Comparative Analysis of the Philippine Arbitration Law and the UNCITRAL Model Law on

International Commercial Arbitration (Part I)

I. Introduction
This paper presents a comparative analysis of two arbitration laws, namely, Republic Act No. 876, otherwise
known as the Philippine Arbitration Law and the United Nations Commission on International Trade Law
(UNCITRAL) Model Law on International Commercial Arbitration. The former was enacted on June 19, 1953
while the latter was approved by the United Nations General Assembly on December 11, 1985.
The growing need for a law regulating arbitration in general was acknowledged when R.A. No. 876 was
passed. Said Act was adopted to supplement and not to supplant the New Civil Code provisions on arbitration.
With its enactment, the Philippine Supreme Court stated in a case that Congress had officially adopted the
modern view that arbitration as an inexpensive, speedy and amicable method of settling disputes and as a
means of avoiding litigation should receive every encouragement from the courts.
On the other hand, the UN General Assembly recommended that all states give due consideration to the
Model Law in view of the desirability of uniformity of the law of arbitral procedures and the specific needs of
international commercial arbitration practice. The twin objectives of the law are the harmonization of national
arbitration laws for international arbitration and the setting up of rules which will meet the present requirements
of international arbitration.
Ii. Major Differences
A) Subject Matter
With respect to the scope of application, the Philippine Arbitration Law differs from the UNCITRAL Model Law
in that the former applies to any controversy existing between the parties involved. The submission or contract
may include questions arising out of valuations, appraisals or other controversies which may be collateral,
incidental, precedent or subsequent to any issue between the parties. The Model Law, on the other hand,
applies only to international arbitration as provided for in Article 1. Said article states:
Article 1. Scope of Application.
This law applies to international commercial arbitration.
The Model Law definition of international commercial arbitration includes situations in which the parties have
their place of business in different states, or in which the place of arbitration or performance is a state different
than that of the parties place of business.
B) Qualifications of Arbitrators
Republic Act No. 876 differs from the Model Law with respect to the requirements of the persons acting as
arbitrators. Under the latter, there are no specific requirements that ought to be possessed by the arbitrator as
the parties are free to agree on his qualifications. Under the Philippine Arbitration Law, on the other hand, the
minimum requirements for the appointment of a person as an arbitrator are that he be of legal age, in full
enjoyment of his civil rights and must know how to read and write. An arbitrator is to be neutral and impartial.
No party shall select as arbitrator any person to act as his champion or to advocate his cause. A ground for the
disqualification of an arbitrator is his personal bias which might prejudice the right of a party to a fair and
impartial award. This bias is presumed where the arbitrator is related by blood or marriage to a party within the
sixth degree; or where he has financial, fiduciary or other interest in the controversy or cause to be decided or
in the result of the proceeding. Under the Model Law, a person may be precluded by a reason of his nationality
from acting as an arbitrator, if such is agreed upon by the parties (Art. 11).
C) Court Intervention
The present Philippine Arbitration Law also differs from the UNCITRAL Model Law on the aspect of court
intervention. Republic Act No. 876 allows broad intervention by the courts. It allows the courts to intervene in
arbitral proceedings and review arbitral awards on the ground of grave abuse of discretion committed by the
Arbitral Tribunal and other grounds. In the case of Chung Fu Industries, Inc. vs. Court of Appeals (206 SCRA
545) involving a special civil action of certiorari, it was held that the Supreme Court will not engage in a review
of the facts found nor even of the law as interpreted or applied by the arbitrator, unless there be on the part of
the arbitrator a grave abuse of discretion or that he has acted without or in excess of jurisdiction. There will be
a judicial review of the award:

