ODR–Solving Technology Disputes Online

ADR (Alternative Dispute Resolution) is joining the technology revolution. What used to be regarded as the venue for small insurance claims ($5000 and under), is now moving mainstream, called ODR (Online Dispute Resolution) and is positioning itself to be the choice of the future for multifaceted international dispute resolution. To date, several types of ADR have been available both nationally and internationally, including: negotiation, conciliation, arbitration and mediation. 1

ADR cases need not compete with litigation, but can offer a wider range of settlement options for certain cases. ADR may be appropriate in cases where a private process is needed; a case is time sensitive or continuity is needed; there may be time sensitivity or cost considerations; the parties may wish to choose a certain adjudicator; or an international award may need to have enforceability. 2 Other considerations that indicate that a case may be appropriate for ADR: is there an ongoing relationship that needs to be preserved?; do the parties need a resolution that only a court can grant? (i.e. legal precedent, injunction or interim remedy); are the issues complex and hard for a jury to grasp? (i.e. technology issues). 3

ODR is being utilized in a wide arena of ADR cases. ODR is being used in traditional conflict categories, such as insurance and employment disputes. ODR is also increasingly being used in pure technology disputes as well, being preferred by the technology community as the most efficient way to resolve technological disputes. 4

The most successful ODR system to date is for settling disputes over the selection of domain names. Domain names are the address names selected to identify a particular web site. 5 Only one person/entity may own a particular domain name (i.e. www.apple.com for Apple Computers, www.ABA.com for the American Bar Association). Domain name disputes arise when someone other than a trademark owner makes a bad faith registration using a domain name that is trademarked. 6 Such registrations are called cybersquatting and are made by persons in the hope that the value of the domain name will rise and can be sold at a profit. 7 The ICANN (Internet Corporation of Assigned Names and Numbers at www.icann.org) was set up in 1999 to issue rules about domain name registrations and solving online disputes. 8 The ICANN domain name arbitration/mediation process is cheaper and faster than litigation. The cost of an ICANN arbitration/mediation is less than $1000 and the time frame for a decision is 60 days (mediation may take more time and cost more, depending on the complexity of the case). 9 The process is on-line (with the exception of a few faxes) and all decisions are posted on the web at www.icann.org/udrp/proceedings-list.htm. 10

ODR is also receiving a great deal of consideration as a way to resolve disputes within the international business community at a great cost benefit. The international technology sector has been a leader in the recognition that ADR/ODR will play a major role in the expansion of the internet, with the establishment of an Arbitration and Mediation Center through the World Intellectual Property Organization ( WIPO ) in Geneva, Switzerland in 1994. 11 In a cost comparison of ADR methods in intellectual property disputes, typical costs for binding arbitration is $151,000; for a combination of arbitration and mediation the cost is $78,000; and for mediation the cost is $50,000. 12 The costs of ODR in the same context would be even lower. This is contrasted with the average costs of $1,000,000 per party in patent litigation, with a particularly heated battle costing as much as $200,000,000 in combined litigation fees. 13 Thus, the cost savings of ADR/ODR are significant.

There are a few traditional resources on ODR, one book and a few articles published in journals, but the vast majority of resources regarding this fast-paced new technology will be found on the internet. 14 There are several private ODR websites that are prepared to intake cases online. 15 Cybersettle (cybersettle.com) and Clicknsettle (clicknsettle.com) are two web-based ventures that allow parties to submit offers for efficient on-line settlement without the offer being revealed to the other party. 16 Offers are submitted over the internet to a machine that calculates whether the offers are within a certain range. The parties agree ahead of time that if the offers are within a certain range, the dispute will end by splitting the difference. When the offers are far apart, the machine keeps the offers secret and negotiations can continue without anything having been given up by the parties. 17

One very helpful resource is a sample online dispute resolution process of a moderately complex employment issue at smartsettle.com. This example allows parties to see what a typical case looks like and even to view how to draft a case framework. 18

Consumers International did a recent survey of 30 ODR service providers and provided the results in an Executive Summary. 19 The survey found that ODR services vary widely from service to service and a business/consumer may need to check several services to determine which service will meet their needs; most services operate in English only; and not a great deal of information is provided regarding governing structures, assurance of impartiality, and incentives for compliance with ODR results. The survey calls for the development of international standards for ODR and for the results of ODR decisions to be made public. 20

ODR mediation presents some unique challenges. First, it is written and more formal. 21

The parties attention span is lower with written negotiation, so communications must be succinct and presented in a visually easy to read manner (i.e. short paragraphs, few words, bullet points). Realize that in the on-line environment, there are not visual or auditory clues found in face to face mediations. If there is any uncertainty as to what is being said, clarification should be sought. 22 If face to face negotiation is a must, there are web conferencing services, like Placeware, CM Stat or WebEx, that can allow parties to see each other and make presentations over the internet. 23 Each web site offers interactive demonstrations.

