KluwerArbitration
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Publication
Journal of International
Arbitration
Bibliographic reference
Sami Kallel, 'Online
Arbitration', Journal of
International Arbitration,
(© Kluwer Law
International; Kluwer Law
International 2008, Volume
25 Issue 3) pp. 345 - 353
P 346
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Online Arbitration
Sami Kallel
(*)
Abstract
This article provides an overview of online arbitration. It considers some of the distinct
features of online arbitration as compared to traditional arbitration. If then discusses online
arbitration in practice. The article concludes by examining some of the reasons why online
arbitration has yet to prove attracting to many internet users.
I Introduction
Considering the rapid increase in the number of Internet users and the encompassing
growth of the World Wide Web, it is all too likely that virtual conflicts can occur and that
they will need to be addressed like any real life dispute. Online Dispute Resolution
(“ODR”) has come to light as an adaptation of the Alternative Dispute Resolution (“ADR”)
process, i.e., arbitration, mediation, and conciliation, with the new requirements of
technology and the emergence of the new virtual society. Thus, ODR is intended to settle
online disputes in an efficient, flexible, quick, and relatively cheap way.
In essence, virtual arbitration is not very different from ordinary offline arbitration. It is
an extrajudicial way of dispute settlement based essentially on the intervention of a
neutral third party who renders a decision that has to be enforced, with the difference
that in online arbitration, parties communicate with the arbitrator and submit their
documents, evidence, and arguments electronically via emails, teleconferences, instant
messengers, etc.
However, the implementation of virtual arbitration is not as easy as it first appears and
“traditional” arbitration cannot be automatically transposed into the electronic
environment. The particularities of cyberspace undoubtedly affect online arbitration, its
procedures, its functioning, and its final results. So far, the legal community has not yet
resolved all the legal problems facing online arbitration. As a result, the few online
arbitration courts and institutions which have been launched on the Internet find
difficulties in attracting Internet users and in winning their trust.
II Particularities of Online Arbitration
A Particularity of cyberspace
1 Legal Relationships
As “Internet is the network of networks” and is globally accessed and universally used,
conflicts may naturally arise among Internet surfers. These disputes can be classified into
three major categories:
(a) disputes relating to the Web's infrastructure such as the refusal of access based on
discriminatory causes, rate fixing, etc.;
(b) disputes relating to information circulation, such as issues with regard to private
life, personal reputation, pornography, dangerous or false information, intellectual
property rights, etc.;
(c) disputes relating to exchanges and dealings, such as contractual disputes,
consumption, etc.
These legal relationships have a transborder character. They are born and they take
effect in an open environment where interconnection is unlimited and where geographic
location no longer matters. Consequently, the difficulty related to a dispute on the
Internet arises from the fact that the virtual dispute resolution process is located in a
“territory” which has not been flagged yet by specific legal rules, as it involves parties
subject to different legal systems and cultures.
Here, national laws cannot face multiple elements of attachment and a universal
accumulation of legislative and jurisdictional competences. Similarly, international laws
are in no better a position to resolve this dilemma. They can manage neither to
harmonize all national standards, nor to solve problems with regard to jurisdictions and
conflict of laws.
Although the Internet has facilitated the globalization of trade and contributed to the
lifting of barriers, the tailoring of costs, and the development of electronic commerce, (1)
it can nonetheless be pointed out that the legal rules applicable to cyberspace are
becoming more and more difficult to harmonize because of their heterogeneity. Indeed,
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 some authors consider that the electronic environment raises the deep structural
differences which exist between the regime of contractual responsibility in civil law and
the theory of breach of contract in common law. (2)
Virtual arbitration is supposed to take into consideration all these aspects when
resolving a dispute between Internet users. It is also supposed to take into consideration
the specificity of the electronic ways of communication. An arbitrator, in a virtual
arbitration, is behind his/her keyboard and the information about the dispute in
P 347 question is communicated to him/her electronically by parties in the four corners of
the world. Thus, online arbitration methods and procedures will be different from those
of offline ones.
2 Methods and Procedures
Technology has certainly an important role to play in regulating virtual disputes.
Currently, it is possible to communicate on the Internet through emails, chat-rooms and
teleconferences.
A general observation of virtual arbitration has shown that emailing is the most used
method of communication enabling parties not only to communicate quickly and
efficiently but also to attach written texts or even audio and video documents to their
messages. For more security, parties can attach their electronic signatures as well.
Sometimes, it is necessary that parties have a direct confrontation and that the
arbitrator receives their testimonies. Chat-rooms, as a forum of written conversations,
provide a useful means to confront people located in different parts of the world.
Nonetheless, this method suffers from some disadvantages, the most important of which
lies in the fact that it is generally harder to communicate by typing on a keyboard than to
talk. In this sense, Henry H. Perritt Jr. considers that “The face to face portions are more
difficult. As multimedia becomes common, recorded audio and video testimony within
the adjudication database is conceivable. Until then the most that can be done in a
purely network environment is interactive argument and presentation through a ‘chat’
feature. It is far from clear, however, that this mode of electronic dispute resolution
would be efficient because people type more slowly than they talk.” (3)
The handicap of chat-rooms can be, however, avoided by another medium of
communication: teleconferencing. This method has the advantage of securing a more
direct and thus a more efficient way of confrontation. Additionally, it has been noted that
it is much harder for a person to lie when he/she is speaking live. Thus, teleconferencing
can ensure a more reliable testimony.
The particularity of the legal relationships involved in a dispute which has to be settled
by virtual arbitration and the particularity of the information communication media used
in order to settle such a dispute will influence the arbitration process and will deeply
determine the differences between offline and online arbitration.

