To resolve a conflict, parties have two options.

They can either

opt for litigation or for arbitration.

As compared to arbitration, litigation is more time consuming and

a costlier process. Arbitration, on the other hand, is a speedier
and a parties-friendly mechanism for dispute settlement.
Arbitration means hearing and settling of dispute outside the
courts. In this, a dispute is referred to an impartial third person
as decided by the parties to the dispute in the arbitration
agreement.

The Need For Arbitration

The conventional litigation methods of dispute settlement are not

appropriate for commercial disputes. Therefore, there arose the
necessity for alternative dispute resolution (ADR) mechanisms,
one of which is Arbitration.

Nowadays, arbitration has emerged as one of the most dominant

and widely accepted form of ADR. Since the Indian judiciary has
failed to deliver justice swiftly, arbitration is openly welcomed.
The lack of formality and absence of long procedure makes
arbitration hassle free and easy.
Therefore, considering all the factors, there is a dire need for
prompt action of the courts to participate and put in their efforts
for effective implementation of arbitration.

Online Arbitration In India

With the boom of e-commerce, a need was felt to redress the

disputes of the consumers online. As the name suggests, online
arbitration means settlement of disputes with the aid of
technological related laws. This however does not mean that it
has parted away with the provisions of the Arbitration and
Conciliation Act 1996. Both the conventional Arbitration Act as
well as the technology laws is applicable to the online arbitration.

Agreements wherein the parties agree to resolve the matter in

dispute through emails is considered to be valid as well as
enforceable as the validity of such agreements have been upheld
by the Supreme court of India in the suit of “ Shakti Bhog foods
Ltd VS. Kola Shipping Ltd.” and “ Trimex International FZE Ltd.
VS. Vedanta Aluminium Ltd.”. Moreover, such agreements are
admissible as evidence as per section 5 of the Information
Technology Act, 2000.

Components Of Online Arbitration

1. The Arbitration agreement

 2. The Arbitral proceedings
3. The Arbitral award

 ARBITRATION AGREEMENT needs to be in writing and

can be made via exchange of letters, telex, telegrams or
any other means of telecommunication. As per the
Information Technology Act, 2000 the requirement of
statutory recognition to electronic records and digital
signatures need to be complied with.

 ARBITRAL PROCEEDINGS can be either Institutional or

Ad-hoc depending upon the will of the parties. The parties
have to clearly spell out the rules in their agreement if
they want to opt for Online Arbitration. The principles
governing the arbitral proceedings have to be expressly
agreed by both the parties. In Online Arbitration, the
hearing and cross examination of the parties or witnesses
takes place through video conferencing.

 ARBITRAL AWARD can be issued through email by

sending scanned copies online and the arbitrator can put
in his digital signature to sign the award. The award must
spell out the reasons for giving such a decision. This
requirement can however be done away with if the parties
decides so. As far as the enforcement of Arbitral award is
 concerned, the copy of it received through post, can be
filed in the courts.

Emerging Trends In Online Arbitration

Over few years, India has been blessed with greater technology
development and thereby the number of e-commerce companies
is multiplying day by day.  However, it is not hidden that a
company and disputes related to it are inseparable. With the
growth of e-commerce companies, consumer disputes are also
growing at great pace which needs to be addressed as soon as
possible to avoid any interference in the working of such
companies. Also, the increase use of technology and internet
besides several of pending cases in the court rooms, it is logical,
practical as well as favorable to tilt towards Online Arbitration.
Considering its advantage over litigation and conventional
arbitration, it has been opted by various companies to resolve
their dispute.

However, it is disheartening to admit that in India, people are not

much aware of their digital rights. Therefore, India should take
initiative to make the people aware of their rights and also to
establish dispute resolution forums for such digital claims. The
Indian legal regime completely recognizes Online Arbitration but
the barrier in its successful implementation is its adoption by the
parties to the dispute.

Advantages Of Online Arbitration

1. It is a swift convenient procedure- as against litigation,

arbitration is a swift process. In online proceedings, face
to face communication is not demanded and the parties
are not required to be assembled at one place. They can
take part in the proceedings at their own convenience and
are also relieved from the long dates given in the
litigation process.
2. Cost saving- it provides substantial savings when
compared from conventional litigation. Those who cannot
afford much or can’t afford long distance travelling
expenses can, with no worries, opt for online arbitration.
3. No Jurisdictional issues- this is one of the main and
highlight advantage of online arbitration. Parties don’t
have to bother themselves in deciding which court they
are required to go in.
4. Other advantages- parties to online arbitration also enjoy
certain other benefits as it provides round the availability
and accessibility and a more efficient case management.
It has a flexible approach and affords greater party
control. Also, it deals with both B2B and B2C disputes.

Challenges In Online Arbitration

Besides being a boom in the dispute settlement system, it comes
with its own challenges and difficulties. Online Arbitration faces
challenges in relation to-

1. Power or system failure and potential inaccessibility-   For

some individuals, access to computers and internet may
be a great challenge. Even after gaining access to a
computer and internet, they might not be comfortable in
using it. The proceedings may last for hours and the
requirement of continuous internet access may pose a
threat for those having limited access.
2. Place of arbitration-   determination of seat of arbitration
is one of the greatest difficulty faced in online arbitration.
It is important to decide the place of arbitration as it will
determine the jurisdiction of courts for setting aside the
award. The place of the arbitration can be decided by the
parties. In case parties fail to decide the issue, this is
decided by the arbitrator.
3. Confidentiality  issue-  since online mediation creates an
electronic record, this may pose a great threat to privacy
and confidentiality. This could enable a party to print out
and distribute e-mail communications without the
knowledge of the other party.
4. Less effective- any dispute can be redressed more
effectively if the parties to the dispute are personally and
physically present before the arbitrator. Moreover, online
 communications do not express the pitch, tone and
volume of the participants.  
5. Limited scope- Online dispute typically concern small
sums of money. It has a limited range of disputes. It
handles only those issues where the amount of
settlement is the only undetermined issue.

Essentials Of An Effective Online Arbitration

Following are the conditions to make online arbitration successful-

 Legislative framework- any dispute resolution

mechanism must a legal framework which facilitates
alternative disputes solving system.

 Faith among users- trust, faith and confidence among

the users are the key factors which makes any dispute
settlement proceedings successful.

 Cost effective- one of the main reasons of entering into

online arbitration is that it is cost effective. Had there
been a high cost, people would not have moved towards
this mechanism.

 Use of multiple languages- since online arbitration is

not place oriented and is not only a domestic dispute
 settlement system, multi language will therefore assist in
making online arbitration more successful.

 Security issues- this is one of the key concern in any of

the dispute settlement mechanism. To ensure
confidentiality and security, following measures need to
be adopted- (a) measures to differentiate original from a
copy, (b) identification of the author of the message, (c)
protecting stored information from others, (d) deleting all
the information of the case once it has been decided.

 In- house facilities- the companies should install in-

house online dispute resolution system as it will
undoubtedly decrease the cost and would obviously be
more time saving.

Conclusion

Online arbitration is still unexplored in India. For its effective and

successful implementation, the court has to give weight to the
arbitral award and should interpret the scope and ambit of such
arbitration.

Considering its advantages, it can really prove to be a progress

especially for a country like India which has enormous population
and heaps of pending cases. Its time efficiency and cost
effectiveness will surely be of great importance to the parties to
the agreement. Therefore, it should be a preferred way of dispute
settlement.

To sum up, online arbitration seems to be quite promising as with

the rapid expansion commercial transactions and globalization,
disputes need to be resolved as soon as possible as online
arbitration is one such mechanism to be relied on for swift and
inexpensive dispute settlement