Web Conferencing is the ability to hold a meeting where participants can listen by phone and simultaneously see visuals through their Web browser. 24 A meeting organizer can control what the participants see, can use drawing tools to emphasize points, can show web pages to the participants, can draw on a white board to illustrate a point and see software in action. 25 Other participants can add comments or the meeting organizer can give another participant the conference control. 26 ODR can be an especially useful tool in interest based bargaining techniques. 27 If a large number of people need to work at building a consensus, polling can be done very effectively over the internet. One very successful system that is in use on a consistent basis is TAGs, used to collect data and build consensus for a variety of governmental and private businesses and industries. 28 Hundreds of ideas can be gathered quickly and conveniently from hundreds of people in a very short time. The ideas can be gathered from anywhere in the world and can be quickly assimilated and sorted for building consensus among a group. 29

Although innovators of internet technology press for small amounts of legal regulation, ODR has expanded at a rapid rate and is requiring new thought in the areas of Regulations and Standards, in order for expansion to occur in a uniform manner without chaos. Proposals are now being proposed in The United States and Canada. 30 Electronic Commerce is a principal catalyst of the 21st Century global economy and as such, those who can quickly and efficiently manage their disputes online will see success in their ecommerce domains. 31 One very successful ODR program is The Online Ombuds Center s program through eBay. 32 (The original test pilot program was done in 1999 through the Center for Information Technology and Dispute Resolution at The University of Massachusetts, www.umass.edu/dispute). 33 This program was set up to handle online business disputes that arose between customer and seller of the auction items on the eBay website. The process utilizes email shuttle diplomacy and upon receiving a complaint, the mediator emailed the disputant, providing information about the process and inquiring about a willingness to mediate. 34 Each party then emails their narratives and demands to the mediator. The mediator then refined the stories and provided a buffer, soliciting discussion, and reformulating the dispute in search of a settlement. 35 The buyers and sellers on eBay are usually separated by great distances, they have no prior relationship and they will probably never meet face-to-face. 36 A face-to-face mediation in this situation is virtually impossible. In this context, ODR is the best dispute resolution choice and has worked well for eBay users.

The complexities facing eBay users are also similar to those conditions facing international business disputes and ODR is increasingly moving into the international arena. In order to save time, money, increase convenience, and work across international time zones, international disputants might consider using a hybrid of ODR and web conferencing services, in order to create the best of all ADR possibilities. For example, this will become increasingly important with China s entry into the World Trade Organization and increasing development of its commercial technology/ecommerce sector. 37

There are several benefits to ODR that can be utilized in cross cultural international disputes: ODR allows the parties to respond and discuss at different times, after they have had time to consult or discuss issues fully, do research, or simply taking time to reflect before responding. 38 Opening statements can be saved and reused by Mediators. Mediators are given time to reframe issues and ODR neutralizes accusatory tones. 39 Online caucusing is very flexible and allows the parties not to have to wait for hours while the mediator speaks to the other side. Additionally, ODR communications are usually archived and it is possible for the parties to refer to what was sent at an earlier point in the process. 40

As the number of individuals and firms connected to the internet increases, it will be commonplace for parties to take advantage of the internet s ability to ignore national boundaries and accelerate exchanges of information and positions and work toward agreement. 41 ODR will grow rapidly, as alternatives to face-to-face meetings will be more needed there, but there is no reason why the technological resources of the internet and the expertise available over the internet cannot be employed for any kind of dispute. 42 Easy and quick communication over great distances may be the form of technical assistance that allow parties to reach common ground. New partnerships and commercial relationships across borders can raise questions about jurisdiction and which form of legal system should be employed, but agreements to mediate through ODR can resolve these challenges. 43

It seems that we are fast approaching a global culture in which differences between nationalities, religions, ethnicities and societies are ultimately obscured. In addition to bringing together nations through technology, there has been an increased harmonization of treaties (NAFTA, the UN Convention on Contracts for the International Sale of Goods), governing regulations (UNCITRAL, New York Convention), nations (Mercosur and the EU) and organizations offering dispute resolution (AAA, ICC, LICA, WIPO and WTO) to ensure uniformity in the treatment of intellectual property among member nations. 44

