Discussion On How To Form A Written Arbitration Agreement In The Era Of The Technology Revolution 4.0: Arbitration Agreement Concluded By Browse-Wrap And Click-Wrap – Legal Effect And Practice

07/04/2021
 

Mr. Nguyen Trung Nam (Tony Nguyen)

Co-founding Partner of EP Legal

VIAC Arbitrator

Deputy Director of Vietnam Mediation Center (VMC) under VIAC. 

Nowadays, as the digital economy emerges, electronic agreements on online websites are becoming more and more prevalent; hence, the legal effect of establishing terms and conditions of service when accessing the website (browse-wrap) and clicking (click-wrap) are of particular interest. The following paper analyzes some of the legal aspects of online agreement conclusion, especially the establishment of the arbitration agreement by means of browse-wrap and click-wrap.

  1. Practical application in the world

Two common methods of establishing online electronic agreements are browse-wrap and click-wrap. Browse-wrap is generally understood as a way of forming an agreement in which, the visitor agrees to the terms and conditions given by the website owner (the other party) through access to and use of the website[1]. This method does not require the visitor to take any action to express their consent.[2]

Image 1: Description of some of the basic contents commonly found in Terms of Services/Terms of Use using Browse-wrap and Click-warp (including arbitration clause)

E.g. 1: This is a type of Browse-wrap that has been in use for a long time, using a concise and 'classic' notification: “By signing up, you agree to our Terms and Privacy Policy”. The Terms and Privacy Policy contains various important contents (including the arbitration clause – for dispute resolution when users find that their rights and interests have been violated); however, it is difficult for users to find and read such information. Lately this browse-wrap form is hardly used anymore.

E.g. 2: Another inadequate form of browse-wrap in which the terms and privacy policies are placed in a small corner, at the bottom of the website.

Click-wrap is a type of online agreement formation in which one party expresses its consent to the terms given by the other by clicking on the icon that says “I accept the terms of the agreement”.[3] This technique is commonly applied by most online service firms such as Slack, Dropbox, Amazon, BuzzFeed, ebay, Uber etc. Arbitration clause is included in the terms and conditions drafted by these firms.

Image 2: Illustration of conventional Click-wrap

Effect of Browse-wrap and Click-wrap

Previously, Article 2 of the 1958 New York Convention provided that the term "agreement in writing" should include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.[4]

Later, along with the development of electronic means of exchange, according to Article 7.4 of UNCITRAL Model Law on International Commercial Arbitration 1985 (with amendments as adopted in 2006), electronic communication is also legitimate in addition to a written arbitration agreement as a term of contract or a separate agreement.[5]

In practice around the globe, an arbitration agreement established in the form of browse-wrap involves various risks because in the opinion of some courts, browse-wrap does not expressly show the consent of the parties[6]; and many nations’ statutes do not deem silence consensus. Meanwhile, arbitration agreement formed by means of click-wrap may be binding on the parties.[7] However, it is important to note that under the laws of some Common Law countries such as the United States, an arbitration agreement will not be enforceable if it allows a party to modify the content of the agreement without prior notice to the other party.[8]

  1. Legal and practical values ​​applied in Vietnam

Article 119 Civil Code 2015 stipulates that civil transactions shall be established verbally, in writing or by specific acts. Meanwhile, pursuant to Article 16.2 of the 2010 Law on Commercial Arbitration , an arbitration agreement must be in writing. In other words, arbitration agreement establishment is not completely similar to the common methods of establishing civil transactions. Arbitration agreement formation is more demanding with regard to the formality of agreement.

In respect of the establishment of the arbitration agreement by the act of "silence"

An arbitration agreement must be in writing and the forms of agreement are specifically listed in Article 16.2 of the 2010 Law on Commercial Arbitration; yet, "silence" is not one of the forms of agreement according to the said provision. Besides, Article 393 of the 2015 Civil Code regarding the acceptance of an offer to enter into a contract provides that in the event the parties have no other agreement or previously established habit, “the silence of the offeree shall not mean an acceptance of the offer to enter into the contract”. Accordingly, "silence" is not comprehended as agreeing to consent. Browse-wrap is a method which deems the silence of the website user the acceptance of the terms and conditions of that website; therefore, it can be concluded that the arbitration agreement is not established via browse-wrap.

In respect of the establishment of the arbitration agreement by "click-wrap"

Article 16.2 of the Law on Commercial Arbitration 2010 stipulates that the arbitration agreement must be made in writing, which includes "email and other forms provided for by law". Pursuant to Articles 11 to 13 of the 2005 Law on Electronic Transactions, information in data message cannot be denied [its] validity for the sole reason that such information is shown in the form of data message. Data message shall have validity as an original copy when satisfying the following conditions: (i) The contents of the data message are ensured being intact since its first origination in the form of a complete data message. The content of a data message is considered intact when such contents remain unchanged except changes in its appearance, which arise in the process of sending, storage or display of the data message; (ii) The contents of the data message are accessible and usable in its entirety for reference when necessary. It is safe to say that the information received by users via click-wrap satisfies the above requirements.

