The Securities and Exchange Commission (SEC) has released new guidelines allowing the prompt resolution of intracorporate disputes without going to court.

The rules were in line with the Revised Corporation Code of the Philippines and covered internal disputes within the company, its members and stockholders arising from the implementation of the articles of incorporation and bylaws, or from intracorporate relations. Excluded are cases involving criminal offenses and third-party disputes.

Under the guidelines, a domestic corporation may provide an arbitration agreement in its articles of incorporation or bylaws, as well as in the form of a separate agreement.

The regulator defines arbitration as a "voluntary dispute resolution process in which one or more arbitrators, appointed by the parties' designated independent third party or in accordance with the rules, resolve a dispute by rendering an award."

Such an agreement must state the number of arbitrators; the designated independent third party who shall appoint the arbitrator and the procedure for the appointment of the arbitrator.

Third party

It must also indicate the period within which the arbitrator should be appointed by the designated independent third party.

"Arbitration agreements that do not comply with such requirements shall be unenforceable, although arbitration shall still proceed under Republic Act No. 9285, or the Alternative Dispute Resolution Act of 2004," the SEC said.

The SEC added the seat or place of arbitration will be presumed to be the Philippines, unless otherwise stated.

"Prior to arbitration, parties must comply with alternative forms of dispute resolution, such as negotiation or mediation, as prescribed under the agreement," it added.

Arbitrators must be accredited by the Office for Alternative Dispute Resolution (OADR) under the Department of Justice or SEC, or by organizations accredited by the OADR or the commission for the purpose of arbitration.

"The arbitral tribunal shall have the power to rule on its own jurisdiction and on questions relating to the validity of the arbitration agreement. It shall also have the power to grant the necessary interim measures to ensure enforcement of the award, prevent a miscarriage of justice, or otherwise protect the rights of the parties," the SEC said.

It noted that interim measures may include "preliminary injunction directed against a party to arbitration and preliminary attachment against property or garnishment of funds in the custody of a bank or third person." INQ @miguelrcamusINQ