Online Arbitration:
Admissibility within the current legal framework
Rafal Morek
rafalmorek@uw.edu.pl
I.
Introduction ...................................................................................................................... 3
II.
General Characteristics of Online Arbitration ................................................................ 5
Background ................................................................................................................. 5
Definition...................................................................................................................... 5
Applicable regulations of international and domestic laws ........................................... 7
III.
Arbitration agreements ................................................................................................ 9
The “in writing” requirement in arbitration law .............................................................. 9
E-mails vis-à-vis traditional means of communication ............................................... 12
An arbitration agreement by the click of a mouse? .................................................... 16
The traditional requirements modernized .................................................................. 19
IV.
Arbitral proceedings ...................................................................................................24
Admissibility of electronic arbitral proceedings .......................................................... 25
Online proceedings .................................................................................................... 27
Electronic deliberations amongst arbitrators .............................................................. 30
The seat of arbitration ................................................................................................ 33
V.
Arbitral awards ................................................................................................................35
Admissibility of electronic arbitral awards .................................................................. 36
Notification of the award to the parties....................................................................... 40
Enforcement .............................................................................................................. 41
VI.
Conclusion ...................................................................................................................44
2
”Online Arbitration“
I. Introduction
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
1
K. Lynch, The Forces of Economic Globalization: Challenges to the Regime of International Commercial
Arbitration (The Hague: Kluwer Law International, 2003) at 345.
2
This article is intended to concentrate on the legal facets of online arbitration rather than its technological
conditions. Drawing from Katsh & Rifkin (E. Katsh & J. Rifkin, Online Dispute Resolution: Resolving Conflicts in
Cyberspace (San Francisco: Jossey-Bass, 2001) at 138), we assume that the challenges faced by online arbitration
“lie more in the realm of law than technology”. In certain situations, however, these both fields seem to blur, and the
discussion of legal issues inevitably involves also technological problems.
3
”Online Arbitration“
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.
This article does not include any comprehensive analysis of online arbitration’s applications, strengths or
weaknesses, in diverse business situations, nor does it refer to such specific fields as for example arbitration of
disputes resulting from domain names registrations.
3
4
”Online Arbitration“
II. General Characteristics of Online Arbitration
Background
Due to the increasing use of the Internet worldwide, the number of disputes arising from ecommerce, 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.
Definition
Online arbitration5 (also called cyber-arbitration6, cybitration7, cyberspace arbitration8, virtual
arbitration9, electronic arbitration10, or arbitration using online techniques11) has attracted the
D. Girsberger & D. Schramm, “Cyber-Arbitration” (2002) 3 European Business Organization Law Review 605 at
605.
4
In this article we decided to use the term ‘online arbitration’. It seems to be the most popular as well as possessing
a number of international connotations, for example: its German counterpart is ‘Online-Schiedsgericht’; see:
Internationales Online-Schiedsgericht, online: <http://www.secumedia.de/pdf2002/BG_DO_11_15_krauss.pdf>.
5
Supra Note 4 at 606, and T. J. Lanier, “Where on Earth does Cyber-arbitration Occur?: International Review of
Arbitral Awards Rendered Online” (2000) 7 ILSA J. Int’l & Comp. L. 1 at 1.
6
G. Herrmann, “Some Legal E-flections on Online Arbitration (“cybitration”)” in: R. Briner, L. Y. Fortier,
K. P. Berger, J. Bredow, eds., Law of International Business and Dispute Settlement in the 21st Century (Köln:
Liber Amicorum Karl-Heinz Böckstiegel, 2001) at 267. Herrmann claims copyright for the word “cybitration”.
7
5
”Online Arbitration“
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
8
Supra Note 1 at 389.
9
P. Carrington, “Virtual Arbitration” (2000) 15 Ohio St. J. on Disp. Resol. 669 at 669.
10
O. Cachard, International Commercial Arbitration: Electronic Arbitration (New York: United Nations
Conference on Trade and Development, 2003), online < http://www.unctad.org/en/docs/edmmisc232add20_en.pdf>
at 1.
J. Hörnle, “Online Dispute Resolution: More than the Emperor’s New Clothes” in E. Katsh & D. Choi, eds.,
Online Dispute Resolution (ODR): Technology as the “Fourth Party”. Papers and Proceedings of the 2003 United
Nations Forum on ODR (2003), online: <http://www.odr.info/unece2003/pdf/Hornle.pdf> at 3.
11
12
The first well known writing specifically on online arbitration was authorized by Jasna Arsic and published by
Journal of International Arbitration in 1997 – J. Arsic, “International Commercial Arbitration on the Internet: Has
the Future Come Too Early?” (1997) 14 J. Int’l Arb. 209.
13
T. Schultz, Online Arbitration: Binding or Non-Binding?, (2002) ADRonline Monthly 11, online:
<http://www.ombuds.org/center/adr2002-11-schultz.html>.
6
”Online Arbitration“
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.
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
This article does not refer to any specific or ”hybrid” forms of arbitration, such as “non-binding arbitration” or
“optionally binding arbitration”, and also “med-arb” or ICANN’s UDRP.
14
15
I.
Manevy,
Online
dispute
resolution:
<http://www.ombuds.org/cyberweek2002/manevy_odr01.pdf>.
what
future?,
online:
H. Yu & M. Nasir, “Can Online Arbitration Exist Within the Traditional Arbitration Framework?” (2003) 20
J. Int’l Arb. 455 at 458.
16
17
Ibid.
See: M. Schellekens, “Online Arbitration and E-commerce” (2002) 9 Electronic Communication Law Review
113. This article provides an overview of the arbitration initiatives that have geared up to solve disputes online.
18
7
”Online Arbitration“
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 Awards 19 (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
19
Convention on the Recognition and Enforcement of Foreign Arbitral Awards is available online at:
<http://www.uncitral.org/english/texts/arbitration/NY-conv.htm>.
20
United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial
Arbitration is available online at: <http://www.uncitral.org/english/texts/arbitration/ml-arb.htm>.
21
European Convention on International Commercial Arbitration, United Nations, Treaty Series, vol. 484, p. 364
No. 7041 (1963-1964) entered into force in 1964. Currently, there are some works on possible revision of the
convention. See: United Nations Economic and Social Council, Advisory Group to Consider Possible Revisions to
the
European
Convention
on
International
Commercial
Arbitration
of
1961,
online:
<http://www.unece.org/ie/Wp5/eucon.htm>. This opens the possibility to adapt the Convention to the needs of
dispute settlement by means of electronic commerce. Although some EU member states (including the United
Kingdom) have not ratified the convention, it may be argued that they should do that, taking into consideration
Article 293 clause 4 of the EC Treaty: “Member States, shall, so far as is necessary, enter into negotiations with
each other with a view to securing for the benefits of their nationals […] the simplification of formalities governing
the reciprocal recognition and enforcement of judgments of courts or tribunals and of arbitration awards”.
8
”Online Arbitration“
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”)
22
Inter-American Convention on International Commercial Arbitration (Organization of American States, Treaty
Series, no. 42) entered into force in 1976. The text of the convention, and the list of contracting states, is available
online at <http://www.asser.nl>.
23
Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards (Organization
of American States, Treaty Series, no. 51) entered into force in 1980. The text of the convention together with the
list of signatories and ratifications is available online at <http://www.oas.org/juridico/english/treaties/b-41.htm>.
24
This article is not intended to include any comprehensive analysis of solutions adopted in national arbitration
laws. It contains, however, a number of representative examples. According to Cachard: „A comparative study of
arbitration law shows a convergence of the general principles governing arbitration procedure in the various legal
systems” – Supra Note 10 at 31.
9
”Online Arbitration“
which stipulates that “[e]ach Contracting State shall recognize an agreement i n w r i t i n g
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 relationship”25; and also in
Article 7(2) of the UNCITRAL Model Law on Arbitration (“MAL”) beginning with the sentence:
“The arbitration agreement shall be i n w r i t i n g ”, 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
25
It is worth mentioning here that though New York Convention is today undoubtedly the most important document
of international arbitrational law, by virtue of the more-favorable-right provision of the Article VII.1 NYC, a party
seeking enforcement of a foreign award is not obliged to base its enforcement on the New York Convention. They
may choose to base the enforcement on another treaty or national law.
