Originally from Arbitration in Asia, Second Edition

PREVIEW

MEMORANDUM CIRCULAR NO. 8
Series of 2022

TO: ALL CONCERNED
SUBJECT:  Guidelines on Arbitration of Intra-Corporate Disputes for Corporations

WHEREAS, Section 181 of Republic Act No. 11232, otherwise known as the Revised Corporation Code of the Philippines (“RCC”), provides that an arbitration agreement may be provided in the articles of incorporation or by-laws of a corporation, and when such an agreement is in place, disputes between the corporation, its stockholders or members, which arise from the implementation of the articles of incorporation or by-laws, or from intra-corporate relations, shall be referred to arbitration. A dispute shall be non-arbitrable when it involves criminal offenses and interests of third parties. The arbitration agreement shall be binding on the corporation, its directors, trustees, officers, and executives or managers.

WHEREAS, the same Section provides that to be enforceable, the arbitration agreement should indicate the number of arbitrators and the procedure for their appointment. The power to appoint the arbitrators forming the arbitral tribunal shall be granted to a designated independent third party. Should the third party fail to appoint the arbitrators in the manner and within the period specified in the arbitration agreement, the parties may request the Commission to appoint the arbitrators. In any case, arbitrators must be accredited or must belong to organizations accredited for the purpose of arbitration.

WHEREAS, the same Section provides that the arbitral tribunal shall have the power to rule on its own jurisdiction and on questions relating to the validity of the arbitration agreement. When an intra-corporate dispute is filed with a Regional Trial Court, the court shall dismiss the case before the termination of the pre-trial conference, if it determines that an arbitration agreement is written in the corporation’s articles of incorporation, by-laws, or in a separate agreement. The arbitral tribunal shall have the power to grant interim measures necessary to ensure enforcement of the award, prevent a miscarriage of justice, or otherwise protect the rights of the parties.

Filed with UP Law Center 29 Septermber 2022