For example, the World Trade Organization (WTO) has formalized a Dispute Settlement Understanding (www.wto.org), so that dispute settlement plays a central role in the security and predictability of the WTO multilateral trading system by securing a positive solution to a dispute. 45 All WTO members agree to abide by the DSU rules which provide for three main ways of resolving disputes: bilateral consultations; good offices, conciliation and mediation; and adjudication, including arbitration, to be administered within a reasonable time by the Dispute Settlement Body (DSB), an ex-officio Director-General, the Secretariat, or between three to five independent trade experts in an expert review group. 46 An appellate process also exists and members are expected to abide by decisions and reach agreed compensation as damages. Failure to pay agreed compensation can result in retaliatory action authorized by the DSB. 47

Another example of a successful dispute resolution program is through the World Intellectual Property Organization (WIPO), a specialized agency of The United Nations. 48 WIPO offers mediation (evaluative and facilitative), arbitration, med-arb, and emergency interim relief. WIPO s services are open to any party and is not limited to the 155 member states affiliated with WIPO treaties. 49 Patent infringement claims are particularly well suited to dispute resolution alternatives, because the claims often require comprehension of complex inventions. Conflicting and technically difficult expert testimony can further complicate decision making. Additionally, patent suits often involve numerous parties across numerous jurisdictions. 50 WIPO provides simple rules to govern proceedings, especially in the admission of technical evidence, which increases the efficiency of its dispute resolution procedures. In high technology markets, products become obsolete in a matter of months–parties cannot afford litigation that takes years. 51 ADR/ODR is flexible, neutral and confidential.

In this millennium, it will be more important than ever for American negotiators to be sensitive to cultural differences between people from different countries and even different regions within those countries. The internet makes it very easy to obtain background and resources on history, culture, current events, laws and practices of a foreign country while preparing to negotiate with a foreign counterpart. 52 Be sure to learn about the culture BEFORE negotiating to avoid costly errors. In preparing to negotiate internationally, consider the relative size of the parties and their ability to absorb risk. 53 Even though everyone may speak English, they may use words that have very different meanings that are significant to their culture. 54 Lawyers may think differently in different legal systems. 55

In actually negotiating internationally, parties need to be sure that each side is comfortable with using technology for negotiating. 56 For instance, fax machines are indispensable in the US, but not even available in some parts of the world. If selecting a video conference as a tool, someone from Europe may be very comfortable with media, while someone from an eastern block country, with a history of large-scale surveillance, may not be as comfortable with this form of interaction. Consider in some countries, if phone or email lines might be tapped and if the use of codes might be necessary. 57 Email etiquette may be quite different, especially in formal cultures like Asia. 58

Internationally, ADR/ODR is gaining acceptance. Socialist, European and Asian countries favor ADR. 59 Other countries (Latin America, Arab Nations, Africa, Canada, Australia) are quickly opening to dispute resolution systems as technology expands and becomes the focus of new economies. 60 The future for the growth of technology in the dispute resolution field is very bright.

ENDNOTES

1 The Chartered Institute of Arbitrators/North American Branch–International Commercial Arbitration Program–Entry Level Course, Pp.26-27; see CRInfo– Mediation/Arbitration sections at www.crinfo.org.

2 Id. at Pp.27-29.

3 CPR Institute for Dispute Resolution, ADR Screen. Vol.12, No.12, December 1994.

4 ICANN has set up a site to deal strictly with disputes over domain names on the web: www.disputes.org ; see www.ombuds.org/.

5 On-line Alternative Dispute Resolution and International Negotiation, Ethan Katsh in The ABA Guide to International Business Negotiations, edited by James Silkenat and Jeffery Aresty, 2nd edition, at P. 214.

6 Id. at 214.

7 Id. at 215.

8 Id.

9 Id.

10 Id.

11 Arbitrating in the Alps Rather Than Litigating in Los Angeles: The Advantages of International Intellectual Property-Specific Alternative Dispute Resolution, Julia Martin, Stanford Law Review, vol. 49:887, 1997, Pp.918-919. WIPO is a specialized agency of The United Nations, whose purpose is to promote the protection of intellectual property throughout the world. Id. at P. 921.

