Legal Framework and Technical Challenges of Online Arbitration: Comparative Study of Regulations, Procedures and Data Security: – Yasmine Bennani
Legal Framework and Technical Challenges of Online Arbitration: Comparative Study of Regulations, Procedures and Data Security:
Cadre juridique et défis techniques de l’arbitrage en ligne : Étude comparative des règlements, des procédures et de la sécurité des données :
Par: Yasmine Bennani
Masters’ student in Business Law at the international university of Casablanca
Abstract:
In a globalized world, arbitration has become a preferred alternative to state courts for resolving international commercial disputes, offering speed, flexibility, and confidentiality. With the rise of e-commerce, the need for arbitration solutions that fit a digital context has become essential. Online arbitration addresses this demand by providing virtual and streamlined procedures, allowing parties to resolve disputes without geographical constraints or travel costs. However, it also raises legal challenges, particularly regarding the recognition of awards and the security of data exchanged online.
National laws, as seen in Switzerland and the United Arab Emirates, are adapting to this new form of arbitration, although differences still exist between jurisdictions. International conventions like the New York Convention play a crucial role in ensuring the enforceability of online awards, but the digital context presents challenges, especially for standards of evidence and notification. Online arbitration institutions, such as the ICC, have updated their rules to allow virtual hearings, thus reflecting an effort to modernize arbitration while maintaining a high level of security and transparency for the parties involved
Keywords: Online arbitration, procedural flexibility, confidentiality, award recognition, international regulation, legislative adaptation.
Resumé :
Dans un monde globalisé, l’arbitrage est devenu une alternative privilégiée aux tribunaux étatiques pour résoudre les litiges commerciaux internationaux, offrant rapidité, flexibilité et confidentialité. Avec l’essor du commerce électronique, le besoin de solutions d’arbitrage adaptées au contexte numérique est devenu essentiel. L’arbitrage en ligne répond à cette demande en offrant des procédures virtuelles et simplifiées, permettant aux parties de régler leurs différends sans contraintes géographiques ni frais de déplacement. Cependant, cela soulève des défis juridiques, notamment en matière de reconnaissance des sentences et de sécurité des données échangées en ligne.
Les lois nationales, comme celles de la Suisse et des Émirats Arabes Unis, s’adaptent à cette nouvelle forme d’arbitrage, bien que des différences persistent entre les juridictions. Les conventions internationales, comme la Convention de New York, jouent un rôle clé pour garantir l’exécution des sentences en ligne, mais le contexte numérique pose des défis,
notamment pour les normes de preuve et de notification. Les institutions d’arbitrage en
ligne, comme la CCI, ont mis à jour leurs règles pour permettre les audiences virtuelles,
reflétant ainsi un effort de modernisation de l’arbitrage tout en maintenant un haut niveau
de sécurité et de transparence pour les parties.
Mots-clés : Arbitrage en ligne, flexibilité procédurale, confidentialité, reconnaissance des sentences, réglementation internationale, adaptation législative.
Introduction :
In an increasingly globalized world, where commercial exchanges are multiplying on an international scale, the need for effective solutions to resolve disputes between companies in different jurisdictions has continued to grow. Arbitration, as an alternative to state courts, has established itself as the method of choice for those involved in international trade. It offers undeniable advantages: speed, flexibility and discretion are features that make it particularly attractive to companies keen to avoid the delays and publicity that often accompany traditional legal proceedings. Unlike state courts, arbitration allows the parties to choose their arbitrators, define rules of procedure tailored to their specific situation, and maintain the confidentiality of their exchanges, the evidence presented, and the award rendered.1
With the rise of e-commerce and the rapid digitization of trade, the traditional boundaries of commerce have widened still further, and transactions are increasingly taking place in a dematerialized space where the parties may be geographically remote. This evolution has introduced new requirements for the arbitration system, including the need to adapt to a world where communication, document sharing and even hearings can take place entirely online. It is in this context that online arbitration has emerged, responding to a pressing need to simplify and accelerate proceedings in a virtual setting.
