Arbitration for intra-corporate disputes (2)

To continue the previous article on the guidelines for arbitration of intra-corporate disputes for corporations, we now move on to the salient portions on the appointment procedure of arbitrators, prohibitions and disclosure requirements for arbitrators, and the procedure for challenging an appointment of an arbitrator. Republic Act 11232, otherwise known as the Revised Corporation Code provides that an arbitration agreement, to be enforceable, should indicate the number of arbitrators and the procedure for appointment.

Appointment procedure of arbitrators

As stated in the previous article, a designated independent third party will have the power to appoint the arbitrator or arbitrators forming the arbitral tribunal, under the parties’ agreed procedure. The guidelines further provided that the parties are deemed to have agreed on an appointment procedure if:

(a) the arbitration agreement provides for the application of a set of arbitration rules that include an appointment procedure and a designated appointing authority; or

(b) the arbitration agreement expressly provides an appointment procedure, which requires the parties’ designated independent third party to appoint an arbitrator or arbitrators.

In the absence of an agreement on the procedure for appointing arbitrators, the arbitration shall proceed under the Alternative Dispute Resolution Act if the seat or place of arbitration is the Philippines, or under the relevant arbitration law if otherwise.

If such designated appointing authority failed to select the arbitrator/s in the manner or within the period specified in the arbitration agreement, a party may request the SEC to appoint the arbitrator/s.

The SEC shall make the appointment upon written request from a party to the arbitration, having regard to:

i. the nature of the dispute;

ii. whether the arbitrators who possess the required qualifications would be available to accept the appointment;

iii. the identity and nationality of the parties to the arbitration agreement;

iv. any considerations in respect of the independence and impartiality of the person to be appointed as an arbitrator;

v. any stipulations in the relevant agreement; and

vi. any suggestions made by the parties themselves.

Before appointing an arbitrator, the SEC shall allow the other party to give any written information that the other party considers relevant to the request for the arbitrator’s appointment, including its objections thereto.

Prohibition on communication with a candidate arbitrator

The guidelines prohibit a party or any person acting on its behalf from communicating with any candidate for an appointment as an arbitrator without notice to the other party. An exception would be a discussion on the candidate’s qualifications, availability, or independence of the parties.

Disclosure requirements for arbitrators

A person who has been approached for his or her possible appointment as an arbitrator shall disclose any circumstances likely to give rise to justifiable doubts about his or her impartiality or independence to the case.

Challenging the arbitrator’s appointment

An arbitrator’s appointment may be challenged by a party to the arbitration if circumstances give rise to justifiable doubts about the arbitrator’s impartiality or independence. A party may also challenge the arbitrator it appointed for reasons of which it becomes aware after the appointment has been made.

A party who intends to challenge an arbitrator who was appointed under these Rules shall send notice of its challenge (“Notice of Challenge”) within 15 days after it has been notified of the appointment of the challenged arbitrator, or within 15 days after the circumstances that give rise to justifiable doubts as to the arbitrator’s impartiality or independence became known to that party.

The other party, who shall have the right to respond to the Notice of Challenge, may do so within 15 days from receipt of such notice copy furnished to the Commission, the arbitrators, and the other party.

The challenged arbitrator may voluntarily withdraw, and in such case, he or she shall be replaced without implying admission or acceptance of the validity of the grounds raised in the challenge.

If all parties refuse to agree to the challenge, or if the challenged arbitrators choose not to withdraw, the challenger may elect to pursue, by seeking a decision on the challenge from the SEC. In this regard, the SEC’s decision is administrative in nature and shall be final.


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