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REPUBLIC ACTS
AN ACT TO INSTITUTIONALIZE THE USE
OF AN ALTERNATIVE DISPUTE RESOLUTION SYSTEM IN THE PHILIPPINES AND TO
ESTABLISH THE OFFICE FOR ALTERNATIVE DISPUTE RESOLUTION, AND FOR OTHER
PURPOSES |
CHAPTER
1 Section 1. Title. - This act shall be known as the "Alternative Dispute Resolution Act of 2004." Sec. 2. Declaration of Policy. - it is hereby declared the policy of the State to actively promote party autonomy in the resolution of disputes or the freedom of the party to make their own arrangements to resolve their disputes. Towards this end, the State shall encourage and actively promote the use of Alternative Dispute Resolution (ADR) as an important means to achieve speedy and impartial justice and declog court dockets. As such, the State shall provide means for the use of ADR as an efficient tool and an alternative procedure for the resolution of appropriate cases. Likewise, the State shall enlist active private sector participation in the settlement of disputes through ADR. This Act shall be without prejudice to the adoption by the Supreme Court of any ADR system, such as mediation, conciliation, arbitration, or any combination thereof as a means of achieving speedy and efficient means of resolving cases pending before all courts in the Philippines which shall be governed by such rules as the Supreme Court may approve from time to time. Sec. 3. Definition of Terms. - For purposes of this Act, the term: (a)
"Alternative Dispute Resolution System" means any process or procedure
used to resolve a dispute or controversy, other than by adjudication of
a presiding judge of a court or an officer of a government agency, as
defined in this Act, in which a neutral third party participates to
assist in the resolution of issues, which includes arbitration,
mediation, conciliation, early neutral evaluation, mini-trial, or any
combination thereof; Sec. 4. Electronic Signatures in Global and E-Commerce Act. - The provisions of the Electronic Signatures in Global and E-Commerce Act, and its implementing Rules and Regulations shall apply to proceeding contemplated in this Act. Sec. 5. Liability of ADR Provider and Practitioner. - The ADR providers and practitioners shall have the same civil liability for the Acts done in the performance of then duties as that of public officers as provided in Section 38 (1), Chapter 9, Book of the Administrative Code of 1987. Sec. 6. Exception to the Application of this Act. - The provisions of
this Act shall not apply to resolution or settlement of the following:
(a) labor disputes covered by Presidential Decree No. 442, otherwise
known as the Labor Code of the Philippines, as amended and its
Implementing Rules and Regulations; (b) the civil status of persons;
(c) the validity of a marriage; (d) any ground for legal separation;
(e) the jurisdiction of courts; (f) future legitime; (g) criminal
liability; and (h) those which by law cannot be compromised. CHAPTER
2 Sec. 7. Scope. - The provisions of this Chapter shall cover voluntary mediation, whether ad hoc or institutional, other than court-annexed. The term "mediation' shall include conciliation. Sec. 8. Application and Interpretation. - In applying construing the provisions of this Chapter, consideration must be given to the need to promote candor or parties and mediators through confidentiality of the mediation process, the policy of fostering prompt, economical, and amicable resolution of disputes in accordance with the principles of integrity of determination by the parties, and the policy that the decision-making authority in the mediation process rests with the parties. Sec. 9. Confidentiality of Information. - Information obtained through
mediation proceedings shall be subject to the following principles and
guidelines: (a)
Information obtained through mediation shall be privileged and
confidential. (1)
the parties to the dispute; (f) a mediator may not be called to testify to provide information gathered in mediation. A mediator who is wrongfully subpoenaed shall be reimbursed the full cost of his attorney's fees and related expenses. Sec. 10. Waiver of Confidentiality. - A privilege arising from the confidentiality of information may be waived in a record, or orally during a proceeding by the mediator and the mediation parties. A privilege arising from the confidentiality of information may likewise be waived by a nonparty participant if the information is provided by such nonparty participant. A person who discloses confidential information shall be precluded from asserting the privilege under Section 9 of this Chapter to bar disclosure of the rest of the information necessary to a complete understanding of the previously disclosed information. If a person suffers loss or damages in a judicial proceeding against the person who made the disclosure. A person who discloses or makes a representation about a mediation is preclude from asserting the privilege under Section 9, to the extent that the communication prejudices another person in the proceeding and it is necessary for the person prejudiced to respond to the representation of disclosure. Sec. 11. Exceptions to Privilege. - (a)
There is no privilege against disclosure under Section 9 if mediation
communication is: (1)
in an agreement evidenced by a record authenticated by all parties to
the agreement; (1)