See, e.g., Art. 178 of the Swiss Act on Private International Law: “As to form, the arbitration agreement shall be
valid if it is made in writing, by telegram, telex, telecopier, or any other means of communication that establishes
the terms of the agreement by a text”; Article 1443 of French Code of Civil Procedure: “To be valid, an arbitration
clause shall be in writing and included in the contract or in a document to which it refers” and also Article 1449;
Article 1677 of the Belgian Judicial Code: “An arbitration agreement shall be constituted by an instrument in
writing signed by the parties or by other documents binding on the parties and showing their intention to have
recourse to arbitration”; Section 2 of the US Federal Arbitration Act; and Article 16 of the Arbitrations Law of the
People’s Republic of China 1995.
26
27
See, e.g., J. Collier, V. Lowe, The settlement of disputes in international law (Oxford: University Press, 1999) at
200.
28
Supra Note 16 at 458.
29
Supra Note 10 at 31.
10
”Online Arbitration“
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 d o n o t r e q u i r e that an arbitration agreement be
made in w r i t i n g , 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
R. Hill, “On-line Arbitration: Issues and Solutions”, (1999) 15 Arb. Int’l. 199, available also online:
<http://www.umass.edu/dispute/hill.htm>.
30
11
”Online Arbitration“
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.
E-mails vis-à-vis traditional means of communication
There are several distinct types of electronic transmission used to conclude an arbitration
agreement. Much more often than by letters, telegrams, faxes or teleprinters, the parties want to
enter into agreements either by an exchange of e-mails or even by a simple mouse click.
Paradoxically, while there is no doubt about the validity of an arbitration agreement concluded
by telegrams, we face a challenge to prove the same with regard to e-mails, for the simple
reason that the major documents of international arbitration law do not provide for the currently
most popular means of data transmission.
The authors of some writings published in the nineties (that is before or shortly after the
adoption of the recent laws referring electronic commerce and signatures) argued convincingly
that an exchange of e-mail messages containing an arbitration clause satisfies the formal
requirements of Article II (2) of the NYC, because an exchange of e-mails can be equated to an
31
Supra Note 16 at 459.
12
”Online Arbitration“
exchange of telegrams.32 Although the newest regulations on electronic commerce make this
discussion – in a sense – outdated and needless, given that e.g. numerous countries have not
adopted e-commerce laws yet, this argumentation is worthy to be outlined here.
The main thesis was that though there are important technical differences between telegrams
and e-mails33, the essential features of an exchange of telegrams could be reproduced through
appropriate use of e-mail.34 Hill argued that, from a technical point of view, it is difficult to see
much difference between not only telegram and e-mail, but also telex, facsimile, and e-mail. For
each technology, a message is converted to a digital format, then transmitted over a
telecommunications network, and finally converted again to a human-readable form. At
transmission, both e-mails as well older means of telecommunication are not readable by the
naked eye35. It is true that e-mails are printed only rarely, but it is not necessary to print a
received fax and a sent telex message either. The argument that there is a greater risk of fraud
with e-mails than with telegrams or telexes is not persuasive, because security procedures
(encryption, intervention of a third-party certification body or even “common-sense business
practices”36 for verification of the identity of the sender, being fairly simple acts that should be
done in the regular course of business and do not require more due diligence than when
32
Supra Note 30 (Hill) and Supra Note 12 (Arsic) at 216.
33
The following key differences between telegrams and e-mails were indicated: first, it was more difficult to change
telegram’s contents during the transmission. Second, the role of intermediaries (telegraph companies v. internet
service providers) differed. Telegraph companies could be assumed to have delivered the telegram with a very high
degree of certainty; in contrast, e-mails can quite easily fail to be delivered. Finally, the telegraph office was (at least
theoretically) able to verify the identity of the sender; in contrast, it is relatively easy to forge an e-mail, or at least to
hide one’s own identity behind a “nickname” ascribed only to an IP address – Supra Note 30.
34
Hill wrote that there is communis opinion doctorum in this respect, referring in particular to the public statements
by V. Veeder and other distinguished arbitration scholars at the Fourteenth Congress of the International Council for
Commercial Arbitration (ICCA) (3-6 May 1998, Paris, France) – ibid.
35
An electronic document is a set of numbers (normally in ASCII or some other code) representing text. See
detailed explanation of the nature of an electronic document in: Ch. Reed, “What is a Signature?” (2000) 3 JILT,
online: <http://elj.warwick.ac.uk/Jilt/>.
36
They may include routine check of the context and content of the e-mail, especially in comparison with what is
done with ordinary letters or facsimiles; maintaining printed copies of all sent and received e-mails; requesting the
recipient to confirm the receipt of e-mails (which reproduces the reliability of return-receipt registered mail) – Supra
Note 30.
13
”Online Arbitration“
corresponding by faxes or letters) can give the e-mail an equivalent degree of security. Hardcopy documents can also be subject to fraud, arguably, to no less extent than electronic
messages. It is reasonable to conclude that the risk of fraud cannot be put forward as a valid
argument against granting the status of written agreement to an arbitration agreement stipulated
and accepted by e-mail.37 On the contrary, there seems to be agreement in the scholarship that
the potential shortcomings of e-mail communication, compared to traditional means of
telecommunication, can be effectively overcome38.
Another thesis was put forward that there is not so much difference between modern electronic
communication and traditional writing. This suggests that an exchange of e-mails could be
equated to ‘an exchange of letters’ as provided for in Article II (2) NYC. Hill argued that e-mail
communication is neither "immaterial" nor "not physical". On the contrary, like any form of
human communication it requires the physical, material alteration of a physical, material
medium (the electrical state of a copper wire). A transfer of matter characteristic for
conventional writings (ink molecules deposited on paper), which is not the case for electronic
communications, has its counterpart in a transfer of energy (magnetic fields altered). To return
to traditional means of telecommunication, there is also no transfer of matter when thermalpaper-faxes are created, only a transfer of energy.39 Even if not printed, allegedly transient
electronic communications, if properly backed-up, may have longer life spans than most paper
records. Indeed, the use of traditional paper documents in international trade has been sharply
criticized:40 “Not only do paper documentation and procedures represent as much as 10 per
cent of goods value, they are slow, insecure, complicated and growing.”41 On the other hand,
37
Supra Note 10 at 20.
38
Supra Note 30.
39
Ibid.
40
Supra Note 16 at 459.
41
Uniform Rules of Conduct for Interchange of Trade Data by Teletransmission (UNCID Rules), Introductory Note,
Section II, online: <http://www.unece.org/trade/untdid/texts/d210_d.htm>.
14
”Online Arbitration“
electronic mail communication is praised to have several advantages over other forms of
communication: it is cheaper, faster and more convenient.42 As a result, from the prospective of
Internet users, the difference between electronic and traditional letters is diminishing or even
gradually disappearing. An opinion pool among them might indicate the e-mail as a regular mail,
distinguished from the old “snail-mail”. In consequence, an analogy between an exchange of emails and an “exchange of letters” within the meaning of the NYC does not seem ridiculous.
Seeking such analogies is not necessary under the MAL, since it explicitly provides that an
agreement is in writing if it is contained in an exchange of “other means of telecommunication
which provides a record of the agreement”. Although a few years ago numerous lawyers argued
that e-mails in general did not constitute a means of telecommunications providing a record that
satisfies the rules for legal evidence, such scepticism currently seems unjustified. Even before
the adoption of specific regulations on e-commerce and e-signatures, it was argued that if only
proper operating procedures are used, e-mail could provide “a record that is as reliable as
physical letters, fax, or any other methods of transmission”43. Today, there can be little doubt
that e-mail messages are admissible as evidence, although appropriate precautions need to be
taken – as in the case of other means of communication – in order to satisfy considerations of
evidentiary integrity and reliability.
Electronic mail, said to be by far the most important use of the Internet, that has fundamentally
altered both personal and business communications44, has been, in a sense, “overlooked” by
major sources of arbitration law. While there is little doubt about admissibility of concluding an
arbitration agreement by an exchange of e-mails under the MAL (and the national laws that
follow the MAL), some problems arise from the narrow definition of “in writing” in the NYC. To
overcome those difficulties the scholarship explored the differences and similarities between
42
R. S. Davis, What is E-mail?, online: <http://www.eslnetworld.com/e-mail.html>.
43
Supra Note 30.
