Does the Internet Occasion New Directions in Consumer Arbitration in the EU?
Doctoral Research Fellow, Norwegian Research Center for Computers and Law, University of Oslo
By and large problems arise when awards are being recognised and enforced under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention). Specifically it is difficult for consumers to either argue that consumer protection comes under the public policy exception found in Article V(2) (b) or rely on Article V(2) (a), which allows courts to refuse recognition and enforcement based on the non-arbitrability of the dispute. Accordingly this article deliberates on ways to overcome this problem and in particular whether new directions in consumer arbitration in the EU are occasioned.
Keywords: Arbitration, New York Convention, Unfair Terms in Consumer Contracts Directive, recognition and enforcement of foreign arbitral awards, consumer protection, pre-dispute arbitration clauses.
This is a refereed article published on: 15 December 2004.
Citation: Schiavetta, ' Does the Internet Occasion New Directions in Consumer Arbitration in the EU?’, 2004 (3) The Journal of Information, Law and Technology (JILT).<http://www2.warwick.ac.uk/fac/soc/law/elj/jilt/2004_3/schiavetta/>
In particular whilst European Union (EU) Member States either prohibit or restrict the use of pre-dispute binding ADR clauses, such clauses are permitted in the United States of America (US). This divergence can be problematic for EU based consumers that enter into contracts over the Internet with businesses based in the US, as national rules may not stand firm when enforcing B2C arbitral awards on an international level. Hence the question arises does the Internet occasion new directions in consumer arbitration in the EU? If EU consumers are unable to uphold domestic restrictions on pre-dispute consumer arbitration clauses in an international context the answer is to this question is affirmative, as different levels of protection emerge. This paper establishes the various directions in which EU Member States can move in order to redress this situation, commenting on which one appears to be the best.
Alternative Dispute Resolution (ADR) refers to methods for resolving disputes that are considered to be an alternative to litigation. Whilst it covers a range of dispute processes the two most utilised forms of ADR are mediation and arbitration. Whereas mediation is a form of third-party intervention that involves a non-biased intermediary, otherwise known as a mediator, supporting and facilitating negotiations between the disputants, arbitration involves the third party assuming the role of adjudicator and making a final decision that is potentially enforceable. Arbitrators usually operate with less formal procedures than those followed in courts, although they still hear the arguments of both parties and analyse the evidence submitted before making a decision. 
In order to avoid litigating, both businesses and consumers may wish to use ADR to aid the resolution process. However, due to the fact that the consumer is in a weaker bargaining position many believe that the consumer’s ability to enter into ADR must be subject to some constraints, particularly if the form of ADR to be used is binding. The reasoning for this strict approach is based on a number of factors. First and foremost pre-dispute ADR binding clauses, such as arbitration clauses, can lead to a loss of rights and procedural protections for consumers. For instance, consumers can be required to give up legal remedies, such as access to punitive damages.
Another possible problem is the repeat player effect, whereby repeat players like businesses can choose and manipulate what ADR processes will be used to enforce their substantive rights against one-shotters, such as consumers. For instance by getting one-shotters to submit pre-dispute to binding arbitration repeat players are able to determine the forum, the applicable law, the ADR Provider and even the third party and hence the repeat player controls much of the disputing process. As such businesses can design arbitral clauses in such a way that they tilt the playing field in their favour.
As a consequence of such negative sides to pre-dispute binding arbitration clauses many countries, such as EU Member States, have legislated to either forbid or restrict their use. Even when consumers are permitted to agree post dispute to use ADR, many prefer non-binding ADR procedures to binding ones, as they are based on co-operation. Furthermore non-binding ADR procedures allow the consumer to retain some control over the resolution process, because they can withdraw from the procedure at any time and they are not obligated to adhere to either the advice or decision of the third party. Despite such benefits, many do not like the uncertainty that surrounds the outcome. Of course decisions made during non-binding determinative ADR procedures can be either issued later by an arbitrator in the form of an award or turned into a contractual agreement but this does not achieve certainty at the outset. Moreover it only serves to lengthen the process and hence it is often considered to be more effective to use binding procedures from the beginning.
In particular the use of pre-dispute binding clauses allows business to achieve some advance certainty as regards the likely cost involved, the speed at which the resolution process will progress and the assurance that the outcome will not become public knowledge. Certainly, high litigation costs have the potential to put corporate assets at risk, businesses do not want to waste more time than is necessary in realising a resolution and unwanted publicity may threaten future business plans. With the rise in international contracts such threats are even more discernible. In addition to having similar assurances consumers are also thought to save money on the end product as the costs saved by the business are passed on to consumers. As such many jurisdictions, such as the US, permit businesses to insert pre-dispute arbitration clauses into consumer contracts.
Legislation in place in EU Member States that forbids or restricts pre-dispute arbitral clauses in consumer contracts stems from the Unfair Terms in Consumer Contracts Directive (the Directive). Article 3 of the Directive states that contractual clauses that have not been individually negotiated will be regarded as unfair where they cause a significant imbalance in the parties’ rights and obligations to the detriment of the consumer and are contrary to good faith. However, this does not mean that all standard terms are automatically classed as unfair; rather the Annex to the Directive gives a non-exhaustive list of terms which can be construed as unfair. For the purposes of this paper a number of relevant terms can be found in the Annex.
Term (q) for example makes specific reference to arbitration, stating that terms that either hinder or exclude the consumer’s right to take legal action or exercise any other legal remedy particularly by requiring consumers to take disputes exclusively to arbitration not covered by legal provisions are unfair. Although term (q) appears to forbid the use of pre-dispute arbitral clauses this is not always the case. For instance term (q) is related to term (i), which deals with those clauses which irrevocably bind the consumer to terms they had no real opportunity to familiarise themselves with – i.e. hidden terms. Thus it would have to be established what notice the consumer was given in respect of the arbitration clause prior to agreement. Where consent was not defective and the consumer had ample opportunity to come to terms with the full consequences of the arbitration clause then the consumer ought to be bound by it.
Likewise, term (q) specifically refers to arbitrations not covered by legal provisions. From the text of the Directive the exact scope of this part of term (q) is uncertain. Whilst it has been suggested that it covers decisions made according to equity, amiable composition or means of uncontrolled discretion, it seems more likely that it refers to ad hoc arbitrations, i.e. arbitrations that do not have any formal administration by any established arbitral organisation.
For instance, the European Court of Justice (ECJ) has stated that the use of amiable composition is permissible. Building on an earlier ECJ ruling, it was confirmed in the Municipality of Almelo case that in order to make a preliminary ruling under Article 234 (then numbered 177) of the Treaty Establishing the European Community, a court or tribunal must satisfy a number of criteria, one of which is the need to apply the rule of law. The ECJ then went on to state that this particular criterion had to be interpreted broadly. Furthermore some EU Member States, such as Spain rely heavily on principles of equity during consumer arbitrations. Consequently, arbitral tribunals will not always base their decisions only on principles of law. It is suggested therefore that the concept of ‘legal provisions’ as discussed in term (q) refers to the procedural rules that will govern the arbitration. This argument gains support from the idea that the procedural rules provide a tool to verify whether the conditions for consumer protection have been met, and as such it is necessary that satisfactory procedural frameworks are in place beforehand. Accordingly this part of term (q) appears to have limited application.
Term (q) goes on to give examples of other terms that could also cause a significant imbalance in the parties’ rights to the detriment of the consumer, such as unduly restricting the evidence available to the consumer and imposing a burden of proof on the consumer which, according to the applicable law, should lie with another party. Thus if the consumer was able to provide evidence and the burden of proof that would normally apply was not deviated from, the clause ought to be permitted under European Community law. Other terms listed in the Annex also give examples of terms that result in significant imbalances, such as term (b), which relates to terms that inappropriately exclude or limit the rights of consumers and term (c), which deals with terms that unilaterally bind the consumer.
