1 Introduction*
Arbitration clauses have become a norm in not only commercial business-to-business contracts, but also business-to-consumer (“B2C”) and employment contracts.1 Arbitration makes sense in commercial agreements, especially when there is need for a specialist arbitrator or protection of business secrets. This need for an expert decision-maker has been a harbinger in construction arbitration for decades, and arbitration is beneficial for international parties who seek a neutral forum and enforceable awards under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”).2
In the United States, courts usually enforce arbitration clauses under the Federal Arbitration Act (“faa”)3, along with efficiency-focused arbitration and
OArb is just one example of online dispute resolution (“odr”), which generally encompasses using technology to assist in preventing and resolving disputes. Most odr, however, is not OArb because it involves facilitation of communications to aid voluntary settlement.8 In contrast, OArb is a distinct subset of odr because it culminates in a final award rendered by a third-party neutral under the faa and New York Convention.
OArb has spiked in the covid-19 pandemic.9 Virtual meeting technology such as Zoom, Skype, Google Meet, WebEx, and Teams has made virtual
Still, some parties want traditional in-person arbitration. Respondents are particularly prone to demand in-person hearings, especially where such demands will delay hearings (and paying any awards). Furthermore, some parties may have genuine concerns for OArb: security, internet connection, comfort with technology, trust, etc.
Part ii of the Chapter provides context by explaining the growth of OArb. Part iii then explains how some parties may seek in-person arbitration and refuse to engage in OArb, while Part iv notes law has developed for entertaining objections to OArb.15 Part v concludes with a call for creativity in crafting OArb that advances access to remedies and justice.
2
The idea of OArb is not new. In fact, e-commerce providers such as eBay have been using OArb for customer claims for some time.16 Nonetheless, there are now many OArb providers who provide text-only arbitration with no in-person hearings.17 Moreover, traditional arbitration providers, such as the American Arbitration Association (“aaa”) and others, now provide virtual hearings, especially in the wake of the pandemic. Indeed, evidence suggests OArb has expanded significantly due to covid-19 shutdowns and health restrictions. Moreover, the trend toward OArb and virtual hearings is likely to continue post-pandemic as parties embrace the efficiencies and conveniences OArb offers.18
As OArb evolves, it has become among the offerings of traditional dispute resolution institutions, such as the American Arbitration Association (aaa), the Judicial Arbitration and Mediation Service (jams), and the International Institute for Conflict Prevention & Resolution (cpr). These organizations have long histories of offering in-person arbitration, but they are now offering virtual hearings. This institutionalization of OArb focuses mainly on virtual hearings, while other OArb providers mainly utilize text-based dispute resolution processes.
For example, the aaa offers a secure portal for parties to file claims, upload and manage their claim-related documents, and view and rank potential arbitrators for selection.19 A similar portal is offered for arbitrators to access and manage their cases and review related files and documents.20 In addition, the aaa offers virtual hearing capacity and guidance.21 Accordingly, it is no
Similarly, jams also offers various teleconferencing and videoconferencing options to assist in arbitration, and encourages Zoom in both arbitration and mediation.23 At the same time, cpr offers an array of arbitration services available to clients online.24 In the wake of the pandemic, cpr also offers online training sessions to help neutrals and advocates learn how to use Zoom to arbitrate online effectively.25 cpr released an annotated model procedural order for video arbitration proceedings.26 Of course, ad hoc arbitrators are also using virtual hearings – especially in the pandemic’s wake.27
Lawyers may be resistant to change, but the popularity and efficiency of OArb will endure post-pandemic.28 The option of having witnesses, clients, and attorneys appearing remotely reduces travel time and the likelihood of cancellations in general, which will continue to prove significant as litigants aim to save money and courts face backlogs.29
3 Objecting to OArb
OArb, and odr more generally, may ease costs and stress of in-person processes. Online processes may even empower marginalized groups by easing
3.1 Digital Divide