a court proceeding involving a crime or felony; or (c) A mediator may not be compelled to provide evidence of a mediation communication or testify in such proceeding. (d) If a mediation communication is not privileged under an exception in subsection (a) or (b), only the portion of the communication necessary for the application of the exception for nondisclosure may be admitted. The admission of particular evidence for the limited purpose of an exception does not render that evidence, or any other mediation communication, admissible for any other purpose. Sec. 12. Prohibited Mediator Reports. - A mediator may not make a report, assessment, evaluation, recommendation, finding, or other communication regarding a mediation to a court or agency or other authority that make a ruling on a dispute that is the subject of a mediation, except: (a)
Where the mediation occurred or has terminated, or where a settlement
was reached. Sec. 13. Mediator's Disclosure and Conflict of Interest. - The mediation shall be guided by the following operative principles: (a)
Before accepting a mediation, an individual who is requested to serve
as a mediator shall: (1)
make an inquiry that is reasonable under the circumstances to
determinate whether there are any known facts that a reasonable
individual would consider likely to affect the impartiality of the
mediator, including a financial or personal interest in the outcome of
the mediation and any existing or past relationship with a party or
foreseeable participant in the mediation; and (b) If a mediation learns any fact described in paragraph (a) (1) of this section after accepting a mediation, the mediator shall disclose it as soon as practicable. At the request of a mediation party, an individual who is requested to serve as mediator shall disclose his/her qualifications to mediate a dispute. This Act does not require that a mediator shall have special qualifications by background or profession unless the special qualifications of a mediator are required in the mediation agreement or by the mediation parties. Sec. 14. Participation in Mediation. - Except as otherwise provided in this Act, a party may designate a lawyer or any other person to provide assistance in the mediation. A lawyer of this right shall be made in writing by the party waiving it. A waiver of participation or legal representation may be rescinded at any time. Sec. 15. Place of Mediation. - The parties are free to agree on the place of mediation. Failing such agreement, the place of mediation shall be any place convenient and appropriate to all parties. Sec. 16. Effect of Agreement to Submit Dispute to Mediation Under
Institutional Rules. - An agreement to submit a dispute to mediation by
any institution shall include an agreement to be bound by the internal
mediation and administrative policies of such institution. Further, an
agreement to submit a dispute to mediation under international
mediation rule shall be deemed to include an agreement to have such
rules govern the mediation of the dispute and for the mediator, the
parties, their respective counsel, and nonparty participants to abide
by such rules. Sec. 17. Enforcement of Mediated Settlement Agreement. - The mediation
shall be guided by the following operative principles: (a)
A settlement agreement following successful mediation shall be prepared
by the parties with the assistance of their respective counsel, if any,
and by the mediator. CHAPTER
3 Sec. 18. Referral of Dispute to other ADR Forms. - The parties may agree to refer one or more or all issues arising in a dispute or during its pendency to other forms of ADR such as but not limited to (a) the evaluation of a third person or (b) a mini-trial, (c) mediation-arbitration, or a combination thereof. For purposes of this Act, the use of other ADR forms shall be governed by Chapter 2 of this Act except where it is combined with arbitration in which case it shall likewise be governed by Chapter 5 of this Act. CHAPTER
4 Sec. 19. Adoption of the Model Law on International Commercial Arbitration. - International commercial arbitration shall be governed by the Model Law on International Commercial Arbitration (the "Model Law") adopted by the United Nations Commission on International Trade Law on June 21, 1985 (United Nations Document A/40/17) and recommended approved on December 11, 1985, copy of which is hereto attached as Appendix "A". Sec. 20. Interpretation of Model Law. - In interpreting the Model Law, regard shall be had to its international origin and to the need for uniformity in its interpretation and resort may be made to the travaux preparatories and the report of the Secretary General of the United Nations Commission on International Trade Law dated March 25, 1985 entitled, "International Commercial Arbitration: Analytical Commentary on Draft Trade identified by reference number A/CN. 9/264." Sec. 21. Commercial Arbitration. - An arbitration is "commercial" if it covers matters arising from all relationships of a commercial nature, whether contractual or not. Relationships of a transactions: any trade transaction for the supply or exchange of goods or services; distribution agreements; construction of works; commercial representation or agency; factoring; leasing, consulting; engineering; licensing; investment; financing; banking; insurance; joint venture and other forms of industrial or business cooperation; carriage of goods or passengers by air, sea, rail or road. Sec. 22. Legal Representation in International Arbitration. - In international arbitration conducted in the Philippines, a party may be presented by any person of his choice. Provided, that such representative, unless admitted to the practice of