Arellano, Eddie: Resolving Internet Disputes


The internet is a global system of interconnected computer networks that use the standard Internet Protocol Suite (TCP/IP) to serve billions of users worldwide. It is a network of networks that consist of millions of private, public, academic, business, and government networks of local technologies. [1] The internet can be described as a powerful communications medium that allows data exchanges in various media formats between a wide ranged of users situated in distant location. The internet applications such as email, commercial websites (E-commerce) and market places (e.g. online auctions), content-sharing websites (e.g. video or photo-sharing websites), social networking sites (such as Myspace, Facebook or linkedln), collaborative websites (e.g. wikis and blogs) and virtual worlds (such as Secondlife or Word of Warcraft) allows users to interact directly with each other and exchange and share information regardless of their physical, geographical location. As such, it has the potential to lead to a multitude of internet disputes. This is particularly so in Business to Consumer (B2C) or Consumer to Consumer (C2C) disputes. [2]

Disputes that arise on and about the internet can be time-consuming to resolve, legally murky and factually complex. Thus, there is a need for the establishment of online dispute resolution system for resolving internet disputes or technology disputes. In such case, it then considers the use of online technology for arbitration. With arbitration, instead of waiting five or more years to have a case resolved, it can be done within a day or a week. These alternative procedures tend to move faster than courts and to cost their corporate creators less than lawsuits.

This paper will proceed to examine how internet disputes can be resolved fairly, outside the courts. It defines the different internet disputes. It looks at the questions of applicable law and due process in arbitration. It then considers different methods and mechanism for dispute resolution. It considers the use of online technology for arbitration, obviating the need for the parties and lawyers to meet face-to-face and leading to more efficient information processing, thereby reducing cost and delay in dispute resolution. Therefore this paper proceeds to examine the legal issues surrounding online arbitration.

Internet Disputes

Considering the internet applications as aforesaid, the following internet disputes may arise: copyright infringement, trademark infringement, internet domain name disputes, defamation and linking and framing disputes.

Copyright infringement – a party is guilty of copy infringement if they violate one of the exclusive rights given to copyright owners under the Copyright Act. Included in those rights are the right to prevent others from reproducing or copying a work, publicly displaying a work, or distributing a work. As a result, web page authors should take care not to copy the work of others. An internet service provider can also be found liable for infringement even when they are not directly engaged in the copying of protected materials. [3]

Trademark infringement – a trademark is a word, image, slogan, or other device designed to identify the goods or services of a particular party. Trademark infringement occurs when one party utilizes the mark of another in such a way as to create a likelihood of confusion, mistake and/or deception with the consuming public. The confusion created can be that the defendant’s products or services are the same as that of the trademark owner, or that the defendant is somehow associated, affiliated, connected, approved, authorized or sponsored by trademark owner. Since most web sites will contain discussions of products or services, web site developers should be aware of the potential trademark issues. [4]

Internet Domain Name Disputes – A domain name is the address of a web site that is intended to be easily identifiable and easy to remember, such as or Domain name disputes arise largely from the practice of cybersquatting, which involves the pre-emptive registration of trademarks by third parties as domain names. Cybersquatters exploit first-come, first-served nature of the domain name registration system to – register names of trademarks, famous people or business with which they have no connection. Since registration of domain names is relatively simple and inexpensive, cybersquatters often register hundreds of such names as domain names. [5]

Defamation – The term defamation refers to a false statement made about someone or some organization that is damaging to their reputation. For a statement to be defamatory, the statement must be published to a third party, and the person publishing the statement must have known or should have known that the statement was false. While the internet provides a new context in which a defaming statement can be made and published, there is little new law relating to internet defamation other than liability for service providers. [6]

Linking and framing- links between pages are the raison d’ etre for the world wide web. Without widespread linking, the web as we know it would not exist. Nevertheless, there are questions about the legality of such connections.

One should not include links to images found on another party’s web without first getting permission.

Reverse passing off by using a link to pass-off another’s work as one’s own most likely violates state law governing competitive business practices.

It should be noted that a link to another’s page or image could be defamatory, and hence subject someone to legal liability.

Any link that falsely leads the end user to conclude that the web page author is affiliated, approved, or sponsored by the trademark owner could lead to a claim of trademark infringement.

