Sample Chapter 1 on Arbitrations

CHAPTER I                         INTRODUCTION
 
Arbitration, in the law, is a legal alternative to the courts whereby the parties to a dispute agree to submit their respective positions (through agreement or hearing) to a neutral third party (the arbitrator(s)) for resolution. Since arbitration is based either upon contract law or, in the case of international arbitration, the law of treaties, the agreement between the parties to submit their dispute to arbitration is a legally binding contract. All arbitral decisions are considered to be "final and binding." This does not, however, void the requirements of law. Any dispute not excluded from arbitration by virtue of law (e.g. criminal proceedings) may be submitted to arbitration. Arbitration exists under both domestic and international law, and arbitration can be carried out between private individuals, between states, or between states and private individuals. In the case of arbitration between states, or between states and individuals, the Permanent Court of Arbitration and the International Center for the Settlement of Investment Disputes (ICSID) are the prodominant organizations. Arbitration is also used as part of the dispute settlement process under the WTO Dispute Settlement Understanding. International arbitral bodies for cases between private persons also exist, the International Chamber of Commerce Court of Arbitration being the most important. The American Arbitration Association is a popular arbitral body in the United States. Arbitration also exists in international sport through the Court of Arbitration for Sport. Moreover,when arbitration occurs under domestic law, either party to an arbitration may appeal the arbitrator's decision to a court, however the court will generally not change the arbitrator's findings of fact but will decide only whether the arbitrator was guilty of malfeasance, or whether the arbitrator exceeded the limits of his or her authority in the arbitral award or whether the award conflicts with positive law. Some jurisdictions have instituted a limited grace period during which an arbitral decision may be appealed, but after which there can be no appeal. In the case of arbitration under international law, a right of appeal does not in general exist, although one may be provided for by the arbitration agreement, provided a court exists capable of hearing the appeal. Some domestic jurisdictions have stipulated that judges may require either arbitration or mediation of certain disputes as a first step toward resolution, familiy law (particularly child custody) being a prime example. Arbitrators are not bound by precedent and have great leeway in such matters as: active participation in the proceedings, accepting evidence, questioning witnesses, and deciding appropriate remedies. Arbitrators may visit sites outside the hearing room, call expert witnesses, seek out additional evidence, decide whether or not the parties may be represented by legal counsel, and perform many other actions not normally within the 23purview of a court. It is this great flexibility of action which, combined with costs usually far below those of traditional litigation, makes arbitration so attractive. No definitive statement can be made concerning the credentials or experience levels of arbitrators, although some jurisdictions have elected to establish standards for arbitrators in certain fields. Several independent organizations offer arbitrator training programs, such as the American Arbitration Association, and thus in effect, credentials. Generally speaking, however, the credibility of an arbitrator rests upon reputation, experience level in arbitrating particular issues, or expertise/experience in a particular field. Arbitrators are generally not required to be members of the legal profession. A growing trend among employers whose employees are not represented by a labor union is to establish an organizational problem-solving process, the final step of which consists of arbitration of the issue at point by an independent arbitrator. Most collective bargaining agreements in organizations where employees are represented by a labor organization stipulate that the final step of any grievance procedure shall consist of arbitration. To ensure effective arbitration and to increase the general credibility of the arbitral process, arbitrators will sometimes sit as a panel, usually consisting of three arbitrators. Often the three consist of an expert in the legal area within which the dispute falls (such as contract law in the case of a dispute over the terms and conditions of a contract), an expert in the industry within which the dispute falls (such as the construction industry, in the case of a dispute between a homeowner and his general contractor), and an experienced arbitrator. Arbitration is a device whereby the settlement of a question, which is of interest for two or more persons, is entrusted to one or more other persons, the arbitrator or arbitrators, who derive their powers from a private agreement, not the authority of a State, and who are to proceed and decide the case on the basis of such an agreement. Moreover, arbitration has also been defined as a mechanism for the settlement of disputes between parties, either by a person appointed by themselves or by relying upon procedures or institutions chosen by the parties. In his definition of arbitration, Robert highlights the similarity between arbitration and litigation: "Arbitration means instituting a private jurisdiction by which litigations are withdrawn from the public jurisdictions, in order to be resolved by individuals vested, for a given case, with the powers to judge such litigations.'' Background of the Study In this time and age, transactions are often take place through the World Wide Web. Commercial transactions conducted on this medium are labelled as e-commerce. Nevertheless, with the purpose for e-commerce to persist to flourish, legal confidence should subsist such that commercial transactions completed online will be put in force in the physical world. A dependable and enforceable dispute resolution mechanism customized exclusively to the needs of the e- commerce milieu would assist in the progress of such officially authorized certainty. Proposed solutions on online dispute includes online alternative dispute resolution (ADR) intuitions that assimilate either a mediation or arbitration model, or some sort of combination of the two. As noted earlier, the idea of taking legal action in a foreign jurisdiction under foreign rules is taken rather anxiously by all businesses engaged in international transactions, including those now partaking in online ventures. The best solution historically for the resolution of international commercial disagreements has been conventional ADR services. As stated earlier, ADR is normally speedy, efficient and confidential. Nevertheless, it is inappropriate for settling online commercial disputes, predominantly for the reason that legal revolution have insulated in the wake of the changes in the social, technological, and commercial mores of cyberspace. Moreover, creative