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Colin rule

  1. 1. An Emerging Model for Global eCommerce ODR June 2nd 2010 Colin Rule Director of Online Dispute Resolution, PayPal
  2. 2. eCommerce Continues to Expand e-Commerce has exploded over the last decade U.S. B2B e-commerce generated $3.1 trillion in sales revenue in 2008, accounting for 27% of B2B transactions U.S. B2C e-commerce generated $225.2 billion in sales in 2008, up 5% from 2007 Consumers are becoming a major part of international commercial transactions for first time Cross border e-commerce trade is flat-lining 2
  3. 3. The Challenge: Creating Justice for eCommerce Traditionally business and consumer issues have found redress in courts However, eCommerce issues are difficult for courts to handle because the issues cross multiple jurisdictions Traditional judicial mechanisms also struggle with eCommerce cases because: the transactions are low value litigation is expensive it is difficult to enforce foreign judgments The solution is ODR: global, cross-jurisdiction, low cost 3
  4. 4. A Decade of Progress  1999: OECD publishes “Guidelines for Consumer Protection in the Context of Electronic Commerce”  2000: US FTC and Department of Commerce host “Alternative Dispute Resolution for Consumer Transactions in the Borderless Online Marketplace” conference  2002: The American Bar Association releases recommended standards for eCommerce Dispute Resolution  2003: GBDe / Consumers International agreement  2004: Global Trustmark Alliance Organizing Committee launched at GBDe Summit in Malaysia  2007: OECD Recommendations call for states to establish mechanisms for arbitration of consumer disputes  2009: European Committee for Standardization releases recommended best practices for ODR 4
  5. 5. International Consensus Rome I Regulation – EU Parliament Recital on special conflict of law rule for consumer contracts calls for ODR European Parliament has cited the need to promote ADR in the field of electronic commerce Several nations (e.g. US, Mexico, Chile) have already launched and evolved alternate dispute resolution (ADR) mechanisms for business to consumer disputes 5
  6. 6. New Initiative: The Global eCommerce ODR Proposal The ODR Initiative is intended to promote consumer confidence in e-Commerce by providing quick resolution and enforcement of disputes across borders, languages, and different legal jurisdictions. Modeled on the ICANN system Model law/cooperative framework and rules developed over 6 months by an extended working group of public, private, academic, and NGO representatives Advanced as a formal proposal of the US Government to the Organization of American States in January 2010 6
  7. 7. Overall System Design Central Clearinghouse Sellers Seller each opt-in to the ODR system voluntarily Providers Seller OAS ODR providers apply Case and are approved Seller DB individually Key Components: A Central Clearinghouse, who maintains the case database; National National Administrators; and National Administrator ODR providers Administrator approved by the National Administrators
  9. 9. 43rd Session of the United Nations Commission on International Trade Law 21 June - 9 July 2010, New York • Note by Secretariat: Provisional  Note by Secretariat: Possible agenda, annotations thereto and future work on online dispute resolution in cross-border electronic scheduling of meetings of the forty- commerce transactions (A/CN.9/706) third session (A/CN.9/683) “The Commission will also have “The goal of any work undertaken before it a note by the Secretariat by UNCITRAL in this field should on the issue of online dispute be to design generic rules which, resolution and, in particular, will consistent with the approach inform on the outcome of the adopted in UNCITRAL colloquium “A fresh look at online instruments (such as the Model dispute resolution (ODR) and Law on Electronic Commerce), global e-commerce”, organized in could apply in both business-to- Vienna on 29-30 March 2010 jointly business and business-to-consumer with the Institute of International environments” Commercial Law (A/CN.9/706).”
  10. 10. Conclusion E-commerce cross-border disputes: will form a significant proportion of complaints in coming years; require tailored mechanisms that do not impose cost, delay and burdens that are disproportionate to the economic value at stake. The time is now to build a global ODR system to address these challenges, and extend justice to issues that are not served by existing systems We’re closer than ever before 10
  11. 11. Appendix 11
  12. 12. Rome I Regulation – EU Parliament Recital  “With reference to consumer contracts, recourse to the courts must be regarded as the last resort.”  “Legal proceedings, especially where foreign law has to be applied, are expensive and slow. . . .”  “The protection afforded to consumers by conflict-of-laws provisions is largely illusory in view of the small value of most consumer claims and the cost and time consumed by bringing court proceedings.”  “As regards electronic commerce, the conflicts rule should be backed up by easier and more widespread availability of appropriate online alternative dispute resolution (ADR) systems. . . ”  Available at m_en.pdf 12
  13. 13. Rome I Regulation -- Review Clause Article 27 of Rome I Regulations requires that by 2013 the EC provide special report to the European Parliament on application of the special Rome I rule for consumer contracts. European Parliament cites need to promote inter alia “ADR in the field of electronic commerce and . . . to review to what extent on-line ADR schemes might be used . . . to increase consumer confidence in electronic commerce and obviate the need for court proceedings” Special report may be accompanied by proposals to amend the special Rome I rule for consumer contracts.  EU Parliament Final Compromise Amendment 104 Article 23(b) (new), available at (2007)1119_romei_am_en.pdf 13
  14. 14. State ODR Models  In some OAS member states, state-run alternate dispute resolution (ADR) mechanisms for business to consumer disputes are very well developed, offering dispute resolution services for a wide range of consumer disputes.  In Mexico, Concilianet, has been established to provide a government run online dispute resolution platform. The Federal Consumer Protection Law promotes and protects the rights of consumers without distinction based on nationality or other considerations. Available at:  In Chile, a similar online platform has been established.  The US Federal Trade Commission launched to refer consumer cross-border cases to ODR providers 14