THE RECOGNITION AND ENFORCEMENT OF AWARDS MADE BY AUTOMATED ARBITRATORS IN ONLINE ARBITRATION By - KP Revanth Chinnappa
THE RECOGNITION AND ENFORCEMENT OF AWARDS MADE BY AUTOMATED
ARBITRATORS IN ONLINE ARBITRATION
Authored By - KP Revanth Chinnappa
ABSTRACT
In both private and
public justice systems, Online Dispute Resolution technology is profoundly
affecting people’s access to justice and redress and the nature of their
procedural experiences. Online arbitration over the years has developed along
with the use of the internet and is a form of ODR which refers to the use of
Alternate Dispute Resolution on the internet to settle disputes. This paper
will discuss one of the most important topics in online arbitration: the
recognition and the enforcement of the outcomes of an online arbitration with
regards to the use of artificial intelligence in such dispute resolution
mechanisms. Online arbitration raises issues regarding the acceptable
boundaries of human autonomy in the area of law and justice; on one hand, a
software arbitrator may be considered as being less biased and susceptible to
human errors but it again raises the issue of fairness and justice that is
ascribed only to human values. The relations in online arbitration between the
parties involved is more complicated and diverse than offline arbitration; one
party is human and the fourth party is commonly used to denote technology. ODR
systems and providers have changed people's access to redressal systems and
consumer disputes. Automation and artificial intelligence play a key role in
ODR including online arbitration but at the same time there are challenges both
practical and normative regarding machine made justice to meet appropriate
procedural and substantive standards. This research paper will study the
framework for evaluating the problem of automated justice and the enforcement
of its outcomes in online arbitration. The lack of enforceable outcomes due to
the technicalities in online arbitration has become a major hurdle for the
growth of ODR as a whole and consistently reduces the trust of the parties in
machine made or automated justice in passing of a binding award. Therefore this
paper examines the role of technology in resolution of disputes and the
outcomes of such online arbitration proceedings. This paper will also
discuss the conduct of such online
arbitration proceedings, the seat of arbitration and most importantly the
procedure for the award. This research paper however will examine whether
machine made justice or automated justice or an Artificial intelligence or a
software or computer be considered as a fair arbitrator in an online arbitral
proceeding with regards to the enforcement of outcomes and their awards.
Keywords: Online Dispute Resolution, Online arbitration, Machine made
justice, Artificial Intelligence, Online arbitral awards
CHAPTER 1. INTRODUCTION
1.1 Overview
Online
arbitration can be defined as an arbitration in which all aspects of the
proceedings are conducted online. One emerging aspect of online arbitration is the use of AI
in the administration of awards and whether the AI can be considered a proper
arbitrator in such online arbitration proceedings.
Online arbitrations have hearings through the use of video conferencing, but
most online arbitrations simply require the parties to upload their evidential
documents, respond to questions from the arbitrator and they receive a decision
from the said arbitrator with the
system automated over time. Online arbitration shares
many similar advantages with online mediation,
such as lower costs and greater flexibility due to their asynchronous nature.
However, a study by ebay in the 1990s showed that the people usually
prefer online mediation more than online arbitration because it is more
efficient than arbitration. The disadvantage of
online arbitration being that there are no face-to-face interactions is also significant as arbitrations rely less
on the parties’ interactions but more on evidentiary written submissions. Now with
the growing role of AI in Justice systems around the world, it must be first
understood that the role of AI is rather limited in such proceedings where the
AI operates as the fourth party or the information technology whose function is
relegated to maintaining records and evidence. Outside the International
Arbitration context, AI was first used in the Loomis case for administering the sentence.[1]
Online arbitrations are
widely used for internet domain name disputes and these can be legally binding
or non-binding in nature. Internet domain name disputes are usually governed by
the Internet Corporation for Assigned Names and Numbers’ (“ICANN”) Uniform
Domain Name Dispute Resolution Policy (“UDRP”). The World Intellectual Property
Organization (“WIPO”) is
one of the UDRP dispute resolution service providers administering the UDRP
Administrative Procedure for domain name disputes and is responsible for
appointing panellists to determine the dispute. The decisions made under the
UDRP Administrative Procedure are non-binding but they are nevertheless highly
effective. This is because while these decisions are not binding on parties, it
is binding on the domain name provider, who will then effect the changes as
determined by the panelists. While the parties have recourse to litigation if
they are unsatisfied with the decision, this is rarely done as the expensive
and time-consuming cross-border litigation is unlikely to be justified by the
value of the domain name.
Online arbitrations over
domain name disputes can also be legally binding. The HKIAC administered Hong
Kong Domain Name Dispute Resolution Policy (“HKDRP”) takes a more direct
approach in effecting the panel’s decision. Article 4 of the HKDRP states that
the parties are required to submit to a mandatory arbitration proceeding which
is governed by the Hong Kong Arbitration Ordinance.[2] The award rendered is
therefore not subject to appeal in any court and is considered as an
arbitration award rendered in Hong Kong for the purpose of enforcement under
the New York Convention.[3]
Online arbitration is
also used in business to consumer disputes. However it is generally unpopular
not because it is a poor medium for dispute resolution, but because consumers
view such arbitration agreements as denying them access to justice through the
courts and in particular, to class action suits which would offer more
compensation.
BACKGROUND OF THE RESEARCH
Online Dispute Resolution (ODR) is
the use of information and communication technology as a means to help people
prevent and resolve disputes and is characterized by its extrajudicial nature.
Online arbitration (cyber arbitration, cybitration, cyberspace arbitration,
virtual arbitration or just electronic arbitration) is a form of ODR whereby
the parties submit their dispute to a non governmental decision maker selected
for and by the parties to render a binding or non binding award to resolve
their disputes. As online arbitration has developed over the years, one of the
most important concepts that developed was the Fourth Party[4];
the fourth party refers to technology, usually an AI or software or computer
program, as another party sitting at the proceeding. The fourth party however
is more than just software and is used to denote the role of technology in
online international arbitration. To conceptualize the idea that ODR software
plays a critical role in online international arbitration, the term fourth
party was coined. It suggests that online space shapes the manner in which
parties interact and the process delivered and in fact the fourth party is a
particular case of larger socio technological phenomenon rising in an virtual
environment[5]. It also conveys the
notion that a software tool in an online arbitration proceeding designed and
programmed through machine learning to operate may not be neutral or impartial.
