PDRCI will conduct a three-day arbitration training seminar for intellectual property professionals on November 8 to 10, 2010 at the University of the Philippines. College of Law in Diliman, Quezon City. This is the second part of the intensive training program on intellectual property rights (IPR) jointly organized by the Philippine Intellectual Property Office (IPO), PDRCI and the World Intellectual Property Office (WIPO).
The training will be open to intellectual property professionals from the IPO as well as interested participants from the public.
The training basically consists of step-by-step lectures on commercial arbitration procedure. On the first day of the seminar, PDRCI Trustee Atty. Arthur P. Autea will give an introduction on arbitration, followed by a discussion by PDRCI Secretary General Atty. Salvador S. Panga, Jr. on pre-arbitration issues. On the second day, PDRCI Trustees Atty. Gwen B. De Vera and Atty. Roberto N. Dio will discuss, respectively, the commencement of arbitration and pre-hearing considerations. On the last day of the program, PDRCI President Atty. Victor P. Lazatin will discuss the conduct of arbitration hearings, while PDRCI President Emeritus Dean Custodio O. Parlade will focus on recognition, enforcement, challenge and vacation of arbitral awards.
The program seeks to provide the participants with basic knowledge of the arbitration laws and recent legal developments in commercial arbitration. The participants are expected to acquire a working knowledge of the arbitration process, both from the perspective of an arbitra- tor and as counsel of a party in arbitration.
The last training seminar will be conducted by the WIPO on December 8 to 9, 2010 at the same venue. A written assessment examination will be held on the day after the completion of the seminar. The successful examinees will be included in the roster of PDRCI trained arbitrators.
Choosing the forum in international commercial arbitration
When the parties to a commercial agreement decide on an arbitration clause, one of the issues that sometimes crop usp is the designation of the place of arbitration. This is especially true when the contracting parties have their places of business in different countries. Both would, of course, want the place of arbitration to be in their respective states. By way of a compromise, the parties usually agree on a “neutral” foreign place of arbitration. Hence, this question comes about: “How do the parties choose the foreign place of arbitration in international commercial arbitration ?”
1 Republic Act No. 9285, otherwise known as the “Alternative Dispute Resolution Act of 2004” and the UNCITRAL Model Law, which govern international commercial arbitration, do not really state how parties should choose a foreign place of arbitration. All that is settled is the following:
- The parties may provide in the arbitration agreement for the place of arbitration. If there is no such agreement, the place of arbitration shall be in Metro Manila, unless the arbitral tribunal, having regard to the circumstances of the case, including the convenience of the parties, shall decide on a different place of arbitration.
- Notwithstanding the above choice on place of arbitration, the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of goods, other property or documents.
3 Faced with these broad rules on the designation of the place of arbitration, there are three considerations to be borne in mind when choosing a foreign place of arbitration. These are costs and convenience of the parties, adherence of the foreign place of arbitration to the UNCITRAL Model Law, as well as its adherence to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”).
Let us go to the first consideration, which is often not the most important one for the parties, i.e., costs and convenience of the parties. While the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate hearings, while depending on several factors, are based in large part on the chosen foreign place of arbitration. Thus, let us say that the contracting parties are a Singaporean corporation and an Australian corporation. To minimize costs and for the parties’ convenience in the event of arbitration, choosing an Asian country as opposed to a European country as the foreign place of arbitration will generally be the better alternative.
Second, the foreign place of arbitration must ideally be a Model Law country. In other words, the foreign place of arbitration must have adhered to the UNCITRAL Model Law. This is especially important in cases where the international commercial arbitration is ad hoc. In ad hoc arbitration, the procedural laws of the forum will govern and may thus affect the conduct of the arbitration. If the chosen foreign place of arbitration is a Model Law country, its arbitration laws will be patterned after well-settled and internationally accepted arbitration rules and principles. Hence, the parties will be able to predict the rules and principles that will govern their arbitration, and the chances of unpleasant surprises arising from the application of the forum’s arbitral rules and principles will most likely be minimal.
Third, the foreign place of arbitration must also ideally be a contracting state to the New York Convention. The enforcement and recognition of an arbitral award may be affected by the place of arbitration. Under Article 31(3) of the UNCITRAL Model Law, “(t)he award shall be deemed to have been made at (the place of arbitration).” Hence, if the parties want to stipulate a foreign country as the place of arbitration, they should make sure that such country is a contracting state to the New York Convention. That way, in the event that the losing party fails or refuses to voluntarily satisfy the arbitral award, the prevailing party may go to the relevant local courts of another contracting state for enforcement. Its local courts shall have the duty to recognize and enforce the foreign arbitral award as a matter of treaty obligation.
By way of illustration, let us go back to the example of the Singaporean corporation and Australian corporation who decide to include an arbitral clause in their commercial commercial dispute.
The Philippines, in view of its proximity to the domicile of both parties, will minimize costs and will be a convenient location. The Philippines is also a Model Law country. Hence, it adheres to well-settled and internationally accepted arbitration rules and principles observed by other Model Law countries. The parties will thus be comforted that they will not be surprised at any turn regarding the arbitration rules and principles observed in their chosen place of arbitration.
For example, the parties can reasonably expect that local courts will not intervene in the conduct of the arbitration, save in the limited instances provided in the UNCITRAL Model Law. This will greatly benefit the success of the arbitration.
Finally, since the Philippines is a party to the New York Convention, any arbitral award will be recognized and enforced as a foreign arbitral award in other contracting states. The petition for recognition and en- forcement, if brought before the local courts of another contracting state, may only be opposed by the losing party to the arbitration on the limited grounds enumerated under Article V of the New York Convention.
Thus, the next time the above question is posed by parties in the drafting of an arbitral clause, it will be worthwhile to ask these questions: (a) will the foreign place of arbitration save the parties costs and cause them no or minimal inconvenience?; (b) is the foreign place of arbitration a Model Law country?; and (c) is the foreign place of arbitration a contracting state to the New York Convention? If the answer to these is yes, then the parties’ choice of the foreign place of arbitration is a good one.