Online Alternative Dispute Resolution - Essay Example

Online Alternative Dispute Resolution: A Critical Review Online Alternative Dispute Resolution: A Critical Review As anyone who has used the Internet knows, the active, lucrative, entrepreneurial world of cyberspace is not without conflict. The extraordinary growth of online commerce and online transactions has generated many disputes; however, there are also resources online which are equipped to deal with these problems - resources that can even help us with any problems that may arise offline. Due to the increasing use of the Internet worldwide, the number of disputes arising from the Internet commerce is forever on the rise. Numerous websites have been established in order to attempt at resolving or at least partially solving this dilemma; as well as to facilitate the resolution of disputes that occurs offline. Dispute resolution is the process of resolving disputes between parties, and there are various methods of dispute resolution, which includes such things as: lawsuits (litigation), arbitration, mediation, conciliation, as well as many types of negotiation. Dispute resolution processes fall into two major types: adjudicative processes, such as litigation or arbitration, in which a judge, jury or arbitrator determines the outcome; and consensual processes, such as mediation, conciliation, or negotiation, in which the parties attempt to reach agreement. Some use the term dispute resolution to refer only to alternative dispute resolution (ADR); of which generally depends on agreement by the parties to use ADR processes, either before or after a dispute has arisen. However, dispute resolution can also take place online by using technology in certain cases. Online Dispute Resolution, a growing field of dispute resolution, uses new technologies to solve disputes. It also involves the application of traditional dispute resolution methods to disputes which arise online.1 Negotiation thrives on technological changes through blind bidding which is one of the most prevalent dispute resolution services which are presently available online. There are a vast array of factors, elements, and subordinated issues in this subject matter, and in order to come to a clearer and more knowledgeable understanding on this issue, the following questions must be addressed: 1. What is the definition and scope of application in regards to Online Dispute Resolution 2. What is the importance of the rise of Online Dispute Resolution 3. What are the similarities and differences between Online Dispute Resolution and Alternative Dispute Resolution 4. What are some problems affecting efficiency in regards to Online Dispute Resolution in the shadow of the law 5. What are some problems affecting efficiency in regards to the trust mechanism in the online environment By thoroughly discussing these five questions, we can come to a more intellectual and critical point of view on the subject matter at hand. The aim of this paper is to discuss all of this, as well as any and all key elements and factors in relation to this. This is what will be dissertated in the following. What is the Definition and Scope of Application in Regards to Online Dispute Resolution Online Dispute Resolution is a branch of dispute resolution which uses specific technology in order to facilitate the resolution of disputes between parties. It primarily involves negotiation, mediation or arbitration, or a combination of all three. In this respect it is often seen as being the online equivalent of Alternative dispute resolution (ADR). However, ODR can also augment these traditional means of resolving disputes by applying innovative techniques and online technologies to the process.2 Online Dispute Resolution can take place either entirely or simply partly online and primarily concerns two types of disputes: those that arise in cyberspace and those that arise offline. As Internet usage continues to expand, it has become increasingly necessary to design efficient mechanisms for resolving Internet disputes because traditional mechanisms, such as litigation, can be time-consuming, expensive and raise jurisdictional problems.3 Offline disputes are often times addressed with traditional dispute resolution mechanisms which are supplemented with online technologies. The methods of Online Dispute Resolution (otherwise known as ODR) available range from negotiation and mediation to modified arbitration to modified jury proceedings.4 The most prevalent types of ODR being offered at the present time are online mediation and online arbitration, which are simply online transpositions of traditional mediation and arbitration. Therefore, online mediation, just like traditional mediation, is a process in which third-party neutrals have no authoritative decision-making power in assisting the disputing parties in voluntarily reaching their own mutually acceptable settlement of issues in the dispute. The existing ODR procedures are based either on a sui generis form of dispute resolution that focuses on the needs of Internet users, or on the dispute resolution forms already developed by the Alternative Dispute Resolution (ADR - which will be spoken about more in the following) movement, thereby transposing offline experiences. In general, ODR involves basically four primary components: Similar to ADR, companies agree to resolve their disputes and/or differences outside the courts, the difference being to use the Internet in order to enhance the process on various levels Professionals guide the parties and apply their ADR experience to support the Internet process ADR rules and practices are adapted to the Internet environment Software tools are used to enhance Internet exchanges ODR can be used by companies in any field to resolve disputes.5 There are two separate and yet main components of ODR: real