Computer systems have been evolving and their use by legal professionals have
been increasing steadily such as the use of DRExM in Egypt which was a software
used to resolve construction disputes. Naturally none of the laws actually
specify whether such machine learning can actually act as an arbitrator and do
not forbid the appointment of a computer as an arbitrator. And due to the
increasing use of the internet worldwide, the number of online disputes arising
from e-commerce contracts, domain names registration and of the like is on the
rise. Offline arbitration in the use of such online disputes will be time
consuming, expensive and raise issues regarding its enforcement, however online
arbitration can be effective even in cases of offline arbitration. However
there exists the problem of automated arbitration and its use in online
arbitration as people are less comfortable relinquishing their decision
autonomy to a software than to other people[6].
RESEARCH PROBLEM
The enforcement and recognition of
online arbitral awards remains as one of the major hurdles to the growth of ODR
as a dispute resolution mechanism. Technology plays a major role in online
arbitration as the fourth party to the dispute as an arbitrator or just as the
Information Technology. The use of machine made justice through the use of
software, Artificial Intelligence and computer programs in online international
arbitration has become more prevalent in resolving and preventing disputes but
there is the question of whether a computer program, software or AI can
actually be considered as a qualified arbitrator who is truly neutral and
impartial in its judgement even though they may not ascribe to human values of
justice and fairness. Although such AI or software may not be susceptible to
human error, the use of such technology as an arbitrator in online arbitration
raises another issue of whether the award made by the fourth party can be
actually considered as being valid as per any current regulatory framework of
International Commercial Arbitration.
RATIONALE AND SCOPE
The use of Online Arbitration has
increased with the onset and increasing use of the internet space. The purpose
of this research paper will be to discuss how such technological innovations
can be actually accommodated within the current existing legislative framework
and the legal regime of International Commercial Arbitration regarding the
enforcement and the neutrality of automated arbitrators. There are many
unresolved matters regarding the use of online arbitration and especially the
use of Automated arbitrators in such online disputes. It is not certain whether
a computer or a software can be considered a qualified arbitrator with values
of fairness and neutrality and even though they may be free from human error,
the validity of such automated arbitrator’s impartiality remains in question.
Therefore this paper will state whether the outcome of such proceedings is
recognised and enforceable.
OBJECTIVES OF THE STUDY
1.
To
critically analyze the emerging role of technology and the use of Artificial
Intelligence, software and machine learning to replace human arbitration in
online arbitral proceedings.
2.
To
examine the regulatory framework and legal regime of online arbitration
regarding the recognition and enforcement of its awards in an automated arbitration.
RESEARCH QUESTIONS
- Whether a computer program,
Artificial Intelligence or Software can be considered as a fair and
impartial arbitrator in an Online International Arbitration proceeding and
under existing legal frameworks of international commercial arbitration?
- Whether the arbitral award made by the fourth party can
be recognised and enforced as being valid under any current regulatory
framework or legal regime of International Commercial Arbitration?
HYPOTHESIS
- The fourth party which can be a computer software or
Artificial intelligence presides over a proceeding and performs its
functions through machine learning and therefore does not ascribed to
human understanding of fairness and justice and thus is not neutral nor
impartial.
- Automated online arbitration is
used specifically for speedy resolution of online disputes by deciding the
dispute mechanism and is used mostly as an information tech to be used for
offline disputes.
RESEARCH METHODOLOGY
This study is doctrinal
and is based on primary and secondary sources gathered from different sources
including books, law journals, online journals, journal articles and online
databases. The researcher has analytically studied various research papers, law
journals, news articles, international conventions, case laws for the purpose
of this research.
LITERATURE REVIEW
Ayelet Sela,’Can Computers Be Fair? How automated and Human powered
Online Dispute Resolution affect Procedural Justice in Mediation and
Arbitration’(2018)
This journal examines whether the use
of automated arbitrators in online arbitration can actually replace human
arbitration or not and discusses the question whether automated arbitrators in
the form of software, AI or computer program through machine learning will be
the perfect arbitrator that is truly neutral and is not susceptible to human
error.
Online Dispute Resolution as a Solution to Cross Border
Consumer Disputes: The Enforcement of
Outcomes (Mcgil, Journal of Dispute Resolution, Vol..2, NO.1, 18TH
July, 2016)
Online Dispute Resolution (ODR) is an
interesting means of giving online consumers efficient remedies in cross-border
disputes. While the effectiveness of ODR is sometimes problematic, ad hoc
solutions can be implemented depending on whether the ODR procedure is adjudicative
or non-adjudicative, and whether the outcomes are binding or non-binding. This
allows parties to seek enforcement before a court or a public authority, or to
rely instead on private enforcement mechanisms. The analysis of each of these
situations shows that the enforcement of binding outcomes obtained through ODR
should be sustained by public regulation. However, important instruments such
as the Rome I, Brussels I and Brussels I recast European Regulations prohibit
pre-dispute ODR agreements, but this scenario might rapidly change thanks to
the European ADR Directive. Efforts of this kind pave the way for greater trust
in engaging in cross-border transactions and should be encouraged.
Self-Enforcing Online Dispute Resolution: Lessons From Bitcoin
(Oxford Journal of Legal Studies, Vol.36, Issue.3, 8TH December,
2015)
The enforcement of outcomes in online
dispute resolution (ODR) is a delicate problem. Since disputes arising out of
e-commerce transactions are typically low in value, the traditional channels of
coercive enforcement are often not a viable option. The article argues that the
Bitcoin system can be used as a source of inspiration to devise new models of
self-enforcement. The article describes the legal framework of ODR and argues that
the goal of self-enforcement can be attained through the use of technology. It
then describes the relevant features of the Bitcoin system, underlining its
potential as a new forum for the expression of private autonomy. It then
investigates the features of Bitcoin adjudication, before arguing that Bitcoin
must be regarded as an original and self-contained system of dispute
resolution, whose characteristics can be used to theorise new models of
self-enforcement. Next, it compares four alternative models of
self-enforcement, two of which take Bitcoin adjudication as an example.
