Multi-party arbitrations in the Philippines

Multi-Party Arbitration is an arbitration involving at least three parties. In the Philippines, various dispute resolution institutions categorically include in their rules of procedure provisions to govern Multi-Party Arbitrations i.e., provisions on joinder and consolidation of proceedings, and rules on the appointment and/or constitution of the arbitration tribunal. Multi-Party Arbitrations are allowed under the respective arbitration rules of the Philippine Dispute Resolution Center, Inc. (PDRCI) and the Philippine International Center for Conflict Resolution (PICCR).

Sections II and III of the 2021 PDRCI Arbitration Rules provide for the rules pertaining to Multiple Party Arbitration proceeding, joinder of parties, and consolidation of arbitrations.

JOINDER
A Request for Joinder shall be submitted no later than the signing of the Terms of Reference in instances where: (a) a party (to an arbitration agreement) wishes to join an additional party to the arbitration, or (b) an additional party wishes to be joined to the arbitration proceeding. The PDRCI or the constituted arbitral tribunal has the power to allow an additional party to be joined to the arbitration if there is a prima facie determination that an arbitration agreement exists and that it binds all the parties and the additional party; or all parties, including the additional party, expressly agree.

However, where an additional party is joined to the arbitration before the arbitral tribunal is constituted, all parties to the arbitration, including the additional party joined, shall decide the constitution of the arbitral tribunal. In the absence of an agreement among them, the PDRCI may revoke the appointment or confirmation of any arbitrator and proceed to appoint the new arbitrators. Where all the parties, including the additional party, expressly agree to the joinder, they also agree to accept any appointment or confirmation already made or the constitution of the arbitral tribunal.

The parties also waive any objection to the validity or enforcement of any award made by the arbitral tribunal, including the validity of its constitution, on the basis of its decision to join an additional party to the arbitration, in so far as such waiver can be validly made.

Under the 2021 PDRCI Arbitration Rules, in an arbitration with multiple parties, claims may be made by any party against any other party, subject to the pleas as to the Jurisdiction of the Arbitral Tribunal. Further, no new claims may be made after the Terms of Reference are signed, except for allowable amendments/supplements, and/or when there is any reservation of the arbitral tribunal’s authority to clarify or refine issues in the course of the arbitral proceedings.

CONSOLIDATION
The PDRCI shall have the power, at the request of a party and after consulting with the parties and any confirmed arbitrators, to consolidate two or more arbitrations (Request for Consolidation), where: (a) the parties agree to consolidate; or (b) all the claims in the arbitrations are made under the same arbitration agreement; or (c) the claims are made under more than one arbitration agreement, a common question of law or fact arises in both or all of the arbitrations, the rights to relief claimed are in respect of, or arise out of, the same transaction or series of transactions, and the PDRCI finds the arbitration agreements to be compatible.

In deciding whether to consolidate, the PDRCI shall take into account all relevant circumstances including, but not limited to, whether one or more arbitrators have been appointed or confirmed in more than one of the arbitrations, and if so, whether the arbitrators are the same.

Where the PDRCI decides to consolidate two or more arbitrations, the arbitrations shall be consolidated into the arbitration that commenced first, unless all parties agree or PDRCI decides otherwise, taking into account the circumstances of the case.

In case of consolidation of arbitrations, the parties to all such arbitrations shall be deemed to have waived their right to designate an arbitrator. The PDRCI may revoke the appointment or confirmation of any arbitrator and proceed to appoint the arbitral tribunal of the consolidated arbitrations, without prejudice to the appointment of the same arbitrators. The consolidation of two or more arbitrations shall not affect the validity of any act done or order made by a court in support of the arbitration before it was consolidated.

However, the revocation of the appointment or confirmation of the arbitrators shall not affect: (a) the validity of acts done or orders made by the arbitral tribunal before the appointment or confirmation was revoked; (b) their entitlement to their fees and expenses; and (c) the date when any claim or defense was raised, for the purpose of applying any statute of limitations or any similar rule or provision.

Moreover, the parties waive any objection to the validity or enforcement of any award made by the arbitral tribunal on the basis of the decision to consolidate proceedings, including the validity of its constitution, insofar as such waiver can validly be made.

PICCR RULES
Articles 7, 8, 10, and related Articles of the PICCR Handbook and Arbitration Rules govern Multiple Parties and consolidation.

Where there are more than two parties to the arbitration, the arbitration shall proceed between those of the parties, including any additional parties joined, with respect to which the PICCR is prima facie satisfied that an arbitration agreement under the Rules that binds them all may exist.

A party wishing to join an additional party to the arbitration shall submit its request for arbitration against the additional party (the Request for Joinder), but no additional party may be joined after the confirmation or appointment of any arbitrator, unless all parties, including the additional party, otherwise agree. The PICCR’s Secretariat may fix a time limit for the submission of a Request for Joinder.

Same as with the PDRCI, in an arbitration with multiple parties, claims may be made by any party against any other party, and provided that no new claims may be made after the Terms of Reference are signed or approved by the PICCR without the authorization of the arbitral tribunal.

CONSOLIDATION
The PICCR may, at the request of a party, consolidate two or more arbitrations pending into a single arbitration, where: (a) the parties have agreed to consolidation; or (b) all of the claims in the arbitrations are made under the same arbitration agreement; or (c) where the claims in the arbitrations are made under more than one arbitration agreement, the arbitrations are between the same parties, the disputes in the arbitrations arise in connection with the same legal relationship, and the PICCR finds the arbitration agreements to be compatible. In deciding whether to consolidate, the PICCR may take into account any circumstances it considers to be relevant.

Similar to the proceedings in the PDRCI, when arbitrations are consolidated before the PICCR, they shall be consolidated into the arbitration that commenced first, unless otherwise agreed by all parties concerned.

Where there are multiple claimants or multiple respondents, and where the dispute is to be referred to three arbitrators, the multiple claimants, jointly, and the multiple respondents, jointly, shall nominate an arbitrator for confirmation. However, in the absence of a joint nomination and where all parties are unable to agree to a method for the constitution of the arbitral tribunal, the PICCR may appoint each member of the arbitral tribunal and shall designate one of them to act as chair. In such case, the PICCR shall be at liberty to choose any person it regards as suitable to act as arbitrator.

Incorporating rules on joinder of parties and consolidation of arbitrations under the Philippine arbitration framework may effectively save time and money, address the issue of multiplicity of suits for a common and/or related factual and legal issue/s of the same/related parties. Joining absent parties into or consolidation of arbitration proceedings will not only prevent multiple legal actions relating from the same dispute but will also mitigate the risk of inconsistent awards or findings of different arbitrators or arbitration tribunal or courts which may have jurisdiction to rule on the same issue/s of the parties involved.

(The views and opinions expressed in this article are those of the author. This article is for general informational and educational purposes only and not offered as and does not constitute legal advice or legal opinion.)

John Frederick E. Derije is a senior associate of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW), Davao Branch.

(6382) 224-0996

jederije@accralaw.com