Commencement of Arbitral Proceedings

(Sec. 5[a], Arbitration Law; Article 5.20, IRR)

In general, the commencement of arbitral proceedings is determined by the prior arbitration

agreement between the parties. Up to that extent, there is similarity between international
commercial arbitration and domestic arbitration on the commencement of arbitral proceedings.

The following are the specific rules for the commencement of domestic arbitration:

1. In an institutional arbitration where there is no prior arbitration agreement, it is

commenced in accordance with the arbitration rules of the institutional arbitrator.

2. In an ad hoc arbitration where there is a prior arbitration agreement, it is commenced

upon the delivery by the claimant to the respondent of a demand for arbitration. The
demand for arbitration shall be in any form and shall state the name, address and
description of each of the parties; the description of the nature and circumstances of
the dispute giving rise to the claim; the relief sought including the amount of the claim;
the relevant agreements including the arbitration agreement, a copy of which shall be
attached; and the appointment of the arbitrators and/or demand to appoint.

Where there is no prior arbitration agreement, it is initiated by one party through a

demand upon the other to submit their dispute to arbitration, and arbitration is deemed
commenced upon the agreement by the other party to submit the dispute to
arbitration. The demand shall also require the respondent to name his arbitrator within
a period which shall not be less than fifteen (15) days from receipt of the demand.

Arbitrators and Arbitral Tribunals

(Articles 5.9 to 5.14, IRR; Sections 8, 9, 10, 11 and 13, Arbitration Law)

I. Number of Arbitrators
- Unless the parties have agreed otherwise, there shall be three (3) domestic
arbitrators for domestic arbitration.

II. Qualifications and Disqualifications

An arbitrator must:
1. Be of legal age;
2. Be in full enjoyment of his civil rights; and
3. Know how to read and write.

No person shall serve as an arbitrator in any proceeding if:

1. He is related by blood or marriage within the sixth degree to either party to the
controversy;
2. He has or has had financial, fiduciary or other interest in the controversy or
cause to be decided, or in the result of the proceeding;
3. He has personal bias which might prejudice the right of any party to fair and
impartial award; or
4. He has been selected to act as champion or to advocate a partys cause.

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 III. Procedure for the Appointment of Arbitrators
- The parties in a domestic arbitration are free to agree on the procedure for the
appointment of arbitrators except that, in order to prevent undue advantage, an
agreement or clause giving a party the power to choose more arbitrators than the
other is VOID. The parties may, however, agree to empower the arbitrators already
appointed to select and appoint additional arbitrators who shall sit with the original
arbitrators.

- If there is no agreement for the appointment, the following are the default rules:
1. Appointment by the parties
2. Default appointment by appointing authority
3. Request for appointment
4. Acceptance of appointment
5. Oath of arbitrators

IV. Grounds for Challenge

1. Circumstances exist that give rise to a justifiable doubt as to his impartiality or
independence;
2. He does not possess the qualifications provided for under the law or agreed to
by the parties;
3. He is disqualified to act as an arbitrator*; or
4. He refuses to respond to questions by a party regarding the nature and extent
of his professional dealings with a party or his counsel.*

- The third (disqualification) and fourth (refusal to answer) grounds are not provided
for in the rules on international commercial arbitration but are provided for in the
rules on domestic arbitration based on Section 10 of R.A. No. 876.

V. Procedure for the Challenge

- The general rule is that the procedure that is agreed upon by the parties for
challenging an arbitrator shall be applied. In default thereof, the procedure that
shall govern shall be the paragraphs (b), (c), (f), (d), (g), (h), (i), (k), (o), (n), (p) of Art.
5.12 of the IRR and Section 11 of the Arbitration Law.

VI. Procedure in Case the Arbitrator Fails to Act

- As in the case of international commercial arbitration, if an arbitrator in a domestic
arbitration becomes de jure or de facto unable to perform his functions or fails to
act without undue delay, his mandate terminates if:
1. He withdraws, or
2. The parties agree on the termination.
- In order to facilitate the voluntary withdrawal of an arbitrator, the withdrawal will
not carry with it the implication that the arbitrator involved accepted the existence
or veracity of the ground for his termination.

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 - If the controversy remains, any party may request the appointing authority to
decide on the termination of the arbitrator, which decision shall be immediately
executor, and shall not be subject to motion for reconsideration or appeal.
- The appointment of a substitute arbitrator, whether on account of a challenge
procedure, or on account of his failure or impossibility to act, shall be governed by
the same rules applicable in the appointment of the replaced arbitrator.

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