The formal rules adaptations needed for enforceability of online arbitration agreements concluded with weaker parties
Principles of Lex Mercatoria, laying down general principles of law, are identical to Lex Informatica, which help in developing some principles for the adjudication of matters by online ADR24. However, some general principles require clarifications from an e-business perspective. The point here is that market cultures vary across the globe in accordance with the cultures of the land. Thus, formulating a general principle of law for the application of OADR in settling e-commerce disputes is a troublesome task for which an objective test has to be defined and a uniform opinion has to be generated amongst the masses of the world.
So far, UNCITRAL have developed some applicable at international level rules which are of great importance in developing Lex Informatica rules. For instance, the principles concerning e-commerce and e-signature have been developed by the Commission. In particular, the Model Law on Electronic Signatures includes provisions on issues such as equal treatment of signature technologies and compliance with a requirement for a signature. Furthermore, The Model Law on Electronic Commerce provides uniform ruleson issues such as the legal recognition of data messages.
Likewise, the United Nations Convention on the Use of Electronic Communication in International Contracts30 creates provisions relating to legal recognition of electronic communications and form requirements. The Convention requires a validity or enforceability of a contract not to be denied on the sole ground that it is in the form of an electronic communication. As for the writing condition for such a contract, it is reputed that ‘[the] requirement is met by an electronic communication if the information contained therein is accessible so as to be usable for subsequent reference’.
Furthermore, to avoid strict interpretation of the NYC, which may lead to the rejection of the enforcement of a concluded via the Internet arbitration agreement, Article 20(1) of the E-Communications Convention states that: ‘The provisions of this Convention apply to the use of electronic communications in connection with the formation or performance of a contract to which any of the following international conventions, to which a Contracting State to this Convention is or may become a Contracting State, apply: Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 10 June 1958)’. By doing so, the Convention enlarges the application of these provisions to the NY Convention. More specifically, the article makes electronically concluded arbitration agreements valid and, thus, enforceable under the NY Convention.
Admissibility of an electronic award under the current framework
It is clear that an online arbitration award is transmitted exclusively by electronic means in the most cases. Thus, the main issue of an electronically concluded award is whether it can be considered as valid under the present legal framework . Since it appears that an online arbitral award is currently facing almost the same difficulties as an online arbitration clause, it is important to think of solutions to the issue .
Formal validity of an electronic award under the current framework
The formal validity of an electronic award has to be examined on two levels: international texts and national texts. First, the international texts will be presented. As for UNCITRAL Model Law on International Commercial Arbitration, its Article 31 explicitly requires a written and signed arbitral award by saying that: ‘The award shall be made in writing and shall be signed by the arbitrator or arbitrators.’ This requirement of writing is also followed by Article 34.2 of the UNCITRAL Arbitration Rules, which state that ‘the award shall be in writing’. Thus, here again the uncertainty regarding the interpretation of the word ‘writing’ arises in the same way as it does for the case of arbitration clause.
When it comes to the NY Convention, it is to be noted that the convention does not specifically provide a writing requirement for an arbitral award.
However, Article IV requires that to seek recognition or enforcement of the award the party needs toproduce the ‘duly authenticated original award’. In the absence of the original, the party will be unable to ask for recognition or enforcement under the NY Convention. Since there is no such thing as a copy or original for computer files, these are infinitely reproducible. Thus, the simple presentation o a computer file cannot fulfil the requirement for an original document.
On national level, some legal systems expressly require the award to be in writing and signed by the arbitrators. Others do not specifically require an award to be in writing. In Swiss law, provisions regarding international arbitration do not stipulate that the award be so rendered, except of if the parties did not agree on any different form of an award. The Swiss position is also shared by the English Arbitration Act 1996. Thus, it is allowed for the parties to agree on any form of an award including an electronic one to satisfy the validity requirement.
Solutions for admissibility of electronic award
Some assert, that Article IV should be asserted together with Article III of the Convention which states that ‘Each contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon’. Hence, if the country where an award was made accepts an electronic form of the award there shall be no restrictions to enforcement of the online award. The same can be applied to the requirement of ‘duly authenticated original award’ as it could be presumed that the award is issued in writing and authenticated by the court of the State where it was made, provided that the law of the national law accepts the concept of electronic writing.
