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Online dispute resolution
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
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.
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.
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.
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
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