Alternative Dispute Resolution

Updates

The ICCA and IBA react to the increasing relevance of data protection regulations, especially GDPR, to the arbitration procedures and parties. The aim of the data protection task force is to compose a guide that identifies the ways in which data protection may need to be taken into account during the course of an arbitration and how it would impact parties to the arbitration and the arbitration procedure. The draft Guide for public comment will be available in March 2019.

The United Nations Commission on International Trade Law’s (“UNCITRAL”) Working Group II approved final drafts for a Convention on the Enforcement of Mediation Settlement Agreements and for a Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation (so called Singapore Mediation Convention). While these instruments need to be adopted and ratified by states, they strengthen the role of mediation as an alternative to arbitration for international commercial dispute resolution.

In Schein, Inc. v. Archer and White Sales, Inc., 586 U.S. the Supreme Court confirmed that when an arbitration agreement delegates to an arbitrator the question of whether the agreement applies to a particular dispute, courts have no power to decide this question, even if a court considers the arbitrability argument to be “wholly groundless.” The Supreme Court thus confirmed the Kompetenz-Kompetenz doctrine recognised in US law.

New Rules on the Efficient Conduct of Proceedings in International Arbitration (aka Prague Rules) launched as an alternative to the International Bar Association (IBA) rules on taking the evidence in international arbitration. Drafted by practitioners from more than 30 countries, the rules are now closer to the civil law approach to disputes. They allow wider rights for parties to call witnesses of facts and experts, as well as expanded use of case-law in the international arbitration proceedings.

Member states of the World Trade Organisation (WTO) – EU, Australia, Canada, China, Iceland, India, Korea, Mexico, New Zealand, Norway, Singapore, and Switzerland - published a proposal for specific changes to address the deadlock in the WTO Appellate Body. The proposal includes an increase to 9 full time working Appellate Body Members, with the term increased to 8 years, and new rules for outgoing members in order to increase efficiency and independence. In addition, the proposal sets measures to ensure that the appeal proceedings are concluded within 90 days (as set by WTO rules), explicitly excludes domestic legal issues from the subject matter jurisdiction, and mandates the Appellate Body to address only the issues necessary to resolve the dispute. The proposal foresees annual meetings between the WTO members and the Appellate Body in order to address trends in jurisprudence and any systemic issues. The proposal will be presented at the meeting of the WTO General Council on 12 December 2018.

The United States, Canada, and Mexico have reached an agreement - the USMCA (the United States-Mexico-Canada Agreement) - to replace NAFTA (the North American Free Trade Agreement). Once in force, the USMCA will significantly alter the investor-state dispute settlement (ISDS) that is currently included in Chapter 11 of NAFTA. Under the new rules, in the case of US-Canada relations, the parties will not have an option to start arbitration proceedings; instead, the investor will have to file a claim in the national court of the host state - the state where the investment has been made and the investors’ rights are breached. In the case of US-Mexican relations, three years after the termination of NAFTA, the USMCA makes a distinction between regular investments and those involving government contracts. Claimants with regular investments may only challenge measures in breach of regulations on national treatment, most-favored nation treatment, and expropriation, excluding indirect expropriation. Before submitting the claim to arbitration, the claimant must first file the claim with the courts of the host state. The arbitration can only commence if there is a final decision of a ‘court of last resort of the respondent or 30 months have elapsed’ from the start of the domestic court proceedings. In the case of Canada-Mexico relations, the USMCA does not regulate the arbitration proceedings. Instead, the investors will have to file claims under the dispute settlement regulations of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) expected to be ratified by Canada on 29 October. The treaty is not yet in force. See also: Canada, Mexico and the US reach a deal to revise NAFTA

Alternative Dispute Resolution

Alternative dispute resolution (ADR) are the methods of resolving a dispute between parties other than through traditional courts. ADR includes early neutral evaluation, negotiation, mediation, arbitration, and online dispute resolution (ODR).

Mediation

Based upon the consent of the parties, mediation provides for the assistance of an independent third party (mediator) in finding solutions to the dispute. Mediation promotes consensus between the parties but does not provide a binding resolution for the participants.

Arbitration

Arbitration is a dispute resolution mechanism available in place of traditional courts. 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 such as the place of arbitration, procedures, and choice of law. The leading international arbitrations are usually attached to chambers of commerce. The main international instrument is the United Nations Commission on International Trade Law (UNCITRAL) 1985 Model Law on International Commercial Arbitration.

The advantages of arbitration include overcoming the potential conflict of jurisdiction and the 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 the protection of human rights; these require the intervention of state-established courts.

In cases where the subject of the dispute is the Internet and relationships stemming from the use of the Internet, arbitration remains the most effective and timely remedy due to the avoidance of jurisdiction conflicts.

Online Dispute Resolution

Online Dispute Resolution (ODR) is a dispute resolution mechanism involving digital technology. The Internet has brought major changes to the alternative dispute resolution making the procedure more agile and time and cost effective. As with regular dispute resolution, ODR allows for filling the gaps of the current regulations in international private law to deal with Internet cases. In addition, it allows for:

  • Improved early neutral evaluation by enabling to bring in experts regardless of the geographical location;

  • Improving effective negotiation by fostering single or double blind negotiations;

  • Introducing e-mediation where parties are led through automated choices to achieve consensus before working with a mediator;

  • Introducing new forms of arbitration and new rules of procedure (such as the digital submission of evidence and documentation, holding hearings via online media, etc.)

