ARBITRATION IN DIGITAL ERA: ONLINE DISPUTE RESOLUTION AND CYBER SECURITY CONCERN

ABSTRACT

The 21st century is one of communication, a multitude of trading platforms, transactions, and commercial interactions taking place between individuals, groups, and companies alike. Conflicts and disagreements have sharply increased as a result, and they are now an inevitable component of our society. It is necessary to address, manage, and settle the disagreements/conflicts quickly and affordably. The study of arbitration in the modern era examines the effective and acceptable applications of technology to advance fair arbitration procedures. Mobile phones, email exchanges, online conversations, and video conferencing are the main methods used in online dispute resolution. The risks of being hacked or experiencing a cyber-attack are growing as our reliance on technology grows and we do business using digital records and information. In arbitration situations, when numerous parties are engaged and information security levels differ greatly depending on who receives it, there is also a substantial danger of exposure. In the following section, we will be addressing the necessary procedure for online dispute resolution and cyber security concern in the age of technology.

KEYWORDS

Online, ADR, Dispute, Resolution, Online dispute resolution (ODR), Law, cyber security, threats.

INTRODUCTION

A novel method of resolving disputes is online arbitration. This system is cost effective, highly efficient and superior to other typical methods of dispute resolution. The Law Commission of India’s 188th report suggested that we use a faster procedure for cases under the “Commercial Operations Division.” In its 176th Report on Amendments to the Indian Arbitration and Conciliation Act, the Law Commission suggested a “fast-track” arbitration process in India, provided that the parties choose to use it.

Online dispute resolution (ODR) is the process of the resolution of disputes through an online means of communication/interaction among the contested parties. Online dispute resolution handles disagreements that were started in cyberspace but have an offline cause that are resolved entirely or partially over the Internet.

An alternative to the traditional legal system, in which cases are filed in court and justice is sought through legal proceedings, is online dispute resolution. A courtroom, attorneys, and judges are involved in the traditional legal system to register and settle disputes whereas the Internet and web-based technologies can be used by the disputing parties in a number of ways. Online dispute resolution can be conducted exclusively via chat, email, and videoconferencing. Parties may also meet in person for in-person communication if necessary.

RELATIONSHIP BETWEEN ADR AND ODR

To each individual, “online dispute resolution” (ODR) can signify different things. When combining the various meanings of the term, one could define ODR as “online technology” (also known as Internet-based communication) used in alternative dispute resolution.
ODR is hence basically an offspring of ADR. Similar to alternative dispute resolution (ADR), it typically offers the same benefits over litigation, such as increased efficiency, increased client control, and reduced expenses. In fact, the advent of advanced technology has made these benefits even stronger for ADR.

As the name implies, online arbitration combines traditional arbitration with technological advancements. The implementation of the Arbitration & Conciliation Act, 1996 is necessary for conventional arbitration as well as online arbitration. On the other hand, support from legislation connected to technology, specifically the Information Technology Act, 2000, is necessary for online arbitration. Electronic signatures and records are recognised legally by Sec. 65-B of the Evidence Act[1] and Sections 4[2] and 5[3] of the Information Technology Act. When viewed through the lens of online arbitration, the 1996 Arbitration & Conciliation Act can be broken down into three sections.

The arbitration agreement,
The arbitral proceedings and
The arbitral award and its enforcement.

In the age of the internet, almost everything is available via an e-network and is in electronic form. Therefore, with this magical technology, arbitration may be a more efficient method of resolving disputes. Written arbitration agreements are the norm in both domestic and international law.

Section 7(4)[4] of the Arbitration and Conciliation Act states that an arbitration agreement may be made by communication or by document. Emails that have both parties’ digital signatures are likewise considered signed documents.

Section 7 (3)[5] specifies that an arbitration agreement must be submitted in written form, but if both sides choose online to submit the matter to ODR, then the issue arrives in motion whether or not this online agreement will be valid in eye of the law.

An arbitral award must be made in written form and signed by every member of the arbitral tribunal, according to Section 31 (1)[6] of the Arbitration and Conciliation Act, 1996.

According to Section 5[7] of the Information Technology Act of 2000, digital signatures are equivalent to paper signatures in terms of legal force. Furthermore, with this being an Online Arbitration, rules relating to use of technology have to be agreed upon by both sides or as established by the Institutions.

PROCEDURE OF ODR

ODR platforms offer various methods to resolve disputes, including negotiation, facilitated settlement, and a final stage with adjudication. The ODR administrator notifies the respondent of a claim, followed by a technology-enabled negotiation stage, such as double-blind bidding or visual-blind bidding. This algorithm generates suggestions or settles a monetary claim if the parties’ proposals fall within a set agreement range.