Finally, it puts forth recommendations for all actors involved in the
implementation of self-enforcing ODR mechanisms and argues that different
models should be left free to compete.
Online Dispute Resolution: The Future of Justice ( International Comparative Jurisprudence,
Vol.1, Issue 1, November, 2015)
The purpose of this study is to
present the main facets of online dispute resolution including a
definition of the term, the types of resolution available, and the most recent
legal regulations in this area. The article is an in-depth study of this field,
discussing online mediation and electronic arbitration, their uses and their
relationships with e-commerce. The strengths and weaknesses of online dispute
resolution are identified and used to help formulate stipulations. The paper is
divided into three parts. Part I looks at preliminary aspects of online dispute
resolution (ODR), including a definition of the term and an examination of its
phases of development, implementation examples and the relationship between ODR
and technology. Part II is devoted to examining the two most frequent forms of
ODR: online mediation and electronic arbitration. Part III is an analysis of
consumer disputes arising from commercial transactions made using electronic
communications. As an example of the implementation of ODR, the author
emphasises the importance of new European regulations on that and alternative
dispute resolution (ADR): Directive 2013/11/EU of the European Parliament
and of the Council of 21 May 2013 on alternative dispute resolution for
consumer disputes and amending Regulation (EC) No 2006/2004 and Directive
2009/22/EC (Directive on consumer ADR), and Regulation (EU) No 524/2013 of the
European Parliament and of the Council of 21 May 2013 on online dispute
resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and
Directive 2009/22/EC (Regulation on consumer ODR).
Online Dispute Resolution in Consumer Disputes (Department of
International and European Union Law, 15TH September, 2011)
Consumer disputes and their nature
are changing very fast every day. E-commerce is promoted by all relevant
stakeholders such as European Commission, consumers associations, competent
institutions, and the business sector in order to achieve the main present
goal—consumer confidence in business and full functioning of the internal EU
market. Here the third parties are important—trade partners from all over the
word. There is no legal relation or actions between disputes and searching for
the most convenient, fast, cheap and comfortable. Because of that, this article
sets out general views on online transactions and consumer protection in the
context of e-commerce and possible online dispute resolution means. The authors
of this article are chiefly concerned about legal uncertainty and the
jurisdiction as well as applicable law in business-to-consumer (B2C)
e-commerce. Online dispute resolution or in other words it is called the ODR is
seen as a possibility to solve these barriers in dispute resolution using
technology to facilitate the resolution of disputes between parties primarily
involving negotiation, mediation or arbitration, or a combination of all three.
In this respect it is often seen as being the online equivalent of alternative
dispute resolution. However, ODR can also augment these traditional means of
resolving disputes by applying innovative techniques and online technologies to
the process.
Online Dispute Resolution ( Deepak verma, 19th September,
2018)
The contemporary world
belongs to communication where a lot of interactions, trading, and business
dealings are happening between people, organizations, and business partners.
This has led to the sharp rise in disputes and conflicts, and they have become
an unavoidable part of our ecosystem. Disputes and conflicts are not only
related to online communication but also crops up during face-to-face or
offline communication. The disputes/conflicts need to be handled, managed, and
resolved timely and in a cost-effective manner. These days, online
communication mediums are used very effectively for such dispute resolutions.
Online dispute resolution is mostly done through video conferencing, email
exchanges, instant chat, and interaction through mobile phones. In order to
understand the corporate perspective of India related to the online
communication and online dispute resolution, interviews of 50 working
professionals were conducted. Each of these professionals is at the leadership
position and uses online communication more often in their day-to-day
professional work. Their views were recorded and interpreted in order to
understand practical issues related to online communication and online dispute
resolution. In this chapter, we will be discussing the pertinent process of
online dispute resolution for both online and offline disputes pertaining to
the business environment.
BlockChains and Online Dispute Resolution: Smart Contracts as
an Alternative to Enforcement (Vol.13, Issue 1, May, 2016)
As cross-border online
transactions increase the issue of cross-border dispute resolution and
enforcement becomes more and more topical. Disputes arising from ecommerce are
seldom taken into the public courts and therefore online dispute resolution
(ODR) is becoming a mainstream solution for resolving them. Simultaneously,
different applications and possibilities of block-chain technologies such as
crypto-currencies have caught the attention of both computer scientists and
legal scholars, increasingly gaining momentum. However, the potential of
block-chains reach further than their use as a currency: they can be used for
the decentralised execution of programmable contracts known as smart contracts,
completely without the need for intermediaries like e-commerce sites, credit
card companies or courts. These possibilities have not previously been
discussed in relation to dispute resolution. This article provides an
introduction to this new technological possibility by examining self-executing
smart contracts that utilise novel blockchain technologies. To demonstrate the
logic behind smart contracts more concretely, a weather bet (i.e. a bet on what
the weather is going to be in a given location) is translated into a
programmable smart contract and then discussed in lines of code with further
explanations. In addition to this, the author suggests that smart contracts
could also be employed for the purposes of dispute resolution, which might
provide a solution for the problem of enforcing ODR decisions. Instead of
normative analysis, the article provides an introductory analysis of the legal
implications that the block-chain technology has outside its application as
virtual currency
CHAPTER 2. THE ROLE OF TECHNOLOGY IN
ONLINE ARBITRATION
2.1 Technology as the Fourth Party
The role of technology in
Online arbitration proceedings is considered as the fourth party where it is
relegated to Information Tech but as over time with the role of technology
increasing in justice systems, it is apparent that the central role of
technology would only increase over time.[7]
Now the real question this begs is whether a computer program or even an AI
should be used in online arbitrations that also as an arbitrator, be it domain
name disputes or blockchain tech or even as simple as that of consumer
disputes. And with the increasing use of technology that it is apparent that it
will increase in online arbitration as evidenced by the use of DRExM
in egypt to use a computer program to decide the dispute mechanism for
construction companies and also in the loomis
case where an AI was used by the
judge to decide the sentence. Now, with the growing need of large businesses to
resolve consumer disputes in an efficient way it will resolve to using
technology to take the heat and resolve disputes faster and the larger number
of disputes brought on by consumers. However there are many problems plaguing
the growth of Online Arbitration and that is the role of technology in it
either as the information technology or more importantly as an arbitrator.
