Online Dispute Resolution [PDF]

Zitiervorschau

ONLINE DISPUTE RESOLUTION

Project Work of Alternate Dispute Resolution On “Online Dispute Resolution”

Submitted To:Mr Hrishikesh Manu Faculty of Alternate Dispute Resolution

Submitted By: Kumar Vikram Aditya Roll No. 1023 3rd Year B.B.A. LL.B. (Hons)

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ONLINE DISPUTE RESOLUTION

ACKNOWLEDGEMENT I am highly elated to have worked on my research topic “Online Dispute Resolution” under the guidelines of Mr Hrishikesh Manu Faculty of Alternate Dispute Resolution. I am very grateful to him for his proper guidance. I would like to take this opportunity to express my profound gratitude and deep regard to him for his exemplary guidance, valuable feedback and constant encouragement throughout the duration of the project. His valuable suggestions were of immense help throughout my project work. His perceptive criticism kept me working to make this project in a much better way. Working under him was an extremely knowledgeable experience for me. I would also like to thank all my friends and my seniors and apart from all these I would like to give special regard to the librarian of my university who made a relevant effort regarding to provide the materials to my topic and also assisting me. Finally I would like to thank my parents and brother for their immense support and presence during this whole project work.

Kumar Vikram Aditya

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ONLINE DISPUTE RESOLUTION TABLE OF CONTENTS Acknowledgement ...................................................................................................... 2 Aims and objectives ................................................................................................... 4 Hypothesis ................................................................................................................. 4 Research methodology .............................................................................................. 4 Sources of data .......................................................................................................... 4 Online dispute resolution: meaning ............................................................................ 5 A brief history of online dispute resolution .................................................................. 8 Online dispute resolution – current scenario ............................................................ 11 Odr in the context of other dispute resolution mechanisms ...................................... 13 Odr in india ............................................................................................................... 17 Disadvantages and Advantages of odr..................................................................... 19 Benefits: ................................................................................................................ 19 Drawbacks: ........................................................................................................... 19 Conclusion ............................................................................................................... 22 Bibliography ............................................................................................................. 24

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ONLINE DISPUTE RESOLUTION

AIMS AND OBJECTIVES The prime objective of the researcher is to: 

To acquaint with meaning and history of Online Dispute Resolution.



To know Online Dispute Resolution in terms of other Alternate Dispute Resolution Methods.



To know Advantages and Disadvantages of Online Dispute Resolution.



To know Online Dispute Resolution in context to India.

HYPOTHESIS The hypothesis taken by the researcher is that Online Dispute Resolution is a far more effective mechanism for resolving online disputes than traditional Alternate Dispute Resolution Methods or litigation

RESEARCH METHODOLOGY The various books, various articles, websites, Law journals, Acts, are referred for this topic. The sources from which the material for this research collected are primary & secondary. The methodology used in the research has been Doctrinal. No non-doctrinal method has been used by the researcher in this project work.

SOURCES OF DATA 

Primary Sources: -



Secondary Sources: - Books on Arbitration and Conciliation, Magazines, Websites,

Arbitration and Conciliation Act 1996.

and Journals etc.

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ONLINE DISPUTE RESOLUTION

ONLINE DISPUTE RESOLUTION: MEANING Online Dispute Resolution relates simply means to resolving disputes on the Internet. It is happening in many forms and forums across Canada, the United States, Europe, India and many other countries. Today’s ODR mechanisms are said to be early harbingers of the future global dispute resolution landscape in the Digital Age.1 The term ODR refers to an array of dispute resolution procedures. Some are fully automated, others, although they take place exclusively online, involve a human neutral. A large group of processes that are included in ODR use digital technologies to lesser degrees. Thus, online dispute resolution is not a monolithic concept – for this reason, some authors argue that it is more accurate not to speak of ODR, but rather of ODR techniques 2, or even of “a plethora of online dispute resolution services”3 devoted to the expeditious and speedy resolution of disputes. The term ODR is used for mechanisms as different as dispute prevention (education, outreach, rating and feedback programs), ombudsman programs, blind bidding,

automated

negotiation,

early

neutral

evaluation

and

assessment,

mediation/conciliation, mediation-arbitration (binding and/or non-binding), arbitration, expert determination, “executive tribunals” or “virtual juries”. Based largely on traditional (offline) alternative dispute resolution4 procedures, such as mediation or arbitration, and various hybrids thereof, ODR is sometimes equivalently labelled as e-ADR. The synergy of alternative dispute resolution and information and communication technology via the Internet is considered a dominant feature of ODR as canvassed in legal literature. The field of out-of-court dispute resolution has grown and flourished alongside the rapid advance of technology for almost thirty years. Yet, a successful relationship between ADR and technology could not have happened without the appearance of the commercial Internet and World Wide Web a decade ago. Since then, one of the main challenges facing the global network is how to resolve a growing number of cross-border disputes in the 1

Many authors have suggested that the spectrum of dispute resolution mechanisms will soon encompass a full range of “virtual” options made possible by the current revolution in information technology – see for instance: Thomas J. Stipanowich, “Contract and Conflict Management” (2001) Wis. L. Rev. 831. 2

Julia Hörnle, “Online Dispute Resolution – The Emperor’s New Clothes? Benefits and Pitfalls of Online Dispute Resolution and its Application to Commercial Arbitration”, online: [Hörnle]. 3 Leon E. Trakman, “From the Medieval Law Merchant to E-Merchant Law” (2003) 53 U. Toronto L.J. 265 at 284. 4 The main forms of alternative dispute resolution (ADR) are arbitration, mediation and negotiation, processes that are effective in settling disputes out of court and in a manner that is less formal than litigation in court. Some authors exclude arbitration from ADR though, emphasizing amicable (conciliatory) nature of ADR, as opposed to adjudicative procedures, such as litigation or arbitration.