The ODR system then moves to the facilitated settlement stage, where a neutral intermediary is appointed to communicate with the parties to reach a settlement. If no settlement is reached, the parties move to the final stage, which involves dispute resolution through arbitration, third-party binding decision, or expert determination. In the end, the decision is made by a judge, arbitrator, or expert, who weighs the elements of the dispute and makes a final decision.

LEGAL VALIDITY OF ONLINE ARBITRATION IN INDIA

Section 4[8] of the Information Technology Act, 2000 (“IT Act”) states that if any law stipulates that a matter must be in writing, typewritten, or printed, then that requirement would be deemed satisfied if the matter is:

made available in an electronic form; and
Accessible enough to be used for future reference.

This means that even though Section 31 (1)[9] of the Act requires an arbitration agreement to be in writing, it must be read in conjunction with Section 4 of the IT Act.

Verifying the identity of the other party is a prevalent problem in the web business relationships. It is important to confirm the identification of the individual you are interacting with. The legal validity of electronic signatures and records is clarified by Section(s) 4 and 5 of the IT Act when combined with Section 65-B of the Evidence Act. These electronic signatures play a crucial role in guaranteeing the legitimacy, identification, and non-disclosure of data transmission, hence promoting confidence.
In State of Maharashtra v. Dr. Praful B. Desai[10], the Supreme Court recognised the use of video conferencing devices for witness statement recording under the aforementioned clauses. The International Chamber of Commerce’s criteria may be adhered to for consistency’s sake.

CYBER SECURITY – A THREAT

Cyber security threats are actions taken by malicious people with the intention of stealing data, damaging computer systems, or interfering with operations. Malware, phishing, man-in-the-middle (MitM) attacks, denial of service (DoS), and infiltration assaults are common types of cyber threats. Cyber threats can come from a range of sources, including hostile nations and terrorist organisations, lone hackers, and reliable people who misuse their authority to carry out evil deeds, such as contractors or workers.

Security is one of the main issues with the modern online communication. The risks of being hacked or experiencing a cyber-attack are growing as our reliance on technology grows. In arbitration situations, when numerous parties are engaged, information security levels differ greatly depending on who receives it, there is also a substantial danger of exposure. Because it’s a web-based nature, online communication is highly vulnerable to obstacles concerning online security, namely those pertaining to secrecy and privacy. Here, the discussion’s confidentiality may be jeopardised, and certain crucial information may be disclosed to the uninvited parties. The sender can use one of the three techniques—

Falsification, which involves presenting a falsehood,
Concealment, which involves hiding the truth, and
Equivocation, which involves sidestepping the subject—to trick the recipient.

The amount of ODRs has increased significantly in the last several years. The increasing frequency and complexity of cyber-attacks have corresponded with the increased use of internet platforms and digitization. These platforms use advanced software to manage many simultaneous file uploads and downloads in real time. ODRs’ technological advancements make these platforms appropriate for meeting the growing security needs in the face of numerous cyber threats. Platforms have implemented and integrated some of the unique characteristics suggested by multiple cyber security tools, such as the 2020 Protocol and international standards (ISO).

In order to prevent disclosing trade secrets, private information, or sensitive financial and business data, parties that use arbitration hope that their disagreements will stay out of the public domain. Confidentiality agreements typically bind parties and arbitral tribunals, and occasionally even the existence of the arbitration is kept a secret. The International Council for Commercial Arbitration (ICCA), the New York City Bar Association, and the International Institute for Conflict Prevention & Resolution (CPR) have formed a Working Group on Cyber security in Arbitration in recognition of the threat and the need to raise awareness.

The majority of law firms and legal professionals have security policies and procedures in place to reduce the likelihood that a cyber-attack would interfere with their business operations or that any privileged or private data could end up in the wrong hands. Attorneys also make an effort to protect this data when it is accessed on different platforms and moved during the arbitration procedure. As a result, the following advice can be remembered to avoid cyber-attacks.

Make sure that any agreement that uses arbitration as a method of resolving disputes also specifies how private information will be kept safe during the arbitration process.
Ascertain that the organisation conducting the arbitration and the arbitration’s selected rules provide sufficient safeguards for confidential data and the integrity of their networks and information systems.
Similarly, whether hiring arbitrators, specialists, or translators, make sure they are all bound by agreements protecting sensitive data and have access to information over secure networks.

