Online arbitration is settlement of disputes by chosen parties through emails and other modes of technology. It is a process by which the ease and the benefits of alternative dispute resolution in India is enhanced by allowing the parties to settle the dispute through electronic modes. Not only the proceedings, the agreement and evidence are also made online.
To distinguish between Conventional Arbitration which requires the applicability of Arbitration and Conciliation Act, 1996, and Online Arbitration, the latter, along with the applicability of Arbitration and Conciliation Act, 1996 also requires the aid of technologically related laws, particularly the Information Technology Act, 2000. In other words, it can be said that Online Arbitration is a composition of conventional Arbitration with the mixture of technology in it.
In Shakti Bhog foods Ltd VS. Kola Shipping Ltd, validity of agreements wherein the concerned parties resolve disputes through emails was taken to be enforceable under the Court. It was further held that from the provisions made under Section 7 of the Arbitration and Conciliation Act, the existence of an arbitration agreement can be inferred from a document signed by the parties or exchange of e-mails, letters, telex, telegram or other means of telecommunication, which provide a record of the agreement.
State of Maharashtra vs Dr. Praful B. Desai
The Supreme Court of India established that Video Conferencing is an acceptable method of recording evidence for witness testimony.
In Grid Corporation of Orissa Ltd. vs. AES Corporation it has been held that when effective conciliation can take place through electronic media, there is no requirement for the disputing parties to be present in front of each other.
Components of Online Arbitration:
There are three components of online arbitration with respect to the Arbitration and Conciliation Act, 1996, they are:-
- The arbitration agreement,
- The arbitral proceedings and
- The arbitral award and its enforcement.
These provisions of Arbitration & Conciliation Act, 1996 (Act) are in conjunction with Information Technology Act, 2000
I) The Arbitration Agreement:
Sections 4 &5 of the IT ACT, 2000 read with Section 65-B of Evidence Act recognises the electronic mode of evidence as an accepted proof in the court.
• Submitting a dispute to online arbitration can occur when there is an e-contract containing an online arbitration clause, or when there is normally written agreement with a clause mentioning reference to online arbitration or when the dispute arises the parties agree to resolve the matter via online resolution.
Section 7(3) of the Arbitration and Conciliation Act, 1996 provides that an arbitration agreement shall be in writing.
• However, if the parties agree online to refer the matter to cyber arbitration through an ODR Service Provider, the question arises as to whether such a cyber-agreement will be valid in law.
Section 4 of Information Technology Act, 2000 lays down the following provisions on this point:
• If it is mentioned in any law that the agreement has to be in writing, typed or printed then such requirement will be deemed to be accepted if the matter is available in electronic form also.
In Trimex International FZE Ltd. VS. Vedanta Aluminium Ltd. The court held that it should be clearly specified in the agreement on which mode of technology will be used in case of settling the disputes among them along with other necessary clauses.
II) Arbitral Proceeding:
Section 18 read with Section 12 of the Arbitration and Conciliation Act, are quite relevant to be cited here. These online techniques can be used in arbitral proceedings, provided that their application does not prejudice one party for example “if it had less access to or know-how of the technology than the other party.
The principles governing the arbitration proceedings are to be explicitly set out and agreed to by the contracting parties. Therefore, the parties may agree that the whole or part of the arbitration proceedings is conducted online, or they may otherwise expressly exclude electronic means.
• The procedural requirements of having the virtual proceedings have to be clearly spelled out including the details for the exchange of pleadings, video conferencing and audio conferencing.
III) Arbitral Award and Enforcement:
Section 31 of the Act relates to the form and contents of the arbitral award. It states that the arbitral award must be in writing, duly signed by the arbitral tribunal. A signed copy of arbitral award shall be delivered to each party after making the award under section 31(5). The award can be issued through email by sending scanned signed copies in PDF format. The actual signed copies can be sent through post.