B Particularities of virtual arbitration

Besides the highly complex relationships involved in this kind of arbitration and its new
procedures and methods, virtual arbitration faces three major legal issues: the
requirement of formalism, the applicable law, and the arbitration award and its
exequatur.
P 348

1 Requirement of Formalism
In “traditional” arbitration, almost all national laws (4) and international agreements (5)
require that the arbitration clause or agreement must be in writing and must be signed by
the parties involved. Is the requirement of a written consent to enter into an arbitration
agreement necessary in virtual arbitration?
In online arbitration, the arbitration clause or agreement is absent and instead it is
replaced by the “click-wrap contract” where an arbitration offer is included in a virtual
adhesion contract and the user's acceptation of this contract is simply expressed by
clicking on the “click here if you accept” icon.
The legal community appears to be following these new aspects of the legal relationships
set forth by technology evolution. An observation of some recent legal texts shows, in fact,
an enlargement in the meaning of “writing.” (6) For instance, the Tunisian legislature
added a new article to the Code of Obligations and Contracts by Law No. 2000-57 of June
13, 2000; the new Article 453bis states:
The electronic document is a writing composed of a set of letters and numbers
or other numeric signs including the one exchanged by communication media,
under the condition that it is of an intelligible content and is archived on an
electronic support which guarantees its reading and consultation when
needed. The electronic document is evidence as a private deed if it is
conserved in its final form by a reliable process and is reinforced by an
electronic signature. (7)

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 Even if it seems to be admitted that formalism is no longer the antonym of electronic,
virtual relationships are still affecting the applicable law and the arbitral award.
2 Law Applicable to Virtual Arbitration
Where the parties omit to specify the applicable law relevant to the virtual arbitration,
the arbitrator will face the problem of determining the applicable law to the dispute. As
was discussed supra, the transborder aspect of virtual relationships may prevent the
arbitrator from determining the real element of attachment in order to apply the
appropriate law in application of the ordinary rule of conflict of laws.
In such online arbitration, the attachment criteria (place of conclusion of the contract,
place of arbitration, etc.) become meaningless since online relationships are themselves
P 349 delocalized and geographically independent. An original solution to this problem was
suggested by the legal community which recommended the creation of Internet courts.
These courts would apply specific rules to the cyberspace environment and the body of
these rules would, in the long term, constitute the “lex electronicae” or the “lex
cyberneticae” (in analogy to the lex mercatoria).
This solution would show its effects in the long term since the accumulation of a lex
cyberneticae requires time and needs the elaboration of legal precedents. These effects
can be further delayed by the fact that the current virtual arbitration courts rarely
publish their decisions, if at all. So until then, how could the problem of the applicable
virtual arbitration law be tackled? And in case the necessary rules are put in place, will
online arbitral awards be easily enforced?
3 Arbitral Award
It is certainly the enforcement of the virtual arbitral award that represents the most
problematic part in the virtual arbitration process. A preliminary observation with regard
to the exequatur of an online arbitral award is related to the form of the award.
In many national and international laws, the award is not required to be in writing;
however, in case of an enforcement claim, the claiming party should provide the original
of the award or a certified copy of it. For instance, the Tunisian Code of Arbitration in
Article 80(2) states that: “La partie qui invoque une sentence arbitrale ou qui en
demande l’exécution doit en produire l’original dûment authentifié ou une copie
certifiée conforme.” (8)
This condition does not seem to be possible on the Web since virtual arbitration lacks
written support. In order to overcome this difficulty, it was recommended that the
arbitrator who has electronically rendered his decision sends the text of the decision in
writing to both parties with his signature on it.
Assuming that the court before which a party is asking to enforce the award has accepted
to consider the case on exequatur, the exequatur judge would have to examine whether
the award complies with the procedural principles, the right of defence, and the public
order of the state where this leave of enforcement is requested. (9) These principles are
fundamental, at least in the “traditional” arbitration procedure. Because of the
particularities of virtual arbitration, the exequatur of a virtual arbitral award may
probably be denied and the entire process could finally find itself pointless unless the
legal community decides to take new steps to facilitate integration of virtual arbitration
awards. In fact, several virtual arbitration bodies have seen the light during the last few
years.
P 350

III Virtual Arbitration in Practice

Several virtual arbitration experiences have seen the light during the last few years.
Unfortunately, a general overview reveals that the results have not yet reached the level
of expectations; many reasons lay behind the mistrust of Internet users in taking
advantage of online arbitration.

