Construction Arbitration as an
Alternative Dispute Resolution
Primitivo C. Cal, Ph.D.
CIAC-Accredited Construction
Arbitrator
Past National President, PICE
WHAT IS ARBITRATION?
the process by which disputants agree on
the appointment of a third party to resolve
disputes on the basis of justice, established
legal principles and generally accepted
industry practice and whose decision shall
be binding upon them.
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ARBITRABLE ISSUES
Violation of specifications for materials and
workmanship
Violation of the terms of agreement
Interpretation and/or application of
contractual provisions
Amount of damages and penalties
Commencement time and delays
Maintenance and defects
Payment default of employer or contractor
Changes in contract cost
Moral Damages, Exemplary Award, Attorney’s Fees
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Construction Arbitration in the
Philippines is administered by the
Construction Industry Arbitration
Commission (CIAC)
Current composition of the CIAC:
1. Atty. Manuel M. Cosico – Chairman
2. Engr. Antonio A. Abola – Member
3. Engr. Emilio Lolito J. Tumbocon – Member
January 9, 1986 – the CIAC rules and criteria for
accreditation were finalized.
CIAC Jurisdiction
E.O. 1008 (the Construction Industry Arbitration Law)
“Section 4. Jurisdiction - CIAC shall have original
and exclusive jurisdiction over disputes arising from
or connected with, contracts entered into by parties
involved in construction in the Philippines, whether
the dispute arises before or after the completion of
the contract, or after the abandonment or breach
thereof. These disputes may involve government or
private contracts. For the Board to acquire
jurisdiction, the parties to a dispute must agree to
submit the same to voluntary arbitration. xxx…. xxx “
CIAC Jurisdiction
R.A. 9184 (the Government Procurement Reform Act)
Section 59. Arbitration – any and all disputes arising from
the implementation of a contract covered by this Act shall be
submitted to arbitration in the Philippines according to the
provisions of R.A. 876, otherwise known as the “Arbitration
Law” . Provided, however, That disputes that are within the
competence of the Construction Industry Arbitration
Commission to resolve shall be referred thereto. The process
of arbitration shall be incorporated as a provision in the
contract that will be executed pursuant to the provisions of
this Act. Provided, That by mutual agreement, the parties
may agree in writing to resort to alternative methods of
dispute resolution.
CIAC Jurisdiction
R.A. 9285 (the Alternative Dispute
Resolution Act of 2004)
Sec. 34. Arbitration of Construction
Disputes: Governing Law – the
arbitration of construction disputes shall
be governed by Executive Order No. 1008,
otherwise known as the Construction
Industry Arbitration Law.
CIAC Jurisdiction
R.A. 9285 (the Alternative Dispute Resolution
Act of 2004
● Coverage (Sec. 35)
- construction disputes between or among parties
to, or otherwise bound by, an arbitration
agreement, directly or by reference
- project owner, contractor, subcontractor,
fabricator, project manager, design professional,
consultant, quantity surveyor, bondsman or issuer
of an insurance policy in a construction project
CIAC Jurisdiction
R.A. 9285 (the Alternative Dispute Resolution Act of 2004)
Section 39. Court to Dismiss Case involving a
Construction Dispute. A Regional Trial Court before
which a construction dispute is filed shall, upon
becoming aware not later than the pretrial
conference, that the parties had entered into an
arbitration agreement, dismiss the case and refer the
parties to arbitration to be conducted by CIAC, unless
both parties, assisted by their respective counsel,
shall submit to the Regional Trial Court a written
agreement exclusively for the Court, rather than the
CIAC, to resolve the dispute.
CIAC Jurisdiction
CIAC Rules of Procedure Governing Construction
Arbitration
● Section 2.3 Condition for exercise of jurisdiction
- arbitration agreement in the contract or subsequent
agreement to submit a dispute to voluntary
arbitration
- form of subsequent agreement : exchange of
communication or some other form showing
agreement to submit to arbitration
● Section 4.1 Submission to CIAC Jurisdiction
- arbitration clause or submission to arbitration is
deemed an agreement to submit an existing or future
CIAC Jurisdiction
CIAC Rules of Procedure Governing Construction Arbitration
controversy to CIAC jurisdiction, notwithstanding the
reference to a different arbitration institution or arbitral
body in such contract or submission
- arbitration clause sufficient for Claimant to invoke
CIAC jurisdiction
- arbitration agreement shall be in writing but need not be
signed by the parties as long as intent to submit to
arbitration is clear
- form: exchange of letters sent by post or by telefax,
telexes, telegrams, email or any other mode of
communications
CIAC Jurisdiction
CIAC Rules of Procedure Governing Construction
Arbitration
● Section 4.2 Failure or refusal to arbitrate
- where CIAC jurisdiction is properly invoked by the filing
of a Request for Arbitration, arbitration shall proceed
even in the absence or lack of participation of the
Respondent
- an award shall be made after receiving the evidence of
the Claimant
● Section 4.3 When arbitration cannot proceed
- no arbitration clause in the contract
- parties cannot agree to submit the dispute to arbitration
PROCEDURES
1. Define Claim or Cause of Action
2. File Claim (Request for Arbitration) with CIAC
3. Notice to Respondent
4. Answer and Counter-claim
5. Reply
6. Appointment of Arbitrator/Tribunal
7. Terms of Reference
8. Hearings
9. Award
10. Execution
ADVANTAGES OF ARBITRATION
OVER COURT LITIGATION
1. Arbitrators have technical expertise
Since disputes in the construction
industry involve technical matters, the
arbitrator/s with their requisite
technical knowledge can settle disputes
as efficiently and equitably as possible.
