Arbitration Law Procedures and Enforcement

Arbitration agreement form and effect

Section 4 requires arbitration agreements to be in writing and subscribed by the party sought to be charged, or by his lawful agent.
Section 4 requires that both a contract to arbitrate future controversies and a submission to arbitrate an existing controversy meet the writing and subscription requirements.
Section 4 provides that making an arbitration contract or submission is deemed consent to the jurisdiction of the Court of First Instance of the province or city where any party resides to enforce the arbitration agreement or submission.

How arbitration starts procedurally

Section 5 provides that an arbitration instituted under a contract to arbitrate future controversies is started by either party serving a demand for arbitration on the other party in accordance with the contract.
Section 5 requires a demand for arbitration to set forth: (a) the nature of the controversy, (b) the amount involved, if any, (c) the relief sought, and (d) a true copy of the arbitration contract.
Section 5 mandates service of the demand in person or by registered mail.
Section 5 requires time-setting and arbitrator naming procedures depending on the contract:
- If the contract provides a single arbitrator, the demand must specify a specific time within which the parties must agree on such arbitrator.
- If the contract provides three arbitrators, the demand must name the arbitrator appointed by the demanding party, and require the other party to advise in writing within fifteen days from receipt the name of the person appointed by the other party; the two arbitrators must agree on the third arbitrator within ten days from the date of notice.
Section 5 allows the aggrieved party, when the other party defaults in answering the demand, to file with the Clerk of the Court of First Instance a copy of the demand and a notice that the original demand was sent by registered mail or delivered in person; the demand must again state the nature of the controversy, amount involved (if any), relief sought, and include a true copy of the arbitration contract.
Section 5 provides that an existing controversy may be submitted by filing with the Clerk of the Court of First Instance a submission agreement stating the nature of the controversy and amount involved (if any), executed by both parties.
Section 5 requires that if a party neglects, fails, or refuses to arbitrate under a submission agreement, the aggrieved party must follow the procedure in Section 5’s demand/default steps.

Court orders and arbitration stay

Section 6 allows a party aggrieved by another party’s failure, neglect, or refusal to perform under a written arbitration agreement to petition the court for an order directing that arbitration proceed as agreed.
Section 6 requires the petitioner to serve five days notice in writing of the hearing of the application personally or by registered mail to the defaulting party.
Section 6 directs the court that, once satisfied that the making of the agreement or the failure to comply is not in issue, it must order the parties to proceed to arbitration according to the agreement.
Section 6 directs the court to summarily hear the issue if the making of the agreement or default is in issue.
Section 6 provides dismissal when the court finds either that no written arbitration provision was made or that there is no default.
Section 6 provides a summary order directing the parties to proceed with arbitration when the court finds a written arbitration provision exists and there is a default.
Section 6 requires courts to decide all motions, petitions, or applications under this Act within ten days after they are heard.
Section 7 requires a court, if a suit or proceeding is brought on an issue arising out of an agreement providing arbitration, to stay the action or proceeding until arbitration is conducted according to the agreement, provided the applicant is not in default in proceeding with arbitration.

Arbitrator appointment, qualifications, and challenges

Section 8 mandates that if the contract or submission provides a method of naming or appointing arbitrators, that method must be followed.
Section 8 provides that if the contract or submission does not provide a method, the Court of First Instance designates an arbitrator or arbitrators.
Section 8 requires the Court of First Instance to appoint arbitrators when:
- the parties cannot agree on a single arbitrator;
- an arbitrator is unwilling or unable to serve and his successor has not been appointed properly;
- a party fails or refuses to name his arbitrator within fifteen days after receipt of the demand; or
- the appointed arbitrators fail to agree or select the third arbitrator.
Section 8 gives the court discretion to appoint one or three arbitrators when the agreement is silent as to number, based on the importance of the controversy.
Section 8 requires arbitrators appointed under the section to accept or decline within seven days of receipt; if an arbitrator declines or fails to accept, parties or the court must appoint substitutes.
Section 9 allows an additional arbitrator only when the submission or contract provides for it; the selection or appointment must be in writing, and the additional arbitrator must sit with the original arbitrators during the hearing.
Section 10 requires arbitrators to be of legal age, in full enjoyment of civil rights, and able to read and write.
Section 10 disqualifies arbitrators related by blood or marriage within the sixth degree to either party.
Section 10 prohibits service where an arbitrator has or has had financial, fiduciary, or other interest in the controversy or cause, or has personal bias that may prejudice a fair and impartial award.
Section 10 forbids a party from selecting as arbitrator his champion or advocate.
Section 10 requires immediate disclosure by an arbitrator if circumstances likely create presumption of bias arise or if the arbitrator believes he might be disqualified as impartial; thereafter, the parties may agree in writing to waive the disqualifying circumstances or declare the office vacant, and any vacancy is filled the same way the original appointment was made.
Section 11 limits challenges of arbitrators only to the reasons in Section 10 that arise after the arbitration agreement or were unknown at the time of arbitration.
Section 11 requires challenges to be made before the arbitrators; if the arbitrators do not yield, the challenging party may renew the challenge before the Court of First Instance where the challenged arbitrator (or any if more than one) resides, and the arbitration hearing is suspended while the incident is discussed, then resumed immediately after an order is delivered.