Online arbitration thus represents a response to the challenges posed by globalization and digitalization. By enabling parties to resolve their disputes without having to travel, online arbitration not only reduces transport and logistics costs, but also overcomes the time and time-zone constraints that can slow down proceedings. Indeed, in a dispute between parties located in different countries, the organization of a physical hearing often involves considerable expense and delays linked to travel and visa formalities. By going digital, online arbitration enables hearings to be organized more flexibly and rapidly, with each participant
1 E. Loquin, L ‘arbitrage du commerce international, Joly éditions, Pratique des affaires, 1re édition, 16/07/2015, p.1-8
able to log on from any location, greatly facilitating coordination between the parties, their lawyers and the arbitrators.
However, while this transformation to online arbitration offers significant advantages in terms of speed and accessibility, it also raises major questions and challenges. On the one hand, legal questions arise as to the recognition and enforcement of arbitral awards made online, especially in jurisdictions where local laws have not yet been adapted to take account of the specificities of digital arbitration. For example, some national laws require arbitral awards to be issued in written form and physically signed, which can be problematic in a digital context where electronic signatures are becoming the norm. National legislation and international conventions must therefore evolve to ensure that online awards enjoy the same enforceability as those rendered in a physical setting.
On the other hand, technical issues relating to the security and confidentiality of data exchanged during online proceedings have become paramount. In a world where cyber- attacks are increasingly frequent and sophisticated, parties to online arbitration must be able to ensure that their confidential information – be it sensitive business data or evidence presented at hearings – is protected against any intrusion. Arbitration institutions and the digital platforms used must implement robust cybersecurity protocols to avoid the risk of hacking or data leakage. This security requirement also extends to video-conferencing and document-sharing systems used during online hearings, which must ensure that only authorized parties can access the information exchanged.2
On the other hand, technical issues relating to the security and confidentiality of data exchanged during online proceedings have become paramount. In a world where cyber- attacks are increasingly frequent and sophisticated, parties to online arbitration must be able to ensure that their confidential information – be it sensitive business data or evidence presented at hearings – is protected against any intrusion. Arbitration institutions and the digital platforms used must implement robust cybersecurity protocols to avoid the risk of
2 see. J. El Ahdab, D. Mainguy, « Droit de l’arbitrage : théorie et pratique » LexisNexis ,2021,
p.738
hacking or data leakage. This security requirement also extends to video-conferencing and document-sharing systems used during online hearings, which must ensure that only authorized parties can access the information exchanged. We will first elaborate the legal framework of online arbitration (I), and secondly Adapting Arbitration Institutions to the Requirements of Online Arbitration (II).
I) The Legal Framework of Online Arbitration: National Adaptations and International Standards
Online arbitration, as a modern method of dispute resolution, requires adaptation of national legislation to guarantee a clear and secure legal framework. The speed, flexibility and dematerialization of online arbitration mean that legislators need to review certain rules to offer companies and practitioners reliable, recognized procedures. Against this backdrop, several countries have already initiated reforms to incorporate the specific features of online arbitration, but the adoption of specific provisions varies from one jurisdiction to another.
In the first part of this discussion, we will explore the topic of online arbitration, focusing on the adaptation of national legislation and the role of international standards (A). In the second part, we will examine legislative diversity and its practical implications (B).
a) Online Arbitration: Adapting National Legislation and the Role of International Standards
1-a) Example of Reform in Morocco: A Progressive Opening
Morocco has made progress in the field of arbitration with Law 95-17 on arbitration and conventional mediation. The aim of this law is to promote alternative dispute resolution methods to relieve the pressure on the judicial system, giving parties access to faster, less costly mechanisms. Although Law no. 95-17 does not specifically enshrine online arbitration, it does suggest that modern means of communication could be exploited to guarantee transparency and fairness. This flexibility of interpretation encourages future explicit
recognition of online arbitration in Morocco, even if a more specific framework would be needed to clarify the modalities of its digital application.3
2-a)France’s flexible approach
