This article is written by Yash Lahoti, a student of GNLU, during his internship with iPleaders

INTRODUCTION

Technological development is significantly overhauling the traditional methods of dispute settlement and electronic  media to sort out disputes  are rising and will become the future of dispute settlement-if it is channelized in a proper manner. Technological advancements have enabled us to tackle many disputes in the past and cyberspace with its   endless possibilities has brought in a new dimension to the regime of international commercial arbitration.[1] Online arbitration is a method, which is being accepted by people at large and has an effective working setup under the current legal framework.

Use of Internet is at its zenith in the current generation and the number of disputes arising in the same forum is also on a rise. Litigation as well as traditional methods of dispute settlement has its share of shortcomings such as they are time consuming, expensive and  have problems regarding the seat/venue of the arbitration.

Accessibility of data via Internet allowed for an immense growth of international commerce. Hundreds of transactions are concluded through electronic medium and entities rely on modern techniques to settle any dispute, which arises during such transaction. In the modern civilization, the dispute settlement mechanism has diversified and arbitration is one of the most preferred methods to resolve disputes. Carrington[2] put forth his experience when dealing with witnesses who hailed from various jurisdictions and the constant trips that they had to make so that they could be present on the day of the proceedings were costly, uneconomical and inefficient. The same problem could have been sorted out with the help of telecommunications and conferencing, if the technological mediums were put to use.

The reality of civil litigation system in the nation is appalling as many people do not have access to the justice system and many lawyers cannot afford to represent clients. Attorney fees and litigation expenses prevent disputants from filing claims and seeking relief from wrongdoers. Many cannot afford to hire lawyers as they are in no position to pay them. There are many reasons, which make the present litigation system unattractive and one such being the monopoly of the lawyers who are earning handsome money from the current litigation system and do not want any change in the same. Second, being the monopolistic nature of the legal system. It takes time for law to evolve and keep pace with the dynamic society and monopolists do not always reform monopolies. There is a historical inertia and the supposed nature of law is slow to change. There is a perception that whatever legal changes are necessary will evolve over a sufficiently lengthy period of time.[3]

However, it’s believed by many that times are changing and modern transaction needs are required wherein the speed of communication has jumped to warp speed. Many e-commerce disputes are emerging today and it requires settlement within few weeks or months so that it doesn’t hamper ease of conducting business and problems stemming from these fast transactions need similarly to be resolved quickly, within weeks or months instead of years.[4]

Many business transactions are conducted through electronic mediums, technological advancement has reached a new height and disputants presume that the ways they use to create relationships and transactions ought to be available to resolve problems. Facets that underlie litigation system are no longer used or relied upon in many serious transactions. Significant financial and business decisions occur nowadays without the expectations or needs that litigations proceedings require. Financial events those are as legally significant as service of process occur by computer transmissions. Judicial hearings require presence of parties and witnesses personally; however transactions rely upon telephone communications and video conferencing.[5]

Today, documents are mostly stored in or have their source in electronic form. [6] The growth in electronically stored information and the variety of systems or devices for creating and storing such information has been dramatic. This creates new issues for discovery as electronically stored information may exist in dynamic databases and other forms very different from static paper.

There is no denying that online arbitration is risky as there can be peculiar problems encountered by only cyberspace and there can be problems to implement the same. Online arbitration has garnered more recognition in the international arbitration sector rather than Indian as the level of technological advancement in foreign countries is undoubtedly more than the Indian scenario. Basically, the problem lies with the fact that the inception of the dispute is of less concern than the fact that the problem requires treatment of being shifted from the conventional methods to the virtual world.

Possibility that the whole proceeding cannot be conducted through online arbitration and during the final settlement of the award, it would be inevitable for the parties to meet up and enforce the award accordingly.

