Villaraza & Angangco is pleased to have contributed the Philippine Chapter of The Legal 500: International Arbitration Comparative Guide. Augusto San Pedro, Jr., Ruth Nichole Ureta, Raquel Wealth Taguian and Rashel Ann Pomoy authored the overview on international arbitration in the Philippines. This provides an overview of the legal framework and key issues in international arbitration in the Philippines.
Philippines: International Arbitration (4th edition)
This country-specific Q&A provides an overview of the legal framework and key issues surrounding international arbitration law in the Philippines.
This Q&A is part of the global guide to International Arbitration.
For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/international-arbitration-4th-edition/
1. What legislation applies to arbitration in your country? Are there any mandatory laws?
Initially, Republic Act No. 876 (Arbitration Law) governed domestic arbitration in the Philippines. Republic Act No. 9285, or the Alternative Dispute Resolution Act (ADR Act), was thereafter enacted, covering international commercial arbitration and amending certain provisions of the Arbitration Law. On the other hand, Executive Order No. 1008 (EO 1008) was enacted to cover the arbitration of construction disputes. The Supreme Court has likewise issued A.M. No. 07-11-08-SC or the Special Rules of Court on Alternative Dispute Resolution (Special ADR Rules) covering judicial reliefs in aid of, or in relation to, arbitration.
2. Is your country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?
- Yes, the Philippines is a signatory to the New York Convention, with the reservation that the signature was made on the basis of reciprocity.
3. What other arbitration-related treaties and conventions is your country a party to?
- The Philippines is also a party to the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (ICSID).
4. Is the law governing international arbitration in your country based on the UNCITRAL Model Law? Are there significant differences between the two?
- Yes. Section 19 of the ADR Act adopted the 1985 UNCITRAL Model Law (Model Law) for international commercial arbitration. There are no significant differences between the ADR Act and the Model Law in the case of international commercial arbitration. Notably, however, the ADR Act made only select provisions of the Model Law applicable to domestic arbitration.
5. Are there any impending plans to reform the arbitration laws in your country?
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The Department of Justice – Office for Alternative Dispute Resolution (DOJ-OADR), which has the function of recommending to Congress needful statutory changes, have made efforts to host and facilitate a consultative conference on proposed amendments to the chapters on mediation and arbitration in the ADR Act in 2017. In 2013 and 2018, Senate Bills were introduced, proposing the mandatory referral to arbitration of disputes involving medical malpractice, insurance law, maritime laws, intellectual property law, and intra-corporate matters and the formation of a Philippine Arbitration Commission for the purpose of handling such disputes. As of date, there are no bills relating to alternative dispute resolution pending in Congress.
6. What arbitral institutions (if any) exist in your country? When were their rules last amended? Are any amendments being considered?
-The Construction Industry Arbitration Commission (CIAC) was created under EO 1008 to handle the arbitration of construction disputes.
On the other hand, the Philippine Dispute Resolution Center, Inc. (PDRCI) is the foremost private arbitration institution in the Philippines. The PDRCI has Arbitration Rules, which were last amended in 2015.
In 2019, the Integrated Bar of the Philippines (IBP) also launched the Philippine Center for Conflict Resolution (PICCR), which administers international and domestic arbitrations, as well as other modes of dispute resolution involving foreign and local parties.
7. What are the validity requirements for an arbitration agreement under the laws of your country?
- An arbitration agreement is required to be in writing. It may be contained in a document signed by the parties or in an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement, or in an exchange of statements of claim and defense in which the existence of an agreement is alleged by one party and not denied by the other. Reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement, provided that the contract is in writing and the reference is such as to make that clause part of the contract. [Art. 4.7 and Art. 5.6, Department of Justice Department Circular No. 98, or the Implementing Rules and Regulations of the ADR Act (IRR)]
However, in the recent case of Hygienic Packaging Corporation v. Nutri-Asia, Inc. [2019], the issuance of a Sales Invoice making reference to Purchase Orders which contained arbitration clauses was not considered a binding arbitration agreement in the absence of proof of any intention of the parties to be bound by the arbitration clause.
