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Managing Partner, ANTIKA Law Firm, Doctor of Law
Partner, ANTIKA Law Firm
Online Arbitration: Reality and Prospects
The rapid development of information technologies and modern instruments of communication inevitably exerts its influence on all spheres of life of society and the order of dispute resolution is no exception. The concept of “online arbitration” is more and more often encountered in the professional environment, which can be understood as an online dispute resolution mechanism (ODR) or an arbitration procedure through the use of information technologies. If in the first case we are talking, as a rule, about the procedure for resolving minor disputes arising in the e-commerce sphere, then in the second — the process of resolving disputes in institutional arbitration or ad hoc arbitration using online communication is implied.
Today there are many online platforms for dispute resolution, but the most common should be considered the Uniform Domain-Name Dispute-Resolution Policy (UDRP) and the European Online Dispute Resolution (ODR Platform).
UDRP was developed by the World Intellectual Property Organization (WIPO) and adopted by the international non-profit organization Internet Corporation for Assigned names and Numbers (ICANN) — accredited registrars in all top-level domains in 1999. Protecting trademark owners, this procedure aims to resolve online disputes arising as a result of illegal domain registration. Complaints are submitted to approved dispute resolution providers, each of which follows the Rules for Uniform Domain Name Dispute Resolution Policy. It is noteworthy that from 19.12.2019 UDRP began to operate in the most popular public domain com.ua in Ukraine, which was the result of the signing of an agreement between the domain register by the Hostmaster Company and WIPO as a provider of dispute resolution services.
The European platform for PCO (hereafter — the ODR platform), was founded in accordance with Regulation No. 524/2013 of the European Parliament and of the Council on online dispute resolution for consumer disputes and the Directive No. 2013/11 of 21.05.2013 of the European Parliament and of the Council on alternative dispute resolution for consumer disputes. The ODR platform serves as the coordinating center for traders, consumers, providers and is used to resolve disputes arising from contracts between European suppliers and consumers concluded online. The following procedure includes: informing a trader on complaint by using the ODR platform, online-negotiation, and the ability of transferring a dispute to a trusted provider.
Since the launch through the ODR Platform, 120 thousand consumer disputes have been initiated, most of which concerned air travel, the supply of clothes and footwear, and information and communication technologies. Despite the effectiveness of the ODR Platform (the 2019 European Commission report indicates that about 42% of disputes were resolved using the ODR Platform), the lack of counterparty awareness of its existence remains a problem. Thus, since as of 2019, 40% of retailers were not aware of the ODR Platform’s availability.
The perspective of further development of the ODR was also clearly indicated by the adoption by UNCITRAL in 2017 of the Technical Notes on Online Dispute Resolution (hereinafter – Notes). Although the developed document is not binding, it is expected that the Notes will make a significant contribution to the development of systems to resolve disputes arising from low-cost cross-border purchase agreements or service supply agreement concluded using electronic communications (e-commerce sphere). The importance of the Notes lies in the wide potential of their application for the development of ODR systems. In particular, in paragraph 2, Section 2 of the Notes, it is indicated that online dispute settlement (ODS — in the terminology of the Notes developers) covers a wide range of approaches and forms (including but not limited to ombudsmen, complaints boards, negotiation, conciliation, mediation, facilitated settlement, arbitration and others). The following stages of ODR are distinguished: negotiations, assistance to the settlement and the third (final) stage. Interestingly, negotiations are defined as negotiations provided by information and communication technologies, during which the claimant and the defendant negotiate directly with each other through the ODR platform. This approach is fully consistent with the above UDRP and ODR platform procedures. Nevertheless, regarding the creation of a global platform on the basis of the Notes, skepticism is still retained not only because of their optional nature, but also because of the difficulty of enforcing decisions, the uncertainty applicable to legal disputes, and the imperativeness of national law protecting consumers.
The process in institutional arbitration also did not remain outside the influence of information technology. For example, Art. 1-2 of the Arbitration Rules of the London Court of International Arbitration in 2014 (hereinafter — the LCIA Rules) provide for the possibility of sending the Registrar a request for arbitration (with all accompanying documents), as well as answer (with all accompanying documents) in electronic form (as e-mail attachments). In this case, the claimant and the defendant can use the standard electronic request/response form, available online on the LCIA website. Article 4.1 of the LCIA Rules entrenched the possibility of delivery of any written messages of the Court LCIA, the Registrar or any party by e-mail or other electronic means of communication.
