PHILIPPINES Trends and Developments Contributed by: Rowena L Garcia-Flores, Patricia Kay L Tysmans-Clemente, Joseph Anthony I Malaya and Roslyn Bianca R Mangaser, Angara Abello Concepcion Regala & Cruz
• one or more of the arbitrators was disqualified from acting as such under the law, and wil- fully refrained from disclosing such disqualifi- cation; or • the arbitral tribunal exceeded its powers, or so imperfectly executed them, such that a complete, final and definite award upon the subject matter submitted to them was not made. Nevertheless, in the case of Maynilad Water Services, Inc v National Water and Resources Board, GR No 181764 et seq, 7 December 2021 ( Maynilad ), involving a domestic arbitral award, the Supreme Court ruled that, if the arbitral award in favour of Maynilad were confirmed, it would result in a disproportionate price dif- ference between two areas when there was no substantial distinction between the water con- sumers therein, which would effectively result in the violation of equal protection of the 1987 Phil- ippine Constitution. Finding that the confirma- tion of the domestic arbitral award would injure the public, the Supreme Court ruled to deny its recognition for being contrary to public policy. Similarly, the Supreme Court ruled in favour of vacating an arbitral award in Lone Congressional District of Benguet Province v Lepanto Consoli- dated Mining Company, GR No 244063, 21 June 2022 ( District of Benguet ) by applying and mak- ing use of public policy considerations. The case of District of Benguet involved a domestic arbitral award rendered by an ad hoc arbitral tribunal in favour of Lepanto Consoli- dated Mining Company and Far Southeast Gold Resources, Inc against the Republic of the Phil- ippines. Here, the Supreme Court put premium on the protection of the “rights of indigenous cultural communities to their ancestral lands to ensure their economic, social and cultural well-
being”. The invoked public policy was found to be “clear, explicit, well-defined and dominant” because “it is directly ascertainable by refer- ence to a statute, implementing administrative rules and court decisions and not merely from ambiguous and murky general considerations of supposed public interests”. The arbitral tribunal cannot be said to have merely erred in the inter- pretation or application of the law; it manifestly disregarded it and the law’s underlying public policy. Nonetheless, while it is presumed that a foreign arbitral award was made and released in due course of arbitration and was subject to enforce- ment by the court, there are limited instances when a court can refuse such enforcement. Similarly, the Special ADR Rules provide that the Philippine court may refuse the recognition and enforcement of a foreign arbitral award when it finds that its recognition and enforcement would be contrary to public policy. However, the Supreme Court has previously emphasised that not all violations of law may be deemed contrary to public policy. In the case of Mabuhay Holdings Corporation v Sembcorp Logistics Limited, GR No 212734, 5 December 2018 ( Mabuhay ), the Supreme Court adopted the majority and nar- row approach that a foreign arbitral award may only be refused when its enforcement would be against “the fundamental tenets of justice and morality, or would blatantly be injurious to the public, or the interests of the society”. Thus, mere errors in the interpretation of the law or fac- tual findings would not suffice to warrant refusal of enforcement under the public policy ground. In Mabuhay , the Supreme Court likewise noted that the restrictive approach to public policy necessarily implies that not all violations of the law may be deemed contrary to public policy.
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