On this basis it is not completely impossible for EU consumers to agree, pre-dispute, to use ADR that has binding results, according to the Directive. Nevertheless, the actual implementation of the Directive by Member States may serve to curb the Directive’s application in this way. Section 6 of the Swedish Arbitration Act, for instance, invalidates arbitration agreements entered into between businesses and consumers (except for rental or lease relationships) prior to the dispute. Whilst some Member States take a similar approach to Sweden, others have not been so strict in their implementation. In Germany, for example, the use of arbitral clauses in consumer contracts is permitted so long as the arbitration clause is contained in a document that has been signed by the parties. Section 126(a) of the German Civil Code elaborates on what constitutes a signature, stating that the written form may be substituted by a qualified electronic signature. Similarly, Section 91 of the English and Welsh Arbitration Act 1996 states that arbitration clauses in consumer contracts will be unfair if they relate to disputes involving a pecuniary remedy that does not exceed £5,000.
Such contrasting approaches to the implementation of the Directive can be witnessed throughout the EU. However two trends emerge from its transposition: whether they restrict or forbid the use of pre-dispute binding arbitral clauses the implementations are all protective of the consumer; and the fact that not all Member States have chosen to forbid pre-dispute clauses altogether but rather regulate their use reflects that the Directive does not ban the use of such clauses in their entirety.
2.1.1 Mandatory Rules on Choice of Forum
The Brussels Regulation, which provides default jurisdictional rules, aims to ensure that weaker contracting parties, like consumers, are protected by a mandatory set of rules. In particular, Article 16 states that consumers may bring proceedings and proceedings must be brought against a consumer by the other party to the contract in the country of their domicile. Article 17 then states that this Article may be departed from only by an agreement that has been entered into after the dispute has arisen. However, Article 1(2)(d) in the Regulation excludes arbitration from its scope. Technically, therefore, no prohibition is placed on the ability to contract out of the terms offered by the instrument if the parties wish to use arbitration to resolve any ensuing disputes.
This analysis gains support from the deliberations in the Report carried out by Professor Peter Schlosser in 1978 on the Regulation’s predecessor - the Brussels Convention – which stated that the Convention in no way restricted the freedom of parties to submit to arbitration. Nor did it restrict Member States from invalidating arbitration agreements affecting disputes for which exclusive jurisdiction exists. Since many Member States took this latter approach when interpreting the Directive, if national legislation exists which forbids the consumer’s ability to agree to an arbitration clause in the first place then the terms of the Brussels Regulation will, of course, apply.
Under the Federal Arbitration Act (FAA), pre-dispute binding arbitration is permitted in respect of interstate commerce.  States in the US are therefore permitted to prohibit or restrict the enforceability of State-based arbitration agreements that do not have interstate parameters. Despite this, most States favour pre-dispute binding arbitration and only a very small number make certain disclosure or other requirements mandatory. Generally, whether dealing with State or interstate commerce the idea is that the pre-dispute clauses result in the parties waiving their constitutional right to go to court. As a result, the formation of an arbitral agreement must be in line with the applicable body of contract law in order to be effective. A court can therefore void an arbitral agreement on the basis that it is at odds with the general provisions of contract law. In deciding the validity of pre-dispute arbitration clauses in consumer contracts, decisions by US courts reflect a similar approach to the wording of the Directive.
Most States in the US hold that any contract purporting to waive a constitutional right must be clear and unambiguous. Thus, the parties must expressly waive their right to go to court, which would involve the consumer being presented with the clause and the consumer explicitly agreeing to it. In a similar vein, most States apply the doctrine that waivers must be ‘knowing, voluntary and intelligent’. As such, the arbitral agreement must be explained to the consumer so that there is a meeting of minds and there has been informed consent. This is a similar approach to that taken by terms (i) and (q) of the Directive in that the arbitral clause must not be hidden from the consumer and they must have had ample opportunity to come to terms with the full consequences of the clause.
Additionally, courts will not uphold arbitral clauses that are deemed to be unconscionable. To determine whether a clause is unconscionable, both procedural and substantive unconscionability will be assessed. Hence, the court will look to how the contract was negotiated, the disclosure of the arbitration terms, and the fairness of the terms themselves. Whilst most jurisdictions require that both procedural and substantive unconscionability are shown to void an arbitration agreement, others are willing to accept just procedural unconscionability where there are egregious facts surrounding the negotiations. For instance, a court has refused to enforce an arbitral clause that was buried deep in a confusing multi-page adhesion contract written in language that was both unfamiliar and never explained to the consumer.
However, reliance on procedural unconscionability alone will generally not be enough, because most consumer contracts are contracts of adhesion and therefore most States will require an element of substantive unconscionability. In such cases, the fact that the contract has been drafted by the stronger party and presented on a take-it-or-leave-it basis serves as evidence for procedural unconscionability. Some States require a little bit more, noting that the procedural unconscionability exists where the consumer was forced to agree to a contract of adhesion because there is no meaningful choice to retain the goods or services elsewhere, and/or the lack of conspicuousness.
When proving the substantive unconscionability of the agreement more evidence is required as this is the most important sign of unfairness. There are a number of reasons why an agreement to arbitrate can be held to be substantively unconscionable, for example, the fees and costs associated with the arbitration are excessive, as this serves to deprive consumers of a forum to vindicate their rights,  the clause is one-way, i.e. businesses can resort to litigation but the consumer cannot, bias on behalf of the arbitrator, inconvenient arbitration venue, or there has been waiver of statutory remedies on behalf of the consumer, such as limitations are placed on the right to damages.
This dual unconscionability standard equates to the relationship between Article 3 and the Annex to the Directive. Article 3 establishes the procedural unconscionability of clauses that have not been individually negotiated. For those that require that little bit more than just the existence of a contract of adhesion, term (i) deals with the conspicuousness of the clause. Article 3 also serves as the starting point for substantive unconscionability as it states that clauses that cause a significant imbalance in the parties’ rights and obligations to the detriment of the consumer will be unfair. Term (q) elaborates on this point by stating that this unfairness can be generated by either hindering or excluding the consumer’s right to exercise any other legal remedy. The good faith element in Article 3 along with terms (b) and (c) also cover a number of the other substantive unconscionability reasons. Furthermore, the fact that the Annex is a non-exhaustive list intimates that a court in the EU could hold a particular circumstance to be substantively unconscionable even though the Directive does not mention it specifically.
Accordingly, it can be suggested that strictly implementing the Directive was not necessary as consumers can agree to use binding arbitration pre-dispute without the stronger party taking advantage of their weaker bargaining position. Indeed, courts in the US have shown that where the agreement to arbitrate is detrimental to the consumer the agreement will not be upheld. Neither does this approach place a greater burden on the consumer to bring an action to void the arbitration clause as most actions between consumers and businesses involve the consumer as plaintiff anyway.
Whether the US approach manages to strike the right balance between protecting the consumer and allowing businesses to enter into contracts with some degree of certainty, is an increasingly important question with the advent of the Internet. Indeed, consumers in the EU have greater possibilities to enter into contracts with companies based in the US that have pre-dispute arbitral clauses embodied in their contracts. Consequently, the rights and obligations of the parties arising from their agreement to arbitrate – for example, their obligation to submit their disputes to arbitration and honour an award – may be subjected to the laws of a non-EU Member State. In such circumstances it is questionable whether EU consumers can retain restrictions on the use of pre-dispute arbitration clauses to which they would normally be entitled.
Generally, if the consumer does not want to participate in the arbitration they have two options: they can either attack the validity of the arbitration clause or seek to rely on international mandatory rules in their place of domicile. In the context of consumer arbitration the two concepts are inherently interrelated as an arbitration clause may be held to be invalid as a consequence of mandatory laws on the validity of arbitration clauses. With respect to mandatory laws, these must be supplanted into contractual relationships irrespective of a choice of law by the parties or indeed the application of the relevant set of conflict of laws rules where no express choice has been made. First and foremost, whether a State’s mandatory laws can be invoked depends on whether the contract has a close connection with the State in question. Furthermore, the mandatory law in question will have to be an international mandatory law. Whereas domestic mandatory rules can be escaped in international settings, international mandatory rules must be adhered to in all circumstances. What constitutes an international mandatory rule depends on both the wording and purpose of the rule. By and large, if a rule is an international mandatory rule the legislation that embodies the rule will specify this. However, where the legislation is not so clear on the applicability of the mandatory rule in an international context their applicability will be judged according to the function of their purpose.
