ADR Presentation

Alternative Dispute Resolution

Presentation Outline ▧ Introduction ▧ Why ADR? ▧ ADR types ▧ Concepts and Procedure ▧ Arbitration ▧ Mediation ▧ Question Time (with prizes!)

1.

Introduction Why ADR ADR in the PH

Why ADR? Why not? ADVANTAGES

▧ ▧ ▧ ▧

▧ ▧

Confidentiality

DISADVANTAGES

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Final decision is difficult to overturn even if erroneous

▧

Cost of arbitration has risen dramatically

▧

Some pieces of evidence, which would be inadmissible under the ROC, may be admitted by the arbital tribunal

Shorter time-scale Can appoint arbitrators More flexibility in the conduct and selection of rules that govern proceedings Finality of award

Guarantee of impartiality, fairness, independence of arbitrators

ADR in the Philippines: Pertinent Laws ▧ Civil Code of the Philippines (Title XIV) ▧ R.A. 876 (Arbitration Law) ▧ R.A. 9285 (Alternative Dispute Resolution

Act of 2004 - ADR Act)

▧ Supreme Court A.M. No. 07-11-08-SC issued on 01 September 2009 (Special

Rules of Court on Alternative Dispute Resolution)

▧ DOJ Issued IRR of the ADR Act of 2004

ADR in the Philippines: Pertinent Laws ▧ Executive Order No. 78 (2012) mandated the inclusion of provisions of the use of ADR mechanisms in all contracts involving:

○ Public-Private Partnership Projects ○ Build-Operate and Transfer Projects ○ Joint Venture Agreements between Government and Private Entities ○ Agreements entered into by Local Government Units

▧ Piatco Case in the ICC in Singapore

ADR in the Philippines: Pertinent Laws ▧ The Philippines is a signatory to the Arbitration Rules of the UNCITRAL Model Law ▧ The ADR Law of 2004 has adopted in its entirety the UNCITRAL Model Law (Model

Law)

ADR in the Philippines: Types ▧ Arbitration ▧ Mediation

○ Court Annexed Mediation (CAM) and Mobile Court Annexed Mediation (Justice on Wheels!) ○ Judicial Dispute Resolution (JDR)

▧ Neutral or Early Neutral Evaluation ▧ Mini-Trial ▧ Mediation-Arbitration (Med-Arb)

17 cases

Handled by PDRCI as of 2014

46 cases to 61 cases Handled by CIAC (2013 and 2014)

859

Total cases filed with CIAC (682/859 resolved)

1I.

Concepts and Procedure Arbitration Mediation

ARBITRATION

What may not be subject to arbitration? ▧ ▧ ▧ ▧ ▧ ▧ ▧ ▧

Labor disputes covered by the Labor Code Civil status of persons Validity of marriage Any grounds for legal separation Jurisdiction of courts Future legitime Criminal liability Future support

Arbitration in the Philippines ▧ Construction Industry Arbitration Commission (CIAC) ▧ Philippine Dispute Resolution Center, Inc. (PDRCI)

○ Most commonly administers arbitration proceedings involving all kinds of subject matter except construction contracts

▧ ICC International Court of Arbitration ▧ Singapore International Arbitration Centre ▧ Hong Kong International Arbitration Centre

Arbitration in the Philippines ▧ The Philippines is a signatory to the Arbitration Rules of the UNCITRAL Model Law ▧ The ADR Law of 2004 has adopted in its entirety the UNCITRAL Model Law (Model

Law)

PROCEDURE

Arbitration in the Philippines ▧ General Rule: an arbitration agreement is consensual and therefore only binding on the contracting parties. ▧ Exceptions: ○ Section 7(2), UNCITRAL Model Law) ○ Rule A.6, Special Rules of Court on ADR

(Guidelines for the Resolution of Issues Related to Arbitration of Loans Secured by Collateral)

Arbitration in the Philippines

“Any controversy or claim arising out of or

relating to this contract, or the breach thereof, shall be settled by arbitration”