law in the Philippines, shall not be authorized to appear as counsel in any Philippine court, or any other quasi-judicial body whether or not such appearance is in relation to the arbitration in which he appears. Sec. 23. Confidential of Arbitration Proceedings. - The arbitration proceedings, including the records, evidence and the arbitral award, shall be considered confidential and shall not be published except (1) with the consent of the parties, or (2) for the limited purpose of disclosing to the court of relevant documents in cases where resort to the court is allowed herein. Provided, however, that the court in which the action or the appeal is pending may issue a protective order to prevent or prohibit disclosure of documents or information containing secret processes, developments, research and other information where it is shown that the applicant shall be materially prejudiced by an authorized disclosure thereof. Sec. 24. Referral to Arbitration. - A court before which an action is brought in a matter which is the subject matter of an arbitration agreement shall, if at least one party so requests not later that the pre-trial conference, or upon the request of both parties thereafter, refer the parties to arbitration unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed. Sec. 25. Interpretation of the Act. - In interpreting the Act, the court shall have due regard to the policy of the law in favor of arbitration. Where action is commenced by or against multiple parties, one or more of whom are parties who are bound by the arbitration agreement although the civil action may continue as to those who are not bound by such arbitration agreement. Sec. 26. Meaning of "Appointing Authority." - "Appointing Authority" as used in the Model Law shall mean the person or institution named in the arbitration agreement as the appointing authority; or the regular arbitration arbitration institution under whose rules the arbitration is agreed to be conducted. Where the parties have agreed to submit their dispute to institutional arbitration rules, and unless they have agreed to a different procedure, they shall be deemed to have agreed to procedure under such arbitration rules for the selection and appointment of arbitrators. In ad hoc arbitration, the default appointment of an arbitrator shall be made by the National President of the Integrated Bar of the Philippines (IBP) or his duly authorized representative. Sec. 27. What Functions May be Performed by Appointing Authority. - The functions referred to in Articles 11(3), 11(4), 13(3) and 14(1) of the Model Law shall be performed by the Appointing Authority, unless the latter shall fail or refuse to act within thirty (30) days from receipt of the request in which case the applicant may renew the application with the Court. Sec. 28. Grant of Interim Measure of Protection. - (a)
It is not incompatible with an arbitration agreement for a party to
request, before constitution of the tribunal, from a Court an interim
measure of protection and for the Court to grant such measure. After
constitution of the arbitral tribunal and during arbitral proceedings,
a request for an interim measure of protection or modification thereof,
may be made with the arbitral tribunal or to the extent that the
arbitral tribunal has no power to act or is unable to act effectively,
the request may be made with the Court. The arbitral tribunal is deemed
constituted when the sole arbitrator or the third arbitrator who has
been nominated, has accepted the nomination and written communication
of said nomination and acceptance has been received by the party making
request. (1)
Any party may request that provision relief be granted against the
adverse party: (i)
to prevent irreparable loss or injury: (4) Interim or provisional relief is requested by written application transmitted by reasonable means to the Court or arbitral tribunal as the case may be and the party against whom the relief is sought, describing in appropriate detail the precise relief, the party against whom the relief is requested, the grounds for the relief, and evidence supporting the request. (5) The order shall be binding upon the parties. (6) Either party may apply with the Court for assistance in Implementing or enforcing an interim measure ordered by an arbitral tribunal. (7) A party who does not comply with the order shall be liable for all damages resulting from noncompliance, including all expenses, and reasonable attorney's fees, paid in obtaining the order's judicial enforcement. Sec. 29. Further Authority for Arbitrator to Grant Interim Measure of Protection. - Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order any party to take such interim measures of protection as the arbitral tribunal may consider necessary in respect of the subject matter of the dispute following the rules in Section 28, paragraph 2. Such interim measures may include but shall not be limited to preliminary injunction directed against a party, appointment of receivers or detention, preservation, inspection of property that is the subject of the dispute in arbitration. Either party may apply with the Court for assistance in implementing or enforcing an interim measures ordered by an arbitral tribunal. Sec. 30. Place of Arbitration. - The parties are free to agree on the
place of arbitration. Failing 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. Sec. 31. Language of the Arbitration. - The parties are free to agree
on the language or languages to be used in the arbitral proceedings.