2.1.1 Information Technology
The role of technology in
ODR as of now is relegated and limited to handling information but that over
time is bound to change. The use of automated justice systems is on the rise
for speedy administration of justice and resolution of disputes and as
previously stated, that will only rise over time. IT in ODR is essential in the
handling of information and what gets where regarding the information of the
parties and therefore plays an essential role. The role of Technology in the
form of AI, Computer program and software can evolve over time to be used as an
arbitrator in online arbitration. Even though the role of technology in online
arbitration is limited to information, it still plays a vital role in it.
2.2 Practical Implications of Automated Arbitrators
Although it is possible
for the parties to select an AI to be an arbitrator, the people prefer human
interaction more than that of an AI or even a computer program. However, the
role of technology in legal proceedings has been gradually increasing over time
with its use in judicial proceedings to even administering sentences. AI and
computer programs have evolved to the point it is based on the understanding of
text and literature and even factual events of the case or a dispute which
allows for its use for creating efficiency in the proceedings of online
arbitration and in its growth and development as an arbitrator.
The problems with the
current implementation and usage will be that the system is still
underdeveloped as an AI or Computer program is not capable of fairness or even
ascribe to human values of justice[8].
Which is why in its practical application, it would be lacking in several
aspects as an arbitrator because it would be more concerned with function than
dispute resolution. Although such practical implications may also bring out
certain positives as the arbitrator, an AI or a computer program can be truly
neutral without any attachments however it cannot preside as the sole arbitrator
which is why the other arbitrators can actually even the AI or Program out.
This will reduce the imbalances in the trust on the qualities of the arbitrator
with the AI just fulfilling its role.
CHAPTER 3. MACHINE LEARNING AS AN
ARBITRATOR
3.1 Machine Made Justice in Online Arbitration:
In this we first identify
the determining factors and then measure the extent of the obligations of the
parties when they agree to settle their dispute through electronic means. The
first determining factor will be the mission given to the third party chosen by
the parties to the dispute. The task of an arbitrator, on the other hand, is if
their competence is based on a contract is jurisdictional or not. The
arbitrator therefore settles disputes in law, and their decision is binding on
the parties. The second determining factor, which is an immediate extension of
the first, depends on the authority vested in the chosen arbitrator. An
arbitral award settles the dispute definitively, and is considered final and
binding. It is deemed to have the authority of ‘res judicata’ as soon as it is
made. The losing party must therefore abide by it once the award has been ratified
even under constraint if it is necessary.[9]
3.2. Role of Artificial Intelligence:
The decision to go to
arbitration places greater constraints on the parties in dispute, in terms of
their conduct both during and after the electronic procedure. The arbitral
clause, by which the parties consent in advance to submit any arising dispute to
an arbitral tribunal, has both a positive and negative effect and this will
prove more negative if the arbitrator is an AI or computer program. The
positive effect is that in accordance with competence to the arbitrator or to
the arbitral tribunal appointed in the clause which according to competence in
this way also has the negative effect of rendering State courts and human
justice lacking in their functions. Consequently, when the parties agree
electronically to an arbitral clause[10],
the validity of which is not yet contested, they cannot bring that dispute
before a judge in their own country and accepting the general conditions must
therefore not be done lightly as a program may not ascribe to human values of
justice[11].
That being said, the co-contractors cannot choose not to take part in the
arbitration just because the procedure is electronic with the role of AI or a
computer program being central because in most consumer cases they may be
forced or stuck with such an arbitrator. However, if the parties refuse to
appoint an arbitrator, to produce a statement of defense or to communicate
electronic documents, the electronic procedure will go ahead without the
defaulting party and an award may be rendered by default by the said arbitrator
as an AI or most importantly as a computer program. However, if the electronic
document of such a proceeding fulfils the necessary conditions for the award to
be rendered, it may be binding on the parties. The party that wins can then
even demand ratification in the state of the losing party.
3.3 Machine learning:
One of the main
challenges of today’s software and databases systems is their ability to manage
a large amount of information coming from different sources and at different
moments in time and adapt over time. Advanced databases systems must cope with
a changing world and not completely reliable sources of information by adopting
a “principled” strategy if an AI or a program is actually used in said context
of online arbitration. Therefore, incorporation by reference of contractual
conditions in the contract calls for particular precautions regarding
accessibility of information by others. Although it is possible that the
current problems regarding the increasing role technology even maybe as an
arbitrator may be solved over time through machine learning. Machine learning
is an important part of an AIs or a computer program’s learning process through
which it may be possible to solve the problems its use in online arbitration as
an arbitrator. However there emerges another problem of whether the award
passed by such an arbitrator will be considered valid or not even if it may be
accepted as an arbitrator which is why the current regulatory framework must
adapt with the change and adopt a new principles strategy when over time the
role of technology becomes central in even online arbitration.
However, there exist ways
through which inconsistencies regarding domestic arbitration laws of nations
can allow for the use of such arbitrators especially in case of consumer disputes[12].
For Example a French case law merely requires the confirmation that the
principal contract does contain a reference to the arbitral clause and silence
on the part of the receiving party regarding this reference implies acceptance
and further, the Court of Cassation now takes an entirely consensual approach,
since it does not even require that the reference to the arbitral clause be
made “in writing”.
3.3.1 Algorithmic Dispute Resolution:
Every program used in
Justice systems or any dispute resolution is based on their algorithms to
understand the context and the procedure of dispute resolution and legal
systems.
As we know, AI provides
computers with the ability to make decisions and learn without explicit
programming. There are two main branches:[13]
?
