An Introduction to Online Dispute Resolution

　

　

Introduction

 

With the rapid development of communication technology, business dealings cross boarder, oceans and continents is no longer uncommon.  While many disputes are traditionally settled via in-person alternative dispute resolution (ADR) systems such as negotiation, mediation, or arbitration, cross-border travel for meetings and negotiations are not only costly but also physically tiring for the parties involved.  As such, traditional ADR systems must be adapted to take advantage of advancing communication technologies.  Online dispute resolution (ODR), much like its ADR counterpart, focuses on negotiation, mediation and arbitration; however, the process has a virtual component. 

 

ODR was first used to settle disputes over intellectual property-related problems such as domain name squatting, and trademark infringement.  However, as businesses began to trade online, ODR was adapted to accommodate business-to-business and business-to-consumer disputes.[1]  ODR systems can also be used for disputes arising from in-person transactions.[2]

 

This paper will first discuss the different types of ODR employed, their advantages, and disadvantages.  Then the paper will examine how the roles of mediators, lawyers, and parties changes in an ODR setting.  Finally, the paper will look at what criteria are needed in order to make ODR more acceptable and accessible in the future.

Types of ODR

 

            There are two forms of ODR: traditional and hybrid.  Traditional ODR restricts all negotiation to an online setting; while, hybrid ODR is conducted partially online and in-person.[3]  Traditional ODR is generally done in one of the following three manners:

(1)   computer program assisted ODR[4];

(2)   a computer program is first used, but if that fails, a mediator will be introduced to assist the parties[5]; and

(3)   telecommunication ODR.[6] 

Whereas, hybrid ODR is usually held in one of the following two ways:

(4)   combination of online and offline meetings[7]; and

(5)   mediation services advertisement.[8].

 

Traditional ODR

(1) Computer Program Assisted ODR

            This form of ODR is generally used to settle disputes over small sums of money.  The parties will each enter an amount of money at which they are willing to settle into a computer program, and if the amounts are within a certain percentage range of one another, the computer program will propose a settlement that is the mean of the two numbers.[9]  An example of this type of ODR is CyberSettle.[10]  Such systems are economical, fast, and completely impartial.  A fee will only be charged if there is a settlement amount is proposed.  However, a weakness in these programs is that they not address the interests of the parties; therefore, these programs are not suitable for complex and sensitive disputes.[11]

 

(2) Computer Program Facilitated

            The first step to this type of ODR is the same as the Computer Assisted ODR process.  A computer program is used to propose a settlement between the parties.  If the parties refuse the settlement, the ODR provider will assign an overseer to mediate or arbitrate the dispute.  Regardless of whether or not the parties reach a settlement, the ODR provider will charge a fee for the mediator/arbitrator’s services.  While the cost of this type of ODR is slightly higher than Computer Assisted ODR, this type of ODR gives room for the parties to express their substantial, psychological and procedural interests and find a solution that is less arbitrary.[12]

 

(3) Telecommunication ADR Process

            This type of ODR follows the traditional ADR processes; however, instead of meeting face to face, the parties work together via e-mail, text messaging, or video conferencing.  This type of ODR does not capture as much of the efficiency benefits as the other traditional ODR processes mentioned above because this is an equally time consuming and strenuous process as finding time to meet with the other parties.  However, this system offers some cost savings as parties do not need to travel to other locations nor do they need to rent a facility to conduct their discussions.  This process is best for complicated problems where the parties have costly restrictions for travel.[13]

 

Hybrid ODR

(4) Combination of Online and Offline Meetings

            This ODR system combines both the benefits of traditional ADR and the efficiencies of ODR.  Parties meet initially in in-person session, but break off into separate groups to think of a plan of settlement on their own.  The parties are encouraged to relay the information and forth and to the mediator.  The parties are free to discuss using online communication programs.  Once the parties have made progress in their discussions, they may meet with the mediator again.  The mediator acts as a moderator between the parties assigning “homework” to the parties.  The mediator may instruct the parties to consider certain possibilities or come up with a draft agreement.  This model of hybrid ODR is ideal with complex problems that would require traditional ADR.  However, this model allows the parties more flexibility in travel and time.  Caucus is not restricted by location rental hours; and, parties are relieved from the pressure that the adverse party is physically close to them.[14]

 

(5) Websites Providing Information

            This type of ODR is an adaptation of the traditional ADR system in the information technology age.  Mediators advertise their services on a personal website and provide some helpful general tips.  If the parties find that they require the services of a mediator, the parties can then contact that mediator using the contact information online.[15]

 

Advantages of ODR

 

            Efficiency savings are generally from the ability of the parties to conduct settlement discussions anywhere anytime regardless of time zone and location differences.  Furthermore, those who require special accommodations can easily participate in the ODR process without making extra arrangements.  With these efficiencies, disputes can be resolved more quickly and easily.[16]

