This article is written by Arkadyuti Sarkar, a student currently pursuing his B.A. LL.B from Shyambazar Law College under the University of Calcutta. This article discusses the possibility of arbitration to shift online after the COVID-19 outbreak.
I am certain that everyone is aware of the drastic transformation in the global socio-economic scenario after COVID-19. Many countries have implemented complete lockdown, including India, and the market and administration in all these nations have been coerced to adopt rapid digitization.
In India, where the Judiciary was reluctant towards implementing the digitization of the courtrooms, previous to the COVID-19 outbreak, has after an overnight decision by the Supreme Court accepted online pleadings through video conferences and other ways.
Now, let us try to analyze the possibility of a shift towards online arbitration in the post-COVID-19 period.
Need for online ADR at the current scenario
In the current scenario where everything is chaotic, the need for moving to an online platform is immense. However, in a situation where urgent issues are already pressurizing the Courts with heaving burdens, thereby cluttering the digital medium, an issue like arbitration is better being held up for the future. Anyways, to ease the burden upon offline arbitrators the online arbitration mechanism shall be highly significant in the post corona period.
What is Arbitration?
Before proceeding any further, let us briefly comprehend the concept of Arbitration.
Arbitration is an ADR (Alternative Dispute Resolution) method, involving out of court settlement disputes between the parties. The dispute is adjudicated by one or more persons appointed as arbitrator(s) and render(s) the arbitration award, which is legally binding upon both the parties and has enforceability in the Courts. The Arbitration in India is governed by Arbitration and Conciliation Act, 1996.
Arbitration is generally used for resolving commercial disputes, especially the ones involving international commercial transactions. However, in some countries such as the United States, arbitration is implemented for solving consumer and seller related disputes too.
Arbitration can either be voluntary or mandatory. Mandatory arbitration can, although, only arise if there is a statute or contractual agreement between the parties, where they agree to recourse to arbitration in case of a dispute, and the judgement of such arbitrator may either be binding or nonbinding.
Can alternate dispute resolution be done online?
After apprehending the concept of Arbitration let us conceptualize about Online Dispute Resolution.
Online Dispute Resolution is a branch of dispute resolution, concerned with the uses of technology for resolving disputes between parties. It basically involves arbitration, mediation or negotiation, or combines all these three. In this perspective, it is often regarded as an online equivalent of Alternative Dispute Resolution or ADR.
However, ODR is capable of expanding these traditional means of dispute resolution by application of innovative techniques and online technologies in the process.
Methods which can be carried out
This method relates to the technological overtaking of negotiation aspects. This process has been designed to assess economic settlements for claims in which liability is unchallenged.
There are 2 types of automated negotiation, double-blind bidding and visual-blind bidding.
The double-blind bidding is applied to determine single monetary issues existing between the parties, while the visual blind bidding is applied to negotiations with any number of parties and issues.
This method proves specifically successful with insurance compensations and commercial activities and is also an effective tool for lawyers as they are capable of using it without exposing the subject of their acceptance unless an agreement is attained. Also, in the case of failure, the right of the parties to approach the court still remains.
Expedient Non-Adjudicative Online Resolution
Another mode of ADR which prioritizes legitimacy and absolute delivery of adjudication, while recognizing the wishes of the litigants of simple and fast possible disposal of the matters.
By discarding any hint for adjudication, services (for eg: one-day decisions) “fast track” a version similar to blind bidding, which is regulated privately to the two parties and an algorithm determines a fair value which has to be accepted by each party.
Contrary to other services, once accepted by both parties, the settlement amount is applied for issuing the Final Resolution Certificate which both parties accept as irrevocable evidence of resolution and final settlement.
Expedient non-adjudicative online resolution by avoiding adjudication saves court time of the litigants, time away from work, fees, and other expenses while protecting both parties from secondary damage.
The victor party usually collects more of his disputed amount, while the losing party does not suffer from any credit damage from having a judgement declared against him. This method is usually utilized in cases related to small claims or limited civil matters.
An online mediation generally starts when an email is sent to the parties informing them of the fundamentals of the online mediation. Meetings are then conducted in the virtual medium, i.e. chat rooms, where the mediator can communicate separately with each party or at the same time with both parties.
There is typically one chat room for holding joint sessions, one for the meetings, and another for filing and storing the documents related to the mediation. This can also be conducted through emails.
Online mediation allows flexibility and faster resolution of the matter compared to offline mediation, which may see a mediation being postponed to a distant date because of the conflicting schedules of the mediating parties.
It also allows the parties time to prepare their response, as one’s immediate response at a mediation is not always the best one. Other benefits include cost savings, time, and convenience. For example: The Singapore State Courts’ Community Justice and Tribunals System has launched its e-mediation for helping those with neighbourly disputes, and save time and money as there are no needs to visit courts for filing the documents.
Online arbitration is defined as an arbitration method in which all aspects of the proceedings are conducted online. Online arbitrations are capable of having hearings through video conferencing, but most simply require parties to upload their evidential documents, reply to questions from the arbitrator and they will receive a decision from him.
This arbitrational mode has multiple advantages resembling online mediation, such as cost efficiency and greater flexibility due to their technological nature.
