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Online dispute resolution

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This presentation is about how Internet can serve as a medium of dispute Resolution for various commercial and contractual disputes. Delivered at a CIAC conference in India by Cyberlaw expert, Karnika …

This presentation is about how Internet can serve as a medium of dispute Resolution for various commercial and contractual disputes. Delivered at a CIAC conference in India by Cyberlaw expert, Karnika Seth it describes various ODR models available on Internet in India and other countries and discusses steps required to be adopted for its implementation in India .

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  • 1. Online Dispute Resolution by Karnika Seth Cyberlaw expert & Managing partner, Seth Associates Chairperson, Cyberlaws Consulting Centre International Conference on ODR India Habitat Centre, Delhi, 31 Jan 2013
  • 2. We live in the Internet age- the new cyberplanet! • According to latest World Internet use statistics, 1,966,514,816 people in the world use Internet • Asians constitute 42% of the Internet users in the world. • Internet powerful medium for social interactions & business
  • 3. Nature of e-disputes E- disputes IP/ Commercial privacy Consumer based Family Social, defamation
  • 4. Meaning of ODR • Online Dispute Resolution adapts electronic means to traditional alternative dispute resolution processes, such as negotiation, mediation and arbitration and/or use software automated processes for dispute resolution • Key advantage is that parties need not submit their disputes for adjudication before the courts of a different jurisdiction • Broad approach-In ODR, not only e disputes are resolved online but also traditional disputes such as commercial or social disputes are capable of being resolved by use of information technology.
  • 5. Communication devices camera, fax, phones, computers, scanners ,webcam, ipod, mobile phones etc
  • 6. Fig 14. 1 NATURE OF DISPUTES RESOLVED BY MEANS OF ODR Commercial Contract performance Partnership differences Industrial Construction contracts Personal injury Family disputes, defamation, privacy Intellectual property rights Product liability Business disputes Insurance coverage Professional liability Banking Joint ventures Real estate and securities 6
  • 7. Essence of ODR According to Katsh and Rifkin, the three important factors, namely convenience, trust and expertise forms the essence of ODR.
  • 8. Other Essential factors Affordability Accessibility Secure Flexibility Enforceable Transparency
  • 9. ODR vs litigation  Qualitatively distinct from judicial process  Can be initiated and terminated at any point of time  Neutral third party of the parties own choice settles the dispute  Proceedings are informal -without procedural technicalities  Proceedings are conducted in the manner agreed by the parties or as per ODR institution’s set of laws  Confidentiality of the subject matter of the dispute is maintained  Reduces acrimony between parties  Encourages customer loyalty in B2C
  • 10. Figure 14.2 ODR process Filing of complaint with ODR provider Appointment of panelist Respondent may respond File supporting doc,Oral hearing If dispute resolved Settlement
  • 11. TECHNIQUES OF Online DR • E-Mediation • E-Conciliation • E-Arbitration • E-Minitrial • E-Negotiation • E-Rent a Judge • And other Hybrid techniques like Medarb, Medola • Neutral listener • Final offer arbitration 11
  • 12. Mediation 6 steps to a Mediation: 1) Introduction by the mediator, 2) statement of the disputes by the parties, 3) information collection time, 4) identification of the problems, 5) bargaining and finding options, and 6) reaching an agreement.
  • 13. Advantages of Mediation • Opportunity for parties to discuss problem issues • heard by neutral person • Mediator does not impose a solution • Parties are more likely to abide by an agreement they mutually draft When goal is maintaining/keeping relationship with the customer/client .
  • 14. 14.2 ODR is recommended When goal is resolving a straight-forward dispute in a cost effective manner Disputes can be easily documented Parties have geographical limitations Time is of the essence No existing relationship
  • 15. Figure 14.1 Multiple Benefits of ODR Inexpensive • Save money on travel, attorney and court costs Time saving Parties have more control & flexibility Private Reduces workload of the judicial system Voluntary-Need not submit to laws of another country for dispute resolution Can overcome language and cultural differences Reduces acrimony Enforceable by agreement e.g mediation, arbitral award
  • 16. MODELS OF ONLINE SETTLEMENTS 18 16 Online settlements. These generally use a blind bidding procedure, and an automated or facilitated negotiation mechanism. Most often they involve only monetary settlements. e.g. Cybersettle , ResolveitNow, Settle Online, SettleSmart etc Online mediation services. These might utilize an automatic software program, or could employ the services of a live mediator who uses email or listservers. E.g. One Accord,WebMediate,Internet Neutral,BBBonline for consumer disputes etc Online adjudication. These include arbitration services, med-arb services, and virtual juries e.g,Resolution Forum,,i-Courthouse, NAF
  • 17. Figure 14.3 POPULAR INTERNET BASED DR SERVICE PROVIDERS 17 Cybersettle, clicknsettle- use of automated softwares –negotiating monetary settlements WIPO Domain name DRS-Domain Names NOVAFORUM-resolve commercial disputes within 72hrs i-Courthouse-Jury trials online Internet Neutral- Settles Online disputes,B2B,B2C The claim room-U.K based-bidding tool- N/M Virtual Magistrate- Settles disputes arising out of internet activity involving users,ISP,etc.
