- Balaji Harish Iyer[1]
I. Introduction
In earlier posts, we discussed the benefits of online arbitration[2] and concluded that conducting arbitrations online will not affect the seat of arbitration[3]. The third and final in this series, this article will examine whether online arbitral awards or e-awards are enforceable. To quote, “One of the qualities of arbitration that makes it the most popular A.D.R. method … is the finality and enforceability of the arbitral award due to the strong enforcement network in the New York Convention.”[4] The discussion on the enforceability of arbitral awards overlaps with the discussion on the grounds of challenges to awards, since they are more or less the same. Further, an award that has been annulled after a challenge is no longer enforceable in another jurisdiction.
An online arbitral award or e-award can be defined as an arbitral award that is signed digitally by the arbitral tribunal and emailed to the parties directly, or if an institution is involved for transmission to the parties by the institution. The losing party must comply with the e-award, and the winning party can seek recognition and enforcement of the e-award in the domestic courts of all those countries where the losing party has assets that can be attached.[5] This article will not entertain a debate as to the “seat” or “place of signing” of the award;[6] this will be taken to have been determined either by the parties or by the arbitral tribunal at the commencement of the arbitration since, as had been stated earlier, “seat” in arbitrations nowadays is a non-issue. [7]
II. Formal Requirement in Arbitration Law
Many curial laws have form requirements for an award:[8] The (Indian) Arbitration & Conciliation Act, for example, provides that an award shall be in writing and shall be signed by the members of the arbitral tribunal;[9]it further provides that the signed copy of the award shall be delivered to the parties.[10] Some domestic laws impliedly allow arbitral awards written and signed digitally; section 52 of The Arbitration Act 1996 of England, parties are free to agree on the form of an award. The implication is that an e-award is upheld, recognized and enforceable under English law, as though it is a traditional paper award. These laws can be interpreted with a degree of modernity that upholds an e-award and permits its enforcement, in favour of admitting alternative forms of writing.[11]
A “written” award does not necessarily mean an award printed on paper and signed physically by the arbitrators. Most jurisdictions have laws that regulate and recognize the use of electronic or digital signatures. Since many national laws recognize the validity of arbitration agreements concluded electronically, there is no room to assume that a similar logic will not apply to e-awards. An arbitral award that is signed with a digital signature[12] by an arbitrator should be considered as valid.[13] For instance, the United Nations Convention on the Use of Electronic Communication in International Contracts provides that where the law requires a communication to be made in writing, the requirement is satisfied if the communication is made electronically and is accessible later for reference.[14] Domestic courts can apply this standard to ensure that an e-award complies with the writing requirement under domestic law. An e-award can be considered as a functional equivalent to a traditional, paper award and meet the standards required for enforcement or to be upheld at the seat.
Even where there are no such laws, domestics courts should not consider the absence of a physical place of arbitration or the absence of an award “written” on paper to impede upholding an award or denying enforcement. Interpretative principles must be applied to broaden the formal requirements of an award to include e-awards that are digitally signed by the arbitral tribunal. Article IV of the New York Convention requires that a party seeking recognition and enforcement of an award produces duly authenticated originals or certified copies of the award and the arbitration agreement. A party can printout and produce the printed copy of the award, with the covering email of the arbitral tribunal or institution to satisfy this requirement.
Delivery of the award to the parties triggers time limits for challenging the award by the losing party and seeking enforcement by the winning party. Delivery of the award either by the tribunal or the institution to the parties by email may be an appropriate method of communicating and delivering the award to the parties. When a party receives the award by email and proof of delivery are not issues that affect the delivery of an award in today’s day and age with mailing clients such as Apple Mail or Microsoft Outlook having features such as “delivery notifications” or “read receipts”.
No jurisdiction, as such, imposes strict formal requirements for delivery of the award to parties.[15] As an evidentiary matter,[16] it is suggested that the party seeking enforcement or the party challenging the award simply produces a printout of the e-award with the covering email of the tribunal or institution, as the case may be. Thus, there is no reason to state that an award that is made and communicated to the parties electronically is not “authentic”[17].
