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Cyber Arbitration and Effective Dispute Resolution

Info: 3853 words (15 pages) Law Essay
Published: 18th Jul 2019

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Jurisdiction(s): Indian law

With the advent of information technology, momentous changes can be seen in the conventional arbitral procedures. In this phase of significant transformation, there is an escalation in the number of arbitration agreements concluded over the internet and the procedures conducted with the help of VoIP (Voice over Internet Protocol) or video-conferencing. The cost-effectiveness and time-efficiency of online or cyber arbitration is undeniable, which is why international arbitrators want to conduct proceedings and issue arbitral awards, in an electronic form. To serve this purpose many arbitration institutions are already providing the requisite platform to perform such proceedings. [1]

In such a situation, a question arises that whether an online arbitration is fully admissible and effective under the current legal framework, which is mostly restricted to the traditional paper-based legal requirements. The main idea of this article is to tackle the aforesaid question and in doing so, the concerned issues will be dealt with under three statues: (i) Arbitration and Conciliation Act, 1996, (ii) Information and Technology Act, 2000, and (iii) Code of Civil Procedure, 1908.

The first part of the article discusses briefly the position of an online arbitration under the Arbitration and Conciliation Act, in 3 sections. The first section considers the formation and validity of online agreements. The second part deals with the conduct of online proceedings and third section discusses the issues of passing, enforcement and validity of an online award. Comparison of these provisions made with similar provisions on a global arena is essential to understand the aspect better and to overcome the existing lacunae.

The second part seeks to examine the relevant aspects of Information Technology with regards to online arbitration. The evidentiary value of an electronic transfer, the legitimacy and reliability of Digital Signatures is briefly discussed in this part.

The third part addresses the legal recognition of the various methods of Alternate Dispute Resolution (ADR) and deals with the evidentiary value of the data transferred through internet or other electronic platform and the binding value of the copies of the documents transpired online, under the Code of Civil Procedure, 1908.

In conclusion, the authors are of the opinion that online arbitration, without any major amendments to the existing statutes, will blend into the current system of Alternate Dispute Resolution (ADR) of India.

Prior to discussing the legal aspects of Online Arbitration, a brief understanding of the background and concept of online or cyber arbitration becomes essential.

I. General characteristics of online arbitration


The rising complexities in nature of disputes at a far greater pace than ever before, due to their cross-border and cross-culture character is a result of inter alia, the increasing use of internet worldwide. The raison d’être of this shift to e-commerce is economic monetary inputs and accounting for time differences, to name a couple. Hence, the global arena is witnessing a departure from traditional methods of dispute resolution to Online Dispute Resolution (hereinafter “ODR”) in its various flavors.

It can be safely stated that ODR is competent to play a positive role in judicial reform. However, in the process of assimilation of ODR, a crucial barrier in the developing countries is the insufficient infrastructure which limits the growth of e-commerce. These countries thus face a challenge of maximizing the benefit of ODR within their financial and infrastructural constraints.


ODR refers to the various uses of the Internet and other web-based technologies to facilitate traditional Alternative Dispute Resolution (“ADR”) or adapt ADR techniques to the online environment, or may even cover mechanisms for dispute prevention (such as education, outreach, rating and feedback programs), ombudsman programs, conflict management, assisted negotiation, early neutral evaluation and assessment and consumer programs. [2]

A number of arbitration institutes like WIPO (World Intellectual Property Organization), ICC, American Arbitration Institute already provide a platform for arbitration proceedings to be carried out online. Others exploring the potential for the same are for e.g. Virtual Court, Online Resolution, e-courts etc. In India, National Internet Exchange of India (NIXI), [3] Perry4law and PTLB provide world reputed services in ADR and ODR (especially in domain name resolution). [4]

Online Arbitration has attracted the attention of legal scholars since mid nineties. [5] Some scholars limit the scope of online arbitration to only those disputes that originate online, however the view held in this article is the acceptance of online arbitration in a wider sense, that is, to include those arbitration proceedings that are conducted at least partly through electronic means. The concern in integrating ODR with the present legal system, therefore, does not depend on the inception of the dispute.


The majority of legal studies on online arbitration agree that, neither law, nor arbitral principles, prevent arbitration from taking place online. Arbitration being a contractual agreement should be carried out within a regulatory framework to avoid challenges for the weaker parties. This, therefore, necessitates a legal examination of multiple layers of regulations including international conventions, bilateral treaties, “soft” or model laws and national arbitration law.

Arbitration and Conciliation Act, 1996

The arising issues under the Indian Arbitration and Conciliation Act (the Act) will be dealt in three major categories: (i) Arbitration Agreement (ii) Arbitration Proceedings (iii) Arbitration Award.