 

            ODR also bypass jurisdictional problems that traditional ADR systems encounter.  With more transactions taking place across boarders, it is uncertain as to which laws the parties should follow.  In traditional ADR, parties sometimes have the mistaken assumption that the laws where they reside should be the governing law.  ODR, on the other hand, follows traditional internet community culture, also called “netiquette”.[17]  Many communities on the internet have its own set of rules and norms which users are expected to follow.  As such, rather than applying the laws of a particular jurisdiction, settlement discussions can be governed by the rules of that community.[18]              By following the norms of a virtual community, the power to determine the rules that govern people’s conduct is put back at the user-level rather than an administrative level.  All users of the virtual community have an opportunity to shape community standards by their participation.  Frequent participants and users of an online system would also be familiar with the rules through postings and general announcements, which are usually immediately brought to the attention of users at the moment they are implemented.  Hence, negotiation, mediation or arbitration based on the community set rules will be perceived as fair and predictable.[19]

 

            Traditional ODR that does not require face-to-face meetings between parties can eliminate any visual or audio discrimination parties may have against each other.  Since none of the parties are aware of the appearance of the other participants, any presumptions about that person based on their appearance or manner of speech can be eliminated.[20]

 

            ODR can also ensure a friendlier tone of communication between parties.  This is particularly true when the ODR process is based on written correspondence.  Instead of allowing emotions to interfere with the ADR process, parties have the opportunity to calm down and deliberate on how they will craft and write out their response.[21]

 

Problems with ODR

 

            Critics of ODR believe that, with the exception of video conferencing, the lack of human interaction proposes a great disadvantage because none of the parties can read non-verbal cues; therefore, it is harder for the parties to gage how each participant feels about the progress of the negotiation or mediation.[22]

 

            Keeping discussions confidential is another hurdle in ODR.  Transcripts of discussions via e-mails and other forums can be printed or saved on a computer; hence, there is greater potential for these discussions to be reproduced word-for-word to other non-related parties.  Furthermore, there is a possibility that hackers may find a way to access and eavesdrop on a discussion.  Unlike traditional ADR, where the environment can be controlled to prevent information from spreading, ODR systems allow a user to produce and redistribute records and transcripts easily.[23]

 

            Critics also argue that ODR do not provide the same satisfaction from vindication as traditional ADR.  Due to the lack of face-to-face interaction, parties to a dispute may feel as though they have not truly expressed their anger and frustration.  Since parties can only vent in writing, they sometimes feel they did not have their “day in court”; hence, ODR does not provide the same level of emotional satisfaction.[24]

 

            Additionally, the appointed ODR provider may not be viewed as a neutral party especially if the ODR is related to a customer-relation problem.  Since a business deals with many consumers, they may contract one ODR provider to resolve all customer-related disputes.  Therefore, a customer may view the ODR provider is a biased party favouring the business and the customer will be reluctant to use ODR.  ODR providers will only be viewed as fair if they are mutually selected by both parties.[25]

 

            ODR also requires that the parties have a certain level of comfort with and access to using computers.  ODR is highly dependent on internet access; hence, a party cannot access ODR if they are in a very remote community where communication technology has yet to develop.  Furthermore, if a party is unfamiliar with using the computer, they will naturally have a disadvantage in ODR.[26]

 

            Furthermore, governments have not enacted laws to give legitimacy and force to ODR settlements.  There is no formal mechanism to prevent disputing parties from not performing their agreed settlement.  Since all discussion and transaction is taken online, it is more difficult to physically enforce one party to perform.[27]

 

            Another concern is that ODR is not sensitive to cultural differences.  Since every culture will have a different way to express their thoughts in writing, those from a different culture may misinterpret the written messages.[28]

 

The Changing Roles

 

            The roles and responsibilities of each participant in an ODR setting is slightly different from ADR.  For example, under ODR, the mediator takes on additional responsibilities such as educating parties as to the use of the computers, and the different communication styles cross cultures.  In an online community setting, the mediator must also be a reputable member off the community so he can be familiar with the rules and norms.  In hybrid ODR, the mediator must also act as the record keeper who organises the information exchanged and decide when enough progress has been made to warrant another joint meeting.[29]  Furthermore, unlike traditional ADR, ODR is often conducted without counsel both to save costs and to allow direct communication between the parties involved.[30]  In fact, some ODR processes, such as Computer Assisted ODR, there is no need for counsel to be present.[31]

 

ODR into the Future

 

            Currently, the success of ODR has been low.  Some ODR providers have difficulty in designing a system that is both affordable and sensitive to users’ needs.  ODR providers, that provide more complex services such as mediator programs, are unable to sustain their business over the long term because the cost of ODR is still higher than the amount which parties are disputing over.  Furthermore, since many jurisdictions have laws that do not bind ODR decisions, parties feel that ODR is effective. 