44
S. Handa, Fundamentals of information Technology (Markham, Ont.: LexisNexis Butterworths, 2004) at 92.
15
”Online Arbitration“
electronic mail and older means of telecommunication listed in the NYC. There seems to be
agreement that the differences do not appear to be of sufficient importance to differentiate
between these electronic media for what concerns the NYC. An analogy between an exchange
of e-mails and ‘an exchange of letters’ is also interesting, however, requires more in-depth
research. The above conclusions make us wonder whether the same is true when the parties
want to conclude an arbitration agreement by other means of electronic transmission.
An arbitration agreement by the click of a mouse?
It is becoming more and more common that a website contains an offer, including an arbitration
clause, and invites a user to accept it by simple clicking on the “I accept” or “Yes” button. Most
often the user has to fill out a standard form agreement or complete a few blank fields, whereas
an arbitration clause remains “buried” among numerous other general terms and conditions.45
Even before the recent regulations on e-commerce were adopted, the scholarship tended to
prove that under certain conditions an arbitration agreement can be validly concluded though a
website.
To support this thesis, Hill invoked functional similarities to the transmission of data through
other means of telecommunication, including those that are explicitly provided for in the NYC
and the MAL. When the offer contained on the website is viewed by a buyer, the bits comprising
the offer, originally stored on the seller's computer, or more accurately a website platform the
seller uses, are transmitted through a network to the buyer's computer and stored (at least
temporarily) on the buyer's computer46. When the buyer wants to accept such an offer, a bit
45
Although the information on the website can be structured and presented in many different ways, there are
typically some facilities for indicating buyer acceptance and transmitting that acceptance back to seller. An offer is
often presented as an electronic form, the buyer completes certain blank fields, and then initiates a "submit" or
"transmit" or "accept" function.
46
This way a transmission of information from the buyer to the seller is conducted. Hill argued that this is analogous
to the transmission that takes place when an e-mail or fax is sent, the only difference being that the recipient initiates
16
”Online Arbitration“
stream comprising the offer and resident in buyer's computer, is modified by the buyer, and then
that modified version is transmitted back to the seller. Thus, there happens an exchange of data
(flow of bits) which is recognized in the literature as “entirely analogous to the exchange that
takes place when e-mails or faxes are exchanged”47, and “comparable to the exchange of
letters or telegrams”48. In consequence, the conclusion is reached that an arbitration agreement
can be validly formed in accordance with Article II (2) of the NYC, when the seller's offer
containing an arbitration clause is accepted by the buyer through a website49. It does not mean,
however, that a contract will be validly concluded in every case.
Entering into arbitration agreements in certain online settings may conflict with the basic
principle of international arbitration law that the consent of the parties is a conditio sine qua non
to validly agree on arbitration50. When a single mouse click suffices to accept an offer with an
arbitration clause, it may of course sometimes happen that an alleged acceptance does not
reflect the fully informed consent of a party. The consent to arbitration is most often contested
when the arbitration clause appears in general terms and conditions presented to a consumer.
Manevy rightly commented that there are far greater legal concerns regarding the consent given
online to arbitration, compared for example to mediation or negotiation processes51. Indeed, “the
the transmission in the case of the website, whereas the sender initiates the transmission in the case of e-mail or fax.
He concluded that this difference has no impact on the validity of the exchange – Supra Note 30.
47
Ibid.
48
Supra Note 10 at 20.
49
Ibid. See also Supra Note 30. Courts in certain jurisdictions have generally accepted the above reasoning. For
example, US courts tend to hold that “arbitration clauses in point and click electronic contracts are enforceable
[notwithstanding the FAA (9 U.S.C. 4) requirement of a "written" agreement]” – see: Lieschke et al., v.
Realnetworks, Inc., 2000 WL 198424 (N.D.Ill. 2-11-2000), online: <http://www.technoinformationlaw.net>.
50
A. Broches, Commentary on the UNCITRAL Model Law on International Commercial Arbitration (Deventer:
Kluwer, 1990) at 38; J. Coe, International Commercial Arbitration: American Principles and Practice in a Global
Context (New York: Transnational Juris, 1997) at 55; B. Poznanski, “The Nature and Extent of Arbitration Powers
in International Commercial Arbitration” (1987) 4 J. Int’l Arb. 71 at 71; A. van den Berg, The New York Convention
of 1958: Towards a Uniform Judicial Interpretation (Antwerp: Kluwer, 1981) at 173.
51
Supra Note 15. Since this article is focused on international commercial arbitration, remarks on arbitration
involving consumers are not to be included. It is however worth mentioning here that in the European Union many
national laws of EU member states are restrictive as to the possibility to resort to arbitration by means of a
17
”Online Arbitration“
basic concern is that participants in arbitration may give up all of their legal due process rights
without understanding what that means”52.
The concerns about the legal significance of the parties’ consents given online have been
broadly discussed in the e-commerce literature.53 In the context of online arbitration, the
problems arise from diverse factual situations, usually more complex than the models of an
exchange of electronic data through e-mails or a website, as described above. In each case, the
absence of a “clear and conspicuous reference” to an arbitration clause could lead to objections
concerning the validity of the arbitration agreement “on the basis of lack of informed consent by
the buyer”.54
As discussed, the parties may wish to conclude an arbitration agreement in many different ways
involving electronic data transmission. It may occur by a fairly simple exchange of e-mail
messages with the agreement either set out in the e-mails’ contents or in a file attached to them.
The e-mail exchange may also refer to a separate written arbitration agreement (“incorporation
by reference”). The parties may also wish to reach agreement through a website. In such case,
an exchange of electronic communications occurs through the parties’ browser software. Either
method (e-mail or website) will ultimately lead to the same question as to whether an electronic
communication provides a required record of the agreement.55
contractual clause in consumer contracts. However, such restrictions mainly apply in the case of domestic
arbitrations and may not be applicable to any international arbitration involving consumers. On the other hand,
according to US law all consumer arbitration clauses are generally lawful.
52
J.
Melamed
&
J.
Helie,
Online
Dispute
Resolution
<http://www.mediate.com/articles/ecodir1.cfm> and Supra Note 4 at 610.
53
M. Geist, Internet law in Canada (Concord, Ont.: Captus Press, 2002) at 598.
54
Supra Note 30.
55
Supra Note 11 at 4.
18
in
the
US,
online:
”Online Arbitration“
The traditional requirements modernized
The concepts of “writing” and “signature” have been recently significantly modernized in order to
provide greater certainty to online contracts and thereby facilitate e-commerce.56 The most
important step to this end was taken on the international level by the adoption of the UNCITRAL
Model Law on Electronic Commerce57 (“Model Law on E-Commerce”) in 1996. It was
subsequently followed by several countries all over the world implementing the provisions of the
Model Law on E-Commerce to their national legal systems. Then, in 2001, the UNCITRAL
Model Law on Electronic Signatures58 was adopted. Those legislative changes resulted in “a
global reform of the writing requirement”.59
The Model Law on E-Commerce is based on the assumption that legal requirements prescribing
the use of traditional paper-based documentation constitute(d) a serious obstacle to the
development of modern means of communication and electronic commerce. Therefore, “in the
preparation of this document, consideration was given to the possibility of dealing with
impediments to the use of electronic commerce posed by such requirements in national laws by
way of an extension of the scope of such notions as "writing", "signature" and "original", with a
view to encompassing computer-based techniques”60. Thus, the Model Law on E-Commerce
relies on the "functional equivalent approach", which is based on an analysis of how the
purposes or functions of the traditional paper-based requirements could be fulfilled with the use
56
Supra Note 16 at 459.
57
The UNCITRAL Model Law on Electronic Commerce was adopted by the General Assembly Resolution 51/162 of
16 December 1996, and amended in 1998; the text available online: <http://www.uncitral.org/en-index.htm>.
58
The text available online: <http://www.uncitral.org/english/texts/electcom/ml-elecsig-e.pdf>.
59
Supra Note 11 at 5.
60
UNCITRAL Model Law on Electronic Commerce with Guide to Enactment, Section 15, online:
<http://www.uncitral.org/en-index.htm>. It is noted that a similar approach is used, e.g., in Article 7 of the
UNCITRAL Model Law on International Commercial Arbitration and Article 13 of the United Nations Convention
on Contracts for the International Sale of Goods.
19
”Online Arbitration“
of electronic techniques61. The Model Law on E-Commerce did not define a computer-based
equivalent to any kind of paper document, and, in a sense, left this category open also for future
technologies.
