Philippine Institute of Arbitrators

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CONSTITUTING THE TRIBUNAL

WITH ARBITRAL ETHICS AND
DISCLOSURES
by
MARIO E. VALDERRAMA AB, LLB, FCIARb, FHKIArb,
FPIArb
CIArb Approved Tutor
CIAC Accredited Arbitrator
Member (co-opted) of the Branch Main Committee of
The Chartered Institute of Arbitrators
East Asia Branch
Contact Details
Tel No 367 4001; Telefax 362 1867
Mobile 0917 4114 594
E-mail <marval.law@gmail.com>

STRUCTURE OF
PRESENTATION
Introduction: Comprehending Arbitrations
Topic I: Constituting the Tribunal
Topic II: Arbitral Ethics and Disclosures

Introduction

COMPREHENDING ARBITRATIONS

CLEARING THE CONFUSION:

ARBITRATION AND STATUTE BASED
ARBITRATIONS

There are several processes

arbitration in the Philippines.

Classes:

called

a. Arbitration (traditional/agreement based)

b. Statute based arbitrations based on law

CLEARING THE CONFUSION

CONCEPT OF ARBITRATION (AGREEMENT

BASED)
Arbitration is a device whereby the settlement of
a question, which is of interest for two or more
persons, is entrusted to one or more other
persons the arbitrator or arbitrators- who
derive their powers from a private agreement,
not from the authorities of a State, and who are
to proceed and decide the case on the basis of
such an agreement Fouchard, Gaillard,
Goldman
on
International
Commercial
Arbitration para 7 citing several authors.

AGREEMENT BASED
ARBITRATION

Elements:
A consensual mode of dispute
resolution by a third party neutral chosen
by the parties leading to a final and
binding award. from Guillard.

It is not true arbitration if any of the

elements is not present.

AGREEMENT BASED
ARBITRATION
Classification

Ad Hoc do it yourself arbitration

Institutional administered by an arbitral

institution, usually under its own rules.

AGREEMENT BASED
ARBITRATION
Classification: Institutional Arbitration

Fully
administered.
arbitrations.

Partly administered.

Example:

ICC

AGREEMENT BASED
ARBITRATION
Note: PDRCI Arbitration
Under PDRCI Rules, the counsel in charge of
the file is empowered to (a) intervene in an
arbitration in case of manifest violation of the
PDRCI Rules and (b) to assist the tribunal and
the parties to, 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.

Agreement Based
Arbitration
Classification as to applicable law
Foreign jurisdictional seat is a country
other than the Philippines. Applicable law
of arbitration is the arbitration law of the
seat.
If a foreign award were being enforced in
the
Philippines, the applicable law is the
New York Convention of 1958.

Agreement Based
Arbitration
Classification as to applicable law
Local - Philippines is the jurisdictional seat

Domestic without foreign element; defined in

the negative. Applicable law is R.A. 876 and
Civil Code Title XIV as amended/modified by
R.A. 9285.
International with foreign element.
Governing law is the UNCITRAL Model Law as
modified by R.A. 9285.

Agreement Based Arbitration:

When Arbitration is International
(Model Law 1(3))

Re parties places of business;

Re agreed seat of arbitration in re places of
business;
Re place where a substantial part of the
obligations is to be performed; place with which
the subject matter of the dispute is most closely
connected in re places of business;
Re agreement that the subject matter of the
arbitration relates to more than one county.

CLEARING THE
CONFUSION:

STATUTE BASED ARBITRATIONS

Sub Classification

Optional - needs stipulation to arbitrate, e.g.

CIAC and voluntary labor arbitrations

Imposed does not require agreement to

arbitrate, e.g. consumer and compulsory labor
arbitrations

FOCUS OF DISCUSSION
Our focus is on agreement based
arbitration.
This is true arbitration, based on consent and
not on law. Consensual justice.
In arbitration the parties craft the procedure.
Those who do not know what to do have no
recourse except to rely on the arbitrator.

CLEARING THE CONFUSION:

AGREEMENT BASED ARBITRATION

Contractual; synonymous with the concept of

party autonomy in the resolution of disputes
Tribunal an instrumentality of the parties
Award is product of private dispute resolution
processes, hence the need for judicial
recognition of confirmation
Principle of finality of awards is based on
contract & core component of the process
Validity issues: award treated just like a
contractual stipulation

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.
Hence, the governing law affirmed, rather
than granted, the right to choose
arbitration.