ADVANTAGES OF ONLINE ARBITRATION

Throughout the paper, it has been seen that a new branch of arbitration is creating a lot of stir in the international as well as in the Indian scenario. The system, even though is a new one but still it functions on some of the archaic rules followed by the conventional arbitration. The new branch is thought to have an edge upon the arbitration, which is in practice in today’s world. The advantages that online arbitration provides are:

• As the traditional methods employ a neutral person to settle the dispute between both the parties, in online arbitration also, a similar pattern is followed wherein a mediator/arbitrator will address the particular needs of the disputants.[7]However, the online arbitration allows a lot more flexibility, saves upon time and money and enables quicker decisions.[8]
• No expert would be able to deny that online arbitration any day is a faster method than the current methods available at hand. Online arbitration was brought forth with the prime objective that it will cut down on the cost, which is usually incurred during arbitration. Many prefer arbitration as it ensures a quicker decision but the method is costly. One session of arbitration can be easily billed for thousands and mostly the elite class prefers it[9], thus online arbitration is an attempt to make this efficient system reach as many as people. In Online Arbitration, physical presence of parties, witnesses are not required, at least at the initial stages and thus, a lot of cost is saved when the parties don’t have to travel for long distances.[10]
• The cost of traditional methods such as litigation and mediation etc., involves a lot of cost and sometimes hiring an attorney that can be unnecessary. The legal profession for some has become a medium to earn as much money as possible and certain attorney’s would bind their clients for long in the maze of legal arena and would keep churning money as much as possible. The aggrieved party would be bound to pay the money but no positive result would come out of it. Thus, online arbitration is a sure shot solution to the problem of increased costs in litigation and conventional arbitration process. In online arbitration, use of cyber space is very high and both the parties and the witnesses presenting themselves would have to have an efficient connection to the modems and computer systems.

Substantial cost savings may also result because online arbitration does not require parties to pay for long distance phone calls or tele-conferencing.[11]

• Another advantage that can be attributed to online arbitration is that all the documents and evidences can be stored in the digital platform and if used the correct methods to secure it, then the cost of safeguarding such documents will also lower down. Thus, storage of documents and evidences in online arbitration is also considerably safe.
• The changing times call for advancement in technology and parallel development in the working of people in each field. Law is considered to be the most dynamic of all fields, everyday a new proposition crops up, every time a new law is made and implemented and thus, any day a new technology can come in and take the place of already existing ones.

Internet has brought in revolution in itself and the mode of virtual arbitration is doing the same in the field of dispute redressal mechanism. The conventional method of posting each and every document and through post or speed most has been substituted with e-mails. Communications through e-mails have made life easier and in a spur of moment, people can express themselves to each other and the other party does not have to be present physically but the disputes get resolved easily.[12]

• Fixing of convenient time and place becomes easier as online arbitration is undertaken. The claimants and respondents don’t have to bother about taking long flights and meeting at a neutral point. Cyberspace is a neutral forum and no party’s rights are harmed if such medium is chosen. Both the parties can come together at any convenient time, place being the place, which they are commonly residing at or the place of their business and can conduct the arbitration sessions. The only requirement wherein the physical presence or signature by mere physical presence is called for is during rendering and enforcement of award.
• There would not be any wastage of time as the amount of idle time that disputants experience is similarly reduced because, in contrast to traditional mediation, the mediator can devote time to one party without wasting the time of the other party, who would traditionally sit around waiting for the next mediation stage.
• The issue regarding the jurisdiction also gets solved to some extent wherein the place of conducting the session of arbitration becomes the jurisdictional point of the said matter. The Tribunals don’t have to deal with an extra issue of jurisdiction, which sometimes leads to disposal of matters and the parties have to keep knocking different doors of judiciary to obtain a favorable award/decree.
• One of the major reasons why online arbitration is preferred is because that confidentiality of the matters are kept as it is which is one of the biggest advantages of traditional arbitration as well. Online arbitration, when conducted should be immune to unauthorized access, identity verification, service denial, crash of the system and viruses and it would be a success with every aspect.[13] However, in any system a full proof confidentiality criteria is not possible and the best way to deal with that situation is to maintain as much transparency as possible while conducting the sessions which will enable trust building among parties, though it should be kept in mind that private information of the parties should be masked when publishing the awards.[14]

