Online Arbitration

It is quite surprising that amongst the first initiatives of ODR in the 1990s was an online arbitration initiative that is: the Virtual Magistrate Project, however online arbitration has, or at the very least seem to have, gradually lost its leading position to other ODR schemes, especially online mediation.

 

This is a phenomenon worthy of due consideration and analysis, especially that traditional offline arbitration, hitherto, remains the business community’s prominent dispute resolution mechanism. However, it remains plausible to argue that the future of online arbitration is promising not only because of the creeping and progressive utilization of ICT applications in traditional offline arbitration, but also owing to the creation of a new ODR Working Group under the auspices of the UNCITRAL.

 

On such account, the present forum aims at exploring the following issues pertinent to online arbitration:

  • What actually constitutes online arbitration?
  • The challenges, benefits, and drawbacks.
  • The costs and expenses involved.
  • What is expected from ODR providers?
  • What is expected from States?
  • What is expected from the parties?
  • What is expected from Neutrals?
  • E-arbitration agreements and legal challenges.
  • How can the proceedings be best conducted?
  • Enforceability of e-awards and future considerations.
  • Online arbitration and the UNCITRAL Working Group. 
  • The future of online arbitration.


Moderated by:

Dr. Mohamed S. E. Abdel Wahab (MCIArb), Licence en Droit (CAI), LL.M (CAI), MPhil (MAN), Ph.D (MAN), CIArb Dip. International Commercial Arbitration (Baliol College, Oxford University – Chartered Institute of Arbitrators), European Law Course (King’s College, London University) has broad and extensive experience of commercial arbitration and expert determination proceedings across the economic and business spectrums, including energy, construction, telecommunications, information technology, pharmaceuticals, hospitality and hotel management, sale of goods, banking,
and finance sectors.


Dr. Abdel Wahab also holds a number of academic visiting posts in Egypt, the UK, and the USA, where he teaches Comparative Commercial Arbitration, English Contract law, Comparative Law, Online Dispute Resolution, and Conflict of Laws. Dr. Abdel Wahab is an Adjunct Professor of Law and
International Commercial Arbitration (Indiana University, USA), and Faculty Coordinator for the Indiana University LLM Program in Business and Comparative Law in Egypt. Dr. Abdel Wahab is a Fellow of the National Centre for Technology and Dispute Resolution at the University of Massachusetts, Amherst, USA.


Dr. Abdel Wahab serves as the vice-chairman of the Cairo branch of the Chartered Institute of Arbitrators since 2005. Dr. Abdel Wahab is a Counselor for International Legal Affairs and International Contracts to the Information Technology Industry Development Agency (Ministry of Communications and Information Technology, Egypt).

 

 

 Zbynek Loebl specialises in the field of Internet law and legal aspects of ICT and technology projects. He has focused on on-line dispute resolution in recent years. He is particularly interested in developing cross-border ODR infrastructure for e-commerce disputes and he proposed to develop an international ODR communication standard called ECRI (e-commerce resolution interchange). He is also active at UNCITRAL WG III which has been developing ODR Rules for cross-border ODR.

 

Zbynek managed a project on establishing a global centre for domain name dispute resolution (ADR.EU) of the Czech Arbitration Court. ADR.EU is an online UDRP provider as well as ODR provider for .eu disputes and .cz disputes. Before focusing on ODR, Zbynek has represented large Czech and international companies and public authorities in the negotiation for significant IT contracts in the Czech Republic and abroad and was active in all aspects of Internet law. He is a Panellist of ADR.EU for disputes related to .eu domain names and in standard arbitration proceedings. He is an active member of the IP Constituency of ICANN.

 

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Contribution from Zbynek Loebl:

 

Current discussions of cross-border ODR

Recently I have participated in several discussions related to the work of UNCITRAL WG III and the preparation of Rules for cross-border ODR. I try to provide below summary of the conclusions of the discussions  related to the issues which I consider as particularly important.

-     Should the Rules distinguish between buyers-consumers and buyers-businesses?

We should avoid distinguishing buyers-consumers and buyers-businesses for the reasons of necessary maximum simplicity and clarity of the Rules. This means that we will need to make balanced decisions to apply a single rule for both.

-     Should the Rules deal with facilitated settlement/mediation as one of the separate stages of an ODR procedure or should it be included as part of the arbitration phase?

