Luận văn thạc sĩ online arbitration international experiences and lessons for vietnam

MINISTRY OF EDUCATION AND TRAINING
FOREIGN TRADE UNIVERSITY

MASTER THESIS

ONLINE ARBITRATION: INTERNATIONAL
EXPERIENCES AND LESSONS FOR VIETNAM

Major: International Trade Policy and Law

NGUYEN BAO HOA

Ha Noi - 2020

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MINISTRY OF EDUCATION AND TRAINING
FOREIGN TRADE UNIVERSITY

MASTER THESIS

ONLINE ARBITRATION: INTERNATIONAL
EXPERIENCES AND LESSONS FOR VIETNAM

Major: International Trade Policy and Law
Code: 1706060005

Student: Nguyen Bao Hoa
SUPERVISOR: Assoc Prof. Nguyen Minh Hang

Ha Noi - 2020

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DECLARATION
I confirm that that this Master Thesis has been written solely by the
undersigned and contains the work of no other person or people except where
explicitly identified to the contrary. I also state that said Master thesis has not been
submitted elsewhere for the fulfillment of any other qualification. It was written with
the thorough guidance of my supervisor - Assoc Prof. Nguyen Minh Hang

Hanoi, …. 18th 2020
Author

Nguyen Bao Hoa

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ACKNOWLEDGEMENT
The dissertation has been completed with the great guidance of Acc Prof.
Nguyen Minh Hang I would like to express my sincere thanks for her patience and
massive help with reading the whole of the thesis and making valuable comments for
my research.
By this occasion, I am much grateful to the Department of Graduate Studies

and Foreign Trade University - who have always create most favorable conditions for
MITPL6 students in completing our study. Thank you so much for their generosity
and I owe a debt of gratitude to all helpers.

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ABSTRACT
Alternative Dispute Resolutions are mechanisms designed to solve disputes
outside the scope of traditional jurisdiction. New technologies may be incorporated to
ADRs in order to facilitate the procedure and make it more efficient and less
expensive manner. In this thesis I will metion about the specific case of arbitration
procedures that are conducted exclusively through electronic means of
communication.
Online arbitration is an ideal dispute resolution mechanism to solve disputes
arising from B2B transactions for various reasons, among others, because it allows
parties to select a specialist they both trust to solve the controversy with an award that
is binding for both parties, but that respect the minimum necessary formalities of the
procedure. Additionally, the use of electronic means of communication allows the
procedure to be conducted in a faster pace, from any location, and allowing parties to
get access to the documents of the procedure at any place at any time.
There is currently no legal framework designed specifically for the conduction
of online arbitration procedures; therefore, the rules for traditional commercial
arbitration should be used. Even though the rules of traditional arbitration allow the
existence of the online version, due to its special characteristics, online arbitration
requires a set of rules designed especially for it.
Online arbitration requires a legal framework that regulates the use of
electronic means of communication in the procedure, the way in which notifications

shall be performed and acknowledgement of receipt granted. The legal framework
should also prescrible the obligation of the parties to take the necessary measures to
ensure that the security and confidentiality of all the information exchanged in the
procedure. Finally, parties should be able to select the extra judicial mechanisms that
they deem convenient for enforcing the award in an easy and fast manner.

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TABLE OF CONTENTS
DECLARATION ....................................................................................................... i
ACKNOWLEDGEMENT ....................................................................................... ii
ABSTRACT ............................................................................................................. iii
TABLE OF CONTENTS ........................................................................................ iv
LIST OF ABBREVIATIONS................................................................................. vi
INTRODUCTION .....................................................................................................1
CHAPTER

1:

OVERVIEW

OF

ARBITRATION

AND

ONLINE

ARBITRATION ......................................................................................................10
1.1.