Frames are used to subdivide web pages into multiple parts. For example, frames could be used to divide a browser into two parts, with one part containing an index for the web site and the second containing content pages. While this type of use is perfectly legal, problems can arise if a frame is used to show pages from two web sites at the same time. The use of frames in this way can mislead the viewer of a site as to the creator of its content, possibly raising issues of copyright infringement, passing off, defamation, and trademark infringement. [7]

ADR and Applicable Law

Alternative Dispute Resolution and Technology is both fascinating and of extreme importance to the future of dispute resolution in general. Online Dispute Resolution takes advantage of the advances in information technology and communication to help disputants deal with relatively low level disputes in a cost efficient manner.

As a consequence of the increasing awareness that ADR methods, particularly arbitration, are better alternatives to litigation in resolving disputes especially in the field of international commerce, the United Nations Commission on International Trade Law (UNCITRAL) adopted the Model Law. The Model Law is designed to meet concerns relating to the current state of national laws on arbitration and is intended to be used as a basis for harmonization and improvement of national laws.

UNCITRAL is the core legal body of the United Nations system in the field of international trade law. A legal body with universal membership specializing in commercial law reform worldwide for over 40 years. UNCITRAL’s business is the modernization and harmonization of rules on international business. UNCITRAL promotes trade as a means of increasing growth and improving living standards. To increase opportunities worldwide, UNCITRAL is facilitating the modern and fair rules on commercial transactions. [8]

UNCITRAL has since prepared a wide range of conventions, model laws and other instruments dealing with the substantive law that governs trade transactions or other aspects of business law which have an impact on international trade. UNCITRAL deals with the laws applicable to private parties in international transactions.

Consistent with the UNCITRAL Model Law, Model law on Electronic Commerce was adopted on 12 June 1996, the Model Law is intended to facilitate the use of modern means of communications and storage of information. It is based on the establishment of a functional equivalent in electronic media for paper-based concepts such as “writing”, “signature” and “original”. By providing standards by which the legal value of electronic message can be assessed, the Model Law should play a significant role in enhancing the use of paperless communication. The Model Law also contains rules for electronic commerce in specific areas. Noting that an increasing number of transactions in international trade are carried out by means of electronic data interchange and other means of communication, commonly referred to as “electronic commerce”, which involve the use of alternatives to paper-based methods of communication and storage of information; the establishment of a model law facilitating the use of electronic commerce that acceptable to States with different legal, social, and economic systems could contribute significantly to the development of harmonious international relations. The adoption of the model law will assist all States significantly in enhancing their legislation governing the use of alternatives to paper-based methods of communication and storage of information and in formulating such legislation. [9] The E-commerce law has now opened the window for the UNCITRAL to be a venue for resolving internet disputes through online dispute resolution.

Online Dispute Resolution

Online Dispute Resolution is a branch of dispute resolution which uses technology to facilitate the resolution of disputes between parties. It is often seen as being the online equivalent of alternative dispute resolution. However, ODR can also augment these traditional means of resolving disputes by applying innovative techniques and online technologies to the process.

ODR is a wild field, which may be applied to a range of disputes; from interpersonal disputes including Consumer to Consumer disputes (C2C) or marital separation; to court disputes and interstate conflicts. It is believed that efficient mechanisms to resolve online disputes will impact in the development of e-commerce. While the application of ODR is not limited to disputes arising out of business to consumer (B2C) online transactions, it seems to be particularly apt for these disputes, since it is logical to use the same medium for the resolution of e-commerce Defining Online Dispute Resolution [10]

Dispute resolution techniques range from methods where parties have full control of the procedure, to methods where a third part is in control of both, the process and the outcome. These primary methods of resolving disputes maybe complemented with Information and Communication Technology (ICT). When the process is conducted mainly online it is referred to as ODR, i.e. to carry out most of the dispute resolution online, including the initial filing, the neutral appointment, evidentiary processes, oral hearings if need, online discussions, and even the rendering of binding settlements. Thus ODR is a different medium to resolve disputes, from beginning to end, respecting due process principles.

ODR was born from the synergy between ADR and ICT, as a method for resolving disputes that were arising online. The introduction of ICT in dispute resolution is currently growing to the extent that the difference between off-line dispute resolution and ODR is blurry. Online Dispute Resolution has defined by some commentators as exclusively the use of Alternative Dispute Resolution assisted principally with Information and Communication Technology tools.