People continue to have differential access to technology and the internet.32 This has become glaringly apparent in the wake of the pandemic, as families without adequate access to the internet struggled to educate their children.33 Pew Charitable Trust reported one in five U.S. parents with schoolchildren at home say it is very or somewhat likely their children will not complete their work because of lack of access to a computer or internet.34 This alone showed how the pandemic has shined a light on technological disparity.35
In the U.S., Pew Research Center reported in 2021 that 93% of U.S. adults used the internet.39 However, age creates divergence as 75% of adults over 65 vs. 96% of adults 50–64, 98% of adults 30–49, and 99% of adults 18–29 used the internet.40 The 2019 study also showed 93% of white people used the internet, versus 91% of Black and 95% Hispanic people. Race therefore also remains a differentiating factor.41 Income also remains an issue, as 99% of U.S. adults making over $75,000 used the internet, in contrast with 86% of adults making less than $30,000.42
How one accesses the internet is essential when it comes to OArb, as those with broadband access on a computer often enjoy more facility with the process because it is generally easier for them to upload documents and engage with the proceedings. This is important in light of differential access to in-home broadband. Pew reported as of February 2021, only 77% of U.S. adults used home broadband.43 This means processes like OArb and other forms of odr must be mobile-friendly to ensure equal access.44 Furthermore, policymakers and businesses must continue collaborating to expand internet access and education programs for vulnerable groups.45
3.2 Value of In-Person Interactions
This Chapter has noted benefits of online communications, including cost and time savings. However, this is not to discredit or ignore the importance of face-to-face interactions.47 Indeed, some have emphasized the importance of psychology and in-person interactions as a counterbalance to pro-odr assumptions.48 Even in arbitration, in-person hearings provide settlement opportunities – during hallway conversations and “breaks” in arbitration proceedings.49 Arguably, Zoom breakout rooms and intermittent phone discussions during a proceeding may foster settlement, but in-person interactions continue to hold some importance.
Additionally, arbitrators have legitimate concerns about use of remote technology for obtaining and hearing evidence. Concerns include whether a witness has been given answers by someone else in the room or through a computer or telephone accessible, but discrete, in a remote setting.50 Although witnesses may be clandestinely “coached” during in-person proceedings through inappropriate elevator conversations or secret notes, the online environment allows for greater leeway for inappropriate witness assistance.51
Still, there are some precautions arbitrators should take. For example, they should disable “chat” functions within conferencing software (such as Zoom) and warn witnesses of their duty to refrain from improper communications and to provide honest testimony based on the facts as they know them. Arbitrators may even require oaths under some arbitral rules. Furthermore, attorneys should understand they violate ethical rules if they secretly “guide”
Additionally, the lack of in-person proceedings may disproportionally harm those parties that are less technologically savvy. For example, individuals comfortable with and knowledgeable about using Zoom have benefitted during the pandemic by understanding the importance of lighting and placement of a camera. Furthermore, those who live in spaces with fewer distractions may have an advantage over those stuck in a crowded environment where it is difficult to focus during an online hearing. Moreover, this all becomes especially important when an arbitrator assesses the evidence presented online to reach a binding decision.
In sum, documents-only arbitration and virtual hearings have merit in many cases, especially in the pandemic.52 Nonetheless, in-person interactions have merit, and technology has its limitations.53 In-person arbitration should remain an option for many, and arbitrators should take special care to ensure all parties in OArb feel comfortable and have full ability to present their cases. In some cases, this may even mean the arbitrator should call for a continuance amid a virtual hearing to allow for completion through in-person hearings to be sure all parties have a full and fair opportunity to present their cases.
4 Ordering OArb Over Objection
There is no question we will see more OArb and virtual hearings even after the pandemic subsides, as many have become accustomed to the time, cost, and “stress” savings of avoiding travel and in-person meetings. At the same time, the law around the faa continues to call for enforcement of arbitration agreements and awards, even in employment and consumer cases. Furthermore, arbitrators generally have quite a bit of discretion in determining “venue” – including an online venue – but contract and faa limitations remain. Nonetheless, there are limitations on this discretion, and fairness must remain paramount.
