To differentiate Conventional Arbitration which requires the applicability of Arbitration and Conciliation Act, 1996, the Online Arbitration, as the name suggests, besides the applicability of Arbitration and Conciliation Act, 1996 also requires the aid of technological related laws, particularly the Information Technology Act, 2000. In other words, it can be said that Online Arbitration is a blend of conventional Arbitration with the taste of technology in it.
The Arbitration and Conciliation Act, 1996 from the point of view of Online Arbitration can be separated into three parts:
- The arbitration agreement,
- The arbitral proceedings and
- The arbitral award and its enforcement
Section 4 and Section 5 of the Information Technology Act read with Section 65 B of the Evidence Act provides for legal recognition to electronic records and signatures.
By closely observing the provisions of Arbitration and Conciliation Act, 1996 in concurrence with Information Technology Act, we must observe the above mentioned three pointers separately initiating with the first segment that is Arbitration Agreement.
The arbitration agreement entered into between the parties by exchange of emails through no formal agreement in writing signed by the parties is valid and enforceable as the validity of such agreements is upheld by Hon’ble Supreme Court of India in the matter of “Shakti Bhog Foods Ltd. Vs. Kola Shipping Ltd.” AIR 2009 SC 12 and “Trimex International FZE Ltd. Vs. Vedanta Aluminum Ltd.” (2010) 3 SCC 1.
Like Conventional Arbitration, the Online Arbitration can either be Ad-hoc Arbitration or Institutional Arbitration.
Moreover, whether the Arbitration is either Online or Offline, in both the scenario the parties or the Institutions should clearly spell out:
- the law governing the arbitration agreement;
- the law governing the contract;
- the procedural law;
- language of the procedural law;
- the jurisdiction of the court (whether exclusive or non-exclusive)
- the place of arbitration
- the language of the proceedings, and
- other procedural details
The procedure relating to the use of technology in case of Online Arbitration have to either agreed by the parties or laid down by the Institutions. Unlike the individual parties the Institutions are in a better position to clearly lay down the details which are necessary and required in case of an Online Arbitration so that the parties are not faced with any additional difficulty when they follow the rules of a particular Institution and for this particular reason also the Institutions acquire more importance.
It is particularly important to spell out these details because Online Arbitration, unlike Conventional Arbitration, is not by physical meeting of parties and arbitrators but is a virtual meeting. It is very much necessary that extra caution needs to be taken and minute details need to be put into the rules and procedures keeping this aspect in view. Since it is inevitable that the arbitration proceedings are meant to be confidential in nature, the infrastructure that is agreed to be used by the parties should not only provide confidentiality of data but should also be reliable.
The second part being arbitral proceedings which are fundamental in nature, it is seen that the agreement or the Institutional rules followed by the parties should clearly spelt out the procedures which would be adopted by the parties. The Statement of Claim and defense, etc which is required to be sent by transmitting the physical copies can be transmitted in electronic form. Parties to the arbitration can be sent through emails by attaching PDF files and the signed copies besides the above mode can be sent through courier later on and once again Section 4 and 5 of the Information Technology Act, read with Section 65 B of the Evidence Act come to the aid of the parties. Such pleadings can be transmitted in electronic form without losing recognition of law.
The Alternative Dispute Resolution system is used for early disposal of dispute in a cost effective manner. The aim and objective of Arbitration and Conciliation Act, 1996 is, to provide quick and effective remedies to dispute and all the requirements of this objective is fulfilled by Online Arbitration.
In the conduct of the proceedings, there could be technical difficulties such as electricity failure, system failure, link failure, etc which need to be taken care of in the agreement or the Institutional rules so that either an alternate provision is made and the information or data fed in the system can be retrieved.
International Chamber of Commerce (ICC) has also showed the way and framed certain Standards for Online Arbitration which are as follows:
- the rules for giving file names with a unique name/identifier for each electronic document.
- To identify the originator,
- Class of document
- Place of arbitration
- This file naming system shall be used throughout the arbitration for all electronic documents.