Arbitration and its advantages. ................................................................10

1.1.1. Arbitration..............................................................................................10
1.1.2. Advantages of Arbitration in comparison with traditional jurisdiction
..........................................................................................................................11
1.2. Online dispute resolution .............................................................................13
1.2.1. Concept of online dispute resolution ....................................................13
1.2.2. Characteristics of online dispute resolution .........................................15
1.3. Online arbitration .........................................................................................17
1.3.1. Concept of online arbitration ................................................................17
1.3.2. Structure and legal basis of electronic arbitration...............................20
1.3.3. Advantages and disadvantages of online arbitration ...........................20
1.3.4. Block-chain regulation and Machine Made Justice in Online
Arbitration ........................................................................................................23
1.3.5. Applicable law to online arbitration .....................................................25
CHAPTER 2: APPLICATION OF ONLINE ARBITRATION IN THE
WORLD AND IN VIETNAM ................................................................................32
2.1. International experience of online arbitration in the world .....................33
2.1.1. Experience of online arbitration in EU ................................................33
2.1.2. Experience of online arbitration in Iran ..............................................35
2.1.3. Experience of online arbitration in US ................................................36
2.1.4. Experience of online arbitration in Singapore ....................................40

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2.1.5. Experience of online arbitration in Indonesia .....................................41
2.2. Online arbitration in Vietnam .....................................................................43
2.2.1. Legal provisions on online dispute resolution and online arbitration 43
2.2.2. The application of online arbitration in Vietnam ................................50
2.2.3. Opportunities of applying online arbitration in Vietnam ....................56
2.2.4. Difficulties when applying online arbitration in Vietnam ...................59
CHAPTER 3: RECOMMENDATIONS AND SUGGESTIONS .......................62
3.1. Recommendations for the state of Vietnam ...............................................62
3.2. Recommendationsfor e-commerce businesses ...........................................67
3.3. Recommendations for online arbitration providers ..................................69
3.4. Recommendations for IT and telecommunications infrastructure vendors
.....................................................................................................................70
3.5. Recommendations for consumers ...............................................................72
3.6. General trend around the World after pandemic .....................................73
3.6.1 Trends after Corona Virus Pandemic ......................................................73
3.6.2 Legal framework for digital transformation for legal proceedings in
Vietnam .................................................................................................................75
CONCLUSION ........................................................................................................77
REFERENCE ..........................................................................................................81

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LIST OF ABBREVIATIONS

No

Acronym

Explanation

1

SIAC

Singapore International Arbitration Center

2

LCC

London Commercial Court

3

DIFCC

The Courts of the Dubai International Financial
Centre

4

UAE

United Arab Emirates

5

CISG

United Nations Convention on Contracts forthe
International Sale of Goods (Vienna, 1980)

6

LCIA

The London Court of International Arbitration

7

ODR

Online Dispute Resolution

8

ADR

Alternative Dispute Resolution

9

QMUL

Queen Mary University of London

10

SIFoCC

Standing International Forum of Commercial
Courts

11

VIAC

Vietnam International Arbitration Center

12

VMC

Vietnam Mediation Center

13

UNCITRAL

The United Nations Commission on International
Trade Law

14

UNCITRAL

UNCITRAL

Model

Model Law

Commercial Arbitration (1985), with amendments
as adopted in 2006

15

IT

Information Technology

16

AI

Artificial Intelligence

17

¶

Paragraph

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Law

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International


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INTRODUCTION
1. Rationale
International trade continues to increase in online volume, resulting in a sharp
increase in disputes arising from such online commerce. Accordingly, arbitration is
the preferred method for resolving international trade disputes, in which online
arbitration is the standard of alternative dispute resolution in the near future,
especially in the field of e-commerce. When the court could not afford to resolve the
dispute, online arbitration has become a legal method of dispute resolution
everywhere in the world with different levels of scope and application. For online
arbitration to be accepted, it is necessary to determine which basic rules will govern
the choice of law, jurisdiction and enforcement of the award. Online arbitration can
inherit the characteristics of traditional arbitration, can also shorten the time of
making judgments, save time and cost for all parties, apply modern technology to
support aid dispute process. In addition, online arbitration is particularly suitable for
e-commerce, when the number of disputes arising is becoming more and more
complicated in large numbers along with the rapid growth of payment and
e-commerce.
The main content of the thesis will review the research and development of
online arbitration in the world, study and refer to the experience of developing online
arbitration of developed countries in the world and developing countries. Like

