G.R. No. 1125 : August 24, 1903
LUCIANO CORDOBA Y PASCUAL, plaintiff-appellant, vs. ANGEL CONDE Y MORENO, defendant-appellee.

FACTS:
On February 20, 1901, the plaintiff and defendant formed a mercantile partnership. Clause 7 of their contract stipulated that all disputes between the partners would be settled by “friendly adjusters” (juicio de amigables componedores), a specific arbitration procedure detailed in the then-existing Spanish Ley de Enjuiciamiento Civil. When disputes arose, the plaintiff filed an action in court for the dissolution of the partnership without first attempting to settle the differences through the agreed-upon procedure. The lower court dismissed the case for lack of jurisdiction, citing Clause 7. The plaintiff appealed, arguing that the agreed arbitration method was no longer viable.

ISSUE:
Whether the lower court correctly dismissed the case for lack of jurisdiction due to the arbitration clause, given that the procedural law governing the “friendly adjusters” system had been repealed.

RULING:
The Supreme Court reversed the lower court’s decision. It held that the arbitration agreement in Clause 7 referred specifically to the detailed procedure under the repealed Spanish Ley de Enjuiciamiento Civil, which included strict formalities, appointment rules, notarial requirements, and a right to appeal to the Supreme Court of Spain. This specific procedure was entirely abolished under the new procedural code, with no equivalent substitute. Since the only method of arbitration consented to by the parties had become legally impossible to perform, the plaintiff was entitled to resort to the courts. The Court also noted that Articles 1820 and 1821 of the Civil Code, which referenced such agreements, were rendered inoperative by the repeal of the procedural law. The case was remanded to the lower court for further proceedings.