Lesson 10

However, it is the duty of the court to determine in a summary proceeding whether or not there

DOMESTIC ARBITRATION

exists a valid arbitration agreement between the parties. If there is, the court shall issue an order
summarily directing the parties to proceed with the arbitration. If there is none, the proceedings

GENERAL PROVISIONS

shall be dismissed.
Kinds of Arbitration Agreement:

Two or more persons or parties may submit to arbitration by one or more arbitrators.

1.

A controversy cannot be arbitrated where one of the parties to the controversy is

Compromissoire an arbitration agreement providing that any future controversy arising

from such contract shall be subject to settlement by arbitration

1.

an infant, or

2.

a person judicially declared to be incompetent,

3.

unless the court approved a petition for permission to submit such controversy to arbitration

Form of arbitration agreement:

made by the general guardian or guardian ad litem of the infant or of the incompetent.

1.

it shall be in writing, and

2.

subscribed by the party sought to be charged, or by his lawful agent.

2.

Compromis an arbitration agreement to submit an existing dispute to arbitration.

A written communication from one party to the other shall be delivered to the addressee
1.

personally,

An arbitration agreement may be in the form of

2.

by registered mail or

1.

an arbitration clause in a contract or

3.

by courier service

2.

in the form of a separate agreement.

A party shall be deemed to have waived his right to object to non-compliance with any

An unsigned arbitration agreement is binding between the parties if it is incorporated by reference

requirement under the arbitration agreement when:

into their contract in such a way as to make it form a part of their contract.

1.

he knows of such non-compliance; and

2.

proceeds with the arbitration without stating his objections to such non-compliance without

PROCEDURE:

undue delay
1.

In the case of a contract to arbitrate future controversies upon demand for arbitration
in accordance with the contract.

Arbitration shall not apply to controversies and to cases which are subject to the jurisdiction of the
CIR or which have been submitted to it.

a.

Such demand shall set forth the nature of the controversy, the amount involved, the
relief sought, and the contract providing for arbitration.

ARBITRATION AGREEMENT

b.

It is an agreement by parties to submit to arbitration all or certain disputes which have arisen or

2.

which may arise between them in respect of a defined legal relationship, whether contractual or

The demand shall be served upon any party either in person or by registered mail.

If one party defaults in answering the demand, the aggrieved party may file with the Clerk of
the RTC having jurisdiction over the parties,

not. The agreement is enforced only against the parties thereto or their assigns. The arbitral

a.

a copy of the demand for arbitration under the contract to arbitrate,

clause of a contract is a commitment of the parties to submit disputes arising under that contract

b.

with a notice that the original demand was sent by registered mail or delivered in

to arbitration.

person to the party against whom the claim is asserted.

c.

Such demand shall set forth the nature of the controversy, the amount involved, the
relief sought, and the contract providing for arbitration.

3.

In the case of the submission of an existing controversy, by the filing with the Clerk of the

Does this now defeat the purpose of arbitration to settle dispute amicably and inexpensive?

RTC having jurisdiction of the submission agreement, setting forth the nature of the

Remedy: the court may reform the agreement.

controversy, and the amount involved.

On mutuality in the arbitration agreement

The doctrine of mutuality requires a contract to be based on an exchange of reciprocal of

Hearing by court
1.

promises. However, modern contracts have dispensed with such requirement of reciprocal

A party aggrieved by the failure, neglect or refusal of another to perform under an arbitration

promises provided that they are supported by sufficient consideration.

agreement may petition the court for an order directing that such arbitration proceed in the
2.

manner provided for in such agreement.

Arbitration is not unenforceable due to lack of mutuality because it gives one party the right to

Five days notice in writing of the hearing of such application shall be served upon the party

litigate arbitrable issues in court, while the other may only invoke arbitration.

in default.
3.

4.

The court shall hear the parties, and upon being satisfied that the making of the agreement

According to foreign jurisprudence, an arbitration agreement is independent and separate from

or such failure to comply therewith is not in issue, shall make an order directing the parties

the contract in which it may be embedded. Further, mutuality is not required in order for an

to proceed to arbitration in accordance with the terms of the agreement.

arbitration clause to be valid. Mutuality of obligation is not required to enforce arbitration

If the making of the agreement or default be in issue, the court shall proceed to summarily

agreement so long as the underlying contract is supported by sufficient consideration.

hear such issue.

5.
6.

If the finding is that no agreement in writing providing for arbitration was made, or that there

When arbitration results in duplicitous procedure

is no default, the proceeding shall be dismissed.

An arbitration agreement is a contract between the parties and only them who are bound by it and

If the finding is that a written provision for arbitration was made and there is a default in

can only be included in an arbitration proceeding under such agreement.

proceeding thereunder, an order shall be made summarily directing the parties to proceed
with the arbitration in accordance with the terms thereof.

