The definition of e-arbitration
The official start of e-arbitration was dated back in 1996 when within Virtual Magistrate project a decision on the dispute was rendered after entirely electronic proceedings were conducted14. Now gradually becoming more and more popular, e-arbitration could be a future of small and medium claims arbitrations taking into account the certain advantages of e-arbitration discussed below.
In a very perfectionist way the e-arbitration also called “online arbitration” or “cyber arbitration” could be defined as a type of arbitration where the entire process of arbitration from A to Z (from the beginning to the end) is conducted with the application of information and communication technology solutions such as emails, video conferencing, e-signatures, real-time communication systems (chats), special software etc.
This definition implies that each element of arbitration such as the conclusion of the arbitration agreement, commencement of arbitration, selection and appointment of arbitrators, submissions, document production, hearings, deliberations, rendering of arbitration award should be conducted through exchange of some digital information subject to certain criteria.
However, in real life there could be situations when some of the above mentioned elements could be done in the traditional way. For example the arbitration agreement can be concluded by way of signing one document containing the consent of the parties to submit the dispute or future dispute to arbitration, but then the parties may agree to conduct all further steps by the use of ICT solutions in order to benefit from the certain advantages that the e-arbitration offers. Thus the arbitrations where the ICT solutions are used even partially can still be defined as e-arbitration. However, it would also make no sense to call something e-arbitration if only notice or request of arbitration is submitted through email. For that reason, our view is that at least the substantial part of the process, especially the procedural steps that generate most of the costs, and those that are most time consuming, should be conducted through the electronic way in order to be classified as an e-arbitration.
For that reason more realistic definition of e-arbitration could describe it as a type of arbitration where at least certain essential steps of arbitration procedure are conducted through electronic means.
2. Main advantages of e-arbitration
A. Costs:
As we would see in further chapters cost efficiency of the arbitration proceeding can be a crucial issue for small and medium enterprises such as Armenian IT companies especially those that are in the early stage of development. The 2015 Survey “Improvements and Innovations in International Arbitration” indicates “Cost as the worst feature” of arbitration15. For that reason we consider this specific aspect of arbitration extremely important in the assessment of overall efficiency of e-arbitration.
In the article “Controlling the rising costs in Arbitration: Where technology can help (and Where it can’t)” the author divided the arbitration costs into five categories [i] arbitrators’ fees and expenses; [ii] administrative costs; [iii] expert fees; [iv] legal costs; and [v] witnesses, management and other logistical costs16.
Some of the above mentioned costs are (could be) fixed fees the others are more negotiable. However, in our view the ICT solutions in any case could contribute in decreasing or mitigating them.
In case of arbitrators’ fees, at first glance it is hard to imagine how ICT solutions can contribute to mitigating them as those are usually stipulated by the arbitration institutions (in case of institutional arbitration) or the arbitrators themselves (in case of ad hoc arbitration). These fees are traditionally considered as remuneration for the intellectual work done by the arbitrators. However the situation is different with the arbitrators’ expenses in this case apparently the parties would avoid at least the travel and accommodation costs of arbitrators if they chose to conduct the proceedings with ICT solutions.
In case of administrative fees which are usually fixed by institutions in published cost schedules, the ICT solutions cannot automatically eliminate or decrease costs. However, this can be done if specifically provided by the rules of the institutions. One can propose that the arbitration institutions need to consider amending the published cost schedules with separate calculations in case the parties select to conduct e- arbitration instead of traditional arbitration, because, apparently use of the ICT solutions can decrease the routine workload done by staff of arbitration institutions.
In case of expert fees and expenses the situation is almost identical to reimbursement of costs and fees of arbitrators, here again ICT solutions can mainly contribute to the elimination or decrease of the costs related to travel and accommodation of the experts.
In case of legal costs the ICT solutions can affect them as much as document circulation and the more important the document production can be done through electronic means this may result to decrease of some expenses (of course to the certain extent). It could also be argued that the ICT solutions can decrease the need for legal assistance while dispute resolution, for example the institution’s web page providing e-arbitration can have an some smart instrument which will enable the unsophisticated users to fill requests for arbitration without assistance of legal advisers.
Finally, witnesses, management and other logistical costs these are the type of costs, which can be affected mostly by the usage of ICT solutions in arbitration. Apparently witness testimony can be concluded online through videoconferencing, thus travel and accommodation expenses would be avoided. The argument is the same also for the venue of hearing as there would be no need to rent a hall and other facilities to conduct the arbitration, instead everyone can participate from his/her own workroom through joining to videoconference.
