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2. The parties are free to agree on a procedure of appointing the arbitrator or arbitrators, subject to the
provisions of paragraphs (4) and (5) of this Article.
3. Failing such agreement:
(i) in an arbitration with three (3) arbitrators:
a.) Each party shall appoint one arbitrator, and the two (2) arbitrators appointed
shall appoint the third arbitrator;
If a party fails to appoint the arbitrator within thirty (30) days of receipt of a
request to do so from the other party, or if the two (2) arbitrators fail to agree on the third
arbitrator within thirty (30) days of their appointment, the appointment shall be made:
upon request of a party;
by the court; or
other authority specified in article 6 (e.g. UNCITRAL)
(ii) in an arbitration with a sole arbitrator, the arbitrator shall be appointed, upon the request of a party,
by the appointing authority.
4. Where, under an appointment procedure agreed upon by the parties,
(i) a party fails to act as required under such procedure, or
(ii) the parties, or two arbitrators, are unable to reach an agreement expected of
them under such procedure, or
(iii) a third party, including an institution, fails to perform any function entrusted to it
under such procedure.
In which case any party may request the appointing authority to take the necessary
measure to appoint an arbitrator, unless the agreement on the appointment requires
another standards in appointment.
5. The appointing authority shall have in appointing an arbitrator, due regard to any
qualifications required of the arbitrator by the agreement of the parties and to such
considerations as are likely to secure the appointment of an independent and
impartial arbitrator and, in the case of a sole or third arbitrator, shall take into
account.
ARTICLE 12. GROUNDS FOR CHALLENGE
a. When a person is approached in connection with his/her possible appointment as an
arbitrator, he/she shall disclose any circumstance likely to give rise to justifiable doubts as
to his/her impartiality or independence.
An arbitrator, from the time of his/her appointment and throughout the arbitral
proceedings shall, without delay, disclose any such circumstance to the parties unless
they have already been informed of them by him/her.
b. An arbitrator may be challenged only if circumstances exist that give rise to justifiable
doubts as to his/her impartiality or independence, or if he/she does not possess
qualifications agreed to by the parties.
A party may bring a petition under this Article before the court in accordance with the Rules of Court or
the Special ADR Rules.
ARTICLE 14. FAILURE OR IMPOSSIBILITY TO ACT.
a. If an arbitrator becomes de jure or de facto unable to perform his/her functions or for
other reasons fails to act without undue delay, his/her mandate terminates if he/she
withdraws from his/her office or if the parties agree on the termination. Otherwise, if a
controversy remains concerning any of these grounds, any party may request the
appointing authority to decide on the termination of the mandate, which decision shall be
immediately executory and not subject to motion for reconsideration or appeal.
b. If, under this Article or paragraph (b) of Article 4.13 (Challenge Procedure), an arbitrator
withdraws from his/her office or a party agrees to the termination of the mandate of an
arbitrator, this does not imply acceptance of the validity of any ground referred to in this
Article or in paragraph (b) of Article 4.12 (Grounds for Challenge).
ARTICLE 15. APPOINTMENT OF SUBSTITUTE
ARBITRATOR.
Choice of Arbitrator Critical
The choice of arbitrator is a critical element in arbitration. The parties expect an arbitrator to
be fair and impartial both in the procedure to be followed for receiving the evidence and
deciding the case. Parties prefer arbitration to litigation, among others because the preceding
is perceived to be less adversarial, confidential, speedy and less expensive. The chosen
arbitrator is therefore expected to satisfy these expectations of the parties.
Qualification of Arbitrator
The parties themselves may agree that the arbitrator so appointed shall possess certain
qualifications. (e.g. years of experience in a particular industry, nationality)
Nationality of Arbitrator
no person shall precluded by reason of his nationality from acting as an arbitrator, unless agreed by
the parties
Is intended to over come nationals from acting as arbitrators in international commercial arbitration,
although this allows the parties or trade associations or arbitral tribunal institutions to specify that the
nationals of certain States may or may not be appointed as arbitrators. More than that, there appears
to be a presumed bias by an arbitrator in favor of a party to the dispute who is of the same nationality.
