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TRANSFIELD PHILIPPINES v. LUZON HYDRO CORPORATION

FACTS:

This case involves two separate but related issues. The first issue pertains to the propriety of calling on the securities during the arbitral proceedings. The Court's Decision on November 22, 2004 resolved this issue in favor of Luzon Hydro Corporation (LHC). The second issue involves the accusation of forum-shopping, which the Court required the parties to submit their memoranda for. LHC claims that Transfield Philippines, Inc. (TPI) engaged in forum-shopping by filing various suits, including a civil case for confirmation and recognition of an arbitral award, an appeal with the Supreme Court, and a petition for review with the Court of Appeals. On the other hand, TPI argues that LHC is also guilty of forum-shopping by raising the issue in this case and another civil case. ANZ Bank and Security Bank, the banking entities involved, moved to be excused from filing a memorandum. TPI later moved for oral argument, stating that the issue of forum-shopping may have significant implications on the interpretation of the Alternative Dispute Resolution Act of 2004 and the viability of international commercial arbitration as a dispute resolution mechanism in the country. TPI also manifested that the ICC arbitral tribunal issued a Final Award ordering LHC to pay them a certain amount. The Court held that for forum-shopping to exist, there must be an identity of parties, rights asserted, relief prayed for, and such that any judgment in one action will be res judicata in the other action. The Court also distinguished the causes of action between the arbitration case, the instant petition, and a civil case.

ISSUES:

  1. Whether it is proper to draw on the letters of credit during the pendency of the arbitral case.

  2. Whether the ICC can issue writs of preliminary injunction against Security Bank and ANZ Bank.

  3. Whether or not the application for enforcement of the Third Partial Award was premature.

  4. Whether or not TPI committed forum-shopping.

RULING:

  1. The court held that the pendency of arbitral proceedings does not foreclose resort to the courts for provisional reliefs. The Rules of the ICC and the Alternative Dispute Resolution Act of 2004 allow for the filing of provisional or interim measures with the regular courts whenever the arbitral tribunal has no power to act or to act effectively.

  2. The court agreed with the petitioner that it would be ineffectual to ask the ICC to issue writs of preliminary injunction against the banks since they are not parties to the arbitration case and that the ICC Arbitral tribunal would not even be able to compel the respondent to obey any writ of preliminary injunction issued from its end.

  3. The application for enforcement of the Third Partial Award was premature because there was no order for the payment or return of the proceeds of the securities. The Third Partial Award explicitly stated that all other issues, including quantum and costs, are reserved for a future award. Therefore, the quantification of the amounts due to TPI had not yet been settled by the ICC Arbitral tribunal.

  4. The charges of forum-shopping filed by both parties against each other are dismissed due to insufficient evidence and mere allegations.

PRINCIPLES:

  • Pendency of arbitral proceedings does not foreclose resort to the courts for provisional reliefs.

  • The Rules of the ICC and the Alternative Dispute Resolution Act of 2004 allow for the filing of provisional or interim measures with the regular courts whenever the arbitral tribunal has no power to act or to act effectively.

  • The court may issue writs of preliminary injunction against parties involved in a case, but cannot compel non-parties to the arbitration case to obey any writ of preliminary injunction.

  • The New York Convention, as confirmed in Section 42 of R.A. 9285, governs the recognition and enforcement of foreign arbitral awards.

  • An application for the recognition and enforcement of foreign arbitral awards shall be filed with the proper RTC.

  • Premature application for enforcement of an arbitral award is not valid if there is no order for the payment or return of the specific amounts.

  • Declarations made in partial awards do not constitute orders for the payment of money.

  • There must be a final determination/award as to specific issues before seeking enforcement.

  • Insufficient evidence and mere allegations are not enough to sustain a charge of forum-shopping.