The Rules should deal with faciliatated settlement as part of the arbitration stage in order to provide for a single arbitrator to decide the case; such arbitrator may engage in a streamlined mediation if the parties are prepared to participate. Main reasons include the need for simplicity and cost efficiency and also the need to arrive at the awards enforceable under the NY Convention.

-     Should the Rules provide for arbitral awards enforceable under New York Convention?

The Rules should provide for arbitral awards enforceable under the New York Convention.  Enforceability under the New York Convention will provide a recognized successful instrument for the enforcement of awards across borders and will help to develop additional private enforcement mechanism (e.g. recognition of issued awards within existing private dispute resolution schemes like chargebacks or eBay-type dispute resolution). Binding decisions will also render the future cross-border scheme much more interesting for buyers and sellers.

-     Should the rules recognize  predispute binding arbitration agreements?

The Rules should allow binding pre-dispute arbitration agreements. Buyers should be provided with a clear and fully informed notice about ODR process and rules and such notice needs to provide for a separate consent of the buyers with the ODR process and rules from the underlying e-commerce transaction (a separate OK click consenting to the ODR should be required from the buyers).

-     Should the Rules allow for complaints against buyers?

The Rules should allow for claims against buyers by making sure that nothing in the Rules exclude such claims. At the same time the Rules should not be misused for debt collection scheme. A possible solution would be to exclude from the applicability of the Rules claims for debt-collection other than claims of sellers for unpaid price of non-returned products and/or rendered services.

 

Currently published updated draft UDRP Rules and List of issues for consideration by UNCITRAL are available at www.uncitral.org, under WG III.

I am quite intrigued by this topic, and I wonder if the online arbitration world can take some cues from the online mediation world.  In online mediation, I have observed that online mediation is not as much about moving all of mediation online (although there have certainly been some attempts in that direction), but it has become about selectively using technology to enhance the process and serve parties' interests.

 

I wonder if the online arbitration community cannot try to incorporate - or continue to incorporate - technology into the arbitration process.  Certainly, arbitrators already take advantage of e-mail opportunities.  And technology, such as videoconferencing, can be used for the presentation of witnesses - especially expert witnesses and others unlikely to live near the hearing site.  In addition, computer and internet might be useful in some cases for demonstrations of live technologies or searches.  Many presentations also include PowerPoint presentations or more sophisticated trial software packages.  These are just a few examples of how we can incorporate technology into an existing framework, and making that traditional framework better.  Perhaps the arbitration community would embrace this type of discussion more easily than a discussion about moving the entire process online.

 

I agree that the 'rules' of online arbitration need to be as consistent as possible, thus treating businesses and individuals exactly the same, and applying the rules of the New York Convention.

I am interested in Kristen's comment about incorporating technology into the online arbitration process.  Perhaps there are some algerithems that can be used to determine fair settlement values.  Just a thought.

The interface between technology and arbitration is both interesting and challenging. the issue with arbitration is that it is a formal adversarial dispute resolution process, where law and procedures must be clearly observed. The challenge is really how technology can be efficiently integrated whilst observing the requirements of equality and due process.

It is also challenging in some legal systems if arbitration agreements are e-agreement concluded online, whether the proceedings should be wholly conducted online, and whether the final award is essentially enforceable in accordance with the New York Convention, as Zbynek has mentioned.

Any thoughts?

I think there are some inventive approaches to online evaluation/arbitration -- I think ebaycourt.com is one, and cybersettle.com is another -- then there are the zipcourt.com and truveli.com/allrise.com examples.  I think the best model (and the most scalable) may be a neg-arb or arb-neg approach, which keeps online processes focused and efficient, yet delivers clear outcomes in 100% of cases. I don't think the ICANN/UDRP approach could scale beyond 100k cases per year without becoming prohibitively expensive.

Does anyone know of examples of night baseball/day baseball online?  Also, I'm very interested in the mechanisms at fairoutcomes.com -- love to hear from someone who has used them for live disputes.

rah

Regarding the applicability of the New York Convention for ODR, you can read the view of UNCITRAL Secretariat in a document published last week – Issues for consideration in the preparation of ODR Rules, available at www.uncitral.org, under WGIII. UNCITRAL Secretariat generally accepts the applicability of the New York Convention to cross-border ODR but at the same time admits that in some countries decisions issued under simple and streamlined cross-border ODR Rules will not be enforceable, mainly in B-C disputes.

