administered arbitration
PDRCI recently changed its administrative guidelines to enable the counsel in
charge of the file to (a) intervene in an arbitration in ease of manifest violation of
the PDRCI Rules; and (b) to assist the tribunal and the parties in, among others, the
procedure to be followed; presenting arguments and evidence; and making awards,
but with the caveat that there is a limit to assistance (Confusion here).
In case of no amicable settlement, all disputes that may arise shall be settled
pursuant to the arbitration rules of the International Chamber of Commerce of
Singapore.
Any dispute arising out of the present contract shall be submitted to arbitration to
be administered by the Philippine Chamber of Commerce and Industry under its
rules that are presently in force.
INCORPORATION CLAUSES
In the Philippines and by a 1990 jurisprudence, a general incorporation clause in a
contract will suffice to incorporate an arbitration agreement contained in another
instrument.
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).
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.
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).
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)
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).
Philippine Arbitration Law mutated in 2004 with the passage of R.A. 9285.
Relevantly, R.A. 9285s Chapter 4 Sec. 19 states:
International commercial arbitration shall be governed by the Model Law on
International Arbitration x x x.
Model Law (1985) Chapter II Art. 7 (2) states in its last sentence: