We know that specialized forums for dispute resolution have been around for quite some time. Maritime disputes, disputes involving energy and natural resources, sports-related disputes, securities and other financial disputes – all have set up their own special forums for alternative dispute resolution.
Odd as it may be, technology-related disputes have been late in joining this family of specialized dispute resolution forums in spite of technology being the global industry that probably has experienced the most accelerated growth in the past decade. This trend becomes even more intriguing when we consider the amount of articles and debates that international arbitration and technology has generated in the past years.
Technological innovation has consistently been a hot topic in international arbitration in past years. The growing need worldwide to use artificial intelligence in handling claims and disputes has motivated dispute resolution professionals, in general, and international arbitration practitioners, in particular, to find ways to join this tech wave.
Their need to keep up with these trends and the associated legal constraints has arisen from massive technological innovation, the growing interest in cybersecurity, blockchain technology, paperless arbitration and online dispute resolution.
Meanwhile, the legal industry has progressively taken up many disciplines pertaining to information technology often put under the umbrella of what we call technology law. This term is being redefined in a more inclusive and less strict manner.
Given the transactional and commercial nature of technology -- both as a product and as a service -- the diverse classification of contracts and agreements generate numerous disputes pertaining to contracts involving transactions or agreements such as:
- technology consulting deals;
- IT outsourcing;
- software licensing and maintenance;
- reseller agreements;
- hardware and software purchasing;
- software-as-a-service agreements;
- e-commerce; and
- data privacy and data security etc.
These are but a few of the areas that constitute sources for highly technical disputes that can be resolved by non-traditional forums able to provide the expertise, confidentiality and flexibility required by the industry.
A 2013 international survey designed by the World Intellectual Property Organization’s (WIPO) Arbitration and Mediation Center (WIPO Center), with 393 respondents (including law firms, companies, research organizations, universities and government bodies) from 62 countries, revealed that respondents generally reported a trend towards out-of-court dispute resolution for technology transactions stemming from tech contracts.
The obvious preference towards resolving disputes in an out-of-court setting resulted from the negative aspects of duration and high cost of litigation. Respondents to the survey also noted the “increasingly international character of contracting” and the “specific neutral expertise” requirement as two factors that motivate the shift towards arbitration. The increase in size and scale of technology transactions was another consideration for moving towards specialized adjudicators and arbitral proceedings.
Almost as an immediate response to these new realities, the Silicon Valley Arbitration & Mediation Center (SVAMC)3 was founded in 2014, to serve the global technology sector, including:
- high tech,
- industries that implement technology, and
- biotechnology and materials sciences.
Working with the major stakeholders -- such as leading tech companies, Alternative Dispute Resolution (ADR) institutions, law firms and universities – SVAMC promotes arbitration and mediation to resolve the technology and technology-related business disputes.
Interestingly enough and confirming the new preference of technology companies for arbitration over litigation, a 2017 study conducted by the Global Technology Dispute Resolution Council (GTDRC)4 and SVAMC showed that the top three issues with litigation involving tech companies were the cost, the resolution time and the lack of experience and qualification of the judges.5 Correspondingly, the top three benefits of arbitration were the specialized and/or expert decision making, the resolution time and the confidentiality of the procedures. The value of specialized technology knowledge for the decision-makers is an important consideration in both rankings, thus further justifying the need for specialized forums. To address the need for qualified neutrals, SVAMC publishes an annual list with the World’s Leading Technology Arbitrators and Mediators.6
In June 2019, the UK based Society for Computers and Law (SCL)7 announced that it was developing a contractual adjudication process for tech disputes based on contracts for tech-related goods and services. The parties can choose their adjudicators from a panel set up by the SCL, in order to resolve the dispute in a three-month procedure. The decision of the adjudicator would only be provisionally binding, because the parties have a six-month period to reopen it by arbitration or litigation.
While it has been exciting to witness the rapid growth of technology and the ever-evolving complexity of technology contracting, it has been equally interesting to see the natural choice of alternative dispute resolution – arbitration, in particular – and specialized forums for the technology industry over litigation. In turn, technology changes the traditional theory and practice of ADR, in a cycle that typifies these times of global accelerated transformation.
ABOUT THE AUTHOR
Irina Beschieriu, Contract Manager, Atos, is a technology transactions professional, with an LLM in Dispute Resolution and Advocacy from Benjamin N. Cardozo School of Law, New York; an MA in European Law; and an LL.B from Romania. Passionate about the interplay between law, business and technology, she worked as a legal expert and project manager for big infrastructure projects before being contract manager for two global tech and outsourcing giants. She specializes in tech contract management, data privacy and dispute resolution in the context of technology law and business.
- Full Report on the Results of the International Survey on Dispute Resolution in Technology Transactions available at https://www.wipo.int/amc/en/center/survey/results.html
- WIPO ADR, Results of the WIPO Arbitration and Mediation Center International Survey on Dispute Resolution in Technology Transactions, pg. 28
- Silicon Valley Arbitration & Mediation Center (SVAMC)
- GTDRC litigation research (referenced in article by American Arbitration Association titled Arbitration Favored over Litigation for Tech Dispute Resolution).
- Cost is the Top Tech Litigation Problem, Survey Shows Arbitration Strongly Preferred for Specialized Expertise, by Gary Benton, Chris Compton and Les Schiefelbein. Full article available at http://go.adr.org/rs/294-SFS-516/images/SVAMC-2017-Survey-Report.pdf
- The full 2019 List is available at https://svamc.org/2019-tech-list/.
- Society for Computers and Law (SCL) website