  • 18. Fig 14.4 VIRTUAL MAGISTRATE AND DISPUTE RESOLUTION 18 Virtualmagistrate.org is an ODR Service provider Dispute arises from online activity Party files it’s complaint with V Mag V Mag contacts the other parties Other party agrees to online arbitration The party answers to the complaint electronically V Mag assigns an arbitrator Arbitrator contacts both parties online requesting more information Resolution of the dispute within 72 hrs of filing
  • 19. Netneutrals.com (including direct negotiation, mediation, voluntary arbitration, and/or independent feedback review) Voluntary Arbitration and IFR decisions are final and are not subject to negotiation or appeal.
  • 20. Case study 1-Square Trade
  • 21. Step 1-Direct Negotiation
  • 22. Step2
  • 23. Step 3
  • 24. Step 3
  • 25. Step 4
  • 26. Step 5
  • 27. Smartsettle Process The Smartsettle process goes through six phases: Phase I:Two or more parties wish to negotiate an agreement about certain matters. Parties may engage a single Smartsettle facilitator to serve both of them or each have their own private facilitator.
  • 28. Smartsettle Process Phase II: A Smartsettle facilitator sets up the case online and gives access codes to each party. Facilitator helps parties work together to discuss their interests –framework agreement made with unresolved issues Phase III. Bargaining ranges are created with optimistic values from each party. Facilitator works independently with each party to elicit their confidential preferences.
  • 29. Smartsettle Process Phase IV: Parties exchange information (may include telephone and/or face-to- face meetings) and offer visible or invisible concessions. Smartsettle generates suggestions based on party preferences and concessions. Equity is achieved when parties reach a tentative solution by agreeing on the same package.
  • 30. Smartsettle Process Phase V:Preference representations are refined with help from the facilitator. Optimization is used to generate improvements to the current tentative solution. Phase VI: When any party wishes to end the negotiation, the Framework for Agreement is filled out with the current solution and signed by all parties.
  • 31. ODR across countries • In Netherlands, the electronic commerce platform is a joint initiative of the business community and the Dutch ministry of Economic affairs that drafted the Code of Conduct for electronic commerce • In Singapore, e ADR was launched which is jointly operated and supervised by Singapore Subordinate Courts, Ministry of Law, Singapore Mediation Centre and Singapore International Arbitration Centre, the Trade Development Board and Economic Development Board to resolve e commerce disputes • E courts in India also aim to promote ODR and deal with litigation and court based ODR using online resources and CBI (Central Bureau of Investigation) is in the process of establishing e courts
  • 32. Indian legal framework & ODR • Information Technology Act, 2000 based on UNCITRAL Model law of e-commerce 1996 • Section 4- Legal recognition of electronic records • Section 5- Legal recognition of electronic signatures • Section 10A Validity of contracts formed through electronic means • Section 11-13-Attribution, acknowledgement and dispatch of electronic records • Section 14-Secure electronic record • Section 15- Secure electronic signatures • Chapter IX on cyber contraventions and chapter XI on offences • Section 72 A punishment for disclosure of information in breach of lawful contract
  • 33. Other supporting legislations • Indian Evidence Act ,1872-Section 65A,B-Admissibility of electronic records • Indian Arbitration Act, 1996-Act permits an arbitral tribunal to use mediation,conciliation or other procedures during the arbitration proceedings to encourage settlement of disputes( S.30) • Section 89 of Code of Civil Procedure, 1908 promotes ADR, Order X Rule 1A • Legal precedents encouraging ODR- State of Maharashtra vs Dr. Praful B. Desai, Grid Corporation of Orissa Ltd. vs. AES Corporation
  • 34. Existing lacunae-ODR regime in India • Need more awareness & training • More funding to set up ODR • Creating Uniform standards and rules for ODR • Logs-Rules pending under Section 67C,IT Act,2000 • Rules pending under Section 3A, 15,16 IT Act,2000-secure electronic signatures, security procedure and practices- other electronic signatures • low cost internet access • Trust seals by a government/private entity • Need clear Law on Internet surveillance • Need stronger security mechanisms • Institutional ODR providers missing in India
