The emergence of Online Dispute Resolution (ODR) in the context of arbitration has been made possible not only by technical advancements, but legal advancements too. Practitioners who may have been skeptical or uncertain about the advantages of ODR began to advocate for its utility and advantages during the COVID — 19 pandemic.
The advantages of online arbitration have been quite evident. ODR platforms contribute majorly to the management of the proceedings, including virtual hearings, enhancing the overall efficiency of arbitration. Arbitration often involves extensive document handling, with large volumes of trial materials and document review. Using electronic document bundles and referencing them during virtual hearings saves time and reduces costs. Additionally, cost savings result from the elimination of the need for parties, tribunal members, and lawyers to travel from various parts of the world to attend hearings.
On the surface, it seems like a win-win situation, except in certain situations such as, determining the seat of the arbitration, where parties fail to mention it.
The seat of arbitration is a designated location chosen by the parties involved in the arbitration process. This selection not only designates the physical location but also establishes the legal jurisdiction governing the arbitration proceedings, which in turn dictates the procedural rules and legal framework that will apply throughout the arbitration process.
The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), which is a key international treaty on enforcement of awards in international arbitration, outlines the conditions under which an arbitral award may be refused recognition and enforcement. If the seat or place of arbitration has not been given due consideration, this can be one of the grounds for refusing to enforce an arbitral award under the New York Convention.
The issue of determining the seat of arbitration becomes even more contentious in the context of online arbitration because cyberspace does not have a geographical location. Unlike traditional arbitration, where a physical place or jurisdiction can help in determining the seat, the virtual nature of online arbitration makes it challenging to pinpoint a specific geographical location. This situation raises complex legal and practical questions about the methods that should be used to determine the seat of online arbitration.
There can be several approaches to determining the seat of arbitration in online arbitration:
Firstly, the most straightforward approach is for parties to agree on the seat of arbitration. This method upholds the principle of party autonomy, allowing the parties to mutually decide on the jurisdiction that will govern their arbitration proceedings.
Secondly, if there is no prior agreement between the parties regarding the seat of arbitration, the arbitral tribunal or the ODR platform shall determine the seat. The decision must be made based on the circumstances of the case and ensuring neutrality, including the convenience of the parties.
Thirdly, if there is a confusion with the seat of the arbitration chosen by the parties, the doctrine of the most significant relationship must be followed. The substantive law governing the dispute may influence the determination of the seat. Further, other determining factors can be the location where one or both of the disputing parties are based, the nationality of the parties involved in the dispute, the physical location of the platform being used for the ODR proceedings etc. (The determining factors may vary depending on the circumstances of the dispute, the preferences of the parties, and the applicable legal framework.)
Itis indeed a prudent approach for parties to explicitly include provisions for ODR within their arbitration agreements. In addition to parties’ proactive involvement, institutions involved in dispute resolution should also consider adapting their approaches to better address the issues related to the seat in online arbitration.
It has become increasingly evident that online arbitration is a lasting trend, institutions that are well-prepared and responsive to the needs of parties involved in online arbitration are more likely to succeed. Adaptations in rules, procedures, and technology to address such common issues in arbitration, like determining the seat, can be instrumental in ensuring the efficiency and effectiveness of online arbitration, enhancing their attractiveness as a means of dispute resolution.