In addition, according to Article 23 of the Law on Electronic Transactions, the parties to an electronic transaction have rights to enter into agreement to use or not to use electronic signatures to sign data messages in the process of transactions, and to use or not use an certified electronic signatures. Thus, in principle, the establishment of an arbitration agreement through electronic data exchange, including online data confirmed via click-wrap, is not hindered or bound by Vietnamese law.

Nevertheless, in practice, the Vietnamese court's interpretation of civil agreements frequently narrows the need for confirmation by signatures. Specifically, when the courts consider agreements made without the signature of one or both parties, the Vietnamese courts often assume there is no agreement between the parties in such cases. In a case of cancellation of arbitral award[9], the court referred to Article 385 of the 2015 Civil Code, which stated “Civil contract means an agreement between parties in relation to the establishment, modification or termination of civil rights and obligations.”. They claimed that since the Certificate of Indebtedness has only the signatures of the debtors and no confirmation from the creditor (even though the creditor was the one who issued this Certificate of Indebtedness), it cannot be considered an Agreement between the parties and as such there is also no arbitration agreement.

Judging from the above-mentioned narrow perspective, agreements in the form of electronic documents will only be legally valid if they meet the conditions specified in Article 9 of Decree 52/2013/NĐ-CP (reliable assurance of the integrity of information; and information contained in the e-document is accessible and usable in its entirety when necessary). Moreover, agreements in the form of data messages will only satisfy the conditions if such data message is signed with a valid digital signature and that digital signature is secured under the provisions of Article 9 of Decree 130/2018/NĐ-CP. From this viewpoint, click-wrap does not meet the aforementioned criterias; hence, the arbitration agreement created by click-wrap will not be enforceable.

In summary, Vietnamese law in principle allows the establishment of agreements on a click-wrap basis and does not recognise the agreement formed via browse-wrap. In practice, however, the court's interpretation is narrower, leading to risks of click-wrap agreements being unrecognised in Vietnam. The writer recommends that the Government or the Supreme People’s Court have specific guidelines for this popular form of agreements conclusion to adopt legitimate click-wrap-based arbitration agreements, which is compatible with international practice.

*This research paper is made to order by the Science Council under Vietnam International Arbitration Centre (VIAC) and only reflects the author’s opinion. VIAC uploads this paper on its official website with the aim of providing valuable information for the reference of the Arbitrators, the parties, other participants in the arbitral proceedings pursuant to VIAC’s Rules of Arbitration, as well as those who are interested in arbitration. Any reference and citation to this research made by a third party shall not be valid or recognized by VIAC. VIAC shall not explain or answer any requests or inquiries related to this research from a third party.

 

[1] https://dictionary.thelaw.com/browse-wrap-agreement/

[2]https://uk.practicallaw.thomsonreuters.com/5-508-6048?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1, Sentence 2

[3] https://www.b2ipreport.com/swip-report/clickwrap-agreement-is-binding-but-arbitration-provision-is-not/, Cited case 4, access on 10/6/2020.

[4] Article II. 2 of Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958

[5] Article 7.4 of UNCITRAL Model Law on International Commercial Arbitration 1985 (With amendments as adopted in 2006)

“(4) The requirement that an arbitration agreement be in writing is met by an electronic communication if the information contained therein is accessible so as to be useable for subsequent reference; “electronic communication” means any communication that the parties make by means of data messages; “data message” means information generated, sent, received or stored by electronic, magnetic, optical or similar means, including, but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy”

[6]https://journaloflegalstudiesinbusiness.files.wordpress.com/2015/09/ibajaca_2001_121to135.pdf, Page 9

[7]https://journaloflegalstudiesinbusiness.files.wordpress.com/2015/09/ibajaca_2001_121to135.pdf, Page 6

[8] Grosvenor v. Qwest Corp., 2012 U.S. Dist. LEXIS 23472, Civil Action No. 09-cv-02848-MSK-KMT (D. Colo. Feb. 23, 2012), Article - Clickwrap Agreement Is Binding (But Arbitration Provision Is Not) by Charles Bieneman, https://www.b2ipreport.com/swip-report/clickwrap-agreement-is-binding-but-arbitration-provision-is-not/

[9] Decision 02/2018/QĐ-KDTM on 25/01/2018 of Hanoi People’s Court

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