Arbitration Agreement

The UNCITRAL Model Law (“MAL”), the New York Convention on Recognition and Enforcement of arbitral Award (“New York Convention”), the European Convention and the Turkish International Arbitration Law all require the agreement to be in writing, however, they do not have a restriction as to the form of arbitration agreement. [6] A step further has been taken under Article 4 of the Turkish International Arbitration Law by validating the arbitration agreement executed by electronic means. [7]

In India, Arbitration and Conciliation Act, 1996 which is drafted on the lines of the “MAL”, does not exclude technological developments. It thus becomes important that an online arbitration clause must pass the test of Section 7 of the Act to be valid. Under Section 7, an agreement shall be in writing if it is contained in exchange of letters, telex, telegrams or “other means of telecommunication” which should signify an active assent by both parties. [8] It can be argued convincingly that an exchange of email can be equated to an exchange of telegram. Despite the existence of certain important technical distinctions between telegrams and e-mails [9] , it is not impossible to replicate the critical features of an exchange of telegrams through an appropriate use of e-mail. [10] It was held by the Hon’ble Supreme Court that electronic communication provides a required record of the agreement. [11]

It does not however mean that the controversies about arbitration agreement concluded online cease to exist. Nor is it always safe to assume the validity of such agreements. There is a little doubt about the admissibility of arbitration agreements concluded through e-mails as evidence in the court of law.

This uncertainty can now be securely departed with, after the enactment of the Information Technology Act. Section 4 of the Information Technology Act, 2000 renders legal recognition of electronic transfer of communication which is admissible as evidence. Using electronic signatures [12] in an arbitration agreement can further help protect the parties. The Information Technology Act, 2000, under Section 5, identifies electronic records and digital signatures.

To conclude, under the existing legal framework, an arbitration agreement accomplished by electronic communication is admissible and can be fully effective if it is meticulously drafted within the structure of the necessary legal guidelines.

Arbitral Proceeding

Traditionally, arbitration relied on meetings of arbitrators and parties appearing in person or through duly authorized representatives. Now, we observe that the Internet encourages remote dispute resolution, and physical meetings are more and more often eliminated, or more accurately, replaced by diverse electronic exchanges. [13]

The parties to an arbitral proceeding are empowered to determine the rules of procedure. [14] They also have the right to decide on the seat of arbitration and the date of commencement of the proceedings. [15] On the basis of that fundamental principle of arbitration law, it is possible to “adapt the procedure to the electronic arena”. [16] Even so, such an online proceeding has to be according to the general principles of arbitral law i.e. the parties have to be treated equally and they should be given full opportunity to present their case. [17] For example if one of the parties lacks the technical know-how of computers and the internet, it would be wrong to conduct an online arbitration.

Thus, it would be safe to conclude that the parties can agree to conduct online arbitration proceedings. In the case of absence of an agreement between the parties, regarding the procedure, it would be reasonable to conclude that the arbitral tribunal can decide to conduct an online proceeding. [18] Though the Arbitration and Conciliation Act does not expressly provide for online arbitration, it does not refute the concept. One issue, however, regarding online arbitration is the legal significance of evidence produced online, which is dealt with in the later part of this article.

Arbitral award

Some issues with regard to awards that need to be answered are whether an award can be issued online after conducting and online arbitration and if issued, can such an award be enforced by national courts within the existing legislative framework?

The NYC merely requires a party seeking enforcement to furnish the duly authenticated original award or a duly certified copy thereof. The question is whether requirement for ‘an original’ can be satisfied by an electronic file as it would be difficult to define the original of such an electronic file and also considering the fact that it is easy to replicate it. The answer to this question can be found in Article 8 of the UNCITRAL Model Law on Electronic Commerce, which explicitly states that a requirement to present information in its original form can be met by an electronic data message.

The Arbitration and Conciliation Act, 1996 requires an award to be in writing and to be signed by the arbitral tribunal. [19] A combined reading of section 3, 5 and 15 of the Information Technology Act, 2000 is sufficient to suggest that ‘digital signatures’ can provide for both authenticity and integrity, they can serve the purpose of a handwritten signature.

The problem of enforcement of an online arbitral award can be reduced if the online arbitration clause is drafted meticulously and with due care.

Information Technology Act, 2000

The authenticity of an agreement or an award can only be concluded by the signature of the parties and the arbitrator(s). However, when the arbitral procedure is conducted online, it is not possible for the parties to personally put their signature. In such a situation, an alternative solution has been found to be the affixation of digital signature to the documents.

The Information Technology Act, 2000 makes provisions regarding Digital Signatures and gives legal recognition to the data transfer through electronic medium. Section 4 of the Information Technology Act renders legal recognition to such electronic transfer of communication which is made admissible as evidence.

A combined reading of section 3 and 5 provides for the authentication of a document by affixing digital signature of the subscriber and recognizes the same as equivalent to the requirement of a manual signature. Section 15 gives recognition to digital signatures by providing that the requirement of any law for authentication by a person’s signature shall be deemed to have been satisfied if such authentication is done by means of a digital signature.

Furthermore, Section 72 of the Act provides for confidentiality and privacy of the electronic record, book, register, correspondence, information, document or other material without the consent of the person concerned, by punishing the person who has secured access to the matter for the disclosure of the same, under the Act.

Code of Civil Procedure, 1908

Section 89 of the Code of Civil Procedure (the Code), in its original form related to arbitration proceedings which was annulled with the enactment of the Arbitration Act, 1940. The new section 89 and the related rules have now been introduced in the CPC (Amendment) Act, 1999. The said section illustrates that wherever, in the opinion of the court, there exists an element of settlement between the parties, the court shall refer the same for various forms of ADR. Order X of the Code further deals with the procedure to be followed by the court. This legislative initiative is certainly the boldest step taken so far to counter the growing imperil of court backlogs.