8. Are arbitration clauses considered separable from the main contract?
- Yes. An arbitration clause, which forms part of a contract, shall be treated as an agreement independent of the other terms of the contract. A decision by an arbitral tribunal that the contract is null and void does not ipso jure entail the invalidity of the arbitration clause. (Art. 4.16, IRR)
9. Is there anything particular to note in your jurisdiction with regard to multi-party or multi-contract arbitration?
- There is no specific reference to multi-party or multi-contract arbitration in the ADR Act or the IRR. Nevertheless, the PDRCI specifically provides for (a) claims between multiple parties in a single arbitration, and (b) multiple contracts in a single arbitration. In the first case, there must be a prima facie determination that an arbitration agreement exists and that the same binds all the parties. In the second case, there must be a prima facie determination that the arbitration agreements under which the claims are made are compatible and that the claims can be determined jointly in a single arbitration.
10. In what instances can third parties or non-signatories be bound by an arbitration agreement?
- Pursuant to the principle of party autonomy, Philippine jurisprudence generally prohibits the impleading of third parties into arbitrations that arise from agreements they are not parties to [Freuhalf Electronics Philippines Corp. v Technology Electronics Assembly and Management Pacific Corp. (2016)]. However, exceptions are made for parties who are bound by separate or accessory contracts which incorporate by express reference arbitration clauses in another primary contract, such as third-party beneficiaries [Bases Conversion Development Authority vs. DMCI Project Developers, Inc., (2016)] and bond issuers to a construction contract [Prudential Guarantee and Assurance, Inc. vs. Anscor Land, Inc. (2010)].
11. How is the law applicable to the substance determined? Is there a specific set of choice of law rules in your country?
- The choice of law governing the substance of the dispute depends on the contract between the parties. In the absence of contrary stipulation, any designation of the law or legal system of a given state shall be construed as directly referring to the substantive law of that state and not to its conflict of laws rules. If the parties fail to designate the law to govern the substance of the dispute, the arbitral tribunal shall apply the law determined by the conflict of laws rules, whichever it considers applicable. (Art. 4.28, IRR)
12. Are any types of dispute considered non-arbitrable? Has there been any evolution in this regard in recent years?
- Yes. The ADR Act does not apply to the resolution or settlement of labor disputes, the determination of the civil status of persons, validity of a marriage, existence of grounds for legal separation, jurisdiction of courts, future legitime, future support, criminal liability, and other matters that cannot legally be the subject of compromise. (Sec. 6, ADR Act)
13. In your country, are there any restrictions in the appointment of arbitrators?
- In international commercial arbitration, there are no restrictions on which arbitrators can be appointed by the parties, unless otherwise expressly agreed upon by the parties (Art. 4.11, ADR Act). In domestic arbitration, arbitrators have to be of legal age, in full enjoyment of his or her civil rights and able to read and write. He or she must not be related by blood or marriage within the sixth degree to a party, or have any financial, fiduciary or other interest in the controversy. (Art. 5.10, IRR)
14. Are there any default requirements as to the selection of a tribunal?
- In case the parties fail to determine the number of arbitrators, the parties shall be deemed to have intended an arbitral tribunal composed of three (3) arbitrators. In the event a party refuses to nominate an arbitrator, in case the parties or two (2) arbitrators fail to arrive at an agreement as required under the rules, or in case a third-party or institution fails to perform its function under their procedures, the appointing authority, in this case the National President of the IBP, is authorized to take the necessary measures to appoint an arbitrator. (Art. 4.10, IRR)
15. Can the local courts intervene in the selection of arbitrators? If so, how?
- Yes. In institutional arbitration, the Regional Trial Court can intervene in the selection of arbitrators if: (a) the parties fail or refuse to appoint an arbitrator, the parties fail to agree on the sole arbitrator, or when two (2) designated arbitrators fail to agree on the third or presiding arbitrary; and (b) the institution fails or is unable to perform its duty as appointing authority within a reasonable time from receipt of the request for appointment.
In ad hoc arbitration, the Regional Trial Court can intervene in the selection of arbitrators if: (a) the parties failed to provide a method for appointing or replacing an arbitrator, or substitute arbitrator, or the method agreed upon is ineffective; and (b) the National President of the IBP, or his duly authorized representative, fails or refuses to act within the required period under pertinent rules, or as agreed upon by the parties, or, in the absence thereof, within thirty (30) days from receipt of such request for appointment. (Rule 6.1, A. Special ADR Rules)
16. Can the appointment of an arbitrator be challenged? What are the grounds for such challenge? What is the procedure for such challenge?