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ONLINE DISPUTE RESOLUTION electronic environment. Diverse legal and non-legal obstacles such as physical, linguistic and cultural distances between parties, juridical difficulties concerning the applicable law, competent jurisdiction and enforcement of judgments make traditional methods of dispute resolution ineffective in the online environment. It has been argued that these deficiencies may significantly hamper further development of the Internet and electronic commerce. Although not free from similar and other concerns, ODR is being depicted as the potentially optimal method to resolve disputes arising on the Internet. At the commonsense level, as several authors argue, if the Internet gives rise to some disputes, it seems appropriate to employ the same medium to deal with them.5 Given that parties physically located far from each other can easily “meet” and communicate in cyberspace, they can both cause and resolve a dispute in cyberspace. In addition, ODR can be more effective than traditional methods in terms of time, convenience and financial resources involved in dispute resolution procedure.6 Thus, in Katsh and Rifkin’s view, online dispute resolution is “a response” to the dispute and other activities that are appearing online, and also “a user” of resources becoming available in cyberspace. Its nature, therefore, reflects various qualities and features of the online environment7. ODR has qualities acquired from the online environment, but it also has traits acquired from ADR. ODR has the same potential advantages over litigation of greater efficiency, greater party control and lower costs.8 It is fair to say that ODR grows directly out of the history of offline ADR – as observed by Rule – “in its earliest incarnations” online dispute resolution procedures were unchanged ADR procedures conducted online.9 The first three pilot projects launched to develop workable dispute resolution techniques online (the Virtual Magistrate, the Online Ombuds Office and the Maryland Mediation Project) were based on arbitration, mediation and complaint assistance techniques.10 For that reason, in the opinion of some authors, the ODR phenomenon relates simply to using the Internet to

5

Hörnle wrote that it is “logical” to use the same medium for the resolution of disputes arisen in online settings – Hörnle, supra note 2 6 ODR is particularly convenient and efficient where the parties are located at a distance, as distance communication obviates the need for travelling. Part II explains the advantages of ODR in more detail. 7 Katsh and Rifkin, supra note at 19. 8 Hörnle pointed out that the introduction of high technology increases these advantages of ADR over litigation – Hörnle, supra note 2. 9 Rule, supra note at 13. 10 Schiavetta, supra note

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ONLINE DISPUTE RESOLUTION provide ADR, whether as an adjunct to face-to-face services or in substitution of them.11 Consequently, they define ODR as “ADR that takes place using computer-mediated communications in the online environment”.12 They also indicate that most laws and principles that apply to ADR in the brick-and-mortar regime will also apply to e-commerce and other Internet disputes. Yet, although ODR is an “offspring of ADR”13, it must be pointed out that with the development of online technology “a new dimension has been added to the dispute resolution industry.”14 Some ODR procedures, like automated negotiation15 or facilitated negotiation16, do not have exact offline equivalents. At this point, the conclusion reached by Hörnle seems accurate: “In one sense, ODR is simply about the use of new tools – information management tools and communication tools – for dispute resolution. But it is equally true that these tools change the methods by which disputes are being solved. ODR introduces a new paradigm of dispute resolution.”17 The growing consensus believes that online dispute resolution can be useful for two types of disputes: those that arise from online interactions and those that arise offline.18 Initially, the focus of ODR stakeholders was largely on consumer disputes resulting from ecommerce transactions. This continues to be an important area for ODR, but it has been joined by a growing number of disputing contexts. The chart below illustrates the wide range of fields in which different services have been offered by ODR providers.

11

Anne-Marie G. Hammond, “The Effectiveness of Online Dispute Resolution”, thesis completed for Royal Roads University MA (Conflict Analysis and Management), available from author [email protected] or in the National Library of Canada. 12 United Nations Conference on Trade and Development, “E-Commerce And Development Report 2003 (Internet edition prepared by the UNCTAD secretariat): Chapter 7: Online dispute resolution: E-commerce and beyond”, online: [UNCTAD]. 13 Hörnle, supra note 2. 14 Schiavetta, supra note. 15 With automated negotiation the disputants use a software programme to settle their monetary dispute. Firstly they enter settlement figures and once the amounts come within certain proximity of each other, say twenty per cent, the claim is settled midpoint. 16 The disputants are provided with a web platform and ICT tools for the purpose of facilitating a resolution. 17 Hörnle, supra note 2. The relation between two fields, which ODR has grown out of, i.e. online (ICT) technology and alternative dispute resolution movement, is far more complex than it could appear prima facie. ADR and ICT technology certainly share some common themes: they involve processes of information exchange and communication, and they both are attributed with resistance to government. See: Thomas Schultz, An Essay on the Role of Government for ODR, (2003) August ADROnline Monthly. 18 Joseph W. Goodman, “The Pros and Cons of Online Dispute Resolution: An Assessment of CyberMediation” (2003) Duke L. & Tech. Rev. 4 [Goodman].