12 Id. At 925. Technology is becoming increasingly globalized, partially from the fact that no country is technologically self-sufficient: highly developed countries are importing and exporting high levels of technology and corporations are increasingly forming international strategic technology alliances. Id. At 931.

13 Id. at 924, citing Polaroid Corp. v. Eastman Kodak Co. with two hundred million in legal fees.

14 Online Dispute Resolution: Resolving Conflicts in Cyberspace, Katsch, Ethan and Rifkin, Janet, Josey-Bass, May 2001, 240 Pp.; Ohio State Journal on Dispute Resolution- www.acs.ohio-state.edu/units/law/jdr ; AAA- www.adr.org ; CPR- www.cpradr.org ; Chartered Institute of Arbitrators- www.arbitrators.org ; BBB- DR- www.bbb.org/complaints/index.html ; National Institute for Dispute Resolution- www.nidr.org ; Hong Kong International Arbitration Centre- www.hkiac.org ; Program on Negotiation at Harvard Law School- www.law.harvard.edu/Programs/PON ; European Conference on Peacemaking and Conflict Resolution- ecpcr.umut.org.tr/ecpcr.

15 A complete list of ODR websites may be obtained at: www.ombuds.org/center/onlineadr.html ; additionally, private services like www.mediate.com (many thanks are extended to Jim Helie and Jim Melamud for their contributions to this article) ; www.odrnews.com ; www.crinfo.org ; www.adrworld.com carry many articles and information on ODR, including the latest news and developments.

16 On-line Alternative Dispute Resolution and International Negotiation, Ethan Katsh in The ABA Guide to International Business Negotiations, edited by James Silkenat and Jeffery Aresty, 2nd edition, P. 218.

17 Id.

18 SmartSettle Tour at www.smartsettle.com/more/tour/tour.htm.

19 Executive Summary, 12/11/00 at: www.consumersinternational.org/campaigns/electronic/sumadr-final.html.

20 Id; The United Nations Commission on International Trade Law recently considered a model law on commercial conciliation; UNCITRAL has been working on model legislation on conciliation, enforcement of awards and interpretation of the New York Convention of 1999: ADR News, 10/18/01, www.adrworld.com/opendocument.asp?Doc=iNYU4Itbh8&code=jMVQFxxV . As these model laws are ratified, in the coming year, ODR will become a tool of choice in international business disputes; see generally Where On Earth Does Cyber-Arbitration Occur? International Review of Arbitral Award Rendered Online, Tiffany Lanier, vol.7, no.1, Sept.2000, ILSA Journal of International & Comparative Law, Nova Southeastern University, Shepard Broad Law Center, Pp.1-15.

21 ADRonline Monthly, Mark Eckstein of SquareTrade.com, www.ombuds.org/center/documents/eckstein.htm.

22 Id.

23 Online Dispute Resolution News at www.odrnews.com , Will Face to Face Meetings Be Replaced? , Jim Rapoza, 10/19/01.

24 Why Web Conferencing Beats Teleconferencing, Deborah Whitman at www.bcentral.com/resource/articles/whitman/113.asp?cobrand=msn. This article also explains the pricing intricacies of different services and gives helpful tips regarding web conferencing.

25 Id.

26 Id.

27 Technology Assisted Group Solutions (TAGS), Federal Mediation and Conciliation Services (FMCS), http://tags.fmcs.gov , [email protected] (many thanks are extended to Regional Director Pamela DeSimone and Commissioner Jim Stott for their contributions to this article).

28 Id.

29 Id.

30 Regulations and Standards for Online Dispute Resolution, Weiner, Alan, 2/15/01, www.mediate.com ; Online Dispute Resolution and Avoidance in Electronic Commerce, Christine Hart, www.law.ualbertal.ca/alri/ulc/current/hart.htm.

31 Weiner at 1.

32 New Mediator Capabilities in Online Dispute Resolution , Colin Rule at www.ombuds.org/center/aaron/adronline2001/01/new_mediator_capabilities inon.

33 On-line Alternative Dispute Resolution and International Negotiation, Ethan Katsh in The ABA Guide to International Business Negotiations, edited by James Silkenat and Jeffery Aresty, 2nd edition, P. 216.

34 Id. at 217.

35 Id. at 217.

36 New Mediator Capabilities in Online Dispute Resolution , Colin Rule at www.ombuds.org/center/aaron/adronline2001/01/new_mediator_capabilities inon ; see generally E-Commerce, E-Disputes and E-Dispute Resolution: In the Shadow of eBay Law , Ethan Katsh, Janet Rifkin, and Alan Gaitenby, Ohio State Law Journal on Dispute Resolution, Vol. 15:3, 2000.