ARBITRATION

Contractual Nature: Basis

An adult is presumed to have sufficient
discretion hence capable of making informed
decisions.
He can, therefore, make arrangements with his
counterpart to resolve their disputes in the same
manner that he and his counterpart can create
legal relations by contract.

ARBITRATION

Contractual Nature:
The process is governed more by contractual
precepts, less by law.

Age of majority

Autonomy of contracts

Limitations on the freedom to contract

ARBITRATION

Contractual Nature:
A common mistake is to look at the law first
instead of applying contractual precepts.
Doing so taking the legal approach will
most likely result to the wrong ideas.

ARBITRATION

Tribunal an Instrumentality of the Parties

In arbitration the parties by contract create their
own tribunal (see Model Law provisions). 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 Private

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 decision is final and conclusive
because the parties have agreed that it be so x x
x. (Stasz v Schwab).

ARBITRATION

Validity
Issues:
Summary
Nature
Enforcement/Recognition Processes

of

The syllogism: The contract between the parties

is to abide by the award or decision of the
Tribunal; the subject of the petition is the award;
ergo the award must be enforced.
Cautionary Note: segregate from the merits of the
award the grounds to vacate the /refuse
recognition of the award where issues of fact
and law may arise.

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 arbitration
laws.

ARBITRATION

Grounds To Vacate/Refuse Recognition

are mainly based on the two constituent
elements of an arbitration, namely:

Contractual

Judicial

The Constituent Elements of an

Arbitration

Judicial The arbitral tribunal decides the

dispute/s like a judge or collective judges, as
the case may be. This distinguishes
consensual arbitration from mediation and
other ADR forms.
Contractual The power of the tribunal
arises from contract. This distinguishes
consensual arbitration from litigation and
statutory arbitration.
(From Carbonneu).

The Constituent Elements of an

Arbitration

From the Judicial Element flows the following:

Requirement to observe due process

Equality of the parties

Reasonable opportunity to be heard

Impartiality of arbitrators

Arbitral Ethics

The Constituent Elements of an

Arbitration

From the Contractual Element

Capacity of the Parties

Correlation: The New Civil Code provisions on
capacity to act and rules involving agency
Consent
No consent, no arbitration
Consent may be vitiated by the vices of consent

The Constituent Elements of an

Arbitration

From the Contractual Element (cont)

Form

Must be in writing.
NOTE: The law has since evolved to have
an expanded definition of in writing.

The Constituent Elements of an

Arbitration

From the Contractual Element (cont)

Jurisdiction of the Arbitral Tribunal

Contractual arbitrability, meaning that the

tribunal should not go beyond the jurisdiction
granted to it by the parties.

But note that the law may grant additional

powers to the tribunal, e.g., power to issue
interim measures of protection

The Constituent Elements of an

Arbitration

From the Contractual Element (cont)

The Rules and Procedure

Parties make their own rules and procedure.
[Note: The terms of reference is more akin to
the Rules of Court rather than a Pre-Trial Order.]

Legal Arbitrability (limitations arising from law that

affect the freedom to contract)

Principle of separability

STATUTE BASED
ARBITRATIONS

Established by statute
Hybrid processes
Freedom of parties to select arbitrators 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

NOTE: CIAC to be used as an example.

STATUTE BASED
ARBITRATIONS

Created by statute:
There is hereby established in the
CIAP a body to be known as the
Construction
Industry
Arbitration
Commission (E.O. 1008 Section 3).

STATUTE BASED
ARBITRATIONS

Hybrid Processes
A perusal of the CIAC procedures will
show a combination of the precepts of
agreement based arbitration and litigation.

STATUTE BASED
ARBITRATIONS

Curtailment
arbitrators:

of

freedom

to

choose

Generally,
only
CIAC
accredited
arbitrators may be appointed in CIAC
panels.

