Admissibility within the current legal framework
I. Introduction 3
II. General Characteristics of Online Arbitration 5
Applicable regulations of international and domestic laws 7
III. Arbitration agreements 9
The “in writing” requirement in arbitration law 10
E-mails vis-à-vis traditional means of communication 12
An arbitration agreement by the click of a mouse? 16
The traditional requirements modernized 18
IV. Arbitral proceedings 24
Admissibility of electronic arbitral proceedings 24
Online proceedings 27
Electronic deliberations amongst arbitrators 30
The seat of arbitration 33
V. Arbitral awards 35
Admissibility of electronic arbitral awards 35
Notification of the award to the parties 39
VI. Conclusion 43
Technological developments of recent years are significantly changing traditional arbitral practices and procedures. Electronic submissions by e-mails or videoconferencing are early harbingers of the technology-dense future of arbitration. Cyberspace with its array of new technological possibilities has already been described in legal literature as a new dimension challenge to the regime of international commercial arbitration.1 Arbitration tends to involve more and more diverse online techniques. Arbitration agreements are concluded, and proceedings conducted, by electronic means in online settings. International arbitrators want to deliberate without leaving their hometowns and would gladly issue an arbitral award in an electronic form. The purpose of this article is to discuss how such technological innovations can be accommodated by the existing legislative framework and regime of international commercial arbitration.2
The main thesis of the article is that online arbitration is fully admissible and effective under the current legal framework, provided that certain requirements are met. In order to justify this thesis the key facets of online arbitration will be presented in the context of existing regulations. Prior to discussing specific legal obstacles that might be encountered, a general picture of online arbitration, including its background and definition, will be outlined. The later part of the paper is organised in a “chronological” fashion, proceeding through the steps of the arbitration procedure sensu largo. The arising issues will be divided into three major categories relating to: (i) arbitration agreements, (ii) arbitral proceedings, and (iii) arbitral awards.3
The first of these parts contains a detailed discussion of the validity of online arbitration agreements. In order to answer the question of whether an arbitration agreement formed by electronic means satisfies the formal requirements of the NYC and other relevant regulations, the requirement that it is “in writing” will be thoroughly examined. This analysis will include the arguments invoked both before and after the adoption of recent laws on electronic commerce and signatures, of course only to the extent that they remain valid.
The second part seeks to answer the question of whether, or more accurately, to what degree electronic means can be used to conduct arbitral proceedings. The view will be upheld that arbitration can be validly conducted despite the fact that parties and arbitrators do not meet in a single location. Then, the issue of whether arbitrators can deliberate by electronic means shall be discussed. Finally, we will tackle difficulties to determine the “seat of arbitration” with regard to such virtually delocalized arbitrations.
The last part of the paper addresses legal issues related to an arbitral award in online settings. Two major problems will be discussed in this section. Can an arbitral award be validly issued by arbitrators in an electronic form? Is such an electronically rendered arbitral award enforceable by national courts within the existing legislative framework of international commercial arbitration?
Prior to discussing these potential stumbling blocks or legal questions the online performance of arbitration may find on its path, some explanation on the background and definition of online arbitration is required.
Due to the increasing use of the Internet worldwide, the number of disputes arising from e-commerce, domain names registrations, and the like, is on the rise. Traditional mechanisms of dispute resolution, including “offline arbitration”, are often inappropriate to resolve them; they tend to be time-consuming, expensive and raise the serious problems related to jurisdiction and enforcement. Hence the point of departure for the development of online arbitration consists in saying: conflicts arising online should be resolved online4. Both practitioners and scholars claim that it has become increasingly necessary to design more efficient mechanisms for resolving “online disputes”. “Offline disputes”, on the other hand, can also be more effectively resolved with the use of arbitration when it takes advantage of diverse online techniques. In the light of the foregoing, we share the view that online arbitration may soon become an essential component of majority of international business interactions, both online and offline.
Online arbitration5 (also called cyber-arbitration6, cybitration7, cyberspace arbitration8, virtual arbitration9, electronic arbitration10, or arbitration using online techniques11) has attracted the interest of legal scholars since the middle of the nineties12. Some authors have emphasized the distinction between arbitrations used to resolve disputes that arise online and offline, and tended to narrow the scope of the term online arbitration only to the former. In this paper such an approach will not be followed. We hold that the major legal challenges faced by arbitration in online settings do not depend on the “origin” of a dispute. Indeed, “old fashion disputes”, that arise offline, may be submitted to arbitration by an exchange of e-mails, and then – by virtue of the consent of parties – resolved with the large involvement of diverse online techniques. Thus, for the purposes of this paper, online arbitration is understood in the broader meaning, as an arbitration procedure conducted, at least partly, through electronic means related to the advancement of the Internet.
It ought to be noted here that the term arbitration itself is sometimes situated in a fairly ambiguous context. This comment refers first of all to so-called “non-binding arbitration”, which must sound like a contradiction in terms, given the inherently binding nature of an arbitral award. A thesis was put forward in the literature that non-binding arbitration suits cyberspace better than traditional arbitration, “because it is effective without being subject to so many legal obstacles” (Schultz13). This paper takes a completely opposite stand. It seeks to examine legal difficulties on the path of online arbitration, to prove that under certain conditions online arbitration is fully admissible and effective within current international commercial arbitration regime.14
There is “an unfortunate tendency to think of online arbitration as a new form of ADR, administered by a new breed of techno-arbitrator, having little in common with its more traditional counterpart”, argued Manevy15. Also in our view, this tendency is not plausible: online arbitration certainly remains arbitration, though may be seen as its new type or dimension. An observation that online arbitration has got “some independence” thanks to new sets of rules it generated (Yu & Nasir16) also does not challenge the argument of necessity to reconcile online arbitration to the existing international commercial arbitration regime.