Arbitration procedure, evidence, and hearing management

Section 12 requires arbitrators, after appointment, to set a time and place for hearing and give notice to each party within five days if the parties reside within the same city or province, or within fifteen days if they reside in different provinces.
Section 12 allows postponement or adjournment only by agreement of the parties; otherwise, arbitrators may order adjournment on their own motion only at the hearing and for good and sufficient cause.
Section 12 bars adjournment from extending the hearing beyond the day fixed for rendering the award unless extended by written agreement of the parties (or their attorneys), or unless the parties proceed without objection.
Section 12 allows the hearing to proceed in the absence of a party who fails to attend after due notice or fails to obtain an adjournment.
Section 12 prohibits making an award solely on the default of a party and requires arbitrators to require the other party to submit evidence as needed.
Section 12 restricts representation: only the party, a person in the regular employ duly authorized in writing, or a practicing attorney-at-law may represent any party; a party intending counsel must notify the other party at least five days prior to the hearing.
Section 12 requires stenographic records of testimony when requested by one or more parties and when the requesting parties assume the cost.
Section 12 grants direct-interest persons a right to attend hearings, while attendance of other persons is at arbitrators’ discretion.
Section 13 requires arbitrators to be sworn before hearing testimony by an officer authorized by law to administer oaths to faithfully and fairly hear and examine and make a just award; the oath applies to every witness before testimony is heard.
Section 14 grants arbitrators power to require attendance of witnesses and to subpoena witnesses and documents when relevance and materiality are demonstrated; arbitrators may require witness retirement during another’s testimony.
Section 14 requires all arbitrators appointed in a controversy to attend all hearings and hear allegations and proofs, but an award by the majority is valid unless the submission or contract expressly requires concurrence of all arbitrators.
Section 14 empowers arbitrators to take measures before the award to safeguard or conserve arbitration subject matter, without prejudice to parties’ right to petition the court for such measures.
Section 15 allows arbitrators at commencement to ask for brief statements of issues and/or an agreed statement of facts; thereafter, parties offer evidence, and arbitrators decide relevancy and materiality.
Section 15 provides that arbitrators are not bound to conform to the Rules of Court pertaining to evidence.
Section 15 allows submission of exhibits the parties wish to submit, requires proper identification, keeps exhibits in the custody of the Clerk of Court, returns exhibits to parties when the award is made, and allows ocular inspection only in the presence of all parties unless a notified party fails to appear.
Section 16 requires arbitrators to inquire whether parties have further proof or witnesses; if all parties answer negatively, the hearing is declared closed unless parties intend to file briefs.
Section 16 sets brief timelines: briefs may be filed within fifteen days after closure of oral hearings; reply briefs, if any, within five days after that fifteen-day period.
Section 17 allows reopening of the hearing by arbitrators on their own motion or upon a party’s request for good cause shown, at any time before the award is rendered; reopening resets the effective date of hearing closure to the reopened hearing’s closing date.
Section 18 permits arbitration without oral hearing by written agreement, using agreed statements of facts, written contentions and documentary proof, and written arguments.
Section 18 requires each party to provide copies of all statements and documents to other parties, and allows written reply; failure to reply within seven days after receipt of another party’s statements and proofs results in waiver of the right to reply.
Section 18 requires arbitrators to declare proceedings closed upon delivery to them of all statements, documents, and reply statements.