A major legal issue concerning online arbitration concerns the legal significance of electronic hearing and the evidence produced online. Many practitioners and academicians have mooted for a blend of both online and offline methods for procuring or taking evidence on record. Recently, the Supreme Court [20] has shown its approval of the use of technology in dispute resolution. It held that video-conferencing could be resorted to for the purpose of taking evidence of a witness. The Supreme Court struck down the High Court order by stating that recording of evidence satisfies the object of Section 273 of the Code of Civil Procedure that evidence be recorded in the presence of the accused. In an earlier decision, Grid Corpn. of Orissa Ltd. V. AES Corpn. [21] , it was held that,

“…effective consultation can be achieved by resort to electronic media and remote conferencing it is not necessary that the two persons required to act in consultation with each other must necessarily sit together”.

Written evidence is regarded as an important tool to ascertain the intention of the person who has given up his right to litigation. For this purpose, documents and evidence that are filed before the Arbitral tribunal may be scanned copies of the originals or can be protected and authenticated with the help of digital signatures. If a document bears a digital signature then it is presumed to be unaltered. Even before the adoption of specific regulations on e-commerce and e-signatures, it was argued that if only proper operating procedures are used, e-mail could provide a record that is as reliable as physical letters, fax, or any other methods of transmission.

Today, there can be little doubt that e-mail messages are admissible as evidence, although appropriate precautions need to be taken in order to satisfy considerations of evidentiary integrity and reliability.


The views held by various scholars and writers seem to be in agreement that online arbitration will prove to be a significant phenomenon of commercial arbitration in long run. In the short run, however, the authors tend to be cynical, contending that some uncertainties remain. In this paper, we claim that although not all of the legal difficulties arising with regard to online arbitration may be easily resolved, there are no undefeatable obstacles to online arbitration within the current legal framework and regime of commercial arbitration.

With appropriate use of available technology, even if far from the cutting-edge, ODR may be able to deliver on the promise to improve access to justice and quality of justice even in a developing country context. One of the longer-term issues on the agenda for further development of ODR is therefore the need to set guidance standards for coping with technology failure and its implications for global development system. Even though it is a new method to conduct dispute resolution, online arbitration is still conducted by traditional arbitration rules.

The ADR-related legislative reforms, when viewed in conjunction with other legislative provisions relating to information technology and e-commerce, provide an excellent opportunity for the establishment of ODR. What lacks is not only consciousness or the awareness of this opportunity but also the skill and the aptitude essential to implement it. This is the task that UNECE [22] has taken upon itself – of introducing to the member-nations, and educating them about, ODR and its inherent benefits.

The said endeavor stands significantly benefit the developing countries including India not only because it perhaps has the highest backlog of cases pending in its courts of law, but also because it’s litigious population shies away from the legal proceedings. On November 26, 1985, the then Chief Justice of India painted a very dismal picture in his Law Day [23] speech. He said and we quote,

“I am pained to observe that the judicial system in the country is almost on the verge of collapse. These are strong words I am using but it is with considerable anguish that I say so. Our judicial system is creaking under the weight of arrears.”

It was quoted by Mr. Ashok Desai, Attorney General in 1996, when the situation was no different from 1985. [24]

A time has arrived that a change in attitude is required for the judicial fraternity in general and lawyers in particular. Suitable education and training is necessary for a staunch, dedicated and knowledgeable workforce which can execute with confidence the various ODR methods in the India legal system. The politicians have to re-think their strategy of keeping new methods of dispute resolution away from the masses for their vested interest.



J. Hörnle, ‘Online Dispute Resolution’ Chapter 12 in J Tackaberry, A Marriott (eds) Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edition), 2004 Sweet & Maxwell London.

Online Dispute Resolution: Some Lessons from the E-Commerce Revolution; Katsh, Ethan, 28 N. Ky. L. Rev. 810 (2001).


J. Arsic, “International Commercial Arbitration on the Internet: Has the Future Come Too Early?” (1997) 14 J. Int’l Arb. 209.

Ziya Akıncı, “Tahkim Giderlerinin Azaltılması ve Elektronik Tahkim” (Reduction of Arbitration Costs and Electronic Arbitration), Milletlerarası Tahkim Semineri (Seminar on International Arbitration) (Ankara, 2003).

R. Hill, “On-line Arbitration: Issues and Solutions”, (1999) 15 Arb. Int’l. 199.

Rafal Morek, “Online Arbitration: Admissibility with the current legal framework”

O. Cachard, International Commercial Arbitration: Electronic Arbitration (New York: United Nations Conference on Trade and Development, 2003).



Arbitration and Conciliation Act, 1996.

Information Technology Act, 2000.

Code of Civil Procedure, 1908.


The UNCITRAL Model Law (“MAL”) on International Commercial Arbitration, 1985.

Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (the “New York” Convention).

Turkish International Arbitration Law, 2001.

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