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JPEPA: Arbitration framework readied

Manila Bulletin | 18 may 2006

Arbitration framework readied
RP, Japan eye easier settlement

The Philippines and Japan are moving towards adopting arbitration procedures in settling disputes to avoid lengthy and expensive court battles in protecting investments from both sides they finalize the provision on dispute as settlement mechanism of their proposed bilateral free trade pact.

A high-level government official said the dispute settlement mechanism is the last hurdle in the proposed Japan Philippines Economic Partnership Agreement (JPEPA) negotiations.

Office of the Solicitor General and the International Legal Bureau of Japan are discussing the framework for the dispute settlement agreement, the official said.

"We want to avoid a repeat of the Fraport case," the source stressed. It could be recalled that the case between the Philippine government and Fraport AG Frankfurt Airport Services Worldwide involving the construction of the Terminal 3 of the Ninoy Aquino International Airport has already dragged on with no immediate resolution in sight.

According to the source, the move is towards resolving conflicts through arbitration rather than go through expensive litigation.

"We want an expedient mechanism that is within our resources," the official said as he stressed the importance of the dispute settlement mechanism in any trade deal.

"Unless you settled the rules, you cannot play the game," he said.

He further added that JPEPA negotiations can still be pursued even if the Supreme Court has yet to rule on the "mandamus" case filed by certain groups preventing the government from pursuing or signing the agreement.

The official noted that both parties can proceed with the negotiations as long as they won’t proceed with concluding or signing the deal without the court resolution on the case.

The signing of the JPEPA has been extended several times. The deal was supposedly for signing late last year.

The new date being floated is a possible signing during the planned visit of Japanese Prime Minister Junichiro Koizume in July this year.

The official called the July timetable a "touch and go".

Other contentious in the JPEPA, which had been settled already, include the movement of natural persons and the automotive sector.

The proposed JPEPA seeks to reduce to zero the tariffs on Philippine and Japanese goods within a ten-year period from its signing or if the deal is signed this year, the FTA would take effect by 2016.

 source: Manila Bulletin