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    Korea Technologies v. Lerma

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    1. Korea Technologies Co. entered into a contract with Pacific General Steel to set up an LPG cylinder plant in the Philippines, which contained an arbitration clause referring disputes to arbitration in Korea. 2. When Pacific General refused to pay the balance and cancelled the contract, Korea Technologies initiated arbitration as well as a civil case in the Philippines. 3. The Supreme Court held that the arbitration clause was valid under Philippine law and ordered the parties to arbitrate, but allowed Pacific General to dismantle the plant in the meantime. The Court also clarified that while arbitral awards are binding, they are subject to judicial review.

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    Korea Technologies v. Lerma

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    120 views1 page
    1. Korea Technologies Co. entered into a contract with Pacific General Steel to set up an LPG cylinder plant in the Philippines, which contained an arbitration clause referring disputes to arbitration in Korea. 2. When Pacific General refused to pay the balance and cancelled the contract, Korea Technologies initiated arbitration as well as a civil case in the Philippines. 3. The Supreme Court held that the arbitration clause was valid under Philippine law and ordered the parties to arbitrate, but allowed Pacific General to dismantle the plant in the meantime. The Court also clarified that while arbitral awards are binding, they are subject to judicial review.

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    5. Korea Technologies v. Lerma

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    1. Korea Technologies Co. entered into a contract with Pacific General Steel to set up an LPG cylinder plant in the Philippines, which contained an arbitration clause referring disputes to arbitration in Korea. 2. When Pacific General refused to pay the balance and cancelled the contract, Korea Technologies initiated arbitration as well as a civil case in the Philippines. 3. The Supreme Court held that the arbitration clause was valid under Philippine law and ordered the parties to arbitrate, but allowed Pacific General to dismantle the plant in the meantime. The Court also clarified that while arbitral awards are binding, they are subject to judicial review.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    120 views1 page

    Korea Technologies v. Lerma

    Uploaded by

    Cedric
    1. Korea Technologies Co. entered into a contract with Pacific General Steel to set up an LPG cylinder plant in the Philippines, which contained an arbitration clause referring disputes to arbitration in Korea. 2. When Pacific General refused to pay the balance and cancelled the contract, Korea Technologies initiated arbitration as well as a civil case in the Philippines. 3. The Supreme Court held that the arbitration clause was valid under Philippine law and ordered the parties to arbitrate, but allowed Pacific General to dismantle the plant in the meantime. The Court also clarified that while arbitral awards are binding, they are subject to judicial review.

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    5. Korea Technologies Co v Hon. Lerma ISSUE: Whether or not the arbitration clause was null and void.

    G.R. No. 143581


    January 7, 2008 HELD: No, it was not null and void.

    Topic: Arbitration clause Lex loci contractus. The contract in this case was perfected here in the
    Petitioner: Korea Technologies Co Philippines. Therefore, our laws ought to govern. Nonetheless, Art. 2044 of
    Respondent: Hon. Alberto Lerma, presiding Judge of RTC of Muntinlupa the Civil Code sanctions the validity of mutually agreed arbitral clause or the
    City and Pacific General Steel Manufacturing Corporation finality and binding effect of an arbitral award. Art. 2044 provides, "Any
    Ponente: Velasco, Jr., J: stipulation that the arbitrators’ award or decision shall be final, is valid,
    without prejudice to Articles 2038, 2039 and 2040."
    FACTS:
    • Korea Technologies Co., Ltd. (KOGIES) is a Korean corporation The arbitration clause was mutually and voluntarily agreed upon by the
    which is engaged in the supply and installation of Liquefied parties. It has not been shown to be contrary to any law, or against morals,
    Petroleum Gas (LPG) Cylinder manufacturing plants good customs, public order, or public policy. There has been no showing that
    the parties have not dealt with each other on equal footing.
    • KOGIES entered into a contract with a Philippine corporation,
    Pacific General Steel Manufacturing Corporation
    The Supreme Court referred the parties back to arbitration but allowed the
    o KOGIES would set up an LPG Cylinder Manufacturing
    respondent to dismantle and transfer the equipment and machineries. The
    Plant in the Philippines
    Court held that the arbitration clause was not contrary to public policy and
    • The contract contained a clause referring all disputes to arbitration in
    sanctioned by Art. 2044 of the Civil Code.
    Korea in accordance with the arbitration rules of the Korea
    Commercial Arbitration Board (KCAB). It also stipulated that the
    The Court noted that the Philippines had incorporated the UNCITRAL
    award rendered by the arbitration tribunal should be final and
    Model Law on International Commercial Arbitration (MAL) in R.A. 9285
    binding.
    (Alternative Dispute Resolution Act of 2004). The Court interpreted the
    • Pacific General Steel paid part of the contract price after the provisions of RA 9285, as follows:
    machineries, equipment and facilities for the manufacture of the 1. Under section 24, the RTC does not have jurisdiction over disputes
    cylinders were shipped, delivered and installed in the plant. that are subject of arbitration pursuant to an arbitration clause and
    • The plant, however, could not operate due to the financial difficulties mandate referral to arbitration;
    of Pacific General Steel which affected the supply of materials. 2. While the parties stipulate in their arbitration clause that the foreign
    • Pacific General Steel refused to pay for the balance and cancelled the arbitral awards are final and binding, they are not immediately
    contract on the ground that KOGIES had altered the quantity and enforceable unless recognized by a competent court, in the case the
    lowered the quality of the machineries and equipment it delivered. RTC, pursuant to Articles MAL 35 and MAL 36.
    • Pacific General Steel informed the petitioner of its plan to dismantle 3. Foreign arbitral award is subject to judicial review by the RTC,
    and transfer the machineries and equipment since the plant never which can set aside, reject or vacate it under Sec. 42 in relation to
    became operational. Sec. 45 of RA 9285 on grounds provided under Article MAL 34 (2).
    • KOGIES initiated arbitration before the KCAB and also commenced 4. RTC decision on foreign arbitral awards is appealable.
    a civil case before the Regional Trial Court (RTC) for violation of
    arbitration clause of contract since Pacific General Steel unilaterally Therefore, the Court ruled that an arbitration clause, which stipulates that the
    rescinded the contract without resorting to arbitration. arbitral award is final and binding, does not oust courts of jurisdiction since
    • Pacific General Steel argued that the arbitration clause was null and international arbitral award is still judicially reviewable under certain
    void for being against public policy. conditions provided for by MAL.

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