EXAMPLE:
Decree No. 2279 0f 1989 was declared unconstitutional by the Supreme Court of Columbia in
that the decree allowed Non-Columbians to act as arbitrators in international arbitration or in
arbitration where the parties to the parties are foreigners.
Stephen R. Bond observed the developments in Eastern Europe and Western Europe.
Eastern Europe prefers those with the desired expertise (on the law applicable to the dispute)
or in general expertise on arbitration. Without ignoring the value of finding an arbitrator with the
requisite expertise.
Non-Western Europe prefers an arbitrator with an intimate knowledge of the legal and
economic context within which that party operates and who comes from the same social, cultural
and linguistic milieu.
Appointment is to be made by the appointing authority
d. A decision on a matter entrusted under paragraphs a,b, and c above to the appointing
authority shall be immediately executory and not be subject to a motion for
reconsideration or appeal.
e. The appointing authority shall have, in appointing an arbitrator, due regard to any
qualifications required of the arbitrator by the agreement of the parties and to such
considerations as are likely to secure the appointment of an independent and impartial
arbitrator, shall take into account as well the advisability of appointing an arbitrator of a
nationality other than those of the parties.
The Special ADR Rules provide that the court shall act as appointing Authority only in the
following instances:
a. Where any of the parties in an institutional arbitration failed or refused to appoint an
arbitrator or where the parties have failed to reach an agreement on the sole arbitrator (in
an arbitration before a sole arbitrator) or when the two designated arbitrators have failed to
reach an agreement on the third or presiding arbitrator (in an arbitration before a panel of
arbitrators), and the institution under whose rules arbitration is to be conducted fails or is
unable to perform its duty as appointing authority within a reasonable time from receipt of
the request for appointment;
b. In all instances where arbitration is ad hoc and the parties failed to provide a method for
appointing or replacing an arbitrator, or substitute arbitrator, or the method agreed upon is
ineffective, and the National President of the Integrated Bar of the Philippines (IBP) or his
duly authorized representative fails or refuses to act within such period as may be allowed
under the pertinent rules of the IBP or within such period as may be agreed upon by the
parties, or in the absence thereof, within thirty (30) days from the receipt of such request
for appointment;
c. Where the parties agreed that their disputes shall be resolved by three arbitrators, but no
method of appointing those arbitrators has been agreed upon, each party shall appoint one
arbitrator and the two arbitrators thus appointed shall appoint a third arbitrator. If a party
fails to agree on the third arbitrator within thirty (30) days of receipt of a request to do so
from the other party.
When Appointment Procedure Will Result in Unfairness
Appointing Authority
The term appointing authority referred to in Model Law Articles 11, 13, and 14,
according to Section 26 of the ADR Act, shall mean the person or institution named in the
arbitration agreement as the appointing authority; or the regular arbitration institution
under whose rules the arbitration is agreed to be conducted. Where the parties have
agreed to submit their dispute to institutional arbitration rules and unless they have
agreed to the procedure under such arbitration rules for the selection and appointment of
arbitrator shall be made by the National President of the Integrated Bar of the Philippines
(IBP) or his duly authorized representatives
Default Appointment
Model Law Article 11(3) prescribes the circumstances under which and the
period after which the appointing of:
an arbitrator for a party;
the third arbitrator;
a sole arbitrator
When a party to a dispute gives the other party a notice of arbitration, and if the
arbitration agreement provides for the appointment of a tribunal, the notice may
include a notification of the appointment of an arbitrator by the party giving
notice and a request for the other party to appoint his arbitrator.
Possible Conflicts in Exercising Default Appointment
When a party requests an appointing authority to make a default appointment, the law does not
require that the other party be notified of this request.