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ONLINE DISPUTE RESOLUTION

A BRIEF HISTORY OF ONLINE DISPUTE RESOLUTION Many authors break up the development of ODR into three different stages: the first lasted until about 1995 (the elementary stage), the second dated from 1995 to 1998 or 1999 (the experimental stage), and the third to the present (entrepreneurial stage).19 Before 1995, only a few specialized dispute resolution procedures were applied informally in specific online contexts.20 Until 1992, the Internet was largely a US-centred network, and commercial activity was banned from it under that country’s National Science Foundation’s acceptable use policy.21 The network was used mainly by academics for sending email and participating in listservs and, in the case of those with some technical expertise, for exchanging files. As the network grew, “flaming”22 and other violations of “netiquette”23 emerged. Other early online disputes involved individuals participating in roleplaying games.24 Some online mechanisms were used to deal with these conflicts, but there were no organized dispute resolution institutions devoted specifically to ODR. Even the term ODR had not yet been invented. When the ban on commercial activity on the Internet was repealed, disputes related to commerce began to surface.25 For example, the first commercial spam case occurred in April 1994.26 The second stage coincided with the growth of the Internet, particularly as a medium for commerce.27 The idea for ODR emerged out of a recognition that disputes would multiply as the range of online activities grew. Thus, the origins of ODR are traceable to a simple insight: the more online transactions there are, the more online disputes there will be.28 As companies began exploring the Internet’s commercial opportunities, interest grew in domain names, and many disputes arose between trademark owners and domain name holders. With 19

Rule, supra note at 21, Katsh & Rifkin, supra note, UNCTAD, supra note 12. For example, blocking or unsubscribing flamers on mailing lists – Rule supra note at 21. 21 Jay P. Kesan and Rajiv C. Shah, “Fool us once shame on you – fool us twice shame on us: What we can learn from the privatizations of the Internet backbone network and the domain name system” (2001) Washington University Law Quarterly 79, online: . 22 The term “flaming” refers to the process of sending repeated nasty messages to individuals or about individuals on the Internet – see: Joshi Pradyna, “Flamers Make for Unease on Net”, Milwaukee J. Sentinel, Apr. 15, 1996, at 9. 23 “Netiquette” means common courtesy online and the informal “rules of the road” of cyberspace – see: Netiquette Home Page, online: . 24 UNCTAD, supra note 12. 25 ibid. 26 R. Everett-Church, “The spam that started it all”, Wired News, April 13, 1999, online: . 27 Rule, supra note at 21. 28 UNCTAD, supra note 12. 20

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ONLINE DISPUTE RESOLUTION the growth of the network, new types of disputes emerged, for example concerning the legality of linking between websites, or other intellectual property issues related to the use and copying of information. In fact, the more the Internet was used for any purpose, the more disputes arose.29 During this period, recognition grew that the Internet needed some focused online institutions to address problems that were arising with increasing frequency. The pioneering experiments in ODR during this phase were largely sponsored by academics and non-profit institutions. Various projects were designed to allow those involved in a dispute to obtain expertise from a distance. For example, in the first case mediated by the Online Ombuds Office, an online mediation project at the University of Massachusetts, an online mediator helped an individual website owner resolve a problem with a local newspaper claiming copyright infringement.30 The third stage is the most recent phase, during which commercial entities began to show interest in online dispute resolution. This stage has involved the commercialisation of ODR systems. This has coincided with a new interest on the part of governmental and international institutions in ODR.31 During this period, to large extent, ODR has become accepted as a needed process in the online environment, and it has been demonstrated that it can be employed with diverse kinds of disputes originating both on- and offline. Despite high costs of building and implementing ODR systems, the number of firms offering some form of ODR has continued to grow. Consequently, the authors of the 2003 UNCTAD E-Commerce and Development Report conclude, there has been growing recognition by both governmental and commercial interests that online resources can be a solution for many problems that originate in the online environment. Thus, the main achievement of the current phase of ODR’s development seems to be that “it is now accepted that it is appropriate – indeed, desirable – that ODR be the process of first choice for disputes generated in online activities”32. Certainly, the main conclusion that could be drawn from this brief historical analysis is that ODR is intimately tied to the expansion and development of the Internet. The role of ODR in cyberspace will be greatest where there is a high degree of interactivity between a

29

ibid. See Center for Information Technology and Dispute Resolution, “Online Ombuds Narrative I: The Web Site Developer and the Newspaper”, online: . 31 Rule, supra note at 21. 32 UNCTAD, supra note 12. 30

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ONLINE DISPUTE RESOLUTION wide variety of users.33 In Colin Rule’s words, the growth of the net fuels the growth in ODR, and the slowdown in the net, temporarily, slows the growth of ODR. Yet, in a long run, like the Internet, the expansion and refinement of ODR is inevitable, “and it goes beyond the flavour-of-the-month attention spans of the media and the stock market.”34

33

E. Casey Lide, “ADR and Cyberspace: The Role of Alternative Dispute Resolution in Online Commerce, Intellectual Property and Defamation” (1996) 12 Ohio St. J. on Disp. Resol. 193 at 193. 34 Rule, supra note at 299.

