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Trends in Jurisprudence

The enactment of R.A. No. 9285 on 2 April 2004 further


institutionalized the use of alternative dispute resolution systems,
including arbitration, in the settlement of disputes. 1
Foreign arbitration as a system of settling commercial disputes of
an international character was likewise recognized when the
Philippines adhered to the United Nations "Convention on the
Recognition and the Enforcement of Foreign Arbitral Awards of 1958,"
under the 10 May 1965 Resolution No. 71 of the Philippine Senate,
giving reciprocal recognition and allowing enforcement of international
arbitration agreements between parties of different nationalities within
a contracting state.2
Time and again, since the effectivity of the Alternative Dispute
Resolution Act of 2004 (ADR Act of 2004), its echoing policy has always
been the ideal foundation upon which disputes are to be settled. It is
clear in Section 2 of the ADR Act of 2004 that party autonomy in the
resolution of disputes or the freedom of the party to make their own
arrangements to resolve their disputes 3 is the pedestal on which
alternative dispute resolution stands and from which it must effectively
proceed.
It is our humble submission that as long as parties are
capacitated to enter into a contract, as one basic characteristic of
G.R. No. 161957 January 22, 2007 Jorge Gonzales And Panel Of Arbitrators vs. Climax Mining
Ltd., Climax-Arimco Mining Corp., And Australasian Philippines Mining Inc., G.R. No. 167994 Jorge
Gonzales vs. Hon. Oscar B. Pimentel And Climax-Arimco Mining Corporation.
2
G.R. No. 87958 April 26, 1990 National Union Fire Insurance Company Of Pittsburg, Pa/American
International Underwriter (Phil.) Inc. vs. Stolt-Nielsen Philippines, Inc. And Court Of Appeals.
3
Section 2 Of Alternative Dispute Resolution Act (Adr) Act Of 2004, Republic Act No. 9285 (2004).
1

arbitration being contractual, alternative dispute resolution cannot be


taken away as an ideal option to achieve speedy and impartial justice
and declog court dockets.4 The ADR Act of 2004 offers speedy and
impartial justice on the part of the disputants, which is one of the
effects of declogging court dockets. Simply put, alternative dispute
resolution gives, as our group calls it, a two-fold effect on both
disputants and the resolving body.
Firstly, party-disputants have their own respective claims.
Practicality dictates that everyone needs speedy and impartial results
in settling claims. Through alternative dispute resolution, opposing
parties do not suffer the length of time as there can be in ordinary cases
or judicial proceedings. Basically, this alternative dispute resolution
addresses the problem of time-consuming and slow-paced procedures in
resolving disputes. As long as they fall under the cases that can be the
subject of alternative dispute resolution, and that the parties are legally
capacitated to enter into contracts and bind themselves upon its legal
effects, the ADR Act of 2004 affords speedy and impartial resolution of
cases. More than that, parties to a dispute subject of alternative dispute
resolution can avoid expensive litigation processes.
Secondly, quasi-judicial tribunals or bodies handling cases through
alternative dispute resolution consequently facilitate the declogging of
court dockets. By this method, the courts can administer justice
efficiently and speedily.
Now, international commercial transaction is surely no longer
uncommon. Commercial transactions go beyond a corporation or an
individuals territorial scope of business. It is a fact that globalization
introduced more complex and progressive international commercial
4

Ibid.

