{"id":132254,"date":"2026-03-09T13:22:43","date_gmt":"2026-03-09T13:22:43","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=132254"},"modified":"2026-03-09T13:22:43","modified_gmt":"2026-03-09T13:22:43","slug":"philippines-investment-treaty-arbitration","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/philippines-investment-treaty-arbitration\/","title":{"rendered":"Philippines: Investment Treaty Arbitration"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-132254","comparative_guide","type-comparative_guide","status-publish","hentry","guides-investment-treaty-arbitration","jurisdictions-philippines"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Cruz Marcelo &amp; Tenefrancia<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/03\/Logo-Full-Color-Vertical.png\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Cruz Marcelo &amp; Tenefrancia<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/03\/Logo-Full-Color-Vertical.png\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Investment Treaty Arbitration laws and regulations applicable in Philippines<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Has your home state signed and \/ or ratified the ICSID Convention? If so, has the state made any notifications and \/ or designations on signing or ratifying the treaty?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes. The Philippines signed the ICSID Convention on 26 September 1978 and ratified the same on 17 November 1978. It entered into force in the Philippines on 17 December 1978.<\/p>\n<p>The Philippines has made no notification after signing or ratifying the ICSID Convention. As to the designation of competent courts or other authorities for the purpose of recognizing and enforcing awards rendered pursuant to Article 54(2) of the ICSID Convention, the Philippines designated the Regional Trial Court (RTC) of the city or province where the arbitration proceedings were held or where the losing party resides or does business.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Has your home state signed and \/ or ratified the New York Convention? If so, has it made any declarations and \/ or reservations on signing or ratifying the treaty?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes. The Philippines signed the New York Convention on 10 June 1958 and ratified the same on 06 July 1967.<\/p>\n<p>The Philippines signed ad referendum with reservation based on reciprocity and declared that it would apply the Convention to the recognition and enforcement of awards made only in the territory of another contracting State.<\/p>\n<p>Upon its ratification, the Philippines made the declaration that it will apply the Convention to the recognition and enforcement of awards made only in the territory of another Contracting State based on reciprocity, and only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does your home state have a Model BIT? If yes, does the Model BIT adopt or omit any language which restricts or broadens the investor's rights?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No, the Philippines does not have a Model Bilateral Investment Treaty (BIT).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please list all treaties facilitating investments (e.g. BITs, FTAs, MITs) currently in force that your home state has signed and \/ or ratified. To what extent do such treaties adopt or omit any of the language in your state's Model BIT or otherwise restrict or broaden the investor's rights? In particular: a) Has your state exercised termination rights or indicated any intention to do so? If so, on what basis (e.g. impact of the Achmea decisions, political opposition to the Energy Charter Treaty, or other changes in policy)? b) Do any of the treaties reflect (i) changes in environmental and energy policies, (ii) the advent of emergent technology, (iii) the regulation of investment procured by corruption, and (iv) transparency of investor state proceedings (whether due to the operation of the Mauritius Convention or otherwise). c) Does your jurisdiction publish any official guidelines, notes verbales or diplomatic notes concerning the interpretation of treaty provisions and other issues arising under the treaties?