On the other hand, the Rules of Court encourages the joining together in one complaint all
persons as plaintiffs or defendants in civil action.

The court shall decide within ten days after such motions, petitions, or applications have been
heard by it.

While an arbitration agreement is valid, a court may refuse to enforce it where it would result in
splitting of the proceeding to resolve the dispute by arbitration as to some of the parties to the

If any suit or proceeding be brought upon an issue arising out of an agreement providing for the

dispute on the one hand and by trial for the others, or the suspension of trial pending arbitration

arbitration, the court in which such proceeding is pending, upon being satisfied that the issue

between some of the parties. The Supreme Court held that this should not be allowed as it would

involved in such proceeding is referable to arbitration, shall stay the action or proceeding until an

result in multiplicity of suits; thus causes unnecessary delay.

arbitration has been had, provided, that the applicant is not in default in proceeding with such
Kinds of Arbitration:

arbitration.

1.

Is arbitration unconscionable?

Binding if it results in an award which is subject to confirmation and enforcement by the

court

Large arbitration costs may preclude a poor litigant from effectively vindicating his rights. As such,

2.

the arbitration agreement becomes unconscionable and unenforceable. The high cost of
arbitration may be due to a claimants excessive demand for damages. The high arbitration fees,
however, is a question of fact.
2

Non-binding if the award is not subject to confirmation and enforcement

Principle of Competence-Competence

2.

The arbitral tribunal may initially rule on its own jurisdiction

If the arbitration agreement provides for the appointment of a sole arbitrator, the demand
shall include an invitation of the claimant to the respondent to meet and agree upon such
arbitrator at a place, time and date stated, which shall not be less than 30 days from receipt

Principle of Separability of the arbitration clause

of the demand.

Said clause shall be treated as an agreement independent of the other terms of the contract of
which it forms part. A decision that the contract is null and void shall not entail automatically the

3.

invalidity of the arbitration clause.

If the arbitration agreement provides for the establishment of an arbitral tribunal of three (3)
arbitrators, the demand shall name the arbitrator appointed by the claimant. It shall include
the curriculum vitae of the arbitrator appointed and the latter's acceptance of the

Invalid and unenforceable arbitration agreement when

1.

The contract containing the arbitration clause had long expired, and

2.

Defective arbitration clause reformed to make it enforceable

appointment.
4.

The demand shall also require the respondent to name his/her arbitrator within a period not
less than 15 days from the receipt of the demand.

Procedure in Administered Arbitration commenced in institutional arbitration in accordance

with the arbitration rules of the chosen institution.

5.

There must be a notice of arbitration which shall include:

Within the said period, the respondent shall give a written notice to the claimant of the
appointment of the respondent's arbitrator and attach to it is the latter's curriculum vitae and

1.

Demand to refer the dispute to arbitration

2.

Names and addresses of the parties;

3.

Reference to the arbitration clause or the separate arbitration agreement that is invoked;

Arbitrators appointed shall either accept or decline their appointments within 7 days of the receipt

4.

A reference of the contract out of or in relation to which the dispute arises;

of their appointments. In case of declination or the failure of an arbitrator or arbitrators to duly

5.

The general nature of the claim and an indication of the amount, if any;

accept their appointments, the parties or the court shall proceed to appoint a substitute or

6.

The relief or remedy sought;

substitutes for the arbitrator or arbitrators who decline or failed to accept his or their appointments.

7.

A proposal as to the number of arbitrators or for the appointment of sole arbitrator and an

In such a case, the proceeding might cause delay due to declination or failure of an arbitrator/s to

appointing authority;

accept their appointment.

8.

Notification of the appointment of an arbitrator; and

9.

The statement of claim

his/her acceptance of appointment.

Where a submission or contract provides that two or more arbitrators therein designated or to be
thereafter appointed by the parties, may select or appoint a person as an additional arbitrator, the

Ad hoc arbitration - commenced when the claimant delivers to the respondent a demand for

selection or appointment must be in writing. Such additional arbitrator must sit with the original

arbitration

arbitrators upon the hearing. Its purpose is that if one or more arbitrators die, resign, or removed
during the hearing and before award, there may not be enough arbitrators left to make an award.

1.

There must be a demand for arbitration, which shall contain the following:
a.

Personal circumstances of the parties;

b.

Description of the nature and circumstances of the dispute;

c.

Statement of relief sought including the amount of the claim;

d.

Relevant agreements, if any;

e.

Appoint of arbitrators and/or demand to appoint.

The additional arbitrators may be appointed to fill the vacancy/ies to effect the award without
rehearing the case.