STATUTE BASED
ARBITRATIONS

Curtailment of freedom to craft procedure:

The Arbitral Tribunal shall at all times adopt the
most expeditious procedure for the introduction
and reception of evidence, and SHALL HAVE
COMPLETE
CONTROL
OVER
THE
PROCEEDINGS, but in any case shall afford full
and equal opportunity to all parties to present
relevant evidence (CIAC Rules Sec. 13.4).

STATUTE BASED
ARBITRATIONS

Tribunal an
Government

instrumentality

of

the

Obviously, as CIAC was created by statute

in implementation of a public interest
declaration.

STATUTE BASED
ARBITRATIONS

No need for confirmation for

enforceability as resultant award is
already integrated into the legal
system.

STATUTE BASED
ARBITRATIONS
Award subject to appeal:
Rule 43 Section 1. Scope. This Rule
shall apply to appeals from awards x x x.
Among those agencies are the x x x
Construction
Industry
Arbitration
Commission.

TOPIC ONE
CONSTITUTING

THE TRIBUNAL

Methods of Appointment
1. Nomination in the arbitration
agreement
- self-explanatory
- possible disadvantage if
appointment made in advance :
arbitrator may refuse or may not
be able to serve for whatever
reason

Methods of Appointment
2. Agreement after dispute has
arisen

self-explanatory

needs consent of arbitrator

Methods of Appointment
3. by an agreed appointing authority or other
agreed procedure
-appointing authority may be an arbitral
institution
(examples: ICC, PDRCI) or a person.
- if parties agreed to submit their dispute
under institutional rules, the institution is the
appointing authority unless if the parties
stipulated otherwise (see R.A. 9285 Sec. 26).
- ad hoc arbitrations: IBP President or his
duly authorized representative is the default
appointing authority (id., Sec. 26)

Methods of Appointment
3. by party appointed arbitrators
- where there are to be three arbitrators each
party shall appoint one arbitrator and the two
appointed arbitrators will appoint the third
(Model Law Art. 11, per R.A. 9285 Sec. 33 also
applicable to domestic arbitration).
[NOTE: In ICC arbitration it is the ICC Court that
appoints the third arbitrator unless if the parties
agreed to a different procedure.]

Methods of Appointment
4. by the Court or other authority
- where there is a default by party or other
appointment mechanism or inability of the
appointed arbitrators to agree, the appointment
shall be made by the Court or other authority
(Model Law Art. 11 [3]).
- per R.A. 9285 Sec. 27: the authority is the
appointing authority as defined in the law; in
default of the appointing authority (who failed or
refused to act within thirty (30) days to perform
his functions), the interested party may renew
application to the Court (the proper RTC
Branch).

Qualifications of the Tribunal (Model Law)

1. Impartiality

- a prospective arbitrator is required to

disclose any circumstances which may
give rise to justifiable doubts as to his
impartiality (Model Law Art. 12.1).
- the duty to disclose is continuing
during the process

Qualifications of the Tribunal (Model Law)

2. Independence
- a prospective arbitrator is required to
disclose any circumstances which may give
rise to justifiable doubts as to his
independence (Model Law Art. 12.1).
- the duty to disclose is continuing during
the process

Qualifications of the Tribunal (Model Law)

3.

Diligence (see Art. 14)

- He must be able to perform his
functions without undue delay

Qualifications of the Tribunal (R.A. 876

Sec. 10)

must be of legal age, in full enjoyment of his civil

rights, and know how to read and write.

must not be related by blood or marriage within the

six degree to either party to the controversy or
cause to be decided; must not have any personal
bias which might prejudice the right of any party to a
fair and impartial award.
NOTE: Model Law Arts. 12 and 14 also apply to
domestic arbitration (R. A. 9285 Sec. 33).

Qualifications of the Tribunal

parties
may
add
other
qualifications/disqualifications
negative: must not be a lawyer
positive: must be an engineer
-

- nationality not as bar unless

otherwise stipulated (Model Law Art.
11.2).

QUALIFICATIONS OF THE TRIBUNAL: IBA

RULES OF ETHICS FOR INTERNATIONAL
ARBITRATORS

Impartial

Independent

Competent

Diligent

Discreet

Qualifications of Tribunal
Role of Appointing Authority
- appointing authority must have regard to
qualifications required by law and by the arbitration
agreement
NOTE: ICC procedure requires confirmation of
appointments made by the parties or made pursuant
to agreed procedure (ICC Art. 9).