4.1
The faa and New York Convention provide for enforcement of arbitration agreements and awards. It does not speak to virtual arbitration, as the idea would have been inconceivable at the Act’s passage in 1925. Nonetheless, most have endorsed the enforcement of electronically created agreements and electronically submitted awards.54 This is fortified by the E-Sign act, which “prohibits any interpretation of the faa’s ‘written provision’ requirement that would preclude giving legal effect to an agreement solely on the basis that it was in electronic form.”55
Nonetheless, consent remains central to enforcement of arbitration agreements. The faa only calls for enforcement of consensual and valid arbitration clauses.56 For example, it was not enough in Campbell v. General Dynamics Government System Corp. that a company obscured an arbitration agreement in a mass email, where the message did not put the employees on sufficient notice they were bound by arbitration simply by receiving an email.57 In contrast, courts have held an employer binds an employee to arbitration where there is evidence the employee logged into an online hr system with a unique login/password and pressed “accept” on the agreement.58 These cases confirm caselaw enforcing “click-wrap” e-contracts that require one to affirmatively “click” on an “accept” button.
Nonetheless, these cases do not address enforcement of OArb per se. Does blanket assent to “arbitration” include agreement to online hearings? What if a party objects to online hearings? The National Arbitration Academy (naa) was one of the first organizations to issue an opinion on ordering online hearings over a party’s objection early in the pandemic.59 On April 1, 2020, the naa issued Advisory Opinion No. 26, finding the need to “provide a fair and adequate hearing” and “provide effective service to the parties” would allow an arbitrator to
The naa advisory opinion stresses before issuing online hearings, an arbitrator should be confident all involved are familiar with the video platform to be used.62 Furthermore, the arbitrator may only order online arbitration over a party’s objection where the parties will have “a fair and reasonable opportunity to present their case and will allow the hearing to move forward on the dates previously scheduled.”63 Other arbitral institutions have issued similar guidance, noting the arbitrators’ discretion in ordering virtual hearings, especially where health and safety are considerations.
That said, courts are starting to face arguments that ordering online arbitration is beyond an arbitrator’s authority under the faa or similar laws. For example, a party made this claim in Legaspy v. Fin. Indus. Reg. Auth., Inc.64 Legaspy asked for a temporary restraining order and injunctive relief against finra to stop them from holding a virtual arbitration hearing and the district court denied his motion. The parties had signed an agreement saying the hearing would be held at a time and place designated by the director of finra, and it would be conducted per finra’s Code of Arbitration Procedure.65 The arbitration was scheduled on August 17, 2020, in Florida, but because of covid-19, finra told the parties on June 23, 2020, the hearing was canceled and would be either rescheduled or held electronically (through Zoom or telephone conference).66 Legaspy argued the proceedings would be difficult and irregular, especially because the other parties needed an interpreter (they were from Argentina), and the cost would exceed his insurance coverage.67
Still, ordering online hearings or an arbitration clause calling for a virtual “location” could be unreasonable where a party lacks access to required technology.69 In Nagrampa v. MailCoups, Inc., the Ninth Circuit ruled the arbitration agreement’s forum selection clause was unconscionable because it was a part of a contract of adhesion, and the place and manner were unduly oppressive.70 In particular, the claimant would have had to travel to Boston, Massachusetts from California, which would have been unduly oppressive and harsh considering the parties’ circumstances.71 The court noted a forum is unreasonable where it would be unduly oppressive or shield the stronger party from liability.72 Accordingly, it would be unreasonable to force a party to arbitrate online where the party lacked access to and/or comfort with the required technologies.
4.2 Arbitrator Discretion
"[C]ourts have recognized that “appearing” in a particular location is easier with modern technology. For example, some courts have held that technology allows arbitration decisions to be made in a place other than where the arbitrators are physically located or the final decision is signed. See, e.g., Moyett v. Lugo-Sanchez, 321 F. Supp. 3d 263, 267 (d.p.r. 2018) (“Despite the physical distance between the arbitrators, who may physically be in Georgia, and the finra litigants, who are in Puerto Rico,
the arbitrators ‘sit’ in Puerto Rico with the aid of videoconferencing technology.”); ngc Network Asia, llc v. pac Pac. Grp. Int'l, Inc., No. 09-cv-8684, 2010 wl 3701351, at *3 (s.d.n.y. Sept. 20 2010) (“[A]n arbitration award is ‘made’ in the district where the hearing is held, not the place from which the award was written or mailed.” (citation omitted) )." Id. at *9.
