Page 1 of 7 ON-LINE ARBITRATION (Indian ... - Luthra & Luthra

ON-LINE ARBITRATION(Indian scenario)On-line Arbitration, as the name suggests, is a mixture of conventionalArbitration with the addition of technology. Conventional Arbitration, i.e.arbitration other than on-line arbitration, requires application ofArbitration & Conciliation Act, 1996 while in the case of On-lineArbitration, assistance of technological related laws, particularly theInformation Technology Act, 2000 is also required.Sections 4 and 5 of Information Technology Act read with Sec 65-B of theEvidence Act provide legal recognition to electronic records andsignatures.The Arbitration & Conciliation Act, 1996, if considered from the point ofview of On-line Arbitration, can be divided into three parts.1. The arbitration agreement,2. The arbitral proceedings and3. The arbitral award and its enforcement.Viewing the provisions of Arbitration & Conciliation Act, 1996 (Act) inconjunction with Information Technology Act, I take you to the firstsegment, i.e. the Arbitration Agreement.Arbitration AgreementHon’ble Supreme Court in the matters of Shakti Bhog 1 and Trimax 2 haveupheld the validity of arbitration agreement entered into by exchange ofemails though no formal agreement in writing signed by the parties hadcome into existence.1 Shakti Bhog Foods Ltd. V. Kola Shipping Ltd., AIR 2009 SC 122 Trimex International FZE Ltd. v. Vedanta Aluminium Ltd. (2010) 3 SCC 1Page 1 of 7

Since arbitration proceedings are meant to be confidential in nature, theinfrastructure that is agreed to be used by the parties should not onlyprovide confidentiality of data but should also be reliable.Arbitral ProceedingsMoving on to the second part, i.e. the arbitral proceedings which arevirtual in nature, it is seen that the procedure which would be adopted bythe parties would already have been spelt out in the agreement or theInstitutional rules followed by the parties. In addition, the Statement ofClaim and defense etc. which need to be sent by transmitting the physicalcopies can be transmitted in electronic form. They can be sent throughemails by attaching PDF files and in addition, signed copies can be latersent though courier. Again, Section 4 and 5 of the Information TechnologyAct, read with Section 65B of the Evidence Act come to the aid of theparties. Such pleadings can be transmitted in electronic form withoutlosing recognition of law.It may however be added that in the conduct of proceedings, there could bedifficulties such as link failure, system failure, electricity failure etc.which need to be taken care of in the agreement or the Institutional rulesso that either a back-up or an alternate provision is made andinformation/ data fed in the system can be retrieved.ICC has taken a lead and framed certain Standards for On-lineArbitration. Some of them are:the rules for giving file names with a unique name/identifier foreach electronic document.o To identify the originator,o Class of documento Place of arbitrationThis file naming system shall be used throughout the arbitration forall electronic documents.Page 3 of 7

The file name and the date of the original document (e.g. the dateshown on a letter that is submitted as evidence) shall appear on thefirst page of the electronic document, either at the top right corneror at the bottom.If data loss occurs and the affected participant cannot itselfreconstitute the lost electronic documents, the other participantsshall help to reconstitute the electronic file(s) by providing copies ofthe pertinent files that they control.Mode of transmission and storage of emailsWhether any confirmation of receipt of email has to be given.File format for sending attachments, like. PDF, Doc, HTML, ASCIIRules for audio and video conferencingo The arbitral tribunal, in consultation with the parties, willissue directions giving details for the conference, such as:(i) day and hour and applicable time zone;(ii) places where a conference front-end is required;(iii) who shall participate and number of persons at each frontend;(iv) special requirements, such as visualization of documents;(v) any other requirements.Apart from ICC, even WIPO is successfully carrying out dispute resolutionelectronically for domain name and other disputes.Other Institutions should take initiative in establishing rules for On-lineArbitration.The procedural requirements of having the virtual proceedings have to beclearly spelt out including the details for exchange of pleadings, videoconferencing and audio conferencing.At this place, a word of caution may be added. In certain circumstances,parties and the arbitrators may be placed at different ends of the systemPage 4 of 7

3. On the award being signed, whether the award can be termed asdomestic of foreign award?4. Whether Sec 34 or Sec 48 would be applicable for raising objectionsagainst the award?5. Whether it would be enforceable under Part I or Part II of the Act.The above list is not exhaustive.By formulating the procedures, some of the problems can be sorted out.Rest of the issues shall be best decided by the courts.Page 7 of 7