Is Online Arbitration

possible in India?
INTRODUCTION

Technological development is significantly overhauling the traditional

methods of dispute settlement and electronic media to sort out disputes
are rising and will become the future of dispute settlement-if it is
channelized in a proper manner. Technological advancements have
enabled us to tackle many disputes in the past and cyberspace with its
endless possibilities has brought in a new dimension to the regime of
international commercial arbitration.[1] Online arbitration is a method,
which is being accepted by people at large and has an effective working
setup under the current legal framework.

Use of Internet is at its zenith in the current generation and the number
of disputes arising in the same forum is also on a rise. Litigation as well
as traditional methods of dispute settlement has its share of
shortcomings such as they are time consuming, expensive and have
problems regarding the seat/venue of the arbitration.

Accessibility of data via Internet allowed for an immense growth of

international commerce. Hundreds of transactions are concluded through
electronic medium and entities rely on modern techniques to settle any
dispute, which arises during such transaction. In the modern civilization,
the dispute settlement mechanism has diversified and arbitration is one
of the most preferred methods to resolve disputes. Carrington[2] put
forth his experience when dealing with witnesses who hailed from various
jurisdictions and the constant trips that they had to make so that they
could be present on the day of the proceedings were costly, uneconomical
and inefficient. The same problem could have been sorted out with the
help of telecommunications and conferencing, if the technological
mediums were put to use.

The reality of civil litigation system in the nation is appalling as many

people do not have access to the justice system and many lawyers
cannot afford to represent clients. Attorney fees and litigation expenses
prevent disputants from filing claims and seeking relief from wrongdoers.
Many cannot afford to hire lawyers as they are in no position to pay
them. There are many reasons, which make the present litigation system
unattractive and onesuch being the monopoly of the lawyers who are
earning handsome money from the current litigation system and do not
want any change in the same. Second, being the monopolistic nature of
the legal system. It takes time for law to evolve and keep pace with the
dynamic society and monopolists do not always reform monopolies. There
is a historical inertia and the supposed nature of law is slow to change.
There is a perception that whatever legal changes are necessary will
evolve over a sufficiently lengthy period of time.[3]

However, its believed by many that times are changing and modern
transaction needs are required wherein the speed of communication has
jumped to warp speed. Many e-commerce disputes are emerging today
and it requires settlement within few weeks or months so that it doesnt
hamper ease of conducting business and problems stemming from these
fast transactions need similarly to be resolved quickly, within weeks or
months instead of years.[4]
Many business transactions are conducted through electronic mediums,
technological advancement has reached a new height and disputants
presume that the ways they use to create relationships and transactions
ought to be available to resolve problems. Facets that underlie litigation
system are no longer used or relied upon in many serious transactions.
Significant financial and business decisions occur nowadays without the
expectations or needs that litigations proceedings require. Financial
events those are as legally significant as service of process occur by
computer transmissions. Judicial hearings require presence of parties and
witnesses personally; however transactions rely upon telephone
communications and video conferencing.[5]

Today, documents are mostly stored in or have their source in electronic

form. [6] The growth in electronically stored information and the variety
of systems or devices for creating and storing such information has been
dramatic. This creates new issues for discovery as electronically stored
information may exist in dynamic databases and other forms very
different from static paper.

There is no denying that online arbitration is risky as there can be

peculiar problems encountered by only cyberspace and there can be
problems to implement the same. Online arbitration has garnered more
recognition in the international arbitration sector rather than Indian as
the level of technological advancement in foreign countries is
undoubtedly more than the Indian scenario. Basically, the problem lies
with the fact that the inception of the dispute is of less concern than the
fact that the problem requires treatment of being shifted from the
conventional methods to the virtual world.
Possibility that the whole proceeding cannot be conducted through online
arbitration and during the final settlement of the award, it would be
inevitable for the parties to meet up and enforce the award accordingly.