It is also interesting that the rapidly developing information and communication technologies can provide more radical and revolutionary solutions such as at least partial substitution of human participation (basically arbitrators and experts) with artificial intelligence. For example, during our research we come across with the one of the IBM projects called “Watson”. IBM Watson is described as a technology platform that can analyze unstructured data, use natural language processing to understand grammar and context, it is also able to understand complex questions and after evaluating all possible meanings and determining what is being asked it can present answers and solutions based on supporting
evidence and quality of information found17. In future “Watson” can also be used to cover some part of
the work done by the arbitrators and experts, this can decrease the cost of e-arbitration even more.
B. Speed:
Traditionally the speed of the procedure (because of its flexible nature, and finality of the award) is considered as one of the advantages of arbitration (in comparison to litigation). However the arbitration is also sometimes criticized for lack of speed18 (probably because the proceedings are not conducted as fast as the parties expected).
In any case it is apparent that the application of ICT solutions can escalate the procedure. It is hard to disagree that notification and other document circulation made through the email correspondence within several seconds, or videoconferencing instead of suspension of proceeding in order to provide the presence of witnesses or experts, could essentially diminish the delays that could occur while implementing more conventional methods.
C. Trust:
In our view the use of ICT solutions can also increase transparency in arbitration proceedings. Under this light one can argue that the party of the e-arbitration proceeding can feel some kind of control over the proceeding, if he or she would have an opportunity to access his/her profile at any time and check the status of the proceeding, steps taken by the adverse party and other participants of the proceeding. Our view is that all this could increase the trust towards this specific subtype of dispute resolution.
3. Main disadvantages of e-arbitration
Despite generally being considered as a positive phenomenon the main disadvantage of e-arbitration, in our view, could be the inability of the parties to have access to technical devices with similar (or almost similar) parameters, similar quality of connection etc.
This problem has an importance for the arbitration where equality of the parties is considered as a crucial cornerstone of the procedure. This is the factor that the parties and especially arbitrators should be very careful because unresolved this problem could lead to setting aside or non- recognition and subsequent problems in enforcement of the arbitration award.
Another characteristic of the e-arbitration that could be considered as a disadvantage is the lack of personal/physical appearance of the parties or witness, experts in front of the arbitrators. One can argue that physical appearance can have crucial importance for the arbitration taken in its adjudicatory nature. For example, sometimes arbitrators need to understand the emotional context within which the witness testifies in order to make an assessment of the credibility of testimony.
Some authors19 consider the security as a disadvantage of e-arbitration, they even describe it as a serious problem of e-arbitration. However the same authors further suggest that certain technology such as encryption, digital signatures and the use of secure - password protected services and other technologies may solve this problem.
4. Certain specific issues related to e-arbitration
Because of its delocalized and non-materialized nature, there are several issues that arise in relation to the permissibility of e-arbitration under the applicable legal regimes,. J. Herboczková in her article “Certain aspects of online arbitration”20 mentions validity of the arbitration agreement concluded by email, determination of the place of arbitration, determination of applicable procedural and substantial laws, validity of an arbitration award rendered in e-arbitration and further recognition and enforcement
of it as interesting topics related to e-arbitration. We also found these issues interesting within the context of this paper thus each of them would be shortly described in below.
A. Validity of arbitration agreement concluded by email:
In the world of arbitration it is commonly accepted that the agreement of the parties to submit their dispute (or future dispute) to arbitration should be in writing. The idea behind this rule is that parties who agree to arbitration give up their right of recourse to the courts of law. It is not unreasonable to require written evidence that they have, in fact, agreed to do this21. For that reason more traditional approach is that the written evidence implies physical existence of a document (or documents) that will express the consent of the party.
However, within the e-arbitration it is reasonably possible that no written document expressing the consent of the party (ies) exists at all22. Instead, there could be a wide range of possibilities to express the consent of the contracting party with exchange of certain digital data. Thus the question here would be whether those mechanisms of exchange of certain digital data would be considered as written consent under applicable legal regimes. These issues would be considered in further chapters when discussing the different instruments constituting legal regime applicable to international arbitration.
B. Determination of the place of arbitration in case of e-arbitration:
In literature the online dispute resolution (including the e-arbitration) is described as having “placeless or dematerialized” nature23 within this context, it is argued that the concept of place of arbitration is becoming even more abstract and as in fact a “strictly legal concept”24.
The issue of determination of the place of arbitration is becoming important when the arbitration agreement does not cover this issue and the parties cannot agree on this after the dispute arises.
The fact that the arbitration is conducted in cyberspace in our view can undermine the more traditional territorial approach which is inclined to link the place of arbitration to the place where the parties have a domicile or the place of the seat of the online arbitration institution25, etc. In following chapters (when discussing the New York convention) we would discuss the solutions that applicable legal regime could provide for this issue.