entrepreneurs and academics have thus devised dispute resolution programs on the web. The aptitude to play a part in an online proceeding of this category generates a freer market for dispute resolution, a market unfettered by anxiety of locality or time. The accessibility of online arbitration services enables parties at anyplace and at any time to commence or take action to a petition by accessing a website and finishing electronic forms that steer them through the numerous stages of the course of action. Moreover, the individual parties are able to become accustomed to the process particularly to their precise needs and utilize multimedia technology to conserve time and money. This sleek and collectively obtainable process diminishes entry impediments to arbitration for businesses and individual parties, providing a new means of access to justice. Initially, the individual factions on the web more often wouldn’t have seen each other in the physical world considering they live actually in different nations or continents. In the real world, common consumers do habitually not go into an international agreement. On the other hand, in the Internet, they would have taken advantage of small transactions, which is unusually for them considering they would have second thoughts in acquiring assets in the physical world. As stated earlier in this chapter courts normally are slow and expensive. Furthermore, courts are considered as a financially irrational channel to resolve disagreement arising from the World Wide Web. The factions to such small or medium-sized disagreements in the web will time and again have hardwearing economic enticement not to pursue court proceedings, leaving the fraudulent party with a victory. Additionally, online arbitration could provide this effectiveness, because the alternative to legal actions in courts is barely negligible and therefore much less costly. Nevertheless, difficulties follow from this form of legal effectiveness. Online arbitration compels the factions to give up some of their liberties, which does not stimulate faith and which is the motive why arbitration at present still deal with a sequence of legal hindrances. In terms of the claims of the consumer, there is for instance a predicament of arbitrability beneath a quantity of regulations. Though it is acceptable that most of these legal hindrances are simply errors in the legal system these obstacles are still there. The international market offered by e-commerce creates peril that may be taken in hand by incorporating arbitration clauses in online contracts. Introducing numerous customers one click far from carrying out a business deal that generates the risk of thousands of consumers putting on record lawsuits in their domestic locations or a fusion in a class action lawsuit. The process of arbitration occurs when a third party is chosen by the parties involved, or proposed by the institution selected by the factions, provides a decision on a case while applying fundamental procedural principles. Conventionally, similar to traditional arbitration, its online counterpart resolves a dispute by making a practical decision. This is what is labelled as the binding form of arbitration. It is a procedure where judgments are enforceable by the powers that be. The philosophy of binding arbitration online is that it comprises a mode of private judging, a substitute for court litigation. Thus, in the milieu commerce in the World Wide Web, arbitration's supplementary remuneration of guaranteeing an adjacent medium for resolution of the dispute and eliminating the presence of class action lawsuit stand up to added importance. Online arrangements may take account of an arbitration stipulation with a forum assortment clause and a preference of law clause. Statement of the Problem The researcher finds the necessity for a study that specifically tackles the impact of online arbitration the advancement of technology. Specifically, this study intends to understand the effect of online arbitration on the community, judicial system, technology and the business itself. It will also try to fill in the difference, advantages and disadvantages between traditional arbitration and online arbitration. Moreover, this paper intends to answer the following queries: 1. What is arbitration? 2. What are the related factors in traditional and online arbitration? 3. What are the advantages and disadvantages of traditional arbitration? 4. What are the advantages and disadvantages of online arbitration? 5. What are the related current issues in arbitrations? 6. How can we improve the online arbitration? Hypothesis of the Study This paper will work on the following hypothesis: o There is a significant difference between online arbitration and traditional arbitration in terms of their performance. o There is a significant difference between online arbitration and traditional arbitration in terms of their advantages and disadvantages. Significance of the Study This study will be a significant endeavor in promoting online arbitration by exposing the biases between traditional arbitration and online arbitration in terms of practicality, effectiveness and performance. It is true that these Moreover, this study will be helpful to the Internet user, researchers, educators, and business practitioners in training and informing them in the area of arbitration. It will help them in formulating social responsibility policies, objectives, and strategies. It will also serve as a future reference for researchers on the subject of arbitration. And importantly, this research will educate individuals in doing businesses in the Internet. Scope and Delimitation This paper shall attempt to determine the impact of online arbitration to the current state of the community. Moreover, the literature covering the area of arbitration, the overview of Internet businesses and policies related in arbitration will be discussed. References: David, R. (1985) Arbitration in International Trade . Deventer, The Netherlands: Kluwer Law and Taxation Publishers. Katsh, E., Rifkin, J., Gaitenby, A., (2000) E-commerce, E-Disputes, and E-Dispute Resolution in the Shadow of eBay law, Ohio State Journal of Dispute Resolution, No. 15 , pp.705 Katsh, E., (2000) New frontier. Online ADR becoming a global priority, in Dispute Resolution Magazine, winter, pp..6. Lalive, P., (1999) Towards a Decline of International Arbitration?, The Journal of the Chartered Insitute of Arbitrators, No. 4. Lasprogata, G. (2001) Virtual Arbitration: Contract Law and Alternative dispute resolution, Journal of Legal Studies Education Vol. 19 No. 107 Robert, J. (1967) Arbitrage: Civil et Commercial . Dalloz, Paris. Robert, J. and Carbunneau, T. (1983) The French Law of Arbitration. Matthew Bender, New York. Vahrenvald, A. (2000) Out of Court dispute settlement systems for e-commerce, Report on legal issues, Joint Research Centre of the EC, Ispra (Italy), 29th May van den Horen, H. (1984) "Commercial Disputes and Their Settlement: A Factor in Business Planning" in International Arbitration: 60 Years of ICC Arbitration--A Look at the Future . ICC Publishing, Paris.