When attacking the validity of an arbitral clause in a contract the consumer must bring proceedings in either the court of their domicile or the jurisdiction where the seat of arbitration is prior to the arbitration taking place. Once a court has asserted jurisdiction it will move on to determine the existence and material validity of the arbitration clause, which involves the court deciding what law governs the question of existence and material validity, and then testing formation under that law. In particular, the judge will consider whether there has been a valid offer and acceptance, consideration and intention to create legal obligations. The assent given to an arbitral clause by the consumer is particularly relevant in the online context.
Akin to the Brussels Regulation, the Rome Convention on the Law Applicable to Contractual Obligations does not apply to arbitration and, as such, the parties are free to make a choice of law. Thus, a court may find that the proper law of the arbitration agreement was, in accordance with a choice made by the parties, a particular US States’ law, and that the arbitration clause was validly concluded under this law. A judge can, of course, find that despite being validly concluded the substance of the clause is substantively unconscionable. For instance, where the arbitration was not a documents-only procedure but requested the consumer to travel to another jurisdiction to participate in the arbitration a court might perceive this to be substantively unconscionable.
In the event that an arbitration clause was held to be valid the consumer’s only option is to rely on international mandatory laws that deal with the validity of pre-dispute arbitral clauses. An English consumer, for example, could seek to rely on the Unfair Terms in Consumer Contracts Regulations 1999 (the Regulations) which void certain arbitral clauses. As a consequence of Section 89 of the Arbitration Act 1996, the Regulations were extended to cover arbitration agreements. Section 89(3) states that the Regulations are applicable whatever the law applicable to the arbitration agreement so long as there is a close connection between the contract and the European Economic Area (EEA).
No definition of close connection is given yet other laws adopting the same approach shed some light on the subject. For instance, according to the Giuliano-Lagarde Report, the concept of close connection in Article 7(1) of the Rome Convention refers to contracts performed in a specific country or where one party is resident or has his main place of business in that country. Likewise, Section 27(2)(b) of the Unfair Terms Act 1977 (UK) appears to set specific requirements for a close connection as it states that the provisions of the Act will apply where in the making of the contract one of the parties acted as consumer, they were habitually resident in the UK at the time, and the essential steps necessary for the making the contract were taken by the consumer in their habitual residence, whether by themself or by others on their behalf. Thus, according to Section 27(2)(b), to establish a connection a consumer contracting online would need to be resident in the UK and use a terminal there.
Despite the fact that both the Rome Convention and the Unfair Terms Act give an indication as to what factors may establish a close connection, it is still unclear from Regulation 9 what approach will be taken, i.e. whether a close connection would result from the fact that the consumer is habitually resident in a Member State or whether additional factors similar to that in 27(2)(b) would be required. If a close connection is established then the Regulations establish international mandatory provisions that must be applied.
In addition to establishing a close connection, the applicability of the Regulations may be constrained by their phraseology, as they simply ‘copy out’ the Directive. Hence, the aforementioned interpretation given to the Directive is also relevant in the context of the Regulations. Thus, a judge could perceive an arbitral clause to be fair even where it relates to a dispute involving a modest amount (as defined by the Specified Amount Order) so long as it does not cause a significant imbalance in the parties’ rights and obligations – for example, the clause does not unilaterally bind the consumer or unduly restrict the evidence available to them, and the arbitration procedure is not an ad hoc one. Whilst it is likely that an English judge would take a defensive approach to pre-dispute arbitration clauses such an interpretation is not impossible.
Unfortunately, the exact position of all the Member States is unknown, however, it can be suggested that if the legislation in place forbids the use of pre-dispute arbitral clauses the ability to rely on that legislation will depend on whether they are mandatory in an international setting. It should be considered, however, that the protection given to consumers in the EU varies from Member State to Member State and hence some consumers will be protected whilst others will not. For instance, even if pre-dispute clauses are not permitted with respect to disputes relating to a monetary amount of less than £5000 GBP, consumers domiciled in England and Wales disputing contracts that relate to amounts that exceed this modest amount will not be protected. In the event that an arbitration clause is declared to be unfair by a court in an EU Member State according to mandatory laws then it would issue a judgment in respect of the dispute between the business and the consumer. Another problem to consider in this context is the issue of enforceability of the court judgment.
Article II of the New York Convention affirms that contracting States must recognise agreements to arbitrate concerning a subject matter capable of settlement by arbitration. Although the uniform rules for determining the law applicable to the agreement are mentioned in the Convention in connection with the enforcement of the award, a systematic interpretation of the Convention suggests that such rules are also applicable to the enforcement of the arbitral agreement. According to Article V(1)(a), enforcement of an award can be refused if the agreement is not valid under the law to which the parties have subjected it, or failing an indication thereon the law of the country where the award was made. Where no choice is made the latter conflict rule can be interpreted in the context of agreements as being the law of the country where the award will be made. Thus, even where a choice has not been made in favour of a particular US State’s law, the place where the award should be delivered, which can be determined by the seat of arbitration, ought to be decisive.
If the agreement is valid according to the applicable law then under Article II(3) of the New York Convention a court is obligated to refer the parties to arbitration at the request of one of the parties. Thus, it would be up to the arbitrator to apply any international mandatory rules. Where a party has sought to rely on the Convention in this way the court would be obliged to grant this request. Whilst such an approach ought to be taken by all courts in states signatory to the Convention US courts have been particularly willing to use the US’s accession to the New York Convention as a reason for enforcing arbitration agreements in international transactions. In fact, US courts have enforced arbitration clauses in international contracts that would not normally be permitted in a domestic context, as this is an internationally uniform rule. In doing so they have confirmed that any discretionary powers they may have in respect of refusing to stay proceedings in favour of arbitration in a domestic context is superseded by this rule when dealing with international arbitration.
Consumers may be saved, however, by Article II(2) in the New York Convention which affirms that an arbitral agreement must be either in writing and signed by the parties or formed by an exchange of letters or telegrams. Whilst no mention is made of modern electronic means, a contemporary interpretation of this Article may lead to communication methods like e-mail being covered by the Convention as e-mails, like telegrams, are in text form and provide an electronic record. Moreover, a number of domestic laws relating to arbitration follow the UNCITRAL Model Law on International Commercial Arbitration and therefore define writing as including an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement. Nonetheless, it remains to be seen whether Article II(2) will be interpreted in this way, and in particular if website communications, such as click-wrap agreements will also be covered.
A recent decision given by the Manitoba Court of Appeal in Proctor v. Schellenberg suggests that such an approach is possible as it was held that the definition of in writing given in the New York Convention was not exhaustive and as such the ‘writing’ can take various forms. All that is important is that there is a record to evidence the agreement of the parties to resolve the dispute by an arbitral process. Accordingly how that record comes into being, whether by way of fax, a series of letters, or for that matter e-mail, is irrelevant. Such a decision indicates that courts may recognise the current practices of concluding contracts in an international context.
However, the New York Convention must be applied uniformly and so long as there is divergence between national laws on e-agreements and e-signatures the exact position of the New York Convention and approach of the courts is ambiguous. Likewise, the formal requirements of arbitration agreement ought to be assessed by reference to Article II(2) of the Convention only as opposed to looking to national law for guidance. Accordingly, a court might not perceive an e-agreement to be valid according to the Convention and, concomitantly, could not refer the parties to arbitration.
In the event that the use of e-mail/click wrap agreements are permitted consumers can attempt to rely on Article II(1) which states that to be a valid arbitration agreement the subject matter must be capable of settlement by arbitration. The problem with this approach is that the Convention is silent on which law should determine the arbitrability of the dispute and various commentators are divided on this particular issue. For instance, whilst van den Berg suggests that the court seized ought to judge arbitrability according to the law applicable in their own jurisdiction various other authors propose that this should be based on either a cumulative application of the law of the forum and the law governing the arbitration agreement or just the law governing the arbitration agreement. Furthermore, many courts have distinguished between domestic and international arbitrability holding that what is arbitrable will be different in the international context. Consequently, it is possible that a court in the EU would not apply its domestic law to the question of arbitrability.
