ARBITRATION is a substitution, by consent of the

parties, of another tribunal for the tribunal provided

by the ordinary processes of law, its object being
the final disposition, in a speedy and inexpensive
way, of the matters involved, so that they may not
become the subject of future litigation between the
parties.

Arbitration is the reference of a dispute to an

impartial third person, chosen by the parties or
appointed by statutory authority to hear and decide
the case in controversy.
An arbitration agreement must be in writing and
subscribed by the parties or their representatives.
It is usually embodied as an arbitration clause of a
contract.

An arbitration clause in a contract that states that

any dispute arising therefrom shall be referred to
arbitration for resolution in the manner therein
prescribed and that any award of the arbitrators
shall be final, is valid as against the contention that
it would amount to ousting Philippine courts of
jurisdiction.
Philippine courts may vacate or modify the awards
made by the arbitrators. Sections 24 and 25 of the
Republic Act 876 read: "Sec. 24. Grounds for
vacating award. —

In any one of the following cases, the court must

make an order vacating the award upon the petition
of any party to the controversy when such party
proves affirmatively that in the arbitration
proceedings:
Arbitrator's award are not "final" nor "non-
appealable."
While Philippine laws refer to awards of arbitrators as
"final" or "non-appealable," the laws do not absolutely
close the doors to judicial inquiry into its legality, nor
preclude the aggrieved party from seeking its nullity,
either by raising it as a defense when sought to be
enforced against him or filing an appropriate petition
to set aside the award, on the grounds of want of
jurisdiction, grave abuse of discretion, violation of due
process, denial of substantial justice or erroneous
interpretation of the law.
(a) The ward was procured by corruption, fraud, or other undue
means; or
(b) That there was evident partiality or corruption in the arbitrators
or any of them; or
(c) That the arbitrators were guilty of misconduct in refusing to
postpone the hearing upon sufficient cause shown, or in
refusing to hear evidence pertinent and material to the
controversy; that one or more of the arbitrators was disqualified
to act as such under section nine hereof, and willfully refrained
from disclosing such disqualifications or of any other
misbehavior by which the rights of any party have been
materially prejudiced; or
(d) That the arbitrator exceeded their powers, or so imperfectly
executed them, that a mutual, final and definite ward upon the
subject matter submitted to them was not made.
Grounds for modifying or correct award. — In any of the
following cases, the court must make an order modifying or correcting the
award, upon the application of any party to the controversy which was
arbitrated:
(a) Where there was an evident miscalculation of figures, or an evident
mistake in the description of any person, thing or property referred to in
the ward; or
(b) Where the arbitrators have awarded upon a matter not submitted to
them, not affecting the merits of the decision upon the matter submitted;
(c) Where the award is imperfect in a matter of form not affecting the
merits of the controversy, and if it had been a commissioner's report, the
defect could have been amended or disregarded by the court.
Foreign arbitration as a system of setting commercial
disputes of an international character was recognized
when the Philippines adhered to the United Nations
Convention on the Recognition and the Enforcement of
Foreign Arbitral Awards on May 10, 1965 by adopting a
Resolution of the Senate, giving reciprocal recognition
and allowing enforcement of international arbitration
agreements between parties of different nationalities
within a contracting state.
Form of arbitration agreement. — A contract to arbitrate a
controversy thereafter arising between the parties, as well as a
submission to arbitrate an existing controversy, shall be in
writing and subscribed by the party sought to be charged, or by
his lawful agent.

The formal requirements of an agreement to arbitrate are

therefore the following:
(a) it must be in writing and
(b) it must be subscribed by the parties or their
representatives.
Enforcement of arbitration. It is generally held that arbitration
agreements which provide for arbitration in a foreign jurisdiction
relate to the law of remedies, and the question of remedy is
determined by the law of the forum. Our court recognizes the
validity of the agreement to arbitrate in case of dispute a foreign
country pursuant to its laws, except disputes arising from
construction contract which Executive Order No. 1008 requires
that arbitration take place in the country under the exclusive
jurisdiction of the Construction Industry Arbitration Commission.
Challenge to submission to arbitrate or to award

There are three ways of challenging either or both of them.

1. The arbitration agreement and its submission may be questioned on any

of the grounds as provided in the Convention on the Recognition and
Enforcement of Foreign Awards of 1958,of which the Philippines is a
signatory.

2.The arbitration award is not self-executing, except where the parties

voluntarily execute the same. If the law of the foreign country where
arbitration takes place in accordance with the agreement of the parties
is not confirmed by the court in said foreign country, the award may be
pleaded in an action filed with the appropriate court in our country, for its
enforcement. The defendant may then question the validity of the award.
3. If the law of the foreign country where arbitration takes place
in accordance with the agreement of the parties is not confirmed
by the court in said foreign country, the award may be pleaded in
an action filed with the appropriate court in our country, for its
enforcement. The defendant may then question the validity of
the award.
Enforcement of foreign arbitration award.
An arbitration agreement or clause entered into a
foreign country, which provides that disputes arising
therefrom may be arbitrated in that country or in
another country according to the laws of the country of
arbitration, is generally binding even though neither of
the parties resides therein
Arbitration in international transportation of goods. Article 32 of the
Warsaw Convention, to which the Philippines has adhered,
provides in part:
"Art. 32. Any clause contained in the contract and all special
agreements entered into before the damage occurred by which the
parties purporting to infringe the rules laid down by this
convention, whether by deciding the law to be applied, of by
altering the rules a to jurisdiction, shall be null and void.
Nevertheless for the transportation of goods, arbitration clauses
shall be allowed, subject to this convention, if the arbitration is to
take place within one of the jurisdictions referred to in the first
paragraph of article 28.