(1) When the supposed errors of fact or of law are so patent, gross and prejudicial to a party. (Chung Fu
Industries, Inc. vs. Court of Appeals, 206 SCRA 545).
(2) When the arbitrator failed to apply the agreement of the parties the breach of which gave rise to the dispute
submitted to arbitration. (Chung Fu Industries, Inc. vs. Court of Appeals, 206 SCRA 545).
(3) When the arbitrator gave one party unjustified extra compensation for certain items of work. (Chung Fu
Industries, Inc. vs. Court of Appeals, 206 SCRA 545).
(4) When one party has been deprived of a fair opportunity to present his position before the arbitral tribunal.
(Hi Precision Steel Center, Inc. vs. Lim Kim Steel Builders, Dec. 13, 1993).
(5) When the award was obtained through fraud or corruption of the arbitrator, or there was evident partiality of
the arbitrator, or the arbitrator was guilty of misconduct, or that the arbitrator exceed his powers. (Hi Precision
Steel Center, Inc. vs. Lim Kim Steel Builders, Dec. 13, 1993).
On the other hand, Article 5 of the UNCITRAL Model Law expressly states that no court shall intervene except
where so provided in the law. The only way to question the award or action of the tribunal will be an application
for setting aside the award on the grounds provided for in Article 34 of the said law. The arbitral award may be
set aside by the court only if:
a) the party to the arbitration agreement was under some incapacity;
b) the party was unable to present his case; or
c) the award was beyond the terms of the submission to arbitration; or
d) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement
of the parties.
e) the court finds the subject-matter of the dispute is not capable of settlement by arbitration under the law of
this State; or
f) the award is in conflict with the public policy of the state.
Further, judicial intervention is limited to those aspects relating to the arbitral processes, e.g., the issuance of
provisional relief pending the arbitral proceedings, assistance in the taking of evidence, and enforcement of
arbitral awards. The Model Law limits judicial review in recognition of the limited connection of international
commercial arbitration to any particular domestic legal system. There is, therefore, no provision for appeal to
the courts on substantive matters. Recourse is limited to an application for setting aside the award. Under the
Philippine Arbitration Law, appeal may be taken from a judgment or order confirming the award, or vacating or
modifying it, through a certiorari on questions of law. Judicial review of an arbitral award may be made by
petition under Rule 65 to the Court of Appeals. Although the parties may stipulate that the arbitrators decision
or award shall be final, it has been held in the case of Chung Fu that the finality of the arbitrators award is not
absolute.
D) Status of Arbitration Proceedings
The Philippine Arbitration Law also differs from the Model Law with respect to the status of the arbitration
proceedings when an action is brought before the courts. Under the former, a party to an arbitration
proceeding which questions its actions may go to court and secure a temporary injunction prohibiting the
arbitral tribunal from proceeding with the arbitration until the court has ruled on the action. On the other hand,
under the UNCITRAL Model Law where an action has been brought before a court, arbitral proceedings may
nevertheless be commenced or continued, and an award may be made, while the issue is pending before the
court (Article 8, par.2).
E) Disclosure Requirement
Another aspect wherein the Philippine Arbitration Law differs from the Model Law is on the disclosure
obligations of the arbitrators. Under the former, no person shall serve as an arbitrator if he has financial,
fiduciary or other interest in the controversy or has a personal bias, which might prejudice the right of any party
to a fair and impartial award (Section 10). This, however, does not require prior disclosure as in the Model
Law. Under the Model Law, when a person is approached in connection with his possible appointment as an
arbitrator, he shall disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or
independence. An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall

without delay disclose any such circumstances to the parties unless they have already been informed of them
by him (Article 12, par. 1).

F) Place of Arbitration
With respect to the designation of the place of arbitration there exists a marked difference between the
Philippine Arbitration Law and the UNCITRAL Model Law. The former does not provide for rules on the
designation of the place of arbitration, whereas the latter provides that where the parties have failed to agree
on the place of arbitration, the place shall be determined by the arbitral tribunal having regard to the
circumstances of the case, including the convenience of the parties. It further provides that the arbitral tribunal
may meet at any place it considers appropriate for consultation among its members, for hearing witnesses,
experts of the parties, or for an inspection of goods, other property or documents. Under the Model Law, the
parties are given broad autonomy. Aside from the place of arbitration, the parties can select their own rules of
procedure, including the number of arbitrators, the language of the arbitral proceeding, and the type of hearing
which may either be an oral or written presentation. Subject to certain mandatory provisions, the parties are
free to determine the procedure to be followed by the arbitral tribunal in conducting the proceedings. They may
do so by reference to a set of institutional or ad hoc arbitration rules, or by developing specific procedural rules
tailored to their particular needs.
G) Applicable Law
Another area of difference between the two laws is the designation of the particular law to govern the dispute.
The Philippine Arbitration Law does not specify the procedure for determining the law to govern the case. This
is in marked contrast with the Model Law which provides that the arbitral tribunal shall decide the dispute in
accordance with such rules of law as are chosen by the parties. This authorizes the parties to select not only a
particular jurisdictions law, but the laws of several jurisdictions, or even general international legal principles.
Failing any designation by the parties, the arbitral tribunal shall apply the law determined by the conflict of laws
rules which it considers applicable. In all cases, the arbitral tribunal shall decide in accordance with the terms
of the contract and shall take into account the usages of the trade applicable to the transaction (Article 28).
H) Correction or Interpretation of Award
The Philippine Arbitration Law can be considered deficient for the reason that it does not extend to the arbitral
tribunal the right to correct or modify its award as first resort, unlike the Model Law which authorizes the
parties to apply to the arbitral tribunal for correction or modification of the award. Article 33 of which provides
that:
Within thirty days of receipt of the award, unless another period of time has been agreed upon by the parties,
a party, with notice to the other party, may request the arbitral tribunal to correct in the award any errors in
computation, any clerical or typographical errors or any errors of similar nature.
The Model Law, in addition, allows the parties to request the arbitral tribunal to give an interpretation of a
specific point or part of the award. The same article gives the parties the opportunity to request from the
arbitral tribunal additional awards as to claims presented in the proceedings but omitted from the award.