Part 1 of Article 12 of the Arbitration Rules of the 2018 Vienna International Arbitration Centre (hereinafter — the Vienna Rules) establishes the requirement to file an arbitration claim in electronic form together with paper one. Moreover, the requirement for a paper form of an arbitral award does not deprive the parties of the right to receive such decision in electronic form (part 5 of Article 36 of the Vienna Rules).
What is impressive in the context of ensuring electronic document circulation in the arbitration process is the current approach of the Hong Kong International Arbitration Centre (hereafter — the HKIAC), which relates the fact that a party, arbitrator, emergency arbitrator or the arbitration court itself receives any written message to post it in any secure online repository agreed by the parties for use (Article 3.1 Arbitration Rules of the HKIAC).
The regulation of the issue of document circulation in the ICAC arbitration at the Ukrainian CCI looks more moderate in this regard. As a general rule, documents related to the opening of proceedings and the implementation of arbitration are provided in writing, however, the ICAC secretariat has the right to invite the parties to submit such documents in electronic form (part 1 of Article 11 of the Rules of the ICAC at the Ukrainian CCI).
Special attention should be drawn to the use of means of communication in international arbitration in the provision of evidence, as well as the electronic form of evidence. Characteristic in this regard is the definition of a document as any text, message, image, drawing, program or data recorded or contained on paper or by electronic, audio, visual or other means in the International Bar Association Rules on Taking Evidence in International Arbitration 2010. (hereinafter — the IBA Rules). When requesting the provision of documents stored in electronic form, the requesting party may independently or must, by order of the arbitral tribunal, identify specific files, search criteria, specific individuals or other ways to search for such documents in an effective and economical way (part 3 of Article 3 of the IBA Rules).
The updated version of Rules of the ICAC at the Ukrainian CCI reflected the specifics of the electronic form of evidence. The electronic evidence refers to information in electronic (digital) form, including electronic documents, websites, text, multimedia and voice messages, databases and other data in electronic form stored on portable devices, servers backup systems. Electronic copies of such evidence must be certified by an electronic digital signature (part 3 of Article 52 of the Rules of the ICAC at the CCI of Ukraine, entered into force 1 January, 2018).
The connection between the use of technology and the provision of evidence is determined by the ability of the Сomposition of the Arbitral Tribunal to receive oral or other evidence through a teleconference, videoconference or similar technology (Article 8 of the IBA Rules). The Rules on the Efficient Conduct of Proceedings in International Arbitration (Prague Rules) 2018 also comply with the trends in the development of international arbitration. Despite the general rule of recommendation, which avoids any form of evidence disclosure, including electronic evidence disclosure (e-discovery), the parties and the composition of the arbitration should strive to organize the arbitration hearing in the most cost-effective way possible, including by reducing the length of the hearing and using video, electronic and telephone communication to eliminate unnecessary expenses on business trips by arbitrators, parties and other participants in the process (Article 4.2., 8.2, Prague Rules).
It should also be noted that today, at the level of institutional arbitration, there is already experience in introducing special platforms that contribute to the high-tech conduct of the arbitration process. So, the Arbitration Institute of the Stockholm Chamber of Commerce, (hereinafter — SCC) in September 2019 announced the launch of the SCC Platform, with which the parties and the arbitral tribunal can exchange documents and messages. As the SCC explained, now there is no need to send confidential or voluminous files and documents by e-mail, since all documentation in cases (including correspondence with the SCC, procedural orders, statements of the parties and their annexes) is uploaded to the individual website of a particular arbitration case. All participants in the trial have the right to upload, view, download and print files of the case. For each trial, a separate website is provided on the SCC Platform simultaneously with the registration of the case, and only participants in the trial have access to the site. In addition, the site contains a procedural calendar with the dates and dates of the proceedings.
Undoubtedly, the development trend of online arbitration comes up against constraints related to determining the right under the ODR, the requirement of a written form for arbitral awards, the enforceability of an online judgment, the need to ensure the confidentiality of arbitration and the authenticity of electronic documents. However, practice shows that the possibilities of online arbitration, which encompass in a broad sense the institutional form and the ODR, are now being effectively implemented and are qualitatively increasing. The proposed convenience and efficiency are the key advantages for the parties when using various technologies in the arbitration process, and these difficulties are only temporary and cannot stop the general progress of the gradual digitalization of international arbitration.