In France, online arbitration does not yet enjoy explicit legal recognition, but it is not out of the question. The flexibility of arbitration procedures in France allows parties to use digital tools, as long as the fundamental principles of fairness and transparency are respected. This approach authorizes the use of digital technologies, although uncertainties remain, particularly as regards the recognition of awards and data protection. France, by allowing a certain degree of freedom, allows partial adaptation, but specific regulations could reinforce the legal security of online arbitration procedures.4
3-a)Switzerland, Pioneer in Digital Arbitration
Switzerland has distinguished itself by its forward-looking approach, incorporating the possibility of holding hearings by videoconference into its private international law as early as 1987. This vision enabled arbitration parties to meet virtually long before the current boom in digital technologies. Today, this visionary legislative framework facilitates the transition to online arbitration without requiring specific legal amendments for each new technology. This flexible approach is testimony to the benefits of anticipatory regulation, which makes it possible to adapt to innovations while maintaining legal certainty.5
4-a)The United Arab Emirates: Precise and Proactive Regulation
3 Law no. 95-17 on arbitration and conventional mediation
4 Code of civil Procedure, France, Articles 1442 to 1527
5 Federal Law of December 18, 1987 on Private International Law
The United Arab Emirates has taken a proactive approach by including specific provisions for online arbitration in Federal Law No. 6 of 2018. This text explicitly authorizes parties to use modern means of communication for hearings, setting clear rules on the use of digital technologies in arbitration proceedings. This framework gives parties the freedom to choose the appropriate digital tools, while ensuring that proceedings meet high standards of security and confidentiality. By offering a structured and transparent legal framework, the Emirates facilitate the use of online arbitration by providing a clear legal basis on which parties can rely.6
b) Legislative Diversity and its Practical Implications
This legislative diversity poses challenges for international arbitration practitioners. Decisions rendered online in one country must be recognized and enforceable in other jurisdictions, and regulatory differences between countries require harmonization of standards to ensure the effectiveness of online arbitration internationally. Legislative disparities generate additional costs and legal uncertainties, creating obstacles for companies choosing online arbitration as a fast and secure method of dispute resolution. L’Impact des Normes Internationales et des Traités dans l’Arbitrage en Ligne.
1-b) The 1958 New York Convention: the basis for international recognition
International conventions play a key role in the promotion and recognition of online arbitration. The 1958 New York Convention, one of the founding texts on the recognition and enforcement of foreign arbitral awards, ensures that awards rendered in one signatory
6 Anastasia Tzevelekou, William Kirley, Modifications de la loi sur l’arbitrage des Émirats arabes unis, Aceris Law LLC, 14-01-2024, IN : https://www.international-arbitration- attorney.com/fr/2023-amendments-to-the- uaes-arbitration- law/#:~:text=le%202023%20La%20loi%20sur%20l’arbitrage%20ajoute%20d%C3%A9sormais
%20une,impartialit%C3%A9%2C%20int%C3%A9grit%C3%A9%20ou%20ind%C3%A9pendance
.%22 consulted on 6/11/2024
state are enforceable in other member states. Although drafted before the digital age, the Convention applies to online awards, provided that the principles of fairness and transparency are respected.7
2-b) Challenges of the Convention in the context of online arbitration
However, applying the New York Convention in a digital context poses certain challenges, particularly in terms of evidence and notification. For example, the Convention requires “written form” for the recognition of awards, which can become problematic in online proceedings where exchanges are often dematerialized. National legislation must therefore adapt its interpretation so that online arbitral awards meet the Convention’s criteria, thereby ensuring their international enforcement.
3-b) The role of UNCITRAL in harmonizing and securing online arbitration
In 1985, the United Nations Commission on International Trade Law (UNCITRAL) published a Model Law on Commercial Arbitration, serving as a model for harmonizing arbitration rules internationally. Although drafted before the rise of online arbitration, this law includes provisions allowing the use of modern means of communication in arbitration proceedings. The UNCITRAL Model Law thus provides an essential basis for countries seeking to incorporate elements of online arbitration into their legislation.
More recently, UNCITRAL has issued specific recommendations to govern online arbitration, particularly with regard to data protection and the management of electronic evidence.
These recommendations aim to ensure that parties can exchange information securely in a virtual environment, without fearing for the confidentiality of their data. Cybersecurity and
7 Convention on the Recognition and Enforcement of Foreign Arbitral and secondly the adaptation of Arbitration Institutions to the Requirements of Online Arbitration
confidentiality are becoming major concerns in online arbitration, and the UNCITRAL guidelines help define standards for secure exchanges.8
These developments provide a structured basis for a comprehensive article covering national and international developments, legal challenges and the practical implications of online arbitration. You can expand on each section with specific examples, doctrinal analyses and comparisons.