A Online arbitration institutions

1 Virtual Magistrate (10)
In 1995, the National Centre for Automated Information Research (NCAIR) together with
the Cyber Law Institute created the Virtual Magistrate as an experimental project. In 1999,
the responsibility for the project was transferred to Chicago Kent College of Law at the
Illinois Institute of Technology.
The Virtual Magistrate's mission is to solve disputes between the Internet's users and the
System Operators. Its scope of dispute settlement is limited to “complaints, about
messages, postings and files allegedly involving copyright or trademark infringement,
misappropriation of trade secrets, defamation, fraud, deceptive trade practices,
inappropriate (obscene, lewd, or otherwise violative of system rules) materials, invasion
of privacy, and other wrongful content.” (11) Accounting and financial issues are excluded
from the Virtual Magistrate's scope.

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 The filing of complaints and communication between the parties and the Virtual
Magistrate arbitration program takes place through email. The Virtual Magistrate
arbitration program provides notice to all parties and persons in interest. Each arbitrator
will attempt to reach a decision within 72 hours (three business days) after acceptance of
a complaint. In resolving disputes, the Virtual Magistrate does not systematically apply
the law of a specific jurisdiction but instead “it will consider the circumstances of each
complaint, the views of the parties about applicable legal principles and remedies, and
the likely outcome in any ultimate litigation or dispute resolution.” (12)
2 Cyber Tribunal (13)
The Cyber Tribunal was a project of the Centre de Recherche en Droit Public in Montreal
(CRDP) created in 1998. Its scope was larger than the Virtual Magistrate since it included
electronic commerce, competition law, authorship law, trademarks, private life, etc. The
Cyber Tribunal's purpose was to participate in elaborating a lex cyberneticae by stating
and publishing its awards. However, the Cyber Tribunal has been defunct since a few
years ago.
P 351
If the Cyber Tribunal had survived longer, it probably would have been of major
importance in resolving problems encountered by virtual arbitration in general. This
body was the “brain child” of the CRDP, an institution located in a legally bicultural
environment (i.e., Canada) with experience of both common and civil law. This project, if
it had succeeded, could have resulted in more comparative law and, thus, more legal
harmonization.
3 Internet Corporation Assigned Names and Numbers (ICANN) (14)
ICANN is an internationally organized non-profit corporation created in 1998 and which
has responsibility for Internet Protocol (“IP”) address space allocation, protocol identifier
assignment, generic (“gTLD”) and country code (“ccTLD”) Top-Level Domain name system
management, and root server system management functions. (15) ICANN resolves disputes
related to these matters via online arbitration. It has implemented a Uniform Domain
Name Dispute Resolution Policy (“UDRP”) which has been used to resolve more than 5,000
disputes over the rights to domain names (according to its website). The UDRP is
designed to be efficient and cost effective.
4 WIPO Arbitration and Mediation Centre (16)
The World Intellectual Property Organization (“WIPO”) established in 1994 in Geneva the
WIPO Arbitration and Mediation Centre, which has created an online arbitration
procedure: the WIPO Electronic Case Facility (“ECAF”). (17) The WIPO ECAF allows parties
and all other actors in a case under the WIPO Mediation, Arbitration, Expedited
Arbitration and Expert Determination Rules to submit communications electronically
into an online docket. Parties receive email alerts of any such submission being made
and may view and search this docket at any time. The WIPO ECAF undertakes to guarantee
the confidentiality of the documents electronically exchanged for the purposes of the
case under arbitration.