Recently, the Andhra Pradesh High Court was moved to obtain security under section 9 of The Arbitration & Conciliation Act in a post-award action; in this case, the Petitioner (a Korean trader) had obtained an award under the I.C.C. Rules of Arbitration. The arbitration was conducted entirely through video conferencing and an e-award was issued, which was communicated to the parties by the I.C.C. through an official email. The Petitioner sought to attach a cargo of sulphuric acid that the Respondent (an Indian acid trader) had loaded at Visakhapatnam Port under section 9, to ensure security for enforcement of the e-award under section 48 of The Arbitration & Conciliation Act. The Andhra Pradesh High Court ordered the attachment of the sulphuric acid as security for the Petitioner’s award-debt.[18]
III. Article V Requirements for Annulment, Recognition & Enforcement
The United Nations Convention on the Recognition & Enforcement of Foreign Arbitral Awards 1958 (“New York Convention” or “N.Y.C.” or “Convention”) permits the cross-border recognition of arbitral awards. The Convention standardizes the requirements and empowers a national court to scrutinize whether an arbitral award meets them for annulment and/or enforcement in its territory;[19] most countries nowadays have adopted the requirements for enforcement set out in the New York Convention in their domestic arbitration laws.[20] In principle, as long as an award meets these requirements, it is quite possible to uphold, recognize and enforce an e-award under the Convention standards.[21]
IIIA. Due Process Requirements
Long has it been settled that an arbitration must follow due process through following procedural rules that ensure the impartiality and fairness of proceedings and the decision-making. A violation of due process is a ground that justifies not recognizing or enforcing an arbitral award.[22] A swift and fair process is indispensable in online arbitration, as much as it is indispensable to traditional arbitrations. The fundamentals of due process should be observed by institutions and tribunals.[23]
A party must be given proper notice of arbitral proceedings; nowadays, emails are an accepted mode of giving notice; while there are issues such as being unable to prove when a party receives an email, email software such as Microsoft Outlook have made it simpler for a sender to be notified if the receiver of the email opens a particular email by creating provisions for “read receipts”. A High Court in India has held that a notice sent on WhatsApp is good service.[24]
Any apprehension of “virtual inequality” in terms of both parties being able to access internet and having an equal opportunity to present their respective cases[25] is easily dispelled in this age of 4G internet. Even if it could not be dispelled in this manner, it is not far removed to say that a party is as responsible for the quality of its internet connection as it is responsible for the strength of its lawyers. Equality in the treatment of the parties can be ensured by using technology only up to the lowest common denominator.[26] Technical safeguards can easily be implemented to ensure that there are no interruptions to online arbitral proceedings that can potentially jeopardize the due process of an e-award.[27]
IIIB. Public policy requirements
Is rendering an e-award against public policy? Without reiterating the earlier discussion on formal requirements, it is safe to say that rendering an e-award is not against the public policy of either the seat (for annulment) or against the public policy of the enforcing territory. In either case, whether there is an implication or not, the law can be liberally interpreted to permit online arbitration awards. It should be noted that while online arbitration may be novel, “novelty” is an insufficient answer to annul or refuse to recognize and enforce e-awards.[28] There is no direct nexus between an electronic award and its violation of public policy for being electronic.
IV. Conclusion
The formal requirements of an arbitral award can be liberally interpreted by domestic courts and arbitrators alike, to permit e-awards, uphold their validity and enforce them against losing parties in jurisdictions across the world. There seems to be no specific prohibition or impediment. Rapidly evolving technology and internet capabilities are also answering to due process requirements of arbitrations. It is quite safe to say that e-awards cannot be challenged on formal or due process grounds. Traditional principles that exist in this regard are sufficient to answer the apparent challenge of a shift from traditional (physical) arbitration to online arbitrations.
Online arbitration appears to have unique issues in the application of traditional principles of international commercial arbitration; in reality however, this is not the case. As discussed in previous articles, there are definitely benefits to online arbitration. These benefits far outweigh the apparent issues. In a technology-driven world, arbitrations too must adopt a technological platform.
