Prajwal Basnet
Mail: [email protected]
National Law University, Delhi
In the Internet context parties located in different parts of the world make contracts with each other at the click of a mouse. However, litigation for these disputes is often inconvenient, impractical, time- consuming and expensive due to the low value of the transactions and the physical distance between the parties. Online Dispute Resolution (ODR) is often referred as a form of ADR which takes advantage of the speed and convenience of the Internet and ICT. ODR is the best option for enhancing the redress of consumer grievances, strengthening their trust in the market, and promoting the sustainable growth of e-commerce. With the increase in practice of ODR after the pandemic, the mechanisms for it ought to and have been seen to be more optimized than ever before for the parties’ convenience and it binding nature even more imperative. It is from this fact that to come up with innovative ways about regulating an ODR, it would be crucial in firstly understanding the nature and the mechanism of an ODR.
- Imperative effect of Online Dispute Resolution (ODR)
The means of ODR for filing consumer class action suits and in general many of the disputes has been of growing importance since the past year due to the threat imposed by the coronavirus and imposition of the lockdown. Online Dispute Resolutions has positive side as well as drawbacks in its operation. As a result, the technicalities for its proper conduct still needs much scrutiny for proper regulation even though the platform has been on a constant path of recognition and progression through the enactment of major treaties such as the New York Convention and the ECC (2005 UN Convention on the Use of Electronic Communication in International Contracts), UNCITRAL, etc.
Descriptively speaking, there are two dimensions to an online dispute resolution. Talking about one dimension regarding the access and convenience, traditional dispute resolution takes place where the parties and mediators/arbitrators must be present at the same location together and at the same time. Conversely, an online dispute resolution is not synchronous to the former as the three actors are not needed in a simultaneous presence for the relevant process of hearings. This would be of cost benefit for them as their time and travel to the location and also of their worktime would be preserved.[1]
Online dispute resolutions on the other dimension, facilitates the use of information communication technology (ICT) as a facilitator of the proceedings and sometimes also as a substitute for judicial function assumed by the arbitrators. The main functions of ICT in an online resolution process are:
- to file documents online by sorting them based on the relevance, theme, etc.
- highlight crucial points
- bring/show up relevant forms as well as performing other functions as a result saving the time of the parties.[2]
ICT also has function much greater than acting as a mere tool for the parties in conducting online proceedings. In an automated negotiation (also known double-blind bidding), the parties are more concerned with coming to a settlement than with disputing the liability. Hence the relevant software is fed with up to three offers (bids having been hidden) that proceed to settle disputes when the offers come within the range that is pre-set or even during a midpoint. From the outset, the parties are bound to oblige the binding nature of the settlement that is produced by the software. Online dispute resolutions are operated by a platform that is linked to a trade association or an arbitral institution where the parties fill in a claim from through online that directs to appropriate processes with applicable remedies which are then sent to negotiation and finally the process of arbitration.[3] Before the outbreak, ODRs were generally held for consumer disputes that would concern small claims[4] which obviously is not the case anymore as it began to cover ADR disputes of wide subject-matter in as much as to replace ADR at some point during the peak of the pandemic. Due to this, the working mechanism ought to be much optimized for the efficiency and conveniency of the parties.
- How Is An Online Arbitration Regulated?
Online Dispute Resolutions (ODR) are not directly controlled through any specific instruments or sort of mechanism that would govern it like a traditional arbitration process. The fact stands still even for ODRs that are held for Consumer Disputes. The legal principles that it is based on, are same as its counterpart i.e. based on the text of the 2013 Consumer ADR Directive.[5] It is different from the offline process because both the consent to arbitrate and the rest of the proceedings themselves are conducted online (or both online or offline).