B Reasons behind virtual arbitration's low attractiveness

Virtual arbitration is a relatively newborn institution which Internet users are not used to.
Its acceptance is conditioned by it succeeding in attaining several requirements,
especially confidentiality and effectiveness.
P 352

1 Confidentiality Requirement
On the Internet, perfect security cannot be achieved. This makes Internet users even
more hesitant to submit their disputes to online arbitration. The principle of
confidentiality in arbitration requires that the parties and the arbitrator do not reveal
information and documents related to the case, and do not disclose the final arbitral
award. In many cases, big companies or well-known businessmen prefer “traditional”
arbitration because there is a guaranteed confidentiality which allows them to protect
their reputation and to keep their secrets safe.
In order to secure the confidentiality requirement, online arbitration institutions have
chosen to establish a mechanism based on obtaining a “client code” and an “access
code” for each party. Nevertheless, Internet users remain reluctant because they are not
convinced that online arbitration institutions are in fact safe. It also does not help them
to hear that the most secure websites (such as those related to national security) can be
hacked (i.e., pirated).
2 Transparency Requirement
The transparency and the independence of the virtual arbitration institution the dispute
is referred to are very important in the eyes of parties involved in a dispute. They have to
be sure that they are dealing with a trustworthy institution that is completely neutral (as

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 regards to politics, race, gender, etc.). They are also interested in knowing about the
financial resources of this institution and in making sure that the arbitrators dealing with
their cases are impartial. These requirements are hard to verify online as it has been
observed that the online arbitration institutions do not communicate this information to
the Internet users on their websites. The interested parties, for lack of better knowledge
about the online institution they are dealing with, are often suspicious and even
reluctant to submit their dispute for settlement.
3 Authenticity of the Evidence
A major problem is raised also with respect to the authenticity of the evidence which is
electronically submitted by the parties involved in a dispute before a virtual arbitration
court. In practice, how can the evidence be authenticated? Would an alternative solution
be to send the documents the “traditional” way, or should one appeal to further
technologies to help authenticate the evidence?
4 Problems of Language and Terminology
The same term in the same language can be differently understood by different persons.
The problem is more serious when the involved parties speak different languages or have
P 353 different legal backgrounds. Many problems may arise because of a minor
misunderstanding or a slight difference in perception and this can become crucial in
solving a dispute.

IV Conclusion
Internet users are still hesitant vis-à-vis virtual arbitration, as they are reluctant to be
involved in a procedure that they perceive to be risky and where the enforcement of the
final decision is not always guaranteed. Their attitude is understandable, since online
arbitration is more or less in its early stages and needs to reach maturity before it
attracts many more users and practitioners. The difficulties that are encountered in this
sphere are not specific only to virtual arbitration but are common to many of the other
P 353 human endeavors that are being strongly impacted by new technologies.

References
*) Attorney-at law and partner of Kallel & Associates, Tunis.
1) Sami Kallel, Arbitrage et Commerce Electronique, 1 Revue de Droit des Affaires
Internationales 24 (2001).
2) P. Trudel, France Abran, Karim Benyekhlef, & Sophie Hein, Droit du Cyberespace
(1997).
3) Henry H. Perritt Jr., Dispute Resolution in Electronic Network Communities, 38 Villanova
L. Rev. 349 (1993).
4) Tunisian Code of Arbitration enacted by Law No. 93-42 of April 26, 1993, art. 1.
5) Convention on the Recognition and Enforcement of Foreign Arbitral Awards art. 2, June
10, 1958, 300 U.N.T.S. 3, 21 U.S.T. 25/7, T.I.A.S. No. 6997 [hereinafter “New York
Convention”] and art. 7 of the UNICITRAL Model Law on International Commercial
Arbitration, 1985, available at
<www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbitration.htm
l>.
6) UNICITRAL Model Law on Electronic Commerce 1996, states in its art. 6(1) a broader
definition of “writing” which includes electronic messages, available at
<www.uncitral.org/uncitral/en/uncitral_texts/electronic_commerce/1996Model.html
>.
7) Author's translation. The official French text reads as follows: “Le document
électronique est l’écrit compose d’un ensemble de lettres et chiffres ou autres signes
numériques y compris celui qui est échangé par les moyens de communication à
condition qu’il soit d’un contenu intelligible, et archive sur un support électronique
qui garantit sa lecture et sa consultation en cas de besoin. Le document électronique
fait preuve comme acte sous seing privé s'il est conservé dans sa forme définitive par
un procédé fiable et est renforcé par une signature électronique.”
8) “The party who invokes an arbitral award or who claims its enforcement must present
the original duly authenticated or a certified copy” (author's translation).
9) It should be pointed out that those principles are those set forth by the New York
Convention, as adopted by a number of states around the world. Tunisia ratified the
New York Convention in July 1967. See Sami Kallel, The Recognition and Enforcement of
Foreign Arbitral Awards in Tunisia, 2 Tilburg Foreign L.R. 17 (1992).
10) Available at <www.vmag.org/>.
11) Available at <www.vmag.org/docs/concept.html>.
12) Available at <www.vmag.org/docs/concept.html>.
13) Available at <www.cybertribunal.org/>.
14) Available at <www.icann.org/>.
15) Available at <www.icann.org/new.html>.
16) Available at <www.wipo.int/amc/en/>.

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 17) Available at <www.wipo.int/amc/en/ecaf/index.html>.

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