Tips on how to lessen arbitration costs

 Posted By: je froilan m. clerigo


When considering the following tips on how to lessen your CIAC arbitration costs and filing fees, bear in mind that these costs are assessed by the CIAC generally on the basis of the amount of the claims of the parties. This means the question of how large or minimal these fees and costs are is answered by how much your stated claims are, in either your request for arbitration, or your answer to it.

Here they are:

A. Limit the claims only to those that are documented, and/or you can otherwise prove.

It frequently happens that contractors do not have as much documentation of the project works as the owner. We suggest that you do not force the issue by putting into your request for arbitration claims that are either not documented, or those which an arbitrator cannot reasonably be expected to find in your favor.

At any rate, you can still amend your complaint to include otherwise undocumented claims if it happens that, during the preliminary conference, facts were admitted by your opponent proving these claims that initially were not included. Or if, during the marking of the exhibits, your opponent produces documents that were not initially available to you when you filed the complaint, and which will prove otherwise undocumented claims. The point is that, do not put in unprovable claims (although you may have every right to them); the risk of them being ignored by the arbitrator may not be worth the substantial filing fees and arbitration costs.

B. Limit claims for attorney's fees, or better yet, forego it altogether, unless you are sure that the case falls within the provisions of the law justifying them. In the majority of cases, the courts - including the CIAC - decline claims for attorney's fees because the general rule in this country is that no one should be penalized for accessing the courts. In plainer words, just because you were forced to request for arbitration does not automatically mean you will be reimbursed the fees you may have paid your attorneys. Or, attorney's fees may be awarded, but the amount you asked for is reduced dramatically.

We had an opponent once who included in his claim Php2,000,000 in attorney's fees. We do not know why he claimed such a substantial amount, but our feeling that the CIAC will not believe that the client spend that much on his attorney was chorused by the CIAC. He ended up paying filing and arbitration fees significantly higher than when he excluded this claim altogether, which was both ridiculous and unprovable anyway.

C. Limit claims for moral and other damages, or see if you can forego them altogether. Awards for moral and other kinds of damages can only be made if the case - and your proof - satisfies certain requirements. If in doubt as to whether your case will fall within the instances enumerated by the law for awarding moral and other damages, be safe and forego them instead.

We had an opponent, which was a corporation, that included in its claims Php1,000,000 in moral damages, despite the consistent rulings of the Supreme Court that corporations, as a general rule, are not entitled to moral damages. True enough, the large arbitration and filing fees the corporation paid went to naught because the CIAC mainly ignored the claims.

D. Work with your lawyer in preparing for the case. Review the request for arbitration or the answer; ask your lawyer to truthfully advise you which claims will be most likely denied and ask that both of you think it through and cost-benefit analyze it. Call the CIAC and ask for an estimate of the fees and costs. Remember that, aside from these, you still have to pay your lawyer his legal fees. Do this before finalizing the pleadings to be filed.

E. Look for ways to settle with the opponent during the early stages of the case. Make reaching the end of the arbitration your last recourse.

After the pleadings are filed, the Terms of Reference (ToR) signed, and the exhibits and evidence marked, the lawyers should already know the strength and weaknesses of their cases. If these lawyers are sufficiently experienced, they should already be able to advise the clients on the reasonable chances of winning or losing, or how much award to realistically expect.

Work with your lawyer to reach a threshold amount. Work to settle with your opponent. In the majority of cases we handled, the case boiled down to mere pesos and centavos; in other words, there is rarely any emotion involved, thus making settlement easy.

Then settle early. Settling sooner rather than later will reduce the amount of costs because the filing fees and arbitration costs are formulated according to the milestones of the case: the longer the case drags before you settle, the more substantial the amount you have to pay or may have paid.

Come to think of it: the above tips can be applied even to regular court disputes, can't they?