- Yes. For both international or domestic arbitration, the appointment of an arbitrator can be challenged if circumstances exist which give rise to justifiable doubts as to his or her impartiality or independence, or if he or she does not possess qualifications agreed upon by the parties. (Art. 4.12 and 5.11, IRR). In domestic arbitration, an arbitrator may also be challenged as well if he or she refuses to respond to questions by a party regarding the nature and extent of his professional dealings with a party or counsel. (Art. 5.11, ADR Act)
Parties are free to agree on the procedure to challenge the appointment of arbitrators. In the absence of any such agreement, a party may challenge an arbitrator by filing a written statement within fifteen (15) days from knowledge of the constitution of the arbitral tribunal or the circumstance which gives rise to grounds to challenge the appointment. Unless the challenged arbitrator withdraws from his or her office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge. In case of an unsuccessful challenge, the challenging party may file a request with the appointing authority within thirty (30) days. (Art. 4.13 and 5.13, IRR)
17. What happens in the case of a truncated tribunal? Is the tribunal able to continue with the proceedings?
- In the event the mandate of any member of an arbitral tribunal terminates by reason of withdrawal, resignation, failure or incapability of performing his or her functions, a substitute arbitrator can be appointed according to rules applicable to the arbitrator being replaced, such as the IRR or the Model Law. (Art. 4.15 and 5.14, IRR)
18. Are arbitrators immune from liability?
- There is no law expressly exempting arbitrators from any liability arising from the arbitration proceedings. However, it appears that arbitrators may be held to answer for any violation of a confidentiality or protective order issued by a court. (Rule 10, Special ADR Rules)
19. Is the principle of competence-competence recognised in your country?
- Yes. Arbitral Tribunals are recognized to have the competence to rule on its own jurisdiction, including any objection with respect to the existence or validity of the arbitration agreement precedent to the filing of a request for arbitration. (Art. 4.16, IRR)
20. What is the approach of local courts towards a party commencing litigation in apparent breach of an arbitration agreement?
- Local courts may refer the parties to arbitration in accordance with the agreement, upon request by the other party to the arbitration agreement not later than the pre-trial conference. The local court may also refer to parties to arbitration if the request for referral is made with the agreement of both parties. (Rules 4.1. to 4.2, Special ADR Rules).
21. How are arbitral proceedings commenced in your country? Are there any key provisions under the arbitration laws relating to limitation periods or time bars of which the parties should be aware?
- Arbitral proceedings are commenced through a demand for arbitration, or request for a dispute to be referred to arbitration. (Art. 4.21 and 5.20, IRR).
22. In what circumstances is it possible for a state or state entity to invoke state immunity in connection with the commencement of arbitration proceedings?
- The State can invoke immunity from suit in relation to sovereign or governmental activities, but not to commercial, private and proprietary acts. [China National Machinery & Equipment Corp. (Group) v Santamaria (2012)]
23. What happens when a respondent fails to participate in the arbitration? Can the local courts compel participation?
- In case of respondent’s failure to participate, resulting in failure to communicate the statement of defense, the arbitral tribunal shall continue the proceedings without treating such failure in itself as an admission of the claimant’s allegations. (Rule 4.25(b) and Rule 5, IRR). In any event, local courts can issue orders to direct a third party, who may be a witness, to comply with a subpoena issued by an arbitral tribunal to testify in an arbitral proceeding. (Rule 9, Special ADR Rules).
24. Can local courts order third parties to participate in arbitration proceedings in your country?
- Local courts have the authority to issue orders to direct a third party, who may be a witness, to comply with a subpoena issued by an arbitral tribunal. (Rule 9, Special ADR Rules).
25. What interim measures are available? Will local courts issue interim measures pending the constitution of the tribunal?
- Local courts can issue interim measures before, pending, and during the constitution of the arbitral tribunal. (Rule 5.2, Special ADR Rules).
Arbitral tribunals may issue interim measures of protection such as preliminary injunction directed against a party, appointment of receivers, or detention, preservation, inspection of property that is the subject of the arbitration. Further, any such provisional or interim relief may be granted for the following purposes: (a) to prevent irreparable loss or injury; (b) to provide security for the performance of an obligation; (c) to produce or preserve evidence; or (d) to compel any other appropriate acts or omissions. (Art. 4.17, IRR).
26. Are there particular rules governing evidentiary matters in arbitration? Will the local courts in your jurisdiction play any role in the obtaining of evidence? Can local courts compel witnesses to participate in arbitration proceedings?
- There is no strict standard of evidence during arbitration, except that all parties are required to be treated with equality and given a full opportunity to present their respective cases. (Art. 18, Model Law) The parties are free to adopt rules on evidence as they may prefer, such as the International Bar Association (IBA) Rules on the Taking of Evidence In International Arbitration.