time ODR and offline ODR. In both these categories there are sub-categories which are the basic components of each one's category. In regards to real time ODR: System generated messages can be handed out to disputants to follow up with a voice message system that gives them the status of the case in the vernacular Mediators can be informed of similar cases in real time using intelligent comparisons of data and disputes GIS boundaries of land can be plotted and sent to regional centers which can print out the maps and hand them over to the disputants to visually aid the process of mediation Case details can be semantically linked to provide mediators with expert systems that are able to generate options to help with decision making F2F synchronous and asynchronous mediation using mobile video conferring technologies In regards to offline ODR: Indexed case histories can feed into knowledge repositories that can be accessed offline, in print or as audio files to help train and build mediation capacities of ADR mediators Anecdotal input by mediators can be indexed to create expert system that examine semantic linkages within and between such input to influence options generation - for instance, the family history of a particular disputant, the structural underpinnings to a land dispute which may be linked to a loss of face and other observations Ability to access thematic or issue based case studies over a given period of time, or examine a particular case against possible options and the probability for resolution based on historical data, or access to case histories in a particular context, region or identity group (ethnic, religious or gender) A central repository of information on past and on-going ADR and ODR processes, grouped by issue, region, ethnicity, mode of settlement, mediator etc. The ODR systems vary in their sophistication (some may use just email, while others have sophisticated web-based platforms), and yet both offer advantages and disadvantages. Among the advantages are elements such as speed, efficiency, low cost, and as well, their capacity to bring parties located in different countries or at some distance together. Among the disadvantages are the challenge to mediators and to disputing parties to settle a dispute without face-to-face contact and as well the need for specific ICT training for mediators. As well, there is the fact that other more technical challenges which include such things as document processing, ensuring confidentiality and ensuring that such services which are available in different languages. What is the Importance of the Rise of Online Dispute Resolution There are many factors included in regards to the importance of the rise of ODR. One of the most primary - and certainly the most well-known - is that of the fact that ODR saves time, money, and is more easily accessible as well as more efficient in basically all regards. ODR will also increase in importance with the ongoing rise in global E-commerce; it is an essential tool for dispute resolution professionals as well as for anyone considering the use of dispute resolution in their personal or business life. What are the Similarities and Differences Between Online Dispute Resolution and Alternative Dispute Resolution There are a number of significant similarities as well as differences between ODR and ADR. Firstly, the main forms of ADR are the same as those of ODR: negotiation, mediation and arbitration. However, as the environment is different, therefore the architecture of the institutions is different, and the procedural rules vary, although sometimes only slightly, and sometimes widely. Electronic communication is probably the first major difference between offline dispute resolution and ODR.6 Another primary distinction is to be drawn between, on the one hand, actual dispute resolution, which covers procedures intending directly to resolve conflicts and, on the other hand, services that should rather be considered as satellite functions, seeking to prevent disputes or to facilitate or in other words improve their resolution, without actually fully resolving them. ODR is an emerging industry which encompasses a broad range of dispute resolution services; ODR includes online ADR for consumer and other transactions, whether transactions occur online or in the 'old' economy. ADR for online consumer transactions may be by ODR or, rather, could use more traditional forms of tools. To begin with, ADR is qualitatively distinct from the judicial process. It is a process where the disputes are settled with the assistance of a neutral third party generally of parties own choice, where the neutral is generally familiar with the disputes of that nature, where proceedings are informal, without procedural technicalities and are conducted by and large, in the manner agreed by the parties, where the dispute is resolved expeditiously and with less expenses, here decision making process aims at substantial justice, where the confidentiality of subject matter of the dispute is maintained to a great extent.7 In more basic terms, the primary point and aim of ADR is to render justice in the form and content that not only resolves the dispute but as well, brings back harmony in the relationship of the parties. In the offline world in recent years, we have observed the increased use by businesses and citizens alike of alternatives to the judicial system for settling disputes. Typical examples include negotiation, mediation/conciliation and arbitration. These have often been found to be rather effective in bringing parties together to resolve their differences quickly and amicably, without requiring a costly recourse to the courts. These alternative forms of dispute settlement are commonly referred to as alternative dispute resolution or ADR. The existing ADR programs range from volunteer dispute