II) Adapting Arbitration Institutions to the Requirements of Online Arbitration
Faced with the rise of online arbitration, arbitration institutions are playing a fundamental role in integrating digital technologies into arbitration proceedings. These institutions, aware of the advantages offered by online arbitration in terms of flexibility and speed, but also of the technical and legal challenges it raises, have begun to adapt their rules to offer users a secure, fair and efficient framework. These adjustments are crucial to ensure that parties can use digital tools in a standardized way that complies with the principles of transparency and confidentiality inherent in arbitration. Firstly, we will discuss the adaptation of arbitration institutions to the digital age: guaranteeing the security, efficiency and fairness of online proceedings (A), and secondly, we will talk about Technological Measures and Cybersecurity Challenges (B).
a) Adapting Arbitration Institutions to the Digital Era: Ensuring Security, Efficiency, and Fairness in Online Proceedings
1-a) ICC’s Pioneering Shift: Embracing Virtual Hearings and Electronic Exchanges for a Globalized Arbitration Process
The International Chamber of Commerce (ICC), one of the world’s most influential and respected arbitration institutions, has led the way by revising its rules in 2021 to allow and
8 Model Law on International Commercial Arbitration (UNICRTAL) Nations-Unis, 2006
supervise online hearings. This revision officially authorizes virtual hearings and the electronic exchange of documents, offering a solution adapted to the needs of a globalized world. Thanks to this flexibility, ICC enables parties to conduct proceedings remotely, significantly reducing the costs and delays associated with travel and the logistics of physical hearings. The integration of these provisions reflects ICC’s commitment to modernizing its practices while maintaining a high level of security and transparency for parties.9
2-a) HKIAC’s Virtual Hearing Guide: Setting Standards for Secure and Efficient Online Arbitration
The Hong Kong International Arbitration Centre (HKIAC) is another arbitration institution that has quickly responded to the online arbitration needs of its users. In 2020, the HKIAC published a specific guide to virtual hearings, separate from its general rules, to frame the conduct of online proceedings. This guide details best practices for managing digital evidence, using audioconferencing and protecting the confidentiality of exchanged data. By establishing these clear rules and providing precise guidelines, the HKIAC helps parties to navigate the technical and legal complexities of online arbitration, while offering them a secure environment that complies with international standards.
3-a) The Flexibility of Institutional Rules: An Asset for Online Arbitration
Unlike national legislation, which often imposes fixed and rigid procedures, institutional rules are designed with a certain flexibility, which is particularly advantageous for online arbitration. Institutions such as the ICC or the HKIAC offer parties greater latitude to adapt procedural rules to their specific needs. This means that parties can choose the videoconferencing platforms they deem most suitable for their situation, decide how hearings are to be recorded, and determine the confidentiality rules applicable to their exchanges. This flexibility enables the personalization of procedures that is essential in an
9 Rules of the International Chamber of Commerce 2001.
online context, where technologies and user expectations can vary considerably from case to case.10
By offering this flexibility, arbitration institutions not only ensure that proceedings meet standards of transparency and security, but also encourage innovation in the use of digital technologies. For example, some institutions allow parties to use artificial intelligence tools to analyze evidence, or biometric verification systems to secure access to virtual hearings. These innovations, though complex, enable parties to make the most of technology while ensuring the confidentiality and integrity of the proceedings.
The rise of online arbitration has introduced major technical challenges, particularly in terms of security and data protection. In a dematerialized environment, sensitive information exchanged between parties, such as confidential business data or digital evidence, is vulnerable to cyber-attacks and intrusions. The digital nature of online arbitration therefore requires robust security measures to ensure that the parties’ data is protected and that the confidentiality of the proceedings is maintained.
The United Nations Commission on International Trade Law (UNCITRAL) has issued recommendations to govern digital transactions and protect personal data in online arbitration. These recommendations include rigorous security protocols, such as data encryption, access management and secure identifiers, as well as strict access control rules to prevent unauthorized intrusions. By respecting these protocols, arbitration institutions can reinforce the confidence of the parties and guarantee a secure environment for electronic exchanges.11
In addition, the General Data Protection Regulation (GDPR), applicable in the European Union, imposes strict standards of confidentiality and protection of personal data, influencing the practices of international arbitration institutions. The RGPD stipulates that all personal data of EU citizens must be processed securely, which includes the obligation to
10 Rules of the International Chamber of Commerce 2001.
11 Nations-Unis, United Nations Commission on International Trade Law (UNCITRAL), 2013
implement suitable security systems to prevent any data leakage. For arbitration institutions, this means that all information exchanged during proceedings, whether communications between the parties or evidence submitted, must be stored and transmitted in a way that complies with the security standards set by the RGPD.
