IS CYBER ARBITRATION LEGAL?
Arbitration is a form of alternative dispute resolution, wherein the disputants resolve their disputes outside the court. The dispute is decided by one or more persons who are known as the arbitrators.
It can be inferred that in cyber arbitration the process of arbitration is carried out with the help of technology, that is computer and internet. The parties do not meet with each other, instead the dispute is resolved virtually. Cyber arbitration is also known as cybitration, cyberspace arbitration, virtual arbitration, electronic arbitration or arbitration online techniques.
The need for cyber arbitration derived because the traditional method of arbitration sometimes may prove to be lengthy and costly. It is beyond doubt that online arbitration is very flexible and cost- effective. It is the need of the hour, because of the increase in the number of Multi- National Companies in India. It does not require the parties to travel in trans- border disputes.
The arbitration contracts must be in writing. Section 4 of the Information Technology Act, provides legal recognition to documents in electronic form, provided that it is available in electric form and accessible to be used for subsequent reference. Section 5 of Information Technology Act, provides legal status to digital signatures. Thus, arbitral contracts in electric form are considered as valid under section 7 of the Arbitration and Conciliation Act, 1996.
SEAT OF ARBITRATION
The major issue in cyber arbitration is deciding the seat of arbitration. In the traditional mode, the place of arbitration is the seat of arbitration. Since, in this mechanism the parties may belong to different territories, the seat of arbitration must be decided unanimously by the parties. If the parties are unable to make a unanimous decision, the arbitrator may decide the seat of arbitration.
The Arbitration proceedings can be conducted through Institutional or Ad-hoc arbitration. The procedure has to be decided by the parties while forming the arbitration contract. If the contract is silent about the proceedings, and the procedure to be followed, the arbitrator may decide upon the same. The parties are also required to submit various documents in their defence. Section 65B of the Indian Evidence Act states that electronic records are admissible as evidence if they are certified by a person occupying an official position. Thus, documents will not lose its legal sanctity if converted in ‘electronic form’, provided that the documents are authentic and relevant. Thus, it can be inferred that the parties may conduct online arbitration proceedings.
Section 31 of the Arbitration and Conciliation Act requires arbitral awards to be in writing and to be signed by the arbitrator and each of the parties. Digital signatures and documents in electronic form are valid under the Information Technology Act. The major issue is the enforceability of arbitral awards. Thus, it is very important for the parties to decide upon this issue beforehand. This issue can be reduced and can be eliminated also if the arbitration agreement is drafted meticulously and with due care.
It can be concluded that cyber arbitration is legal and it can prove to be very effective if all the provisions of the Arbitration and Conciliation Act of 1996 are adhered to. It is a viable and time saving dispute resolution mechanism.