Rule 4 - JURISDICTION OF THE

ARBITRAL TRIBUNAL

Submitted by:

ARCISO, Diane Gale B.

MARZAN, Dina R.

LL. B. 2C

University of the Cordilleras

ARTICLE 4.16
 COMPETENCE OF ARBITRAL TRIBUNAL TO RULE ON ITS
JJRISDICTION

COMPETENCE OF ARBITRAL TRIBUNAL TO RULE ON ITS

OWN JURISDICTION

The arbitral tribunal may rule on its own jurisdiction,

including any objections with respect to the existence or validity
of the arbitration agreement.

Judicial Determination of Issue of Existence of Validity of

Arbitration Agreement

It is the existence of a valid arbitration agreement binding

between the parties that give an arbitral tribunal the jurisdiction
to hear and decide the dispute between them.

The challenge to the jurisdiction of an arbitral tribunal often

concerns at the threshold the issue of existence, validity and
enforceability of the arbitration agreement.

Determination by Arbitral Tribunal of its Jurisdiction

The thrust of the challenge to a tribunals jurisdiction is that

the arbitral tribunal is not competent to resolve a dispute that
concerns the issue of existence, validity or enforceability of an
arbitration agreement upon which the jurisdiction of the arbitral
tribunal depends.

In determining the jurisdiction of an arbitral tribunal, the

arbitration agreement or arbitration clause should be as an
independent and separate agreement from the container
agreement, and hence, the invalidity of the latter does not
automatically result in the nullity of the former. It is only in the
event that the arbitration agreement or clause is itself void,
inexistent, inoperative that the arbitral tribunals jurisdiction may
be questioned.

A party who do not want to participate in the arbitration

proceeding or who is not nominating its arbitrator to prevent the
constitution of arbitral tribunal and who filed further a case before
a court does not bar to enforce the laws under the Model Law
concerning such situation. The Model Law allows an appointing
authority to appoint an arbitrator for the recalcitrant party and
authorizing the commencement or continuation of the arbitration
even while the issue of jurisdiction of an arbitral tribunal is before
a court.

2 BASIC PRINCIPLES IN INTERNATIONAL COMMERCIAL

ARBITRATION

A. Principle of Separability
The arbitration agreement is separate and distinct from the
main contract.
It is independent of and separate from that contract. A
declaration that the contract is null and void does not entail
ipso jure the invalidity of the arbitration clause.
B. Principle of Competence-competence
A tribunal is competent to rule upon its own jurisdiction,
including any objection with respect to the existence or
validity of the arbitration agreement.

CHALLENGES TO THE COMPETENCY OF THE TRIBUNAL

A. In general
a. Non-existence or invalidity of the arbitration
agreement
 b. Upon the nullity of the contract the breach of which
has resulted in the dispute submitted to arbitration
c. Upon other grounds not specified in the articlei

This article allows the arbitral tribunal, on its own

motion, to rule on the issue of the existence or validity of the
arbitration agreement even without objections from either
party if its own jurisdiction depends upon such
determination.

B. Existence or Validity of the Agreement; the Governing Law of

the agreement
C. Formal Validity of Arbitration Agreement
D. Lack of Legal Capacity to Enter into Agreement
E. Unenforceability of the Agreement
F. Non-Arbitrability of Dispute

APPEAL TO THE RTC

When the arbitral tribunal defers, until after hearing and as

part of its award, a party may appeal its ruling on the issue of
existence, invalidity or enforceability of an arbitration agreement
to a Regional Trial Court with jurisdiction under Model Law Article
16(3). In case an appeal is made, the arbitral tribunal may either
suspend or continue the arbitration proceedings. If it chooses to
continue the arbitration proceedings, it may render an award.

If an issue is one which can be submitted to the court for

determination at the stage where a party applies with the court to
set aside the award under Model Law Article 34(2) (a) (i), the
court can review the issue and the determination of the court on
this issue is further subject to appellate review.

DISPUTES INVOLVING A MIX OF ARBITRABLE AND NON-

ARBITRABLE ISSUES
 In cases when parties request to refer disputes involving a
mix of arbitrable and non-arbitrable issues to arbitration, the
courts have different opinion on whether arbitration should
proceed or not.