Whether the arbitration agreement will be binding on the consumer will also be constrained by the possibility that the arbitration may have begun in the US. Although arbitration can proceed without both parties submitting to the arbitration, the consumer may have allowed the arbitration to proceed so as to save time and money. Such an approach may be taken because the consumer may believe that the arbitration might favour them or their lawyer has advised them to wait until the business tries to enforce the award against them in a court in their jurisdiction. In the event that the consumer wants to prevent the arbitration from proceeding they could move to have the arbitration stayed by a US court. Unfortunately, the consumer would e confronted with the sae problems as they would when bringing an action in a US court to have the agreement declared void, i.e. they have to spend time and money pursuing such an action and the US court may refuse to stay the arbitration on the basis of the US’ assignation to the Convention.
If the arbitration procedure goes ahead arbitrators ought to apply any mandatory laws relating to the non-arbitrability of the dispute regardless of a choice of law. Hence, where an international mandatory law states that the subject-matter of the dispute was not arbitrable an arbitrator ought to refuse to take judgment over the case. Unfortunately, save for cases where the choice of law gives effect to cases of corruption or fraud, the principle that arbitrators are bound to apply the law chosen by the parties is often enough to set aside a foreign mandatory law. A study by Yves Derains showed that arbitrators were more inclined to apply mandatory rules that are not part of the lex contractus where the parties have not made an express choice on the applicable law, and they were more prepared to apply them when they are part of the law of place of performance than when they were contained in the law of the parties’ respective countries. As Pierre Mayer correctly points out, this conclusion reflects that whilst one trend has emerged which is favourable to the application of mandatory rules another has emerged that is hostile. As such, it must be acknowledged that the international nature of a contract increases the danger that such laws will not be applied.
Nonetheless, if courts are willing to leave such decisions up to arbitrators this implies that they are in some way obliged to apply mandatory laws. Moreover where arbitrators are aware that courts are counting on them to apply mandatory laws this may encourage them to meet this expectation. Furthermore, when arbitrators are faced with a conflict between the will of a State and the will of the parties they must consider what can happen to their award if a mandatory rule in an enforcement state is not adhered to. Additionally, given that arbitrators are essentially replacing national judges, States would refuse to give their support to arbitration as an institution if it continued to result in the sacrifice of their public interests, which would otherwise be protected by a judge. Hence arbitrators have a duty to promote the survival of arbitration.
Ultimately whether or not the arbitrator ought to apply international mandatory rules the possibility still exists that an arbitrator may deliver an award that fails to adhere to mandatory laws in the consumers domicile. In such cases the focus must shift to the remedies available to the consumer. Seeing as the arbitral tribunal would likely have their seat of arbitration in the US the consumer would have to lean on US laws during the review process. First and foremost, the FAA provides very limited grounds on which courts may vacate or modify an arbitral award; in particular, an arbitral ruling may be vacated if corruption, fraud, or arbitrator misbehaviour has taken place. Courts can also modify or correct an award, but these require a mistake, an award on a matter not submitted to the arbitrator, or an award that is imperfect in matter of form not affecting the merits of the controversy.
Deferential review is also available under US law, which obliges courts to enforce arbitral awards absent compelling evidence that the arbitrator ignored mandatory rules. However, it has been suggested by Andrew T. Gutzman that this possibility is only available in the simplest cases. For instance, the practice of issuing an award without a reasoned opinion in the US is often adopted specifically to avoid giving the loser any grounds upon which to challenge the award. Thus, courts would find it difficult to pinpoint whether an arbitrator had in fact applied mandatory laws.
As noted earlier, the consumer can ignore the award and wait for the business to seek recognition and enforcement under the New York Convention. In such cases the consumer would have to rely on one of the provisions found in the New York Convention that permits a court in the enforcement State to deny the recognition and enforcement of an arbitral award to avoid adhering to it. In particular Article V(2)(b) permits refusal on the basis that enforcement would breach public policy and Article V(2)(a) allows courts to refuse recognition and enforcement based on the non-arbitrability of the dispute.
Dealing with the concept of public policy first, this covers a number of sub-categories of rules and norms, one of which is mandatory laws, and hence if a national law views a consumer protection law as mandatory they ought to be considered as falling within the scope of the public policy provision. However, research carried out by the International Commercial Arbitration Committee revealed that the concept of public policy found in Article V(2)(b) is based on international public policy, which is considerably narrower than domestic public policy. Furthermore, whilst specific and subjective to each State and technically based on the public policy of the country in question, by and large the approach of national courts has been to apply public policy provision restrictively. States take this view probably because they aspire to be an international arbitration centre and if they expect their own awards to be recognised abroad they too must enforce those rendered in other countries.
This restrictive interpretation of the public policy clause is taken because courts recognise that the finality of arbitral awards is key to operation of the New York Convention system. For instance, in Waterside Ocean Navigation Company v. International Navigation Ltd the court stated that Article V(2)(b) “[m]ust be construed in light of the overriding purpose of the convention”. Namely the recognition and enforcement of commercial arbitration agreements in international contracts is to be encouraged and the standards by which agreements to arbitrate are observed and arbitral awards are enforced in the signatory countries must be unified. Accordingly, in the event that arbitrability is questionable under a national public policy rule the predominant view seems to be that the award is valid.
Moreover, even if the national law on the arbitrability of consumer disputes could be viewed as coming within the public policy exception Articles 6(2) of the Directive calls upon Member States to ensure that the protection offered by the Directive is not lost as a consequence of a choice of law of a non-Member State. Thus, the consumer obtains their protection from the Directive not the legislation in place in the enforcing Member State. A judge could therefore find an arbitral clause permissible under the Convention regardless of the national law, so long as the arbitration clause did not cause a significant imbalance in the rights of the parties to the detriment of the consumer, for instance, change the burden of proof, and the procedure is not ad hoc.
When attacking the validity of an arbitral award under Article V(2)(a) of the Convention the consumer would be suggesting that the subject matter of the difference was not capable of being settled by arbitration under the law of that country. Whereas this appears to focus on the laws of the country where enforcement is sought the application of this Article may be restricted by Article V(1)(a), which stipulates that the invalidity of the agreement may justify a refusal to enforce the award, i.e. if the subject matter of the dispute is not arbitrable any award rendered on the subject will be invalid. Invalidity is judged according to the law of the enforcement court and the law governing the arbitration agreement, which can be either the law chosen by the parties to govern the agreement or failing that, the law of the country where the award was made (arbitral seat). Thus arbitrability could be judged according to the rules in place in as many as three different countries.
Even if this particular argument was not accepted and arbitrability was to be judged solely on the enforcement court’s own law, van den Berg suggests that the question of non-arbitrable subject matter is superfluous because, like mandatory laws, it forms part of the general concept of public policy. Thus, it can be suggested that the non-arbitrability of a dispute should be judged according to what is internationally arbitrable. Indeed, a number of courts have drawn this particular distinction. On the whole, therefore, it is highly likely that an arbitration agreement would not be considered invalid when judged under the New York Convention.
EU Member States must also apply the New York Convention when enforcing arbitral awards that have been rendered in another EU Member State and thus the same problems exist internally as externally. Yet this issue can be considered as almost non-existent within the EU seeing as most jurisdictions forbid or severally restrict the use of pre-dispute clauses in the first place and businesses based in the EU will accordingly refrain from using pre-dispute arbitral clauses. Conversely, where pre-dispute clauses are permitted in the forum State there may be a problem. For example an arbitral award rendered in the UK relating to a dispute involving a monetary amount of more than £5000 GBP would likely be upheld in the exequatur court. The French Court of Appeal has already done just this, enforcing an arbitration clause in a contract governed by English law relating to the purchase of a car by a French consumer on the basis that consumers deserve a lower level of protection if they partake in cross-border transactions.
Although the problems associated with recognition and enforcement exist offline they are more prominent now because consumers have a greater ability to enter into contracts with companies in jurisdictions that permit pre-dispute consumer clauses. Indeed, the ease at which arbitral agreements can be formed online increases the possibility that consumers will have an arbitral clause incorporated into their contract.
As such the Internet has changed the landscape for consumer arbitration considerably and thus new directions in consumer arbitration are occasioned in EU.
Unfortunately, despite the protection given to consumers in some EU Member States the illegality of arbitral agreements cannot always be guaranteed when consumers contract with companies based in countries that permit pre-dispute arbitral binding arbitral clauses, either in their entirety or when certain conditions are met. Consequently, consumers in the EU are subject to different levels of protection. Given that it is debatable whether pre-dispute consumer arbitration clauses are prohibited under the Directive anyway, it might be practical to realign the EU’s position with that of countries like the US, particularly since the US does not prohibit pre-dispute binding arbitration but manages to achieve the same result as the Directive.