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ONLINE DISPUTE RESOLUTION

ONLINE DISPUTE RESOLUTION – CURRENT SCENARIO Despite the fact that first online dispute resolution projects were set up a decade ago, ODR is still in its infancy. No theory – as a systematically organized set of principles offered to explain a particular phenomenon35 – has been created for ODR so far. Few authors have written on the theory of online dispute resolution: in the cutting edge book by Katsh and Rifkin, the section entitled “The Theory of ODR” does not even fill two pages.36 This lack of theoretical reflection on online dispute resolution results mainly from the fact that ODR is still a novelty which has not managed to attract popular attention yet. As of June 1, 2005, altogether only 138 articles in the LexisNexis database contained the term “online dispute resolution,” and many of them only did so in a single sentence or a footnote reference. Another important reason is that ODR represents the gamut of dispute resolution possibilities which are difficult to measure and classify by any coherent set of criteria and principles. As noted by Rule, ODR may both involve automated negotiation processes administered by a computer, or it can provide world-class experts to administer arbitration procedures remotely, for example. “ODR systems can be legalistic and precedent-based, like the courts, or flexible exception-handling mechanisms to act as an extension to customer service efforts. ODR can be a multimillion dollar customer relationship management system or a $ 75 website set up to aid a mediator with administration of a small case. Any use of technology to complement, support, or administer a dispute resolution process falls into the world of ODR”.37 This richness of the online dispute resolution phenomenon, inherited from ADR albeit growing, implies that ODR could be classified into different “traditional” groups of dispute resolution procedures. While some ODR mechanisms are “procedures of agreement” (for example online mediation), others belong to “procedures of advice” (e.g. tools supporting negotiation) or “procedures of decision” (e.g. online arbitration).38 Sometimes the ODR neutral plays a facilitative, non-judgemental role, and other times they have “absolute decision-making authority.”39 ODR can take place both on an ad hoc basis, as well on the basis of advanced agreement, dispute resolution program and – arguably, also in the future – 35

See: Merriam-Webster Dictionary, online: . Katsh and Rifkin, supra note at 10-11. 37 Rule, supra note at 44. 38 On the classification of the procedures of agreement, advice and decision, see: Genevieve A. Chornenki, The Corporate Counsel Guide to Dispute Resolution (Canada Law Book Inc., Aurora, 1999) at 7-10 [Chornenki]. 39 Rule, supra note at 44. 36

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ONLINE DISPUTE RESOLUTION legislation or government mandate.40 While some ODR processes enable integrative (cooperative) problem solving in which parties can work together to generate new value for both sides (“expand the pie”)41, others – such as automated blind bidding – are designed for merely splitting a difference.42 Finally, in cyberspace, like in real space, when seeking to resolve a conflict, parties can rely both on their interests as well as rights or power. As observed by Bordone, encouraging people to approach dispute resolution from an interestbased rather than a rights- or power- based perspective is not always easy, either offline or online.43 The ODR phenomenon encompasses a collection of diverse procedures intended to prevent, manage or resolve disputes in the online environment. Fitting them into a coherent theoretical framework suitable for dispute resolution is certainly a difficult task. Nevertheless, given that dispute resolution is commonly viewed as a “series of informational exchanges”44, or more specifically as “a complex process of information management, information processing, and communication”45 – according to several authors – information and communications technology lends itself well to this task.46 What makes ODR particularly intriguing and new is that some of these informational exchanges occur between human and machine, rather than directly between human and human.47 Bit by bit, the newest methods of resolving disputes, embodied in the ODR phenomenon, can change the landscape of dispute resolution, along with its theoretical underpinnings. Theoretical reflection on online dispute resolution is still in its infancy. This paper focuses rather on practical, i.e., regulatory aspects of the ODR phenomenon.

40

Chornenki, supra note 38 at 11. Rule, supra note at 37 42 Yet, it seems that in the realm of the Internet even the latter can bring about a mutually satisfying and “winwin” solution, if applied in appropriate circumstances and upon parties’ consent. 43 Robert Bordone, “Electronic Online Dispute Resolution: A Systems Approach – Potential, Problems, and a Proposal” (1998) 3 Harv. Negotiation L. Rev. 175 at 187-189 [Bordone]. See also Rule, supra note at 37, suggesting that both in offline and online settings, disputes are frequently framed as “zero-sum, me-versus-you affairs where any gain enjoyed by one party comes at the expense of the other party”. 44 Ethan Katsh, “Online Dispute Resolution: Some Lessons from the E-Commerce Revolution” (2001) 28 N. Ky. L. Rev. 810 at 817 [Katsh, Online Dispute Resolution]. 45 Julia Hörnle, “Online Dispute Resolution” in John Tackaberry and Arthur Marriott, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice, Volume 1 (Sweet & Maxwell, London: 2003) at 783 [Hörnle, Online Dispute Resolution]. 46 ibid. at 783. 47 As observed by Katsh, “what makes the design of online processes difficult is that the range of requests permitted to the human by the system must be flexible and broad enough to satisfy the needs of the human. At the same time, however, any possible request must be anticipated so that a suitable and appropriate array of responses is programmed into the machine” – Katsh, Online Dispute Resolution, supra note 44 at 817. 41