Knowledge-based
systems (KBS) are computer programs that learn to reason, and their
knowledge is explicitly represented as ontologies or rules rather than
implicitly via code as rules which they will follow. KBS can be subdivided then
into:
?
Rule-based
systems—is one whose knowledge base contains the domain knowledge coded in the
form of IF-THEN or IF-THEN-ELSE rules and circumstances. The IF-THENS and
IF-THEN-ELSE are specially limited in outcome of any judicial proceedings of
any justice systems which allow for AI or Programs to actually learn the
sentence or the judgement of case in many justice systems. This application of
such learning allows them to operate themselves in online dispute resolutions
and many justice systems.
?
Case-based
Reasoning—a form of so-called expert systems that are based in decision-making
on prior case experience of the Program or AI, instead of on a predefined rule
set to which it is not limited to
?
Machine
Learning—is a type of AI program with the ability to learn without explicit programming,
and can change when exposed to new data over time through experience. This in
turn allowing them to understand procedure and what is to be done in case of
any situation that may occur over time
?
Supervised
learning is the task of inferring a function from labelled training data, and
through which the training data consisting of a set of training examples
including precedent case laws, statutes, provisions and even case study can be
used for its application in online arbitration.
Other AI technologies
which are important for legal services include natural language processing
(NLP) and sentiment analysis:
?
NLP
is the application of computational techniques for the analysis and synthesis of natural
language, literature and speech. This also includes the analysis of legal
language and terms and their scope and application
?
Sentiment
analysis-the process of computationally identifying and categorising opinions
expressed in a piece of text allowing them to understand the context of
disputes and the stakes.
Recent developments have
been made, principally in France in Predictive or Quantitative Justice where
assessments are made of probability for success/failure, strategy and outcome
before a particular tribunal.
3.3.2 Blockchain technologies:
Elements of blockchain
technology[14]
originally conceived for Bitcoin[15] and other
cryptocurrencies are now recognised to have far-reaching potential in other
areas such as Online Arbitration. Blockchains are a way to order transactions
in a distributed ledger, a record of consensus with a cryptographic audit trail
maintained and validated by multiple nodes. Blockchain technology has allowed
many parties to converge on a common protocol that can track assets and
personal information. Using this tech, many processes and third-party solutions
are streamlined or collapsed entirely together with the machine learning at its
centre.
The core technologies
being:
?
Distributed
Ledger (DL) - a decentralised database where transactions are kept in a
shared, replicated, synchronised, distributed bookkeeping record, which is
secured by cryptographic sealing. The key distinction between ‘distributed
ledgers’ and ‘distributed databases’ is that nodes of the DL cannot/do not
trust other nodes—and so must independently verify transactions before applying
them.
?
Smart Contracts[16] are simply the rules that participants
have collectively signed up to that govern the evolution of the ‘facts’ in the
distributed ledger. They can even be computer programs that attempt to codify
transactions and contracts with the intent that the records managed by the
distributed ledger are of course authoritative with respect to the existence,
status and the evolution of the people's underlying legal agreements which they
represent. Which is why the use of such mechanisms used in smart contracts can
prove beneficial in its use in online arbitration.
For many of the
blockchains, the key attributes are (a) Resilience—blockchains operate as decentralised networks as opposed
to a central server with a single point of failure; (b) Integrity—blockchains operate using
distributed open-source protocols removing the need to trust a third party for
execution; (c) Transparency—public
blockchains[17] have
inherent transparency features, since all changes are visible by all parties;
and (d) Unchangeable—records in
a distributed public blockchain are largely ‘immutable’, allowing applications
and users to operate with a good degree of confidence. In general, the key
interesting property is the creation of systems that assure that a group of
untrusting parties all have accurate and identical records. Blockchain
therefore removes the need to have a trusted third party, for example by acting
as custodian or agent for records or assets and thereby creating transparency
being the information tech.
CHAPTER 4. REGULATORY FRAMEWORK AND
PROCEDURE FOR THE RECOGNITION AND ENFORCEMENT OF AWARDS MADE BY AUTOMATED
ARBITRATORS
4.1 Formation of Electronic Arbitration Agreement:
Traditionally, the acceptance of
arbitral clauses are subject to laws and conditions that are designed to
protect the consent of the contractors. Although, in an arbitral clause, the
parties undertake in advance to submit any dispute that arises to an arbitral
tribunal. In so doing, they renounce their right to refer their dispute to the
State courts. This commitment therefore should not be taken as lightly, nor
imposed by the drafter of the contract on the other. That being the case, any
arbitral clause is therefore subject to two conditions. (1)It is necessary to
confirm the consent of the party against whom the clause is invoked. In basic
terms, consent to arbitration is often contested when the clause is contained
in the general provisions. (2)it should be ensured that the requirements of
form ad validitatem, prescribed by their domestic laws and certain
international conventions, have been properly followed and observed. This
second condition relates to the form of the arbitration agreement. However, in
e-commerce operations, the arbitral clause often appears in the general
conditions that have been proposed and accepted by electronic means as terms
and conditions.
4.1.1 Electronic Consent to Arbitration
The creation of an arbitration
agreement in a contract concluded by electronic means raises two sets of difficulties.
The first concerns the party that drafted the electronic contract[18]. The second set of
difficulties concerns the party accepting the electronic offer
4.1.2 Form of Consent
The client in an e-commerce
transaction orders a physical or incorporeal product on any specific website.
The website operator has made it possible for him to access the general
conditions where the arbitral clause appears. American case laws generally
agree that a click on the “I agree” button serves as being sufficient for a
contract to be formed between them. And in a court decision in I. Lan systems,
Inc. v. Netscout Service Level Corp on 2 January 2002, the judge declared that
the user of any software program who and when downloading, clicked on the “I
agree” button at the bottom of the licensing contract, was now bound by the
contract. The judge in this case applied classical contract law, which had
authorized the accepter to consent by means of actions specified in advance by
the offeror. In this instance, the click of the button represented the method
of acceptance specified by the offeror. This principle is again well
established in another case law, particularly with regard to sales of computer
software online as the “I accept” button must be visible, and the Internet user
must be obliged to click on it to start the process of initiating the
transaction. Thus, in a decision in Specht v. Netscape Communications Corp, the
Court decided that general conditions containing the arbitral clause could not
be invoked against a user who had just downloaded a piece of software. In this
instance, the user was able to download the software directly by clicking on
the “download” link, without having to actually click on the “I accept” button.