Referral to ADR (Rule 4) ▧ A party to a pending action (Security Bank) ▧ Order referring to ADR: o reconsideration, appeal or certiorari (i.e. immediately executory) ▧ (Rule 4.7) Court cannot decline on the following reasons: ○ Not all disputes of the action may be arbitrated ○ Not all of the parties are bound by the arbitration

agreement ○ Issues raised could be speedily/ efficiently resolved elsewhere ○ Seems not the prudent action ○ Stay of action would prejudice rights of parties to civil action not bound by arbitration agreement

Referral to ADR (Rule 4) ▧ Despite pendency of the action referred to (i.e. the

▧

proceeding to refer the case to ADR) the arbitration proceedings may be commenced or continued (Rule 4.8) Contents: (Rule 4.3) ○ Form of a Motion ○ Shall include notice of hearing (i.e. it would be Security Bank who will schedule the hearing not the court motu proprio) Serve this also to the responden

○ ▧ Comment/ Opposition must be filed within 15 days from service of petition

Judicial Relief (Rule 3) ▧ Before or after commencement

of arbitration (filed any time prior to commencement)

BEFORE COMMENCEMENT ▧ Applies only if place of arbitration is in the PH

▧ ANY party questioning existence ▧

and validity of arbitration agreement RTC where place any of petitioner or respondent has principal place of business

Judicial Relief (Rule 3) BEFORE COMMENCEMENT ▧ prima facie determination by court upholding validity of arbitration agreement shall not be subject to MR/appeal/certiorari

▧ but this determination does not

prejudice right of any party to raise the same issue re: agreement before the arbital tribunal or in a petition to vacate award

Judicial Relief (Rule 3) AFTER COMMENCEMENT ▧ Applies only if place of arbitration is in the PH

▧ ANY party questioning existence

and validity of arbitration agreement ▧ RTC where place any of petitioner or respondent has principal place of business

Judicial Relief (Rule 3) AFTER COMMENCEMENT ▧ ANY party to the arbitration

▧ Judicial relief on the ruling of the

▧

arbital tribunal on a preliminary question upholding/ declining its jurisdiction Filed within 30 days after receiving the tribunal ruling

▧ RTC where arbitration is/

principal place of business of parties

Judicial Relief (Rule 3) AFTER COMMENCEMENT ▧ Aggrieved party cannot seek judicial relief to question deferral

▧ Must await final arbital award

before judicial recourse ▧ Ruling of tribunal deferring on resolving jurisdiction: no MR, no appeal, no petition for certiorari ▧ Tribunal is only a nominal party

Arbitration in the Philippines

Chattel Mortgage on the car

Guidelines on Loans Secured by Collateral: Rule A ▧

Extends to accessory contract securing such loan such as pledge/ mortgage

▧

Foreclosure is not precluded by arbitration

▧

BUT agreeing to refer any dispute under contract of loan to arbitration, the lender who is secured by accessory contract of real estate mortgage shall be deemed to have waived right of judicial foreclosure

Guidelines on Loans Secured by Collateral: Rule A REMEDY BEFORE CONSTITUTION

▧

Apply with appropriate court for interim relief against such action of the lender

▧

Must be obtained in a special proceeding for that purpose against action taken by the lender

▧

Any determination of the court in the special proceeding is only provisional in nature

Guidelines on Loans Secured by Collateral: Rule A REMEDY AFTER CONSTITUTION ▧ Includes claim for damages

▧ An arbitration agreement in a contract

of loan precludes the borrower therein providing security for the loan from filing and/or proceeding with any action in court to prevent the lender from foreclosing the pledge or extrajudicially foreclosing the mortgage.

Guidelines on Loans Secured by Collateral: Rule A ▧ Arbital Tribunal can also provide relief! ○ Upon submission of adequate security ○ Suspend/ enjoin lender from

proceeding against collateral securing the loan pending final determination by the arbital tribunal of the dispute brought to it ○ Can also resolve issue of validity of foreclosure if the same has not been foreclosed ○ Can also confirm validity of such foreclosure if made before rendition of award

Guidelines on Loans Secured by Collateral: Rule A ▧ Arbitration involving a ThirdParty Provider of Security

○ The accessory contract securing the

loan ○ ONLY IF such 3rd party securing the loan agreed to the accessory contract to be bound by such arbitration agreement ○ Different way of choosing the arbitrator/s

