Has Online Dispute Resolution Got a Future?

[discussion on ulcc_ecomm-l electronic mailing list April 2009]

1.  Gregory, John D.
Sent: April 20, 2009 4:32 PM
Subject: has online ADR got a future?

Every few years there is a wave of enthusiasm for online alternative dispute resolution. One can see one starting in the mid-1990s, and another in 1999-2000, and maybe a wavelet in 2004 or so.  Some international bodies are thinking about it again, according to discussion at the ABA’s Business Law spring meeting over the past weekend.

Osgoode Hall Law School has just got a major gift to set up an online ADR centre, the largest in the world, according to the press story, here: http://www.yorku.ca/yfile/archive/index.asp?Article=12327 .

Can this be made to work?  I know that pure numbers-based saw-offs can be automated, but can one get beyond that?  Is the dispute resolution practice of WIPO or CIRA for domain names a useful precedent?  eBay used to run Square Trade – did that not die? Fade away? (maybe it’s thriving…)  How about the Better Business Bureau’s bbbonline?

I’m a believer in ADR generally, both mediation and arbitration (which are quite different in principle) but remain to be persuaded that they have widespread application online.

Want to persuade me (and the rest of the list)?  What principles am I overlooking, what successes am I ignoring?

John G

John D. Gregory

2. One key to a successful mediation is communication, including body language, between and among the parties.  I think unless the online ADR process includes cameras that allow everyone to see everyone else (maybe excluding the mediator), there may be a risk of misinterpretation of the verbal messages being sent back and forth.  That said, maybe the body language would reveal things that may prevent the resolution.

3. I agree with comment # 2 that online ADR risks losing important information that can only be obtained or exchanged in face-to-face hearings (mediation or arbitration).  I would add that even the testimony itself is likely to be different because witnesses can testify with considerably different nuances when they have to face their adversaries, and equally important, when they have to face the arbitral panel.  I think there would be an increased likelihood (in the US in any event) of diminished candor and that cross-examination would also be less effective.  I think that video is no substitute for face-to-face hearings, and is best at recording what occurred in a face-to-face hearing, but should not be relied upon beyond that.

4. I concur with # 2 and # 3.  Online ADR works only where the premise is that the issue is simple, the facts are straightforward, there is no x-exam or discovery of a witness in an arbitration, the human dimension of the parties and others is irrelevant, the result is not intended to be nuanced, etc. 


The domain name dispute resolution systems all ignore real world matters away in the interest of speed, simplicity and cost, and are directed to a transfer/not transfer decision. 


But as lawyers know, we can even assume the facts or anything else away to make something simple.

5. As a regular participant in many forms of ADR and litigation, it strikes me that on-line ADR is likely appropriate in the same very very few circumstances where purely paper-based ADR works well.

ADR by telephone, while not nearly as robust as in-person ADR, often works reasonably well for mediation and is in frequent use where the parties are geographically separated or the key decision maker is a big shot and realistically will not attend the mediation in person.

The next step up, video hearings/mediation, have improved to the point where, in my view, they are an important choice in the selection of ADR tools.  I have done cross-examinations by video conference in High Definition and they worked quite well.  In one case before a judge (the courts are increasingly users of partial video hearings), the judge commented that he liked being able to watch the witness during cross by video-conference (I was live and witness was overseas) because the upper third of the witness’ body filled the screen, the judge did not have to turn his head to see the witness on the witness stand (usually the stand is to the side of the judge and not right in front where one puts the TV), and it was easier for him to watch the witness and take notes at the same time.

For a really useful, on-line ADR tool, we would need a large screen application that includes multiple video feeds, documentary display, and huge bandwidth.  No doubt such a tool will grow out of the cooperative on-line meeting systems slowly being rolled out for business.  All that would be missing are the usual ADR drinks and stale cookies...

6. Further to # 5’s comments on video conferencing, I note that ADR Chambers in Toronto has launched an online video mediation service.  http://adrchambers.com/ca/mediation/eVideo-mediation/

I have not used it, but it does seem to have the interactive features that are essential for effective mediation, as long as everyone has adequate bandwidth and there are no technology glitches.  It would be interesting to try it and see how it works in practice. 

7. [JDG] For a collection of resources and links to others about online dispute resolution, one can look at www.odr.info .

It describes among other things the contents of the 7th annual ODR forum, held in Victoria. (U Vic has had a distinguished program in dispute resolution for many years.)


The 7th Forum consisted of two days of plenary sessions and breakout sessions. The Forum assembled the world's leading practitioners, academics, students, and civil society to discuss the resolution of disputes using online technologies. These disputes may range from b2c (Business to consumer) to the prevention of human rights violations in conflict regions, to reconciliation of opposing groups in armed conflict, to disputes over intellectual property on the internet. It also included the leading technology developers who design conflict resolution platforms for use legal, commercial, or insurance related disputes (i.e. PayPal).