Local courts have the power to render assistance to an arbitral tribunal with respect to taking evidence, such as issuing orders to direct a witness to comply a subpoena issued by an arbitral tribunal. (Rule 9, Special ADR Rules).
27. What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your country?
- Parties are free to adopt rules on ethics, such as the IBA Guidelines on Conflicts of Interest in International Arbitration, or the Rules of Ethics for International Arbitrators. Philippine counsels are likewise bound to abide by Code of Professional Responsibility.
28. In your country, are there any rules with respect to the confidentiality of arbitration proceedings?
- Arbitration proceedings, including records, evidence, and the arbitral award, are considered confidential and cannot be published, except: (a) with consent of the parties; or (b) for the limited purpose of disclosing to the court relevant documents where resort to the court is allowed. (Sec. 23, ADR Act).
29. How are the costs of arbitration proceedings estimated and allocated?
- Costs and allocation of costs can be subject to the agreement of the parties. In default of such an agreement, costs, such as arbitrator’s fees, expenses of the arbitrators and witnesses, costs of expert advice, and legal representation and assistance, are generally fixed by the arbitral tribunal or the institution under the auspices of which tribunal was constituted. Fees of the arbitral tribunal are required to be reasonable in amount, taking into account the amount in dispute, complexity of the subject matter, and time spent by the arbitrators. Costs are borne by the unsuccessful party, unless the arbitral tribunal makes a reasonable apportionment between the parties, taking into account the circumstances of the case. (Art. 4.46 and 5.46, IRR).
30. Can pre- and post-award interest be included on the principal claim and costs incurred?
- Under Philippine Law, interests that may be awarded based on a money claim is only interest stipulated upon in writing by the parties under the contract (Art. 1956, Civil Code of the Philippines). A legal interest of 6% is likewise due on an award of money until satisfaction of such award, in the absence of written stipulation. (Bangko Sentral ng Pilipinas Circular No. 799, series of 2013)
31. What legal requirements are there in your country for the recognition and enforcement of an award? Is there a requirement that the award be reasoned, i.e. substantiated and motivated?
- The petition for the recognition and enforcement of an arbitral award must be verified and must state the allegations required to be made by the Special ADR Rules, and contain authentic copies of the arbitral agreement, arbitral award, and the appointment of the arbitral tribunal. (Rule 1.4, Special ADR Rules) There is no other requirement to substantiate an arbitral award.
32. What is the estimated timeframe for the recognition and enforcement of an award? May a party bring a motion for the recognition and enforcement of an award on an ex parte basis?
- There is no timeframe for the Regional Trial Court before which a petition to recognize and enforce an arbitral award is filed to resolve the said petition. However, one 2010 World Bank study found that, on average, it takes around 135 weeks to enforce an arbitration award rendered in the Philippines (from filing an application to a writ of execution attaching assets, and assuming there is no appeal), and around 126 weeks for a foreign award. (Manuel Bautista, Jr., as cited in The ADR Act of 2004: A decade of changes and challenges by Ryan P. Oliva, The Philippine ADR Review, October 2014).
No petition for recognition and enforcement of an arbitral award - whether arising from domestic arbitration proceedings, international commercial arbitration proceedings in the Philippines, or foreign arbitration proceedings - may be filed on an ex parte basis, since the respondents to such a petition are given time to oppose the same. (Rules 11.7, 12.8 and 13.6, Special ADR Rules).
33. Does the arbitration law of your country provide a different standard of review for recognition and enforcement of a foreign award compared with a domestic award?
- There is no difference in the standards of review for the recognition and enforcement of arbitral awards promulgated in domestic arbitration proceedings, international commercial arbitration proceedings in the Philippines, or foreign arbitration proceedings. In all three (3) types of proceedings, local courts shall not disturb the arbitral tribunal’s determination of facts and/or interpretation of law. (Rules 11.9, 12.11 and 13.11, Special ADR Rules) Moreover, arbitral awards are presumed to have been made and released in due course of arbitration, and is subject to confirmation by the Regional Trial Court. (Rules 11.9, 12.12 and 13.11, Special ADR Rules).