Failing such agreement, the language to be used shall be English in
international arbitration, and English or Filipino for domestic
arbitration, unless the arbitral tribunal shall determine a different
or another language or languages to be used in the proceedings. This
agreement or determination, unless otherwise specified therein, shall
apply to any written statement by a party, any hearing and any award,
decision or other communication by the arbitral tribunal. CHAPTER
5 Sec. 32. Law Governing Domestic Arbitration. - Domestic arbitration shall continue to be governed by Republic Act No. 876, otherwise known as "The Arbitration Law" as amended by this Chapter. The term "domestic arbitration" as used herein shall mean an arbitration that is not international as defined in Article (3) of the Model Law. Sec. 33. Applicability to Domestic Arbitration. - Article 8, 10, 11,
12, 13, 14, 18 and 19 and 29 to 32 of the Model Law and Section 22 to
31 of the preceding Chapter 4 shall apply to domestic arbitration. CHAPTER
6 Sec. 34. Arbitration of Construction Disputes: Governing Law. - The arbitration of construction disputes shall be governed by Executive Order No. 1008, otherwise known as the Constitution Industry Arbitration Law. Sec. 35. Coverage of the Law. - Construction disputes which fall within
the original and exclusive jurisdiction of the Construction Industry
Arbitration Commission (the "Commission") shall include those between
or among parties to, or who are otherwise bound by, an arbitration
agreement, directly or by reference whether such parties are project
owner, contractor, subcontractor, quantity surveyor, bondsman or issuer
of an insurance policy in a construction project. Sec. 36. Authority to Act as Mediator or Arbitrator. - By written agreement of the parties to a dispute, an arbitrator may act as mediator and a mediator may act as arbitrator. The parties may also agree in writing that, following a successful mediation, the mediator shall issue the settlement agreement in the form of an arbitral award. Sec. 37. Appointment of Foreign Arbitrator. - The Construction Industry
Arbitration Commission (CIAC) shall promulgate rules to allow for the
appointment of a foreign arbitrator or coarbitrator or chairman of a
tribunal a person who has not been previously accredited by CIAC:
Provided, That: (a)
the dispute is a construction dispute in which one party is an
international party Sec. 39. Court to Dismiss Case Involving a Construction Dispute. - A
regional trial court which a construction dispute is filed shall, upon
becoming aware, not later than the pretrial conference, that the
parties had entered into an arbitration to be conducted by the CIAC,
unless both parties, assisted by their respective counsel, shall submit
to the regional trial court a written agreement exclusive for the
Court, rather than the CIAC, to resolve the dispute. CHAPTER
7 A.
DOMESTIC AWARDS Sec. 40. Confirmation of Award. - The confirmation of a domestic arbitral award shall be governed by Section 23 of R.A. 876. A domestic arbitral award when confirmed shall be enforced in the same manner as final and executory decisions of the Regional Trial Court. The confirmation of a domestic award shall be made by the regional trial court in accordance with the Rules of Procedure to be promulgated by the Supreme Court. A CIAC arbitral award need not be confirmed by the regional trial court to be executory as provided under E.O. No. 1008. Sec. 41. Vacation Award. - A party to a domestic arbitration may
question the arbitral award with the appropriate regional trial court
in accordance with the rules of procedure to be promulgated by the
Supreme Court only on those grounds enumerated in Section 25 of
Republic Act No. 876. Any other ground raised against a domestic
arbitral award shall be disregarded by the regional trial court. B.