However, this solution to the problem is not efficient for two reasons. Firstly, as it was shown before, in comparative law there is no unanimous opinion as for the absence of the writing requirement. It also creates uncertainties regarding to the fact that the localisation of the place, where an electronic award was made, is subject to discussions. Finally, it could also be asserted that the New York Convention allows national courts to refuse an enforcement of a foreign arbitral award if that would violate the public policy of the forum. Nevertheless, as it was shown previously, there is no acceptable justification for an e-award to be infringing the public policy per se, thus national courts should avoid to adopt a strict standard for what is considered valid legal practice.
Necessity to define a juridical seat of online arbitration: Territoriality v Delocalisation theories
When it comes to the localisation of arbitration procedure, it has been argued that: ’In order to develop a truly borderless system for online arbitration, it may be necessary to re-invent arbitration on the basis of the delocalization theory’, when opposed to those who are in favour of territoriality which implies that any arbitration is subject to a specific system of national law. The delocalisation theory involves no attachments of international arbitration to any national law whatsoever, thus the law of the place of arbitration (the lex fori) has no control over arbitration procedure. To justify the theory, the proponents maintain that national laws vary from one country to another. That being said, some of national legal systems do not fit for the purpose of the fast development and flexibility of international commercial arbitration. Those in favour of the theory maintain that jurisdiction should be exercised by the country where the enforcement of an award is sought.
Which is more, it is thought that the development of international commercial arbitration may be under risk since national courts could impose various restrictions on arbitration procedure. This situation is of a negative impact on arbitrators as they are to be aware of various national laws and they also have to cope with multiple restraints imposed by national laws. According to the opinion of delocalisation theory advocates, the best manner to get rid of these potential obstacles is to free arbitration procedure from the control of national laws, which is the law of the place of arbitration. In the end, arbitrators may ignore the lex fori by applying any procedural law they find appropriate. In addition, the pure delocalisation theory has a practical disadvantage. As a matter of fact, it does not fit into the present framework under which the arbitration award has a substantial link with the jurisdiction where it is made. In fact, Article 1(1) of the New York Convention states that: ‘This Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought, and arising out of differences between persons, whether physical or legal’. Thus, the Convention considers the territoriality to be of a major importance for an enforcement stage.
The ways to define a juridical seat of online arbitration: The critical approach
Online arbitration presents difficulties concerning the determination of the seat of arbitration. Due to decentralisation of online arbitration procedure where parties to an arbitration along with arbitrators interact from different places, it is troublesome to define one single location of the procedure. The obvious multiple location of this type of the arbitration procedure makes it complicated. Nevertheless, as it was seen before, it is necessary to define the juridical seat of electronic arbitration.
Usually, parties have tendency to involuntarily choose the location of online arbitration institution as the seat of arbitration. The choice of the seat is usually set forth in applicable arbitration rules. As a rule, arbitration institutions are inclined to impose its location as a place of arbitration, this rule is provided by a major part of online arbitration institutions, for example, Article 1.4 of Regulation of the Russian Arbitration Association’s Online Arbitrationimposes the seat in Moscow in the case of no decision reached by parties. Some arbitration institutions provide parties with limited choice of place of arbitration, for instance, Article 12 of Regulation of the eJust platform states that parties are free to choose the seat of arbitration between Paris and Genève. Article 12.3 contains s special provisions for consumers according to which a consumer has the right to demand his place of residence59 to be the seat of online proceedings. Otherwise, in the absence of choice, eJust Regulation follows the common practice of setting its statuary seat as the place of arbitration. In this case, the decision to submit the dispute to a specific online arbitration institution may be also seen as an implicit choice of the seat of arbitration.
In the case if no choice was provided by parties nor an electronic arbitration institution foreseenthe rule on defining the seat in the absence of choice, the question one has to ask is, where is the seat of online arbitration? A few theoretical possibilities arise. The one can either search for the solution within the traditional arbitration framework or to contemplate the possible justification hidden in the delocalization theory. Another choice is to analyse existing for any online arbitration territorial attachments in order to find the most suitable one. The solution provided by offline arbitration framework seems to be the most convenient for the reasons explained below.