In ODR, the information management is not only carried out by physical persons but also by computers and software. The assistance of ICT has been named by Katsh and Rifkin as the “fourth party” because ODR is seen as an independent input to the management of the dispute. In addition to the two disputants and the third neutral party, the labelling of technology as the fourth party is a clear metaphor which stresses how technology can be as powerful as to change the traditional three side model. While the fourth party may at times take the place of the third party, i.e. automated negotiation, it will frequently be used by the third party as a tool for assisting the process.

The fourth party may do many things such as organize information, send automatic responses, shape writing communications in a more polite and constructive manner e.g. blocking foul language. In addition, it can monitor performance, schedule meetings, clarify interests and priorities and so on. The assistance of the fourth party will increase the more technology advances, thus reducing the role of the third neutral party. As a result, ODR processes are increasing in efficiency providing their disputants with greater advantages in terms of time saving and cost reductions. [11]

ODR processes should be structured in the context of internet disputes and concludes that the optimal choice is online arbitration.


Arbitration is a highly legalistic process with significant and difficult legal and fairness issues especially in business to consumer (B2C) disputes. Arbitration is a time-tested, cost efficient alternative to litigation. Arbitration is the submission of” a dispute to one or more impartial persons for a final and binding decision, known as an “award”. Awards are generally final and binding on the parties in the case. Arbitration is less formal than litigation, though more than any other consensual process. It is often used to resolve businesses’ disputes because this procedure is noted for being private and faster than litigation. Once the procedure is initiated parties cannot abandon it. Another feature of arbitration is that the award is enforceable almost everywhere due to wide adoption of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Moreover, arbitral awards prove frequently easier to enforce than court decisions from overseas.

The majority of legal studies on online arbitration agree that, neither law, nor arbitral principles, prevent arbitration from taking place online. Online arbitration seems admissible under the New York Convention and the E-Commerce Directive, this is arguably an assumption by most commentators, rather than a legal statement. Since arbitration is based on a contractual agreement between the parties, an online process without a regulatory framework may generate a significant number of challenges from consumers and other weaker parties if due process cannot be assured. Currently, most arbitration providers allow parties to carry out online only part of the arbitration process, e.g. parties may download claim forms, the submission of documents through standard email or secure web interface, the use of telephone hearings, etc. The main challenge for online arbitration is that if judicial enforcement is required then it partly defeats the purpose of having an online process. [12]

The Uniform Domain Names Dispute Resolution Policy (UDRP)

Traditionally, arbitration resolves disputes by delivering a decision that will be legally binding. Non binding arbitration processes may also be effective when using ODR tool because they often encourage settlements by impairing a dose of reality and objectivity. In addition, self-enforcement measures may reinforce the efficacy of non binding processes. The most significant example is the Uniform Domain Name Dispute Resolution Policy which was created by the Internet Corporation for Assigned Names and Numbers (ICANN). UDRP is an administrative process which has developed a transparent global ODR process that allows trade mark owners to fight efficiently cybersquatting. The UDRP is used to resolve disputes between trade mark owners and those who have registered a domain name in bad faith for the purpose of reselling it for a profit, or taking advantage of the reputation of a trademark.

The Internet Corporation for Assigned Names and Numbers (ICANN) Domain Name Dispute Resolution System is considered as a potential model for other types of internet disputes.

A proposed model of dispute resolution for the internet

Alternative dispute resolution, to a considerable extent, employs communication to lessen tensions and reach agreements. Thus, while the network serves as a place where informational activities heighten the likelihood of conflict, the network also presents opportunities for designing online places that can be employed to reduce and resolve conflicts. Arbitration, for example, is largely a process in which information is obtained and evaluated and online tools should provide opportunities for online arbitration.

Workable ODR places

A model of dispute resolution for the internet may be started at developing workable online dispute resolution places. It is an online arbitration primarily oriented around disputes that confront system operators. System operators are owners or managers of systems on which these information distribution activities take place. They provide the account, software, and other means that allow one to engage in publishing and other communicative activities. However, while systems operator provides the means for publishing to occur, it may or may not have any control over or involvement in the activity. The common type of problem that expects to deal with is the posting of messages and files that may place the system operator in some jeopardy. As described by David Post, the standard dispute is one in which: one party (complainant) asserts that a second party (actor) has posted a message or a file on a system under the control of another party containing “wrongful content” of some kind, e.g., material that infringes complainants copyright or trademark rights, misappropriate trade secrets belonging to complainant, is defamatory or fraudulent or inappropriate(obscene, lewd, or otherwise violative of system rules), and demands that the offending posting be removed from the system under system operator’s control. [13]

Response Time

The net is not simply a new channel of communication but it is a channel that changes the assumptions users have about both time and space, duration and distance. It is appropriate for online dispute resolution processes to be concerned with response times since “the Net is a real time activity. Messages, files and postings become available worldwide at the touch of a key.