ADVANTAGES OF ONLINE ARBITRATION

Throughout the paper, it has been seen that a new branch of arbitration
is creating a lot of stir in the international as well as in the Indian
scenario. The system, even though is a new one but still it functions on
some of the archaic rules followed by the conventional arbitration. The
new branch is thought to have an edge upon the arbitration, which is in
practice in todays world. The advantages that online arbitration provides
are:

As the traditional methods employ a neutral person to settle the dispute

between both the parties, in online arbitration also, a similar pattern is
followed wherein a mediator/arbitrator will address the particular needs of
the disputants.[7]However, the online arbitration allows a lot more
flexibility, saves upon time and money and enables quicker decisions.[8]

No expert would be able to deny that online arbitration any day is a faster
method than the current methods available at hand. Online arbitration was
brought forth with the prime objective that it will cut down on the cost,
which is usually incurred during arbitration. Many prefer arbitration as it
ensures a quicker decision but the method is costly. One session of
arbitration can be easily billed for thousands and mostly the elite class
prefers it[9], thus online arbitration is an attempt to make this efficient
system reach as many as people. In Online Arbitration, physical presence
of parties, witnesses are not required, at least at the initial stages and thus,
 a lot of cost is saved when the parties dont have to travel for long
distances.[10]

The cost of traditional methods such as litigation and mediation etc.,

involves a lot of cost and sometimes hiring an attorney that can be
unnecessary. The legal profession for some has become a medium to earn
as much money as possible and certain attorneys would bind their clients
for long in the maze of legal arena and would keep churning money as
much as possible. The aggrieved party would be bound to pay the money
but no positive result would come out of it. Thus, online arbitration is a sure
shot solution to the problem of increased costs in litigation and
conventional arbitration process. In online arbitration, use of cyber space is
very high and both the parties and the witnesses presenting themselves
would have to have an efficient connection to the modems and computer
systems.

Substantial cost savings may also result because online arbitration does
not require parties to pay for long distance phone calls or tele-
conferencing.[11]

Another advantage that can be attributed to online arbitration is that all the
documents and evidences can be stored in the digital platform and if used
the correct methods to secure it, then the cost of safeguarding such
documents will also lower down. Thus, storage of documents and
evidences in online arbitration is also considerably safe.

The changing times call for advancement in technology and parallel

development in the working of people in each field. Law is considered to
be the most dynamic of all fields, everyday a new proposition crops up,
 every time a new law is made and implemented and thus, any day a new
technology can come in and take the place of already existing ones.

Internet has brought in revolution in itself and the mode of virtual

arbitration is doing the same in the field of dispute redressal mechanism.
The conventional method of posting each and every document and
through post or speed most has been substituted with e-mails.
Communications through e-mails have made life easier and in a spur of
moment, people can express themselves to each other and the other
party does not have to be present physically but the disputes get
resolved easily.[12]

Fixing of convenient time and place becomes easier as online arbitration is

undertaken. The claimants and respondents dont have to bother about
taking long flights and meeting at a neutral point. Cyberspace is a neutral
forum and no partys rights are harmed if such medium is chosen. Both the
parties can come together at any convenient time, place being the place,
which they are commonly residing at or the place of their business and can
conduct the arbitration sessions. The only requirement wherein the
physical presence or signature by mere physical presence is called for is
during rendering and enforcement of award.

There would not be any wastage of time as the amount of idle time that
disputants experience is similarly reduced because, in contrast to
traditional mediation, the mediator can devote time to one party without
wasting the time of the other party, who would traditionally sit around
waiting for the next mediation stage.

The issue regarding the jurisdiction also gets solved to some extent
wherein the place of conducting the session of arbitration becomes the
 jurisdictional point of the said matter. The Tribunals dont have to deal with
an extra issue of jurisdiction, which sometimes leads to disposal of matters
and the parties have to keep knocking different doors of judiciary to obtain
a favorable award/decree.