Sanctions (Re Disqualified Tribunal) (Model Law

Arts.12 14)

- open to challenge by any party

- challenged member may opt to recuse
himself; if he refused, challenged to be decided
by tribunal (if compose of more than one).
- unsuccessful challenge may be elevated to
the appointing authority (w/in 30 days from
notice of decision). Decision of appointing
authority not subject to appeal.
Note: arbitral proceedings may continue during
the pendency of the challenge incident

Sanctions (Re Disqualified

Members of Tribunal) (Model Law)
Notes:

Model Law provision (Arts. 12, 13 & 14) are

default provisions; hence procedure
agreed upon by the parties prevail.

Model Law provisions also applicable to

domestic arbitration (R. SA. 9285 Sec. 33).

Sanctions (Re Disqualified

Members of Tribunal) (Model Law)
Notes:

If both/all parties agree to the challenge,

then the challenged arbitrator has no
option except to resign.

What Normally Transpires

1. Ad Hoc arrangements
- contracts with arbitrator
- solicitation of appointments
proscribed
- issue as to fees/expenses: per IBA Rules,
no unilateral agreement with a party
unless the parties agree otherwise or a
party
defaults.
- cancellation fees
- terms of engagement
- where one party is recalcitrant

What Normally Transpires

2. Institutional arrangements
- General: per institutional rules
- PDRCI would not normally intervene, except
when requested (rules changed).
- re fees: subject to agreement between the
parties and the tribunal; default rule is PDRCI
schedule (rules changed).

What Normally Transpires

2. Institutional arrangements

ICC
- parties submit
appointed) to ICC

their

nomination

(party

- ICC writes to nominees who are required to fill

up a brief info sheet, a declaration of independence
and consent to serve
- ICC either confirms nomination or express
reservations (so that the parties may act on it) and
send it to the parties together with copies of the
accomplished documents.

What Normally Transpires

2. Institutional arrangements
ICC (cont)
- in case of recalcitrance by one party, ICC
search for possible appointee by inquiring from
the relevant ICC National Committee for
nominations and follow the previous process
(Note change in rules).
- ICC normally does not appoint as Chairman
a person who is of the same nationality as the
parties or anyone of them.

Constitution of the Tribunal:

CIAC
1. Choice / Selection of Arbitrators

At most six nominees

In order of preference
CIAC accredited

2. Variables

Sole arbitrator

Tribunal

Availability

Common Nominee

CIAC discretion

TOPIC II

DISCLOSURE IN ARBITRATION

STRUCTURE OF PRESENTATION
Part 1: General
Part 2: The Tests
Part 2A : Subjective: Eyes of the Parties
Part 2B1: Objective Test
Part 2B1a: IBA: An Informed Reasonable
Third Party Test
Part 3: Disclosure in the CIAC

PART ONE: GENERAL

Qualifications of the Tribunal (Model Law)
1. Impartiality
2. Independence
3. Diligence
4. Others agreed to by the parties

Qualifications of the Tribunal (Model

Law)
1. Impartiality refers to state of mind
2. Independence refers to relationships
3. Diligence the arb must be able to perform
his/her functions without undue delay

Qualifications of the Tribunal (Model

Law)

FOCUS: On Impartiality and Independence

DUTY TO DISCLOSE

The most important element in the

requirement of impartiality and
independence is disclosure (Redfern and
Hunter on page 242 of Law and Practice
of International Arbitration)
Rule on disclosure also limit party autonomy
failure to comply with duty to disclose
may give rise to a challenge which, if
successful, will result to removal or
disqualification of an arbitrator.

DUTY TO DISCLOSE
Re Impartiality
- a prospective arbitrator is required to
disclose any circumstances which may
give rise to justifiable doubts as to his
impartiality (Model Law Art. 12.2).
- the duty to disclose is continuing
during the process

DUTY TO DISCLOSE
Re Independence
- a prospective arbitrator is required to
disclose any circumstances which may give
rise to justifiable doubts as to his
independence (Model Law Art. 12.1).
- the duty to disclose is continuing during
the process

DUTY TO DISCLOSE
Time
- the disclosure should be made to the
parties without further delay, from the time
of his appointment and throughout the
arbitral proceedings unless the parties
have already been informed by him/her
(see Model Law Article 12(1).)