This particular button expressing agreement to the general conditions was even
relegated to the bottom of their Web page, in a place that the user could not
find. In summary, a simple click does not signify acceptance unless it is
linked explicitly to the general conditions. So, a click of a button that
simply starts the process of transaction without any other reference is
therefore considered inoperative.
Arbitration in consumer disputes:
Each State and each international
agreement has its own criteria on the meaning and the definition of the word
‘consumer[19]’. Therefore, it is
necessary to confirm whether the criteria for applying the text in question are
fulfilled. Usually, the consumer often seems to be the subject in law that
merits particular protection by reason of their supposed status or weakness. In
essence, the category of “consumer” therefore signifies a person who contracts
for their personal use and of course, the Internet reduces the imbalance between
consumers and businesses, for example by facilitating price comparisons of
different products using different agents. Therefore, the need to confer an
equal level of protection online and offline to the consumers is generally
agreed. Arbitration may represent a threat to the consumer, especially if the
costs of arbitration are high and the use of automated arbitration in consumer disputes
may even be disastrous if not properly applied. AI or computer programs are
mostly used to handle the transaction on behalf of a company to deal with
customers and the use of the automated system is increasing over time. In
consumer disputes, mediation is mostly the preferred one but that is also
evolving to include automated systems which is why consumer disputes can be
better resolved with the use of AI.
4.2 Electronic Arbitration Procedure:
First and foremost, the Internet and
information technology have a practical impact on dispute resolution procedures[20]: documents are
transmitted instantaneously to the arbitrators at a modest cost, and the
parties avoid incurring travel costs. For the arbitrators themselves,
electronic documents present significant advantages, particularly when the
parties' submissions are large, because they can do a keyword search without
having to review the entire file. Also, arbitrators are already using new
technology widely. In addition to this daily use of information technology (IT)
equipment, the Internet has had a profound impact on dispute resolution
procedures. Although alternative dispute resolution traditionally relied on
interviews and meetings between the litigants and the arbitrator or mediator,
the Internet now encourages remote dispute resolution. Physical meetings have
thus, however, been replaced by electronic exchanges and there is no actual
interaction. This total or partial elimination of the physical meetings between
the litigants and the third parties they have chosen to resolve their dispute
is a feature of electronic procedures. By the same token, the use of the
Internet and IT leads to the replacement of traditional documents and written
evidence by electronic documents and written evidence. The electronic procedure
can therefore be organized using a variety of models, involving the complete or
partial elimination of hard-copy documents.
4.2.1 Conduct of Procedure:
The various stages of the
electronic proceedings can be organized by electronic means. However, it is
important to make sure that the principles of good justice are not adversely
affected by electronic exchanges.
4.2.2 Stages of Proceedings:
In this subsection, we
look at the major stages of the proceedings in turn, from initial submission to
deliberation and rendering of the award[21].
- Initiation of Electronic Proceedings:
When a disagreement
between parties that have stipulated an arbitration agreement cannot be
resolved, it is up to the claimant to refer the matter to the arbitral
tribunal. This referral can be drawn up and sent electronically. Secure
electronic signature technology allows the arbitral tribunal to be certain that
the referral email is indeed sent by the person claiming to be the author.
The arbitral institution then informs the respondent of the existence of the
proceedings by email. The referral by the claimant
and the notification to the respondent can perfectly well be done by email if the arbitration rules to which the litigants have
signed up so provide. In the case of ad hoc arbitration, the claimant would
have to notify the respondent that it is incumbent upon him/her to appoint an
arbitrator. At this stage, the electronic proceedings are underway. The litigants are then able to exchange their conclusions
and arguments in electronic written statements.
- Electronic Request for Arbitration:
The Request for
Arbitration sets out the claims of the parties and the questions at issue for
the arbitral tribunal to resolve. It also defines the main rules that will
govern the arbitration procedure. In principle, it should bear the signature of
the arbitrators and the parties. It can be of particular use in electronic
procedures when the arbitration rules do not specifically deal with certain
questions. The parties could use the Request for Arbitration to agree to
exchange documents electronically or even to decide on the seat of the
electronic arbitration[22].
- Production of Written Statements and Documents:
At this stage, the
litigants must produce their written statements and documents, which they
address to the arbitrator and to the adverse party in order to respect the
principle of contradiction. In electronic commerce disputes arising out of an
electronic contract, the parties are able to produce and exchange exclusively
electronic documents in the form of files attached to emails. For
example, Article 3(2) of the ICC Rules authorizes electronic communication with
the Court and the Secretariat. However, physical documents are actually necessary in support of an
argument. For example, one of the parties may
produce a bailiff's affidavit and in many States, the law has not yet put in place procedures
for rendering this into an electronic format as authentic acts drawn up by
ministerial officers. The litigant will therefore have to use the postal
service.
- Absence of Electronic Hearings:
The organization of
electronic hearings is technically possible, but it involves considerable
technical resources, which are currently accessible only at a high cost. Some
experimental projects have been undertaken in the United States by state
courts, using specially prepared rooms. In the short and medium term,
electronic arbitration will have to do without actual electronic hearings
between absent persons if costs are to be kept under control. Are arbitral
proceedings possible without a hearing that brings together the parties and
their legal representatives? They are possible; the United Kingdom has for a
long time recognized “documents-only arbitration”, requiring no hearing. The
absence of a hearing does, however, make the procedure more difficult to administer
in three respects. First of all, procedural hearings, which generally take
place before State courts, often allow a simple verbal resolution of questions
relating to the presentation of documents. In this situation, there is an
exchange of electronic mails, ensuring that the principle of contradiction is
respected. Secondly, the absence of a hearing also seems to compromise the
hearing of witnesses' statements and expert opinions by the arbitral tribunal.