The Model Law on E-Commerce introduced instead a new concept of “data message”, which
includes, e.g., e-mail and electronic data interchange (EDI)62. Article 6(1) of the Law provides
also a new definition of “in writing” by stating that “[w]here the law required information to be in
writing, that requirement is met by a data message if the information contained therein is
accessible so as to be usable for subsequent reference”. According to Article 11: “In the context
of contract formation, unless otherwise agreed by the parties, an offer and the acceptance of an
offer may be expressed by means of data messages. Where a data message is used in the
formation of a contract, that contract shall not be denied validity or enforceability on the sole
ground that a data message was used for that purpose.” The Model Law on E-Commerce refers
also to some specific online arrangements which may affect the validity of an arbitration
agreement concluded online, and that were highly disputable under the former legal framework.
The Law enshrines for example “incorporation by reference” (“hyperlink”) in its Article 5 bis, in
the following form: “Information shall not be denied legal effect, validity or enforceability solely
on the grounds that it is not contained in the data message purporting to give rise to such legal
effect, but is merely referred to in that data message.”
A similar approach can be seen in the EU Directive on electronic commerce63 that obliges the
EU member states to amend their legislations in order to take away formal obstacles to
61
Ibid., Section 16. The authors of the Guide to Enactment analyzed the functions served by a paper document in
comparison with e-documents what, to some extend, reflects the discussion concerning electronic data transmission
in comparison to older means of telecommunication provided for in the NYC and the MAL, outlined in the previous
sections of this article.
According to Article 2 (b) of the Model Law, “electronic data interchange (EDI)” means the electronic transfer
from computer to computer of information using an agreed standard to structure the information. For the detailed
explanation on “EDI” see Supra Note 44 at 115-117.
62
63
Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of
information society services, in particular electronic commerce, in the Internal Market (Directive on electronic
20
”Online Arbitration“
electronic contracting. Article 17 of the directive provides that their legislation must not hamper
the use of out-of-court schemes for dispute settlement, including appropriate electronic means,
and Article 9 (1) expressly imposes on the member states a duty to ensure that contracts can be
concluded by electronic means, without “being deprived of legal effectiveness and validity on
account of their having been made by electronic means”64 This led Schellekens to the
conclusion that “in Europe little problems are to be expected with regard to [arbitration
agreements concluded online and] national legislation on arbitration”.65 Provided that similar
regulations will be adopted in other jurisdiction, Schellekens’ conclusion could be true with
regard to a broader frame of reference.
However, such conclusion can be fully justified only provided that, despite its rather restrictive
wording, the New York Convention is commonly construed to allow electronic arbitration
agreements. Neither recent laws on electronic commerce nor the MAL supplemented the NYC’s
provisions that remained unchanged since 1958. Three solutions were proposed to reconcile
Article II (1) and (2) of the NYC with Article 7(2) of the MAL66 and, respectively, with the ecommerce laws. First, it was suggested that Article II (1) and (2) of the NYC could be finally
amended. This proposal was rejected again; an amendment might not be easily achieved since
other provisions of the Convention probably would probably also be subject to discussions67.
Another alternative could consist in adopting a statement addressing the modern interpretation
of Article II (1) and (2) of the NYC. With that regard, some concerns were expressed that not all
commerce), published in Official Journal of the European Communities dated 17.7.2000, L 178/1, online:
<http://europa.eu.int/eur-lex/pri/en/oj/dat/2000/l_178/l_17820000717en00010016.pdf>.
64
Article 9.1 Directive on e-Commerce: Member States shall ensure that their legal system allows contracts to be
concluded by electronic means. Member States shall in particular ensure that the legal requirements applicable to
the contractual process neither create obstacles for the use of electronic contracts nor result in such contracts being
deprived of legal effectiveness and validity on account of their having been made by electronic means.
65
Supra Note 18 at 119.
66
Supra Note 15.
67
See A. Vahrenwald, M. Wilikens, P. Morris, from the Joint Research Center of the European Commission, Outof-court dispute settlement systems for e-commerce. Part IV: Arbitration, online: <http://dsaisis.jrc.it/ADR.report.html>.
21
”Online Arbitration“
the states would accept such an instrument, which would in turn affect the status of reciprocity,
important for the effectiveness of the international scheme for recognition and enforcement of
foreign arbitral awards under the NYC. As the third, the simplest and the best solution it was
recognized that the “in writing” requirement of Article II of the NYC should be interpreted liberally
in the light of the subsequent the MAL and other relevant laws68.
To support this stand, many authors have tended to prove the inherently functional and
“technology-friendly” of the NYC’s provisions. Schellekens, for example, argued that in 1958 the
exchange of letters and telegrams was added to “make sure that arbitration could be agreed
upon using the most modern means of communication”69. Therefore, wrote Schellekens, “the
Convention does take into account the needs of legal practise”70. Electronic means such as email and website communication may very well be seen as the modern functional equivalents of
the traditional means of communications, such as telegrams or letters. Hill suggested that
literally restrictive definition of “writing” in the NYC has been, and will be in the future, gradually
extended in the course of technological development. Article 7(2) of the MAL has extended the
NYC’s original catalogue to an exchange of telex or "other means of telecommunication which
provides a record". Courts have extended Art. II(2) to telex in several cases, and “some eminent
authorities believe that it should also be extended to facsimile”.71 The writers hold, therefore,
that contemporary interpretation of the New York Convention, based on a functional approach,
should include the electronic records in the concept of “writing”.72 Thus, for example, Article II
(2) New York Convention should, despite its restrictive wording, allow arbitration agreements
concluded through an exchange of e-mails or other electronic communications, as does more
68
Supra Note 15.
69
Supra Note 18 at 120.
70
Ibid.
71
See the literature invoked by Hill (Supra Note 30), including: P. Fouchard, E. Gaillard, and B. Goldmann, Traité
de l'arbitrage commercial international (Litec, 1996) at 392.
72
Schellekens (Supra Note 18 at 120); Hill (Supra Note 30).
22
”Online Arbitration“
clearly Article 7(2) of the MAL.73 National laws that require a strict writing requirement also
should be adapted accordingly.74
Decisions of courts in several jurisdictions refusing to recognise and enforce an award under the
NYC, when the award is based on an arbitration agreement concluded by electronic means
such as email75, may suggest that relying on the liberal interpretation of the NYC cannot suffice.
Thus, possible inclusion of the NYC in the list of international instruments to which the draft
convention on the use of electronic communications in international contracts would apply is
currently under discussion76. An intended purpose of the draft convention is to provide a uniform
regime for the use of electronic communications in the formation and performance of
international contracts. In working groups, “overall support” was expressed in favour of the
inclusion of a reference to the NYC in the draft convention, which was “expected to provide
welcome clarity to the writing requirement contained in article II(2) and other requirements for
written communications in the text of the NYC”.77 The discussions will be continued during 42nd
session of the UNCITRAL Working Group II (10 - 14 January 2005, New York)78.
As discussed, though the recent e-commerce laws have “legitimized” electronic communications
in the light of traditional paper-based legal requirements, it does not mean that the controversies
G. Kaufmann-Kohler, “Arbitration Agreements in Online Business to Business Transactions”, in: R. Briner et al.,
eds., Law of International Business and Dispute Settlement in the 21st Century (Köln: Liber Amicorum Karl-Heinz
Böckstiegel, 2001) at 358-362; L. J. Gibbons, Rusticum Judicium? Private ‘Courts’ Enforcing Private Law and
Public Rights: Regulating Virtual Arbitration in Cyberspace, 23 Ohio Northern L. Rev. (1998) 769,
<http://law.utoledo.edu/publications/Gibbons-Ohio%20N.U.%20L.%20Rev.htm>, Section III.B.2.; Hill (Supra Note
30).
73
74
Supra Note 4 at 615.
75
See Hörnle (Supra Note 11 at 8) and her comments on a decision of the Hålogaland (Norway) Court of Appeal
dated 16. August 1999 (Stockholm Arbitration Report 1999, Vol. 2, at 121).
76
See the information on the works of the UNCITRAL Working Group II, online: <http://www.uncitral.org/enindex.htm> and <http://ods-ddsback-ny.un.org/doc/UNDOC/LTD/V04/582/19/PDF/V0458219.pdf?OpenElement>.
“A widely shared view was that another compelling reason to address the New York Convention in the draft
convention would be to avoid some of the difficulties that could be foreseen if an amendment of the New York
Convention itself had to be undertaken.” - A/CN.9/569 - Report of Working Group II (Arbitration) on the work of its
forty-first session (Vienna, 13-17 September 2004).