Vietnam, through which, the writer made recommendations to effectively apply
online arbitration in Vietnam.
2. Litterature review
There are several researches on ODR in general and online arbitration in
particular.
Frank (1997) in the study of Online Systems in Alternative Dispute Resolution

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found that the problem with online arbitration is difficult in selecting the appropriate
law to apply to the dispute. Arbitrators may only need to apply applicable legal rules
to determine the law governing the value of the dispute, but it is often unclear what
choice of laws rules will govern a particular dispute when Legal systems cannot be
clearly defined when applied in Cyberspace. Frank (1997) also argues that
contractual obligations are the only effective means of contracting parties with online
courts. Therefore, the incorporation of online terms must be included in the user
registration agreements. Accordingly, the use of online systems to resolve binding
disputes will be less restrictive.
Eddie (2000) argues that in the context of national legal systems related to
censorship technology, there have been calls for adjustment of international
commercial arbitration to consider the issue of online arbitration. Accordingly, the
parties to the Internet dispute will be comfortable, resolving their disputes through
the same means that they are doing business. Online arbitration also provides an
incentive for the parties to agree on a dispute settlement system and the parties will be
able to bypass formal legal institutions and maximize government intervention.
Eddie also discusses a number of special and very important issues that will need to
be addressed to ensure the proper and legal functioning of online arbitration

including: time frames applicable to online arbitration; rights of the parties to the
dispute regarding access to the material; requests concerning communication
between the parties and the arbitrator; procedure to cater for authenticated or
authoritative situations; and instructions on the appearance and enforcement of online
arbitration.Meanwhile, Llewellyn et al (2002) found that large costs, jurisdiction and
transnational lawsuits were not feasible to perform in court,not provide an equal
playing field for online arbitration in disputes between merchants although at the time
this system may not exist or be inadequate for disputes between consumers and
traders.

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Eddie's study (2000) also suggested a mechanism for online arbitration to
work in practice, such as The World Intellectual Property Organization (WIPO) to
resolve intellectual property disputes. Accordingly, online arbitration begins by
accessing procedures through the website and then electronically submitting a
request at the WIPO Arbitration Distribution Center. All claims about claims, facts
and legal arguments, documentary evidence need to be submitted electronically and
online. The arbitration center determines the location of the arbitrator and the
language used. After the end of the required requirements, a final award is given and
no appeal is given. Accordingly, the steps mentioned above for the strict time frames
are specified in the WIPO rules.The parties contact via digital means and send
requests by completing the corresponding electronic and online forms via secure
channels, and receive automatic notifications, payment of electronic fees, databases
of document storage and storage, and secure channels are all via Internet-based
systems.
Eddie (2000) also provides other examples of an online Arbitration that clearly

shows that organizations have realized the potential advantages and predicted the
need to resolve disputes by online arbitration such as Cybertribunal is a project of the
Faculty of Law in University.Montreal; The Office of Online Inspection is provided
by the Massachusetts Center for Information Technology and Dispute Resolution at
the University of Massachusetts providing mediation services primarily to other
parties; The Virtual Judge Project is a joint venture of the American Arbitration
Association and Villanova LawSchool related to trademark infringement, fraud
disputes.
Tiffany (2000) in her study confirmed that the best regulation of trade on the
Internet can be done by combining current international law while drafting new
flexible laws to supplement and clarifyapplicable laws. And the same combination
can be applied to online arbitration to create some law certainty.In order to conduct

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arbitration online, Tiffany (2000) listed six arbitration tribunals that the arbitrator can
submit including the American Arbitration Association (AAA); International
Chamber of Commerce (ICC); London Court of International Arbitration (LCIA);
Stockholm Chamber of Commerce (SCC); International Center for Settlement of
Investment Disputes (ICSID); and the United Nations Conference on International
Trade Law (UNCITRAL).
Tiffany et al (2000) also argued that the statutory arbitration rules of most
countries will maintain the decision of the judgment officer to be binding, except for
the discovery of fraud or arbitration such as evidence of corruption among arbitrators;
the referee has exceeded their powers.For online arbitrators, due to their independent
geography and number of participants, the parties involved may include defendants,
petitioner and arbitrators and may be located in many other geographical locations