transactions. Due to this complexity and rapid movement on commercial


market, it can never be said that all goes well. Business carries with it
potential legal problems. Thus, business entities organized on different
states enter into contracts with arbitration agreements or arbitration
clause.
Chapter 4 of ADR Act of 2004 provides for International
Commercial Arbitration. The UNCITRAL Model Law on International
Commercial Artbitration is glaring from our own provisions on
International Commercial Arbitration as embodied in the ADR Act.
Section 19 explicitly speaks of the adoption of the Model Law on
International Commercial Arbitration to wit:
SEC. 19. Adoption of the Model Law on
International
Commercial
Arbitration.
International commercial arbitration shall be
governed by the Model Law on International
Commercial Arbitration (the "Model Law")
adopted by the United Nations Commission on
International Trade Law on June 21, 1985
(United Nations Document A/40/17) and
recommended approved on December 11, 1985.
The Philippines adherence to the United Nations "Convention on
the Recognition and the Enforcement of Foreign Arbitral Awards of
1958, otherwise known as the New York Convention paved the way for
foreign entities or corporations to enter into commercial transactions
with domestic corporations in the Philippines. This act of the Republic
of the Philippines made international trade safer and more conducive
for multinational companies to engage business in the Philippines.

In the case of Korea Technologies vs. Lerma 5, the Supreme Court


discussed the issue on what governs an arbitration clause. It recognized
the adherence of the Philippines with the New York Convention and the
adoption of the Model Law in our jurisdiction. The Supreme Court held
in this wise:
In case a foreign arbitral body is chosen by the
parties, the arbitration rules of our domestic
arbitration bodies would not be applied. As
signatory to the Arbitration Rules of the
UNCITRAL Model Law on International
Commercial Arbitration of the United Nations
Commission on International Trade Law
(UNCITRAL) in the New York Convention on
June 21, 1985, the Philippines committed itself to
be bound by the Model Law. We have even
incorporated the Model Law in Republic Act No.
(RA) 9285, otherwise known as the Alternative
Dispute Resolution Act of 2004 entitled An Act to
Institutionalize the Use of an Alternative Dispute
Resolution System in the Philippines and to
Establish the Office for Alternative Dispute
Resolution, and for Other Purposes, promulgated
on April 2, 2004.
The Supreme Court made emphasis on the features of R.A. 9285
adopting the UNCITRAL Model Law. It mentioned Section 35 of the
UNCITRAL Model Law, which deals with the recognition and
enforcement of an arbitral award. It further proclaimed that the RTC
5

G.R. No. 143581 January 7, 2008 Korea Technologies Co., Ltd. vs. Hon. Alberto A. Lerma.

has jurisdiction to review foreign arbitral awards with specific


authority and jurisdiction to set aside, reject, or vacate a foreign
arbitral award, as provided for by Section 42 in relation to Section 45 of
the ADR Act of 2004.
Basically, the Supreme Court highlights the application of
arbitration in international commercial transactions. The Philippines,
by virtue of R.A. 9285 and R.A. 876, has become a seat of arbitration for
international commercial arbitration. Consequently, an important point
on this matter is that, it gives way for foreign corporations as well as
domestic corporations to have a comfortable relationship and freely
choose which tribunal will conduct arbitration.
However, insofar as domestic corporation is concerned, as in the
case of Korea Technologies vs. Lerma6, the Supreme Court stated that:
Thus, based on the foregoing features of RA 9285,
PGSMC must submit to the foreign arbitration as
it bound itself through the subject contract. While
it may have misgivings on the foreign arbitration
done in Korea by the KCAB, it has available
remedies under RA 9285. Its interests are duly
protected by the law which requires that the
arbitral award that may be rendered by KCAB
must be confirmed here by the RTC before it can
be enforced.
With our disquisition above, petitioner is correct
in its contention that an arbitration clause,
stipulating that the arbitral award is final and
6

Ibid.

binding, does not oust our courts of jurisdiction as


the international arbitral award, the award of
which is not absolute and without exceptions, is
still judicially reviewable under certain conditions
provided for by the UNCITRAL Model Law on
ICA as applied and incorporated in RA 9285.
Clearly, from the foregoing, the Supreme Court interprets R.A.
9285 as a protection of the interest of PGSMC, a domestic corporation.
Although contracting parties may choose to which tribunal they will
submit their case for arbitration, as in the case of a foreign arbitral
tribunal, our law on alternative dispute resolution, especially on
international commercial arbitration affords protection for domestic
corporations through RTCs jurisdiction.