37 E-Commerce and International Political Economics: The Legal and Political Ramifications of the Internet on World Economies, Chelsea Ferrette, vol.7, no.1, Sept.2000, ILSA Journal of International & Comparative Law, Nova Southeastern University, Shepard Broad Law Center, Pp. 33-35. By 2002, China will have 9.4 million internet users. The Chinese have agreed to allow 49% of telecommunication and internet services to be owned and developed by foreign investors, thus creating an explosive market for commerce and the internet in China over the next decade. Id.

38 Id; Many cross cultural issues face the globalization of ODR, including: culture, language, the need to save face , literacy levels, and cultural bias: see Cross Cultural Issues of ODR , 4/01, www.ombuds.org/center/aaron/adronline2001/04/april_op-ed.htm; see ODR and The Global Management of Customer Complaints: How Can ODR Technologies Be Responsive to Different Social and Cultural Environments?, Fermenia, Nora, presented at The Hague Conference of the OECD, 12/12/2000, www.mediate.com/articles/femenia.cfm.

39 Id; The First European Electronic Consumer Dispute Resolution Service (ECODIR) was launched in 10/01, to handle disputes over non-delivery of goods purchased on the internet, overcharges, and transactional disputes related to online purchases. ADR News, 10/31/01, www.adrworld.com/opendocument.asp?Doc=5EgPBMksNn&code=jMVQFxxV .

40 Id; Integrating the Internet into Your Mediation Practice, James Melamed, www.mediate.com/articles/melamed8.cfm.

41 On-line Alternative Dispute Resolution and International Negotiation, Ethan Katsh in The ABA Guide to International Business Negotiations, edited by James Silkenat and Jeffery Aresty, 2nd edition, P. 211.

42 Id. at 212.

43 Id. at 213.

44 Negotiating Across Cultures in the New Millennium, Jeanne Hamburg, in The ABA Guide to International Business Negotiations, edited by James Silkenat and Jeffery Aresty, 2nd edition, P. 57.

45 www.wto.org/english/thewto_e/whatis_e/eol/e/wto08/wto8_18.htm for the management of disputes under Articles XXII and XXIII of GATT 1947; GATT 1994; and Agreement on Trade-Related Aspects of Intellectual Property Rights ( TRIPS ).

46 Id.

47 Id.

48 Arbitrating in the Alps Rather Than Litigating in Los Angeles: The Advantages of International Intellectual Property-Specific Alternative Dispute Resolution, Julia Martin, Stanford Law Review, vol. 49:887, 1997, Pp.918-919. WIPO is a specialized agency of The United Nations, whose purpose is to promote the protection of intellectual property throughout the world. Id. at P. 920.

49 Id. at 921.

50 Id. at 926.

51 Id. at 928.

52 Negotiating Across Cultures in the New Millennium, Jeanne Hamburg, in The ABA Guide to International Business Negotiations, edited by James Silkenat and Jeffery Aresty, 2nd edition, P. 59.

53 A Checklist for Negotiators Representing Small to Medium-Sized Companies in the Global Marketplace, Ann MacNaughton and Wayne Fagan, in The ABA Guide to International Business Negotiations, edited by James Silkenat and Jeffery Aresty, 2nd edition, P. 204.

54 Id. At 205.

55 Id. At 205.

56 Negotiating Across Cultures in the New Millennium, Jeanne Hamburg, in The ABA Guide to International Business Negotiations, edited by James Silkenat and Jeffery Aresty, 2nd edition, P. 60.

57 Id. at 61.

58 Id. at 62.

59 Arbitrating in the Alps Rather Than Litigating in Los Angeles: The Advantages of International Intellectual Property-Specific Alternative Dispute Resolution, Julia Martin, Stanford Law Review, vol. 49:887, 1997, Pp.918-919. WIPO is a specialized agency of The United Nations, whose purpose is to promote the protection of intellectual property throughout the world. Id. at P. 958.

60 Id. at 957-963.

                       

Dana Tait

Dana Tait is presently an LLM Student in Dispute Resolution Studies at The Straus Institute at Pepperdine University in Malibu, California. She graduated with a JD from Southern Methodist University and was in insurance and commercial litigation for 8 years. She ran a mediation practice for 4 years, mediating 325… MORE >