Here again, the obstacle is not insurmountable. The use of testimonial evidence
is not universal; it is mainly favoured in countries that have adopted common
law, where there is direct examination and cross-examination of witnesses.
- Administration of Evidence:
Dean Carbonnier, underlines the traditional
importance of evidence in support of arguments in legal proceedings. The unique
aspect of electronic commerce operations is that evidence of the legal acts or
facts often can only be reported by electronic means. Thus the instrument of an
electronic contract will take the form of a computer file. Likewise, the proof
of an act of unfair competition committed on the Internet will be reported by
the production of a computer file, for example a screenshot of the competitor
website. This being the case, electronic commerce operators must put in place a
real “probationary strategy” to provide themselves, as operations progress,
with electronic evidence of the legal acts and facts on which their rights are
based. It is all the more important to have such a probationary strategy
because very often the only evidence that they will be able to produce will be
electronic. The gathering of electronic evidence is useful in that such
evidence is admissible before the arbitral tribunal and carries probative
force. It then becomes necessary to analyse how the arbitrator administers the
electronic evidence[23].
4.3 Regulatory Framework of Online arbitration vs Automated
arbitrators
As per the regulatory frameworks
which we will examine,[24] it is possible for an
AI or a program to be an arbitrator or even the sole arbitrator. But the main
question is whether the use of such technology can actually replace human
justice even when they may become a necessity for speedy resolution. This necessity
may be evidenced by the increasing use of bots or programs for their customer
service in large businesses and they have only grown exponentially. This has
allowed large scale customer service to
be much faster than human customer service although the people prefer
human ones more, but this use of tech for the use of information is only
growing which has then seeped into Justice systems around the world including
international arbitration. The speedy resolution of disputes and dispensing
justice is enticing but at this moment, the current framework does not cover
all the aspects of AI and their role in justice systems and proceedings. Which
is why although an AI may be qualified enough to be an Arbitrator, there may
still be some incostinces regarding the framework which may not cover all its
aspects.
Considering how wide wide use of
technology is in electronic commerce, Taking into account international legal
instruments, such as the The NY convention and the EU convention and 1985
UNCITRAL Model Law on International Commercial Arbitration, as subsequently
revised, the UNCITRAL Model Law on Electronic Signatures and the United Nations
Convention on the Use of Electronic Communications in International Contracts,
Taking into account also enactments of domestic legislation, more favourable
than the Conventions in respect of form requirement governing arbitration
agreements, arbitration proceedings and the enforcement of arbitral awards,
Considering that, in interpreting the Convention, regard is to be had to the
need to promote recognition and enforcement of arbitral awards, Recommends that:
- Article II, paragraph 2, of the
Convention on the Recognition and Enforcement of Foreign Arbitral Awards
1958, should be amended and applied recognizing that the circumstances
described therein are not exhaustive and also include provisions in the
context of agreements through electronic means.
- That Article VII, paragraph 1, of the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, 1958, should be applied
to allow any interested party to avail itself of rights that it might
have, under their domestic law or treaties of the country where an
arbitration agreement is sought to be relied upon, to seek recognition of
the validity of such an arbitration agreement, electronic or otherwise
Generally when an award is passed by
the arbitrator as an AI it will not be justified because it doesn’t have the
facts like humans; it passes information based on the precedents which have
already been stored in the form of block-chain or smart contracts. It will pass
an award based on it and it will not be justified because it doesn’t know the
emotions which are connected to the facts which are being presented in front of
the arbitrator that is the AI. Therefore, the use of such AI in online
arbitration is possible but not probable as the current framework needs to
reframe itself to include the use and the role of technology in its
proceedings.
4.3.1 Regulatory Framework For the Recognition of Computers
as an Arbitrator
In most instances,
arbitrators have to be flexible and have to be qualified in legal expertise to
be qualified enough as an arbitrator. The power for the selection of
arbitrators entirely rests upon the parties through many guidelines,
legislations and similar documents and since there exist widely recognized
criterias for parties to select their arbitrators, such as impartiality,
independence, honorability, availability, neutrality but in most situations,
parties have to take into consideration much more in order to feel comfortable
with the outcome and be confident in the judgement of the arbitral tribunal.[25] Parties,
therefore in choosing their arbitrators are in front of decisions based on both
opportunity and legality. They have to always pay attention to the conditions
imposed by law or regulations and, at the same time, they have to compare and
contrast the best person for the particularities of the case at hand. However
Legislation exists for a reason which then comes to limit opportunity, because,
if the parties are completely free, they may decide the selection of
arbitrators taking in consideration more of their personal interests, than the
general frame of the case. It is widely accepted that the parties’ involvement
in the selection of their arbitrators enhances the predictability of their
arbitration proceeding, taking into consideration the fact that the parties
should always have a general representation in terms of procedure from the
arbitrator they choose. Which in the case, is possible for an AI or a program
to be considered as a qualified and proper arbitrator under some of the few
regulatory frameworks.
4.3.2 The New york Convention:
The New York Convention
of 10 June 1958 on the Recognition and Enforcement of Foreign Arbitral Awards
has worldwide recognition regarding the enforcement and recognition of awards,
with over 100 States having ratified or signed up to it. Its range of
application is very broad, since it only requires one Party to seek
ratification of the award before the courts of a contracting State for the
Convention to be applicable. The main objective of the Convention remains to
determine the conditions for awards to be recognized and enforced.
There are several
provisions under the New York Convention which address the issue of selection
of the arbitral tribunal. Article V(1)(d) of the NY Convention provides that
recognition of an award may be refused if “the composition of the arbitral
authority … was not in accordance with the agreement of the parties or, failing
such agreement, was not in accordance with the law of the country where the
arbitration took place”.
Furthermore, article II
of the New York Convention states that “Each contracting State shall recognize
an agreement in writing under which the parties undertake to submit to
arbitration all or any differences which have arisen or which may arise between
them in respect of a defined legal relationship, whether contractual or not,
concerning a subject matter capable of settlement by arbitration.” Further
stating that “the term “agreement in writing” shall include an arbitral clause
in a contract or an arbitration agreement, signed by the parties or contained
in an exchange of letters or telegrams.”
