By Alice Smith, Student, University of Sheffield

Katsh and Rifkin purport that a successful dispute resolution should consider convenience and trust.[1] This post will consider the application of these concepts to Online Dispute Resolution (‘ODR’). ODR is the online equivalent to alternative dispute resolution, that uses technology to resolve disputes between parties. Pubel and Schmitz argue that ODR should become the dominant mechanism in resolving disputes because it defies jurisdictional limits and allows a more efficient redress mechanism. I will argue that, not only has ODR improved these elements, but its independent adoption serves to facilitate access to justice in high-value, complex disputes. However, to balance equity and innovation, there should be an integration of modern and traditional dispute resolution rather than a binary choice being exercised.

Convenience

 

Traditionally resolving disputes is expensive and difficult, as it requires parties to travel to locations for in-person processes. This means that traditional dispute resolution is also inconvenient, as it is not cost and time effective for parties to reach a resolution for low-value disputes.

Schmitz argues that ODR is transformative in improving convenience because of its ability to ‘defy jurisdictional limits’.[2] ODR ‘allows individuals to resolve disputes during times that work with their own time zones’[3], reducing the need for

parties to travel. Software, such as The Mediation Room has improved convenience in developed countries. Such platforms allow mediators and arbitrators to exchange documents and communicate with parties online. The dispute process is simplified, as parties do not have to account for time and cost restraints in resolving disputes. This is further aided in such software’s accessibility, through a mobile phone web browser, which Schmitz contends has further democratised access to justice, given only 36.1% of parties in developing countries own a computer. It increases convenience for parties as they can theoretically participate in the process from any device, at any time.

Schmitz’s description of ODR’s transformative capabilities in increasing convenience assumes that parties have the pre-requisite technology and internet connection. This is a point highlighted by Sternlight who notes that ODR’s enhancement of convenience, is limited to disputes in developed countries such as the United Kingdom, where 96% of UK households use the internet. In contrast, a developing country, like South Sudan, has an internet penetration rate as low as 8%. This means that it would be procedurally unfair to use ODR in isolation, whilst there remains a ‘digital divide’.[4]

There is also the issue of quality of communication, when using mobile phones for ODR. Whilst there are 136 million smartphone users in Brazil, the issue is not whether parties can participate, but the extent to which they can participate and whether this allows sufficient access to justice in ODR. The use of a mobile phone can cause practical difficulties in conveying parties’ thoughts as it does not have a physical keyboard or mouse. As Sternlight contends this reduces access to justice, in comparison to a face-to-face setting, as parties will struggle to communicate a broad range of beliefs and build a rapport to solve a dispute efficiently. The extent to which rich communication is needed is dependent on the scale and complexity of the dispute. Therefore, limited communication may not serve as a barrier to access to justice, where the claim is simple and of low value. At the same time, there is the potential for its adoption to hinder communication or unfairly delay solutions with parties from developing countries. This supports a hybrid approach. Although internet disparity cannot be as easily solved, greater enabling of participation of parties from mobile phones could be achieved by developing specifically designed ODR apps.

ODR’s ability to improve convenience is not transformative enough to abandon traditional methods of dispute resolution. Full adoption would not necessarily facilitate access to justice for those in developing countries, in high-value claims, as the quality of communication is weakened at the expense of convenience. This supports the need for a hybrid approach to cultivate rich communication when needed.

Trust

Trust is integral in resolutions to allow parties to cooperate and reveal information, facilitating a quicker solution.

When e-commerce was originally introduced, there was a rising level of distrust, which affected online businesses. This was because there was consumer uncertainty as to whether remedies could be efficiently obtained, given that human customer services were difficult to reach because of the volume of low-value complaints. This resulted in consumers spending large durations on hold on the phone, with remedies only accessible during customer service operating hours. With several tens of millions of e-commerce disputes every year, traditional dispute resolution cannot handle low-value disputes efficiently to encourage buyer trust.

