In its Decision dated June 29, 2016 in G.R. No. 210858, Department of Foreign Affairs v. BCA International Corporation, the Second Division of the Supreme Court ruled that the deliberative process privilege can be invoked in a domestic arbitration under Republic Act No. 9285 (2004), the “Alternative Dispute Resolution Act of 2004.”
In its appeal by way of petition for review to the Supreme Court, the Department of Foreign Affairs (DFA), who was the party respondent in the ad hoc arbitration of its contractual dispute with BCA International Corporation (BCA), invoked deliberative process privilege to assail the resolution of the National Capital Regional Trial Court in Makati City, which granted BCA’s petition to issue subpoenas to former government officials to produce certain documents in their custody and to testify in the arbitration hearings.
However, instead of dismissing the DFA appeal for procedural defects, the Supreme Court partially granted it and remanded the case to the trial court to if the documents sought to be produced in the pending arbitration were protected by the deliberative process privilege.
Citing U.S. jurisprudence, the Supreme Court ruled that the deliberative process privilege protects from disclosure advisory opinions, recommendations, and deliberations comprising part of a process by which government decisions and policies are formulated.
The Supreme Court added that the privilege serves to assure that government officials will feel free to provide the decisionmaker with their uninhibited opinions and recommendations without fear of later being subjected to public ridicule or criticism.
In this light, the Supreme Court ruled that the deliberative process privilege can be invoked in an arbitration under the Alternative Dispute Resolution Act of 2004. Under the Act, orders of an arbitral tribunal are appealable to the courts.
Therefore, if a government official is compelled to testif y before an arbitral tribunal and the order of an arbitral tribunal is appealed to the courts, such official can be inhibited by fear of later being subjected to public criticism, preventing such official from making candid discussions within his or her agency.
BCA has moved the Supreme Court to review and reconsider its ruling because it is contrary to the Alternative Dispute Resolution Act of 2004 and its previous opinions on arbitration.
Traps, tricks, and terrible predicaments in enforcing international arbitral awards in the Philippines
The following is from a lecture by the author at the symposium on “International Commercial Arbitration: Best Practices to Address Traps, Tricks, and Terrible Predicaments” held on May 5, 2016 at the Ateneo de Manila University Law School. Part 2 discusses enforcement of a New York Convention award and the implications of the Supreme Court decision in Tuna Processing, Inc. v. Phil. Kingford, Inc
Enforcement of New York Convention award
In one of the scenarios earlier, the award was made in the Philippines instead of abroad. Can the losing party raise any grounds to resist enforcement of the award if it fails to file a petition to set aside the award within the statutory period of three months from receipt of the award? The answer is no.
Rule 12.2 states: “A petition to set aside can no longer be filed af ter the lapse of the three (3) month period. … Failure to file a petition to set aside shall preclude a party from raising grounds to resist enforcement of the award.”
If the award were made in a country that is signatory to the New York Convention, may the losing party raise any grounds to resist enforcement of the award if he did not file a petition to set aside the award within the three months from receipt of the award? Yes, as in fact filing a petition to set aside a foreign arbitral award is not required under the Special ADR Rules. In fact, Rule 13.4 expressly provides that “(a) Philippine court shall not set aside a foreign arbitral award but may refuse it …” This is where the rules on foreign arbitral awards (referenced to the New York Convention) differ from the rules on international commercial arbitration (referenced to the Model Law) seated in the Philippines.
How differently does the Special ADR Rules treats of an international arbitral award made in the Philippines compared with the one made abroad? With respect to the former, Rule 12.2 provides that “(i)f, however, a timely petition to set aside an arbitral award is filed, the opposing party must file therein and in opposition thereto the petition for recognition and enforcement of the same award within the period for filing an opposition.”
Firstly, no such rule is provided with respect to an international arbitral award made abroad. Secondly, the said provision appears to prevent multiplicity of suits, which only makes sense to the Philippine court functioning as both the supervising court and the enforcing court.
It is probably in the same breadth that Rule 12.2 provides that “(a) petition to set aside can no longer be filed af ter the lapse of the three (3) month period. … Failure to file a petition to set aside shall preclude a party from raising grounds to resist enforcement of the award.”
Let us assume that the party in Tuna Processing against whom the award is being enforced filed with the Supreme Court a motion for reconsideration of its ruling, arguing that the rules on international award for the one made in the Philippines