  • 35. To design an ODR system for India- • What kind of disputes can be settled through ODR? • How much information can parties submit? • Should audio/video/documentary attachments be allowed? • Procedure & time frame for appointment of neutral judges/panelists and decision making • Can a party access updated status of the case? • Should each party get the opportunity to rebut? • How is payment processing handled? • What is a reasonable number of attempts to contact the respondent? • Enforceability of settlements and decisions arrived at during dispute resolution
  • 36. Self Regulation vs Government role in ODR • Schultz was of the opinion that government’s role is more important as compared to the self regulation approach. • Accreditation-Symbolic capital-authenticity, credibility • Financial aid • Supervision • Provision of appeal for accountability • In USA, Australia, New Zealand, Singapore, Canada, U.K. special funding is being granted by the government to initiate ODR projects. • I would advocate Public –Private partnership model
  • 37. Self regulation -Use of Trust seals & certification
  • 38. Use of Trust seals & certification
  • 39. Truste certification
  • 40. Challenges in ODR • Requirement of consent of both parties • Legal recognition to ODR clause-B2C contracts- EU view • Maintaining standards and quality • Accountability and impartiality of neutrals and arbitrators. • Confidentiality of information gathered during the Arbitration process. • Lack of homogenous cyberlaws –core principles same- UNCITRAL Model law of e- commerce • Will national courts recognize awards rendered online. • For the purposes of statutes and treaties such as the New York Convention, where will an online arbitration take place, and where will the award have been made. • How does one ensure the authenticity of and integrity of documents, electronically. • Lack of personal interaction may reduce chances of settlement ( Goffman, face theory) • Differences in language and culture
  • 41. Solutions to ODR hurdles • Need for an ODR law analogous to lex mercatoria. • In European Union, the E commerce Directive, provides in article 17 that in case of an e-dispute, the member states are required to ensure that the parties are not hindered from using ADR process for dispute resolution ‘including appropriate electronic means’ . Some harmonization is in place-UNCITRAL Model law on e- commerce & electronic signatures • Use of encryption & other security tools-The electronic court house uses multiple security layers including sophisticated server, complex pass word and software which backs up complete data of its servers and stores information submitted by the parties in a protected environment. Such technical infrastructures is required to alleviate any concerns a breach of privacy, confidentiality in the ODR process. • Many paralegal rights such as money back guarantees and buyer protection clauses and authentication seals are becoming popular on most e commerce websites- to generate trust • ODR reduces acrimony – no disadvantage if personal interactions not there • Overcome differences in language and culture through translators
  • 42. IT & DISPUTE RESOLUTION-RECOMMENDATIONS  Nature of Virtual world of cyberspace- devoid of physical boundaries  Improvisation and extension of ODR system application to new subject areas worldwide.  Online International Court of Justice for e—Disputes— Need for political reconciliation between main trading blocks  Organization or system of law to regulate e-disputes through uniform means e.g ICANN Policy for domain name disputes till uniform ODR law is achieved  IT enabled DR should be introduced in all model legislative texts, national laws as an internationally accepted uniform method of dispute resolution 42
  • 43. Figure 14.4 Overcoming Enforcement Challenges Parties to a mediation conditionally agree that mediation will convert to arbitration. Where an agreement is reached, the mediator can render an arbitral award consistent with the agreement Parties put into escrow each party’s consideration involved in dispute. The escrow agent can distribute the assets in accordance with the outcome of the ODR process. Parties to a settlement agreement provide in the agreement that incase of non compliance, the parties agree to have an arbitrator appointed to draft an arbitral award according to the terms of the settlement agreement.
  • 44. Thank you! SETH ASSOCIATES ADVOCATES AND LEGAL CONSULTANTS New Delhi Law Office: C-1/16, Daryaganj, New Delhi-110002, India Tel:+91 (11) 65352272, +91 9868119137 Corporate Law Office: B-10, Sector 40, NOIDA-201301, N.C.R ,India Tel: +91 (120) 4352846, +91 9810155766 Fax: +91 (120) 4331304 E-mail: mail@sethassociates.com