Thus, the advantages of online arbitration are numerous and if it’s directed in the correct direction, it can prove to be fruitful for the future generations to come. It comes with very few hassles but proves beneficial for majority. It is speedily gaining recognition in the international sector, even though it might be doused with certain disadvantages and arbitrators more often root for the method. The litigation system is burdened in any country and arbitration acts as a boon for those who have been stuck in the system for long. Even the civil laws allow for attributing any matter to arbitration, if it feels that it can be handled better in that field. In the Indian scenario also, the same trend follows wherein, if the civil courts grant permission to the parties to go for arbitration, then it can do so and the award shall be binding upon the party.

Online arbitration has managed to make a mark in every dispute redressal mechanism around the world and it shall continue to do so, if as many parties undertake the practice as possible.

DISADVANTAGES OF ONLINE ARBITRATION

Every system has its pros and cons and even this system has its share of them. The old school followers still stuck by the traditional rules of either litigating a matter or going for the traditional arbitration methods wherein both the parties will sit face to face with each other and try to sort out their dispute. It is felt that cyberspace at all times may not be the best platform where a tribunal should be sorted out. As has been pointed out by Joel Eisen in the article,[15] the practice of arbitration cannot be reproduced in an online environment because ‘cyberspace is not a mirror image of the physical world.

• Both the parties sitting together with a neutral person acting as their arbitrator sometimes proves beneficial as the parties will be able to understand each other in a much clearer manner which may not be possible in cyberspace, even though both the parties are sitting opposite each other.[16] The power of compelling a party who is face to face with you is easier rather than online arbitration. The process of understanding the dispute by both the parties and the arbitrator is much clearer and surer.
• One of the biggest disadvantages of the system is that there is no provision for appeal; the decision rendered becomes binding upon both the parties. Thus, if by any chance the decision is not what is expected by any of the parties, and then he may be left remediless and will have no avenue to avail. The award shall be enforced as it is and in many conditions, depending upon the authenticity of witnesses and evidences, the victim might not be remedied at all. The genuineness of any witness can be understood in a better manner if they are face to face, rather than being through the medium of cyber space.
• Till date, limited range of disputes is attributed to traditional arbitration methods only, then it can be gauged that even lesser number comes for online arbitration. Matters wherein the parties have already determined liability and the dispute solely pertains to determination of appropriate compensation are apt disputes for online arbitration. However, our system is crammed with complex and complicated matters, which can be left to arbitration such as family matters, matters related to women and children etc., and only niche commercial matters are for arbitration. Thus, the range of disputes brought forth in online arbitration is very limited and thus, there is a high possibility that this system will not be put to much use.
• Another disadvantage is accessibility of online arbitration when in many countries; use of Internet is banned or is highly restricted.[17] Under such circumstances, it is very difficult to conduct such sessions because either government or its agent’s interference can cause disruption in the whole system.
• One more glaring disadvantage is that even though online arbitration can reduce the overall cost of the process, but the up-front and continuing fees or the initiation fees is very high. The cost to start an online proceeding can be high and sometimes when a lot of disturbance occurs in cyberspace, then highly intricate and complex machines have to be purchased which in no way can reduce the cost of the arbitration.[18]

Thus, even though a new stem of arbitration is welcomed, it comes with a cost, which may not be advantageous for public at large. It is a very new field, which is unexplored and many people are shying away from even  delving into the field as it comes with its negatives. It can be quite conveniently said that people are too comfortable with the present legal system and does not want to try their hands at new things. Tailing the same argument, most arbitrators are aged and experienced, but experienced only in the field of law and rather not at the new technologies that are coming up. They are still comfortable writing down their judgments with pen and on a paper rather than type it out. Thus, it can serve as a big hindrance in the success of online arbitration. Its beginning has been welcomed by many but the question looms that what will be the future of online arbitration as its acceptability can pose hindrance to many.