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ONLINE DISPUTE RESOLUTION

ODR IN THE CONTEXT OF OTHER DISPUTE RESOLUTION MECHANISMS The role of technology in mediating communication between parties is seen as the main difference between ODR and other methods of dispute resolution.48 Yet ODR applies technology to achieve the very same goal: helping people to resolve their disputes. The role of ODR in the context of other dispute resolution mechanisms has been often viewed through the prism of achievements of the ADR movement. As noted by Katsh & Rifkin, “over the last quarter century, ADR has proven that moving justice away from the courthouse is often desirable and that the arena of dispute resolution, once thought to be the exclusive domain of law and courts, is markedly different from what it was several decades ago.”49 While ADR has moved dispute resolution away from litigation and the courts, online dispute resolution extends this trend even further. If ADR represents a move from a fixed and formal process to a more flexible one, ODR – by designating cyberspace as a location for dispute resolution – moves ADR from a physical to a virtual place50, and makes dispute resolution even more flexible and convenient. The Internet has brought ADR “directly to each individual’s personal computer.”51 ODR can combine “the effectiveness of ADR with the comfort of the Internet.”52 ADR was the original model for ODR, and many goals and techniques of ADR will certainly remain goals and techniques of ODR.53 As noted by Rule, ODR started out as the administration of ADR processes online: it was seen as a way to replicate face-to-face interaction when such interaction was not possible. If the face-to-face mediation process involved three stages (such as unassisted storytelling, assisted storytelling, and joint problem solving), then that was exactly what early online neutrals attempted to do. The tasks of the online mediator were the tasks of the offline mediator: reframing the discussion, keeping the parties on track, and reality-testing proposed solutions.54 Online mediation still strongly resembles offline mediation, and it does not seem likely to change in the not-so-distant 48

Rule, supra note at 45 Katsh and Rifkin, supra note at 27. 50 Arno R. Lodder and John Zeleznikow, “Developing an Online Dispute Resolution Environment: Dialogue Tools and Negotiation Support Systems in a Three-Step Model” (2005) 10 Harv. Negotiation L. Rev. 287 at 297 [Lodder and Zeleznikow]. 51 Martin C. Karamon, “ADR on the Internet” (1996) 11 Ohio St. J. on Disp. Resol. 537 at 548. 52 Lodder and Zeleznikow, supra note 50 at 337. 53 Ethan Katsh, “Bringing Online Dispute Resolution to Virtual Worlds: Creating Processes through Code” (2004/2005) 49 N.Y.L. Sch. L. Rev. 271 at 285 [Katsh, Bringing]. 54 Rule, supra note at 44 (noting that arbitration were even simpler). 49

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ONLINE DISPUTE RESOLUTION future. Online processes can even get closer to replicating “true” dispute resolution procedures as technology is perfected.55 Today, since high-quality videoconferencing systems are not yet easily affordable, communications in online mediation are mainly textual and asynchronous. The principal means of communication are thus email and web-based communications, i.e. chat rooms and bulletin boards.56 In the future, videoconferencing, and certainly also new means of communication, will be utilized to more accurately replicate face-to-face interaction in the online environment. Regardless of the quality and accessibility of videoconferencing however, of course ODR will never completely replace the face-to-face encounter. ODR should not be seen as a competitor or substitute for offline alternative dispute resolution57, but rather a natural response to the emergence of new sphere of human activity and, consequently, new types of conflicts. The necessity for new methods of dispute resolution arises from the fundamental nature of the Internet itself. First, the global character of the Internet undermines the notion of territoriality, one of the foundations of traditional locus-based systems of dispute resolution. Because the Internet does not correspond to the jurisdiction of any sole existing sovereign entity, territorially defined laws and rules are difficult to apply to the Internet and activities of Internet users.58 Traditional, state-run and territorial courts are “too slow, too expensive, and too inaccessible to address all problems that arise on the Internet.”59 The Internet collapses not only physical space, but also time, in many ways. Information travels rapidly on the Web: cyberspace allows people in all corners of the world to send and receive information 24/7. This feature has significant implications for the world of dispute resolution. As noted by Rule, “one way that online interaction completely changed the dispute resolution process was in the way it changed the participants’ notion of time.”60 They can contact one another much faster and more often than ever before. In addition, they can do it in a number of ways. New synchronous (such as instant messaging or VoIP) and asynchronous (for example threaded

55

ibid. Thomas Schultz, “Does Online Dispute Resolution Need Governmental Intervention? The Case for Architectures of Control and Trust” (2004) 6 N.C. J.L. & Tech. 71 at 74 [Schulz, Does Online]. 57 See, for example, Joel B. Eisen, “Are We Ready for Mediation in Cyberspace?” (1998) BYU L. Rev. 1305 at 1308 [Eisen] (who noted that “electronic communication is no substitute for the ability of face-to-face conversations to foster important process values of mediation.”) 58 Alejandro E. Almaguer and Roland W. Baggott, III., “Shaping New Legal Frontiers: Dispute Resolution for the Internet” (1998) 13 Ohio State Journal on Dispute Resolution 711 at 712 [Almaguer and Baggott]. 59 David R. Johnson and David Post, “Law and Borders –The Rise of Law in Cyberspace” (1996) 48 Stan. L. Rev. 1367 at 1372-1373. 60 Rule, supra note at 47. 56