- The file name and the date of the original document (e.g. the date shown on a letter that is submitted as evidence) shall appear on the first page of the electronic document, either at the top right corner or at the bottom.
- If data loss occurs and the affected participant cannot itself reconstitute the lost electronic documents, the other participants shall help to reconstitute the electronic file(s) by providing copies of the pertinent files that they control.
- Mode of transmission and storage of emails
- Whether any confirmation of receipt of email has to be given.
- File format for sending attachments, like. PDF, Doc, HTML, ASCII
- Rules for audio and video conferencing
The arbitral tribunal, in consultation with the parties, will issue directions giving details for the conference, such as:
- day and hour and applicable time zone;
- places where a conference front-end is required;
- who shall participate and number of persons at each front-end;
- special requirements, such as visualization of documents;
- any other requirements.
It is necessary that the parties should decide the procedural requirements of having the virtual proceedings which have to be clearly spelt out including the details for exchange of pleadings, video conferencing and audio conferencing.
It is noteworthy to mention that in certain circumstances, parties and the arbitrators may be placed at different ends of the system in different geographical areas. Various combinations may arise, for instance, a party may be sitting with an arbitrator at one end while the other two arbitrators may be sitting at the second and the third end and the other party may be sitting at the fourth end. Therefore, in such cases like the instance mentioned above the allegations of non compliance of Section 12 and Section 18 of Arbitration and Conciliation Act, 1996 may arise. Hence, the rules for holding the arbitration proceedings should be formulised in such a manner that in holding of virtual proceedings equality and impartiality to the parties is ensued.
ARBITRAL AWARD AND ITS ENFORCEMENT
Now the third part relates to the legal sanctity of Online Award. Much important thing is that Section 31(1) of the Arbitration and Conciliation Act, 1996 lays down that the arbitration award shall be in writing and shall be signed by the members of the arbitral tribunal and hence Section 51 of the Information Technology Act, 2000 provides that the digital signature have the same effect as a paper signature.
As stated in the earlier part of the article, being an Online Arbitration, the procedures relating to use of technology to be either agreed upon by the parties or laid down by the Institutions. Section 31 of the Arbitration & Conciliation Act requires the award to be in writing and signed by the arbitrators. The award can be issued though email by sending scanned signed copies in PDF format. The actual signed copies can be sent through post.
In an alternative, the arbitrators can also put their digital signatures and provide accuracy and integrity to the award. For enforcement of the award, the original signed copy received by post or the digitally signed awards, as the case may be, can be filed before the courts.
Model law of electronic Commerce promotes the equivalent approach whereby electronic documents can be considered original for enforcement. The New York and Geneva Convection requires filing of original or duly authenticated copy of the award for enforcement.
The very vital legal issue comes as to the court which any party should approach for enforcement of the Online Arbitral award. The question what does constitute place of court, the place where Online Arbitration agreement was signed or sitting place of arbitrators?
Section 36 of Arbitration and Conciliation Act,19962 , the enforcement of the award will be as a decree of the court and the same would be enforced under the Code of Civil Procedure, 1908. The definition of ‘Court’ as given in the Arbitration and Conciliation Act in section 2 (e)3 is that the court in which the award will be enforced is dependent on the subject matter of the arbitration and not the place where the arbitrator sits or renders the Online Arbitration Award.
Online Arbitration should be a preferred way of dispute resolution since it is fast, economic and efficient. Online Arbitration is still conducted by traditional arbitration rules even though it is a new method to conduct dispute resolution. The parties and the arbitrators in an online arbitration should always consider the legality of the applicable arbitration agreements and procedures, choice of law, seat of arbitration and form of the awards. These precautions will assist online arbitration to work within the framework of existing national and international treaties. However, online arbitration should develop its own rules over the course of time. It is clear that Online Arbitration is not different from what the conventional arbitration is. The only difference is the omission of physical platform and introduction of a virtual platform.
In conclusion, online arbitration is possible and online arbitral awards should therefore have the same effect of traditional arbitral awards. Online arbitral awards are binding and final, subject to set aside only for the same limited procedural grounds as traditional arbitral awards.