34. Can arbitration awards be appealed or challenged in local courts? What are the grounds and procedure?
- Any party to a domestic arbitration, not later than thirty (30) days from receipt of the arbitral award, may file petition with the appropriate Regional Trial Court to vacate an arbitral award on the following grounds:
1. the award was procured through corruption, fraud or undue means;
2. there was evident partiality or corruption in the arbitral tribunal or any of its members;
3. the arbitral tribunal was guilty of misconduct or any form of misbehavior that materially prejudiced the rights of any party;
4. one or more arbitrators were disqualified to act as such under the law but willfully refrained from disclosing the disqualification;
5. the arbitral tribunal exceeded its powers or imperfectly executed them that a complete, final and definite award upon the matter submitted to them was not made;
6. no arbitration agreement existed or is invalid based on the grounds to revoke a contract, or is unenforceable; or
7. a party to the arbitration is a minor or judicially declared incompetent. (Section 24, Arbitration Law vis-à-vis Section 40, ADR Act; Rule 11.4(A), Special ADR Rules).
Any party to an international commercial arbitration in the Philippines, not later than three (3) months from receipt of the arbitral award, may file a petition with the appropriate Regional Trial Court to set aside or refuse the enforcement of the arbitral award on the following exclusive grounds:
1. a party to the arbitration agreement was under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereof, under Philippine law;
2. 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 otherwise unable to present his case;
3. the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration;
4. the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties;
5. the subject-matter of the dispute is not capable of settlement by arbitration under the law of the Philippines; or
6. the recognition or enforcement of the award would be contrary to public policy. (Rule 12.4, Special ADR Rules).
As regards a foreign arbitration, any party thereto, at any time after receipt of a foreign arbitral award, may petition with the appropriate Regional Trial Court to refuse recognition and enforcement of a foreign arbitral award on the same exclusive grounds as those for international commercial arbitration in the Philippines, with the addition of the ground that the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which that award was made. (Sec. 42 and 43, ADR Act; Rule 13.4, Special ADR Rules).
35. Can the parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitration clause)?
- Any stipulation that the arbitrators’ award or decision shall be final is valid. If such a stipulation was mutually and voluntarily agreed upon, and has not been shown to be contrary to any law, or against morals, good customs, public order, or public policy, the said stipulation must be respected. [Korea Technologies Co., Ltd. v Lerma (2008)]
36. To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
- The rule in the Philippines is that state immunity cannot be extended to commercial, private and proprietary acts. [China National Machinery & Equipment Corp. (Group) v Santamaria (2012)]
Where the State gives its consent to be sued by private parties, it may limit the claimant's action ‘only up to the completion of proceedings anterior to the stage of execution’ and that the power of the courts ends when the judgment is rendered, since government funds and properties may not be seized under writs or execution or garnishment to satisfy such judgments. Disbursements of public funds must be covered by the correspondent appropriation as required by law. [Republic v Villasor (1973)] However, the immunity of public funds from garnishment or levy does not apply where the funds sought to be levied are already allocated by law for the satisfaction of the money claim against the government. [City of Caloocan v Allarde (2003)]
37. In what instances can third parties or non-signatories be bound by an award? To what extent might a third party challenge the recognition of an award?
- Pursuant to the principle of party autonomy, Philippine jurisprudence generally prohibits the impleading of third parties into arbitrations that arise from agreements they are not parties to [Freuhalf Electronics Philippines Corp. v Technology Electronics Assembly and Management Pacific Corp. (2016)]. However, exceptions are made for parties who are bound by separate or accessory contracts which incorporate by express reference arbitration clauses in another primary contract, such as third-party beneficiaries [Bases Conversion Development Authority vs. DMCI Project Developers, Inc., (2016)] and bond issuers to a construction contract [Prudential Guarantee and Assurance, Inc. vs. Anscor Land, Inc.(2010)].
In that regard, only parties to the domestic arbitration proceedings, international commercial arbitration proceedings in the Philippines, or foreign arbitration proceedings may challenge an award. (Rules 11.1, 12.1 and 13.1, Special ADR Rules).
38. Have courts in your jurisdiction considered third party funding in connection with arbitration proceedings recently?
- There is currently no Philippine Supreme Court ruling on the validity of third party funding in arbitration. There is no specific law which allows or disallows third party funding. What is prohibited are champertous contracts where a third party, stranger to the litigation, undertakes to carry on the litigation at its own cost and risk in consideration of part of the proceeds of the litigation, if successful. [Nocom v Camerino (2009)].
39. Is emergency arbitrator relief available in your country? Is this frequently used?
- Emergency arbitrator relief is available in the country. Neither the ADR Act nor the IRR specifically mentions this relief. Nevertheless, it is specifically provided for under the 2015 Rules of the PDRCI. Since this is a recent development, parties have started availing of the remedy only in 2019.