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The following are the BITs currently in force in the Philippines<a href=\"#_ftn1\" name=\"_ftnref1\">[1]<\/a>:<\/p>\n<ol>\n<li>Israel \u2013 Philippines BIT (2022) signed on 07 June 2022, and entered into force on 12 March 2024<\/li>\n<li>Philippines \u2013 Syrian Arab Republic BIT (2009) signed on 25 November 2009, and entered into force on 04 May 2010<\/li>\n<li>Philippines \u2013 Portugal BIT (2002) signed on 08 November 2002, and entered into force on 14 August 2003<\/li>\n<li>Austria \u2013 Philippines BIT (2002) signed on 11 April 2002, and entered into force on 01 December 2003<\/li>\n<li>Bahrain &#8211; Philippines BIT (2001) signed on 07 November 2001, and entered into force on 01 April 2002<\/li>\n<li>Mongolia &#8211; Philippines BIT (2000) signed on 01 September 2000, and entered into force on 01 November 2001<\/li>\n<li>Kuwait &#8211; Philippines BIT (2000) signed on 12 March 2000, and entered into force on 04 May 2002<\/li>\n<li>India &#8211; Philippines BIT (2000) signed on 28 January 2000, and entered into force on 29 January 2001<\/li>\n<li>Argentina &#8211; Philippines BIT (1999) signed on 20 September 1999, and entered into force on 01 January 2002<\/li>\n<li>Philippines &#8211; Turkey BIT (1999) signed on 22 February 1999, and entered into force on 17 February 2006<\/li>\n<li>Finland &#8211; Philippines BIT (1998) signed on 25 March 1998, and entered into force on 16 April 1999<\/li>\n<li>Myanmar &#8211; Philippines BIT (1998) signed on 17 February 1998, and entered into force on 11 September 1998<\/li>\n<li>BLEU (Belgium-Luxembourg Economic Union) &#8211; Philippines BIT (1998) signed on 14 January 1998, and entered into force on 19 December 2003<\/li>\n<li>Denmark &#8211; Philippines BIT (1997) signed on 25 September 1997, and entered into force on 19 April 1998;<\/li>\n<li>Bangladesh &#8211; Philippines BIT (1997) signed on 08 September 1997, and entered into force on 01 August 1998;<\/li>\n<li>Germany &#8211; Philippines BIT (1997) signed on 18 April 1997, and entered into force on 01 February 2000;<\/li>\n<li>Philippines &#8211; Switzerland BIT (1997) signed on 31 March 1997, and entered into force on 23 April 1999;<\/li>\n<li>Chile &#8211; Philippines BIT (1995) signed on 20 November 1995, and entered into force on 06 November 1997;<\/li>\n<li>Canada &#8211; Philippines BIT (1995) signed on 10 November 1995, and entered into force on 13 November 1996;<\/li>\n<li>Philippines &#8211; Thailand BIT (1995) signed on 30 September 19995, and entered into force on 06 September 1996;<\/li>\n<li>Czech Republic &#8211; Philippines BIT (1995) signed on 05 April 1995, and entered into force on 04 April 1996;<\/li>\n<li>Australia &#8211; Philippines BIT (1995) signed on 25 January 1995, and entered into force on 08 December 1995;<\/li>\n<li>Philippines &#8211; Saudi Arabia BIT (1994) signed on 17 October 1994, and entered into force on 11 November 1996;<\/li>\n<li>France &#8211; Philippines BIT (1994) signed on 13 September 1994, and entered into force on 13 June 1996;<\/li>\n<li>Philippines &#8211; Romania BIT (1994) signed on 18 May 1994, and entered into force on 14 June 1998;<\/li>\n<li>Korea, Republic of &#8211; Philippines BIT (1994) signed on 07 April 1994, and entered into force on 25 September 1996;<\/li>\n<li>Philippines &#8211; Spain BIT (1993) signed on 19 October 1993, and entered into force on 25 September 1996;<\/li>\n<li>China &#8211; Philippines BIT (1992) signed on 20 July 1992, and entered into force on 08 September 1995;<\/li>\n<li>Philippines &#8211; Viet Nam BIT (1992) signed on 27 February 1992, and entered into force on 29 January 1993;<\/li>\n<li>Italy &#8211; Philippines BIT (1988) signed on 17 June 1988, and entered into force on 04 November 1993;<\/li>\n<li>Netherlands &#8211; Philippines BIT (1985) signed on 27 February 1985, and entered into force on 01 October 1987; and<\/li>\n<li>Philippines &#8211; United Kingdom BIT (1980) signed on 03 December 1980, and entered into force on 02 January 1981.<\/li>\n<\/ol>\n<p><strong><em>a. Has your state exercised termination rights or indicated any intention to do so? If so, on what basis (e.g. impact of the Achmea decisions, political opposition to the Energy Charter Treaty, or other changes in policy)?<\/em><\/strong><\/p>\n<p>No, it does not appear that the Philippines has exercised termination rights or indicated an intention to do so.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does your home state have any legislation \/ instrument facilitating direct foreign investment. If so: a) Please list out any formal criteria imposed by such legislation \/ instrument (if any) concerning the admission and divestment of foreign investment; b) Please list out what substantive right(s) and protection(s) foreign investors enjoy under such legislation \/ instrument; c) Please list out what recourse (if any) a foreign investor has against the home state in respect of its rights under such legislation \/ instrument; and d) Does this legislation regulate the use of third-party funding and other non-conventional means of financing.