In addition to enforceability under NYC we need to look at other even more efficient ways how to ensure quick implementation of ODR decisions. Such additional enforcement options will most probably be private rather than publc and will include reputation-based tools (including e.g. naming – shaming), interface with payment channels and chargeback systems and possibly other mechanisms.


Dr. Mohamed S. Abdel Wahab said:

The interface between technology and arbitration is both interesting and challenging. the issue with arbitration is that it is a formal adversarial dispute resolution process, where law and procedures must be clearly observed. The challenge is really how technology can be efficiently integrated whilst observing the requirements of equality and due process.

It is also challenging in some legal systems if arbitration agreements are e-agreement concluded online, whether the proceedings should be wholly conducted online, and whether the final award is essentially enforceable in accordance with the New York Convention, as Zbynek has mentioned.

Any thoughts?

I suspect the naming/shaming will not be adequate for enforcement.  Reliance on payment providers or internet infrastructure providers (e.g. ICANN) will likely be more effective.  Also, if there is a big marketing push behind the trust marks, where consumers really get awareness about the value of merchant participation, that will encourage merchants to both open their wallets and abide by outcomes.  But that can be very expensive to sustain.  Personally, I do not believe widespread enforcement of these outcomes under the NY convention is going to happen, particularly in Europe and Latin America.  But pre-dispute binding consumer arbitration does appear to be coming in the US in a pretty big way.

Also, I just saw this... coming soon!  Congratulations, Mohamed:

http://www.amazon.com/Online-Dispute-Resolution-Theory-Practice/dp/...

rah

... and of course I would like to invite everybody to Prague to the ODR Forum 2012 (27-29 June). You can see more information at www.odr2012.org. ODR Forum will be held during the same week as ICANN meeting in Prague so you will be able to switch between ICANN and ODR...
 
Colin Rule said:

I suspect the naming/shaming will not be adequate for enforcement.  Reliance on payment providers or internet infrastructure providers (e.g. ICANN) will likely be more effective.  Also, if there is a big marketing push behind the trust marks, where consumers really get awareness about the value of merchant participation, that will encourage merchants to both open their wallets and abide by outcomes.  But that can be very expensive to sustain.  Personally, I do not believe widespread enforcement of these outcomes under the NY convention is going to happen, particularly in Europe and Latin America.  But pre-dispute binding consumer arbitration does appear to be coming in the US in a pretty big way.

Also, I just saw this... coming soon!  Congratulations, Mohamed:

http://www.amazon.com/Online-Dispute-Resolution-Theory-Practice/dp/...

rah

I agree with Colin that enforcement of ODR awards cannot depend only on one option. We do not have situation similar to UDRP domain name disputes, where all UDRP decisions must be implemented by registrars which registered the disputed domain names. First natural option are the payment channels as Colin mentioned. Some payment channels already have their own ODR - chargebacks or eBay/Paypal ODR and from informal discussions I have had it seems that they will not be willing to become enforcement agents for another ODR system or systems. I think it is more likely that the payment channels might initially take into account decisions issued within another (international) cross-border system (e.g. using the ODR Rules being prepared by UNCITRAL). This in my view might be possible, there can be a common interface between these systems and step by step we can get further and further. In addition, the reputation based Internet penalties might become a very useful complementary incentive, mainly if national and international consumer centers will become involved. I guess only online sellers which wants to sell cross-border will be interested in cross-border ODR and for those sellers the reputation on the Internet will be crucial.

Last but not least, enforceability under New York Convcention will be very important to facilitate all the private enforcement mechanisms mentioned above.

 

I would also like to inform you that together with Colin and Charlie Underhill from BBB we are preparing a pilot on cross-border ODR using the UNCITRAL Rules. If everything goes well we will announce the pilot at the next meeting of UNCITRAL WG III in mid-November (i.e. in two weeks). You will find detailed information about the pilot on www.odr2012.org (website of the ODR Forum 2012 in Prague) starting from mid November. The pilot will be open to all interested parties.

In response to the distinction between buyers-consumers and buyers-businesses, should there not be different rules between buyers and businesses due to the sophistication of businesses and their ability to draft "take it or leave it" language into their contractual ADR provisions?

James Fletcher

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