(usually 6 or more). Up to six national courts may have relevant jurisdiction for
review purposes. Accordingly, the location of the arbitrator is determined by the
geographical location of the server. If the parties disagree with the position of the
arbitrator, the arbitral tribunal may determine the appropriate location.
Another issue that was also raised in the study was that although the parties
agreed to the terms of the online arbitration in the contract, it was impossible to
determine whether the local court would help or hinder the arbitration. Referees and
many local rules will have to follow. Therefore, online arbitration is a useful
alternative dispute resolution but still needs to create new or amend the old arbitration
rules.
Regarding transparency in online arbitration, Bashar (2009) states that unless
the result of online arbitration is published, system users cannot find out what the law
is applied to. However, the owner of a trademark or a trader will have many dispute
resolution cases and may gain unwarranted advantages. Thus, in a well-defined,
highly developed, legal and commercial environment, such as e-commerce, online

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referees face the challenge of establishing certainty as mentioned. This can be done
by requiring the decisions of the online arbitrator to be provided publicly by the ODR
provider.
Karen et al (2002) have found that the more difficult issue is whether
consumers should refuse online arbitration in the process of contract formation,
which depends on the transparency of the arbitration process. Online arbitration only
becomes a method of resolving international disputes between businesses and
consumers when the online arbitration process must be an open process, allowing
consumers to participate in online commerce. At the same time, it is necessary to

limit the occurrence that suppliers often conduct secret procedures. Karen's research
suggests that the key means to achieve this allows consumers to observe the entire
process and increase the transparency of the system. Research by Karen et al (2002)
also shows that courtroom doors in the United States are open to anyone interested in
observing the process. Published decisions represent the solidity of the US legal
system while many other countries do not publish decisions.
The European Commission considers transparency must be included in any
out-of-court dispute resolution process, including significant online. Accordingly,
decisions published from online arbitration will also show that this process is an
attempt to fairly resolve international online disputes. Online arbitration providers
should provide arbitral awards and relevant statistical information. Publicizing
decisions will not be too difficult because the online proceedings will automatically
create a record; Disputes between consumers and businesses are quite similar to those
between businesses.1 In addition, some countries have acknowledged the exception
appropriately to keeping confidential decisions not only for online arbitration but also
for offline arbitration between businesses.
1

Karen Stewart; Joseph Matthews, Online Arbitration ofCross-Border, Business to Consumer Disputes, 56

U.Miami L. Rev. 1111 (2002)

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Thuy (2016) also investigated the online trade dispute resolution with the
proposal of using ODR in which online arbitration. This study focuses on the legal
issues that hinder the application of ODR in general, in Vietnam. The author also said

that effective settlement of online trade disputes is one of the most important
factorsto build trust and promote e-commerce in Vietnam.
Bao and Hanh (2017) in his research said that ODR including online
arbitration is a trend applied by many countries around the world. This study has
shown the advantages and disadvantages when applying the above form and confirms
that online arbitration is one of the ODR forms that can be successfully applied in
Vietnam.
In conclusion, there have been many topics about online arbitration in the
world, there are some topics about online arbitration in Vietnam, but there have not
been any studies on online arbitration particularly and the experience of other
countries to apply in Vietnam. Referring to the experience of other countries,
especially those that have successfully applied online arbitration with condition and,
the level similar to Vietnam is extremely necessary because it will help Vietnam save
a lot of deploy time and cost. At the same time, the study also answers questions
about solutions for the transparency and fairness of e-commerce booming in Vietnam
today.
3. Researchquestions and objectives
The thesis will address the following research questions:
(1) The basic principle and caracteristics of online arbitration?
(2) Countries around the world including developed and developing countries
such as Vietnam, has applied online arbitration? What experiences are
drawn for Vietnam?
(2) Will Vietnam take advantage of strengths and overcome weaknesses in

