Remedial Law

TUNA PROCESSING, INC. v. PHILIPPINE KINGFORD G.R. No. 185582 February 29, 2012 Enforcement of Foreign Arbitral Award


FACTS:

Kanemitsu Yamaoka, five Philippine tuna processors, and respondent Kingford entered into a Memorandum of Agreement (MOA), which provided, among others, the establishment of Tuna Processors, Inc. (TPI).

Due to a series of events, the licensees, including respondent Kingford, withdrew from petitioner TPI and correspondingly reneged on their obligations. Petitioner submitted the dispute for arbitration before the International Centre for Dispute Resolution in the State of California, USA and won the case against respondent.

To enforce the award, petitioner TPI filed a Petition for Confirmation, Recognition, and Enforcement of Foreign Arbitral Award before the RTC of Makati City.

The petition was dismissed on the ground that the petitioner lacked legal capacity to sue in the Philippines.

Petitioner TPI now seeks to nullify the order of the trial court dismissing its Petition for Confirmation, Recognition, and Enforcement of Foreign Arbitral Award.

ISSUE:

Can a foreign corporation not licensed to do business in the Philippines, but which collects royalties from entities in the Philippines, sue here to enforce a foreign arbitral award?

RULING:

The petition is impressed with merit.

We reiterate that the foreign corporation’s capacity to sue in the Philippines is not material insofar as the recognition and enforcement of a foreign arbitral award is concerned.

Following the generalia specialibus non derogant principle, the Alternative Dispute Resolution Act of 2004 shall apply in this case as the Act, as its title – An Act to Institutionalize the Use of an Alternative Dispute Resolution System in the Philippines and to Establish the Office for Alternative Dispute Resolution, and for Other Purposes – would suggest, is a law especially enacted to actively promote party autonomy in the resolution of disputes or the freedom of the party to make their own arrangements to resolve their disputes. It specifically provides exclusive grounds available to the party opposing an application for recognition and enforcement of the arbitral award.

Sec. 45 of the Alternative Dispute Resolution Act of 2004 provides that the opposing party in an application for recognition and enforcement of the arbitral award may raise only those grounds that were enumerated under Article V of the New York Convention, and not one of these exclusive grounds touched on the capacity to sue of the party seeking the recognition and enforcement of the award.

Rule 13.1 of the Special Rules provides that [a]ny party to a foreign arbitration may petition the court to recognize and enforce a foreign arbitral award. The contents of such petition are enumerated in Rule 13.5. Capacity to sue is not included.

Oppositely, in the Rule on local arbitral awards or arbitrations in instances where the place of arbitration is in the Philippines, it is specifically required that a petition to determine any question concerning the existence, validity and enforceability of such arbitration agreement available to the parties before the commencement of arbitration and/or a petition for judicial relief from the ruling of the arbitral tribunal on a preliminary question upholding or declining its jurisdiction after arbitration has already commenced should state [t]he facts showing that the persons named as petitioner or respondent have legal capacity to sue or be sued.

When a party enters into a contract containing a foreign arbitration clause and, as in this case, in fact submits itself to arbitration, it becomes bound by the contract, by the arbitration and by the result of arbitration, conceding thereby the capacity of the other party to enter into the contract, participate in the arbitration and cause the implementation of the result.

The subject Resolution was REVERSED and SET ASIDE.

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