Likewise, the increase in electronic versions of ADR (e-ADR) can also serve to intensify the problem as there is now more scope and reason to use pre-dispute online arbitral clauses. In particular, e-ADR reduces the overall resources that both the business and consumer needs to invest in the dispute. For instance, they do not have to travel to appear at hearings and so both the time and costs associated with such travel are eliminated. Thus, businesses could seek to rely on e-arbitration so as to avoid the possibility that an arbitration clause be declared void on the basis that it was substantially unconscionable for the consumer to travel to another jurisdiction. 
First and foremost, signatory States to the Convention can ratify it with the so-called ‘commerce limitation’ and as such they will only apply the Convention to awards that deal with commercial law issues. If a Member State has chosen this limitation and under their national law disputes with consumers are not, per se, viewed as commercial disputes, any arbitral awards rendered in consumer ADR may not be enforceable under the New York Convention.
Another possible saviour may be the standard enunciated by Article IV(b) which states that the party wishing to apply for recognition and enforcement of the arbitral award must supply the original agreement referred to in Article II or a duly certified copy thereof. As noted above, Article II(2) affirms that an arbitral agreement must either be in writing and signed by the parties or contained in an exchange of letters or telegrams. Hence, an agreement may not be deemed valid at the stage of the enforcement of the award. However, if a court has previously compelled arbitration on the basis that the arbitral agreement was valid then this may influence the decision of the enforcing court. In particular, they may favour enforcement on the basis that if they refuse to enforce the award this will of course result in a major inconsistency in the application of the Convention, which defeats one of the goals of the Convention, i.e. a uniform application of the Convention. Where the enforcement procedure relates to an arbitration procedure that has proceeded without the intervention of a court then it will be a lot easier for a court in the EU to rely on this particular saving grace.
If the Convention is not interpreted in such a way that e-agreements formed by both email and click-wrap techniques are upheld then it is irrelevant whether EU consumers enter into ADR agreements with companies based in countries where pre-dispute arbitration is permitted. In particular, any award delivered by an arbitration tribunal as a consequence of an invalid e-agreement would be unenforceable. Thus, there would be no need for consumers to attempt to rely on the public policy or non-arbitrable provisions of the Convention.
On the other hand, it is likely that the Convention will be interpreted in this way, whether this is as a consequence of a contemporary interpretation by a court on the basis of the Convention as it stands now, the production of an interpretative instrument by UNCITRAL – an idea that is currently under discussion – or a complete modernisation of the Convention. Alternatively, the party seeking enforcement may try to rely on the Most Favourable National Enforcement (MFR) rule, which states that the Convention shall not deprive any interested party of any right they may have to avail themselves of an arbitral award in the manner and to the extent allowed by the law or the treaties of the country where such award is sought to be relied upon. It should be noted here, however, that in the event that the MFR is invoked the party invoking it must rely on the national law in toto to the exclusion of the New York Convention and so may lose the benefits offered by the New York Convention in enforcing awards that would not normally be permitted under national law.
Despite the availability of various loopholes it is advisable that the EC institutions confront head-on the problem that consumers may be subject to different levels of protection as these loopholes, if they in fact exist, will not always produce the desired outcome. Accordingly, it must be decided whether a strict or lenient approach to pre-dispute arbitration will be taken within the EU. If a strict approach is to be taken then full harmonisation should take place which eradicates the little differences that exist between Member States. This will involve promulgating legislation that clearly states that pre-dispute arbitration clauses are unfair and forbidden regardless. Furthermore, such a provision would have to be classed as international mandatory law. The problem with this approach is that whilst this ensures territorial protection for EU consumers and ensures that courts, wherever they are based, will implement these laws, it does not solve the problems associated with relying on arbitrators to implement them. In such circumstances an arbitral award that breaches an EU consumer’s right to benefit from an international mandatory law that forbids pre-dispute arbitration clauses may be enforced under the New York Convention. Such a problem is particularly relevant given that many consumers will initially shy away from legal action so as to save resources.
To avoid this problem either the policy against permitting pre-dispute arbitration clauses in consumer contracts would need to be adopted at an international level or the EC institutions could take a more in favorem arbitrii attitude to pre-dispute arbitration clauses. Seeing as the former will be very difficult to achieve and the latter is in line with interpretation of the current UTCC Directive it is suggested that permitting pre-dispute clauses may be the best option. Indeed, this suggestion gains support from the emergence of a more positive approach in general to out-of-court settlement in the EU. For instance, the European Parliament has sought to promote the use of arbitration for consumer disputes and countries such as Spain have attached arbitration boards to public bodies to deal with complaints relating to B2C disputes.
If the decision was taken to permit the use of pre-dispute arbitration clauses more specific standards would have to be set which regulated the way in which such clauses should be included. One possible option would be to force Providers to use either an opt-in or opt-out system. In fact some companies in the US have already begun including a statement underneath the arbitration clause which allows the consumer to receive the goods or services without accepting the arbitration clause so as to prevent their clause from being procedurally unconscionable. Of course the language and presentation of such a choice would have to be conspicuous and businesses would have to explain this decision and its consequences in order for it to be meaningful.
It can of course be suggested that online consumers will have an advantage over offline consumers because they have the World Wide Web as resource to help them understand their decision to opt-in/out of arbitration. However, opt-in/out decisions are just as operable offline as businesses could be obligated to supply their customers with the necessary information to make an informed decision. Moreover, courts would be able to negate any acceptance of a clause that was procedurally unconscionable. Generally, therefore, it may be more beneficial to consumers if the EC institutions harmonised the EU position on pre-dispute arbitral clauses in favour of such clauses and regulated their operation to ensure that the consumer is protected. If such an approach was taken within the EU this may encourage legislators in other jurisdictions to follow suit or encourage more companies in countries like the US to operate similar systems on their own merit.
Undoubtedly, the Internet does occasion new directions in consumer arbitration in the EU because the possibility exists for consumers to have arbitral clauses embodied in their contracts that can be enforced against them despite the existence of national laws to the contrary. Whilst the uncertainty surrounding the New York Convention’s coverage of electronic agreements, and in particular click wrap agreements, may make such problems redundant in the interim it is likely that the Convention will eventually be interpreted to favour e-agreements. Regulatory action therefore has to take place that will either permit the use of pre-dispute consumer arbitration so as to realign the EU position with countries such as the US for international commerce or forbid it so as to establish a very specific position in respect of the internal market.
Seeing as the latter approach relies on arbitrators implementing international mandatory laws to sustain the EU’s strict approach to pre-dispute arbitration on an international level it is suggested that it is in the best interests of consumers that pre-dispute arbitration clauses are permitted so that consumers are not subject to varying levels of protection. To be sure, consumers would have more realistic expectations as far as contracting with businesses in the US. Furthermore, they would be entitled to more protection during the formation process if pre-dispute clauses are regulated. Accordingly, it appears that it is in the best interests of the consumer if the EC institutions begin to think ‘outside the box’.
 See further Palmer, Michael., & Roberts, Simon., Dispute Processes: ADR and the Primary Forms of Decision Making, Butterworths: London, 1998.
 National Consumer Law Center, Consumer Arbitration Agreements: Enforceability and Other Topics, The Consumer Credit and Sales Legal Practice Series, Second Edition, 2002, pages 5 -6 and 53.
 Menkel-Meadow, Carrie., Do the “Haves” come out ahead in Alternative Justice Systems: Repeat Players in ADR, 15 Ohio St. J. on Disp. Resol. 19 (1999-2000). This problem was first discussed by Marc Galanter in the context of litigation. He suggested that repeat player litigants have more power over one-shotters as a consequence of their experience. Of course not all litigants with experience are repeat players and similarly not all one-shotters are ‘have-nots’. Nonetheless the general idea is that those with resources tend to be repeat players and will, over time, come out ahead, as they are able to structure the next transaction and a build a record. Moreover they can develop expertise, have ready access to specialists, and can take a long-term approach to litigation. See further Galanter, Marc., Why the “haves” come out ahead: Speculations on the Limits of Legal Change, 9 Law & Society Review 95-160 (1974).