One of the major reasons why online arbitration is preferred is because

that confidentiality of the matters are kept as it is which is one of the
biggest advantages of traditional arbitration as well. Online arbitration,
when conducted should be immune to unauthorized access, identity
verification, service denial, crash of the system and viruses and it would be
a success with every aspect.[13]However, in any system a full proof
confidentiality criteria is not possible and the best way to deal with that
situation is to maintain as much transparency as possible while conducting
the sessions which will enable trust building among parties, though it
should be kept in mind that private information of the parties should be
masked when publishing the awards.[14]

Thus, the advantages of online arbitration are numerous and if its

directed in the correct direction, it can prove to be fruitful for the future
generations to come. It comes with very few hassles but proves beneficial
for majority. It is speedily gaining recognition in the international sector,
even though it might be doused with certain disadvantages and
arbitrators more often root for the method. The litigation system is
burdened in any country and arbitration acts as a boon for those who
have been stuck in the system for long. Even the civil laws allow for
attributing any matter to arbitration, if it feels that it can be handled
better in that field. In the Indian scenario also, the same trend follows
wherein, if the civil courts grant permission to the parties to go for
arbitration, then it can do so and the award shall be binding upon the
party.
Online arbitration has managed to make a mark in every dispute
redressal mechanism around the world and it shall continue to do so, if as
many parties undertake the practice as possible.

DISADVANTAGES OF ONLINE ARBITRATION

Every system has its pros and cons and even this system has its share of
them. The old school followers still stuck by the traditional rules of either
litigating a matter or going for the traditional arbitration methods wherein
both the parties will sit face to face with each other and try to sort out
their dispute. It is felt that cyberspace at all times may not be the best
platform where a tribunal should be sorted out. As has been pointed out
by Joel Eisen in the article,[15] the practice of arbitration cannot be
reproduced in an online environment because cyberspace is not a mirror
image of the physical world.

Both the parties sitting together with a neutral person acting as their
arbitrator sometimes proves beneficial as the parties will be able to
understand each other in a much clearer manner which may not be
possible in cyberspace, even though both the parties are sitting opposite
each other.[16] The power of compelling a party who is face to face with
you is easier rather than online arbitration. The process of understanding
the dispute by both the parties and the arbitrator is much clearer and surer.

One of the biggest disadvantages of the system is that there is no

provision for appeal; the decision rendered becomes binding upon both the
parties. Thus, if by any chance the decision is not what is expected by any
of the parties, and then he may be left remediless and will have no avenue
to avail. The award shall be enforced as it is and in many conditions,
depending upon the authenticity of witnesses and evidences, the victim
 might not be remedied at all. The genuineness of any witness can be
understood in a better manner if they are face to face, rather than being
through the medium of cyber space.

Till date, limited range of disputes is attributed to traditional arbitration

methods only, then it can be gauged that even lesser number comes for
online arbitration. Matters wherein the parties have already determined
liability and the dispute solely pertains to determination of appropriate
compensation are apt disputes for online arbitration. However, our system
is crammed with complex and complicated matters, which can be left to
arbitration such as family matters, matters related to women and children
etc., and only niche commercial matters are for arbitration. Thus, the range
of disputes brought forth in online arbitration is very limited and thus, there
is a high possibility that this system will not be put to much use.

Another disadvantage is accessibility of online arbitration when in many

countries; use of Internet is banned or is highly restricted.[17] Under such
circumstances, it is very difficult to conduct such sessions because either
government or its agents interference can cause disruption in the whole
system.

One more glaring disadvantage is that even though online arbitration can
reduce the overall cost of the process, but the up-front and continuing fees
or the initiation fees is very high. The cost to start an online proceeding
can be high and sometimes when a lot of disturbance occurs in
cyberspace, then highly intricate and complex machines have to be
purchased which in no way can reduce the cost of the arbitration.[18]

Thus, even though a new stem of arbitration is welcomed, it comes with a

cost, which may not be advantageous for public at large. It is a very new
field, which is unexplored and many people are shying away from even
delving into the field as it comes with its negatives. It can be quite
conveniently said that people are too comfortable with the present legal
system and does not want to try their hands at new things. Tailing the
same argument, most arbitrators are aged and experienced, but
experienced only in the field of law and rather not at the new
technologies that are coming up. They are still comfortable writing down
their judgments with pen and on a paper rather than type it out. Thus, it
can serve as a big hindrance in the success of online arbitration. Its
beginning has been welcomed by many but the question looms that what
will be the future of online arbitration as its acceptability can pose
hindrance to many.