DUTY TO DISCLOSE
To Whom Addressed:
- the parties per statute
- requirements of transparency also
require disclosure to the other arbitrators (if
any), the administering institution (if any) and
the appointing authority (if any).

DUTY TO DISCLOSE
What to Disclose: General
- matters touching on relationships and
events, other than casual, that are related to the
arbitration; the parties to the arbitration,
including directors, important officers and
significant stockholders; the other arbitrators,
party representatives (or counsel for the
parties), even important witnesses.
- in case of doubt, the unwritten rule is to
disclose

DUTY TO DISCLOSE

What to Disclose: Particulars

- see discussion on the standards

DUTY TO DISCLOSE
Effect of Rules of Confidentiality
- if rules of confidentiality will prevent an
arb from making a disclosure, then he should
not accept or resign from the assignment
(Derains and Schwartz: A Guide to the New
ICC Rules, footnote no. 246 on page 22; also
the IBA Guidelines)

DUTY TO DISCLOSE

Effect of Lack of Knowledge

- not an excuse for nondisclosure if the arb failed to make
the necessary investigation (see
IBA Guidelines).

DUTY TO DISCLOSE

Effect of Non-Disclosure
- it is not the failure to disclose per
se that would result to removal or
disqualification. It is, rather, the
resulting appearance of being partial or
biased that will do so.

DUTY TO DISCLOSE
Effects of Disclosure
- on the plus side: it creates an impression
that, in so far as the arb is concerned, he
believes that he is not disqualified or is not in a
conflict of interest situation.
- on the minus side: disclosure opens the
way for parties to probe further to determine
whether or not the disclosed fact or event is a
ground for disqualification.

DUTY TO DISCLOSE

Effects of Disclosure (cont)

- on the plus side: it would now be
on the part of the challenging party to
convince the arbitrator that the
disclosed facts and the circumstances
would create the appearance of being
partial or biased.

THE STANDARDS

1. Eyes of the Parties Test (Subjective Test)

standard for disclosure and disqualification in
the ICC, some other institutions; also IBA Rules.
2. Objective Test the general rule. Reflected in
the Model Law.
2.a. The IBA Guidelines uses the Eyes of the
Parties Test as its standard for disclosure and
the objective test as its standard for
disqualification.

PART 2A: EYES OF THE PARTIES

TEST
An arbitrator must appear to be impartial
and independent in the eyes of the parties.
Non disclosure by the arb will justify a
party in making speculations arising from
verifiable or reasonably assumed facts;
hence the arb shall cease to appear impartial
and independent in the eyes of the parties.

PART 2A: EYES OF THE PARTIES

TEST
The test is reflected in ICC Arbitration Rules
(1988) Article 7.2.
It is also reflected in the IBA Rules of Ethics for
International Arbitration: Failure to make such
disclosure creates an appearance of bias, and
may itself be a ground for disqualification even
though
the
non-disclosed
facts
or
circumstances would not of themselves justify
disqualification.

PART 2A: EYES OF THE PARTIES

TEST
What to Disclose
- almost all relationships and events, other
than casual, that are related to the arbitration;
the parties to the arbitration, including directors,
important officers and significant stockholders;
the other arbitrators, party representatives (or
counsel for the parties), even important
witnesses.
- in case of doubt, the unwritten rule is to
disclose

PART 2B1: THE OBJECTIVE TEST

What to Disclose
- x x x he shall disclose any
circumstance likely to give rise to
justifiable doubts as to his impartiality or
independence. (Model Law Art. 12 (1)).
- in case of doubt, the unwritten rule is
to disclose

PART 2B1: THE OBJECTIVE TEST

What to Disclose
- x x x he shall disclose any
circumstance likely to give rise to
justifiable doubts as to his impartiality or
independence. (Model Law Art. 12 (1)).
- Issue: when should
considered justifiable?

doubts

be

PART 2B1a: REASONABLE THIRD

PERSON TEST
Intro: Introduced by the IBA Guidelines on
Conflict of Interest in International Arbitration
(IBA Guidelines) to temper the eyes of the
parties test which, per the IBA, is subjective.
- posited the view that there should be a limit to
disclosure; reason.
- adopted what it describes as an objective
rule: an arbitrator must appear to be impartial
and independent from the point of view of a
reasonable third person having knowledge of
the relevant facts.