Arbitration in the Philippines

ARBITRATION PROPER

Interim Measures of Protection (Rule 5) ▧ Any party may ask ▧ RTC which has jurisdiction over the following: ○ Principal place of business ○ Where parties of individual

resides ○ Where any of the acts sought to be enjoined are being performed, threatened to be performed, or not being performed ○ Real property subject to arbitration is situated

Interim Measures of Protection (Rule 5) ▧ Prior notice may be dispensed with in ▧

certain cases (Rule 5.7) Court cannot deny assistance based on: ○ Granted ex parte ○ Party opposing application found new material evidence ○ Measure of protection amends, revokes, modifies or is inconsistent with earlier measure of protection issued by the court

▧ If there is sufficient merit in the

opposition, court must refer the matter back to the arbitral tribunal

Interim Measures of Protection (Rule 5) ▧ Prior notice may be dispensed with in ▧

certain cases (Rule 5.7) Court cannot deny assistance based on: ○ Granted ex parte ○ Party opposing application found new material evidence ○ Measure of protection amends, revokes, modifies or is inconsistent with earlier measure of protection issued by the court

▧ If there is sufficient merit in the

opposition, court must refer the matter back to the arbitral tribunal

Arbitration in the Philippines

ARBITRATION PROPER

Choosing the Arbitrator/s ▧ Rules 6, 7, 8 deal with the process

▧

▧

in choosing an arbiter, ousting one as well as terminating his/her mandate rules also give instances when the court may act as Appointing Authority (i.e. the one choosing) DOJ IRR gives the method on how to choose the arbitrator

RULES ON CONFIDENTIALITY AND EVIDENCE ▧ Rules 9 and 10 govern these ▧ Rule 9: May request the court for assistance in obtaining evidence

○ May request any time, as the need arises ○ Request with RTC where arbitration is taking place/ residence of witnesses/ where evidence may be found ○ Type of assistance

▧ Rule 10: Request that specific information remain confidential

Arbitration in the Philippines

DECISION HAS BEEN MADE!

CONFIRMATION, CORRECTION, VACATION OF AWARD

Domestic Example of a ground when a court may set aside or refuse enforcement of arbitral award.

DOMESTIC ARBITRAL AWARDS Confirmation Correction/ modification Vacation Petition to vacate in opposition to a petition to confirm ▧ Petition to confirm in opposition to a petition to vacate ▧ ▧ ▧ ▧

DOMESTIC ARBITRAL AWARDS GROUNDS TO VACATE

▧ Procured through corruption,

GROUNDS TO CORRECT/ MODIFY

▧ Evident partiality/ corruption

▧ Evident miscalculation of figures or error

▧ Tribunal is guilty of

▧ Awarded upon a matter not submitted to them

▧ One or more of the arbitrators

▧ Arbitrators omitted to resolve issue not submitted

fraud or undue means in the arbitral tribunal misconduct

were disqualified to act

▧ Arbitral tribunal exceeded power

▧ Agreement did not exist ▧ Minor/ incompetent party

▧ Award is imperfect in a matter of form not affecting the merits of controversy

International Commercial Arbitration Award Recognition/ Enforcement/ Setting Aside

Foreign Arbital Award Recognition and Enforcement

APPEALS

Appeals (Part IV): MR (not allowed) ▧ A prima facie determination upholding the existence, validity or enforceability of an arbitration agreement pursuant to Rule 3.1 (A);

▧ Any ruling on the challenge to the appointment of an arbitrator; Any order resolving the issue of the termination of the mandate of an arbitrator; and

▧ An order referring the dispute to arbitration;

▧ An order granting assistance in taking evidence.

▧ An order appointing an arbitrator;

Appeals (Part IV): MR ▧ When? 15 days from receipt of order. No extensions.

▧ May oppose 15 days after receipt of MR

▧ Must be resolved 30 days

from receipt of opposition/ comment or upon expiration of the 15 days to comment

▧ a party to an arbitration is

precluded from filing an appeal or a petition for certiorari questioning the merits of an arbitral award.

▧ Can deny recognition and

enforcement of a foreign arbitral award only upon the grounds provided in Article V of the New York Convention, but shall have no power to vacate or set aside a foreign arbitral award.