77
78
A/CN.9/WG.II/WP.133 - Annotated Provisional Agenda – Supra Note 76.
23
”Online Arbitration“
about arbitration agreement concluded online completely disappeared. Nor could one assume
that every arbitration agreement concluded by an exchange of e-mails or electronic data
interchange will be valid. The means of telecommunication applied must satisfy certain
conditions, i.e. provide the agreement’s record that is “accessible so as to be usable for
subsequent reference”. However, even traditional forms of arbitration agreements, explicitly
listed in the NYC, are not free from fairly similar requirements. To conclude, under the current
legal framework an arbitration agreement concluded by electronic communications is admissible
and can be fully effective, yet certain requirements must be met.
IV. Arbitral proceedings
New technologies are already widely used in arbitral proceedings. With the use of the Internet,
documents can be transmitted instantaneously to arbitrators and parties at a modest cost. Many
arbitrators find dealing with electronic documents easier than with hard copies, especially when
submissions have numerous pages. In addition to this daily use of information technology, the
Internet seems to have a more profound impact on arbitration procedures. Traditionally,
arbitration relied on meetings of arbitrators and parties appearing in person or through duly
authorized representatives. Now, we observe that the Internet encourages remote dispute
resolution, and physical meetings are more and more often eliminated, or more accurately,
replaced by diverse electronic exchanges.79 These developments seem to bring benefits to both
arbitrators and parties: the former can proceed without leaving their hometowns, the latter avoid
incurring travel costs.
79
Supra Note 10 at 31.
24
”Online Arbitration“
Admissibility of electronic arbitral proceedings
According to communis opinio, parties are free to agree that the whole or part of arbitral
proceedings are conducted online, with the use of whether asynchronous80 (e.g. e-mail) or
synchronous (e.g. video- or audio-conference) electronic means (on the other hand, parties are
also free to agree on the exclusion of the use of electronic means for the conduct of arbitral
proceedings).81 The principle of procedural autonomy82 (some authors refer instead to the
concept, or principle, of “party autonomy”83) allows parties to decide on the procedure to be
followed by an arbitral tribunal in conducting proceedings. Thus, on the basis of that
fundamental principle of arbitration law, it is possible to “adapt the procedure to the electronic
arena”84, and conduct online arbitration in many various ways. Every such electronic arbitration
procedure is nonetheless still subject to general principles of arbitration law, since “contractual
freedom
cannot
undermine
the
mandatory
regulations
that
govern
the
arbitration
procedure”(Cachard85).
An analysis of applicable mandatory rules is of great practical importance, though it may occur
troublesome, since ‘place’, or ‘seat’, of online arbitration seem to be “virtual”. The principles of
tribunal’s impartiality and equal treatment of parties, expressed e.g. in Article 12 and Article 18
the MAL, are certainly of particular relevance among such mandatory rules. It seems clear that
online techniques can be used in arbitral proceedings, provided that their application does not
prejudice one party. Drawing from literature, a party might be prejudiced, “if it had less access to
80
Asynchronous electronic means are those where there is a time lapse between an initial communication and a
reply.
81
Supra Note 30; Supra Note 11 at 3; Supra Note 16 at 465.
82
Supra Note 10 at 31; G. van Harten, Chapter 11 and the Francovich Doctrine: Comparing State Liability under
NAFTA and EC law (Montréal: Centre Études internationales et Mondialisation, 2003), online:
<http://www.gric.uqam.ca/pdf/Cahier_0304_GusVanHarten.pdf>
83
Supra Note 11 at 3; Supra Note 30; Supra Note 16 at 465; Supra Note 1 at 394.
84
Supra Note 10 at 31.
85
Ibid.
25
”Online Arbitration“
or know-how of the technology than the other party” (Hörnle86). For example, it would be
unacceptable to “impose transmission of documents via CD-Rom if one party states that it does
not have the facilities for reading CD-Roms” (Hill87). Manevy wrote that “the conduct of a fully
automated process might contradict due process and adversarial principle”. Though this claim
sounds both reasonable and interesting, it has not been thoroughly discussed in legal literature
yet. Role and Lodder&Thiessen88 referred very briefly to “automated arbitration” in their writings,
and Carrington only outlined a vision of future virtual arbitration as “an entirely digitized event” 89.
Apparently, the question of whether computers will be ever capable of replacing human
arbitrators have been considered too naïve, and therefore has not received major consideration
by scholars thus far. Indeed, many authors have been very sceptical about its twin concept of
“automated judge”90. Thus, it seems that in the predictable future the role of technology will
consist in supporting rather than replacing arbitrators. In any case, in order to secure the
fairness of arbitral proceedings, the use of electronic means, regardless of its scope, should be
appropriately formalized in procedural orders issued by the arbitral tribunal or, preferably, by
agreement between the parties.
Thus, parties are free to agree on the use of electronic means for the conduct of arbitral
proceedings, in the extent, to which it does not conflict with mandatory provisions of applicable
laws. When the parties’ agreement is missing, it seems plausible to conclude that an arbitral
tribunal can decide on the use of electronic means. This view is supported by Article 19 (2) MAL
that provides that failing the parties’ agreement on the arbitration procedure, “the arbitral tribunal
86
Supra Note 11 at 3.
87
Supra Note 30
88
C. Rule, Online Dispute Resolution for Business (Jossey-Bass, 2002) at 57-58.
89
Supra Note 9 at 669.
“Fifteen years ago people were still talking about the automated judge – a computer that would, after being ‘fed’
legal facts, render ‘correct’ decisions. This naïve euphoria is gone. The substantive use of technologies and networks
in the legal world has a different focus today.” – V. Mayer-Schönberger, “The International Lawyer in Times of
Cyberspace” in J. Drolshammer & M. Pfeifer, eds., The Internationalization of the Practice of Law (The Hague:
Kluwer Law International, 2001) 401 at 407.
90
26
”Online Arbitration“
may, subject to the provisions of [the MAL], conduct the arbitration in such manner as it
considers appropriate”. We hold that if there is no agreement between parties, in certain
circumstances the arbitral tribunal is not only authorized to order the use of electronic means,
but also to large degree obliged to do that, given the tribunal's duty to avoid unnecessary delay
or expense. For example, under Article 20.1 of the ICC Rules of Arbitration, arbitrators have an
obligation “to establish the facts of the case by all appropriate means”, “within as short a time as
possible”.
If parties agree on institutional arbitration, applicable arbitration rules also have to be taken into
consideration. Specific provisions contained in such rules may conflict with the parties’ intent to
conduct arbitral proceedings online. Where necessary, such provisions must be specifically
overridden by an explicit agreement between the parties.91 Otherwise, there would be a risk that
an award in a given case could not be enforced. Since the arbitration rules are deemed to be
agreed between the parties, possible violation of the rules would be considered as violation of
the parties’ agreement, which could result in a refusal to enforce the award in accordance with
Art. V(1)(d) NYC.92
Online proceedings
The need to override certain provisions of applicable arbitration rules may occur when they
contain references to a written form, a physical appearance before an arbitral tribunal, or other
similar requirements. However, since numerous arbitration institutions have already adapted or
supplemented their rules to online proceedings (or at least are planning to do that), such
problems are gradually disappearing93.
91
Supra Note 30; Supra Note 11 at 4.
92
Supra Note 18 at 121; Supra Note 30 and Supra Note 11 at 4.
93
Supra Note 18 at 121.
27
”Online Arbitration“
Provided that it is not inconsistent with an arbitration agreement or applicable arbitration rules, a
party wishing to have recourse to arbitration can submit its request for arbitration by e-mail. A
notification to a respondent can also well be done in the same way. In international business
settings, most parties are currently able to produce and exchange exclusively electronic
documents, e.g. in the form of files attached to e-mails. Such electronic submissions are
considered to be convenient, and functionally equivalent to those printed on paper. This view is
reflected in a number of arbitration rules; for example, Article 3(2) of the ICC Rules specifically
authorizes electronic communication with the Court and the Secretariat of the ICC. Parties may
also agree to use more advanced IT solutions, such as online electronic file management
systems94 that enable parties and arbitrators to file all documentation on a web-based platform
and communicate solely, or mainly, through such a platform.