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ONLINE DISPUTE RESOLUTION discussion) ways of communication became available, and are already widely employed in online dispute resolution61. As observed by Bordone, online technology brought about the vast potential for increasing communication and understanding, and at the same time, also an increased potential for misunderstanding. “From one’s computer terminal, it is difficult to understand the implications of cyberspace’s annihilation of distance and space on communication in relationships. […] In the non-virtual world, persons communicate using much more than mere words. Tone, affect, space, and time all add to the richness of an interpersonal communication and help us to calibrate our responses appropriately to that of our counterpart.”62 While it is easier to communicate a difficult or unpleasant message via email, or other asynchronous means, than in person or on the telephone (the “distance” of time and location makes such communications more comfortable for the messenger), the impact on the receiver is not likely to be any better. On the contrary, the ultimate effect of using a computer-mediated communication to “comfortably” deliver “uncomfortable” messages can actually lead to more rather than less conflict between the involved parties.63 Although online dispute resolution borrows so much from ADR, its place is in a very different environment. In cyberspace, “communication transcends time, space, and physical reality”.64 These unique characteristics inevitably influence the nature and type of disputes arising on the Internet, and thereby the type of dispute resolution process best suited for the forum.65 As the Internet grows, new forms and techniques of ODR are being developed, such as software that helps parties to brainstorm, identify their interests and priorities, or organize and focus their conversation. As a result, ODR becomes increasingly independent from the world of offline ADR. There is no doubt that ODR has already moved out of the stage where it was a mere, and inherently pale, imitation of face-to-face interaction when such interaction was not possible.66 Online technology presents us with opportunities to develop new tools for dispute resolution that might be employed in both online and offline environments. 67 While

61

ibid. According to Rule, most people do not interact at the same time over the Internet. Many communication technologies used online were actually designed as asynchronous to allow people to log on as they like throughout the day. 62 Bordone, supra note 43 at 180-181. 63 ibid. at 180-181. 64 ibid. at 179. 65 ibid. 66 Katsh, Bringing, supra note 53 at 284. 67 ibid. at 290-291.

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ONLINE DISPUTE RESOLUTION ODR still borrows much from ADR, it seems that in the future ADR will also borrow from ODR.68

68

Katsh and Rifkin, supra note at 24.

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ONLINE DISPUTE RESOLUTION

ODR IN INDIA With the aforesaid legislations in place, the ground is now set for ODR to take a footing because we have both an ADR-friendly civil procedure and the technology and the statutory recognition for the use thereof. What we now require is first, that more and more courts make earnest attempts at making the optimum use of the provisions of Section 89 of the Code, and second, that there be more and more trained dispute resolution service providers (DRSPs), individuals as well as institutions, who can effectively deal with the disputes referred to them by the courts for resolution. Whenever a foray is made into any new territory, uncharted routes need to be taken. So is the case with ODR, as the implementation of technology as the “fourth party”69 in dispute resolution is a novel scenario for India. It is hence inevitable that in the course of implementing ODR systems, questions will be raised regarding various aspects thereof and the argument against it is likely to be on the lines of “there is no precedent to that”. Undoubtedly, as with everything else in life, issues will arise from time to time on several aspects of ODR. However, the basic issue of legal sanction for the use of electronic media has already been settled by the 2000 Act. The Supreme Court too has shown its approval of the use of technology in dispute resolution. In a recent case70 it held that video-conferencing could be resorted to for the purpose of taking evidence of a witness. In that case, one party was seeking direction of the court to take evidence of a witness residing in the United States of America. Though a lower court had ordered such evidence to be taken with the help of video-conferencing, the concerned High Court struck down that order on the grounds that the law required the evidence to be taken in the presence of the accused. The Appeal Bench of the High Court upheld the said latter order. The Supreme Court struck down the High Court order by stating that recording of evidence satisfies the object of Section 273 of the Code of Civil Procedure that evidence be recorded in the presence of the accused. In explaining the benefits of video-conferencing, the Court observed that “In fact the Accused may be able to see the witness better than he may have been able to if he was sitting in the dock in a crowded Court room. They can observe his or her demeanour. In fact the facility to play back would enable better observation of demeanour. They can hear and rehear the deposition of the witness.” Addressing the various submissions made before it, the Court stated that “Virtual reality is a state where one is made to feel, hear or imagine what does not really exist. Video-conferencing has nothing to do with virtual 69 70

See Ethan Katsh and Janet Rifkin, Online Dispute Resolution: Resolving Conflicts in Cyberspace (2001). State of Maharashtra v. Dr. Praful B. Desai (2003) 4 SCC 601

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ONLINE DISPUTE RESOLUTION reality. Video-conferencing is an advancement in science and technology which permits one to see, hear and talk with someone far away, with the same facility and ease as if he is present before you i.e. in your presence.” “This is not virtual reality, it is actual reality.” Several interesting observations are made in the said Order which clearly indicate the strong support for use of technology, and especially video-conferencing, in the justice delivery system. This is not the first time that the Supreme Court has ruled in favour of technology. In an earlier decision71 it held that “When an effective consultation can be achieved by resort to electronic media and remote conferencing it is not necessary that the two persons required to act in consultation with each other must necessarily sit together at one place unless it is the requirement of law or of the ruling contract between the parties.” In this case the contention was that the two arbitrators appointed by the parties should have met in person to appoint the third arbitrator. In yet another decision72 in which use of available technology has been given a real boost, the Supreme Court held that “Technological advancement like fascimile, Internet, e-mail, etc. were in swift progress even before the Bill for the Amendment Act was discussed by Parliament. So when Parliament contemplated notice in writing to be given we cannot overlook the fact that Parliament was aware of modern devices and equipment already in vogue.”