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong><em>a. Please list out any formal criteria imposed by such legislation \/ instrument (if any) concerning the admission and divestment of foreign investment;<\/em><\/strong><\/p>\n<p>The Philippines has promulgated laws that govern the rules and regulations on foreign investments in the Philippines. These include, among others, the Foreign Investments Act, the Public Service Act, and the Retail Trade Liberalization Act.<\/p>\n<p><strong>Republic Act No. 7042, as amended by Republic Act No. 11647 (Foreign Investment Act)<\/strong><\/p>\n<p>The Foreign Investment Act allows foreign nationals to own a micro, small, and medium-sized enterprise (MSME) with a minimum paid-in capital of USD100,000.00, provided the enterprises meet the following conditions:<\/p>\n<ol>\n<li>utilize advanced technology (to be determined by the Department of Science and Technology);<\/li>\n<li>endorsed as startup enablers or as a startup in accordance with the Innovative Startup Act; and<\/li>\n<li>hires no less than fifteen (15) Filipino employees.<\/li>\n<\/ol>\n<p>Foreign businesses employing foreign nationals and enjoying fiscal incentives must devise an understudy or skills development program that benefits Filipino workers.<\/p>\n<p>Non-Philippine nationals may own up to one hundred percent (100%) of domestic market enterprises, unless foreign ownership therein is prohibited or limited by existing law or the Foreign Investment Negative List, which is a list of areas or activities that sets limits on foreign ownership.<\/p>\n<p>List A of the Foreign Investment Negative List consists of areas of investment reserved for Philippine nationals. The Philippine Constitution restricts foreign ownership in some of these investment areas to a maximum of forty percent (40%).<\/p>\n<p>Notably, foreign ownership is prohibited in the following areas:<\/p>\n<ol>\n<li>Mass media, except recording<\/li>\n<li>Practice of licensed professions<\/li>\n<li>Retail trade<\/li>\n<li>Cooperatives<\/li>\n<li>Private security agencies<\/li>\n<\/ol>\n<p>Limited foreign ownership is allowed in the following areas:<\/p>\n<ol>\n<li>Private radio communication networks<\/li>\n<li>Private recruitment<\/li>\n<li>Advertising<\/li>\n<li>Ownership of private lands and condominium units<\/li>\n<li>Exploration, development, and utilization of natural resources<\/li>\n<\/ol>\n<p>List B of the Foreign Investment Negative List indicates limits in foreign ownership for reasons of security, defense, risk to health and morals, and protection of small and medium-scale enterprises. They include but are not limited to the following:<\/p>\n<ol>\n<li>Manufacture, repair, storage, and\/or distribution of products and\/or ingredients requiring Philippine National Police (PNP) clearance such as firearms, gunpowder, and dynamite<\/li>\n<li>Manufacture, repair, storage, and\/or distribution of products and\/or ingredients requiring Department of National Defense (DND) clearance such as guns and ammunition for warfare, gunnery, bombing, fire control systems, and military communication equipment<\/li>\n<li>Telescopic sights, sniper scopes, and other similar devices<\/li>\n<li>All forms of gambling, except those covered by investment agreements with the Philippine Amusement and Gaming Corporation (PAGCOR)<\/li>\n<\/ol>\n<p>The required capital for the endeavor should not be less than US$200,000.00. It can be lowered to US$100,000.00 if the activities involve advanced technology or the company has at least 50 direct employees.<\/p>\n<p><strong>Commonwealth Act No. 146, as amended by Republic Act No. 11659 (The Public Service Act)<\/strong><\/p>\n<p>Under the Public Service Act, an entity controlled by or acting on behalf of the foreign government or foreign state-owned enterprises is prohibited from owning capital in any public service classified as public utility or critical infrastructure.<\/p>\n<p>The following are considered as a public utility:<\/p>\n<ol>\n<li>Distribution of Electricity<\/li>\n<li>Transmission of Electricit<\/li>\n<li>\u00a0Petroleum and Petroleum Products Pipeline Transmission Systems<\/li>\n<li>\u00a0Water Pipeline Distribution Systems and Wastewater Pipeline Systems, including sewerage pipeline systems<\/li>\n<li>Seaports<\/li>\n<li>Public Utility Vehicles<\/li>\n<\/ol>\n<p>Critical infrastructure refers to any public service that owns, uses, or operates systems and assets, whether physical or virtual, so vital to the Republic of the Philippines that the incapacity or destruction of such systems or assets would have a detrimental impact on national security, including telecommunications and other such vital services as may be declared by the President of the Philippines.<\/p>\n<p>However, the sovereign wealth funds and independent pensions funds of each state may collectively own up to thirty percent (30%) of the capital of such public services.