SEC FINALIZING ARBITRATION FRAMEWORK
The Securities and Exchange Commission (SEC) is finalizing a framework that will allow the resolution of intracorporate disputes through a speedy and impartial arbitration process.
On June 23, the SEC released for public comment the draft guidelines operationalizing Section 181 of Republic Act No. 11232, or the Revised Corporation Code of the Philippines, which covered arbitration proceedings.
Section 181 provides that an arbitration agreement may be provided in the articles of incorporation or bylaws of a corporation. When such an agreement is in place, disputes within a corporation or among its stockholders/members, which may arise from the implementation of the articles of incorporation, bylaws, or from intracorporate relations, may be referred to arbitration.
The arbitration agreement will be binding on the corporation, its directors, trustees, officers and executives or managers. However, disputes that involve criminal offenses and interests of third parties cannot be referred to arbitration.
The draft guidelines define arbitration as a voluntary dispute resolution process in which one or more arbitrators—appointed by the designated independent third party or in accordance with the rules—will resolve a dispute by rendering an award.
The provision of arbitration agreement in the articles of incorporation or bylaws, as well as in the form of a separate agreement must contain the number of arbitrators, the designated independent third party who will appoint the arbitrators, procedure for the appointment of arbitrators and the period within which arbitrators should be appointed.