71 72

Grid Corpn. Of Orissa Ltd. V. AES Corpn. 2002 A.I.R. (S.C.) 3435 Sil Import, USA v. Exim Aides Exporters, Bangalore (1999) 4 SCC 567

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ONLINE DISPUTE RESOLUTION

DISADVANTAGES AND ADVANTAGES OF ODR BENEFITS: The principal advantages of ODR are as follows: 

Economically viable: Cost is one of the most crucial factors in dispute resolution, as disputants like to reach an optimal decision at the lowest possible price. ODR best suits the financial demands of all parties to a dispute, as most of the document are exchanged via email and the proceedings take place online as opposed to exchange of documents by post. The costs related to travel and accommodation, venue for conducting the proceedings is also eliminated. Therefore, carrying out ODR is not only easier and faster, but it is also significantly cheaper.



Speedy resolution: ODR is a speedy process. Where, in ADR it may take several months to resolve a dispute, ODR promises settlement of disputes within a few weeks. Further, the borderless nature of the internet diminishes the communication problems faced by parties and their counsels who may be located in different time zones. Moreover, the internet enables parties to easily obtain data and other information about their cases in real time. In addition to easy accessibility, e-mail simplifies the task of scheduling ODR proceedings and avoids any phone or fax-tags in the process. The internet is also a superior and swifter form of communication, as it facilitates the sending and storing of documents of multiple parties simultaneously, thus saving both time and money.



Non-confrontational mechanism: By removing the physical presence of the adversary, ODR enables the adjudicating body to dispassionately resolve the dispute, purely on basis of the merits of the case. Further, since most of the arguments or dialogues take place asynchronously over the internet, it allows the disputants to reflect on their positions before articulating their response. Additionally, such a mechanism neutralizes any economic or other power disparities that may obtain between the disputants, as there may be several instances where one party to the dispute is a small-time manufacturer/supplier and the opposite party is global entity.



Neutral forum: The internet offers a neutral forum for adjudication and the “home advantage” one of the parties hitherto enjoyed. Facilitates record keeping: ODR facilitates the process of maintaining the record of the correspondences, pleadings, statements, and other written, oral or visual communications, by relying solely on digital records. This inturn saves time and money of the parties. DRAWBACKS: The following drawbacks prevail in the ODR process which hampers its growth as an efficient mechanism for resolving disputes:

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ONLINE DISPUTE RESOLUTION 

Lack of human interaction and miscommunication: The lack of face-to-face interaction deprives the adjudicating authority of the opportunity to evaluate the credibility of parties and the witnesses. Moreover, the impersonal nature of the internet can potentially cause miscommunication between the parties, which is likely to occur when parties are located in different countries and speak different languages.



Limited range of disputes: Like ADR, ODR is also best suited to resolve only certain types of disputes, like, e-commerce and domain name disputes. The ODR mechanism may not be suitable for resolving every kind of online dispute, for example, negotiation and mediation may be more suitable in resolving issues such as the damages that may be payable for breach of contract. Further, tortious disputes, such as defamation and trespass, may require discovery, interrogatories, recording the testimony of a witnesses and the crossexamination, which may not be convenient to process over the internet.



Inadequate confidentiality and secrecy of proceedings: The secrecy of proceedings is fundamental to the process of dispute resolution, which ODRs inherits from ADRs. Accordingly, ODR providers have made technological arrangements, such as, installation of various software’s, firewalls, etc., to protect the data sent by the parties from data interception, alteration, etc. Though substantial efforts have been made towards creation and implementation of data protection laws, these measures do not ensure 100% protection from hackers and other cyber offenders and require constant updating, despite which there may still exist loop-holes which can be exploited. Thus, inadequate internet security may act as a major deterrent in the growth of ODR.



Inadequate authenticity: Closely related to the issue of security is the issue of authentic identification of the user. In an ADR process, one party can be certain that the other party it is dealing with is the party actually involved in the dispute. However, in cyberspace, it is not easy to verify the authenticity of messages received and it is relatively easy for a third party to impersonate or misrepresent one of the parties in the dispute, causing confusion, thereby defeating the very purpose of adopting ODR.



Jurisdiction: Internet being a borderless medium transcends and challenges traditional concepts of jurisdiction. This leads to problem in deciding the applicable substantive law which is to be applied to the dispute. This issue can only be resolved by parties clearly identifying the applicable substantive and procedural laws in the clause whereby they agree to submit the dispute to resolution by ODR. Ultimately, the resolution of this issue would be contingent upon the pronouncement of the court systems in different

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ONLINE DISPUTE RESOLUTION jurisdiction which would examine and interpret such ODR clauses, but this process is inescapable and inevitable and cannot be circumvented. 

Hindrances at pre-trial stage: A significant component of the pre-trial stage is discovery, interrogatories and collation of evidence in support the respective contentions of the parties. This discovery or fact-finding process may be minimized in the ODR process to speed the process of settlement of dispute. However, in a situation where the facts are disputed, a limited discovery procedure may serve to limit the fact finding capacity of the adjudicating authority to discover the true and correct state of facts. Further, limiting or eliminating the discovery process may offend the due process, causing the courts to strike them down as they do not meet the minimum requirements of due process.