RECENT DEVELOPMENTS – Online Dispute Resolution Is Promoted By NITI Ayog to Provide Quick Access to Justice

On November 29, 2021, the paper ‘Designing the Future of Dispute settlement: The ODR Policy Plan for India’ was launched by NITI Ayog, with the goal of increasing dispute avoidance, containment, and settlement online. By implementing the report’s suggested changes, India might become a global leader in the application of innovation and technology in Online Dispute Resolution (ODR) to ensure that every person has efficient access to justice.

The research suggests three different levels of action to address obstacles to India’s adoption of the ODR framework. At the structural level, it recommends steps to boost access to digital infrastructure, raise digital literacy, and prepare experts as neutrals to provide ODR services. The paper suggests using ODR to resolve conflicts involving government agencies and departments at the behavioural level. The paper suggests using a gentle approach to regulate ODR platforms and services at the regulatory level. This entails establishing moral and design guidelines to help ODR service providers regulate themselves while promoting ecosystem development and innovation. The research also emphasises the importance of implementing the required changes to statutes in order to strengthen the current legislative framework for ODR. A framework for ODR’s progressive implementation is provided in the report.

CASES RELATED TO ODR

Two significant Supreme Court rulings—Trimex International FZE Ltd. v. Vedanta Aluminium Ltd[11], and Shakti Bhog Foods Ltd. v. Kola Shipping Ltd.[12]—provide insight into the current situation of Indian law. In both cases, the Hon. Supreme Court upheld the legality and enforceability of a written arbitration agreement reached through the parties’ exchange of emails and electronically signed documents. The arbitration agreement, which was reached between the parties via email exchanges rather than a formal written agreement signed by both parties, was declared by the court to be legitimate and enforceable.
The Supreme Court states clearly in Grid Corporation of Orissa Ltd. vs. AES Corporation[13] that it is not necessary for the two parties who are required to act in consultation with each other to meet in person unless mandated by law or the ruling contract between the parties. Instead, effective consultation can be achieved through the use of electronic media and remote conferencing.

CONCLUSION

Technology is not a menace to arbitration. It can and ought to be applied to improve the areas where arbitration is now criticised. Our advantage is that state court institutions have never held exclusive jurisdiction over commercial dispute resolution in many jurisdictions across the world. The likelihood of conflict will increase with the number of people using the internet. The current sites are making an effort to satisfy that demand, but they first need to solve a number of issues. While the legal system struggles to maintain order in an ever-evolving and complicated internet environment, new information-processing-based methods for resolving disputes have evolved that offer some security and consistency. In the real world, alternative dispute resolution (ADR) is a substitute for litigation; however, in the virtual world, ODR serves a more comprehensive purpose as an alternative to the legal system. Thanks to technology, disagreements can now be settled quickly and comfortably from home, negating the need to travel and/or pay fees that would otherwise be associated with litigation or traditional ADR. Despite a number of obstacles and restrictions, the process has received prompt attention and has been able to continue operating well. Technology and justice have finally met, are interacting, and will do so much more quickly than any of us can ever fathom. The ultimate goal is to present ODR as a powerful instrument that enables internet users to access alternative dispute resolution.

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[1] The Evidence Act, 1872, §65B, No. 1, Acts of Parliament, 1872 (India).

[2] The Information Technology Act, 2000, §4, No. 21, Acts of Parliament, 2000 (India).

[3] The Information Technology Act, 2000, §5, No. 21, Acts of Parliament, 2000 (India).

[4] Arbitration and Conciliation Act, 1996, § 7, Cl. 4, No. 26, Acts of Parliament, 1996 (India).

[5] Arbitration and Conciliation Act, 1996, § 7, Cl. 3, No. 26, Acts of Parliament, 1996 (India).

[6] Arbitration and Conciliation Act, 1996, § 31, Cl. 1, No. 26, Acts of Parliament, 1996 (India).

[7] The Information Technology Act, 2000, §5, No. 21, Acts of Parliament, 2000 (India).

[8] The Information Technology Act, 2000, §4, No. 21, Acts of Parliament, 2000 (India).

[9] Arbitration and Conciliation Act, 1996, § 31, Cl. 1, No. 26, Acts of Parliament, 1996 (India).

[10] State of Maharashtra v. Dr. Praful B. Desai, (2003) 4 SCC 601

[11] Trimex International FZE Ltd. v. Vedanta Aluminium Ltd., (2010) 3 SCC 1

[12] Shakti Bhog Foods Ltd. v. Kola Shipping Ltd., AIR 2009 SC 12

[13] Grid Corporation of Orissa Ltd. vs. AES Corporation (2002) 7 SCC 736

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