This highlights the courts’ deference to arbitrators’ choice of venue, including an online forum. Accordingly, a party would have to show the arbitrator(s) exceeded the wide contours of that discretion to overturn an order for online arbitration hearings.
On a similar note, the court in Sanduski v. Charles Schwab & Co., Inc., 219cv01340jadbnw, 2020 wl 4905537 (D. Nev. Aug. 20, 2020), faced an argument that a partially virtual hearing exceeded the panel’s authority under finra rules.73 The court deferred to the arbitrator’s discretion in finding it was “not ‘clear from the record that the arbitrators recognized the applicable law and then ignored it’ as is required to vacate an award under §10(a)(4).”74 The court, therefore, seemed to apply the “manifest disregard for the law” standard of review that some glean from the penumbras of faa§10(a)(4). Easily upholding the decision under this standard, the court noted, “in fact, this panel’s decision to continue with the semi-virtual hearing is not only reasonable, but it does not appear to meaningfully deviate from finra Rule 12401, which makes no mention of whether a panel hearing requires the arbitrators to be physically present.”75
5 Conclusion
Technology has provided immense fuel for OArb, and its benefits became apparent in the pandemic. When properly designed, OArb may allow individuals to resolve disputes quickly and cheaply, without the cost or hassle of travel or time away from work. That is not to say OArb is perfect or suited to every case or party. A digital divide persists, and policymakers must remain vigilant in protecting access to justice.76 Arbitration clauses calling for mandatory
Instead, we should take the covid-19 momentum toward OArb to advance online processes that foster access to justice. We have an opportunity to examine problems with procedures in traditional dispute resolution ecosystems, such as arbitration, and to reimagine – and not merely repeat – those procedures in an online world.
I thank Claire Mendes, Emily Bergman, Sarah Mader, and Ryan Thomas for their research assistance. The chapter is derived from a prior article, Amy J. Schmitz, “Arbitration in the Age of Covid: Examining Arbitration’s Move Online,” Cardozo Journal of Conflict Resolution 22 (2021): 245–92 and some parts are substantially similar to that article.
Of the 100 largest U.S. companies (as listed in Fortune), many have had arbitration agreements since 2010, including class arbitration waivers. Imre Stephen Szalai, “The Prevalence of Consumer Arbitration Agreements by America’s Top Companies,” University of Carolina Davis Law Review. Online 52 (2019): 234. The data shows that 81 of the 100 companies have used arbitration agreements, and 78 of those 81 companies use class waivers.
New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), 9 u.s.c. secs. 201–08; 9 u.s.c. secs. 301–07 (implementing the Inter-American Convention on International Commercial Arbitration (Panama Convention)).
Federal Arbitration Act (“faa”), 9 u.s.c. secs. 1–16 (covering domestic arbitration), secs. 201–08 (implementing the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”)), secs. 301–07 (implementing the Inter-American Convention on International Commercial Arbitration (“Panama Convention”)). See also Green Tree Fin. Corp. v. Randolph, 531 U.S. 79 (2001) (emphasizing the “liberal federal policy favoring arbitration agreements”).
See generally Jeffrey W. Stempel, “Arbitration, Unconscionability, and Equilibrium: The Return of Unconscionability Analysis as a Counterweight to Arbitration Formalism,” Ohio State Journal on Dispute Resolution 19 (2004): 812–13 (highlighting restrained application of unconscionability in the wake of rising formalism).
Electronic Signatures in Global and National Commerce Act 2006, 15 u.s.c. §96 (2006), sec. 7001 (making electronic contracts enforceable to the same extent as written contracts; effective October 1, 2000).
Amy J. Schmitz, “‘Drive-Thru’ Arbitration in the Digital Age: Empowering Consumers Through Regulated odr,” Baylor Law Review 62 (2010): 178–244 (proposing “OArb” as a distinct type of online dispute resolution); Amy J. Schmitz, “Arbitration in the Age of Covid: Examining Arbitration’s Move Online,” Cardozo Journal of Conflict Resolution 22 (2021): 245–92.
See generally Linda S. Mullenix, “Ending Class Actions as We Know Them: Rethinking the American Class Action,” Emory Law Journal 64 (2014): 39.
