I. Introduction 3 II. General Characteristics of Online Arbitration 5




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Applicable regulations of international and domestic laws


At this early stage, the legal regulation of online arbitration exists as “a collection of hybrid terms and rules of dispute resolution”17. A number of arbitration institutions have already opened the possibility to perform arbitration procedures online. Some of them are institutions with long traditions in providing dispute resolution services, e.g.: WIPO, ICC and the American Arbitration Association. Many others, exploring the potential of the Internet for dispute resolution by arbitration, are relatively unknown, e.g.: I-courthouse, Virtual Magistrate, Cybercourt, Online Resolution and IntelliCOURT.18 A significant number of arbitration institutions have made an effort to either adapt their previous arbitration rules to the online environment, or to set up specific sets of rules for online arbitration.

The current legal framework for online arbitration, however, is provided by multiple layers of regulation. Besides institutional rules of arbitration and private contractual agreements, the regime of international commercial arbitration consists of international conventions, bilateral treaties, “soft” or model laws (such as UNCITRAL model laws) and national arbitration laws. The legal analysis in this paper is mainly concentrated on the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards19 (hereinafter referred to as “New York Convention” or in short as “NYC”), because of its central role in international arbitration. The New York Convention must be taken as a starting point in order to answer the question of whether online arbitration is hampered by any requirements under the current legal framework. The formal requirements in the NYC mainly concern an arbitration agreement and an arbitral award (Sections III and V, respectively, of this article). The analysis of legal framework for online arbitration with respect to arbitral proceedings (Section IV) will mainly refer to UNCITRAL Model Law on International Commercial Arbitration20 (“MAL”). A few other sources of international arbitration law, such as the European Convention on International Commercial Arbitration (“Geneva Convention”) of April 21, 196121, and the Inter-American Convention on International Commercial (“Panama Convention”) of January 30, 197522 supplemented by the Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards (“Montevideo Convention”) of May 8, 197923, shall also be mentioned in the paper. The analysis of the current legal framework for online arbitration will be completed by a few examples of solutions adopted in major national arbitration laws.24


III.Arbitration agreements


Arbitration agreements are more and more often concluded by modern means of electronic transmission, instead of traditional forms, usually involving paper covered with printing or handwriting and participating parties’ signatures. Yet the legal framework relevant for such agreements, including the New York Convention (1958), was established in large part well before the Internet age. Thus arises the problem of whether it is possible to validly agree on arbitration through electronic means, such as e-mail or by assenting to an offer on a website. The answer to this question depends mainly on the issue whether the electronic transmission can satisfy the “in writing” requirement set forth in the above regulations.

The “in writing” requirement in arbitration law


Most international and national legal sources require an arbitration agreement to be concluded in a written form. This principle can be seen in: Article II of the New York Convention (“NYC”) which stipulates that “[e]ach Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship25; and also in Article 7(2) of the UNCITRAL Model Law on Arbitration (“MAL”) beginning with the sentence: “The arbitration agreement shall be in writing”, also in several national arbitration laws26.

The principle that a valid arbitration agreement must be in writing has been established for several reasons. These reasons are broadly discussed in the scholarship concerning traditional arbitration27. Put simply, according to Yu and Nasir: “formalities such as writing and signature are based on the need for some physical evidence or authentication from the person who has given up his right to litigate in national courts. Written evidence is regarded as essential in order to ascertain such an intention”28. In other words, the importance of an arbitration agreement consists in the fact that by undertaking to submit arising disputes to an arbitral tribunal, the parties renounce the right to refer the disputes to state courts. Such commitment should therefore not be taken lightly, nor imposed by the drafter of the contract.29 A "writing requirement" cautions the actors that they are entering a solemn matter, and it promotes deliberation and seriousness.30

In principle, other sources of international arbitration law follow the same approach as the NYC and the MAL. The Geneva Convention of April 21, 1961, a regional agreement that binds mainly European States, defines the arbitration agreement as: “either an arbitral clause in a contract or an arbitration agreement, the contract or arbitration agreement being signed by the parties, or contained in an exchange of letters, telegrams, or in a communication by teleprinter” (Article 1.2(a)). However, being more liberal than the NYC, the Geneva Convention states further “in relations between States whose laws do not require that an arbitration agreement be made in writing, any arbitration agreement [can be] concluded in the form authorized by these laws”. The Panama Convention of January 30, 1975 does not use the term “writing” at all, but instead it states that the arbitration agreement shall be set forth in “an instrument signed by the parties or in the form of an exchange of letters, telegrams or telecommunications” (Article 1).

Even the phrase “agreement in writing”, contained in both the most important sources of arbitration law, i.e. NYC and the MAL, may be diversely construed. Pursuant to Article II (2) NYC: “The term ‘agreement in writing’ shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams”. UNCITRAL Model Law on International Commercial Arbitration takes a different stand. Article 7(2) provides broader understanding of “in writing”: “An agreement is in writing if it is contained in a document signed by the parties or in an exchange of letters, telex, telegrams or other means of telecommunication which provides a record of the agreement.”

Following the definition contained in the MAL, modern arbitration laws tend to be flexible in defining “in writing”.31 Reflecting Article 7(2) of the MAL, such definitions include any method of communication that can serve as a record of the agreement. For example, the 1996 English Arbitration Act stipulates “writing” in section 5 (1) and defines “writing” in section 5 (6) to include "its being recorded by electronic means." Article 6(a) of the US Uniform Arbitration Act refers to “an [arbitration] agreement contained in a record”, whereas the ‘record’ means “information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form”. Article 1031 (5) of the German Code of Civil Procedure (Zivilprozessordnung) provides explicitly that the written form may be substituted by the electronic form pursuant to Section 126 a of the German Civil Code ("Bürgerliches Gesetzbuch – BGB"). This leaves open the question which electronic forms can constitute legally valid records, or more accurately, under which conditions such forms can be used to enter into arbitration agreements.

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