Appeals (Part IV): Appeal to CA ▧ Granting or denying an

▧ Setting aside an

▧ Denying a petition for

▧ Dismissing the petition to set

interim measure of protection;

appointment of an arbitrator; Denying a petition for assistance in taking evidence;

▧ Enjoining or refusing to enjoin a person from divulging confidential information;

▧ Confirming, vacating or

correcting/modifying a domestic arbitral award;

international commercial arbitration award; aside an international commercial arbitration award even if the court does not decide to recognize or enforce such award;

▧ Recognizing and/or

enforcing an international commercial arbitration award;

Appeals (Part IV): Appeal to CA ▧ Dismissing a petition to

enforce an international commercial arbitration award;

▧ Recognizing and/or

enforcing a foreign arbitral award; Refusing recognition and/or enforcement of a foreign arbitral award;

▧ Granting or dismissing a

petition to enforce a deposited mediated settlement agreement; and

▧ Reversing the ruling of the

arbitral tribunal upholding its jurisdiction.

Appeals (Part IV): Appeal to CA ▧ CA may require the respondent to file comment (10 days from notice) 7 legible copies

▧ ▧ If CA finds prima facie evidence that RTC committed error, may give due course and after 15 days from notice that it was given due course, CA may require court/agency to transmit original or CTC of entire record of proceeding under review ▧ Appeal does not stay award ▧ Party appealing required to post bond

Appeals (Part IV): Certiorari (CA) ▧ Holding that the

arbitration agreement is inexistent, invalid or unenforceable;

▧ Reversing the arbitral

tribunal's preliminary determination upholding its jurisdiction;

▧ Denying the request to refer the dispute to arbitration;

▧ Granting or refusing an interim relief;

▧ Denying a petition for the appointment of an arbitrator;

▧ Confirming, vacating or correcting a domestic arbitral award;

▧ Suspending the

proceedings to set aside an international commercial arbitral award and referring the case back to the arbitral tribunal;

Appeals (Part IV): Certiorari (CA) ▧ Allowing a party to enforce an international commercial arbitral award pending appeal;

▧ Adjourning or deferring a

ruling on whether to set aside, recognize and or enforce an international commercial arbitral award;

▧ Allowing a party to enforce a foreign arbitral award pending appeal; and

▧ Denying a petition for assistance in taking evidence.

▧ RTC acted in excess in jurisdiction, grave abuse of discretion etc.

▧ Arbital tribunal is nominal party ▧ Arbitration may continue despite petition for certiorari ▧ No injunctions

Appeals (Part IV): Certiorari (SC) ▧

Failed to apply the applicable standard or test for judicial review prescribed in these Special ADR Rules in arriving at its decision resulting in substantial prejudice to the aggrieved party;

▧

Erred in upholding a final order or decision despite the lack of jurisdiction of the court that rendered such final order or decision;

▧

Failed to apply any provision, principle, policy or rule contained in these Special ADR Rules resulting in substantial prejudice to the aggrieved party; and

▧

Committed an error so egregious and harmful to a party as to amount to an undeniable excess of jurisdiction.

MEDIATION

Mediation in the Philippines ▧ Part II on Specific Court Relief in the SC Rules on ADR also applies to Mediation (Rule 1.12 of SC ADR Rules) ▧ Department of Justice (DOJ) issued DOJ Memorandum Circular No. 098-09: Implementing Rules and Regulations of the ADR Act

DOJ MC 098-09: Chapter 3 MEDIATION ▧ Rule 1: General

▧ ▧

Provisions Rule 2: Selection of Mediator Rule 3: Ethical Conduct of Mediator

▧ Rule 4: Role of Parties and Their Counsels ▧ Rule 5: Conduct of Mediation ▧ Rule 6: Place of Mediation

▧ Rule 7: Enforcement

▧

of Mediated Settlement Agreements Rule 8: Enforcement of Mediated Settlement Agreements

▧ Rule 9: Confidentiality ▧ Rule 10: Fees and Costs

QUESTION TIME

Questions Example of a ground when a court may set aside or refuse enforcement of arbital award.

Questions Who may challenge the appointment of an arbitrator?

Questions What is the difference between Court Annexed Mediation (CAM) and court referred mediation?

Questions What governs Mediation Proceedings in the Philippines?

Questions Difference between an International Commercial Arbitration Award and a Foreign Arbitral Award

BONUS What is my favorite animal?