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developing online arbitration to widely apply this new type of dispute resolution,

especially in the field of e-commerce? What solutions to be implemented for the
state, the technology providers, technology infrastructure and consumers?
4. Scope of research
In this thesis, the author wants to limit its content to a scope of research,
focusing on online arbitration rather than expanding and comparing different types of
ODR in order to find the appropriate form for Vietnam. The thesis focuses on the
study of online arbitration in developed countries combined with the advances of
science and technology. Through these, the thesis proposes a number of
recommendations for stakeholders in Vietnam to successfully apply online
arbitration, including the very important role of state agencies and arbitration services
providers in Vietnam.
As for geographical scope, the study shall cover the theories of online
arbitration and application in the world (such as US, Singapore, Iran, Indonesia
and EU) and demonstrate how they are applied in Vietnam.
As for time scope, the research shall examine on the development of online
arbitration from 2000 up to now
5. Methodologies
This study was conducted by the following methods. First, the method of
examining the theory and the study of components related to online arbitration and
the broader picture is online dispute resolution (ODR), especially in the context of the
new trend in the world with the strong rise of information technology and the
application of artificial intelligence. The thesis is mainly based on secondary legal
data from studies related to the application of laws in countries around the world and
to the reality in Vietnam. Secondly, the conceptual analysis method is also used to
analyze legal rules on a practical basis and the context of information technology

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infrastructure changes very quickly and points out the strengths and weaknesses of
online arbitration as well as advantages and disadvantages when applied in Vietnam.
In the legal field, especially in online disputes, the opinion of commercial
arbitrators directly handling disputes is very valuable for reference and consideration
to clarify the issue under study. In addition, statistical and selective method (list and
select the form of solution similar to the object to be studied) is also applied when this
study provides a set of experiences and solutions that countries have applied in
developing online and selecting appropriate solutionsto effectively apply online
arbitration in Vietnam.
6. Structure of thethesis
The thesis will focus on analyzing the benefits of online arbitration and
looking for effective application of online arbitration and overcoming the weaknesses
of this method in countries around the world. In addition to the introduction focused
on reviewing the history of development and the theoretical studies of online
arbitration and conclusions, the content of the thesis will be divided into three
chapters.
Chapter 1 will be dedicated to examining the definition and characterization of
component related to online dispute resolution, electronic contracts, and codes
regarding online arbitration globally, regionally and Countries. At the same time this
chapter goes into depth analysis of the strengths and weaknesses of online arbitration.
Chapter 2 presents key online development experiences in developed
countries around the world such as the US, Europe, South Korea and regional
countries with Vietnam such as Singapore and Indonesia. This chapter also focuses
on a thorough analysis of the current Vietnamese laws relating to online arbitration in
order to find out what needs improvement and what content can be used to apply in
practical online arbitration. In addition, the reality of online arbitration activities in

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Vietnam is also presented with the advantages, difficulties and challenges posed.
Chapter 3 sets out solutions and recommendations for the state, IT
infrastructure development units, online arbitration service providers, e-commerce
companies and consumers in order to promote the development of online arbitration,
transparent efficiency of online dispute activities, contributing to promoting the
development of e-commerce in Vietnam.

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CHAPTER 1: OVERVIEW OF ARBITRATION AND ONLINE
ARBITRATION
1.1.