In principle, parties can agree to conduct proceedings by online technology without an oral
hearing, i.e. on a documents-only basis95. However, when the parties’ explicit agreement is
missing, the situation gets complicated. Article 24 (1) of the MAL states that “unless the parties
have agreed that no hearings shall be held, the arbitral tribunal shall hold such hearings at an
appropriate stage of the proceedings, if so requested by a party". On the other hand, many
national arbitration laws provide for no general right to an oral hearing. Under English law, for
example, Section 34 of the Arbitration Act 1996 “gives neither party a right to an oral hearing
unless the parties have agreed to an oral hearing or the tribunal orders a hearing”.96 Face-toface hearings may not be a necessity – as argued Yu & Nasir with citations to relevant case-law
– even in traditional arbitration97. In online arbitration, parties may decide to conduct hearings
94
Supra Note 11 at 3
95
Ibid.
96
Ibid. Section 34 of the Arbitration Act 1996, online: < http://www.hmso.gov.uk/acts/acts1996/1996023.htm>.
97
Supra Note 16 at 465.
28
”Online Arbitration“
online and to examine and cross-examine witnesses, or hear experts, using teleconferencing98
or videoconferencing99 technology100. Most often, online hearings can suffice to establish the
facts of a case. Currently, there are however two major problems that impede the broad
application of this technology in international commercial arbitration101. First of them relates to
technology itself, the other to law.
According to Cachard (2003), though electronic hearings are technically possible, they involve
considerable technical resources, which are currently still accessible only at a high cost.102
Hörnle (2003) expressed some concerns about sufficient quality of transmissions103. Delays and
interruptions cannot often be avoided, and witnesses are not clearly seen and heard. “The
physical demeanour and tone of voice should be easily detectable to assess the credibility of
Such terms as ‘telephone conference’, ‘teleconference’, ‘audio-conference’ and ‘videoconference’ are commonly
confused, any the difference between them is not clear any more. According to Webopedia (online encyclopedia
dedicated to computer technology, online: <www.webopedia.com>), ‘teleconference’ means just “a conference via a
telephone or network connection”.
98
According to Webopedia, videoconferencing means “conducting a conference between two or more participants at
different sites by using computer networks to transmit audio and video data. For example, a point-to-point (twoperson) video conferencing system works much like a video telephone. Each participant has a video camera,
microphone, and speakers mounted on his or her computer. As the two participants speak to one another, their
voices are carried over the network and delivered to the other's speakers, and whatever images appear in front of the
video camera appear in a window on the other participant's monitor. Multipoint videoconferencing allows three or
more participants to sit in a virtual conference room and communicate as if they were sitting right next to each other.
Until the mid 90s, the hardware costs made videoconferencing prohibitively expensive for most organizations, but
that situation is changing rapidly. Many analysts believe that videoconferencing will be one of the fastest-growing
segments of the computer industry in the latter half of the decade.”
99
100
The use of tele- and video-conferences in court proceedings is currently admissible in many jurisdiction.
Probably the most innovative web-based broadband video conferencing system, that allows solicitors to conduct
their court hearings from a remote source, has been recently set up in Singapore (see: online
<http://www.justiceonline.com.sg/index.html>). Hörnle pointed that it is allowed for example in England and Wales
and the US. See: CPR Part 32, Rule 32.3, or the US Federal Rules of Civil Procedure: Fed. R. Civ. P. 43 (a): "The
court may, for good cause shown in compelling circumstances and upon appropriate safeguards, permit
presentation of testimony in open court by contemporaneous transmission from a different location." – Supra Note
11 at 12.
101
Ibid.
102
Supra Note 36
103
Supra Note 11 at 12.
29
”Online Arbitration“
that witness. For example, it might not be apparent if a witness blushes because the colour
resolution of the monitor is not sufficient”104.
A major legal issue concerning electronic hearings in online arbitration concerns the legal
significance of evidence produced online. As Hörnle argued, “for evidence given on oath, the
oath is only effective, if false testimony amounts to perjury at the place where the evidence is
given”105. However, in certain jurisdiction, for example in Japan, arbitrators may not put
witnesses under oath or at risk of criminal prosecution for lying 106. In consequence, in many
circumstances it would be recommendable to have all parties represented, or a member of the
tribunal, present at each end of the video-link. Alternatively, in order to guarantee a due conduct
of electronic hearings, a trusted third party such as a local arbitral institution or a notary could be
involved107. Of course, such restrictions diminish the attractiveness of online arbitration in terms
of its cost, time and convenience. A simpler method to hear a witness could consist in using
other than videoconferencing, synchronous (real-time) online technologies, such as
teleconference (audio transmission) or online chat (written text messages, e.g. Internet Relay
Chat). They cannot, however, constitute a real alternative to audiovisual hearing, because of
difficulties to assess the credibility of a witness and other like reasons.108
Electronic deliberations amongst arbitrators
If an arbitral tribunal consists of more than one arbitrator, the question arises whether the
arbitrators have to meet in one place in order to decide the case and draw up an award. Modern
In her article Hörnle gave also some practical advice, e.g., “in order to avoid a coaching of the witness, the
picture [transmitted during a video-conference] should cover the whole room at the witness end, which necessitates
at least two cameras” – Supra Note 11 at 12.
104
105
Ibid.
See: A. M. Pardieck, “Virtuous Ways and Beautiful Customs: The Role of Alternative Dispute Resolution in
Japan” (1997) 11 Temp. Int'l & Comp. L.J. 31 at 49.
106
107
Supra Note 11 at 12.
108
Ibid.
30
”Online Arbitration“
arbitration laws do not preclude electronic deliberations among arbitrators, since they do not
impose any particular procedure concerning the deliberations of the arbitrators and their
decision-making process.109
There are four conditions under which electronic deliberations among arbitrators are admissible
under Swiss Law. They were discussed in details by Hill110. First, all the arbitrators have to
agree on the use of such electronic means. Second, all the arbitrators have to participate in the
discussion, unless an arbitrator is excluded for valid reasons such as illness or refusal to
participate in any form of deliberation. Third, the arbitrators can deliberate online unless the
parties have ruled out such electronic deliberations. And finally, fourth, the procedural basis for
such electronic deliberations has to be properly documented, for example in the parties’
agreement or in a procedural order.
Electronic deliberations among arbitrators are also admissible under English law since it does
not impose any particular procedure on arbitrators’ decision-making process, as Lord Denning
MR discussed in European Grain and Shipping Ltd v Johnson111. The key requirement is that all
arbitrators actively participate in decision-making process. Each arbitrator must participate in
establishing the facts of a case, and the award must reflect the state of mind of all the arbitrators
The issue of arbitrators’ deliberations is not regulated in the MAL. As for decision making by panel of
arbitrators, the MAL provides only that if there is more than one arbitrator, “any decision of the arbitral tribunal
shall be made, unless otherwise agreed by the parties, by a majority of all its members. However, questions of
procedure may be decided by a presiding arbitrator, if so authorized by the parties or all members of the arbitral
tribunal.”
109
110
Hill cited in extenso the sentence of the Swiss Supreme Court, in which the court held that the arbitrators need
not meet in person and are free to conduct deliberations by electronic means, including e-mail, provided that suitable
precautions are taken. The sentence was rendered under the regime of the Concordat sur l'arbitrage (CIA), an
arbitration law that is no longer in force. However, as Hill explained, the provisions of the current law, the Swiss
Private International Law Act (LDIP), are analogous to those of the CIA for what concerns the matter in hand, so the
sentence should be applicable to arbitrations conducted under the regime of the LDIP – Supra Note 30.
111
Supra Note 11 at 13, European Grain and Shipping Ltd v Johnson, CA, [1982] 3 All ER 989 (992)
31
”Online Arbitration“
at the time when they signed it.112 Yet, English law does not stipulate that the decision-making
process must be done orally in the presence of all the arbitrators.113
Nowadays, whenever an agreement or award (…) is to be done by two or three
jointly, the practice is for one or the other to draw up a draft and send it to the
others for their consideration and comments. One or other may suggest
amendments and send it back. So it goes to and fro until the draft is agreed.114
Hörnle115 argued that this procedure of deliberating and drawing up an award might be well
replicated online by asynchronous electronic means. To this aim, adequate security measures
should be taken.
It is worth mentioning at this point that the standpoint of English law has impacted upon several
other jurisdictions. The following words urged by a judge of a court in Sri Lanka are very
characteristic:
“(…) the Courts have taken into account the changed circumstances resulting
from the transformation that was taking place due to technological advancement.