<\/p>\n<p>Finally, foreign nationals shall not be allowed to own more than fifty percent (50%) of the capital of entities engaged in the operation and management of critical infrastructure, unless the country of such foreign national accords reciprocity to Philippine Nationals as may be provided by foreign law, treaty or international agreement.<\/p>\n<p><strong>Republic Act No. 8762, as amended by Republic Act No. 11595 (Retail Trade Liberalization Act)<\/strong><\/p>\n<p>Under the Retail Trade Liberation Act, foreign-owned partnerships, associations, and corporations may, upon registration with the Securities and Exchange Commission (SEC), or in case of foreign-owned single proprietorships, upon registration with the Department of Trade and Industry (DTI), engage or invest in the retail trade business, under the following conditions:<\/p>\n<ol>\n<li>The foreign retailer shall have a minimum paid-up capital of Twenty-Five Million Pesos (PhP 25,000,000.00).<\/li>\n<li>The foreign retailer\u2019s country of origin does not prohibit the entry of Filipino retailers; and<\/li>\n<li>In the case of foreign retailers engaged in retail trade through more than one (1) physical store, the minimum investment per store must be at least Ten Million Pesos (PhP 10,000,000.00). However, this requirement shall not apply to foreign investors and foreign retailers who are legitimately engaged in retail trade and were not required to comply with the minimum investment per store at the time of the effectivity of this Act.<\/li>\n<\/ol>\n<p>The foreign retailer shall be required to maintain in the Philippines a paid-up capital of Twenty-Five Million Pesos (PhP25,000,000.00), unless it has notified the SEC or the DTI of its intention to repatriate its capital and to cease operations in the Philippines.<\/p>\n<p><em><strong>b. Please list out what substantive right(s) and protection(s) foreign investors enjoy under such legislation \/ instrument;<\/strong><\/em><\/p>\n<p>All foreign investors have the right to:<\/p>\n<ol>\n<li>Repatriation of investments. This is subject to the limitation that repatriation be done in the same currency as well as in the same exchange rate at the time of first investment.<br \/>\n2. Remittance of earnings. Interest payments, payment of loans made to foreign entities, and other obligations should also follow the same kind and exchange rate of currency for this remittance.<br \/>\n3. Freedom from expropriation. The home state is prohibited from seizing properties stemming from foreign investments, unless these are meant for public use or in the interest of national welfare or defense and upon payment of just compensation.<br \/>\n4. Non-requisition of investment. The home state is prohibited from requisition of property stemming from foreign investments, unless it was done in the event of war or a national emergency, and only for that time. However, just compensation must still be made with the same conditions.<\/li>\n<\/ol>\n<p><em><strong>c. Please list out what recourse (if any) a foreign investor has against the home state in respect of its rights under such legislation \/ instrument;<\/strong><\/em><\/p>\n<p>The recourse of the foreign investor against the Philippines in respect of its rights under Philippine legislations\/instruments will depend on the nature of the foreign investor\u2019s claim.<\/p>\n<p>When there is a BIT and\/or MIT between the home state of the foreign investor and the Philippines, the foreign investor may bring an investment treaty arbitration claim against the Philippine government for the latter\u2019s violation of the former\u2019s specific right\/s under the BIT and\/or MIT, e.g., fair and equitable treatment or full protection and security, before an indicated arbitration institution.<\/p>\n<p><em><strong>d. Does this legislation regulate the use of third-party funding and other non-conventional means of financing.<\/strong><\/em><\/p>\n<p>No, the aforementioned laws do not regulate the use of third-party funding and other non-conventional means of financing an arbitration.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Has your home state appeared as a respondent in any investment treaty arbitrations? If so, please outline any notable practices adopted by your state in such proceedings (e.g. participation in proceedings, jurisdictional challenges, preliminary applications \/ objections, approach to awards rendered against it, etc.)<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, the Philippines has appeared as respondent in the following investment treaty arbitrations, among others:<\/p>\n<ol>\n<li>SGS Soci\u00e9t\u00e9 G\u00e9n\u00e9rale de Surveillance S.A. v. Republic of the Philippines, (ICSID Case No. ARB\/02\/6)<\/li>\n<li>Fraport AG Frankfurt Airport Services Worldwide v. Republic of the Philippines (ICSID Case No. ARB\/03\/25)<\/li>\n<li>Fraport AG Frankfurt Airport Services Worldwide v. Republic of the Philippines (ICSID Case No. ARB\/11\/12)<\/li>\n<\/ol>\n<p>The Philippines raised relevant jurisdictional and procedural issues, leading to the dismissal of these cases.