FUTURE OF ONLINE ARBITRATION

Society has been changing forever and with them the people have learnt to adapt with the same, they have been imbibing the new laws, regulations of the society and even the legal system. From the archaic times to the contemporary times, legal field has been such that went through a lot of changes, some favorable and some were not.

The advent of the society was parallel to the development of the legal system in the world. India was one of the places where civilization knocked before than many other nations and people were peace loving and considerate who would mingle with each other and live in a peaceful manner. The earliest disputes were, as can be traced, related to property matters. When people were given the opportunity to acquire land or any other immovable property, people thought of their gain and would use any techniques to acquire the same, as it would symbolize wealth and a higher status in the society. Fraud, cheating, misrepresentation were part and parcel of acquiring land and this eventually lead to the inception of the legal system in India.

In the earlier times, there were no formal court system and the elders of the society would take up the matter. They are adjudged to be the best people to resolve the dispute as they were well connected with the happenings of the society or the village they resided in. Their decision was held to be final and binding upon the parties who came before that. The administrative system of the princely states portrays a systematic judicial system for the first time where people with special knowledge were elected to fill up the posts. Certain priests or soldiers were exclusively appointed to deal with the justice system of the kingdom.

Trial by ordeal[19] was a famous method to determine the guilt of a person. The ancient Indian society[20] was largely dominated by faith and religious people and considered the method as a valid proof. It was very common to swear by the truth or to call upon the Gods to witness the truth of a statement, as is clear from various illustrations of the ordeal given in the Smritis.[21]. There were other kinds of trial that were also prevalent but this was considered to be the most potent among all.

If noticed during the times of Asoka, the great philosopher of all times i.e. Chanakya[22] had full-fledged responsibility to look after the judicial system. Emperor Bindusara always relied on the words of Chanakya before deciding upon any matter. The priest would also be consulted before any punishment was meted out to the culprit. Thus, such posts were considered to be holy and of high stature and they were expected to have high code of conduct. This system was successfully carried on for several years and even the Mughal dynasties complied with the same.

However, with the advent of the British things reached its structured form wherein it was realized that a regulatory framework should be in place to govern the entire system or a very chaotic and haphazard situation was in place. No one was held responsible for any act or omission, which would wrong the other party. Thus, the litigation of Court system was developed in India. The Charter of 1833[23] provided the foundation for consolidating reforms and codifying laws and accordingly, a law commission was appointed in 1834 and this step lead to the modernization of Indian laws.

Later, High Courts in the three presidency towns i.e. Calcutta, Bombay and Madras were set up, which gave a boost to the entire judicial system. However, it was not a rosy picture as one after the other cases started piling and the judiciary could not handle the same. Victims were not given justice and the accuseds were languishing in the prison without being correctly convicted. Thus, the need was felt that an alternate system should be devised that can take off certain burden of the shoulders of the judiciary.

Looking towards the apathetic situation, the judicial system borrowed the concept of arbitration from the western world. Arbitration was a welcome change wherein the courts could divert the matter to a neutral body in appropriate cases. The idea of not going for litigation and waiting for a long period of time before justice could be delivered. Arbitration gave the parties the opportunity to settle the matter outside the purview of court and still obtain a binding and final decision. Arbitration has been held high among all the dispute resolution mechanisms and various facets are adding onto the said mechanism with change in the society.

One such addition has been the foundation of online arbitration, which was a dream even in the past few years. For ease of business and to keep pace with the society, even Internet has been made a medium to solve such disputes. Online dispute mechanism started to resolve matters related to domain names of websites and allied disputes. Then the same method has been extended to some other commercial disputes, which did not arise out of the online medium but still the online arbitration platform was being utilized. This showed the willingness of the society to try their hands at this new method as they thought it could be in their favor.