Online Office

Generally, arbitration proceedings are administered by an arbitral institution, an example of which is the International Chamber of Commerce. In online arbitration, there must be an online office for disputes arising out of online activities. The online office exists as a place where one can obtain information and consult a person with expertise. The place is not a physical site but a site on the World Wide Web where one can access information or receive assistance from one of the online official.

Independent Officials

There must be independent officials who are not an authoritative or final decision maker but is “a confidential and informal information resource, communications channel, complaint-handler and dispute-resolver.” The role of said officials was originally intended to be an antidote to abuses of governmental and bureaucratic authority and administration, and continue to be effective intervenor in cases of arbitrary decision making.


An assurance of confidentiality is generally a feature of alternative dispute resolution. Whatever ADR process is employed can be expected to work more effectively when each party is assured that what they reveal will not be shared with other parties, unless permission is given to do so.

Authenticity of Messages

Cyberspace is an environment in which copying is easier but guaranteeing the authenticity of messages is harder. In cyberspace, it is possible for one to assume many identities (pseudonyms) and to change one’s identity by pressing a few keys, or to have no identity (anonymity). Thus, while it is ordinarily possible to copy any message that one sees on the screen, one also tends to be wary of attributing the message to the person who appears to be the sender.

Just as software, in the form of encryption, can guarantee that only one person is able to read a message, there are software solutions to the authenticity problem. Digital signatures, for example, are codes that are embedded in a message that can be employed to verify that a message was sent by someone. What this suggests is that third parties who work online will need to be sensitive to the varying levels of message authentication that are available online and to select the level that is appropriate to the problem and to the parties. [14]


An arbitral body once constituted has the power to examine the question of its own competence. The UNCITRAL Model Law under Article 16, paragraph 1 adopts the principle of “kompetenz-kompetenz,” which means that the arbitral tribunal has the power to rule on its jurisdiction, that is, on the very foundation of its mandate and power. As a rule, the arbitral tribunal can take cognizance only of those disputes submitted to it. Parties may not always intend arbitration to be the sole means of settling disputes. They may agree to refer to the courts those disputes arising from other aspects of the contract. In this case, the arbitral tribunal will have no jurisdiction since the same were not submitted to it for resolution. [15]

Recognition and enforcement of Awards

Arbitral awards may be enforced pursuant to the New York Convention of 1958. The Convention obliges participant countries to enforce arbitral awards as if the awards were made in their countries subject to limited grounds on which enforcement may be refused. These grounds are those enumerated under Article V of the New York Convention. [16]

Awards are Final and Binding

As a rule, an award rendered by an arbitral tribunal is final and binding on the parties. Generally, courts shall not review the findings of fact made by arbitral tribunals. However, this rule admits of exceptions. Article 34 paragraph 1 of the UNCITRAL Model Law on International Commercial Arbitration provides that: “Recourse to a court against an arbitral award may be made by application for setting aside in accordance with paragraphs(2) and (3) of this article.” Hence, the awards may be subject to judicial review only on limited grounds specifically provided by law. [17]


Since the multitude of internet disputes arise from the use of web applications, it is applicable that it should be resolved through online dispute resolution, particularly online arbitration. Online arbitration may be said to have adopted the modern view of encouraging the parties to make their arrangements with regard to solving disputes.

The ability of technology, especially the Internet, to make many business processes more efficient is now making it clear that online dispute resolution (ODR) through online arbitration is the next frontier of Alternative Dispute Resolution. The Internet promises to make more disputes reachable by ADR and to facilitate the resolution of disputes faster and at a lower cost. The Internet also provides the legal profession the opportunity to prevent the vast waste of our scarce resources. Better stewardship is achievable, but like many shifts from paper to technology, a clear strategic pathway has yet to appear.

In view of the foregoing, the UNCITRAL plays an important role in the realization of online arbitration. On the otherhand, it is hoped that parties to transactions would support the aforesaid method as an alternative to court litigation and which provides disputants with greater advantages in terms of time savings and cost reductions.
















[15] Alternative Dispute Resolution by Marthe Lois V. Cordia

[16] Alternative Dispute Resolution by Marthe Lois V. Cordia

[17] Alternative Dispute Resolution by Marthe Lois V. Cordia


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