resolution programs for consumers to professional providers (individuals and organizations) of numerous types of dispute resolution services for consumers and businesses. While forum arbitrators are legal professionals, providing legal decisions, there are a wide range of services available in the marketplace.8 These answer divergent dispute resolution needs. ADR has been a growth industry as more and more businesses and consumers consistently seek to address personal or business disputes outside of our lawsuit system. ADR has been tested and implemented successfully over the years as a means and method to avoid the high costs and delays of court-based litigation, and in some cases even to restore business relationships between the litigants. It is in this same manner to which ODR enacts, using the same sound principles online, resulting in even further reductions in costs and delays. ADR techniques are extra-judicial in character, and these techniques have achieved success in the case of business/commercial disputes such as banking, contract performance, and interpretation, construction contracts, intellectual property rights, insurance coverage, joint ventures, partnerships differences, personal injury product liability, professional liability, real estate and securities.9 This is to say that ADR offers the best and most efficacious solution in respect of commercial disputes on an international nature. This is not to say, however, that there are not problems or negative factors in regards to ADR; it is not intended, after all, to supplant altogether the traditional means of solving disputes by means of litigation wherein there is an adjudication or final determination of a dispute which is binding on the parties thereto. A brief description of ADR procedures widely used is as follows: Negotiation - A non-binding procedure in which discussions between the parties are initiated without the intervention of any third party with the object of arriving at a negotiated settlement of the dispute Conciliation mediation - A non-binding procedure in which an impartial third party, the conciliator / mediator, assists the parties to a dispute in reaching a mutually satisfactory and agreed settlement of the dispute. Med-Arb - A procedure which combines sequentially conciliation / mediation and where the dispute is not settled Over the past thirty years, the legal profession has pioneered ADR as a response to the delays and costs which are consistently involved in court-based litigation. There is now a large body of experience with many lawyers using ADR as a valued approach to help their business clients.10 ADR has been incredibly fruitful in that it has thoroughly proven itself in the saving of both time and money, and in many instances has even aided the involved parties in restoring their business relationships and in the avoidance of the acrimony of extended litigation. ADR is also becoming fast considered as one of the best practices in supply chains in which the parties agree from the immediate outset in their contracts to forego court-based litigation and rely instead solely on ADR. What are Some Problems Affecting Efficiency in Regards to Online Dispute Resolution in the Shadow of the law Much is written on the state of ODR from al legal perspective, and indubitably, the pace of change of ODR in recent years is indicative of a systematic shift in its conceptualization, design and application in the transformation of disputes. Traditional civil and commercial law is becoming less accessible, primarily in regards to the fact that it is too expensive and imposes unreasonable time frames. On the Internet there are a wide range of products and services which are available to customers and companies, and yet there is not truly adequate legal certainty. In both cases, recourse to information and communications technologies must provide remedies for these problems.11 In businesses, disputes are especially inevitable, and clearly, economic development depends primarily on the availability of effective dispute resolution mechanisms. Indeed, the presence of clear rules and a well-defined, predictable legal framework are important factors for the growth of business no matter the area.12 In the United States, the situation in regards to this issue is even more complex than most, and the risk of duplication is even greater owing to the country's constitutional structure and the large number of stakeholders (the federal administration plus 50 state authorities). In today's world, arbitration and mediation are increasingly used to settle disputes, so because of this, traditional mediation and arbitration organizations manage a growing number of national and international disputes every year. Over time, these organizations have developed unparalleled expertise in dealing with the disputes submitted to them.13 Even as ODR facilitated or enabled interactions that were impossible or impracticable before, what it inevitably confronted was not the absence of law but municipality of laws that appeared to apply. For the most part, the Internet indeed raised vexing legal questions, particularly on jurisdiction. As cross-border online communications and transactions grew, so did concerns that the unpredictability of the legal environment will trigger disputes of which, in the absence of a practical and appropriate dispute resolution mechanism, will eventually undermine confidence in electronic commerce. The concerns in regards to this were hardly idle in that the online environment itself possessed characteristics that tended to heighten the possibility of disputes. No other medium in the present world offers or allows stranger-to-stranger transactions as easily as the Internet, for the cloak of anonymity that it confers complicates authentication of a party's possessed identity and enforcement of