 Menkel-Meadow, Ibid, pages 25-26 and 32-34.
 Fahmy, Hossam, M., Arbitration: Wiping out consumer rights?, Texas Bar Journal, 2001, Vol.64, page 917, http://testsite.texasbar.com/globals/tbj/2001/oct01/fahmy.asp, (accessed 01/10/03).
 E-mail communication with Professor Arnold Vahrenwald, 25/04/2003.
 See the Uniform Arbitration Act which has been followed by most States, which does not have a specific clause determining the validity of pre-dispute consumer clauses. Thus it is left up to courts to determine in line with their laws of contract. Only a few States have more specific and individual rules for arbitration.
 See further Office of Fair Trading, Unfair Standard Terms: Guidance for Consumer Advisors on the Unfair Consumer Terms Regulations 1999, August 2000,
2d32x4apzum4yxr7z7hwr3huhpjw4eol7d447xhshum4uip3bklyip3sjg/unfair.pdf, (accessed 05/02/03).
 See for instance the Directive 97/7/EC of The European Parliament and of the Council of 20 May 1997 on the Protection of Consumers in respect of Distance Contracts, which gives a seven day cooling off period which allows the consumer to familiarise themselves with the applicable documentation, which subsequently limits the use of standard ADR clauses. See further Zealander and Zealander v. Laing Homes Limited (Unreported) 1999.
 See further Odams de Zylva, Martin., Effective Means of Resolving Distance Selling Disputes, 2001, http://www.e-global.es/015/015_odamas_distance.pdf.
 Ibid. Decisions in equity are based on what is deemed to be just and fair. Amiable composition gives the arbitrator the power and discretion to apply their own perceptions of fairness and commercial reality. Uncontrolled discretion gives the arbitrator the power to determine and define what constitutes, for instance, a ‘material’ damage.
 Vahrenweld, Arnold., Out-of-Court Dispute Settlement Systems for E-commerce, Report on Legal Issues, Part IV: Arbitration, 31st October 2000 (revised 07/03/01). Ad hoc arbitrations involve a draft set of ad hoc provisions being inserted into a contract, which will refer to a generally accepted set of arbitral rules, such as the UNCITRAL Arbitration Rules, or the arbitral tribunal will be allowed to produce its own procedures after the dispute has arisen.
 Erauw, Johan., Reference by Arbitrators to the European Court of Justice for Preliminary Rulings, in L’Arbitrage et le Droit Europeén, referring to Municipality of Almelo and others v NV Energiebedrijf Ijsselmij, European Court of Justice, Case C-393/92 (1994) ECR I-1477, as cited in Vahrenweld, Supra No. 13, Page 149. Although it also stated that in some cases despite an agreement to the contrary arbitral tribunals must still observe certain rules of law, such as those falling under the heading of public policy, by virtue of the primacy of Community law and its uniform application.
 Municipality of Almelo et al, Ibid, at paras 21 – 24. See in particular para 23:“[A] court of a Member State to which an appeal against an arbitration award is made pursuant to national law, must, even where it gives judgment having regard to fairness, observe the rules of Community law […]”.
 For example, 99.23 % of all consumer arbitrations 1999 were dealt with by equity. Vahrenweld, Supra No. 13, pages 149 and 199.
 Ibid, page 150. N.B. Vahrenweld appears to use the word exclude to mean prohibit as opposed leave out.
 Vahrenweld, Supra No.13, Page 150. It should be noted here that the European Union is supported by three pillars, the European Community pillar, the Common Foreign and Security Policy pillar, and the Police Cooperation in Justice and Home Affairs pillar. Whilst the last two are intergovernmental in nature the EC pillar embodies the EC institutions, which work together to pass EC legislation that is then applicable throughout the EU (This is evidenced by the titles given to the legislation passed, for example, Directive 2004/8/EC). Of course it is possible to say EU law seeing as the law applies throughout the EU but it is more accurate to say EC law. Furthermore the roles of the institutions are considerably different when operating on behalf of the Member States in the second and third pillars.
 See further SOU 1999/166. It should also be noted that Swedish law, like all Scandinavian jurisdictions, afford similar protection to small businesses, See for example, the Swedish Contract Act, Section 36. Collins, Brian, St. J., Unfair Terms in Consumer Contracts Regulations 1994,  3 Web JCLI, http://webjcli.ncl.ac.uk/articles3/collins3.html. Similar provisions exist in Norway, Finland and Denmark.
 Section 1031 (1) of the Code of Civil Procedure states that an arbitration agreement shall be contained either in a document signed by the parties or in an exchange of letters, telefaxes, telegrams or other means of telecommunication which provide a record of the agreement. Section 1031 (5) then states that whilst arbitration agreements to which a consumer is a party must be contained in a document which has been personally signed by the parties this written form pursuant to subsection 1 may be substituted by electronic form pursuant to section 126a of the Civil Code. See further German Arbitration Law 1998, http://www.dis-arb.de/download/Zpo-eng.rtf, (accessed 04/04/04). A similar approach is taken in Luxembourg which permits arbitral clauses so long as the arbitration clause is separately signed. Article 1135-1 of the Code of Civil Law in Luxembourg. See also Graham, James., A., Consumer Protection / Advertising: Comments to the proposed draft by the ABA, http://www.kentlaw.edu/cyberlaw/docs/foreign/Luxembourg-Advert-Graham.rtf, (accessed 11/03/04), page 2.
 This ‘modest amount’ is set by Statutory Instrument and is therefore changeable according to the economic climate. See further Unfair Arbitration Agreements (Specified Amount) Order 1999, No.2167.
 Council Regulation (EC) 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters. The legislation applicable to European Free Trade Area States (which includes EEA countries and Poland, Lichtenstein and Switzerland), and the EU Member State is the Lugano Convention. Of the EU countries only Denmark is still signatory to the Regulation’s predecessor, the Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters 1968.
 Schlosser, Peter., Report on the Convention on the Association of the Kingdom of Denmark, Ireland and the United Kingdom of Great Britain and Northern Ireland to the Convention on Jurisdiction and the Enforcement of judgments in civil and commercial matters and to the Protocol on its interpretation by the Court of Justice, OJ C 59/71 (1978), page 93, Section 63.
 See Allied-Bruce Terminix Companies v. Dobson 513 U.S. 265, 115 S.Ct. 834 where the Supreme Court held that the FAA was applicable to consumer Arbitrations.
 Supra No.2, page 17.
 See for example Nelson v. Cyprus Bagdad Copper Corporation 119 F.3d 756 (9th Cir. 1997) at 762. See also National Consumer Law Center, Ibid, pages 25-26.
 See Obstetrics & Gynecologists Wixted, Flanagan & Robinson v. Pepper 101 Nev. 105, 693 P2d 1259 (1985) at 1261 and Turner Brother Trucking 8 S.W.3d 370 (Tex.App. 1999). See also National Consumer Law Center, Supra No.2, pages 28-29.
 Ibid, page 38-39. The Supreme Court in California noted that “[t]he more substantively oppressive the contract term, the less evidence of procedural unconscionability is required [and vice versa]. Armendariz v. Found Health Pyschcare Services Incorporated 24 Cal. 4th 83, 114, 99 Cal. Rptr. 2d 745, 6 P.3d 669 (2000) as cited in National Consumer Law Center, Supra No.2, page 39.
 National Consumer Law Center, Ibid, page 39.
 Barajas v. PHP Clearinghouse No.51, 778D (D.Ariz. Nov. 6, 1997). See also Pitchford v. Oakwood Mobile Homes Incorporated 1999 U.S. Dist. LEXIS 20596 (W.D. Va. Dec. 20, 1999).
 See Circuit City Stores Incorporated v. Adams 279 F.3d 889 (9th Cir. 2002).
 See Veal v. Orkin Exterminating Company Incorporated 2001 U.S. Dist. LEXIS 4846 (W.D. Mich. Apr. 9, 2001).
 Powertel Incorporated v. Bexley 743 So.2d 570 (Fl. Dist. Ct. App. 1999). It should be noted that the element of surprise in inherently fact specific.
