Transfield Philippines v. Luzon Hydro Corporation
REITERATIONFacts
The Antecedents: Transfield Philippines, Inc. (TPI) and Luzon Hydro Corporation (LHC) were parties to a Turnkey Contract. Disputes arose, leading to international arbitration before the International Chamber of Commerce (ICC). LHC called on certain securities (standby letters of credit) issued by Australia and New Zealand Banking Group Limited (ANZ Bank) and Security Bank Corporation. TPI sought to prevent LHC from calling on these securities and the banks from releasing the funds, filing Civil Case No. 00-1312 for injunction, which was denied by the RTC. The Court of Appeals also denied TPI's petition for review in CA-G.R. SP No. 61901. Procedural History: The Supreme Court previously resolved the merits of the case in favor of LHC in a Decision dated 22 November 2004. This Resolution addresses the issue of forum-shopping. TPI filed Civil Case No. 04-332 for confirmation, recognition, and enforcement of the Third Partial Award from the ICC arbitration. LHC alleged that TPI was guilty of forum-shopping by filing these suits. TPI, in turn, accused LHC of forum-shopping for raising the issue in multiple forums. ANZ Bank and Security Bank were excused from filing a memorandum as the resolution would not materially affect them. The Petition: The core issue before the Court in this Resolution is whether either party committed forum-shopping. TPI argued that the resolution of the forum-shopping issue has significant implications on the interpretation of the Alternative Dispute Resolution Act of 2004 and the viability of international commercial arbitration. The ICC Arbitral Tribunal subsequently issued its Final Award on 9 August 2005, ordering LHC to pay TPI US$24,533,730.00, which included the proceeds of the standby letters of credit.
Issue(s)
Whether Transfield Philippines, Inc. (TPI) committed forum-shopping by filing Civil Case No. 04-332 for the confirmation, recognition, and enforcement of the Third Partial Award. Whether Luzon Hydro Corporation (LHC) committed forum-shopping by raising the issue of forum-shopping in multiple cases. Whether the filing of Civil Case No. 04-332 for the enforcement of a partial arbitral award constitutes forum-shopping, considering the pendency of other related proceedings, and whether seeking provisional reliefs during arbitration is permissible.
Ruling
The Court RESOLVED to DISMISS the charges of forum-shopping filed by both parties against each other. No pronouncement as to costs.
Ratio Decidendi
On the issue of forum-shopping by TPI: The Court found no identity of causes of action among the arbitration case, the instant petition, and Civil Case No. 04-332. The arbitration case determined whether delays were excused and addressed monetary awards. Civil Case No. 00-1312 (precursor to the instant petition) sought to enjoin LHC from calling on securities, while the instant petition questioned the propriety of drawing on letters of credit during arbitration. Civil Case No. 04-332, however, was for the confirmation, recognition, and enforcement of a Third Partial Award, specifically seeking a writ of execution for the Third Partial Award. The Court noted that the Third Partial Award declared LHC wrongfully drew upon the security and TPI was entitled to its return, but it reserved quantification of amounts for a future award. The Fifth Partial Award clarified that declarations did not constitute orders for payment and were not enforceable as such, merely constituting amounts to be included in the Final Award. The Final Award, issued later, quantified the amounts. Therefore, the application for enforcement of the Third Partial Award was premature as it did not contain an order for payment of money, but rather declarations and reservations for future awards. The Court also found no identity of parties, as the arbitration case only involved TPI and LHC, while the instant petition included the banks, and Civil Case No. 04-332 involved only TPI and LHC as parties to the arbitration agreement. On the issue of forum-shopping by LHC: The Court found TPI's allegations of LHC committing forum-shopping to be bare allegations, insufficient to sustain the charge. The Court did not elaborate further on this point, implying a lack of substantiation by TPI. On the issue of the permissibility of seeking provisional reliefs during arbitration and the prematurity of the enforcement application: The Court reiterated that the pendency of arbitral proceedings does not foreclose resort to the courts for provisional reliefs. The Rules of the ICC, the Arbitration Law (R.A. No. 876), and the Alternative Dispute Resolution Act of 2004 (R.A. 9285) all allow parties to petition judicial authorities for interim or conservatory measures, or when the arbitral tribunal cannot act effectively. However, in this specific instance, the application for enforcement of the Third Partial Award was deemed premature because the award itself did not contain an order for payment of money, but rather declarations and reservations for future awards.
Main Doctrine
The filing of multiple suits involving the same parties for the same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable judgment constitutes forum-shopping. However, the pendency of arbitral proceedings does not foreclose resort to the courts for provisional reliefs, and the filing of an application for confirmation, recognition, and enforcement of a foreign arbitral award, even a partial award, is permissible under the law, provided it is not premature.