The appointing authority in turn may give notice to the parties of the appointment is made or wait
until the appointee has confirmed acceptance of his appointment.
Between these two periods- from the time the request is made to the appointing authority to the
time the appointee has confirms his appointment the defaulting party may appoint his
arbitrator.
A similar situation may occur where the arbitrator to be appointed is the third arbitrator and the
request is made to the appointing authority to make the default appointment.
Until the appointing authority in fact makes this or the appointee confirms his acceptance of the
appointment, the two previously named arbitrators may eventually decide on the third arbitrator.
Appointment by the Appointing Authority
The appointing authority, however, does not simply make the appointment of an
arbitrator.
As Model Law Article 11(5) requires, the appointing authority shall have due
regard to any qualifications required of the arbitrator by the agreement of the
parties and to such considerations as are likely to secure the appointment of an
independent and impartial arbitrator and, in case of a sole or third arbitrator,
shall take into account as well as the advisability of appointing n arbitrator of a
nationality other than those of one parties.
Appointment by Court as Appointing Authority
Grounds of Challenge
Two grounds of a challenge under article 12
Arises if circumstances exist which give rise to justifiable doubts as to the arbitrators
impartiality or independence.
Arises from the fact that the appointed arbitrator does not possess the qualification
agreed upon by the parties.
Who May Challenge Arbitrator
A party may challenge an arbitrator appointed by him or in whose
appointment he had participated, but only for the reasons of which
he became aware after the appointment has been made.
When the challenge is made, the challenged arbitrator may voluntary withdraw
from his office or the other party may agree to the challenge, but if neither event
occurs, the arbitration tribunal shall decide on the challenge.
The challenged as arbitrator as a member of the tribunal is not specifically
excluded from taking part in the decision.
If the arbitral tribunal fails to decide the challenge or decides in favor of the
challenged arbitrator, Article 13 (3) of the Model Law goes on to say that the
party making the challenge may request the appointing court or appointing
authority to decide on the challenge, which decision shall be subject to no
appeal; while such request is pending, the arbitral tribunal, including the
challenged arbitrator, may continue the arbitral proceeding and make an award.
When Challenge is Unsuccessful
The aggrieved party may request the Appointing authority to rule on the
challenge. But where such Appointing Authority fails or refuses to act within such
period of time provided under the applicable rule, or in default thereof, within
thirty (30) days from receipt of the challenge, then and only then may the
aggrieved party renew the challenge in the court.
The challenge shall be filed as a petition with the Regional Trial Court:
Where the principal place of business of any parties is located; or
Where any of the parties, if individuals, reside; or
In the National Capital Region.
The Petition shall state:
According to Rule 7.9 of the Special ADR Rules provides that Reimbursement of
expenses and reasonable compensation to challenged arbitrator. Unless the bad
faith of the challenged arbitrator is established with reasonable certainty by
concealing or failing to disclose a ground for his disqualification, the challenged
arbitrator shall be entitled to reimbursement of all reasonable expenses he may
have incurred in attending to the arbitration and to a reasonable compensation
of his work on arbitration.
Model Law Article 14 provides for the same grounds for terminating the mandate
of an arbitrator as Article 13(2) of the 1976 UNCITRAL Arbitration Rules.
Under Article 14, there is failure or an impossibility to act on the part of the
arbitrator if he is unable to act de jure (as a matter of law), de facto (as a matter
of fact) or if there exists any other cause by which he fails to act without undue
delay.
The arbitrator may die or withdraw from his office, or the parties may agree on
the termination of his mandate, or the court or appointing authority, pursuant to a
successful challenge, may decide to remove him.
Replacement of Arbitrator
If an arbitrators become de jure or de facto unable to perform his functions as arbitrator. It is
the time when they can be replaced.
The appointment of a substitute arbitrator shall be made in accordance with the rules that
were applicable to the appointment of the arbitrator being replaced rather than to the manner
by which such arbitrator was appointed.
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