<\/p>\n<p>SGS Soci\u00e9t\u00e9 G\u00e9n\u00e9rale de Surveillance S.A. v. Republic of the Philippines, ICSID (Case No. ARB\/02\/6)<\/p>\n<p>SGS Soci\u00e9t\u00e9 G\u00e9n\u00e9rale de Surveillance S.A. (SGS) concluded an agreement with the Republic of the Philippines in which SGS agreed to provide specialized services to assist in improving the customs clearance and control processes of the Philippines. The Contract required SGS to provide pre-shipment inspection services of the Philippines\u2019 imports in the country of export, including verification of the imports\u2019 quality, quantity, and price. SGS was required to maintain a liaison office in the Philippines and to provide certain technical and training assistance to the country. The Contract was extended three times, but eventually, the Philippine government discontinued SGS\u2019s services. SGS submitted monetary claims to the Philippines government for unpaid sums under the Contract, amounting to approximately US$140 million plus interest.<\/p>\n<p>SGS commenced ICSID arbitration proceedings, alleging that the Philippines had violated the Switzerland\u2013Philippines Bilateral Investment Treaty by refusing to pay the amounts claimed under the Contract, failing to accord SGS fair and equitable treatment, unlawfully expropriating SGS\u2019s property, and breaching the \u201cumbrella clause.\u201d The Philippines objected to the Tribunal\u2019s jurisdiction over the matter, arguing that there was no \u201cinvestment\u201d in its territory as required by the BIT; that the dispute was purely contractual; and that the issues in dispute were governed by the contractual dispute resolution clause, which referred the parties to Philippine courts.<\/p>\n<p>The Tribunal ruled that SGS had made an investment in the territory of the Philippines and that both the umbrella clause and the broad dispute resolution clause in the BIT gave it jurisdiction to hear the contract claims. The Tribunal held, however, that the contract claims were inadmissible because priority was to be given to the forum selection clause in the Contract. The Tribunal stayed the proceedings in favor of the dispute resolution forum specified in the Contract.<\/p>\n<p>Fraport AG Frankfurt Airport Services Worldwide v. Republic of the Philippines (ICSID Case No. ARB\/03\/25)<\/p>\n<p>Fraport, a German company, invested in various Philippine companies for the purpose of finance, construction, and operation of an international passenger terminal at Manila\u2019s principal airport, based on a concession agreement granted by the Philippine government. Upon the allegation that the Philippine government refused to honor the concession agreement, Fraport initiated ICSID arbitration proceedings pursuant to the Germany\u2013Philippines BIT.<\/p>\n<p>After closure of the proceedings but before rendition of the award, the Philippines informed the tribunal of a material development concerning issues of the Philippine law that were discussed in the proceedings. Without reopening the proceedings, the tribunal decided to complete the evidentiary record and asked the parties to provide relevant documents. This documentation provided specific evidence on the relevant municipal law issues for the first time.<\/p>\n<p>Based on this new evidence, but without informing the parties about it, the tribunal attached great importance to certain secret shareholder agreements. In its award, the tribunal extensively used the new evidence, and the issue arising out of the new evidence formed an essential part of the ratio of the award. In essence, the tribunal found that Fraport\u2019s investment violated the Philippine Anti-Dummy Law by way of the secret shareholder agreements. As a result, there was no investment \u201cin accordance with law\u201d as required by the BIT and the tribunal lacked jurisdiction ratione materiae (that is, subject-matter jurisdiction).<\/p>\n<p>In deciding the case, the Annulment Committee annulled the award in its entirety based on Article 52(1)(d) of the ICSID Convention, finding that the tribunal seriously departed from a fundamental rule of procedure. The purpose of Article 52(1)(d) was to control the integrity of the arbitral procedure. The right to be heard was a fundamental rule of procedure. The right to be heard also covered the party\u2019s right to make submissions on new evidence received by the tribunal and relevant to the tribunal\u2019s final deliberations.