If arbitral proceedings are conducted entirely online at a distance, with parties and arbitrators in distinct places, prima facie, it seems difficult, or even impossible, to determine the place, or seat118, of the arbitration. This observation led some scholars to conclusion that “virtual arbitration [has] no situs”119, or at least “no identifiable seat of arbitration”120, since it “is not pertaining to any particular geographical territory”121. In the light of the foregoing, Yu&Nasir proposed “to re-invent arbitration on the basis of the delocalization theory”122. However, ‘delocalization’ appears to be highly problematic within the current framework of international commercial arbitration. Both state arbitration legislation and international conventions are “premised on the nation state as the place of arbitration”123.
In international arbitration, the place of arbitration, that is geographically determined, constitutes a core element on which numerous legal implications depend124. “The principle of territoriality is of a tantamount importance concerning the determination of the jurisdiction of the arbitration” (Vahrenwald125). For example, Article 1(2) MAL provides that the provisions of this Law apply only, if the place of arbitration is in the territory of a given state that adopted the MAL. However, the terminology used in international arbitration law to establish “the territoriality of the arbitration”126 is not uniform. The NYC refers to the places “where the arbitration took place” (Article V(1) lit. (d)) and “where the award was made” (Article V(1) lit. (a))127. According to Article I(2)(c) of the Geneva Convention, the term 'seat' means “the place of the situation of the establishment that has made the arbitration agreement”. The Panama Convention refers in Article 5(1)(a) to the “law of the State in which the decision was made”. The MAL does not define this term, though refers to the ‘place of arbitration’ in Article 20.
Article 20 of the MAL, followed by modern national arbitration laws, authorizes parties to freely choose the place of arbitration. If the parties agree on institutional arbitration, the choice of the seat is most often set forth in applicable arbitration rules. Thereby, the parties to an online arbitration usually “involuntarily choose”128 the location of a given arbitration institution as the place of arbitration. On the other hand, the parties’ selection of such institution might be considered as an implicit agreement on the arbitration at a particular place129. If an arbitration agreement or arbitration rules fail to specify the place of arbitration, in accordance with the second sentence of Article 20(1) MAL, “the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties”. Thus, designating a formal place of arbitration can be achieved through decision of parties (either directly or by reference to the arbitration rules) or arbitrators.
The admissibility of the free choice of the seat of arbitration by parties or arbitrators results in the conclusion that the physical place, or perhaps – more accurately – lack of the physical place, of arbitral hearings and other procedural acts, is irrelevant. Since the procedural acts in online arbitration are performed remotely, “determining the place of arbitration on the basis of objective indices is scarcely conceivable”130. Case law allows the seat of arbitration to be “a strictly legal concept dependent on the will of the parties”131. Given that statistics show that parties choose the seat of arbitration, in more than 80 per cent of ICC arbitrations132, we subscribe to the view that difficulties in determination of the seat of arbitration do not hamper online arbitration.
Among diverse legal issues related to an arbitral award in online settings, two major problems are of particular importance. Can an arbitral award be validly issued by arbitrators in an electronic form? Would such an electronically rendered arbitral award enforceable by national courts within the existing legislative framework of international commercial arbitration?
Admissibility of electronic arbitral awards
Taking the NYC as a starting point for the analysis of whether electronic arbitral awards are admissible within the current legal framework, we note that the convention does not explicitly provide for an arbitral award signed and in writing133. The NYC merely requires a party seeking enforcement to furnish the duly authenticated original award or a duly certified copy thereof. National arbitration laws do not take consistent approaches in respect of formal requirements applicable to arbitral awards134. Yet, some authors expressed doubts “whether an award that is solely rendered in electronic format is sufficient” (Schelleckens, also Arsic and Hill)135.