FUTURE OF ONLINE ARBITRATION

Society has been changing forever and with them the people have learnt
to adapt with the same, they have been imbibing the new laws,
regulations of the society and even the legal system. From the archaic
times to the contemporary times, legal field has been such that went
through a lot of changes, some favorable and some were not.

The advent of the society was parallel to the development of the legal
system in the world. India was one of the places where civilization
knocked before than many other nations and people were peace loving
and considerate who would mingle with each other and live in a peaceful
manner. The earliest disputes were, as can be traced, related to property
matters. When people were given the opportunity to acquire land or any
other immovable property, people thought of their gain and would use
any techniques to acquire the same, as it would symbolize wealth and a
higher status in the society. Fraud, cheating, misrepresentation were part
and parcel of acquiring land and this eventually lead to the inception of
the legal system in India.

In the earlier times, there were no formal court system and the elders of
the society would take up the matter. They are adjudged to be the best
people to resolve the dispute as they were well connected with the
happenings of the society or the village they resided in. Their decision
was held to be final and binding upon the parties who came before that.
The administrative system of the princely states portrays a systematic
judicial system for the first time where people with special knowledge
were elected to fill up the posts. Certain priests or soldiers were
exclusively appointed to deal with the justice system of the kingdom.

Trial by ordeal[19] was a famous method to determine the guilt of a

person. The ancient Indian society[20] was largely dominated by faith
and religious people and considered the method as a valid proof. It was
very common to swear by the truth or to call upon the Gods to witness
the truth of a statement, as is clear from various illustrations of the
ordeal given in the Smritis.[21]. There were other kinds of trial that were
also prevalent but this was considered to be the most potent among all.

If noticed during the times of Asoka, the great philosopher of all times
i.e. Chanakya[22]had full-fledged responsibility to look after the judicial
system. Emperor Bindusara always relied on the words of Chanakya
before deciding upon any matter. The priest would also be consulted
before any punishment was meted out to the culprit. Thus, such posts
were considered to be holy and of high stature and they were expected to
have high code of conduct. This system was successfully carried on for
several years and even the Mughal dynasties complied with the same.
However, with the advent of the British things reached its structured form
wherein it was realized that a regulatory framework should be in place to
govern the entire system or a very chaotic and haphazard situation was
in place. No one was held responsible for any act or omission, which
would wrong the other party. Thus, the litigation of Court system was
developed in India. The Charter of 1833[23] provided the foundation for
consolidating reforms and codifying laws and accordingly, a law
commission was appointed in 1834 and this step lead to the
modernization of Indian laws.

Later, High Courts in the three presidency towns i.e. Calcutta, Bombay
and Madras were set up, which gave a boost to the entire judicial system.
However, it was not a rosy picture as one after the other cases started
piling and the judiciary could not handle the same. Victims were not
given justice and the accuseds were languishing in the prison without
being correctly convicted. Thus, the need was felt that an alternate
system should be devised that can take off certain burden of the
shoulders of the judiciary.

Looking towards the apathetic situation, the judicial system borrowed the
concept of arbitration from the western world. Arbitration was a welcome
change wherein the courts could divert the matter to a neutral body in
appropriate cases. The idea of not going for litigation and waiting for a
long period of time before justice could be delivered. Arbitration gave the
parties the opportunity to settle the matter outside the purview of court
and still obtain a binding and final decision. Arbitration has been held
high among all the dispute resolution mechanisms and various facets are
adding onto the said mechanism with change in the society.
One such addition has been the foundation of online arbitration, which
was a dream even in the past few years. For ease of business and to
keep pace with the society, even Internet has been made a medium to
solve such disputes. Online dispute mechanism started to resolve matters
related to domain names of websites and allied disputes. Then the same
method has been extended to some other commercial disputes, which did
not arise out of the online medium but still the online arbitration platform
was being utilized. This showed the willingness of the society to try their
hands at this new method as they thought it could be in their favor.