contracts or applicable laws; while the Internet eliminates distance as a barrier to transacting, the absence of mechanisms to enforce accountability or deter dishonest behavior encourages acts such as fraud or other deliberate non-performance of contractual obligations. Intellectual property law was one of the most specific areas in which the collision between technology and traditional legal framework became evident just as ecommerce was taking off in the late 90s. What are Some Problems Affecting Efficiency in Regards to the Trust Mechanism in the Online Environment With any endeavor, there are, of course, problems; there are numerous problems affecting efficiency in regards to the trust mechanism in the online environment, of which are all of great significance and importance, and which must be discussed fully and thoroughly in order to gain a proper overall understanding of the issue at hand. For instance, there is the importance of cooperation among interested parties on a topic such as ODR, which is trans-national and which affects both the industrialized world as well as developing countries. Hans van Loon, Secretary General of the Hague Conference on Private International Law, drew a distinction between the technological and economic environment, of which is truly global, and the legal environment, which is a patchwork of national, and sometimes regional issues. Mr. van Loon commented that there is a future for trans-national ADR, interfaced with rules on appropriate law and uniform policies, but that the major challenge is to find a formula creating room for ADR on the one hand and adjudication on the other.14 Mr. van Loon also stressed that against such a background, the challenge is primarily to build bridges to cope with diversity, and he stated that it was necessary to provide an ordered system for access to national courts and in order to facilitate court conclusions. As well, he said that it was equally important to promote ADR as well as ODR and to provide citizens with precise rules stating exactly what occurs if an agreement is not reached. There are three major disadvantages of ADR in particular which should be mentioned: first, ADR needs the consent of all parties in order to be binding and enforceable unlike conventional litigation, in which the imperium the court can be used to compel a party to resolve a dispute. Second, ADR is not always appropriate; arbitration and other ADR are most beneficial only when the motivating force driving the parties is economic and damages can be awarded by one party to another. Third, ADR is not necessarily consistent when there is a need of a precedent enforceable judicial decision which can help resolve latter cases. Indeed, third party neutrals are not bound by previous cases. As well, a settlement is binding in between the parties as a regular contract. In summary of this, ADR are best suited when the parties do not seek to avenge legal rights because they are 'solution rather than blame orientated'. One of the challenges with online arbitration is that binding and parties may give up all due rights to participate without fully understanding this. To the extent that one or more parties are disappointed with the imposed solution, they may be substantial problems with implementation and enforcement. As well, the introduction of information technology into the dispute resolution process raises a new number of legal issues. The precise nature of these issues and the manner which they are treated may vary from one system to another. Nevertheless, they are general traits. Contracts concluded by electronic means, including dispute resolution agreement raise a number of legal issues. In the United States, perhaps, the most challenging legal issue facing online mediation, as well as face-to-face, is the degree of confidentiality for mediation in the event of legal review challenging the propriety of a mediated agreement. On the one hand, the courts have been very supportive of the confidentiality of mediation discussions while on the other hand, there is concern that there may sometimes be participant incompetence, over-reaching, misrepresentation, fraud or duress, and the courts are somewhat confused about under what circumstances, if any, a reviewing court may look at the mediation discussions themselves to determine whether a settlement was properly reached or not. To the extent that online negotiation/mediation takes place like traditional ADR within the 'shadow of law', there are also challenging issues about just what 'shadow' to consider in a particular situation; still this is not substantially different than the world of face-to-face dispute resolution where the legal context is often not clear at all. Then, it also goes without saying that, to participate in online resolution, one needs to have a computer with web access. Even though more and more people are getting online and the cost of equipment is dropping, there are sharp differences among countries. Currently, according to a recent research, about one-third of a billion people are now online, and almost one half (147 million) are from North America and just over a quarter (92 million) are from Europe, and roughly 6 per cent (19 million) are from Britain. And as well, in addition to equipment, people need to have special technological skills, mostly related to that of navigating on the web, to participate in an online negotiation (particularly blind bidding) or mediation. Therefore, sites must be designed so that parties have a clear understanding of the process, especially if they are paying to participate. From this review we can see that ODR is a new and powerful way to resolve business disputes, this of which has the potential to save companies much time and money, as well as cutting back on any delay which might have been present beforehand. It also helps