A major concern related to the NYC referred to the term ‘duly authenticated original award’ in Article IV NYC. Put simply, if the original is not produced, a party is not successful in seeking recognition or enforcement of the award. The issue arose whether the requirement for ‘an original’ can be satisfied by an electronic file, since “there is no such thing as a copy or original for such files, and they are infinitely reproducible”136. To answer this question, once again the doctrine of ‘functional equivalence’137 has been invoked. Since the function of ‘an original’ is “to be a point of reference and a means of measuring the fidelity of the copies”138, an electronic file, under certain conditions, can be considered ‘an original’. To this aim, the integrity of a file containing an arbitral award must be appropriately guaranteed, given that the purpose of Article IV NYC is to confirm the integrity of the award and also the identity of the arbitrators.139 Furthermore, Article 8 of the UNCITRAL Model Law on Electronic Commerce explicitly states that a requirement to present information in its original form can be met by an electronic data message. Cachard concluded that “it would be paradoxical not to accept as original an electronic award guaranteed in this way, while elsewhere states admit as authentic acts performed by electronic means; (…) nevertheless, for greater legal security, the revision of Article IV is envisaged”.140 We doubt whether the revision of Article IV NYC is indeed required, because its flexible interpretation is perfectly legitimate in our view. Hence, we hold that secure electronic documents can be considered ‘originals’ within the meaning of the NYC. Also a requirement that an award has to be ‘duly authenticated’ is not considered as a stumbling block to admissibility of electronic awards under the NYC. With respect to traditional arbitration, the requirement provided in Article IV NYC means that “the signature of the arbitrator has to be authenticated by a trusted third party, such as a diplomatic or consular agent”.141 By far the practice of electronic awards’ authentication for the purposes of Article IV NYC has been to large degree ambiguous. It is not clear, inter alia, whether diplomatic and consular agents, or other state agencies, or perhaps certified private entities, should be entrusted with authenticating services.
Other concerns about admissibility of electronic arbitral awards referred to formal requirements under national arbitration laws. In many jurisdictions such requirements result from Article 31 (1) MAL, according to which “the award shall be made in writing and shall be signed by the arbitrator or arbitrators” (e.g. Article 31 (1) of Canadian Commercial Arbitration Act, Article 1057 (2) of Dutch Code of Civil Procedure, or Article 1473 of French New Civil Procedure Code; also Article 32(2) of the UNCITRAL Arbitration Rules states that “the award shall be made in writing”). Many states require awards to be in writing142, and most states require that one or more of the arbitrators sign them143. Other jurisdictions do not expressly require the awards to be in writing (e.g. French, Polish and Swiss law144), though such a requirement is sometimes considered as implied. Finally, it must be pointed out that under a few national arbitration laws there are no formal requirements that would hamper rendering the electronic awards, or even, rarely, specific legislations enshrining the electronic arbitral awards were enacted. For example, according to English Arbitration Act 1996145, “the parties are free to agree on the form of the award” (Section 52 (1)). Only if there is no such agreement, “the award shall be in writing signed by all the arbitrators or all those assenting to the award” (Section 52 (2)). In the United States, the Revised Uniform Arbitration Act of 2000146 provides for the use of electronic signatures by arbitrators. According to its Article 19, “an arbitrator shall make a record of an award. The record must be signed or otherwise authenticated by any arbitrator who concurs with the award”. The terms ‘or otherwise authenticated’ are intended to conform to the US Electronic Signatures in Global and National Commerce Act. In an official comment to Article 19 of the Uniform Arbitration Act, it is stated explicitly that “an arbitrator can execute an award by an electronic signature which is intended to mean ‘an electronic sound, symbol, or process attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record’". However, despite a few significant liberal legislations (such as English Arbitration Act 1996 or US Uniform Arbitration Act 2000), the comparative analysis of the national arbitration laws leads us to the conclusion that many national arbitration laws still require the arbitral awards in writing and signed. Thus, some writers doubted whether an arbitral award could be rendered in electronic format.
Majority of such sceptical opinions about admissibility of the electronic arbitral awards were given before the adoption of recent laws on electronic commerce. On the other hand, while some authors claimed that formal requirements concerning arbitral agreements had not hampered online arbitration even before e-commerce laws were adopted, no similar thesis was put forward with respect to formal requirements concerning arbitral awards. On the contrary, Arsic and Hill argued that the arbitral awards, whether final or provisional, must be written on paper and be signed, in ink and by hand, by arbitrators147. Even recently, Schelleckens (2002) wrote that online arbitration would have to result in a paper award148. We hold that the recent laws on e-commerce made these objections outdated. The laws providing for the electronic equivalents of traditional writings and signatures allow, in our view, the arbitral awards to be rendered online. However, since numerous countries have not adopted the e-commerce laws yet, some problems will remain “until laws and courts routinely accept electronic signatures”149.
In our opinion, the legal obstacles to rendering an electronic arbitral award can be overcome. When ‘an original’ is required, the production of an electronic document is sufficient, provided that its integrity and attribution to the arbitrators are guaranteed. Most difficulties that remain today should disappear soon when electronic documents and signatures are commonly accepted.