See generally Amy J. Schmitz & Colin Rule, The New Handshake: Online Dispute Resolution and the Future of Consumer Protection (American Bar Association, 2017); see also Amy J. Schmitz, Building on OArb Attributes in Pursuit of Justice, in Arbitration in the Digital Age: The Brave New World of Arbitration (Maud Piers & Christian Aschauer, 2018), 182.
Melody Alger, “Conducting Arbitrations and Mediations Remotely During the Covid-19 Crisis and Beyond,” 68 Rhode Island Bar Journal 68 (2020): 15.
See “2021 International Arbitration Survey: Adapting arbitration to a changing world,” White & Case llp, accessed May 6, 2021,
Id.; Andrey Panov, “Post-COVID-19 world and the duty to conduct arbitrations efficiently and expeditiously,” Thomson Reuters, accessed August 13, 2020,
“White & Case llp, supra note 10 “When discussing virtual hearings, two key takeaways emerged from interviews. First, there appears to be a growing expectation that virtual hearings will become the default option in the future for procedural hearings and conferences.” Id.
Karen Maxwell, “Could Arbitration Support Courts During the COVID-19 Crisis?,” Thomson Reuters, accessed May 27, 2020,
Svetlana Gitman, (Esq., Vice President, Am. Arb. Ass’n/Int’l Ctr. for Disp. Resol.), in email with Amy J. Schmitz, Professor, June 30, 2020.
Due to space limitations, this Chapter will not go into all the guidance that has been developed around OArb, but Part iv at least gives some mention.
Schmitz, “’Drive-Thru’,” supra note 6, at 178–244.
Amy J. Schmitz and Janet Martinez, “ODR Providers Operating in the U.S.” in ODR in the United States, in Online Dispute Resolution: Theory and Practice: A Treatise on Technology and Dispute Resolution, eds. Mohamed S. Abdel Wahab, Ethan Katsh and Daniel Rainey, (2020), available at
See Amy J. Schmitz, The Arbitration Conversation, May 31, 2021,
“aaa-icdr Technology Services,” American Arbitration Association, accessed June 18, 2020,
Id.
Svetlana Gitman, “Arbitration Conversation No. 1 – Amy Chats with Svetlana Gitman,” interview by Amy J. Schmitz, Arbitrate.com, June 30, 2020,
“aaa-icdr Virtual Hearing Case Statistics,” American Arbitration Association, accessed Jun. 2, 2021,
“Virtual Mediation & Arbitration,” jams, accessed June 18, 2020,
“Arbitration,” International Institute for Conflict Prevention and Resolution, accessed June 6, 2020,
“adr in the Time of COVID-19: How Neutrals & Advocates Can Use Zoom for Mediations & Arbitrations,” International Institute for Conflict Prevention and Resolution, accessed March 30, 2020,
“new: cpr’s Annotated Model Procedural Order for Remote Video Arbitration Proceedings,” International Institute for Conflict Prevention and Resolution, accessed June 18, 2020,
Alger, “Conducting,” supra note 9, at 15–16.
Id.
Id. at 17.
See Avital Mentovich, J.J. Prescott, and Orna Rabinovich-Einy, “Are Litigation Outcome Disparities Inevitable? Courts, Technology, and the Future of Impartiality,” Alabama Law Review 71, (2020): 900–4.
See Susan C. Herring, “Computer-Mediated Communication on the Internet,” Annual Review of Information Science and Technology 36 (2002): 144–45 (2002); David Allen Larson and Paula Gajewski Mickelson, “Technology Mediated Dispute Resolution Can Improve the Registry of Interpreters for the Deaf Ethical Practices System: The Deaf Community Is Well Prepared and Can Lead by Example,” Cardozo Journal of Conflict Resolution 10 (2008): 140–4 (explains evidence that less bullying occurs through online communication than F2F).