The online dispute resolving mechanism ensures that the objective of

conventional arbitration is upheld i.e. speedy delivery of justice without
causing inconvenience to the parties and not draining them financially.
The use of cyberspace and technology ensured that the system could
become a success. Video conferring and Internet has been used for
commercial purposes and the same tools are utilized for solving disputes
that arise out of such commercial transactions. Even though the thought
is novel, it has certain practical difficulties, which till not settled will not
make the system as useful as it has been envisaged. However, its a
pleasant welcome to see that courts in India and around the world has
started using internet applications and judges have started receiving
training in computers and are encouraged to use such technologies in the
court scenario.[24]

Online arbitration calls for the parties to be present during the rendering
of award so that they can sign the award before it is enforced and
decision is delivered as soon as possible, however the decisions are not
held to be binding and have to approach the court at the last stage
wherein the enforcement can be only done by the court. It is one feature
where it falls short of the conventional arbitration.

As the method is just starting out, it would require some amount of

capital, which initially can make the whole system a costly affair but then
as time progresses and the system is accepted by many, the economic
costs will also come down making the online arbitration scenario
conducive for many. Thus, all opportunities should be given to the system
to develop so that it can reach maximum number of people and pull them
out of their plight and sorry situation.

[1] K. Lynch, The Forces of Economic Globalization: Challenges to the

Regime of International Commercial Arbitration, Kluwer law
International, pg. 345 (2003)

[2] Carrington, P.D., Virtual Arbitration, Ohio State Journal on Dispute

Resolution, Vol. 15, no. 3, pp. 669-690 (1995)

[3] Id.

[4]Supra (n 1)

[5] Id.

[6]ReOperadora DB Mexico, S.A. de C.V., 2009 WL 2423138 (M. D. Fla.

2009)
[7]E. Casey Lide, ADR and Cyberspace: The Role of Alternative Dispute
Resolution in Online Commerce, Intellectual Property and
Defamation, 12 OHIO ST. J. ON DISP. RESOL. 193, at 208

[8] Id., at 719 (1996)

[9]Lan Q. Hang, Online Dispute Resolution Systems: The Future of

Cyberspace Law, 41 SANTA CLARA L. REV. 837, 855 (2001)

[10]Llewellyn Joseph Gibbons, Robin M. Kennedy, and Jon Michael

Gibbs, Frontiers of Law: The Internet and Cyberspace: Cyber-mediation
communications Medium Massaging the Message, 32 N.M.L. REV. 27, 42
(2002)

[11]George H. Friedman, Alternative Dispute Resolution and Emerging

Online Technologies: Challenges and Opportunities, 19 HASTINGS
COMM. & ENT. L.J. 695, 712 (1997)

[12]Jim Melamed, The Internet and Divorce Mediation, available at

http://www.mediate.com/articles/melamed9.cfm, last visited September
25, 2002

[13]Nicolas De Witt, Online International Arbitration: Nine Issues Crucial

To Its Success, 12 The American Review Of International Arbitration 462
(2001)

[14]Isabelle Manevy, Online Dispute Resolution: What Future? 42, June

2001, http://www.juriscom.net/uni/mem/17/odr01.pdf, last accessed on
September 27, 2015
[15]Joel B. Eisen, Are We Ready for Mediation in Cyberspace? 1998 BYU
L. Rev. 1310 (1998)

[16]Ponte, Lucille M. &Cavenagh, Thomas D., Cyberjustice: Online

Dispute Resolution (ODR) for E-commerce, 31 (2005)

[17] Id.

[18] Public citizen, protecting health, safety and democracy,

www.citizen.org, last accessed on September 27, 2015

[19]V. D.Kulshreshtha, Landmarks in Indian Legal and Constitutional

History (published 2010 Eastern Book Company) 10th Edition 5

[20]L. D. Barnett, Antiquities of Indian (published 1964 Cornell

University Library) 18

[21]Raj Kumar, Essays on Legal System in India (first published 2003,

2012 Discovery Publishing House) 8

[22]KautilyasArthasastra, Vol. IV, p. 10

[24]Maria Mercedes Albornoz and Nuria Gonzalez Martin, Feasibility

analysis of Online Dispute Resolution in Developing Countries, Inter-
American Law Review, Vol. 44, No. 1