The 8th such forum is being held in Haifa in June of this year (2009)

Ontario’s auto insurance regime has been using telephone mediations for years between those injured in auto accidents and the insurers.

So: what IS ODR?   DR using any technology at all, from email to video conferencing?  Is there anything special about the medium used?


Does anyone on this list know just what Osgoode Hall L.S. intends to do at its new online ADR Centre?

8. As a further follow-up, I checked my limited notes and talked a bit about this with XXX who had been more involved than me.  I also looked at the OAS website and here's the decision on "consumer protection" issues for CIDIP VII:

The Delegations agreed that CIDIP-VII work on consumer protection would produce a Convention on choice of law as well as a Model Law on monetary restitution: the Convention would provide a system for determining rules for consumer litigation, while the model law would complement that instrument by focusing on practical mechanisms for redress when litigation does not provide cost-effective solutions. As a result, these two instruments working in unison will comprise CIDIP work on topic one covering the most relevant aspects of consumer protection in the Americas.


There seem to be several topics under consideration including, as you noted, jurisdiction.  Jurisdiction, particularly for e-Commerce issues, was the Canadian proposal.  But Brazil and the US have moved in somewhat different and broader directions including a possible Model Law and a Convention.  The page at the above link has further links to the documents under discussion in the various areas, i.e., jurisdiction, applicable law, and monetary restitution.

At one point in the discussions last year, there was a 'model' for an online dispute mechanism floated but it was quite complex and, some felt, potentially expensive.  Some felt that a much more simplified approach would be appropriate to the extent that many cross-border 'consumer' disputes were likely to have small financial sums involved.  I don't recall if a simpler approach has been proposed (XXX didn't either) or whether this has now been incorporated into the possible Model Law.  But it does appear that ODR was at least being discussed for CIDIP VII at some point.  And since no one has posted anything about it on the list, perhaps it's died or at least faded farther away.  In any event, I just wanted you have this background.

9. I wrote my LLM thesis on this subject in 2001, more particularly, on ODR for international consumer transactions.  I did not publish my thesis, so it is not easily accessible.

The field has evolved since, but I believe certain observations still hold true.  ODR offers the following advantages over traditional forms of offline dispute resolution:

(1) It is (or can be) relatively inexpensive, and provides disputing parties with access to dispute resolution / remedies when it would otherwise not be cost-effective to do so.  For example, a consumer in a cross-border transaction with a $200 dispute (or even a $500 dispute) will conclude that it is not cost-effective to seek legal representation, litigate and travel to the state of the merchant to seek his remedies.  So without ODR, this consumer has to rely on other remedies such as credit card chargeback, but that is not universally available.  In the absence of an effective dispute resolution service, the consumer will likely avoid merchants that are not well-known (not "trusted"), and prefer more "trustworthy" merchants.  This acts as a dampener on e-commerce.

(2) Using technology (software), ODR offers certain dispute resolution techniques that are not available offline.  For example, blind bidding, where the 2 disputing parties disclose their offers and bottomlines confidentially to the system, and the system will declare a settlement if the offers and bottomlines are within a predetermined percentage of each other.  If there is no settlement (e.g. the bottomlines are too far apart), the system will maintain the confidentiality of the positions disclosed solely for the purposes of the blind bidding exercise.  I believe SquareTrade used this technique.  This also offers greater neutrality of the mediator (the software) since no human being is involved.

The key issue that will determine whether any ODR service is effective and well-utilised is enforceability of the result.  That's the main reason why the ICANN UDRP is well-utilised - the results are enforced in a binding manner.

10. Very good observations by # 9. 


My [governmental] organization experimented with ODR earlier in the decade.  Our program includes handling 55,000 calls and complaints per year on consumer issues/disputes with business.  Mediation is voluntary, but respondents are acutely aware that they are dealing with a government agency with enforcement powers and I think that the effectiveness of moral suasion and early neutral evaluation in our approach is stronger because of that.  That being said, we did not include in our analysis any file in which the statute/regs provided an automatic remedy (e.g. business failed to provide refund of deposit when consumer exercises statutory cooling off right within the prescribed period, fizx the proven mistakes on a credit history file) and of course we excluded files in which allegations of serious consumer law violations arose.  We also have to manage a "crank factor" involving the baseless, the frivolous and occasionally the malicious complaints.

The range of issues is very wide – disputes over home reno/repair, car repair, lawn car, retail sales (especially furniture), fitness club memberships, and in one memorable case, an online “institute of transcendental karmic yoga” operating out of St. Paul (we mediated a full refund for consumers bent out of shape).  Dollar values relatively small -- although perhaps not to many of our clients – usually in the hundreds or low thousands of dollars.