Arbitration and its advantages.
This chapter will go through the main characteristics of arbitration and the

advantages that it reprents. Afterwards, we will go through the differences between
the traditional and the online arbitration procedure.
The content about the main characteristics of the online arbitration procedure
and the current legal framework, which regulates traditional arbitration, is
applicable for the online procedure or if they are incompatible, in which case a new
set of rules will be required.
1.1.1. Arbitration
Arbitration is “a method of dispute resolution involving one more or more

neutral third parties who are chosen by or agreed to by the disputing parties, and
whose decision is binding”4.
Arbitration is one of many Alternative dispute resolutions (ADRs) that exist as
an alternative to traditional jurisdiction. It has certain characteristics that differentiate
it from the others, for instance, its procedural rules are more formal, as parties have
deadlines for the presentation of their arguments and evidence. Unlike in negotiation
or mediation, a party that has agreed upon arbitration cannot walk out of the
procedure. Arbitration is intended to provide a final resolution for the dispute; it is not
merely intended to mediation between parties or to conciliate them. Actually, the
resolution of the arbitrations (the award) is binding and enforcable.
The above mentioned characteristics give arbitration considerable relevance
among the available ADRs. This does not mean that arbitration will always be the
4

Garner, Bryan A. (editor-in-chief), Black’s Law Dictionary, West Group, 1996, p.40.

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ideal mean to slove a dispute. Each ADR has its own advantages and drawbacks.
Therefore, in each case, parties should analyze which is the most convenient way to
solve their particular dispute.
1.1.2. Advantages of Arbitration in comparison with traditional jurisdiction
Arbitration comes equipped with certain characteristics that make it an
attractive option for dispute resolutions. Among others, arbitration has the following
advantages:
(i)

Election of the arbitration: Arbitration allows parties to choose the arbitrator

or panel of arbitrators who will solve the dispute.
The possibility of choosing the arbitrators becomes useful in disputes involving
technical or special knowledge. For example, in e-commerce, in disputes involving
the sale of software, parties may want to select an arbitrator who is an expert on the
subject.
The arbitrator’s specialized knowledge can help solve the dispute faster an in a more
economical manner, while a traditional judge may not have sufficient knowledge to
solve the dispute, or would need the opinion or advice of an expert, which may make
the judicial procedure longer and expensive. Furthermore, parties can create an
arbitral panel composed of experts from different fields, e.g., a technical expert and a
lawyer.
(ii)

Internationalization: Parties can select any location in the world for the arbitral
proceedings, this may be especially helpful in international disputes in which
the parties involved reside in different countries.

(iii)

Neutrality and equality: Parties are able to select an arbitration with no
inclination towards one or the other, so that the neutrality and equality of the
procedure is guaranteed.

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This characteristic is helpful in disputes involving parties with different
nationalities. In this case, they may deem it convenient to appoint an impartial
arbitrator instead of going before the national court of one of the parties,
whose impartiality may be doubtful.7
(iv)

Flexibility: Arbitration allows flexibility in both procedure and time, provided
that minimum formalities required to guaranty the due process of law are
observed. Parties in arbitration will not be tied to the formal mechanisms of a
normal court proceeding8, as an arbitral procedure can be tailored for each
case.

(v)

Confidentiality: Arbitration is generally considered to be a confidential
procedure. Arbitration agreements normally imply confidentiality obligations
in connection with all the information exchanges in the arbitral procedure9. On
the other hand, judicial procedures are public and the information related to it
may be disclosed.
The confidentiality of the arbitral proceedings may stimulate e-business
transactions if they know that in the event of a dispute, it will remain
confidential. Parties may want to keep the information regarding the
arbitration confidential, as sensitive information may be exchanged in the
process. Additionally, in some cases, if the existence of a dispute is disclosed
to the public, a company may face financial or reputational damages.
However, parties may allow, to a certain extent, the publicity of an arbitral
procedure. For instance, in the Netherlands, with the prior authorization of the
parties, awards are published without indicating the names of the parties

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T. Schultz, G. Kaufmann-Kohler, D. Langer, & V.Bonet, Online Dispute Resolution: The State of the Art and
the Issues, E-Com Research Project of the University of Geneva, Geneva, 2001, http://www.
Online-adr.org.p14.
8
St.John Sutton, David, et al, Russell on Arbitration, 23nd edition, Sweet & Maxwell Limited, London, 2007,
p.12.
9
Gabrielle Kaufmann-Kohler, Schultz, Thomas, Online dispute resolution, challenges for contemporary
justice, Kluwer law international, 2004, p.49.

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