Mediation and Arbitration

Mediation and Arbitration are two common forms of alternative dispute resolution (ADR) in the Philippines. They offer alternatives to traditional litigation, aiming to resolve disputes more efficiently, cost-effectively, and amicably.

Mediation in the Philippines

Mediation is a voluntary process where a neutral third party, the mediator, helps the disputing parties communicate and negotiate to reach a mutually acceptable agreement. The mediator does not impose a decision but facilitates dialogue and understanding.

Key Features of Mediation:
  1. Voluntary Participation: Both parties must agree to participate in mediation. It’s a consensual process that requires willingness from both sides to negotiate.
  2. Confidentiality: All discussions in mediation are confidential, which encourages open and honest communication.
  3. Control: The parties maintain control over the outcome. The mediator helps guide the process, but the parties decide on the resolution.
  4. Non-binding: Mediation agreements are not legally binding unless the parties formalize the agreement into a contract or a court order.
  • The Alternative Dispute Resolution Act of 2004 (Republic Act No. 9285) governs mediation in the Philippines. It promotes the use of ADR and institutionalizes it as a means to settle disputes, especially in civil and commercial cases.
  • Court-Annexed Mediation (CAM): Mediation is integrated within the judicial system, where cases filed in court can be referred to mediation before proceeding to trial.
Arbitration in the Philippines

Arbitration involves a neutral third party or a panel (the arbitrator or arbitral tribunal) that listens to the evidence and arguments presented by the disputing parties and then makes a binding decision.

Key Features of Arbitration:
  1. Binding Decision: Unlike mediation, the outcome of arbitration is binding and enforceable in court.
  2. Flexibility: The parties have the flexibility to select their arbitrators, the rules governing the arbitration, and the venue.
  3. Confidentiality: Arbitration proceedings are generally private, which can protect the parties’ reputations and trade secrets.
  4. Speed and Cost: Arbitration can be faster and less costly than litigation, though it can still be expensive depending on the complexity of the case.
  • The Arbitration Law (Republic Act No. 876) and the Alternative Dispute Resolution Act of 2004 are the primary laws governing arbitration in the Philippines.
  • Construction Arbitration: The Construction Industry Arbitration Commission (CIAC) handles disputes related to construction contracts.
  • International Arbitration: The Philippines is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This allows foreign arbitral awards to be enforced in the country and vice versa.
  • Mediation is generally preferred for disputes where parties seek a mutually beneficial solution and wish to preserve their relationship. It’s commonly used in family disputes, community issues, and some commercial disputes.
  • Arbitration is often used for more complex commercial disputes, especially in industries like construction, finance, and international trade, where a binding decision is necessary.
Challenges and Developments:
  • Awareness and Training: There is a continuous need for public awareness and training of mediators and arbitrators to ensure the effectiveness of ADR mechanisms.
  • Judicial Support: The Philippine judiciary actively supports ADR by referring cases to mediation and enforcing arbitral awards. However, there are challenges in ensuring consistency in enforcement and recognition, especially with international arbitration awards.
  • Cultural Considerations: In the Philippines, where family ties and community relationships are highly valued, mediation aligns well with cultural norms of resolving disputes amicably.

Overall, mediation and arbitration are crucial components of the Philippine legal landscape, providing effective alternatives to traditional litigation. They help reduce the burden on courts and offer parties more control over the resolution process.