Arbitration Agreement (Philippines)

An Arbitration Agreement in the Philippines sets out the agreed resolution of the disagreement, defining what each party gives up and what they receive in return.

An Arbitration Agreement differs from an Arbitration Clause in that the agreement is a separate, standalone document executed after the dispute has already arisen, while an arbitration clause is a provision within the original contract executed before any dispute arises. Under Section 3.1 of the PDRCI Domestic Arbitration Rules (2020), both forms satisfy the requirement that an arbitration agreement be in writing under Section 2 of RA 9285. The distinction matters in practice because parties disputing an existing matter may need a standalone agreement when their original contract contained no arbitration clause.

The Construction Industry Arbitration Commission (CIAC) under Executive Order No. 1008 (1985) handles construction disputes; the Philippine Dispute Resolution Center, Inc. (PDRCI) handles general commercial disputes; and the International Chamber of Commerce (ICC) International Court of Arbitration handles international commercial disputes involving Philippine parties. The Philippine courts — through the Regional Trial Court designated as Special Commercial Court — perform a supervisory role over arbitral proceedings, handling applications for interim relief, confirmation of awards, and recognition of foreign awards under the New York Convention (1958).

The Supreme Court in Korea Technologies Co., Ltd. v. Lerma (G.R. No. 143581, January 7, 2008) held that Philippine courts must give effect to arbitration agreements and should not allow one party to circumvent an arbitration agreement by filing suit in the regular courts. The tribunal's competence to rule on its own jurisdiction (kompetenz-kompetenz) is recognized under Section 3.3 of the PDRCI Rules.

The legal framework governing the Arbitration Agreement (Philippines) in Philippines draws on several key statutes and regulatory bodies. Under Philippine law, the Civil Code of the Philippines (Republic Act No. 386) governs contractual obligations. The Revised Corporation Code (Republic Act No. 11232) regulates corporate entities through the Securities and Exchange Commission (SEC). The Labor Code of the Philippines (Presidential Decree No. 442) and Department of Labor and Employment (DOLE) govern employment matters. The Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission (NPC) protect personal data. The Bureau of Internal Revenue (BIR) administers tax obligations under the National Internal Revenue Code. Parties executing a Arbitration Agreement (Philippines) in Philippines should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Revised Corporation Code (RA 11232, 2019) sets the foundational requirements.

An Arbitration Agreement in the Philippines is needed when parties to an existing dispute wish to resolve it through arbitration but their original contract did not contain an arbitration clause.

An Arbitration Agreement is needed when two business entities — such as a Philippine corporation and a foreign investor — have an existing contract dispute and want to avoid the delays and publicity of the Philippine court system. Filing a case before the Regional Trial Court in Metro Manila typically takes 5-10 years to final resolution; PDRCI arbitration typically concludes within 9-18 months under its expedited rules.

An Arbitration Agreement is needed when the parties' original contract only contained a mediation clause and mediation has failed. Under Section 3 of RA 9285, parties who fail to settle through mediation may escalate to arbitration through a new written agreement, preserving the private and confidential nature of the dispute resolution process.

An Arbitration Agreement is needed in commercial disputes between a Philippine company and a foreign company where the foreign party insists on neutral international arbitration under UNCITRAL or ICC rules to avoid perceived home-court advantage before Philippine courts.

An Arbitration Agreement is needed in disputes between shareholders of a Philippine corporation under the Revised Corporation Code (Republic Act No. 11232, 2019) regarding intra-corporate disputes. Under Section 181 of RA 11232, corporations may adopt arbitration agreements in their articles of incorporation or bylaws to cover intra-corporate disputes.

An Arbitration Agreement is needed when parties to a failed joint venture under the Civil Code need to submit asset valuation, profit sharing, or dissolution terms to a neutral technical expert acting as arbitrator, avoiding the generalist approach of Regional Trial Court judges unfamiliar with industry-specific valuation methods.

A valid Arbitration Agreement for the Philippines under Republic Act No. 9285 and A.M. No. 07-11-08-SC must contain the following essential elements.

Written Form: The agreement must be in writing under Section 2 of RA 9285. An exchange of emails, letters, or other telecommunications that records the parties' agreement to arbitrate satisfies this requirement under Section 3.3 of the PDRCI Rules (2020).

Parties and Capacity: Full legal names, addresses, and capacity of all parties. Corporate parties must be identified by SEC registration number and authorized signatory under the Revised Corporation Code (RA 11232). Individuals must be of legal age (18 years) under the Family Code (Executive Order No. 209).

Description of Existing Dispute: A clear, specific description of the dispute being submitted to arbitration — including the nature of the claim (contractual, tortious, statutory), the approximate amount in controversy in Philippine pesos (PHP ₱), and the date the dispute arose. This distinguishes the agreement from an arbitration clause, which covers future disputes.

Choice of Arbitral Institution: Name the institution: PDRCI for domestic commercial disputes (PDRCI Arbitration Rules, 2020); CIAC for construction disputes (CIAC Revised Rules of Procedure, 2020, under EO 1008); ICC International Court of Arbitration for international disputes; or ad hoc arbitration under UNCITRAL Arbitration Rules (2013). State the applicable rules by name and version.

Seat and Venue: Specify the seat of arbitration (city and country), which determines the supervisory court. For domestic arbitration in the Philippines, the seat determines which Regional Trial Court acting as Special Commercial Court has supervisory jurisdiction under Rule 1.2 of A.M. No. 07-11-08-SC.

Number and Qualifications of Arbitrators: State the number of arbitrators — typically one for smaller disputes (below PHP 5,000,000) and three for larger disputes — and any specific qualifications required (e.g., licensed Philippine lawyer, accredited CIAC arbitrator, certified public accountant for accounting disputes).

Language and Governing Law: Specify English or Filipino as the language of proceedings. State the substantive law governing the dispute (Civil Code of the Philippines, RA 9285, or other applicable statute).

Costs and Fees: Allocate arbitration fees between the parties. PDRCI administrative fees are based on the amount in dispute under the PDRCI Schedule of Fees (2020). Each party typically pays its own legal fees unless the award provides otherwise.

Additional compliance elements for a Arbitration Agreement (Philippines) used in Philippines include: Under Philippine law, the Civil Code of the Philippines (Republic Act No. 386) governs contractual obligations. The Revised Corporation Code (Republic Act No. 11232) regulates corporate entities through the Securities and Exchange Commission (SEC). The Labor Code of the Philippines (Presidential Decree No. 442) and Department of Labor and Employment (DOLE) govern employment matters. The Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission (NPC) protect personal data. The Bureau of Internal Revenue (BIR) administers tax obligations under the National Internal Revenue Code. Forms-legal.com provides this template as a starting point for Philippines-compliant documentation.