in the building of stronger relationships between business partners. ODR has much to offer because it draws on experienced ADR professionals.15 As well, it easily adapts ADR rules and practices in order to take the best advantage of the Internet and in order to provide parties with Web-enhanced tools to enhance problem solving. By its actual nature, ODR is well suited to facilitate any and all electronic commerce and supply chains but as well to help companies in any field to better handle disputes and keep their business relationships strong and free of any costly litigation fees. There are many separate views on this issue, all of which are differing in their own way, and all of which must be taken fully and thoroughly into consideration. Risaburo Nezu, Director, Directorate for Science, Technology, and Industry, OECD, summarizes by saying that while it is clear that not one size fits all vis--vis ADR programs, that discussions on the subject help to identify some common elements for ADR mechanisms and approaches to developing such mechanisms. As well, he stated that none of the existing online ADR mechanisms (most of them very recently set up) meet all of the above elements and therefore the systems still need further improvement. Regarding future work in this area, he stressed that several thought that a clearinghouse to facilitate the sharing of information would be beneficial.16 ODR originated in online disputes for which traditional means of dispute resolution were not suited; however, it is really only with the advancement of the Internet and powerful network based techniques that ODR's potential for both on and offline disputes began to be recognized, based on an understanding that 'dispute resolution, a process that typically occurred with parties meeting face to face, would be affected deeply as conflict occurred increasingly among people who could only communicate at a distance.'17 The development of the information society and rapid growth in electronic commerce will inevitably give rise to disputes and therefore will place new demands on the different parties to settle them; some of these new demands which are already being observed today. Just like in the offline world, we can expect and are already observing various forms of dispute emerging offline. Like offline, these disputes typically occur either between businesses or between businesses and consumers in contractual relationships. As we have seen, offline ADR involved a triangle: the two parties and a neutral introduces a 'fourth party' at the table, 'which is the technology that works with the mediator or arbitrator'. Although indeed, offline mediation and arbitration were already multimedia process involving exchanges of information through face to face meetings and other means of communication, including emails. An increasing number of organizations are providing online dispute resolution services, especially in the United States either offering electronic negotiation services or more traditional arbitration and mediation services. In regards to the outlook for the future potentials of ODR; it is hard to explain the potential of new web and mobile technologies to those who have spent many years fine tuning ODR systems for the PC. However, even in countries such as the United States, the importance of looking at ODR systems that incorporate mobile and new technologies is in fact growing at a particularly rapid pace.18 Online dispute resolution was heralded as a way to circumvent clogged and slowly moving American federal and state courts. From 1995 to 1998, informal online dispute resolution mechanisms were recognized as distinct from ADR and since 1998 they have become an industry in the United States. References Benyekhlef, K., & Gelinas, F. (n.d.). Online Dispute Resolution. Retrieved May 30, 2006, from http://72.14.207.104/searchq=cache:hlBBKpEFgFgJ:www.lex-electronica.org/articles/v10-2/benyekhlef_gelinas.pdf+online+dispute+resolution&hl=en&gl=ca&ct=clnk&cd=49 Duke Law & Technology Review. (2003). The Pros and Cons of Online Dispute Resolution: An Assessment of Cyber-Mediation Websites. Retrieved May 28, 2006, from http://www.law.duke.edu/journals/dltr/articles/2003dltr0004.html Hattotuwa, S. (2006). The Future of ODR: One Brief Glimpse. Retrieved May 28, 2006, from http://sanjanah.googlepages.com/ODR-Egypt.pdf Katsh, E., & Rifkin, J. (2001). Online Dispute Resolution: Resolving Conflicts in Cyberspace. San Francisco, CA: Jossey-Bass Publishers. Ponte, L. M. (2001). Throwing Bad Money After Bad: Can Online Dispute Resolution (ODR) Really Deliver the Goods for the Unhappy Internet Shopper 3 Tul. J. Tech & Intell. Prop. 55, 66-87. Sawhney, K. (n.d.). Alternative Dispute Resolution to Online Dispute Resolution. Retrieved May 28, 2006, from http://www.ficci.com/icanet/quterli/jan-march2002/ICA2.htm Secretariat. (2000). Building Trust in the Online Environment: Business to Consumer Dispute Resolution. Retrieved May 28, 2006, http://72.14.207.104/searchq=cache:TaU8WN7onf4J:www.olis.oecd.org/olis/2001doc.nsf/43bb6130e5e86e5fc12569fa005d004c/c1256985004c66e3c1256a33005b80a1/%24FILE/JT00106356.DOC+Some+Problems+Affecting+Efficiency+in+Regards+to+the+Trust+Mechanism+in+the+Online+Environment&hl=en&gl=ca&ct=clnk&cd=2 Schultz, T., Kaufman-Kohler, G., Lagner, D., & Bonnet, V. (2001). Online Dispute Resolution: The State of the Art and the Issues. Retrieved May 29, 2006, from http://www.online-adr.org/reports/TheBlueBook-2001.pdf Wikipedia. (2006). Online Dispute Resolution. Retrieved May 29, 2006, from http://en.wikipedia.org/wiki/Online_Dispute_Resolution Yuan, Y., & Archer, N. (2004). Online Dispute Resolution. Retrieved May 29, 2006, from http://72.14.207.104/searchq=cache:T-AdcXFswYUJ:cebi.ca/Public/Team1/Docs/online_dispute_resolution.pdf+difference+between+ODR+and+ADR&hl=en&gl=ca&ct=clnk&cd=6#4 Read More