The online dispute resolving mechanism ensures that the objective of conventional arbitration is upheld i.e. speedy delivery of justice without causing inconvenience to the parties and not draining them financially. The use of cyberspace and technology ensured that the system could become a success. Video conferring and Internet has been used for commercial purposes and the same tools are utilized for solving disputes that arise out of such commercial transactions. Even though the thought is novel, it has certain practical difficulties, which till not settled will not make the system as useful as it has been envisaged. However, it’s a pleasant welcome to see that courts in India and around the world has started using internet applications and judges have started receiving training in computers and are encouraged to use such technologies in the court scenario.[24]

Online arbitration calls for the parties to be present during the rendering of award so that they can sign the award before it is enforced and decision is delivered as soon as possible, however the decisions are not held to be binding and have to approach the court at the last stage wherein the enforcement can be only done by the court. It is one feature where it falls short of the conventional arbitration.

As the method is just starting out, it would require some amount of capital, which initially can make the whole system a costly affair but then as time progresses and the system is accepted by many, the economic costs will also come down making the online arbitration scenario conducive for many. Thus, all opportunities should be given to the system to develop so that it can reach maximum number of people and pull them out of their plight and sorry situation.

[1] K. Lynch, “The Forces of Economic Globalization: Challenges to the Regime of International Commercial Arbitration”, Kluwer law International, pg. 345 (2003)

[2] Carrington, P.D., “Virtual Arbitration”, Ohio State Journal on Dispute Resolution, Vol. 15, no. 3, pp. 669-690 (1995)

[3] Id.

[4]Supra (n 1)

[5] Id.

[6]ReOperadora DB Mexico, S.A. de C.V., 2009 WL 2423138 (M. D. Fla. 2009)

[7]E. Casey Lide, “ADR and Cyberspace: The Role of Alternative Dispute Resolution in Online Commerce, Intellectual Property and Defamation”, 12 OHIO ST. J. ON DISP. RESOL. 193, at 208

[8] Id., at 719 (1996)

[9]Lan Q. Hang, “Online Dispute Resolution Systems: The Future of Cyberspace Law”, 41 SANTA CLARA L. REV. 837, 855 (2001)

[10]Llewellyn Joseph Gibbons, Robin M. Kennedy, and Jon Michael Gibbs, “Frontiers of Law: The Internet and Cyberspace: Cyber-mediation communications Medium Massaging the Message”, 32 N.M.L. REV. 27, 42 (2002)

[11]George H. Friedman, “Alternative Dispute Resolution and Emerging Online Technologies: Challenges and Opportunities”, 19 HASTINGS COMM. & ENT. L.J. 695, 712 (1997)

[12]Jim Melamed, The Internet and Divorce Mediation, available at http://www.mediate.com/articles/melamed9.cfm, last visited September 25, 2002

[13]Nicolas De Witt, “Online International Arbitration: Nine Issues Crucial To Its Success”, 12 The American Review Of International Arbitration 462 (2001)

[14]Isabelle Manevy, “Online Dispute Resolution: What Future?” 42, June 2001, http://www.juriscom.net/uni/mem/17/odr01.pdf, last accessed on September 27, 2015

[15]Joel B. Eisen, “Are We Ready for Mediation in Cyberspace?” 1998 BYU L. Rev. 1310 (1998)

[16]Ponte, Lucille M. &Cavenagh, Thomas D., “Cyberjustice: Online Dispute Resolution (ODR) for E-commerce”, 31 (2005)

[17] Id.

[18] Public citizen, protecting health, safety and democracy, www.citizen.org, last accessed on September 27, 2015

[19]V. D.Kulshreshtha, ‘Landmarks in Indian Legal and Constitutional History’ (published 2010 Eastern Book Company) 10^th Edition 5

[20]L. D. Barnett, ‘Antiquities of Indian’ (published 1964 Cornell University Library) 18

[21]Raj Kumar, ‘Essays on Legal System in India’ (first published 2003, 2012 Discovery Publishing House) 8

[22]Kautilya’sArthasastra, Vol. IV, p. 10

[24]Maria Mercedes Albornoz and Nuria Gonzalez Martin, ‘Feasibility analysis of Online Dispute Resolution in Developing Countries’, Inter-American Law Review, Vol. 44, No. 1