Award timing, form, remedies, and arbitration conduct

Section 19 requires the award within thirty days after closing of hearings, or within thirty days after proceedings in lieu of hearing are declared closed, unless the parties stipulate otherwise in writing; the period may be extended by mutual consent.
Section 20 requires the award to be in writing and signed and acknowledged by a majority of arbitrators if more than one, or by the sole arbitrator if one.
Section 20 requires each party to be furnished a copy of the award.
Section 20 authorizes arbitrators to grant remedies or relief they deem just and equitable within the parties’ agreement, including specific performance of a contract.
Section 20 allows arbitrators to embody a settlement reached during arbitration in an award upon request, and the settlement award must be signed by the arbitrators.
Section 20 forbids arbitrators from acting as mediators, and requires that settlement negotiations occur without the presence of the arbitrators.
Section 20 limits arbitrators’ power to decide only matters submitted to them; award terms must be confined to the disputes submitted.
Section 20 authorizes arbitrators to assess in the award arbitration expenses of one party against another when necessary.
Section 21 sets arbitrator fees at fifty pesos per day unless the parties agree otherwise in writing prior to arbitration.

Court confirmation, vacatur, modification, and judgment

Section 22 deems arbitration under a contract or submission a special proceeding, assignable to the court specified in the agreement; if none is specified, the Court of First Instance in the province or city where one of the parties resides or does business, or where arbitration was held, has jurisdiction; applications are made like motions unless this Act provides otherwise.
Section 23 requires that any party may apply for confirmation within one month after the award is made, and the court must grant confirmation unless the award is vacated, modified, or corrected as prescribed by this Act.
Section 23 requires notice of the confirmation motion to be served on the adverse party or his attorney according to the rules for service of notice upon an attorney in an action in the same court.
Section 24 mandates vacating an award upon petition when the petitioner proves affirmatively that during arbitration:
- the award was procured by corruption, fraud, or other undue means; or
- there was evident partiality or corruption in the arbitrators or any of them; or
- the arbitrators committed misconduct by refusing to postpone the hearing upon sufficient cause, or refusing to hear pertinent and material evidence; or one or more arbitrators were disqualified under Section 10 and willfully refrained from disclosing the disqualifications or other misbehavior that materially prejudiced rights; or
- the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the matters submitted was not made.
Section 24 allows the court, when it vacates an award, to direct a new hearing either before the same arbitrators or new arbitrators chosen as in the original submission/contract; any time limit for rendering a decision applies to the new arbitration and runs from the court’s order date.
Section 24 authorizes, upon vacatur, costs not exceeding fifty pesos and disbursements to the prevailing party, enforceable like costs upon motion in an action.
Section 25 mandates modifying or correcting an award when the petitioner proves within:
- evident miscalculation of figures, or evident mistake in the description of any person, thing, or property; or
- an award on a matter not submitted to the arbitrators, if it does not affect the merits of the matter submitted; or
- an award imperfect in form not affecting merits, where a commissioner’s report defect could have been amended or disregarded by the court.
Section 25 directs the court to modify and correct to effect the award’s intent and promote justice between parties.
Section 26 requires notice of a motion to vacate, modify, or correct the award to be served within thirty days after the award is filed or delivered, using the service rules applicable to attorneys in an action.
Section 27 provides that upon granting confirmation, modification, or correction, the court enters judgment conforming to the award; the court may award costs of the application and subsequent proceedings, and if awarded the amount is included in judgment.
Section 28 requires that at filing of a motion to confirm, modify, correct, or vacate, the moving party also file with the Clerk:
- the submission or arbitration contract;
- the appointment of arbitrators;
- each written extension of time to make the award (if any);
- a verified copy of the award;
- each notice, affidavit, or other paper used in the application and copies of each court order in the application;
- and provides that judgment is docketed as in an action, with the judgment having the same force and effect and being enforceable as a judgment in the court where entered.
Section 29 limits appeals from orders under this Act or from judgments entered upon awards by certiorari to questions of law, with proceedings governed by the Rules of Court where applicable.

Parties’ death and arbitration continuation

Section 30 provides that if a party dies after making an arbitration submission or contract, the proceedings may be begun or continued upon application of, or notice to, the executor or administrator, or temporary administrator of the estate.
Section 30 authorizes the court to extend the time for serving notice of a motion to confirm, vacate, modify, or correct an award when a party dies.
Section 30 requires that upon confirming an award filed or delivered while a party has died, judgment is entered in the name of the original party, and the proceedings thereafter follow the same rule as after a verdict.

Repeals, separability, and effectivity

Section 31 keeps the provisions of Chapters one and two, Title XIV, Book IV of the Civil Code in force.
Section 31 repeals all other laws and parts of laws inconsistent with this Act.
Section 31 provides separability: if any provision of this Act is held invalid, the remainder is not affected.
Section 32 makes the Act effective six months after approval, approved on June 19, 1953.