Information systems arbitrators

Fernando Aparicio. Professor. IE Business School

30 May 2006

As business becomes increasingly global, third-party arbitration offers a quick and efficient way to resolve the cross-border disputes involving information systems and arising from the growing use of the Internet.

Because no specialised jurisdictional bodies exist to resolve conflicts over information systems, management can find itself trapped in a gridlock when a dispute of this type breaks out. Currently, the official judicial procedure is slow and lengthy and lacks the expertise needed to ensure an adequate resolution of conflicts involving financial systems. Consequently, management at many
companies is increasingly calling on arbitration by impartial third parties to resolve its disputes in this area. Third party arbitration is based on the idea that an expert in financial-systems will employ technically correct criteria to resolve a dispute.

The arbitration systems employed in other global sectors such as foreign trade are proving to be a good, cheap and convenient instrument for resolving conflicts involving information systems. Under this extra-judicial system, the parties involved in a legal dispute voluntarily submit their contractual differences to a third party or parties who then act as arbitrators in the disagreement.

The rules regulating this process are based on the agreement by both sides to accept the arbitrators’ decision (equivalent to a sentence). Both parties must fulfil their obligations as dictated by the decision, which is considered confidential. It also offers all the necessary guarantees which go into effect immediately under current legislation.

Another interesting aspect to this question is posed by international disputes. These are occurring at a time when services are increasingly transcending national borders, driven by the massive use of the Internet. Under this new model, my customer relation management (CRM) is supplied by the United States, my email marketing campaign manager hails from South Africa and my automatic backups are executed in France.

The potential disputes that could arise on the international arena shouldn’t weigh on my decision to expand abroad. Rather I should feel confident that there is a third party arbitrator able to deal, in an adequate and timely manner, with any conflicts that might occur.

The most telling example for the need for arbitration came from the Internet Corporation for Assigned Names and Numbers (ICANN)-- the organisation responsible for processing generic higher level domains such as .com, .net and .org—when it faced the urgent need to resolve a dispute. The ICANN discarded the international treaty procedure on the grounds it was too slow. It also ruled out the enactment of national laws, arguing they risked becoming too divergent.

Instead it asked the World Intellectual Property Organisation (WIPO), among others, to step in and resolve the conflict, using the formula in which an ´arbitrator´, ´mediator´ or expert (from a list of approximately 200 independent professionals authorised to take decisions in this type of case) examined the situation and made a decision accordingly. All this was done at reasonable prices and usually within a two-month framework.

The new plan for .es domains includes a system of extra-judicial conflict resolution in which a series of accredited suppliers can respond to claims of possible speculative domains. Associations such as ACAM, AEADE and ARGITEC are promoting third-party arbitration in the business world. They are trying to demonstrate that disputes in such areas as failed computer projects, incomplete functional analyses, conflicts over intellectual property, non-fulfilment of the terms of a Service Level Agreement (SLA) and irregularities in the provision of online services, etc. can be perfectly resolved through the system of conflict arbitration.

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