Pubel states that ODR is transformative as ‘by providing consumers with effective and economic redress mechanisms’[5] it encourages trust. Likewise, Katsch  states that ODR can be more trusted than human management. ODR can be seen to increase the trust of buyers with low-value disputes, by providing an efficient remedy. For example, for users of eBay, where there is an estimation of 60 million disputes annually, ODR operates via a Money Back Guarantee service. Here, the buyer has the right to file an online complaint stating they have either not received the item, the item is faulty or doesn’t match the initial listing. The seller then must respond within 3 working days to mitigate the issue. If the buyer is not satisfied, this can result in eBay forcing a refund from the seller’s PayPal account. As Pubel states, to boost trust for low-value claims, there needed to be more responsive redress systems. ODR can be seen to facilitate more responsive redress systems as buyers can quickly obtain remedies, regardless of whether the seller is cooperative and the number of simultaneous disputes occurring.  This can increase trust, as there is the certainty that ODR can protect buyer investment and react quickly when the seller has failed to fulfil their obligation.

Pubel in asserting that ODR is an ‘automatic process that enhances online negotiation’[6], fails to consider ODR’s inefficiency in gaining trust amongst parties, with high-value claims. Indeed, the average value of e-commerce orders ranges from $84.69 to $120.51, suggesting that ODR can be used where it is illogical and cost-prohibitive to pursue litigation. However, where the claim is of high value, and parties wish to pursue litigation for greater redress, ‘ODR is not that effective at building trust’[7] as it encourages identity-based distrust. Pubel is potentially referring to software such as SmartSettle. Here, parties are detached by anonymity and remoteness.  This means that disputing parties can be unaware of whom they are engaging with. There are no social cues, and so parties lose personal connections. Resultantly, this creates fear and hesitation to engage amongst parties. This highlights how, when used in isolation, ODR is not transformative because the online anonymity it brings can trigger defensive behaviour, rather than cooperation. Parties may be apprehensive within the dispute process by withholding information and attacking the other’s position, which would less likely occur in a physical setting. Thus, ODR’s blanket adoption here is not an adequate form of legal assistance for high-value claims. It can subsequently reduce access to justice by causing delays in solutions to disputes, or settlements not being made at all. Additionally, if parties are withholding information, this can simultaneously result in inadequate redress, unrepresentative of actual harms caused. Therefore, ODR should be used as ‘just one tool in a broader toolbox of trust-building tools and techniques’.[8] To facilitate ODR, there must be initial physical unmasking, like that in traditional dispute resolution, to promote trust in high-value claims. This could be achieved by legal professionals organising preliminary face-to-face meetings between parties, undermining ODR’s ability to enhance convenience in dispute resolution.

Conclusion

It can be seen from the benefits of ODR, that its implementation can aid in parties seeking redress for low-value disputes. However, ODR is not transformative enough to challenge traditional dispute resolution’s existence, as it cannot always be used to remedy high-value, complex disputes. Therefore, ODR ought to remain a complementary tool in resolving disputes rather than becoming the dominant form of dispute resolution.

[1] Katsh E and Rifkin J, Online Dispute Resolution: Resolving Conflicts in Cyber Space (1st edn, Josey Bass, 2001).

[2] Amy J Schmitz, ‘There’s an ‘APP’ For That: Developing Online Dispute Resolution to Empower Economic Development’ [2018] 32 Notre Dame Journal of Law, Ethics & Public Policy 4.

[3] Amy J Schmitz, ‘There’s an ‘APP’ For That: Developing Online Dispute Resolution to Empower Economic Development’ [2018] 32 Notre Dame Journal of Law, Ethics & Public Policy 3.

[4] Amy J Schmitz, ‘There’s an ‘APP’ For That: Developing Online Dispute Resolution to Empower Economic Development’ [2018] 32 Notre Dame Journal of Law, Ethics & Public Policy 4.

[5] Luca Dal Pubel, ‘eBay Dispute Resolution and Revolution: An Investigation on a Successful ODR Model’ (Conference: Collaborative Economy: Challenges & Opportunities, Barcelona, July 2018) 132.

[6] Luca Dal Pubel, ‘Ebay Dispute Resolution and Revolution: An Investigation on a Successful ODR Model’ (Conference: Collaborative Economy: Challenges & Opportunities, Barcelona, July 2018) 138.

[7] Colin Rule, Larry Friedberg, ‘The Appropriate Role of Dispute Resolution in Building Trust Online’ [2005] 13 Artificial Intelligence and Law 204.

[8] Colin Rule, Larry Friedberg, ‘The Appropriate Role of Dispute Resolution in Building Trust Online’ [2005] 13 Artificial Intelligence and Law 204.