PART 2B1a: REASONABLE THIRD

PERSON TEST
Redfern and Hunter on page 242:
There is thus a subtle difference, in this
context, between the objective test as to
whether the relevant facts would cause doubt in
the mind of a reasonable third party, and the
subjective test as to whether they might cause
doubt in the mind of the parties involved in the
specific case in question.

PART 2B1a: REASONABLE THIRD

PERSON TEST
Means Adopted by the IBA To Attain its
Objectives
- the Guidelines enumerated 7 general standards
regarding
impartiality,
independence
and
disclosure;
- it also made a varied but nevertheless nonexhaustive list of possible situations that it
classified into its so-called Green List,
Orange List, Waivable Red List and NonWaivable Red List.

PART 2B1a: REASONABLE THIRD

PERSON TEST
Means Adopted by the IBA To Attain its
Objectives (cont)
Note that the situations in the application lists
are more like examples. So, look for analogous
situations.

PART 2B1a: REASONABLE THIRD

PERSON TEST: The General
Guidelines
(Abstracts)
(1) General Principle
Every arbitrator shall be impartial and
independent of the parties at the time of accepting
an appointment to serve and shall remain so until
the final award has been rendered or the
proceedings
have
otherwise
been
finally
terminated.

PART 2B1a: REASONABLE THIRD

PERSON TEST: The General
Guidelines
(Abstracts)
(2) Conflict of Interest
(a) Doubts of arbitrator
(b) The informed reasonable third party test
(c) Likelihood that the arbitrator may be
influenced by factors other than the merits
(d) Existence of justifiable doubts in the nonwaivable red list

PART 2B1a: REASONABLE THIRD

PERSON TEST: The General
Guidelines
(Abstracts)
(3) Disclosure by
the Arbitrator
(a) The eyes of the parties test as standard for
disclosure
(b) Effect of advance declarations of waiver re
occurrence of future events
(c) Effect of disclosure re belief of arbitrator
(d) Resolving doubts as to whether to disclose
or not
(e) Arb should not consider stage of arbitration
in deciding whether to disclose of not

PART 2B1a: REASONABLE THIRD

PERSON TEST: The General
Guidelines
(Abstracts)
(4) Waiver by the
Parties
(a) The 30-day time bar in making challenges
(b) Disqualification under the non-waivable red
list cannot be waived
(c) Waivers of disqualification under the
waivable red list
(d) Arbitrator participation in settlement
proceedings; what to do if arbitrator were to
develop doubts as to his impartiality and
independence (Careful here)

PART 2B1a: REASONABLE THIRD

PERSON TEST: The General
Guidelines
(Abstracts)
(5) Scope
(a) Chairs, panelists, sole arbitrators however
appointed
(b) Extension to administrative secretaries and
assistants, with the tribunal having the
responsibility of seeing to it that such duty is
respected.

PART 2B1a: REASONABLE THIRD

PERSON TEST: The General
Guidelines
(Abstracts)
(6) Relationships
(a) Arb and law firm considered as one, but
activities of law firm and relationship by arb to be
considered on a case to case basis if it will
constitute a ground for disqualification. Include
membership in a group.
(b) If a party a legal entity: person/legal entity
w/ controlling interest, or direct economic interest
in, or with duty to indemnify party for the award is
to be considered to bear the identity of the party.

PART 2B1a: REASONABLE THIRD

PERSON TEST: The General
Guidelines
(Abstracts)
(7) Duty of the Parties
and the Arbitrator
(a) Duty of a party to inform; covers
relationships and includes individuals with
controlling influence or economic interests; also
its counsel and any know relationship with
arbitrators; duty to make reasonable inquiries.
Must be done in partys own initiative and as early
as possible.
(Duty of arbitrator to make reasonable
inquiries. Lack of knowledge not an excuse if arb
failed to make reasonable inquiries.