<\/p>\n<p>Fraport AG Frankfurt Airport Services Worldwide v. Republic of the Philippines (ICSID Case No. ARB\/11\/12)<\/p>\n<p>Following the annulment of the first award, Fraport filed a new request for arbitration with ICSID in 2011. The Philippines objected to the tribunal\u2019s jurisdiction on the basis that Fraport\u2019s venture had not been accepted in accordance with domestic law and therefore did not qualify as an investment under the BIT.<\/p>\n<p>Article 1(1) of the BIT defines \u201cinvestment\u201d as \u201cany kind of asset accepted in accordance with the respective laws and regulations of either Contracting State.\u201d While Fraport attempted to argue that this language should be understood as an \u201cadmittance clause,\u201d the tribunal accepted that it was a \u201clegality requirement.\u201d The tribunal then noted EDF International and others v. Argentina and observed: \u201ceven absent the sort of explicit legality requirement that exists here, it would still be appropriate to consider the legality of the investment. As other tribunals have recognized, there is an increasingly well-established international principle which makes international legal remedies unavailable with respect to illegal investments, at least when such illegality goes to the essence of the investment.\u201d<\/p>\n<p>The Philippines successfully argued that the share agreements through which Fraport invested in Philippines International Air Terminals Co., Inc. (PIATCO) and its affiliates triggered violations of domestic law. The Anti-Dummy Law prohibits foreign intervention in the management, operation, administration, or control of a public utility. Fraport\u2019s share purchase agreements dictated that the Philippine shareholders in PIATCO would in certain circumstances act upon Fraport\u2019s recommendation. The tribunal agreed that these arrangements violated domestic law and that Fraport had not been \u201cadmitted\u201d in accordance with Article 1(1) of the BIT. There was therefore no \u201cinvestment\u201d for the purpose of the tribunal\u2019s jurisdiction.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">In the context of awards issued in non-ICSID investment treaty arbitrations seated in your jurisdiction, please set out (i) the grounds available in your jurisdiction on which such awards can be annulled or set aside, and (ii) the court practice in applying these grounds.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Based on the Special Rules of Court on Alternative Dispute Resolution (Special ADR Rules) which essentially echoes the New York Convention and the UNCITRAL Model Law, a Philippine court may refuse recognition of an award in a non-ICSID investment treaty arbitration if itinds that:<\/p>\n<p>a. the subject-matter of the dispute is not capable of settlement or resolution by arbitration under Philippine law; or<\/p>\n<p>b. the recognition or enforcement of the award would be contrary to public policy.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">In the context of ICSID awards, please set out: (i) the grounds available in your jurisdiction on which such awards can be challenged and (ii) the court practice in applying these grounds.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There are no specific grounds available in the Philippines on which ICSID awards can be challenged. ICSID awards are not subject to an appeal or to other remedies in the Philippines. Nonetheless, Article 52(1) of the ICSID Convention provides an exhaustive list of grounds on which a party to an ICSID award may seek annulment. These grounds include: (a) the tribunal was not properly constituted; (b) the tribunal manifestly exceeded its powers; (c) there was corruption on the part of a member of the tribunal; (d) there has been a serious departure from a fundamental rule of procedure; (e) the award has failed to state the reasons on which it is based. Incidentally, these are essentially similar grounds under Special ADR Rules.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">To what extent can sovereign immunity (from suit and\/or execution) be invoked in your jurisdiction in the context of enforcement of investment treaty awards.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Currently, there is no law or case explaining the extent that sovereign immunity may be invoked in the Philippines in the context of enforcement of investment treaty arbitration awards.<\/p>\n<p>Subject to the foregoing discussion on specific available remedies against an ICSID arbitral award, Philippine courts may refuse enforcement of an award in an arbitration seated outside the Philippines if the Philippine court finds that:<\/p>\n<p>a. the subject-matter of the dispute is not capable of settlement or resolution by arbitration under Philippine law; or<\/p>\n<p>b. the recognition or enforcement of the award would be contrary to public policy. [Rule 13.4, Special ADR Rules]<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please outline the grounds on which recognition and enforcement of ICSID awards can be resisted under any relevant legislation or case law. Please also set out any notable examples of how such grounds have been applied in practice.