The disadvantage of online arbitration lies in the lack of face-to-face interactions which has lesser significance as arbitrations depend less on the interactions of the parties but more upon the evidence adduced through written submissions.
Online arbitration has also its uses in business to consumer disputes. However it is typically unpopular not because of being a poor dispute resolution medium, but because consumers view such arbitration agreements as a barrier for them in accessing justice through the courts and particularly, to file action suits which would render more compensation.
The advent of new technologies and applications has started influencing the business strategies of the companies in a significant manner. Acknowledging this new development, the WIPO Arbitration and Mediation Center is developing an online, Internet-based system for administering disputes. This online dispute resolution system and all associated information are accessible through the Online Dispute Resolution pages of the Center’s website.
The Uniform Domain Name Dispute Resolution Policy (UDRP)
Conventionally arbitration involves dispute resolution through the delivery of legally binding decisions, i.e has the same enforceability before the Courts as any other judgements.
Non-binding arbitration processes may also be effective when using ODR tools, as settlements are often encouraged by them. Moreover, self-enforcement measures may review the effects of non-binding processes.
The most significant example is in the creation of UDRP by Internet Corporation for Assigned Names and Numbers (ICANN) UDRP has been referred to as an administrative process by some commentators.
In any case, the UDRP has created a clear global ODR process, allowing trademark owners inefficient fight against cybersquatting. The UDRP is used for resolving disputes between trademark owners and users of registered domain names in bad faith purporting to resell it for profitable exchange, or taking advantage of a trademark reputation.
Advantages of ODR
Compared to litigation, online dispute resolution is extremely profitable as it reduces the huge advocate’s fee. Also, in comparison to traditional arbitration, the Online dispute resolution is cost-efficient in another way as it cuts down the ostentatious costs involved in the normal travelling expenditures during the manual resolution of disputes. Apart from that, the high costs involved for availing reputed 3rd parties also subside as the physical presence of the parties becomes unessential.
Online dispute resolution surrounds over a wide geographical region, thereby guaranteeing excellent service quality to people of varying areas. There is also a variety in the choice of service providers in case of ODR as different websites delivering these services are capable of seeking to resolve a dispute irrespective of the location of their head office.
Dodging jurisdictional issue
The settlement is bound by an agreement, entered into by the disputing parties. Through Online Dispute Resolution, the subject of the jurisdiction of the tribunal to try the dispute can easily be avoided, thereby saving the time of the parties to the dispute.
Informality, flexibility and creativity
Online Dispute Resolution mechanism is a usually informal, flexible and creative tool of dispute resolution and ungoverned by strict procedural and evidential rules. This may allow the parties in designing or participating in a moduled process to suit their needs and encourages a consensual over an adversarial approach.
Disadvantages of ODR
For availing online dispute resolution, the primary requisite is having a rudimentary concept of computers and internet operation. However, in developing countries like India, this becomes a major issue as not much people have internet access to avail ODR. Also, those who have access are reluctant towards its usage due to lack of trust. Therefore, the issue is not solely with the lack of basic computer knowledge but also the reluctance towards availing online services.
Online dispute resolution creates electronic distance between the parties as there is no physical appearance of the arbitrator or mediator. In other words, given the involvement of virtual processes in ODR, the mental state and the resulting body language of the disputing parties are not transparent to the arbitrator. This restricts the arbitrator from developing any personal relationship with the disputing parties. Also, the arbitrator is incapable of controlling the temper and tone of the parties to the dispute, resulting in a significant decrease in the arbitrator’s strong value.
Dispute resolution often involves sharing lots of confidential information by the parties to the dispute or their representatives. Sensitive information is particularly more crucial for making corporate negotiations, where often trade secrets are disclosed. However, cyberspace is exposed to cybercrime. In the absence of proper security, this confidential and sensitive information can easily become a target of the hackers which in turn can bring disastrous effects upon the concerned parties.
Limitation of Disputes
Some disputes are restricted to the method of opted online dispute resolution. For eg: fully automated ODR (Online Dispute Resolution) can only be used for resolving specific types of disputes, and even after that, it is capable of solely handling disputes where the settlement amount is the issue.
Factually, for the proper functioning of the ODR, it would appear that the parties to the suit would need to engage in initial discussions, agree to the fundamental facts surrounding the disputes, and have already held one of the parties liable for the damages.
Then the parties would have to apparently agree for limiting further discussions to the only issue on an appropriate monetary compensation amount. Thus, restricting the final stage of ODR in determining a compensatory monetary figure excludes the possibility for innovative, interest-centred, and unconventional negotiation which is the insignia of many successful negotiations.
After acknowledging the plethora of facts on online arbitration, the reader I hope is now capable of appreciating the significance of shifting to and using online arbitration. However, alongside the different mechanisms and advantages, one also needs to be aware of the disadvantages related to the online dispute resolution process. There are issues like breaches in confidentiality and privacy, accessibility to computers, limitation of disputes, and impersonality.
Again as I have already mentioned previously, arbitration is an out of the court settlement by the parties to a dispute. In a situation like this where many urgent and serious issues are yet to be addressed by the judicial system which is burdening upon it, the further burden of these sorts of settlements shall affect the addressing of those pending issues. However, indeed in the post Corona period, a dynamic shift towards online arbitration shall indeed be beneficial.
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