 See Brower v. Gateway 2000, Incorporated 676 N.Y.S.2d 569 (N.Y. Sup. Ct. App. Div. [Aug] 1998. This concept was recently verified in Craig Comb, et al. v. PayPal Incorporated, Cases No. C-02-1227 and C-02-2777 JF (N.D. Cal., August 30, 2002). See National Consumer Law Center, Supra No.2, pages 46 – 47.
 See Arnold v. United Companies Lending Corporation 204 W. Va. 29, 511 S.E.2d 854 (1998). See also Flores v. TransAmerica HomeFirst Incorporated, (2001) 93 Cal.App.4th 846.
 See Graham v. ScissorTail Incorporated 28 Cal. 3d 807, 171 Cal. Rptr. 604, 623 P.2d 165 (1981). N.B. This particular argument has yet to be accepted in a number of courts. See further National Consumer Law Center, Supra No.2, page 51.
 See Patterson v. ITT Consumer Financial Corporation 14 Cal. App. 4th 1659 18 Cal. Rptr. 2d 563.
 See Strilen v. Supercuts Incorporated 51 Cal. App. 4th 1519, 60 Cal. Rptr 2d 138 (1997).
 Lawson, Phillipa., Comments on the Draft Hague Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters, February 26, 2001,
http://www.piac.ca/HagueConvention.htm, (accessed 12/04/04).
 Schu, Reinhard., Consumer Protection and Private International Law in Internet Contracts, http://ruessmann.jura.uni-sb.de/people/rschu/public/essay.htm, (accessed 08/03/04).
 Voser, Nathalie., Mandatory Rules of Law as a Limitation on the Law Applicable in International Commercial Arbitration, American Review of International Arbitration 1996. For instance mandatory rules seek to pursue a public interest and therefore serve social or economic goals. Generally the interests of the private parties are inferior or often not even considered at all. As such the goal of mandatory rules tends to pursue goals which are detached from the contract itself.
 See for example Section 27(2) of the United Kingdom’s Unfair Contract Terms Act 1977.
 For example the purpose of competition laws is to protect is to protect a market from anti-competitive activity that will have harmful consequences and as such these rules will only be applied to the extent that that they relate to a substantial potential anti-competitive activity within the market that they seek to protect. Thus their ambit is deduced from their purpose. Mayer, Pierre., Mandatory Rules of Law in International Arbitration, Arbitration International, 274-293 and 322, at page 287.
 See Supra No.39. It should be noted that the applicable law in an arbitral relationship can vary depending on what aspect of the arbitral relationship is being considered. Firstly there is the proper law of the underlying contract, which creates the substantive rights and obligations of the parties out of which the dispute has arisen. Secondly there is the proper law of the arbitration agreement, which is the law governing rights and obligations of the parties arising from their agreement to arbitrate. Thirdly it is possible to apply the proper law of reference, i.e. the law governing the contract which regulates the individual reference to arbitration. Lastly there is the procedural law, such as the law governing the arbitration proceedings and the manner in which the reference is to be conducted. Whilst in most arbitral relationships the applicable law will be the same in all four cases there is potential to have different laws applicable. See further Sumitomo Heavy Industries Ltd V Oil and Natural Gas Commission  1 Lloyd’s Rep 45.
 It should be noted here that although formation ought to be judged according to applicable law if the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards applies then it is arguable that if the agreement conforms to the requirements of Article II(2) then there exists a strong presumption that there has been a meeting of minds between the parties. See van den Berg, Albert, Jan., The New York Convention of 1958, Toward a Uniform Interpretation, Kluwer Law and Taxation Publishers, Deventer/The Netherlands: 1981, page 177. Article II(2) affirms that to be valid an arbitral agreement must be either in writing and signed by the parties or contained in an exchange of letters or telegrams which, although strict, is a fairly narrow requirement. In order to fall under the New York Convention the arbitration agreement must either relate to an arbitration that will take place in State other than that of the forum court or where it relates to arbitration that is due to take place in the forum state of the court it involves at least one party that is a foreign national or the underlying transaction is international. See further van den Berg, Part I – 2, and in particular pages 70 -71.
 It was held in Specht v. Netscape Communications Corporation and America Online Incorporated No.01-7860 (L) (2d. Cir. Oct, 1, 2002) that so long as the business can demonstrate that the party knowingly assented to the arbitration clause, i.e. through the use of a click wrap system, it would be upheld.
 See Article 2(d). This exclusion covers procedural aspects, the formation and validity and effects of such agreements. See further Giuliano, Mario., and Lagarde, Paul., Report on the Convention on the law applicable to contractual obligations,
http://www.rome-convention.org/instruments/i_rep_lagarde_en.htm, (accessed 13/03/04). This report also emphasised that arbitral clauses can be taken into account for the purposes of Article 3(1), which deals with an express choice of law made by the parties.
 Of course it is possible that a judge will find a way to protect the consumer and implement the law of the consumer’s domicile. In such cases the issue of enforceability of the judgment arises where the judgment finds in favour of the consumer.
 See for example Oceano Grupo Editorial v. Murciano Quintero Joined Cases C-240/98 to C-244/98, 2000 ECR I-04941.l, Supra No.38 and Brower v. Gateway 2000, Supra No.35.
 Article 5(2) of the same Convention also states that a consumer should not be deprived of mandatory rules of the law of the country in which he has his habitual residence, if in that country the conclusion of the contract was preceded by a specific invitation addressed to him or by advertising, and he had taken in that country all the steps necessary on his part for the conclusion of the contract or if the other party or his agent received the consumer’s order in that country.
 The approach taken here and by Article 5(2) of Rome is now seen to be ineffective as for example it would not catch consumers using a terminal in another Member State, for example, in a Web café. This was the reasoning behind the changes made to the Brussels regime which now states that a close connection will be established were the business directs their activities to several or that Member State and the contract falls within that Member State. Given the territorial nature of this particular instrument, where the business is not based within the territory of the EU they must have a branch there and the contract must have arisen out of the operations of that branch if the contract is to fall within its scope.
 The Regulations were subjected to heavy criticism in the beginning because of this verbatim approach as the Directive itself was considered to be rather unspecific and as such the Regulations had simply inherited this problem.
 See further Zealander case, Supra No.10.
 Whereas some countries have bilateral agreements with other countries in respect of the enforcement of judgments this is not always the case. For instance the US is not party to any Convention or bilateral Treaty on the recognition and enforcement of foreign judgments. N.B. An effort was made in the 1970s to conclude one with the UK but this was stopped by the British insurance industry. See further Kovar, Jeffrey, D., Negotiations at the Hague Conference for a Convention on Jurisdiction and Enforcement of foreign judgments, http://www.state.gov/documents/organization/684.doc, (accessed 14/04/04). It should be considered here that on the basis of Comity a court judgment may be recognised and enforced. Furthermore this problem will be solved if the long awaited Hague Convention on Jurisdiction and the Enforcement of Foreign Judgments is realised.
 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958.
 van den Berg, Supra No.46, page 126.
 Ibid, page 127.
 See further Langerichte of Heidelberg Oct 23 1972 as cited in van den Berg, Supra No.46, page 127.
 See for example Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 723 F.2d 155, 162 (1st Cir. 1983), rev'd 473 U.S. 614 (1985). It should be noted here that the idea of a court issuing a directive imposing arbitration is unknown in many jurisdictions and so the real meaning of referring the parties to arbitration relates to courts staying court proceedings in favour of arbitration at the request of one of the parties. N.B. One party must object the court having a role in the resolution process the court cannot compel on its own motion. Article II(3) states that the parties can be referred to arbitration within the meaning of this article. See further van den Berg, Supra No.46, pages 129 - 131.
 Ibid, 473 U.S. at 631. In American Safety Equip. Corp. v. J.P. Maguire & Company the court highlighted that arbitration clauses in international contracts must be enforced even assuming that a contrary result would be forthcoming in a domestic context. Thus antitrust disputes and securities disputes, which are normally not arbitrable in a domestic situation, have been viewed as arbitrable when they arise within an international transaction.
 American Safety Equip. Corp. v. J.P. Maguire & Company. See also See for example Lonrho Ltd.v. Shell Petroleum Co. Ltd. - 31 January 1978 - High Court of Justice, Chancery Division.