 

However, due to lengthy waiting time for courts, some governments, such as the United States, are placing more resources in investigating the effective implementation of ODR systems.  Ultimately, the success of ODR will be dependent on its cost, convenience, reliability, and expertise.   ODR providers must operate in a predictable way: those who are using the services will be assured that the ODR process they participate in is fair and practical and settlements are honoured.  The methods and tools that ODR providers use should be transparent.[32]  In the future, it is expected ODR processes will be more commonly used for typical business transaction disputes.  It may also be possible that ODR be standardized internationally to ensure consistent application cross boarders.[33]  It is only through further development and adoption would ODR hit its full potential as a cost effective and efficient means of resolving disputes.

Bibliography

 

1.       “Developments in the Law of Cyberspace” (1998 – 1999) 112 Harv. L. Rev. 1676

 

2.       “Online Dispute Resolution Mechanism” (1998) 2 Copyright & New Media Law Newsletter 3 (QL)

 

3.       ABA, “Addressing Disputes in Electronic Commerce” (2002 – 2003) 58 Bus. Law. 415

 

4.       Ljiljana Biukovic, “International Commercial Arbitration in Cyberspace: Recent Developments” (2001 – 2002) 22 Nw. J. Int’l L. & Bus. 319

 

5.       Peter Blanck, Ann Wilichowski, & James Schmeling, “Disability Civil Rights Law and Policy: Accessible Courtroom Technology” (2003 – 2004) 12 Wm. & Mary Bill Rts. J. 825

 

6.       Dave Blinsky, “Lawyers can’t Afford to Ignore Online ADR Providers” (2004) 23 The Lawyers Weekly 34 (QL)

 

7.       Robert C. Bordone, “Electronic Online Dispute Resolution: A Systems Approach—Potential, Problems, and a Proposal” (1998) 3 Harv. Negot. L. Rev. 175

 

8.       Jagruti Chauhan, “Online Dispute Resolution Systems: Exploring E-Commerce and E-Securities” (2003) 15 Windsor Rev. Legal & Soc. Issues 99

 

9.       Gregory P. Ewing, “Using the Internet as a Resource for Alternative Dispute Resolution and Online Dispute Resolution” (2002) 52 Syracuse L. Rev. 1217

 

10.   Llewellyn Joseph Gibbons, “Creating a Market for Justice; a Market Incentive Solution to Regulating the Playing Field: Judicial Deference, Judicial Review, Due Process, and Fair Play in Online Consumer Arbitration” (2002 – 2003) 23 Nw. J. Int’l L. & Bus. 2

 

11.   Llewellyn Joseph Gibbons, Robin M. Kennedy, & Jon Michael Gibbs, “Cyber-Mediation: Computer-Mediated Communications Medium Messaging the Message” (2002) 32 N.M. L. Rev. 27

 

12.   Lan Q. Hang, “Online Dispute Resolution Systems: The Future of Cyberspace Law” (2000 – 2001) 31 Santa Clara L. Rev. 837

 

13.   Lesley Ellen Harris, “Cyberspace Jurisdiction Newest Test for International Law” (1998) 18 The Lawyers Weekly 13 (QL)

 

14.   Ed Hore, “Intellectual Property: Best .ca domain Names Already Taken” (2000) 20 The Lawyers Weekly 9 (QL)

 

15.   Ethan Katsh, “Online Dispute Resolution: Some Lessons From the E-Commerce Revolution” (2001) 28 N. Ky. L. Rev. 810

 

16.   Julie Macfarlane et al. eds., “Thinking About Dispute Resolution” (2003) 42 Alta. L. Rev. 559 (QL)

 

17.   James C. Melamed, “Mediating on the Internet Today and Tomorrow” (2000 – 2001) 1 Pepp. Disp. Resol. L. J. 11

 

18.   Henry H. Perritt Jr., “Dispute Resolution in Cyberspace: Demand for New Forms of ADR” (1999 – 2000) 15 Ohio St. J. on Disp. Resol. 675

 

19.   W. Anthony Poland, “Electronic Courthouse a Timely, Affordable ADR Solution” (2004) 23 The Lawyers Weekly 44 (QL)

 

20.   Anita Ramsatry, “Government-To-Citizen Online Dispute Resolution: A Preliminary Inquiry” (2004) 79 Wash. L. Rev. 159

 

21.   Robert Alexander Schwartz, “Can Arbitration Do More for Consumers” (2003) 78 N.Y.U. L. Rev. 839

 

22.   Karen Stewart, Joseph Mathews, “Online Arbitration of Cross-Border Disputes” (2001 – 2002) 56 U. Miami L. Rev. 1111

 

23.   Leon E. Trakman, “From the Medieval Law Merchant to E-Merchant Law” (2003) University of Toronto Press Inc. (QL)