PART 2B1a: REASONABLE THIRD

PERSON TEST
THE GREEN LIST
No duty to disclose in situations within the
Green List.
Examples:
1. The arbitrator has a relationship with another
arbitrator or with the counsel for one of the
parties through membership in the same
professional association or social organization.

PART 2B1a: REASONABLE THIRD

PERSON TEST
THE GREEN LIST (cont: examples)
2. The arbitrator has had an initial contact with
the appointing party or an affiliate of the
appointing party (or the respective counsels)
prior to appointment, if this contact is limited to
the arbitrators availability and qualifications to
serve or to the names of possible candidates for
a chairperson and did not address the merits or
procedural aspects of the dispute.

PART 2B1a: REASONABLE THIRD

PERSON TEST
THE ORANGE LIST
The duty to disclose exists in those situations
falling within the Orange List
Examples:
3.1.4. The arbitrators law firm has within the past
three years acted for one of the parties or an
affiliate of one of the parties in an unrelated
matter without the involvement of the arbitrator.

PART 2B1a: REASONABLE THIRD

PERSON TEST
THE ORANGE LIST (cont: examples)
3.5.3. The arbitrator holds one position in an
arbitration institution with appointing authority
over the dispute.
3.1.5 The arbitrator currently serves, or has
served within the past three years, as arbitrator
in another arbitration on a related issue
involving one of the parties or an affiliate of one
of the parties.

PART 2B1a: REASONABLE THIRD

PERSON TEST
INCOMPLETE ORANGE LIST SITUATIONS
- considered to be in the Green List even if
they are not written there.
- note that disclosure is discretionary in those
cases involving situations where the 3-year
period applies because of conflict of opinion as
to the period

PART 2B1a: REASONABLE THIRD

PERSON TEST
THE WAIVABLE RED LIST
The duty to disclose exists in those situations
falling within the Red List. And, there should
be a written and informed waiver on the part of
the parties for the arbitrator to continue acting
as such. Disclosure must include the fact that
arb is in the waivable red list and needs waiver
to continue.

PART 2B1a: REASONABLE THIRD

PERSON TEST
THE WAIVABLE RED LIST (cont)
Examples:
2.1.2. The arbitrator has previous involvement in
the case.
2.3.5.The arbitrators law firm had a previous but
terminated involvement in the case without the
arbitrator being involved himself or herself.

PART 2B1a: REASONABLE THIRD

PERSON TEST
THE NON-WAIVABLE RED LIST
The arbitrator is disqualified if the situation falls
within the Non-Waivable Red List. Disclosure will
not cure the disqualification.
1. There is an identity between a party and the
arbitrator, or that arbitrator is a legal representative
of an entity that is a party in the arbitrator.
2. The arbitrator is a manager, director, or member of
the supervisory board, or has a similar controlling
influence in one of the parties.

PART 2B1a: REASONABLE THIRD

PERSON TEST
THE NON-WAIVABLE RED LIST (cont)
3. The arbitrator has a significant financial
interest in one of the parties or the outcome
of the case.
4. The arbitrator regularly advises the
appointing party or an affiliate of the
appointing party and the arbitrator or his or
her firm derives a significant income
therefrom.

PART 2B1a: REASONABLE THIRD

PERSON TEST
IMPORTANT NOTES:
1.

The application lists do not purport to

comprehensive. They are guidelines. (per IBA).

be

2. The Guidelines states principles and the appllcation

lists are examples of those principles.
3. The IBA also observed the possibility of borderline
situations where a debate may exist as to whether
or not the situation falls within one or the other
application list.

PART 2B1a: REASONABLE THIRD

PERSON TEST
IMPORTANT NOTES (cont):
4. Some situations may not be included in the specific
examples.
Violation of ethical rules, such as the rule
proscribing solicitation of appointments, is a ground
for disqualification; also proof that an arbitrator may
be influenced by other factors other than the merits.

PART 2B1a: REASONABLE THIRD

PERSON TEST
IMPORTANT NOTES (cont):
5.

The IBA just released its 2014

superseding its 2004 Guidelines.

Guidelines,

Note, though, the the Guidelines adopted by PDRCI

is the 2004 version.