b) Technological Measures and Cybersecurity Challenges
As online arbitration continues to gain prominence, ensuring the security of digital proceedings has become a paramount concern for arbitration institutions. The integration of advanced technological tools is essential to protect sensitive information exchanged between parties and to maintain the integrity of the arbitration process. From secure videoconferencing platforms to identity verification systems and digital evidence management, institutions are employing a range of measures to safeguard confidentiality and prevent data breaches. However, these security protocols come with challenges, including added costs and the need for specialized technical expertise, which can present barriers for certain parties. Furthermore, the risk of cyberattacks and data leaks remains a serious threat, requiring arbitration institutions to invest heavily in secure infrastructure and proactive cybersecurity strategies.12
1-b) Specific security requirements for online arbitration
Security in online arbitration also relies on advanced technological tools to control and protect the information exchanged. Arbitration institutions often use secure videoconferencing platforms, equipped with end-to-end encryption systems to prevent data interception. These platforms also include identity verification devices to ensure that only authorized participants can access the hearings. In some cases, electronic signatures and
12 See. questions 26, 27 and 28 on data protection and cybersecurity in the White & Case/QMUL 2020 International Arbitration Survey, “Adapting Arbitration to a Changing World”, which opened for responses on October 12, 2020.
digital evidence management systems are used to guarantee the authenticity of documents exchanged, and to prevent any risk of falsification.
These enhanced security measures are essential to guarantee the confidentiality and integrity of online proceedings. However, they also introduce additional costs and require specific technical skills, which can represent an obstacle for some parties, particularly small businesses that do not have the resources to invest in advanced technologies. To meet this challenge, some arbitration institutions offer tailored security solutions, such as access to secure platforms and training services to help parties familiarize themselves with digital tools.
2-b) The Impact of Data Leaks and Cyber Attacks on Online Arbitration
Cyber attacks and data leaks are real threats in online arbitration, with potentially serious consequences for the parties involved. A successful cyber attack could allow unauthorized third parties to access confidential information, manipulate evidence or compromise the confidentiality of hearings. Such incidents could not only harm the parties involved, but also compromise the reputation of arbitration institutions. Consequently, cybersecurity risk management has become a priority for arbitration institutions, which are investing in secure infrastructures and training their teams to respond to digital threats…
Conclusion
The evolution of online arbitration represents a significant transformation in the field of alternative dispute resolution, marked by both opportunities and challenges. The varying approaches of different jurisdictions – from Switzerland’s pioneering stance to Morocco’s progressive opening – demonstrate that legal systems are gradually adapting to accommodate online arbitration, albeit at different paces and with varying degrees of specificity. Arbitration institutions have shown remarkable adaptability in integrating digital solutions while maintaining the fundamental principles of arbitration, as exemplified by the ICC and HKIAC’s initiatives. The implementation of robust cybersecurity measures and advanced technological solutions has become crucial in ensuring the confidentiality and reliability of online proceedings, though this creates new challenges regarding accessibility and cost. While the New York Convention continues to provide a foundational framework for international recognition, there is a growing need for harmonized standards specific to online arbitration, as evidenced by UNCITRAL’s ongoing efforts to address digital-specific challenges. Looking ahead, the success of online arbitration will depend on several factors: the continued development of clear legislative frameworks at national and international levels, the ability of arbitration institutions to maintain security while ensuring accessibility, the evolution of technology to meet the specific needs of online arbitration, and the harmonization of international standards to facilitate cross-border enforcement. As technology continues to advance and global commerce becomes increasingly digital, online arbitration is likely to become more prevalent. The challenge for the arbitration community will be to maintain the balance between innovation and the fundamental principles of fairness, transparency, and justice that have long been the hallmarks of arbitration practice. This evolution represents not just a technological shift, but a fundamental transformation in how international disputes are resolved, promising greater efficiency and accessibility while presenting new challenges that the arbitration community must continue to address proactively.
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Code de procédure civile
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l’arbitrage d’urgence. Règlement de la Chambre de Commerce Internationale 2001.
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