Publication of proceedings and award: If ODR is to be encouraged as a popular mode of dispute resolution, details of proceedings and decisions would be required to be published which ensures transparency. But, this contradicts the very essence of ODR, which is respecting the confidentiality and right to privacy of the parties. Thus, the fate of ODR hangs in balance with one school of thought demanding absolute secrecy of proceedings and the other school seeking publication of proceedings and the decisions. As a matter of practice, currently, all ODR providers keep the proceedings confidential and release information only if both the parties agree to publish the decision.



Difficulty in enforcement of online awards: Like ADRs, in the case of online arbitrations, once the decision has been rendered, the same has to be enforced in the appropriate court. In several jurisdictions, including India, the orders in execution are subject to appeals and this serves to protract the process of execution. Going by this principle, unless the parties are assured of the enforcement and implementation of the decisions, disputants may not have much faith in online proceedings. Further, enforceability of foreign decisions pronounced after completion of ODR proceedings is also an issue which must be considered while agreeing to an ODR clause.



Challenging an award: Since ODR proceedings are conducted online, another issue requiring clarity is the intervention of a court during or after the completion of the proceedings and/or pronouncement of the decision. This will again raise the question of: (a) the enforcement of the decision of the court in the country where the opposite party operates/resides; and (b) appeals against the decision of the court and enforcement of the said decision.

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CONCLUSION Online dispute resolution has its sceptics and its enthusiasts. The sceptics say given that ODR has not revolutionized dispute resolution yet, it is nothing more than a passing fad. The enthusiasts see an opportunity to develop new resources to resolve conflicts more effectively than today and argue that the Internet and ODR are still in a process of institution building – even if it takes longer than originally assumed – time will come to develop a global ODR system. This project contends that the lack of a spectacular success of online dispute resolution projects stems from significant flaws of their current regulatory framework. There is no comprehensive legal regime governing dispute resolution on the Internet, and as a result online dispute resolution suffers from the lack of legal certainty and public confidence. The absence of ODR law is exacerbated by the weaknesses of the other modalities of regulation: market, norms and technology. Arguably, a solid legal framework is needed to allow for the proper growth of online dispute resolution with its norms, market and technology. Over the past decade, Internet law in India and many other countries has evolved significantly with the introduction of new privacy, e-commerce, and copyright legislation. One constant, however, has been governmental support for a hands-off, self-regulatory policy approach for online dispute resolution. Given the unsatisfactory effects of this approach, it is time to re-examine it. While it remains to be seen which trend in ODR regulation will prevail, it must be kept in mind that the development of the Internet has changed the dynamics of the regulatory environment. The reasonable policy-making must rely on careful consideration of all the modalities of regulation. The best, and in fact the only presently effective solution, is co-regulation, a combination of both private and national and international mechanisms, working in a coordinated effort to provide the optimal regulatory framework of online dispute resolution. Suggestions: In the absence of an enforceable international regulatory regime, the following suggestions are proffered to establish ODRs as an effective mechanism of dispute resolution: Creation of national and international body: By an international treaty of the community of nations, an international ODR body needs to be created which would establish its own substantive and procedural law. Every member country should have a national body conducting

ODRs,

providing

the

infrastructural

facilities

and

the

panel

of

arbitrators/mediators, based upon the guidelines set out in the treaty to which the country is a signatory/member. This international body should be independent and should be vested CHANAKYA NATIONAL LAW UNIVERSITY

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ONLINE DISPUTE RESOLUTION with appellate powers. Hence, in case the disputants wish to challenge the decision, they can only have recourse to this appellate forum and not to the national civil court system. Further, the decisions should be final and binding upon the parties and the said international body should also have the power to enforce the award. “Due process” and “fair play”: To be a successful means of resolving disputes, ODR must satisfy all requirements of “due process” and “fair play,” such as the appointment of an unbiased decision maker to settle disputes by allowing parties to choose from a panel of arbitrators or mediators, which may be made available on the website of the ODR provider; providing background information of arbitrators or mediators to facilitate the process of selection; and pronouncing a reasoned decision. Security technology: ODR providers should be certain that they adopt security mechanisms to ensure the safety of the parties information, such as, allow only authorized access to their websites and adopt the latest security technology available and update it regularly. ODR providers should also mandate that parties use digital signatures in their online communications. The purpose of such digital signatures is two-fold: (a) it encrypts the online message or document, thereby providing security to the transmission; and (b) it allows the receiver to verify the authenticity of the message. Further, the rapid growth of ODR providers in the last few years is evidence that ODR is a far more effective mechanism for resolving online disputes than traditional ADR or litigation. A concerted effort by the governments, consumer groups, and the online industry could go a long way in facilitating the establishment of speedy and economical resolution of disputes employing the ODR mechanism.

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ONLINE DISPUTE RESOLUTION

BIBLIOGRAPHY STATUTE: 

The Arbitration and Conciliation Act 1996.

BOOKS: 

An Introduction to Alternate Dispute Resolution System (ADR), Anupam Kurlwal, 2nd Edition, 2014, Central Law Agency.



Alternate Dispute Resolution, M. Sridhar, 1st Edition, 2006, Lexis Nexis



Law of Arbitration and Conciliation, Justice R.S. Bachawat’s , 5th Edition (Reprint), 2015, Lexis Nexis.



Alternate Dispute Resolution, P.C.Rao and William Sheffield, 2009, Universal Law Publishing Co.

WEBSITES: 

Electronic Consumer Dispute Resolution, online: .



Dispute

Resolution

Services,

online:

.

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