Under Section 25 of the ADR Act, the court shall refer to

arbitration those 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. Additionally, Rule
4.7 of the Special ADR Rules provides that the court shall not
decline to refer some or all of the parties to arbitration for any of
the following reasons:

a. Not all of the disputes subject of the civil action may be

referred to arbitration;

b. Not all of the parties to the civil action are bound by the
arbitration agreement and referral to arbitration would
result in multiplicity of suits;

c. The issues raised in the civil action could be speedily

and efficiently resolved in its entirety by the court
rather than in arbitration;

d. Referral to arbitration does not appear to be the most

prudent action; or

e. The stay of the action would prejudice the rights of the

parties to the civil action who are not bound by the
arbitration agreement.

TIMELINESS OF ISSUE OF COMPETENCE

The issue of jurisdiction of an arbitral tribunal may be raised

not later than the filing of the statement of defense or answer of
the respondent or of a motion to dismiss filed by him, unless the
arbitral tribunal considers the delay justified for it to admit a later
plea.

Model Law Article 16(2) provides that: A plea that the

arbitral tribunal does not have jurisdiction shall be raised not later
than the submission of the statement of defense. A party is not
precluded from raising such a plea by the fact that he has
appointed, or has participated in the appointment of, an
arbitrator.

IMMEDIATE JUDICIAL REVIEW OF TRIBUNALS

DETERMINATION ON ITS JURIDICTION

While the policy of limiting court intervention to a minimum

is understood, the International Bar Association (IBA) suggested
that it should not be applied so rigidly as to lead to extreme
situations which may result in unnecessary disruption and delay
of the arbitration proceedings and cost of arbitration to the
parties.

The Special ADR Rules recognize the right of a party to

petition the court for judicial relief from a ruing of the arbitral
tribunal on a preliminary question upholding or declining its
jurisdiction. This petition may be filed within 30 days after having
received notice of that ruling by the arbitral tribunal.

The court shall render judgment on the basis of the

pleadings filed and the evidence, if any, submitted by the parties,
within thirty (30) days from the time the petition is submitted for
resolution. The court shall not enjoin the arbitration proceedings
during the pendency of the petition. Judicial recourse to the court
shall not prevent the arbitral tribunal from continuing the
proceedings and rendering its award. The court shall dismiss the
petition if it fails to comply with Rule 3.16; or if upon
consideration of the grounds alleged and the legal briefs
submitted by the parties, the petition does not appear to be prima
facie meritorious.

The aggrieved party may file a motion for reconsideration of

the order of the court. The decision of the court shall, however,
not be subject to appeal. The ruling of the court affirming the
arbitral tribunals jurisdiction shall not be subject to a petition for
certiorari. The ruling of the court that the arbitral tribunal has no
jurisdiction may be the subject of a petition for certiorari.

Where the arbitral tribunal defers its ruling on preliminary

question regarding its jurisdiction until its final award, the
aggrieved party cannot seek judicial relief to question the deferral
and must await the final arbitral award before seeking appropriate
judicial recourse.

A ruling by the arbitral tribunal deferring resolution on the

issue of its jurisdiction until final award shall not be subject to a
motion for reconsideration, appeal or a petition for certiorari.

If the arbitral tribunal renders a final arbitral award and the

Court has not rendered a decision on the petition from the arbitral
tribunals preliminary ruling affirming its jurisdiction, that petition
shall become ipso facto moot and academic and shall be
dismissed by the Regional Trial Court. The dismissal shall be
without prejudice to the right of the aggrieved party to raise the
same issue in a timely petition to vacate or set aside the award.

OBJECTION THAT TRIBUNAL IS ACTING IN EXCESS OF ITS

JURIDICTION

In case an arbitral tribunal which has jurisdiction in the first

place exceeds the scope of its authority, a party may raise the
objection as soon as the excess of jurisdiction over a matter
alleged to be beyond the scope of its authority becomes
apparent.
 However, where such issue of the arbitral tribunal acting
beyond the scope of its authority is not raised within the said
period, the party affected is precluded from raising it during a
later stage of the proceedings or during the application for its
enforcement and for setting it aside. Yet, there are cases where
the time-bar provided does not apply, which his discussed under
Model Law Articles 34 and 36.