FOREIGN ARBITRAL AWARDS Sec. 42. Application of the New York Convention. - The New York Convention shall govern the recognition and enforcement of arbitral awards covered by the said Convention. The recognition and enforcement of such arbitral awards shall be filled with regional trial court in accordance with the rules of procedure to be promulgated by the Supreme Court. Said procedural rules shall provide that the party relying on the award or applying for its enforcement shall file with the court the original or authenticated copy of the award and the arbitration agreement. If the award or agreement is not made in any of the official languages, the party shall supply a duly certified translation thereof into any of such languages. The applicant shall establish that the country in which foreign arbitration award was made is a party to the New York Convention. If the application for rejection or suspension of enforcement of an award has been made, the regional trial court may, if it considers it proper, vacate its decision and may also, on the application of the party claiming recognition or enforcement of the award, order the party to provide appropriate security. Sec. 43. Recognition and Enforcement of Foreign Arbitral Awards Not Covered by the New York Convention. - The recognition and enforcement of foreign arbitral awards not covered by the New York Convention shall be done in accordance with procedural rules to be promulgated by the Supreme Court. The Court may, grounds of comity and reciprocity, recognize and enforce a nonconvention award as a convention award. Sec. 44. Foreign Arbitral Award Not Foreign Judgment. - A foreign
arbitral award when confirmed by a court of a foreign country, shall be
recognized and enforced as a foreign arbitral award and not a judgment
of a foreign court. Sec. 45. Rejection of a Foreign Arbitral Award. - A party to a foreign arbitration proceeding may oppose an application for recognition and enforcement of the arbitral award in accordance with the procedural rules to be promulgated by the Supreme Court only on those grounds enumerated under Article V of the New York Convention. Any other ground raised shall be disregarded by the regional trial court. Sec. 46. Appeal from Court Decisions on Arbitral Awards. - A decision
of the regional trial court confirming, vacating, setting aside,
modifying or correcting an arbitral award may be appealed to the Court
of Appeals in accordance with the rules of procedure to be promulgated
by the Supreme Court. Sec. 47. Venue and Jurisdiction. - Proceedings for recognition and enforcement of an arbitration agreement or for vacation, setting aside, correction or modification of an arbitral award, and any application with a court for arbitration assistance and supervision shall be deemed as special proceedings and shall be filled with the regional trial court (i) where arbitration proceedings are conducted; (ii) where the asset to be attached or levied upon, or the act to be enjoined is located; (iii) where any of the parties to the dispute resides or has his place of business; or (iv) in the National Judicial Capital Region, at the option of the applicant. Sec. 48. Notice of Proceeding to Parties. - In a special proceeding for
recognition and enforcement of an arbitral award, the Court shall send
notice to the parties at their address of record in the arbitration, or
if any party cannot be served notice at such address, at such party's
last known address. The notice shall be sent at least fifteen (15) days
before the date set for the initial hearing of the application. CHAPTER
8 Sec. 49. Office for Alternative Dispute Resolution. - There is hereby established the Office for Alternative Dispute Resolution as an attached agency to the Department of Justice (DOJ) which shall have a Secretariat to be headed by an executive director. The executive director shall be appointed by the President of the Philippines. The objective of the office are: (a)
to promote, develop and expand the use of ADR in the private and public
sectors; and (a)
To formulate standards for the training of the ADR practitioners and
service providers; Sec. 51. Appropriations. - The amount necessary to carry out the provisions of this Act shall be included in the General Appropriations Act of the year following its enactment into law and thereafter. Sec. 52. Implementing Rules and Regulations (IRR). - Within one (1)
month after the approval of this Act, the secretary of justice shall
convene a committee that shall formulate the appropriate rules and
regulations necessary for the implementation of this Act. The
committee, composed of representatives from: (a)
the Department of Justice;
The Joint Oversight Committee shall become functus officio upon approval of the IRR. Sec. 53. Applicability of the Katarungan Pambarangay. - This Act shall not be interpreted to repeal, amend or modify the jurisdiction of the Katarungan Pambarangay under Republic Act No. 7160, otherwise known as the Local Government Code of 1991. Sec. 54. Repealing Clause. - All laws, decrees, executive orders, rules and regulations which are inconsistent with the provisions of this Act are hereby repealed, amended or modified accordingly. Sec. 55. Separability Clause. - If for any reason or reasons, any portion or provision of this Act shall be held unconstitutional or invalid, all other parts or provisions not affected shall thereby continue to remain in full force and effect. Sec. 56. Effectivity. - This act shall take effect fifteen days (15)
after its publication in at least two (2) national newspapers of
general circulation. Approved: April 2, 2004 |
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