PART 2B1a: REASONABLE THIRD

PERSON TEST
EYES OF THE PARTIES STILL EXISTS
The parties in making a challenge may still use
the eyes of the parties test in Orange List
Situations.
Nevertheless, at the end of the day, the issue that
may result to removal is whether or not the
undisclosed fact or circumstance will create,
from the point of view of a reasonable third
person having knowledge of the relevant facts,
justifiable doubts as to the arbitrators
impartiality or independence.

PART 2B1a: REASONABLE THIRD

PERSON TEST
IMPORTANT NOTES:
1. In the situations falling within the Orange
List, it is still the appearance of being partial or
biased that will disqualify the arbitrator. The test
to be applied is, however, the informed
reasonable third person test.
2. The IBA Guidelines will only apply if adopted by
the parties. If yes, it becomes rules.
3. The Application Lists is based on accepted
practices and jurisprudence per the IBA.

PART 2B1a: REASONABLE THIRD

PERSON TEST

Must read: the IBA Rules on Ethics and the

IBA Guidelines. The Guidelines
supersedes the IBA Rules in case of
conflict.

DISCLOSURE IN ARBITRATION

PART THREE
RULES OF DISCLOSURE
IN THE CIAC

COMMENCEMENT OF DUTY TO
DISCLOSE
Duty Commences Upon Acceptance of Appointment
CIAC Rule 10 Sec 10.2.
Upon acceptance of his appointment, the
Arbitrator shall disclose in writing to CIAC any
circumstances likely to create in either party a
presumption of bias or which he believes might
disqualify him as an impartial arbitrator. Such
written disclosure shall be communicated to the
parties immediately by the secretariat. x x x.

DEFERMENT OF DUTY TO DISCLOSE

Duty To Disclose May Be Deferred: CIAC Rule 10
Sec 11.3
During the preliminary conference the arbitrator
who had failed to make his or her written
disclosure required in the previous section shall
disclose any circumstance likely to give rise to
justifiable doubts as to impartiality or
independence, including financial or personal
interest in the outcome of the arbitration or any
existence or past relationships with any
individual or corporate party together with their
respective relatives or principal
stockholders/officers or foreseeable participant

DUTY TO DISCLOSE AFTER THE

PRELIMINARY CONFERENCE

There seems to be no rule

requiring an arbitrator to make
any disclosure after the
preliminary conference.
It is submitted, however, that the
duty exists notwithstanding the
silence of the CIAC Rules.

FAILURE TO DISCLOSE AS GROUND

FOR CHALLENGE
CIAC Rules has no express provision.
Rule 9.6: A party may also request the inhibition of
the arbitrator upon other just and valid reasons
affecting independence, integrity, impartiality
and interest.
Query: What, then, is the effect of non-disclosure if,
at the end of the day, it is the act, event or
relationship which disqualifies?

WITHDRAWAL OF ARBITRATOR
CONDITIONED ON CIAC APPROVAL
THE arbitrator concerned cannot just withdraw. It is
the CIAC who shall make the decision.
Rule 9.6.3: The arbitrator xxx may without
admitting the existence of the ground of
challenge, motion or request, choose to inhibit
himself but his decision shall be subject to
approval by the CIAC.
Rule 9.6.5: The decision of CIAC to retain or
replace an arbitrator shall be final.

EVOLVING PRACTICE?

Given the CIAC Rules, it would

seem that an evolving practice
in CIAC is for the arbitrator to
simply withdraw if challenged,
the withdrawal subject to and
effective upon the approval by
the CIAC.

FINAL NOTES

The words in CIAC Rule 11 Sec

11.3. xxx shall disclose any
circumstance likely to give rise
to justifiable doubts as to
impartiality or independence
are substantially the same as
Model Law Article 12 (1) and in
UNCITRAL Rules (1976) Article

FINAL NOTES

CIAC has not announced that it

is applying any test or
standard in deciding the
issue or whether or not an
arbitrator were disqualified
or should be removed.

WANT TO KNOW MORE?

Attend our courses and
seminars.
Contact us for schedules.
Visit us at
<www.philippinearbitrators.org
>
Philippine Institute of Arbitrators
c/o Atty. Mario E. Valderrama
Tel. No. (632) 367 4001
Telefax (632) 362 1867
E-mail: marval.law@gmail.com