THE ISSUE OF PRECLUSION

The issue of preclusion was not resolved by the Model Law

because it has been left to the State adopting it to deal with the
appropriate procedural rules to apply in the following situations:

a. Where the arbitrability of a dispute is raised in court

before arbitration is initiated, or while it is pending,
and the decision of the court becomes final and
executory, whether such decision precludes wither
party from taking action inconsistent with that
decision;

b. Where the arbitrability of a dispute is raised as a

challenge to the jurisdiction of an arbitral tribunal,
the latter may resolve the issue in one of three ways:
1) grant the motion and declare itself without
jurisdiction, or 2) deny the motion and uphold its
jurisdiction, or 3) defer resolution of the issue until
after hearing on the merits and in its final award;

c. Where request is made to a court to resolve the issue

of arbitrability and consequently the issue of
jurisdiction, and the court resolves it by reversing the
ruling of the arbitral tribunal, the issue is whether the
parties and the arbitral tribunal can continue with the
 arbitration proceedings or the arbitration will be
terminated.

Apart from the question of whether there is a valid

arbitration agreement between the parties at the time arbitration
was initiated, the conduct of a party in participating in the
arbitration proceedings may provide a sufficient independent
basis for concluding that there was acquiescence by the objecting
party to the jurisdiction of the arbitral tribunal. The issue of
preclusion would be properly raised, not on the issue of whether
the ruling of the arbitral tribunal in favor of its jurisdiction has a
preclusive effect, but on the consent implicitly given by a party to
have the dispute submitted to and resolved in the arbitration
proceeding.

ARTICLE 4.17

POWER OF ARBITRAL TRIBUNAL TO ORDER INTERIM

MEASURES

Complementation between arbitration and court action is

best exemplified in the area of interim measures. Interim
measures are ancillary remedies intended for the protection of the
subject matter of the dispute. They include, but are not limited to,
preliminary injunction, appointment of receivers, detention of
property, preservation of property, and inspection of property
subject of the dispute.

As a rule, interim measures are applied with and secured

from the arbitral tribunal. However, there are instances when it
cannot grant the interim measure such as when the arbitral
tribunal is not yet constituted, or when the arbitral tribunal
already constituted has no power to act or is unable to act
effectively. In these instances, a party may apply for interim
measures with a court which may grant them. The petition for this
purpose shall be governed by the Special ADR Rules.

A court cannot refuse to grant, implement or enforce a

petition for an interim measure on the sole ground that the
petition is merely an ancillary relief and the principal action is
pending with the arbitral tribunal. While interim measures are
categorized in the ADR Act and the IRR as ancillary remedies,
they are different from the provisional remedies under the Rules
of Court in that the application for interim measures filed before
the regular courts can stand by themselves despite the pendency
of the arbitration of the principal action before the arbitral
tribunal.

The procedure for granting interim measures in International

Commercial Arbitration is as follows:

1. After the arbitral tribunal has been constituted, any

party may request for the grant of interim measures from
the arbitral tribunal against the adverse party. This request
shall be in writing transmitted by reasonable means to the
arbitral tribunal and the adverse party, describing the
precise relief in appropriate detail, the ground therefor, and
the evidence supporting the request.

2. The relief may be granted in order to:

a. prevent irreparable loss;

b. provide security for the performance of an
obligation;
c. produce or preserve evidence; or
d. compel any other appropriate acts or
omissions.

3. The grant of the interim measure may be conditioned

upon the provision of security or any act or omission
specified in the order.
 4. The order either granting or denying the request for
interim measures shall be binding upon the parties and
either party may apply with the courts for assistance in
implementing or enforcing it.

5. A party who refuses to comply with the order for an

interim measure shall be liable for damages resulting from
non-compliance, including all expenses and reasonable
attorneys fees paid in obtaining the judicial enforcement
thereof. The party who refuses to comply with the court
order compelling compliance with an interim measure may
be cited for indirect contempt of court.

6. Before the constitution of the arbitral tribunal, or to

the extent that the arbitral tribunal already constituted has
no power to act effectively, the interim measure may be
requested from the court in accordance with the Special
Rules of Court on Alternative Dispute Resolution.

SOURCES
A.M. No. 07-11-08-SC. (2009, September 1). Special Rules of Court
on Alternative Dispute Resolution.

Department Circular No. 98. (2009, December 4). Implementing

Rules and Regulations of the Alternative Dispute Resolution
Act of 2004.

Parlade, C. O. (2011). International and Domestic Arbitration.

Quezon City: Central Book Supply, Inc.

Robeniol, G. T. (2012). Alternative Dispute Resolution. Quzon City:

Central Book Supply, Inc.