When we are barely a decade away from the 21st century, it would not accord
The 1996 Act stipulates that unless parties have not agreed to the contrary, arbitral tribunal’s decisions are to be
made by majority of votes. If a chairman has been appointed, his vote is counted as the votes of other arbitrators.
However, if there is neither unanimity nor a majority, the view of the chairman prevails as to any decision, order or
award.
112
113
European Grain and Shipping Ltd v Johnson, CA, [1982] 3 All ER 989 (992)
114
Ibid.
Hörnle argued that drafts of an award “could be exchanged as e-mail attachment or uploaded (and accessed) on a
secure platform until the award has been finalized. (…) Finally the method used must provide for adequate security
in two respects. The first concern is to ensure the privacy of the proceedings. (…) Second, it is important to ensure
that the communications of the arbitrators are properly authenticated. This could be achieved by password or passphrase protection to gain access to the communication platform, where appropriate and by electronic signatures.
Therefore, provided certain precautions are taken, it is possible for the arbitrators to deliberate online at a distance”
– Supra Note 11 at 13.
115
32
”Online Arbitration“
with reason to interpret the concept of ‘joint participation’ as being physically
present together at one and the same place”.116
Also under French and Italian law there is no doubt that unless agreed otherwise by the parties,
deliberations of a panel of arbitrators through electronic means are permitted.117
The above brief analysis leads us to the conclusion that arbitrators may make an award after
discussing a case by diverse synchronous or asynchronous online techniques, provided that
suitable precautions are taken. A major mandatory requirement of modern arbitration laws is
that all the arbitrators must participate in a real way in each discussion and decision. Yet no
particular form is imposed for deliberations of arbitrators and their decision-making process.
The seat of arbitration
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
116
Paddy Marketing Board v. S. V. Industries (Ceylon) Ltd., C.A. No. 1257/86, D.C. Colombo 2458/SPL, online:
<http://www.lawnet.lk/report/1990-2/Pad%2029.htm> at 29.
According to the French Cour d’appel de Paris, “no particular form is imposed for the deliberations of the arbitral
tribunal; in international it is difficult to hold multiple meetings of a group of people who live in different countries”
Paris, 22 décembre 1978, IMR c/ Lynx Machinery, Revue de l’arbitrage, 1979, at 276. This decision was confirmed
by the Cour de Cassation,Cass, 1ère civ, 28 janvier 1981, Revue de l’arbitrage, 1981, at 425 – Supra Note 15 with
citation to French law and Italian law, which explicitly allow for deliberation by video-conferencing.
117
118
For the purposes of this paper, we assume that the meaning of the terms 'seat of the arbitration' and 'the place of
arbitration' are, in principle, identical – A. Vahrenwald, Out-of-court dispute settlement systems for e-commerce,
online: <http://www.vahrenwald.com/doc/part4.pdf> at 83.
119
Supra Note 9 at 669.
120
Supra Note 12.
121
Supra Note 11 at 9.
33
”Online Arbitration“
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
122
Supra Note 16 at 473.
123
Supra Note 1 at 394.
124
Supra Note 4 at 617.
125
Supra Note 118 at 83.
126
Ibid.
127
Some authors hold that those terms have identical meanings: K. Lionnet, Handbuch der Internationalen und
nationalen Schiedsgerichtsbarkeit (Stuttgart: Boorberg 1996) at 95; Supra Note 118 at 83.
128
Supra Note 16 at 463.
34
”Online Arbitration“
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.
V. Arbitral awards
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
129
Supra Note 118 at 82.
130
Supra Note 10 at 53
Ibid. – with citation to the decision of Court of Appeal of Paris, 28 October 1997, Société Procédés de
préfabrication pour le béton v. Lybie, Revue de l’arbitrage, 1998, at 399, note Bruno Leurent.
131
132
ICC Bulletin (1999) 10 (1). See the info online: <http://www.iccwbo.org/court/english/bulletin/bulletin.asp>.
35
”Online Arbitration“
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
It must noted, however, that according to some writers such requirements should be construed under the NYC –
See: M. E. Schneider, Ch. Kuner, “Dispute Resolution in International Electronic Commerce”, (1997) 14 J. Int’l
Arb. at 24. Certainly, in 1958, all arbitral awards were written on paper and signed, in ink and by hand, by
arbitrators.
133
134
Supra Note 10 at 50.
135
Supra Note 18 at 122.
136
Supra Note UNCTAD10; the above issue pertains specifically the NYC; other major sources of international
arbitration law, such as Article 31.1 of the MAL, do not refer to “an original”, but instead require that the award be
in writing and that it be signed by the arbitrators.
The “functional equivalent” approach is promoted by the Model Law on Electronic Commerce, as discussed in
the first part of this article. See also: Guide to Enactment of the UNCITRAL Model Law on Electronic Commerce
(New York, 1997) at 20 (section 15).
137
36
”Online Arbitration“
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.
A. Lucas, J. Devèze & J. Frayssinet, Droit de l’informatique et de l’Internet [Law on IT and the Internet] (Paris,
PUF, 2001) at 577.
138
139
In practice it is sufficient for the arbitrators to apply their electronic signature to the document, with a
certification authority guaranteeing that the pair of keys belongs to the arbitrator – Supra Note 10 at 51.
140
Ibid.
141
A. J. van den Berg, The New York Arbitration Convention of 1958 towards a Uniform Judicial Interpretation
(Deventer Boston: Kluwer Law and Taxation Publishers, 1981) at 253.
37
”Online Arbitration“
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 i n w r i t i n g and shall be s i g n e d 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
142
For example, in Germany, Article 1054 (1) ZPO, and in Sweden, Article 31 of the Swedish Arbitration Act.
143
Supra Note 10 at 51.
144
In France, title V of Volume IV of the New Civil Procedure Code, in Poland, art. 708 § 1 Civil Procedure Code,
and in Switzerland, Article 189 § 2 of the Federal Law on Private International Law, do not mention awards in
writing.
145
Arbitration Act 1996, the website of Her
<http://www.hmso.gov.uk/acts/acts1996/1996023.htm>.
146
Majesty's
Stationery
Office
(HMSO),
online:
Revised Uniform Arbitration Act, the website of National Conference of Commissioners on Uniform State Laws
(NCCUSL), online: <http://www.nccusl.org/nccusl/uniformacts-alphabetically.asp>.
38
”Online Arbitration“
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
147
Supra Note 12 and Supra Note 30.
148
Supra Note 18 at 122. Schellekens argued that from a practical perspective, this is not a very large obstacle to
online arbitration, if an arbitrator has to send a paper version of an award to parties.
149
Supra Note 30 (Hill), Supra Note 12 (Arsic) and Supra Note 18 (Schellekens) presented similar conclusions.
39
”Online Arbitration“
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.
Notification of the award to the parties
The next arising question concerns the form in which the award must be sent to the parties. The
importance of this issue results from the fact that the act of notification of the award to the
parties has significant effects of both substantive and procedural nature. It allows the parties to
take cognizance of the substance of the decision, and then take further necessary steps. As
Cachard wrote, “the award immediately acquires the authority of res iudicata”150. Thus, it is
particularly important to transmit the award without alteration. A major procedural effect of the
notification consists in the fact that the notification constitutes the starting point for various time
periods151, inter alia, for correction and interpretation152, and appeals against the award. For that
reason, the date of notification must be certain153. We subscribe to the views that these
requirements can be met by the means of electronic communication. “Notification by secure email ensures that the award is timed and dated, and guarantees its integrity and attribution to
the arbitrators” (Cachard154). There is no doubt about that under the most liberal among national
arbitration laws, the English Arbitration Act 1996, which explicitly provides that the parties are
free to agree on the requirements as to notification of the award (Section 55 (1)). In such a
150
Supra Note 10 at 52.
Ibid.; J. Huet & S. Valmachino, “Réflexions sur l’arbitrage électronique dans le commerce international”
[Observations on Electronic Arbitration in International Commerce], Gazette du Palais, 9–11 January 2000 at 16.
151
152
For example, Article 29 of the ICC Arbitration Rules of 1998 provides that the parties may request correction of
material errors within 30 days of notification of the award to the parties.
153
Supra Note 10 at 52.
154
Ibid.
40
”Online Arbitration“
case, the parties may well agree that the arbitral award is to be notified to them by e-mail or
uploaded on a secure platform accessible to them155.
