Internet Dispute Resolution – Part I

Internet dispute resolution procedures such as arbitration or mediation are necessary when there is an actual case or controversy between the parties. These types of alternative dispute resolution procedures provide a viable option for the parties to solve their legal claims before or during litigation. So, in general, an appointed neutral third party (i.e., arbitrator, mediator) reviews the case and renders a decision with the following caveat: Arbitration is usually a binding process but mediation is not binding between the parties.

Internet disputes arise in several areas such as business transactions that take place between commercial organizations and their customers. They take place during international e-commerce transactions. Internet disputes may also occur between users or subscribers of social media websites. In any event, all kinds of online disputes are taking place which should be addressed and resolved by a qualified neutral third-party – i.e., arbitrator, mediator.

International e-commerce transactions have expanded in recent years especially since there are multiple websites that provide a way to find and order products or services. These e-commerce websites (e.g., Amazon, eBay, Alibaba) sell a variety of products or services to their users or subscribers. So, naturally, there will be problems which is why there should be a fair and efficient resolution system.

What about confidentiality and data privacy?

It is a known fact that electronic communication devices are not absolutely secure at all times. In addition, electronic transmissions on the internet can be intercepted by third parties without authorization. The hackers can infiltrate electronic communication devices by sending malware to recipients. The computer will be compromised for an unknown duration once the malware has infiltrated its system. So, the internet dispute resolution provider should take this matter into consideration simply because it will be handling sensitive or confidential information (e.g., trade secrets, financial records). In fact, if any of the evidence is forged or falsified, then it may have a negative effect on the outcome. In other words, the internet dispute resolution provider must establish trust and confidence for its users in the virtual world.

How can we enforce the arbitration award?

The enforcement of arbitration awards is another challenge litigants face after the dispute resolution process has been finalized by the neutral judge. In summary, the prevailing party will receive the binding arbitration award which in essence is an agreement between the parties. Therefore, it is possible for the losing party to not comply with the arbitration award which would constitute a breach of contract. Moreover, in California, the statute of limitation for breach of written contract is four years pursuant to Code of Civil Procedure Section 337. As such, the prevailing party has a limited time to file a motion to confirm the arbitration award.

What are the rules and regulations?

The Federal Arbitration Act (“FAA”) is a federal law that facilitates arbitration for dispute resolution. The statute applies to state and federal courts as confirmed in Southland Corporation v. Keating, 465 U.S. 1 (1984) wherein the Supreme Court of the United States addressed the issues concerning arbitration and held that the FAA applied to contracts that were signed under state laws. The court’s majority held that Congress intended to encourage arbitration as much as possible since there is a national policy favoring arbitration. However, the dissenting minority held that the FAA’s legislative history showed that it was only intended to apply to contracts that were signed under federal laws.

The Uniform Arbitration Act (“UAA”) was enacted to insure arbitration agreements are enforceable in the states and to promote uniform laws in all jurisdictions. This statute does not address several issues such as: who would decide whether a dispute is subject to arbitration, whether the judge or neutral arbiter can issue a provisional remedy, how can one of the parties instigate arbitration, can arbitration proceedings be consolidated, or whether the neutral arbiter can order discovery, issue protective orders, or decide motions for summary judgments.

The Electronic Signatures In Global and National Commerce Act (“E-SIGN Act”) is a federal law that permits the usage of electronic signatures and electronic records in interstate and foreign commerce. It is codified under 15 U.S.C. §§ 7001, et seq., and it allows the parties to execute documents by using special software. This federal statute allows the parties to engage in online alternative dispute resolution when necessary. They can also electronically sign and submit documents during the process. In some cases, special software such as DocuSign may be used by the service provider.

Our law firm assists clients in matters related to internet dispute resolution procedures such as arbitration and mediation. It’s important to know your legal rights and responsibilities when involved with internet transactions. Please contact our law firm to speak with an internet attorney at your earliest convenience.