RCEP and arbitration

Published July 22, 2022, 12:05 AM

by Senator Francis Tolentino


Senator Francis N. Tolentino

In relation to my column on the Regional Comprehensive Economic Partnership Agreement (RCEP) last March 10, 2022, I stated my view that in order for the Philippines to maximize the benefits that the RCEP promises, we should first ensure the ratification of certain foundational treaties. (https://mb.com.ph/2022/03/10/the-regional-comprehensive-economic-partnership/)

To recap, I’ve mentioned a few of these foundational treaties, namely: the Hague Choice of Court Convention, the United Nations Convention on Contracts for the International Sale of Goods, and the Convention on the Use of Electronic Communications in International Contracts.

Allow me to now illustrate why I refer to these several treaties as foundational. These are those that the Philippines ought to reconsider being a state party to before engaging with the RCEP.

The RCEP is the world’s largest free-trade agreement that provides greater simplicity in trade relations with its uniform terms and conditions among the RCEP members. As such, in case of disputes, the RCEP provides for dispute settlement mechanisms, the salient features of which include the following:
First, a choice of forum, which allows a complaining party to select the forum within which to address a dispute that concerns substantially equivalent rights and obligations in the RCEP Agreement and another international trade or investment agreement to which the parties to the dispute are a party, to the exclusion of other possible fora.

Second, consultation provisions requiring the parties to first enter into consultations, if requested.
Third, good offices, conciliation, or mediation provisions, which allows a party to a dispute to voluntarily undertake alternative methods to settle disputes.

Fourth, the establishment of a panel that allows a complaining party to request for the establishment of a panel to resolve a dispute in circumstances where consultations are unsuccessful.

Lastly, interested third parties are allowed to participate in disputes with their views considered during the panel process.

The foregoing dispute settlement mechanisms are provided under the RCEP to facilitate the resolution of issues arising between parties of transactions covered by the RCEP. However, by acceding to the RCEP alone, we would be at a disadvantage compared to other RCEP countries who are state parties to other foundational and relevant treaties.

For instance, let us say a Filipino trader has an international trade agreement with a Singaporean trader. Their agreement provides that any dispute shall be brought to the exclusive jurisdiction of the courts of the Philippines. The Hague Choice of Court Convention – which Singapore is a state party to and which the Philippines is not – provides for the binding nature of the judgment rendered by the exclusive court chosen by the parties and obliges the contracting state parties to recognize or enforce such a judgment. Now since the Philippines is not a state party to the said Convention, the Filipino trader may have difficulties in making Singapore courts recognize and enforce that judgment.

Another scenario is when the Filipino trader, in pursuit of his judicial claims arising out of the international trade agreement, seeks to obtain testimony and evidence located in Singapore. The Hague Evidence Convention establishes methods for provision of testimony and documents between a signatory state when evidence is sought and another signatory state where evidence is located, for use in judicial proceedings in the requesting state. However, since the Philippines is not a state party to this Convention, the Filipino trader cannot then avail of the methods provided therein to support his claim.

In terms of perfection of international trade contracts, the Philippines may again be at a disadvantage in cases where the other contracting party is choosing to contract between a state party to the United Nations Convention on Contracts for the International Sale of Goods (CISG) and the Philippines who is a non-state party. Since this Convention provides for a modern, uniform, and fair regime for contracts for the international sale of goods, thereby decreasing transaction costs and promoting efficient international dealings because of the uniform terms and conditions – the other contracting party may prefer dealing with a fellow state party to the Convention as opposed to the Philippines who has yet to impose their own terms and conditions.

There are a few more other relevant and foundational treaties that we have yet to reevaluate and discuss. The foregoing are just illustrations of how the Philippines will be at a disadvantageous position in case we become a state party to the RCEP without ensuring that the basic building blocks of international commercial transactions are in place. In fulfilling the latter, this would complete or expand the remedies available in our international trade agreements. As such, I heed my colleagues in the 19th Congress to also reassess all treaties which the Philippines are non-state parties to and consider the protection of our international commercial transactions for the betterment of the Philippine economy – a clear priority in the administration of our President Ferdinand “Bongbong” Marcos, Jr.

(The writer, Senator Francis ‘Tol’ N. Tolentino is a member of the 19th Congress. He obtained his Masters of Law (LL.M.) from the University of London, specializing in Public International Law, and from the Michigan Law School, specializing in Constitutional Law.)