Enforcement
The ability to have an arbitral award relatively easily enforced internationally is one of the most
attractive and distinctive features of international arbitration.156 The New York Convention itself
has been described as "the single most important pillar on which the edifice of international
arbitration rests"157, and “perhaps (…) the most effective instance of international legislation in
the entire history of commercial law"158. Arbitral awards rendered in online procedure have all
attributes of traditional arbitral awards: they are authoritative, binding and final, subject to an
action to set aside for limited procedural grounds. To return to so-called “non-binding
arbitration”, decisions that do not qualify as ‘arbitral awards’ within the meaning of the NYC “are
either not enforceable or enforceable [only] like contracts, so for instance settlements reached in
mediation”.159
We don’t share the optimistic views that in online arbitration, “voluntarily fulfillment of the arbitral
award by the losing party is the most likely outcome”160. A few authors defended such a claim
155
Supra Note 11 at 17.
156
By contrast, the enforceability of court judgments in foreign courts is dependent on the existence of a bilateral or
multilateral enforcement arrangement, and even then, a number of other specific difficulties and complexities
peculiar to the foreign courts may arise. The enforceability of international arbitral awards is generally simpler and
more certain. See e.g.: R.C. Bordone, “Electronic Online Dispute Resolution: A Systems Approach: Potential,
Problems, and a Proposal”, (1998) 3 Harv. Negot. L. Rev. 175 at 185. Yu & Nasir wrote: “as long as an arbitral
award fulfills the procedural requirements of Article V the NYC, and is issued within the territory of a country party
to the Convention, the winning party can be almost certain that the award will be recognized and enforced.” – Supra
note 16 at 470.
J. Wetter, “The Present Status of the International Court of Arbitration of the ICC: An Appraisal” (1990) 1 Amer.
Rev. of Int'l Arb. 91 at 93.
157
158
M. J. Mustill, “Arbitration: History and Background”, (1989) 6 J. Int'l Arb. 43 at 49.
159
T. Schultz, G. Kaufmann-Kohler, D. Langer & V. Bonnet, Online Dispute Resolution: The State of the Art and
the Issues, E-Com Research Project of the University of Geneva (Geneva, 2001), online:
<http://www.onlineadr.org> at 82.
160
Supra Note 16 at 470.
41
”Online Arbitration“
pointing out that “cyberspace connects its residents by interest and profits”161, and the residents
of this virtual “interest-based world”162 voluntarily participate in online activities. Given that “there
is no pressing need for legal accountability when the parties share a strong set of legally
acceptable values and seek to use arbitration as a means of preserving and enhancing their
relationship”163, voluntary compliance with the arbitral award would be – as they argued – the
most likely outcome. We are of the view that such claims are too optimistic. We doubt whether
there is so much difference with respect to the fulfillment of arbitral awards in online or offline
settings. Thus, in our view, in the predictable future, the role of the enforcement mechanism
established by the NYC shall remain the backbone of international commercial arbitration.
Thus, online arbitration inevitably comes into contact with the territory-based arbitration
framework and, to the same extent as traditional arbitration, may be subject to the examination
by relevant national courts. A main difficulty with the recognition and enforcement of online
awards concerns the ‘territorial principle’ in the current regime of international arbitration. Two
major issues arise on that ground under the NYC. The first relates to Article I.1 NYC, which
defines the scope of the NYC’s application by the reference to “arbitral awards m a d e i n t h e
t e r r i t o r y of a State other than the State where the recognition and enforcement of such
awards are sought”. This problem may be easily overcome if parties or arbitrators have
specified the juridical seat of the arbitration (as discussed in the previous section of this paper).
Both under the NYC and the MAL, an arbitral award is deemed to be made at the seat of
161
Ibid.
R.C. Bordone, “Electronic Online Dispute Resolution: A Systems Approach: Potential, Problems, and a
Proposal” 3 (1998) Harv. Negot. L. Rev. 175 at 188.
162
M. E. Budnitz, “Arbitration of Disputes Between Consumers and Financial Institutions: A Serious Threat to
Consumer Protection” (1994-1995) 10 Ohio St. J. on Disp. Resol. 267 at 319.
163
42
”Online Arbitration“
arbitration164, regardless of where the hearings were held, or where the arbitrators signed the
award.
The second problem relates to Article V.1.(d) NYC which provides that the recognition and
enforcement of an award may be refused, if “the arbitral procedure was not in accordance with
the agreement of the parties, or, failing such agreement, was not in accordance with the law of
the c o u n t r y w h e r e t h e a r b i t r a t i o n t o o k p l a c e ” (this provision is reproduced
verbatim in Article 36(1)(a)(iv) MAL, and now adopted in over 40 jurisdictions 165). Manevy
argued that “if the seat of arbitration cannot be determined (…), it may be difficult to verify
whether the arbitral procedure was “in accordance with the law of the country where the
arbitration took place”166. To solve this problem it is necessary to refer once again to the concept
of the seat of arbitration. As discussed in the previous section of this paper, the strictly legal
nature of the seat of arbitration overcomes the problem of multiple physical locations of
procedural acts, and ambiguities about territorial locations of procedural acts conducted online.
According to Article 20 MAL, “parties are free to agree on the place of arbitration [, and] failing
such agreement, the place of arbitration shall be determined by the arbitral tribunal”. Of course,
difficulties will arise if the parties or the arbitrators overlook the importance of the determination
of the place of arbitration. Another issue at the stage of enforcement refers to the requirement to
“supply the original agreement referred to in Article II [i.e. “agreement in writing” within the
meaning of the NYC] or a duly certified copy thereof”. Since the problem of how the
requirements concerning “in writing” and “original” can be reconciled with online arbitration were
presented in the previous sections of this paper, there is no need to repeat this argumentation.
See: Article 31 (3) of the MAL: “The award shall state its date and the place of arbitration as determined in
accordance with Article 20(1). The award shall be deemed to have been made at that place”.
164
165
P. J. Turner & J. Paulsson, Grounds for Refusal of Recognition and Enforcement Under the New York
Convention: A Comparative Approach, Experts Group Meeting on Dispute Resolution and Corporate Governance,
2003, online: <http://www.oecd.org/dataoecd/2/62/3860479.pdf>.
166
Supra Note 15.
43
”Online Arbitration“
VI. Conclusion
The emergence and growth of online arbitration practices resulted in the increasing interest in
the question of whether an arbitration conducted by the use of electronic means is valid within
the current legal framework. As a new mechanism of dispute resolution, online arbitration has
encountered certain difficulties in the application of traditional principles of international
commercial arbitration law.
This article outlined potential obstacles lying in the path of online arbitration. The online
performance of arbitral proceedings finds a number of both stumbling blocks as well “teething
problems” on its way. The majority of the arising issues refer to formal requirements in the
current regime of international commercial arbitration. These requirements come in various
guises: the requirement of an agreement in writing, the requirement of signatures and the
requirement of an original. We argued that under certain conditions online arbitration must not
be hampered by formal requirements. We hold also that advanced technology may be of great
assistance in conducting arbitral proceedings, including electronic submissions, hearings, and
even deliberations between arbitrators.
Several issues in this paper have only been briefly outlined. These include defining the place of
arbitration and the place where the award is made, since online arbitrations may be par
excellence delocalized with the ‘cyber-arbitration tribunals’ having no real physical seat. We
agree with the view that the advancement of this type of arbitration may give a new meaning to
the delocalization theory in international arbitration law.
Some authors observed, with certain disappointment, that thus far online arbitration has not
offered a real alternative to traditional arbitration. It is still considered a legal tool that is
promising but “must be utilized with caution due to the above mentioned legal uncertainties”
44
”Online Arbitration“
(Manevy167). Yet we do not agree that online arbitration should be seen as traditional
arbitration’s competitor. Online arbitration schemes constitute a new dimension of traditional
arbitration, existing within the same legal framework. In our opinion arising legal problems do
not constitute insuperable obstacles to the application and further growth of online arbitration.
The rise of providers of online arbitration seems to reflect this observation.
Thus far, there seems to be agreement in the literature that in the long run, online arbitration will
prove to be an important phenomenon within the regime of international commercial arbitration,
and certainly “most arbitral institutions will invest in online arbitration”168. However, in the short
run, the authors tend to be sceptical, arguing that some uncertainties remain 169. In this paper,
we claim that although not all of the legal difficulties arising with regard to online arbitration may
be easily resolved, there are no insurmountable obstacles to online arbitration within the current
legal framework and regime of international commercial arbitration.
167
Ibid.
168
Ibid.
169
For example Supra Note 18 for 125.
45