Basic FAQ for Arbitration Clauses for SME Business Contracts (v.2022-1)
If your contract has an arbitration clause, resort to arbitration becomes mandatory if (or when) there is conflict between the contracting parties.
Neither party will be allowed to bring the matter to courts. The issue will have to be resolved through arbitration.
It is an alternative mode of dispute resolution.
Arbitration is generally faster and cheaper than litigation with the courts. Often times, for business transactions, speed in resolution of disputes is very important.
There are arbitration centers like the Philippine Dispute Resolution Center (PDRCI). But, parties are free to choose the venue for arbitration.
The parties are free to choose what rules to apply. The PDRCI, mentioned earlier has its own set of rules. Parties may choose to adopt those rules.
The parties can choose the arbitrators. One common method is for each party to choose an impartial arbitrator and for the two arbitrators to choose a third arbitrator. Some parties choose only a single arbitrator.
Yes. The winning party can ask the courts to enforce the award.
No. However, the courts can vacate the award for a very limited set of reasons.
Partiality/corruption; the arbitral award was procured through fraud; prejudicial misconduct of the arbitral tribunal are some of the examples.
The parties can choose the procedure, and thus, can also choose how long the arbitration will take. The entire process can be a few weeks or months.
Typically, a case with the Regional Trial Court can last for two years. Then, the appeals can last for another four to five years.