Our ODR was really shuttle diplomacy for the most part, with the disputants feeding in e-mails to mediators and our mediators communicating with respective parties the same way.  The consultant called it “mediated asynchronous communication”.  Real-time online communication occurred in about 8% of cases -- when it did, resolutions were very good.  Perhaps only these “live” online exchanges are really "online" DR.


ODR did not "take off" as a method of choice because our consumer customers demonstrated a decided preference for filing a complaint form and having our staff do shuttle diplomacy by telephone.  Smaller business respondents felt much the same way, but bigger businesses (large enough to have complaints depts) as expected endorsed ODR readily.  In fact, businesses agreed more often (just shy of 85% of the time) to participate in ODR than in "regular" mediation (just over 50% of the time). 


A lot of our complainants and a surprising number of businesses did not have e-mail addresses, at least not that they wanted to share with the government.  This is not an issue for regulators who have an online e-complaint mgmt system which enables disputants to go online and enter the ODR process w/o providing e-mail addresses.  A partner regulatory agency that was part of our project confirmed this.

Resolution rates were much higher for ODR than for our control group of cases from the “phone/letter pool”.  This may have to do with the fact that the persons who volunteered for the ODR project tended to be keeners with skills above the larger team average.  However, we also felt that the opportunity to exchange written positions thru a mediator seemed to encourage disputants to organize thoughts better, temper their comments etc – and the ability to fire attachments with, say, photocopied contracts or photos of damage was really well-liked.

As for "blind bidding", we had it on the menu but my staff were reluctant to suggest it.  To be fair, many of the resolution outcomes desired by our clients do not involve getting money back (stop billing me!  cancel the contract (no deposit)!  give back that item I left for repairs!  I don't want my money back -- just start the job!  move my mom to the correct burial plot!).  Because our mediation is wholly voluntary, confidential and w/o prejudice the parties are incented to be reasonable with their bids.  Our customers want to know more about "why?" and we find that people who come to the government are looking for a rights-based as opposed to interest-based resolution -- and can register considerable disappointment when we don't simply order and force a business to "do the right thing".  I have observed, though, that interest-based mediation becomes more attractive to people who discover they don't have the rights they thought they did :-)

Just some random thoughts from experience.

11. On the Osgoode mention, I wanted to clarify that the new centre is not about online ADR at all, it is really about a physical space. There will be an e-court room, which means they will use computers and other electronics but will still be physically in the room. There will also be actual ADR rooms that may employ technology. See below from the story:

The facility – which will be named, subject to University approval, the Paul B. Helliwell Centre for Innovation in Dispute Resolution – will employ the latest in technology to assist law students, researchers, courts, mediators and arbitrators in exploring new ways to resolve disputes. In addition to being a laboratory where researchers will examine different dispute resolution environments, it will also feature actual court sittings (including Ontario Court of Appeal sittings) and other forms of dispute resolution activity, both within Canada and internationally.

12. The Osgoode project sounds interesting and promising.


Just to digress and get back to the present a bit.


Sorry if this has been mentioned before.


One tool that I have found quite useful and under-utilized is the possibility of video hook ups for court proceedings. The Federal Court now does this routinely for motions, although there are frequently some technical glitches - which can be trivial or potentially serious in consequence. Fortunately, they've never been serious for me.


In a matter of any serious complexity where oral argument is appropriate, it's potentially important for the adjudicator and the counsel to "see" and hear each other.  Travel costs and time can be an enormous and unnecessary burden even on parties with lots of money.


As web cam and video conferencing becomes cheaper and more reliable, I'd certainly like to see more of it in play. 


With this new technology, nobody need leave their office - as long as each party and the court/arbitrator or whoever have compatible systems.


There's no reason by this couldn't work in ADR - I suspect it's already in play.


The cost could be close to or even "free" based on Skype and presumably other technologies already out there. There is no longer any need for expensive telephone hookups. I'm sure people would be happy to pay a reasonable premium over "free" for enhanced bandwidth to enable HD like video and quality sound, and other bells and whistles such as document presentation, etc.

13. I just read # 11’s email to the list and it seems that great minds think alike. The CRDP (Centre de recherche en droit public) has been working on a very similar project for 4 years now, and construction is set to begin shortly. The «cyberjustice » laboratory, as it is called, will be an e-courtroom where University on Montreal and McGill University students, as well as lawyers from across the country and the world (it has agreements with France and the US) will be able to test and help develop new technologies to hopefully make the legal system more efficient. All Quebec courts are also on board.

Where the project seems to differ from Osgoode’s, though, is that it plans to also build a computer lab where researchers and programmers will work to develop the next generation of court software, as CRDP had done in the mid 90’s with ODR.

It has received major funding from both the Quebec government and Ottawa. If all goes well, it will be operational in early 2010. Hopefully, the two centres will be able to collaborate on certain projects since I think we can all agree that there is more than ample work in this field for everybody.

14. The ADR Chambers’ e-mediation: http://www.adrchambers.com/uploads/emails/evideo/email.html