Alternative Dispute Resolution

IN THE Philippines, legal disputes don’t always have to be resolved through lengthy court proceedings. Under Philippine law, two main avenues for resolution may be used: litigation and arbitration. Each offers a structured path to resolution for a variety of situations. However, they can differ significantly in their specific processes, the privacy available to both parties, and the typical overall costs. 

For those who are unfamiliar with the terms, at a glance, here are some details that distinguish these resolution methods from each other:

Litigation

This refers to the formal process of resolving disputes through the court system. It is:

• Public. Court proceedings are generally open, and decisions are published.
• Strictly procedural. Litigation follows the Rules of Court, which come with defined steps and timelines.
• Appealable. Parties may challenge rulings before higher courts.
  

Arbitration

This is a private method of resolving disputes, taking place outside of court. Arbitrations are:

• Confidential. Proceedings and outcomes are generally not open to the public.
• Flexible. Parties can agree to their own rules and choose arbitrators with relevant expertise.
• Final. In most cases, awards are binding with only very narrow grounds for appeal.

While these alternatives are often used for certain kinds of disputes, only a specialized arbitration or litigation lawyer can give credible advice on their usefulness in your specific instance. With the right legal guidance, you can better understand which path you must choose to gain the best outcomes under Philippine law.

How Litigation and Arbitration Apply in Philippine Law

Both litigation and arbitration are bound by applicable Philippine laws. Let’s take a closer look at how these two mechanisms are used in the country.

1) Both Are Fully Supported by Philippine Law

Litigation is governed by the Rules of Court, while arbitration is guided by Republic Act No. 9285, or the Alternative Dispute Resolution (ADR) Act of 2004, which also covers mediation, conciliation, and hybrid resolution methods. This law is meant to encourage individuals and companies to consider alternative dispute resolution methods before resorting to the courts, thus benefiting both the court system and the disputing parties.

2) There Are Different Jurisdictions for Different Disputes

Philippine courts hear a wide range of disputes, including but not limited to criminal cases, civil actions, and constitutional matters. Arbitration, however, is used primarily for civil and commercial disputes, including those involving contracts or business deals. Criminal matters, issues involving family law, and other cases covered by the ADR Act of 2004 are not allowed to go through arbitration.

3) Both Litigation and Arbitration Decisions Are Supported by Law

Both litigation and arbitration outcomes are enforceable in the Philippines. Litigation judgments are carried out through legal mechanisms like writs of execution, while arbitral awards can be enforced through the courts. 

If necessary, courts can even set aside arbitral awards and order measures to prevent one party from acting unfairly during arbitration. Notably, the Philippines is a signatory to the New York Convention, which allows for the recognition of foreign arbitral awards.

4) Arbitration Can Be Faster and More Cost-Efficient

Because litigations require court resources, they can be significantly drawn out due to congestion. The simpler appeals process also makes it possible to delay resolutions even further.

Arbitration, on the other hand, can be much more efficient and less expensive, especially if a proper framework and good management are applied. For that reason, arbitration tends to be preferred in business settings.

5) Privacy Matters for Sensitive Issues

Litigation proceedings and outcomes are part of the public record, which may or may not be a good thing, depending on one’s objectives. Arbitration is more discreet and may be more appropriate for cases that involve trade secrets, serious risks of reputational damage, or sensitive details. 

6) Arbitration Offers More Flexibility

In court proceedings, litigations are rigid in terms of procedure and schedule. Arbitration, however, lets parties choose expert arbitrators, agree on hearing locations, and even set timelines. This makes arbitrations especially useful for high-level, industry-specific conflicts where subject-matter expertise matters.

7) Appeals Work Differently in Practice

Litigation makes it fairly easy for parties to appeal rulings to higher courts. Arbitration decisions, by contrast, are typically final in most instances. While arbitral awards can be set aside, in practice it has only happened in rare cases involving fraud, misconduct, or a violation of public policy.

Courtroom or Conference Table? How You Can Make an Informed Decision

In cases where both litigation and arbitration are on the table, your choice shouldn’t come down to preference or advice from non-experts. Your choice must ultimately rest on the nature of your dispute, your priorities, and acceptable compromises, as well as your long-term goals.

Both litigation and arbitration can also involve decades of precedent as well as counterintuitive practices, which means you’ll want to get advice from a trusted law firm. A firm with a good track record for both court proceedings and alternative resolution processes should help you set your impending case in the right direction.

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