Nowadays, online arbitration is also increasing for to be used for business-to-consumer (B2C) relationships along with traders and other commercial actors that are governed under the principle of consumer law and consumer arbitration therefore apply mutatis mutandis. However, opposed to the theoretical example, in practical sense, it is seen that the ODR needs more uniformity, clarity and sensible regulation. Talking about the consent to enter into an arbitration agreement, in the traditional method where the consent is of paramount importance, in online process there are many instances where consent of the parties are precluded in an agreement with the company owners. For example: A client or customer cannot waive or exclude such clause specifically where such clause is an intrinsic part of the purchase or other online agreement.[6] Hence, the whole industry is subject to this form of arbitration. Such clauses according to relevant consumer protection directives would be regarded as unfair. Hence, it can also be seen that such cases are of such nature that the consent is well replaced by the fairness that assists in regulating smooth conduct of online arbitration.
- How are online arbitral awards issued and what are the challenges faced in their issuance?
The nature of the issuance of arbitral awards and the outcomes of mediation were, and in some cases, still subjects that were ambiguous and dynamic but have undergone gradual progressive changes in their regulation. Even though online arbitration is being recognized and enforced does not make its decision binding or final in many of the disputes. It is mostly up-to the parties’ will to render a decision binding.[7] The parties can only choose for it to be conditionally binding or unilaterally binding. It is a rule that is also recognized under legal enactments and legislations. For example: Art 58(1) of the English Arbitration Act leaves it to the parties’ discretion whether an award should be considered as final or binding.[8] The acts of the parties being otherwise are not enforceable under the 1958 New York Convention.[9] Alongside the arbitral awards, even the outcomes of mediation are equally binding under EU Mediation Directive hence carrying the importance same as that of a court’s judgment. But it would not have a binding effect under the 1958 New York Convention unless if it is stipulated under certain treaties.
The obstacles arising out of the 1958 New York Convention are eliminated or reduced by the enactment of the ECC (2005 UN Convention on the Use of Electronic Communication in International Contracts) which would apply to fulfilling on being a cross-border electronic communications in business to business contracts where at least one party is of contracting state.[10] The ECC helped in reducing the obstacles in a sense that it safeguarded the online authentication method of communication between parties as it is based on the principle of “functional equivalence” and gives such agreements the same status as a hand-written agreement. Hence, it also creates a binding effect on arbitral awards issued by such binding online agreements but one of the parties to the contract must be of the contracting state. Therefore, such arbitral awards can be enforced in the courts through the printed format of the award or even electronically by informing parties by having their signatures.
- Overview and Conclusion
Online arbitration therefore is similar to the traditional mode of arbitration and not subjected to partially or wholly different regimes or system that would govern it. The online ODR is considered to be satisfying the requirements that underpin traditional arbitration. Some mechanisms such as the ODR Consumer Regulation lists an ODR platform that filters complaints and suits to appropriate fora. Therefore, the nature and status of ODR can be seen to be constantly moving towards a developing and progressive line where the systematic and convenient mechanisms of the ODR in facilitating smooth dispute settlements are protected by emerging laws and practice and protecting the binding effect of its decisions that includes the issuance of arbitral awards along with increase of scope of subject-matter that would be subject to an ODR.
[1] Ilias Bantekas, An Introduction to Online Arbitration (1st edn, CUP 2015) 265
[2] ibid 266
[3] E. Katsh, Bringing Online Dispute Resolution to Virtual Worlds: Creating Processes through Code (2004) 49 New York Law School Law Review 271 as cited in Ilias Bantekas, An Introduction to Online Arbitration (1st edn, CUP 2015) 265
[4] Ilias Bantekas, An Introduction to Online Arbitration (1st edn, CUP 2015) 266
[5] Directive 2013/11 on Consumer ADR (21 May 2013), L 165/63 as cited in Ilias Bantekas, An Introduction to Online Arbitration (1st edn, CUP 2015) 265
[6] ibid pp 265
[7] ibid pp 271
[8] Art 58(1), English Arbitration Act
[9] ibid 271
[10] Art 1, ECC.