ONLINE ARBITRATION IN INDIA
With technological advancement at its zenith the number of e-commerce companies is growing carrying with it rising number of consumer disputes which needs to be resolved in few weeks or month so that it doesn’t create a hassle for effective functioning of such companies. India has two ways of dispute resolution system - either through litigation or through arbitration. Litigation is very expensive and time taking method of resolution of dispute. However arbitration proves to be a speedy settlement mechanism. Despite 1996 Act, there are backlog of civil cases pending. This mechanism can further be improved by adopting online Dispute Resolution System.
Online Arbitration as depicted by its name means resolution of disputes by using technology. It has to be understood with Arbitration & Conciliation Act, 1996 and Information Technology Act, 2000. (Section 3 & 4)
Mechanism of Online Arbitration
Online arbitration comprise mainly of arbitration agreement, arbitration proceedings and arbitral award.
For referring the case for online arbitration there are three modes- either incorporation online arbitration clause in agreement, Secondly, a written contract providing for online arbitration; and lastly, reference to online arbitration after the dispute has arisen. According to Section 7 of Arbitration Act, arbitration agreement should be in writing which includes an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or an exchange of statements of claim and defense in which the existence of the agreement is alleged by one party and not denied by the other. The question here arises is whether agreement entered online will be valid? For that Section 4 of Information Technology Act, 2000 states that agreement in writing is deemed to be satisfied if the agreement is in electronic form and is accessible to be used for a subsequent reference. The arbitration agreement entered into between the parties by exchange of emails through no formal agreement in writing signed by the parties is valid and enforceable as the validity of such agreements is upheld by Hon’ble Supreme Court of India in the matter of “Shakti Bhog Foods Ltd. Vs. Kola Shipping Ltd.” and “Trimex International FZE Ltd. Vs. Vedanta Aluminum Ltd.” . Also such agreement is admissible as evidence as per Section 5 of Information Technology Act, 2000.
However other details as prescribed under the act relation to place of arbitration, law applicable and other rules should be prescribed both in online and offline arbitration agreement.
The arbitration proceeding as in case of conventional arbitration can be in conducted either adhoc or through institution. It is solely on the discretion of parties how they want to conduct arbitral proceeding. They have to spell out rules in their agreement if they want to conduct it online. As prescribed in the act parties have to submit statement of claim and defense as per Section 24 within prescribed limit online. The hearing and cross examinations of witness can take place through video conferencing. The place of arbitration in online arbitration is virtual. Such proceedings face few challenges relating to power failure, system failure and link failure. For that International Chambers of Commerce has prescribed few standards:-
Section 31 of the Arbitration and Conciliation Act, 1996 deals with form and contents of the arbitral award. Such an award must be in writing and signed by the members of the arbitral tribunal. Such an award must state the reasons upon which it is based unless the parties have agreed that no reason is required or the award is pursuant to the settlement between the parties Section 31(5) states that after the arbitral award is made, a signed copy shall be delivered to each party. The award can be issued through email by sending scanned copies online. The signature of arbitrator on award can be digital signature. Section 15 read with Section 11 of IT Act, 2000 states that digital signature have same evidentiary value as of handwritten signatures. It can be attributed to original attributor of that document.
The enforcement of award can be as per Section 36 of Act which states that it will be enforced in the manner provided under Civil Procedure Code. For enforcement of the award, the original signed copy received by post or the digitally signed awards, as the case may be, can be filed before the courts. As per the functional equivalent approach promoted by Model Law of electronic Commerce, electronic documents can be considered original for enforcement.
Online dispute Resolution mechanism in India is at nascent stage and various steps needs to be taken to implement it successfully. However, it is an effective and inexpensive method of mode of settlement which is accepted as per Indian laws. Precautions should be taken while drafting arbitration agreement. Online arbitration can prove to be boon for disposal of backlog cases by Indian judiciary. For effective implementation and removing difficulties in electronic communication, parties should formulate rules in the agreement itself.