Advantages and disadvantages of online arbitration: the critical approach to the justification of perfect arbitrability for weaker parties
The restriction of arbitrability in certain cases can take two different forms: the willingness to put in place either a procedural or substantial protection of vulnerable parties. The substantial protection implies the obligatory application of the relevant nation law to the merits, while the procedural one may be adjusted to protect the position of a weaker party in legal proceedings. The reasons why abitrability is limited for certain group of people may concern both procedural and substantive protection measures.
Among the practical reasons for putting limitations to arbitrability, according to some authors, the following disadvantages of arbitration when compared with national courts could be found: the price; the fact that arbitrator will not always respect all of the protective substantive rules if he finds them shocking; the risk of the proceedings being held far from the place where a weaker party lives; and the risk for the vulnerable party to face an unknown jurisdictional environment with its not less unknown rules. Others, find additional issues: no possibility of a rational decision for or against arbitration before the dispute arises due to the non negotiable nature of the clause; no legal representation; no class actions; limited possibilities for bringing evidence; no legal dispute insurance; only limited access to documents (which are usually in the hand of the trader); only limited appeal possibilities; no pre-trial discovery procedure. Which is more, the limitations to due process can exist in online arbitration.
However, due to the specificity of online arbitration, some of these reasons do not exist or are not justified. To begin with the most significant advantage of ODR, which is that it obviates the need for travelling. Thus, there is no risk that the proceedings will be held at a great distance from the place of the residence of a weaker party. As for the risk of facing an unknown jurisdictional environment, online arbitration presents as an easier and more comprehensible dispute resolution venue than the traditional courts are. Hence, using online arbitration platform might be more persuasive and easier than filling a complaint to a national jurisdiction.
Table des matières
Chapter 1: The quest for enforceability of an online arbitration award: weaker parties’ aspect
Section 1: Formal requirements for an online arbitration agreement and an electronic award: the adaptations needed for enforceability of an award
Part 1: Formal validity of online concluded clauses regarding the NY Convention
A. Interpretations of the NY Convention formal requirements: the applicability to online arbitration agreements
B. The formal rules adaptations needed for enforceability of online arbitration agreements concluded with weaker parties
Part 2: Admissibility of an electronic award under the current framework
A. Formal validity of an electronic award under the current framework
B. Solutions for admissibility of electronic award
Section 2: Defining the seat of online arbitration and the localisation of an electronic award: solutions provided with the regard to weaker parties
Part 1: The seat of online arbitration
A. Necessity to define a juridical seat of online arbitration: Territoriality v Delocalisation theories
B. The ways to define a juridical seat of online arbitration: The critical approach
Part 2: Impact of the place where an electronic award was rendered on enforceability
A. Necessity to localise an electronic award
B. Solutions to the electronic award localisation dilemma
Chapter 2: Weaker parties in online arbitration procedure: issues and pursuit of adjustments
Section 1: Public policy obstacle to enforceability of an online arbitration award with weaker parties
Part 1: The limits to arbitrtability of disputes risen with weaker parties: online arbitration aspect
A. The public policy restrictions imposed on disputes with weaker parties
B. Advantages and disadvantages of online arbitration: the critical approach to the justification of perfect
arbitrability for weaker parties
Part 2: The necessity of developing the different set of rules for online arbitration for perfect arbitrability
A. Adapting an informed standard of consent as a specific weaker parties’ protection technique in online
B. Developing high standards of weaker parties’ substantial and procedural protection worldwide
Section 2: Financial aspects of online disputes involving weaker parties
Part 1: The cost aspect of online arbitration with weaker parties: the issue and the already existent response
A. Fee-based online arbitration: the discouraging impact on the use of online arbitration by a weaker party
B. The answers to the issue provided in offline and online arbitration’s practice
Part 2: Practical and legal solutions to the issue of financing of electronic arbitration with weaker parties
A. The common adaptations to framework needed for arbitration with weaker parties
B. Practical solutions