FREQUENTLY ASKED QUESTIONS
A. ABOUT PDRC
- What is the Philippine Dispute Resolution Center?
- What services does PDRC offer?
PDRC offers the following services:
- administration of commercial arbitration and mediation
- appointment of arbitrators, mediators and other neutrals
- seminars on commercial arbitration and mediation
- training and accreditation
- networking with international arbitration centers
- referral services
- information on arbitration agreements, rules, and arbitration law and practice
- transcription of minutes and hearings
PDRC works closely with the three branches of the Philippine government (the executive, through the Philippine Department of Justice and the Department of Trade and Industry; the legislative, through the Philippine Congress; and the judiciary through the Philippine Supreme Court) in drafting substantive laws and procedural rules on ADR as well as in information dissemination and training on matters concerning ADR, trade law, and commerce. It publishes The Philippine ADR Review (PADRR), a monthly newsletter.
B. PDRC ARBITRATION
- What is arbitration?
- How is arbitration different from mediation?
- How is arbitration different from court litigation?
- What are some advantages of arbitration over court litigation?
Arbitration is a process where the parties agree to submit their disputes to a neutral arbitrator or tribunal, who renders an award after hearing the parties. Legally, it is defined as a voluntary dispute resolution process whereby one or more arbitrators, appointed in accordance with the agreement of the parties, or under rules promulgated pursuant to Republic Act No. 9285 (2004) and its Implementing Rules and Regulations (IRR), resolve a dispute by rendering an award. [Republic Act No. 9285 (2004) or “ADR Act of 2004”, Sec. 3(d); DOJ DC No. 98, s. 2009; IRR of ADR Act of 2004), Rule 2, Art. 1.6, Sec. A (3)].
Mediation is facilitated negotiation. A third-party neutral called the mediator does not render an award but facilitates communication between the parties and assists them in reaching a voluntary resolution of their dispute.
Arbitration is different from court litigation in many ways. The basic difference, however, is that arbitration is a private and voluntary dispute resolution process. It is contractual in nature and is less formal. The tribunal derives its authority to resolve the dispute from the consent of the parties. No one may compel another to arbitrate, unless they have previously agreed to resolve their dispute by arbitration.
Some of the advantages of arbitration over court litigation are:
- The parties may choose the arbitrators, whether local or foreign, who have the necessary skills and technical expertise to hear and adjudicate a dispute.
- Proceedings are private and confidential.
- Compared to court litigation, arbitration is generally faster and more cost efficient.
- Parties can choose the place of arbitration and the venue of the proceedings.
- In international commercial arbitration, the parties can be represented by local or foreign counsel.
- As a general rule, arbitral awards are not appealable on the merits.
- A foreign arbitral award, which may be enforced in the Philippines pursuant to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, is generally easier to enforce compared to foreign court judgments.
Arbitration may be institutional or ad hoc.
Institutional arbitration is administered by an entity registered as a domestic corporation with the Securities and Exchange Commission (SEC) and engaged in, among others, arbitration of disputes in the Philippines on a regular and permanent basis, e.g., the PDRC [IRR of ADR Act of 2004, Sec. D (10)].
Ad hoc arbitration is arbitration administered by an arbitrator or by the parties themselves. An arbitration administered by an institution shall be regarded as ad hoc arbitration if such institution is not a permanent or regular arbitration institution in the Philippines [IRR of ADR Act of 2004, Sec. D (1)].
Generally, institutional arbitration has the advantage of predictability and certainty. The arbitration undergoes a process that both parties accept in advance of the dispute, from the appointment of the tribunal, to the venue and conduct of the proceeding, to the time limit, up to the rendition and enforcement of the final award. The parties are also familiar with the cost of institutional arbitration, which apply uniformly to all disputes.
While there are advantages to an ad hoc arbitration, e.g., the parties will have more control over the cost of the arbitration (as they are not subject to the fee schedule of an arbitration center) or over the proceeding itself (as they can agree to their own rules), there are disadvantages, including; (a) the parties in an ad hoc arbitration may have to negotiate the rules of procedure instead of availing of tried and tested arbitration rules (e.g., PDRC Rules); (b) the absence of a permanent secretariat with an experienced staff who can provide administrative assistance; (c) lack of access to skilled and experienced arbitrators who can resolve the dispute; (d) delay and difficulty in the appointment of arbitrators in case of a challenge or if the parties fail to timely appoint the arbitrators; (e) lack of readily available and convenient physical facilities and equipment as well as support services for arbitration; and (f) difficulty in encouraging reluctant parties to proceed with arbitration. An ad hoc arbitration may take longer than institutional arbitration and, in some cases, even longer than court litigation.