The IBP has recently launched the PICCR. It is envisioned to include emergency arbitrator relief.
40. Are there arbitral laws or arbitration institutional rules in your country providing for simplified or expedited procedures for claims under a certain value? Are they often used?
- The 2015 PDRCI Rules allow a party to apply for expedited procedure where:
1. The amount in dispute representing aggregate of any claim, counterclaim or any other claim does not exceed PhP250,000.00;
2. The parties so agree; or
3. In cases of exceptional urgency.
This measure, being a recent development, is not often used.
The recently launched PICCR is envisioned to include expedited procedure in its rules.
41. Have measures been taken by arbitral institutions in your country to promote transparency in arbitration?
- Currently, the regime in effect in the Philippines in one for confidentiality of arbitration proceedings. The ADR Act explicitly provides for confidentiality of arbitration proceedings, including all records, evidence and arbitral award, and prohibits publication except with the parties’ consent or for the limited purpose of disclosing to the court of relevant documents where resort to court is allowed. (Sec. 23, ADR Act) There is no movement yet towards transparency.
42. Is diversity in the choice of arbitrators and counsel (e.g. gender, age, origin) actively promoted in your country? If so, how?
- There is no active promotion of diversity in arbitrators and counsel. The PDRCI and the DOJ- OADR have their respective lists of accredited arbitrators.
43. Have there been any recent court decisions in your country considering the setting aside of an award that has been enforced in another jurisdiction or vice versa?
- As of September 2019, there is no decision yet by the Philippine Supreme Court upholding the setting aside of an arbitral award that had already been enforced in another jurisdiction. Nevertheless, an award by the CIAC of the Philippines had already been refused recognition and enforcement by the South Korean Supreme Court for violating the New York Convention.
44. Is corruption an issue that is regularly raised in your jurisdiction? What standard do local courts apply for proving of corruption?
- There is no case decided by the Philippine Supreme Court where corruption was raised in relation to arbitration proceedings.
45. Have there been any recent court decisions in your country considering the definition and application of “public policy” in the context of enforcing or setting aside an arbitral award?
- In December 2018, the Philippine Supreme Court, for the first time, declared its adoption of a narrow definition of “public policy” in the context of enforcement of arbitral award. In Mabuhay Holdings Corporation v Sembcorp Logistics Limited [2018], the Philippine Supreme Court held that “[m]ere errors in the interpretation of the law or factual findings would not suffice to warrant refusal of enforcement under the public policy ground. The illegality or immorality of the award must reach a certain threshold such that, enforcement of the same would be against [the Philippines’] fundamental tenets of justice and morality, or it would blatantly be injurious to the public, or the interests of the society.” In ruling against Mabuhay, the Philippine Supreme Court reasoned that a restrictive approach to public policy implies that not all violations of law are deemed contrary to public policy. Mere incompatibility of a foreign arbitral award with domestic law does not amount to a breach of public policy.
46. Have there been any recent court decisions in your country considering the judgment of the Court of Justice of the European Union in Slovak Republic v Achmea BV (Case C-284/16) with respect to intra-European Union bilateral investment treaties or the Energy Charter Treaty? Are there any pending decisions?
- The Philippine Supreme Court has not yet issued any decision that considers the judgment in in Slovak Republic v Achmea BV (Case C-284/16) which found the arbitration clause in bilateral investment treaty as incompatible with European law. However, the recent decision in Mabuhay Holdings Corporation v Sembcorp Logistics Limited [2018], appears to be a move in the opposite direction where a claim of violation of public policy due to the incompatibility with the arbitral award and Philippine law was rejected by the court.
47. Have there are been any recent decisions in your country considering the General Court of the European Union’s decision Micula & ors (Joined Cases T-624/15, T-694/15 and T-694.15), ECLI:EU:T:2019:423, dated 18 June 2019? Are there any pending decisions?
- There is no decision of the Philippine Court that considers the decision of the General Court of the European Union in Micula & ors (Joined Cases T-624/15, T-694/15 and T-694.15), ECLI:EU:T:2019:423, which upheld the enforcement of an arbitral award despite the claim of the European Commission that the same is an aid that violates the European Agreement. Nevertheless, Mabuhay Holdings Corporation v Sembcorp Logistics Limited [2018] is consistent with the ruling in Micula & ors since the Philippine Court, through its restrictive interpretation of public policy, upheld an arbitral award despite a claim that the same violates Philippine law.