4.3.4 National Laws:
National legal systems
have adopted different regulations concerning the form of the arbitration
agreement and also regarding the selection of their arbitrators and have
provided the qualification and the qualities of an arbitrator. Some national
law systems take a consensual approach, which is not subject to any conditions
regarding form. Conversely, other systems however have adopted a more
formalized approach, requiring the stipulation of an agreement in writing. In
these systems, an electronic document is acceptable to legislators and in many
case laws. In any case, the validity of the arbitration agreement is not
subject to the conflict-of-laws method, but is assessed directly according to
the material regulations available to the judge considering the matter. So
since it is established that an AI or a program can be a qualified arbitrator
depended upon the will of the parties but up until now there has been no such
instances as the use of AI in Justice and dispute resolution systems as a sole
presiding arbitrator or even existing in arbitral tribunal for any dispute
resolution However, it must be noted that the field of AI in justice systems
and its use in dispute resolution, much less online arbitration is still in the
learning stage. Machines are faster and not prone to human errors of not being
available and with the growing number of disputes over time, the role of AI to
dispense and resolve disputes through machine learning in courts and in online
arbitration is not far.
CHAPTER 5. CONCLUSION
Our research began from the role of
technology in online arbitration where although technology is an important
aspect of online arbitration, its role is limited in its function handling
information. But as we have learned there is a growing of technology in all
aspects today and those aspects also include its role in the judicial process
such as the infamous loomis case where the Judge used an AI to determine the
sentence and again there is the use of DRExM software being used in egypt which
is then used to determine the dispute mechanism perfect for the context of
their dispute. This role as of yet is not yet central in decision making and in
the case of ODR, AI or programs are being already used in resolving consumer
disputes but not in the case of online arbitration which creates the question
of such AI or computer programs' role in the arbitration proceedings. It is
almost certain that the role of technology in online arbitration and that is in
case of such a machine being the arbitrator. However, In appointing
arbitrators, parties have to take into consideration their national laws
applicable to the matter, the international guidelines and rules regulating the
selection of arbitrators and the factual aspects of the case. The ideal
arbitrator is the one that meets both the criteria of opportunity and legality
with regard to the specific case at hand. An objective assessment of the case
and the needs of the parties is essential in selecting an arbitrator.
As we have established, we know that
it is possible under certain regulatory frameworks for an AI or Program to be
an arbitrator or even a sole arbitrator but under the consent of the parties.
An AI or a computer program can be considered as the perfect arbitrator that is
not prone to human errors and can serve as the perfect arbitrator, but as it
does not ascribe to human values of justice it cannot be flexible as a human
arbitrator. But as we have learned, the problem emerges not only from its
current state of development but due to the lack of regulation regarding all
its aspects of usage in legal proceedings.
In conclusion, an AI can be an
arbitrator if the parties agree but the usage of such arbitrators is yet to be
seen but is inevitable over time. The current framework allows for the parties
to select their arbitrator so it is possible but the there needs to be
framework covering all aspects of its limitations and actual usage in the field
of understanding and administering awards.
BIBLIOGRAPHY
PRIMARY SOURCES:
The New York Convention on the
recognition and enforcement of Foreign Arbitral Awards, 1958.
The EU Convention on International
Commercial Arbitration, 1961
SECONDARY SOURCES:
Journal Articles
Sela
A, 'Can Computers Be Fair? How Automated And Human-Powered Online Dispute
Resolution Affect Procedural Justice In Mediation And Arbitration' [2016] Ohio
State Journal on dispute resolution.
Articles:
Heller P and others, 'Arbitrator: A
Software Pipeline For On-Demand Retrieval Of Auto-Curated Nifh Sequences From
Genbank' (2014).
Ekwenze S, 'Arbitration Agreement:
Nature And Implications' [2012] SSRN Electronic Journal
Vahn
den Heuvel E, 'ONLINE DISPUTE RESOLUTION AS A SOLUTION TO CROSS-BORDER
E-DISPUTES' OECD
Online Articles
Bazil
Oglinda, 'Key Criteria In Appointment Of Arbitrators In International
Arbitration' (Tribunajuridica.eu, 2015)
Books:
Abdel Wahab M, Online Dispute
Resolution: Theory And Practice (Eleven International Publishing 2012)
MacDonald W, The Role Of The
Arbitrator In The Use Of Statutes (National Library of Canada 1981)
Handsaker M, and Handsaker M, The
Submission Agreement In Contract Arbitration
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E, and Rifkin J, ‘Online Dispute Resolution: Resolving Conflicts In Cyberspace’
(2011)
WEBLIOGRAPHY
www.ssrn.com
www.manupatra.com
www.Jstor.com
www.Heinonline.com
[1] State of Wisconson v Eric Loomis
[2016] Supreme Court of Wisconsin, No 2015AP157–CR (supreme court of
wisconsin).
[2] Hong Kong Domain Name Dispute Resolution Policy,
(2011) Article 4
[3] The New York Convention, 1959
[4] Ethan katsh & Janet Riftkin, ‘Online Dispute Resolution’ 93-94 (2001)
[5] Ayelet Sela,’Can Computers Be Fair? How automated and
Human powered Online Dispute Resolution affect Procedural Justice in Mediation
and Arbitration’
[6] Rafal Morek,’Online Arbitration:Admissibility within
the Current Legal Framework’.
[7] Ethan Katsh and Janet Rifkin ‘Online Dispute Resolution: Resolving Conflicts in Cyberspace’ 2011
[13] (Barnett and Treleaven, 2017)
[14] Blockchain Explained, 2020
[16] (Schechtman, 2019)
[17] (Hegadekatti,”BlockChain” 2017)
[18] (Hanotiau,”consent to arbitration”
2011)
[22] (Scene II: ICSID Registers the
Request, 2002)
[23] (Pietrowski,”administration of
arbitration 2006)
[24] See Chapter 4.2 for further details
[25] Bazil
Oglinda, 'Key Criteria In Appointment Of Arbitrators In International
Arbitration' (Tribunajuridica.eu,
2015)