In the absence of a contractual stipulation that the dispute shall be resolved by arbitration under the rules of the PDRC, the parties may agree to submit the dispute to a binding arbitration to be administered by the PDRC under its rules of procedure. The contractual stipulation is known as an arbitration clause, while the agreement to arbitrate is known as an arbitration agreement or a submission agreement.
It is recommended that parties include an arbitration clause in their contract. For a model arbitration clause, see item no. 8 below.
PDRC recommends the following model arbitration clause:
The parties may wish to consider adding:
- The appointing authority shall be… (name of institution or person);
- The number of arbitrator/s shall be… (one or three)
- The place of arbitration shall be… (city or country)
- The language(s) to be used in the arbitral proceedings shall be…
The PDRC follows its Arbitration Rules and Administrative Guidelines.
The procedure is set out in the 2015 PDRC Arbitration Rules. The provisions of the national law on arbitration, Republic Act No. 865 (1953) or The Arbitration Law and the ADR Act of 2004 and its IRR, and the Special Rules of Court on Alternative Dispute Resolution also apply to an arbitration with PDRC.
The parties may agree on any number of arbitrators, usually one (sole arbitrator) or three (panel). In the absence of agreement, the number of arbitrators shall be three.
The parties may agree on the procedure of appointing the arbitrator/s. If the parties agree in the arbitration clause or in the submission agreement to a method of appointing the arbitrator/s, such method shall be followed. Otherwise, the PDRC Arbitration Rules shall apply in case of institutional arbitration administered by PDRC. In ad hoc arbitration, the provisions of the IRR of ADR Act of 2004 shall apply.
In international commercial arbitration, any impartial and independent individual may be appointed as arbitrator [UNCITRAL Model Law, Art. 12; IRR of ADR Act of 2004, Art. 4.12].
In domestic arbitration, an arbitrator must be of legal age, in full enjoyment of his or her civil rights, and knows how to read and write. The arbitrator shall not be related by blood or marriage within the sixth degree to either party. He or she shall also have no financial, fiduciary, or other interest in the dispute or in the result of the arbitration, and must have no personal bias that may prejudice the right of any party to a fair and impartial award. The arbitrator may not act as a champion of any party or to advocate its cause. [Rep. Act No. 876 (1953), Sec. 10; IRR of ADR Act of 2004, Art. 5.10]
A substitute arbitrator shall be appointed in accordance with the rules that apply to the appointment of the arbitrator being replaced (IRR of ADR Act of 2004, Art. 4.15).
An arbitrator who is biased may be challenged. If the challenged arbitrator objects to or disagrees with the challenge, the challenge may be raised with the PDRC Board of Trustees, whose decision shall be final. If the PDRC Board of Trustees fails to act on the challenge within 30 days, the challenge may be renewed with the proper Regional Trial Court.
An institutional arbitration usually lasts between six months to one year. Under the PDRC Arbitration Rules, an award shall be made by the tribunal within one year from its constitution [Art. 42 (1)]. An ad hoc arbitration may take one to two years or more.
C. PDRC MEDIATION
- What is mediation?
- How is mediation different from arbitration?
- How is mediation different from litigation?
- When should parties avail of mediation?
- What are the rules that PDRC follows for mediation proceedings?
- Can one party refer a case to mediation without the agreement of the other party?
- What happens when mediation succeeds?
- What happens if the parties fail to come to any settlement?
- How many mediators are appointed to resolve a dispute?
- How is a mediator appointed?
- How long does the mediation last?
Mediation is a voluntary process in which a mediator, selected by the disputing parties, facilities communication and negotiation, and assists the parties in reaching a voluntary agreement regarding a dispute [ADR Act 2004, Sec. 3(q)].
Although both arbitration and mediation involve a third party neutral, the latter plays a different role in arbitration and mediation. In arbitration, the arbitrator/s resolve a dispute by rendering an award, whereas in mediation the mediator assists the disputing parties to communicate and reach a voluntary agreement. Mediation is also known as assisted negotiation.
Mediation is a voluntary and private dispute resolution process where both parties agree to engage a neutral third party to help them resolve their dispute through a voluntary agreement. In litigation, the parties may immediately commence an action by filing a complaint before the court or a government agency even without the consent of the other party.
