By Dr. Jur. Ihab Amro (Professor of Private Law and a practicing lawyer and an arbitrator; Ph.D. Athens, Greece).
This post examines firsthand whether online arbitration agreements (‘e-arbitration agreements’) and online arbitral awards (‘e-arbitral awards’) can be enforced in national courts under the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (hereafter ‘The NYC’) despite the fact that there is no direct indication to the enforcement of such agreements and awards in this convention.
In principle, the NYC gives a national court the power to scrutinise whether an arbitral award meets the requirements for enforcement before enforcing it in its own territory. Such judicial review differs from state to state and even from one court to another within the same state. In doing so, a national court must rely on the NYC, national laws of arbitration, national laws regulating e-commerce and e-signatures, international conventions and model laws regulating e-commerce and e-signature.
On the one hand, the enforcement of cross-border online arbitration agreements is possible under the NYC based on the more-favourable-right provision contained in Article VII of the same convention, which might be a national law or international treaty or convention, including the NYC itself.
In that, many national laws in both common law and civil law countries have recognised the validity of arbitration agreements concluded and signed electronically, including, but not limited to, the German Arbitration Law, the Austrian Arbitration Law, and the Slovenian Arbitration Law. Also, some national courts in both common law and civil law countries have construed the writing requirement of the NYC liberally, and accordingly have decided to enforce e-arbitration agreements in their own jurisdictions, including Switzerland and Israel.
On the other hand, the enforcement of online arbitral awards is also possible under the NYC based on the more-favourable-right provision contained in Article VII of the same Convention, which allows the winning party to rely on other national laws, model laws, and international conventions, including the NYC itself. A national court of the country in which recognition and enforcement of an e-award is sought, may accept to recognise and enforce an e-award if a national law permits such enforcement. However, a national court should deal in a liberal manner with requests for recognition and enforcement of e-arbitral awards, considering the specific nature of an e-arbitral award and the new developments in electronic communications (‘e-communications’). In doing so, a court should not consider, as impediments facing the enforcement of an e-award, the absence of a written arbitration agreement, the absence of an oral hearing, the absence of a physical place of arbitration, the absence of the written form of an award, and parties’ inability to provide a duly certified copy of an agreement or an award. That is attributed to the wide use of e-communications in cross-border commercial transactions nowadays, and also because many national laws and institutional arbitration rules in both common law and civil law jurisdictions have dealt with these issues liberally. Even so, it is desirable that arbitrators issue a signed, printed copy in order to avoid the refusal of an e-award in national courts. If online institutional arbitration is applicable, the online dispute resolution provider or institution, also known as (‘ODR provider’), should issue a printed copy signed by the arbitrators and sealed by the institution, and send it to the parties through regular mail.
A national law may impliedly allow, in some circumstances, the recognition and enforcement of an award rendered and signed in an electronic form. Some national laws have broadened the concept of an arbitral award, including the English Arbitration Act of 1996, and the Swiss Code on Private International Law. According to Section 52 of the English Arbitration Act and to Article 189 (1) of the Swiss Code on Private International Law, parties are free to agree on the form of an award. This means that both the English Arbitration Act and the Swiss Code on Private International Law do not require an award to be in a specific form. Consequently, an e-arbitral award shall be recognised and enforced in both jurisdictions in the same manner and to the same effect as a traditional award, noting that the NYC does not deal directly with the form of an arbitral award. However, it is desirable that arbitrators issue a hard copy of an e-award in order to meet the formality requirements of Article IV of the NYC, especially in those countries whose national arbitration laws require that an arbitral award be in writing and signed by the arbitrators.
On this matter, it should be mentioned that some national laws in civil law countries, including Brazil and Greece, allow filing of cases, submission of documents, and production of evidence through a unified online information system. This shall be applicable to submission of cases pertaining to the enforcement of cross-border online arbitral awards.
As far as the enforcement of an e-award is concerned, it should be observed that most common law and civil law countries have enacted laws that regulate the use of e-signatures in e-commerce transaction. Consequently, the e-signature of an arbitral award by the arbitrators, as well as by the parties, is accepted and constitutes prima facie valid evidence in national courts.
Article V of the NYC lays down seven grounds for the refusal of recognition and enforcement of an arbitral award. In order to avoid the refusal of recognition and enforcement of e-arbitral awards under the NYC, parties and arbitrators should carefully examine, inter alia, how national laws and courts in the prospective country of enforcement deal with the formation and the validity of an e-arbitration agreement. Also, they must examine the possibility for conducting oral hearings online as part of due process under the law of that country of enforcement.
As noted above, some of these grounds constitute obstacles facing the recognition and enforcement of e-arbitration agreements and e-arbitral awards under the NYC, including the writing requirement, the physical place of arbitration, the due process and oral hearings, the formality requirements, and setting aside of an award in the country of origin.
To avoid the above obstacles facing recognition and enforcement of cross border e-arbitral awards under the NYC, and also to create a more liberal regime in favour of the enforcement of cross-border e-arbitral awards and e-arbitration agreements, national courts of both common law and civil law countries must apply the provisions of both the NYC and national laws liberally, considering the new developments of e-commerce and information technology. National laws of arbitration should be revised in those countries whose laws have not yet recognised the validity of both e-arbitration agreements and e-arbitral awards.
*(You can find a more detailed analysis of these issues in Ihab Amro’s article, The Slovenian Arbitration Review, Slovenska arbitražna praksa (Ljubljana) 5 (2), June 2016, at pp. 17-32)