Thom File, “Computer and Internet Use in the United States,” U.S. Census Bureau accessed May 2013,
Suzanne Woolley, Nikitha Sattiraju, and Scott Moritz, “U.S. Schools Trying to Teach Online Highlight a Digital Divide,” Bloomberg, March 26, 2020,
Emily A. Vogels et al., “53% of Americans Say the Internet Has Been Essential During the COVID-19 Outbreak,” Pew Research Center, Apr. 30, 2020,
Dana Goldstein, “The Class Divide: Remote Learning at 2 Schools, Private and Public,” New York Times, last modified June 5, 2020,
“Key Internet Statistics to Know in 2021 (Including Mobile),” Broadband Search, accessed May 31, 2021,
Id.
Id.
“Internet/Broadband Fact Sheet,” Pew Research Center, April 7, 2021,
Id.
Id.
Id.
Id.
John Busby et al., FCC Reports Broadband Unavailable to 21.3 Million Americans, BroadbandNow Study Indicates 42 Million Do Not Have Access (BroadbandNow Research, 2020),
See, e.g., Rebecca R. Ruiz, “F.C.C. Chief Seeks Broadband Plan to Aid the Poor,” New York Times, May 28, 2015,
Amy J. Schmitz, “Expanding Access to Remedies through E-Court Initiatives,” Buffalo Law Review 67, (2019): 101–73 (2019).
Adam Samuel, “Now Plaguing Dispute Resolution Processes: Proceeding in ADR Without the Handshakes,” Alternatives to the High Cost of Litigation 38, no. 5 (April 2020): 71.
Id.
Id.
Id.
Id.
See Amy J. Schmitz, “Measuring ‘Access to Justice’ in the Rush to Digitize,” Fordham Law Review 88, (2020): 2381; Schmitz, “Expanding Access,” supra note 46, at 101–160.; Amy J. Schmitz, “A Blueprint for Online Dispute Resolution System Design,” Journal of Internet Law 21, no. 3 (2018); Schmitz & Rule, The New Handshake, supra note 8.
Jean R. Sternlight, “Pouring a Little Psychological Cold Water on Online Dispute Resolution,” Journal of Dispute Resolution (Winter 2020): 1.
Caleb Gerbitz, “Are Pre-Dispute Agreements to Arbitrate Online Enforceable?,” Arbitration Brief 7, January 25, 2020,
Campbell v. Gen. Dynamics Gov’t Sys. Corp., 407 F.3d 546 (1st Cir. 2005).
See Theroff v. Dollar Tree Stores, Inc., 591 S.W.3d 432 (Mo. Sup. Ct. 2020) (en banc). In this case, the court held that a party did not consent to arbitration where a former Dollar Tree employee who was legally blind was never provided with a reasonable means to read and understand a form arbitration provision included in hiring paperwork. Id.
Id. at 559.
Holmes v. Air Liquide USA LLC, wl 267194 (S.D. Tex. 2012), affirmed, 498 Fed. Appx. 405 (5th Cir. 2012). See also, In re Holl, 925 F.3d 1076 (9th Cir. 2019) (enforcing an arbitration clause in an e-contract).
“Formal Advisory Opinion No. 26: Video Hearings,” Committee on Professional Responsibility and Grievances, National Academy of Arbitrators, April 1, 2020,
Id.
Id.
P. Jean Baker, “Utilizing Virtual Arbitration during the Pandemic,” American Bar Association, May 26, 2020,
Id.
Legaspy v. Financial Industry Regulatory Authority, Incorporated, wl 4696818 (N.D. Ill. 2020).
Id.
Id.
Id.
Id. at 4.
Gerbitz, supra note 54, at 27.
Nagrampa v. MailCoups, Incorporated, 469 F.3d 1257 (9th Cir. 2006).
Id.
Id.
Sanduski v. Charles Schwab & Co., Inc., 2:19-cv-01340-jad-bnw, 2020 wl 4905537(D. Nev. Aug. 20, 2020).
Id.
Id.
Rebecca L. Sandefur, “The Fulcrum Point of Equal Access to Justice: Legal and Nonlegal Institutions of Remedy,” Loyola of Los Angeles Law Review 42 (2009): 950–54.
Compare Nagrampa v. MailCoups, Inc., 469 F.3d 1257, 1293 (9th Cir. 2006) (holding that the arbitration agreement’s forum selection clause was unconscionable because it was a part of a contract of adhesion, and the place and manner requirements (traveling to Boston from California) were unduly oppressive and harsh considering the circumstances of the parties).