Generally, the Rules of Court or the rules of procedure of the government agency do not apply to mediation. Because of the popularity and effectiveness of mediation as an alternative form of dispute resolution, Philippine courts and government agencies have required mediation as a condition to a trial or hearing on the merits.
Mediation should be used when the parties desire the assistance of a mediator to help them reach a win-win resolution of their dispute. Parties can refer their dispute to mediation at any time, more particularly: (a) if their contract contains a mediation clause stating that the parties should refer any dispute arising from the contract to mediation or to an institution like PDRC which offers mediation services, in which case their dispute can be referred to mediation according to the mediation clause; (b) even if the parties did not sign an agreement to mediate before their dispute arose, they may agree to have their dispute referred to mediation in order to reach a negotiated solution under the guidance of a mediator; and (c) where other proceedings have commenced (e.g., litigation or arbitration), the parties may still agree to hold such proceedings in abeyance while they refer their dispute to mediation.
PDRC is updating its rules on mediation. Nevertheless, PDRC may administer mediation applying the provisions of ADR Act of 2004 and its IRR.
As with arbitration, mediation can only be commenced with the agreement of all the parties.
If the parties have not agreed in advance on mediation before the dispute arose, one party may propose mediation to the other party and the parties may enter into a mediation agreement after the dispute has occurred.
Once the parties have reached an agreement, they may put their agreement in writing, oftentimes with the help of their counsel and the mediator, and thereafter sign it. The mediator will review the agreement to make sure that it is consistent with what the parties agreed to.
It may happen that the parties are unable to find a settlement to their dispute or they reach only a partial solution, which leaves some points in dispute. Depending on the reasons for this, the parties may wish to schedule another mediation session, continue privately with negotiations, or turn to other modes of dispute resolution to resolve their dispute such as litigation or arbitration. The parties should also consider whether the terms of their contract state how they should proceed.
Generally, only one mediator is appointed to assist the parties to resolve their dispute.
The parties may choose any person to act as mediator. The parties may request PDRC or the Office of Alternative Dispute Resolution (OADR) to provide them with a list or the resumes of their certified mediators. The OADR may be requested to inform the mediator of his or her selection [IRR of ADR Act of 2004, Art. 3.3]. If the parties fail or are unable to appoint a mediator, PDRC may appoint a mediator.
Depending on the complexity of the issues in the dispute, the mediation may take anywhere from less than an hour to as long as one year or more. If the parties are unable to reach an agreement during mediation, they may refer any unresolved issues to arbitration.
D. COMMENCING ARBITRATION OR MEDIATION WITH THE PDRC
- Who may avail of the services of PDRC?
- How does a party file a request for arbitration with the PDRC and what are the procedures involved?
- How may one avail of the services of PDRC?
- How many sets of the Notice or request does a party need to file with PDRC?
- When may these services be availed of?
- What are the fees to be paid to PDRC?
- What are the fees involved and how much?
- When are these fees paid and who shoulders them?
Any person who is bound by an arbitration agreement may avail of the PDRC’s services relating to the administration of an arbitration. Any person may also avail of PDRC’s mediation services.
The procedure for commencing an arbitration under the PDRC Arbitration Rules are described in Article 4 (Notice of Arbitration).
Any of the parties to a contract with an arbitration clause or to an arbitration agreement may contact the PDRC Secretariat to request assistance in filing a notice. The submission of a Notice of Arbitration shall be accompanied by payment of a non-refundable filing fee and payment of a provisional advance on cost.
A party desiring to avail of PDRC’s mediation services may also contact the PDRC Secretariat to request assistance in filing a request for mediation.
For arbitration – Three sets are needed if the arbitral tribunal is composed of a sole arbitrator, and five sets if the arbitral tribunal is composed of three arbitrators.
For mediation – Three sets.
Any time a dispute subject of an arbitration or mediation clause arises.
The Schedule of Administrative Fee is found on pages 74-75 of the 2016 Arbitration Rules.
The Schedule of Arbitrator’s Fees is found on pages 73-74 of the 2016 Arbitration Rules.
In all cases, the claimant is required to pay upon filing of its Notice of Arbitration a non-refundable filing fee of Seventy Five Thousand (P75,000.00) Pesos (“Filing Fee”), One Hundred Thousand (P100,000.00) Pesos as deposit for Arbitrator’s Fees, and Twenty Five Thousand (P25,000.00) Pesos as deposit for miscellaneous expenses, to be credited to the claimant’s Provisional Advance on Cost.