Arbitration is a dispute resolution mechanism available in place of traditional courts. Such mechanisms are used extensively to fill the gap engendered by the inability of current international private law to deal with Internet cases. An example is the Universal Domain-Name Dispute-Resolution Policy (UDRP), which was developed by WIPO and implemented by ICANN as the primary dispute resolution procedure.
In arbitrations, decisions are made by one or more independent individuals chosen by the disputants. The mechanism is usually set out in a private contract, which also specifies issues as place of arbitration, procedures, and choice of law. International arbitration within the business sector has a long-standing tradition.
In comparison to traditional courts, arbitration offers many advantages, including higher flexibility, lower expenses, speed, choice of jurisdiction, and the easier enforcement of foreign arbitration awards. One of the main advantages of arbitration is that it overcomes the potential conflict of jurisdiction. Arbitration has particular advantages in regard to one of the most difficult tasks in Internet-related court cases, enforcement of decisions (awards). The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards regulates the enforcement of arbitration awards. According to this convention, national courts are obliged to enforce arbitration awards. Paradoxically, it is often easier to enforce arbitration awards in foreign countries by using the New York Convention regime rather than to enforce foreign court judgement.
The main limitation of arbitration is that it cannot address issues of higher public interest such as protection of human rights; these require the intervention of state-established courts. Arbitration has been used extensively in commercial disputes. There is a well-developed system of rules and institutions dealing with commercial disputes.
The main international instrument is the United Nations Commission on International Trade Law (UNCITRAL) 1985 Model Law on International Commercial Arbitration. The leading international arbitrations are usually attached to chambers of commerce.
Arbitration and the Internet
Arbitration and other alternative dispute resolution systems are used extensively to fill the gap engendered by the inability of current international private law to deal with Internet cases. For example, the Universal Domain-Name Dispute-Resolution Policy (UDRP) was developed by WIPO and implemented by ICANN as the primary dispute resolution procedure. Since the beginning of its work under UDRP in December 1999, the WIPO Arbitration and Mediation Center has administered more than 22,500 cases and with the introduction of new gTLDs, new challenges are expected to occur.
The UDRP is stipulated in advance as a dispute resolution mechanism in all contracts involving the registration of gTLDs (e.g. .com, .edu, .org, .net) and for some ccTLDs as well. Its unique aspect is that arbitration awards are applied directly through changes in the DNS without resorting to enforcement through national courts.
Arbitration provides a faster, simpler, and cheaper way of settling disputes. However, the use of arbitration as the main Internet dispute settlement mechanism has a few serious limitations.
- First, since arbitration is usually established by prior agreement, it does not cover a wide area of issues when no agreement between parties has been set in advance (libel, various types of responsibilities, cybercrime).
- Second, many view the current practice of attaching an arbitration clause to regular contracts disadvantageous for the weaker side in the contract (usually an Internet user or an e-commerce customer).
- Third, some are concerned that arbitration extends precedent-based law (US/UK legal system) globally and gradually suppresses other national legal systems. In the case of e-commerce, this might prove to be more acceptable, given the already high level of unification of substantive rules of commercial law. However, an extension of precedent law has become more delicate in sociocultural issues such as Internet content, where a national legal system reflects specific cultural context.