 See for example the Lonrho case, Ibid.
 Article II(3) states that the parties can be referred to arbitration within the meaning of this article.
 Hill, Richard., On-line Arbitration: Issues and Solutions, http://www.umass.edu/dispute/hill.htm, (accessed 15/05/02), and Arsaic, Jasna., International Commercial Arbitration on the Internet: Has the Future Come Too Early, Journal of International Arbitration, Vol.14 (1997) 3, 209-221.
 See Van den Berg, Supra No.46, page 284 -286.
  M.J. No. 496. Cf. Decision of the Norwegian Hålogaland Court of Appeal 16th August 1999, as reported in Stockholm Arbitration Report 1999 Vol.2, at page 121.
 See Vahrenweld, Arnold., Supra No.13, page 37.
 See Kahn Lucas Lancaster, Inc. v. Lark International, Ltd. (2d Cir. 7/29/99) and Sidley and Austin, Standards For Enforcement of Arbitration Agreement May Be Different Under International Convention, Alternative Dispute Resolution Developments, http://articles.corporate.findlaw.com/articles/file/00082/000829/title/
 See further van den Berg, Supra No. 46, page 154, and in particular footnotes 99 and 100.
 See Audi-NSU Auto Union A.G. v. S.A. Adelin Petit And Cie (Belgium No.2) Cour de Cassation (1st Chamber) June 28, 1979.
 See for example Article 6 of the ICC’s International Court of Arbitration Rules, http://www.iccwbo.org/court/english/arbitration/rules.asp#article_5, (accessed 12/04/04).
 Derains, Yves., Public Policy and the Law Applicable to the Dispute in International Arbitration, International Arbitration Congress, 8, 1986, New York, 227 – 256, page 243. Whilst specific States have the power to regulate arbitration the takes place within its territory, arbitral tribunals are not organs of a specific state. N.B. Unlike a judge that can determine mandatory rules of the forum and those which are foreign an arbitrator has no lex fori, but rather the arbitrator must distinguish between the mandatory laws of the lex contractus and the mandatory laws of another legal system.
 Ibid, page 248.
 Derains, Yves., Supra No.74, pages 248 – 254.
 Supra No.44, page 283.
 Ibid, page 279.
 Supra No.44, page 280.
 Ibid, page 276. In an article by Marc Blessing it is pointed out that this idea that an arbitrator should always consider the enforcement of an award leads to a situation where arbitrators may be forced to deliver a ‘wrong’ decision to secure enforcement. See Impact of the Extraterritorial Application of Mandatory Rules of Law on International Contracts, Swiss Commercial Law Series, Helbing and Lichtenhahn, page 61, in particular footnote 64. Whilst this is undoubtedly true, the arbitrator ought to consider this possibility when they are contemplating the application of a mandatory rule and the possible effects its application or non-application may have on the enforcement of the award and hence stay away from delivering a wrong decision.
 Ibid, pages 285-6.
 Gutzman, Andrew T., Arbitrator Liability: Reconciling Arbitration and Mandatory Rules, http://www.law.duke.edu/journals/dlj/articles/dlj49p1279.htm, (accessed 09/03/04).
 It should be noted here that a court may use a party’s non-objection to the arbitration as activating the doctrine of estoppel in respect of the Convention’s grounds for refusal particularly where, for example, they have participated in the arbitration i.e. appointed an arbitrator.
 See further Committee on International Commercial Arbitration, Interim Report on Public Policy as a Bar to the Enforcement and Recognition of International Arbitral Awards, International Law Association London Conference (2000), page 15.
 See further Shepherd, Audley., Public Policy and the Enforcement of Arbitral Awards: Should there be a Global Standard?, Oil, Gas and Energy Law Intelligence, Volume I, Issue 2, March 2003, http://www.gasandoil.com/ogel/samples/freearticles/article_67.htm, (accessed 27/11/03). See also van den Berg, Albert Jan., Distinction Domestic-International Public Policy, New York Consolidated Commentary Cases, (1996) XXI Yearbook at p.502, and Final Report on Public Policy as a Bar to International Enforcement of International Arbitral Awards, http://www.ila-hq.org/pdf/Int%20Commercial%20Arbitration/International%20C
ommercial%20Arbitration%202002.pdf, (accessed 12/12/03). An alternative approach to enforcing the public policy rule according to the international public policy standard is to rely on the doctrine of transnational public policy. This particular doctrine seeks to find shared values in the various legal systems so as to avoid localising the application of the Convention. However, only a limited number of decisions make reference to this concept and as such it is likely that this particular approach will not be endorsed. See further Interim Report, page 7. For an example of a judgment that endorsed this approach see W. v. F. and V. (1995) Bull. ASA 217.
See Final Report, Ibid. In the USE case Parsons & Whittemore Overseas Co. v. Société Générale de L’Industrie du Papier 508 F.2d 969 (2d Cir. 197) it was stated that the “[e]nforcement of foreign arbitral awards may be denied on the basis [of Public Policy] only where enforcement would violate the forum states most basic notions of morality and justice”.
 This reasoning was applied in the Singaporean case of Hainan Machinery Import and Export Corp. v. Donal & McCarty Pte Ltd  1 SLR 34.
 737 F.2d 150 (2d Cir.1984).
 Ibid. See also Deutsche Schachtbau Tiefbohrgesellschaft mbh v. Ra Al Khaimah Oil Company  2 Lloyd’s Report 246.
 See further Fouchard, Philippe., Gaillard, Emmanuel., and Goldman, Berthold., Traite de l’Arbitrage Commercial International, Litec, Paris 1996, as cited in Vahrenweld, Supra No.66, Page 213.
 Vahrenweld, Supra No.13, Page 219.
 See further Section 2.2.
 Whilst it can be argued that the fact that the Convention has separated public policy and arbitrability indicates that they are not necessarily dependent on each other the reason it was included in the Convention as a separate condition is historical, i.e. it was featured as a separate ground for refusal in the Convention’s predecessors. Despite objections to this separation this system was kept without discussion.
 Cordero Moss, Guiditto., Arbitrability of Disputes Regarding Petroleum Investments in Russia and the Validity of an International Arbitration Award, Volume 7, Article 15, http://www.dundee.ac.uk/cepmlp/journal/html/vol7/article7-15.html, (accessed 24/11/03).
 See further Supra No.46.
 Fritz Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974).
 Supra No.46.
 Such a ruling was given despite the fact that consumer arbitration is controversial in France. The Court held that the French consumer had lost their protection when they moved out with their jurisdiction. Cour d’Appel de Paris of 07/12/94, Revue trimestrielle du droit commercial 1995/401, as cited in Vahrenwald, Supra No.13, page 203.
 See further Vahrenweld, Ibid, Pages 148 -9. See further Oceano Grupo Editorial v. Murciano Quintero Joined Cases C-240/98 to C-244/98, 2000 ECR I-04941.l. See also Patterson, Supra No.38 and Brower, Supra No.35.
 Kuner, Christopher., Legal Obstacles to ADR in European Business to Consumer Electronic Commerce, http://www.kuner.com/data/pay/adr.html, (accessed 24/01/04). Within the EU the only countries to ratify the Convention with the Commerce Limitation have been Denmark and Greece. See further Status of the Conventions and Model Laws, http://www.uncitral.org/en-index.htm, (accessed 12/04/04).
 It should be noted here that arbitrators are also obligated to implement this Article in the New York Convention, see further van den Berg., Supra No.46, pages 185 – 190.
 Hitherto this Article has only been interpreted to permit enforcement of an already annulled award where the laws in the country where enforcement is sought are more liberal than that of the New York Convention. However it may be possible to rely on it to have an e-award enforced, particularly since the purpose of the Convention is to facilitate the recognition and enforcement of arbitral awards. Indeed the rationale for including this rule seems to be based on making the enforcement of awards in the greatest number of cases possible. See further Schiavetta, Susan., The relationship between e-ADR and Article 6 of the European Convention of Human Rights pursuant to the case law of the European Court of Human Rights, JILT, Issue 1, 2004 and van den Berg, Supra No.46, pages 81 – 90.
 See further Resolution on the Promotion of Recourse to Arbitration for the Resolution of Legal Conflicts, 25/07/94, OJ C 205/519.