Published 28 December 2018, The Daily Tribune
We have received quite a number of queries on arbitration, particularly on enforcement of foreign arbitration award, so I decided to run another article on the topic. Arbitration is a dispute resolution mechanism whereby parties, by their agreement, submit their dispute to the decision of one or more persons which results in a final and binding award. An arbitration award is legally binding and generally enforceable in the courts.
Under Philippine law, three types of arbitrations are recognized: a domestic arbitration, administered within the Philippines involving Philippine parties, or where there is no international element to the dispute; a domestic-international arbitration, administered within the Philippines under Philippine arbitration rules but involving international elements such as a foreign party, a contract executed abroad, or where a foreign place has the closest connection with the agreement; and, a foreign arbitration, which is an arbitration carried out under the arbitration rules of some other country.
As stated, this article focuses on the latter, i.e., a foreign arbitration award, defined as an arbitral award made in a country other than the Philippines. Because the Philippines ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards in 1965, such awards are generally accorded recognition and enforcement in our country.
The importance of having the foreign arbitral award recognized by our courts cannot be overemphasized. Under Republic Act 9284, otherwise known as the Alternative Dispute Resolution Act of 2004, a foreign arbitral award, when confirmed by the Regional Trial Court, shall be enforced in the same manner as final and executory decisions of courts of law of the Philippines. Under the Special Rules of Court on Alternative Dispute Resolution (the “Special ADR Rules”) issued by the Supreme Court, any party to a foreign arbitration may petition the court to recognize and enforce a foreign arbitral award.
The petition must be filed at any time after receipt of a foreign arbitral award before the Regional Trial Court (a) where the assets to be attached or levied upon is located, (b) where the act to be enjoined is being performed, (c) in the principal place of business in the Philippines of any of the parties, (d) if any of the parties is an individual, where any of those individuals resides, or (e) in the National Capital Judicial Region.
It must be remembered that arbitral awards are final and executory and cannot be reviewed on their merits. Thus, a recourse to a court against an arbitral award shall be made only through a petition to set aside the arbitral award and on grounds prescribed by the law. These grounds include: (i) the incapacity of one of the parties to, or the invalidity of, the arbitration agreement; (ii) the party making the application to set aside or resist enforcement was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was unable to present his case; (iii) the award deals with a dispute outside of the terms of the submission to arbitration; (iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties; (v) the subject-matter of the dispute is not capable of settlement by arbitration under the law of the Philippines; or (vi) the recognition or enforcement of the award would be contrary to public policy.
Any other recourse from the arbitral award, such as by appeal or petition for review or petition for certiorari or otherwise, shall be dismissed by the court.
Finally, once the judgment of the court recognizing the foreign arbitral award attains finality, the winning party may secure a writ of execution and seek assistance from our courts in enforcing the writ by levying on the assets of the losing party, garnishing its accounts, and other enforcement measures as may be proper to satisfy the award.
For comments and questions, please send email to cabdo@divinalaw.com