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is currently no ground on which recognition and enforcement of ICSID awards can be resisted under any relevant legislation or case law in the Philippines.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">To what extent does your jurisdiction permit awards against states to be enforced against state-owned assets or the assets of state-owned or state-linked entities?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>While no Philippine statute or case squarely addresses the enforcement of investment treaty awards against state-owned assets or assets of state-owned or state-linked entities, Philippine jurisprudence draws a clear distinction between government property exempt from execution and property that may be levied upon.<\/p>\n<p>The controlling test is the nature of the government\u2019s ownership. Property held in a governmental capacity\u2014i.e., for public use or for the administration of government\u2014is absolutely exempt from execution. By contrast, property held in a proprietary, quasi-private, or business capacity may be subject to execution.<\/p>\n<p>In PSALM v. Felisa Agricultural Corporation, the Philippine Supreme Court applied this distinction. It held that National Transmission Corporation (TRANSCO) and Power Sector Assets and Liabilities Management Corporation (PSALM), both government-owned and controlled corporations, perform electricity transmission and generation functions that are commercial in nature, albeit imbued with public interest. Because these functions are proprietary rather than governmental, the Court ruled that the assets and funds of TRANSCO and PSALM are held in a proprietary capacity and may therefore be subject to execution.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please highlight any recent trends, legal, political or otherwise, that might affect your jurisdiction's use of arbitration generally or ISDS specifically.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In recent years, the Philippines has prioritized projects to increase foreign investments. In 2024, the total foreign direct investments (FDI) approved by the government amounted to PhP57.70 billion. The major country sources of FDIs to the Philippines are the British Virgin Islands, the United States, Japan, the Netherlands, Singapore, South Korea, the Cayman Islands, and Australia.<\/p>\n<p>The main sectors for foreign investment are manufacturing, electricity, water and gas, transport and storage, hotels, services, and infrastructure. The Philippines\u2019 high investment appeal is attributable to certain factors like its growing economy, high literacy rate, demographic and educational advantages with a large proportion of English speakers, and the private sector\u2019s receptivity to innovation.<\/p>\n<p>Given the growing foreign investments in the Philippines, a rise in the use of investment treaty arbitration in settling future disputes between the State and foreign investors can be anticipated.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please highlight any other investment treaty related developments in your jurisdiction to the extent not covered above (for e.g., impact of the Achmea decisions, decisions concerning treaty interpretation, appointment of and challenges to arbitrators, immunity of arbitrators, third-party funding and other non-conventional means of financing such proceedings).<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>While the Philippines has, generally, been the respondent in a number of investment treaty arbitrations, the rights of investors under the various BITs and MITs that the Philippines is a party to also extend to Filipino investors. At a time when Filipino investors have expanded beyond the shores of the Philippines and have started to invest in business opportunities in other countries, Filipino investors should find comfort in the fact that the Philippines has entered into various BITs and MITs that will protect their rights as foreign investors. The rights of investors, such as fair and equitable treatment, full protection and security, and lawful expropriation, are rights that Filipino investors may invoke against the host State to ensure the protection of their investment.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">4567<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/132254","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=132254"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}