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Qualifications of CIAC Arbitrators
Men of Distinction
Technically Qualified
Trained and Accredited by CIAC
Professionals with Experience in Construction
Disputes and nuances thereof
ACCREDITATION OF CONSTRUCTION
ARBITRATORS: Minimum Requirements
1.1 At least 40 years of age at the time of
application;
1.2 Holder of bachelor’s degree in
engineering, architecture, law, accountancy
or any other course of relevant to
construction industry;
1.3 Licensed to practice his/her profession.
ACCREDITATION OF CONSTRUCTION
ARBITRATORS
1.4 At least ten (10) years in the practice of his/her
profession and ten (10) years of work experience in
construction management-related activities or in
handling of contractual disputes and/or contract
negotiations ;
1.5 In full enjoyment of his/her civil rights, must not have
been convicted of a crime involving moral turpitude or
of any other crime for which the penalty imposed upon
him/her is over six (6) months of imprisonment.
ACCREDITATION OF CONSTRUCTION
ARBITRATORS
1.6 Willing to undergo all screening requirements
1.7 Willing to undergo training to be conducted by the CIAC.
2. EXCEPTIONS :
2.1 Exceptional professionals who have substantially
complied with the minimum requirements 1.1 to 1.6,
and who by reason of trainings or experiences in
construction, conducted lectures on accreditation
courses upon invitation by the CIAC.
ADVANTAGES … (cont.)
2. Parties choose the arbitrators
Since the parties are given the
opportunity to choose the
arbitrator/s, they can designate
those whom they deem to be
qualified to conduct the
proceedings.
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ADVANTAGES … (cont.)
3. Parties define the terms of reference
Parties to a contract may specify the
scope or nature of the dispute. They
can choose from either broad or
limited arbitration and stipulate the
terms under which proceedings shall
be conducted.
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ADVANTAGES … (cont.)
4. Proceedings are simple, faster and
less expensive
Disputes can be resolved much faster,
simpler and less expensive than it would
take if the parties resort to court action.
Being contractual in nature, arbitration
permits the parties to specify the time
and place for hearings. No special form is
required in presenting a demand for
arbitration or in responding thereto.
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ADVANTAGES … (cont.)
5. Proceedings are confidential
Arbitration is held in private.
Pleadings are confidential except to
the parties themselves.
Awards are unpublished.
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ADVANTAGES … (cont.)
6. Arbitrator's decision is binding
The arbitrator or arbitral tribunal is vested
with the authority to decide, and such
decision is binding on the parties.
A MR of an award or a decision handed
down by the arbitrator is not allowed
except on questions of fact and law which
are appealable to the Court of Appeals.
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ADVANTAGES … (cont.)
7. A single forum may be convened for all
parties
One attractive feature of arbitration is the
possibility of bringing together in one
proceeding all the parties that may be
involved, provided they are bound by the
arbitration agreement.
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ADVANTAGES … (cont.)
8. Choice of representative is not limited to
lawyers
License to practice law is not required for
counsel/representative to appear before
an arbitrator or arbitral tribunal.
The parties exercise discretion who should
represent them in arbitration .
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ADVANTAGES … (cont.)
9. Work on a contract may continue as
arbitration proceeds
Since some construction projects cover
large expenses and employ many people,
is often important to add in the contract a
provision that work shall continue while
arbitration proceeds.
Such stipulation may not be effective
when the parties resort to regular court
hearings.
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ADVANTAGES … (cont.)
10. Arbitration preserves friendly relations
Arbitration proceedings are less formal,
less adversarial and more speedy than
court proceedings, thus helping to
preserve a friendly relationship between
disputants.
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Construction Industry Arbitration Commission
Addresses/Contact Numbers
:
(02) 897-0853
:
(02) 897-9313
:
ciac_ciap@yahoo.com
:
CIAC Philippines
:
2nd Flr., Executive Building Center
369 Sen. Gil J. Puyat Ave. cor.
Makati Avenue, Makati City
THANK YOU!