[1] Balaji Harish Iyer is an advocate practising before the Bombay High Court. His focus is on arbitration and alternate dispute resolution. Balaji obtained his Master’s degree in law (International Dispute Resolution) from Humboldt University of Berlin and Bachelor’s degree (with Honours) from National Law University, Delhi. Mobile: +917349360143. [2] Balaji Harish Iyer, Arbitration vs The World (Article Series) Part I: International Arbitration in the Time of Covid-19, The Arbitration Workshop(2020), https://www.thearbitrationworkshop.com/post/arbitration-vs-the-world-article-series-part-i-international-arbitration-in-the-time-of-covid-19 (last visited Apr 24, 2020). [3] Balaji Harish Iyer, Arbitration vs. The World (Article Series) Part II: Making a Mountain Out of a Molehill, The Arbitration Workshop (2020), https://www.thearbitrationworkshop.com (last visited May 25, 2020). [4] Hong-Lin Yu & Motassem Nasir, Can Online Arbitration Exist Within the Traditional Arbitration Framework?, 20 Journal of International Arbitration 455–473, 470 (2003). [5] Ihab Amro, Online Arbitration in Theory and in Practice: A Comparative Study in Common Law and Civil Law Countries, Kluwer Arbitration Blog (2019), http://arbitrationblog.kluwerarbitration.com/2019/04/11/online-arbitration-in-theory-and-in-practice-a-comparative-study-in-common-law-and-civil-law-countries/ (last visited Apr 8, 2020). [6] See the discussion in, Hong-Lin Yu and Motassem Nasir, supra note 4 at 471. [7] Balaji Harish Iyer, supra note 3. [8] United Nations Convention on the Recognition & Enforcement of Foreign Arbitral Awards, 3 & 4 (1958); Ihab Amro, supra note 5. [9] The Arbitration and Conciliation Act, 31(1) (1996). [10] Id. at 31(4). [11] Haitham A. Haloush, The Authenticity of Online Alternative Dispute Resolution Proceedings, 25 Journal of International Arbitration 355–364, 359 (2008). [12] See specifically on “digital signatures”, Id. at 362–364. [13] Lars Markert & Jan Burghardt, Navigating the Digital Maze - Pertinent Issues in E-Arbitration, 27 J. Arb. Stud. 3–31, 24–25 (2017). [14] United Nations Convention on the Use of Electronic Communication in International Contracts, 9(2) (2013). [15] Id. at 26. [16] See for e.g., Indian Evidence Act, 65B (1872). [17] See, Hong-Lin Yu and Motassem Nasir, supra note 4 at 472. [18] Sulphide Corporation v. New Way Vyapaar Pvt. Ltd., ICOMAOA No. 2 of 2020, High Court of Andhra Pradesh at Amaravati. [19] United Nations Convention on the Recognition & Enforcement of Foreign Arbitral Awards, supra note 8 at 5; See the relevant section in Sami Kallel, Online Arbitration, 25 Journal of International Arbitration 345–353, 349 (2008). [20] See for e.g., The Arbitration and Conciliation Act, supra note 9 at 48. [21] See, Ihab Amro, Enforcement of Cross-Border Online Arbitral Awards and Online Arbitration Agreements in National Courts, Young ICCA Blog (2016), http://www.youngicca-blog.com/enforcement-of-cross-border-online-arbitral-awards-and-online-arbitration-agreements-in-national-courts/ (last visited May 24, 2020). [22] See, United Nations Convention on the Recognition & Enforcement of Foreign Arbitral Awards, supra note 8 at 5(1)(b). [23] Mohamed S. Abdel Wahab, The Global Information Society and Online Dispute Resolution: A New Dawn for Dispute Resolution, 21 Journal of International Arbitration 143–168, 160 (2004). [24] SBI Cards & Payments Services Pvt. Ltd. v. Rohidas Jadhav, 2018 S.C.C. Online Bom. 1262. [25] Lars Markert and Jan Burghardt, supra note 13 at 14–15; See also, Mohamed S. Abdel Wahab, supra note 21 at 160–161. [26] Lars Markert and Jan Burghardt, supra note 13 at 15. [27] Id. at 16. [28] Mohamed S. Abdel Wahab, supra note 21 at 166.