With regards to the new forms arbitration, an example is the Universal Domain-Name Dispute-Resolution Policy (UDRP) developed by WIPO and implemented by ICANN as the primary dispute resolution procedure. 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 is not agreed upon by the parties, rather it is applied to all the contracts. In addition, awards are applied directly through changes in the DNS without resorting to enforcement through national courts.

 

The need to regulate disputes in cross border e-commerce consumer cases in the single market has led the EU to adopt the Directive of consumer ADR No 2013/11/EU. Filling a void, it required the EU nation states to provide ADR bodies for the settlement of consumer to business disputes beginning in 2015. A year later, the Regulation on consumer ODR No 524/2013 came into effect introducing the creation of an online platform to file complaints on e-commerce. This legislation introduces significant change to the existing civil justice system in the EU. It has created an additional way for consumers to achieve accessible, timely, and cost effective redress.

 

ODR is evolving and on track to be included in more arbitral rules. While it has its weak points, such as accessibility and confidentiality issues, it gives parties more convenient, flexible, and effective way to resolve their disputes compared to traditional arbitration.

Events

Actors

(WIPO)

WIPO has developed, together with the

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WIPO has developed, together with the Internet Corporation for Assigned Names and Numbers, the Uniform Domain Name Dispute Resolution Policy (UDRP). Under this policy, WIPO’s Arbitration and Mediation Centre provides dispute resolution services for second level domain name registrations under generic top-level domains (gTLDs). The Centre also administers disputes under a specific policies adopted by some gTLD registries (e.g. .aero, .asia, .travel). In addition, the Centre offers domain name dispute resolution services for over 70 country code top-level domains (ccTLDs). WIPO has developed a ccTLD Program, with the aim to provide advice to many ccTLD registries on the establishment of dispute resolution procedures.

(ICC)

ICC engages in the WTO particularly representing micro, small, and medium enterprises (MSMEs).

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ICC engages in the WTO particularly representing micro, small, and medium enterprises (MSMEs). In 2016 ICC issued a report calling for a new WTO agreement on e-commerce. ICC’s objective is to have an e-commerce framework that is more open to MSMEs. The report recommends three main actions: a capacity building fund for SMEs; making trade more efficient for SME for instance through harmonised tariffs for low value items; and global rules to support consumer trust in the digital economy. ICC has also carried out research on trans-border data flows.

(WTO)

The WTO’s involvement in e-commerce-related issues started in 1998, when the Ministerial Conference adopted th

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The WTO’s involvement in e-commerce-related issues started in 1998, when the Ministerial Conference adopted the Declaration on Global Electronic Commerce, which called for the development of a work programme on e-commerce. The programme, also adopted in 1998, provides a definition for e-commerce and sets out responsibilities for WTO bodies in e-commerce-related areas. Other e-commerce-related initiatives undertaken by the WTO include: a moratorium rendering electronic transmissions free of custom duties among WTO member states; a dispute resolution mechanism which addresses, among others, cases involving electronic transactions; and the annual WTO Public Forum. There are ongoing discussions among WTO member states as to whether the organisation should play an increasing role in e‑commerce.

(ICANN)

ICANN is responsible for coordinating the evolution and operation of the Domain Name System.

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ICANN is responsible for coordinating the evolution and operation of the Domain Name System. The organisation coordinates the allocation and assignment of names in the root zone of the DNS, and the development and implementation of policies concerning the registration of second-level domain names in generic top-level domains (gTLDs). It also facilitates the coordination and evolution of the DNS root name server system. When it comes to gTLDs, ICANN concludes agreements with registry operators (for the administration of each gTLD), and accredits registrars. In the case of country code top-level domains (ccTLDs), ICANN only goes as far as (re)delegating them on the basis of some high-level guidelines.

(EC)

Over-the-top services, next generation networks, the collaborative economy, and artificial intelligence are am

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Over-the-top services, next generation networks, the collaborative economy, and artificial intelligence are among the issues the European Commission is paying particular attention to. The Electronic Communications Code proposed by the Commission in September 2016 plans to introduce some level of regulation for OTT services. Encouraging the deployment of NGN networks able to better support the provision of converged services is a priority for the Commission, as part of its Broadband Strategy and Policy. The EU executive body has also issued guidelines and policy recommendations for the collaborative economy, while its Digitising European Industry strategy identified artificial intelligence and robotics are cornerstone technologies to be supported.

(UNCITRAL)

In line with its mandate to contribute to the harmonisation of international trade law, UNCITRAL has drafted s

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In line with its mandate to contribute to the harmonisation of international trade law, UNCITRAL has drafted several documents of relevance for matters concerning Internet and jurisdiction. Examples include the Model law on electronic commerce (1996), the Model law on electronic signatures (2001), and UN Convention on the use of electronic communications in international contracts (2005), and the Technical Notes on Online Dispute Resolution (2016). E-commerce continues to be an area of interest for the Commission, which has a dedicated working group focused on the legal dimensions of issues such as identity management, trust services, electronic transferable records, cloud computing, etc.

Instruments

Conventions

Link to: Convention on Cybercrime (Budapest Convention) - Article on dispute setlement (arbitration) (2001)

Other Instruments

COMESA Model law on electronic transactions

Resources

Publications

Internet Governance Acronym Glossary (2015)
An Introduction to Internet Governance (2014)

Reports

Report of the Director General to the WIPO Assemblies (2015)

GIP event reports

Where and How to Protect Legal Interests in the Digital Era (2017)
ICANN58: GNSO-GAC Facilitated Dialogue on IGO & Red Cross Protections (Session 2) (2017)

Processes

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