The Effectiveness of Online Dispute Resolution to Resolve Internet Related Disputes

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Introduction

It is important to focus on the fact that today the distance between traders and consumers, as well as business partners, can increase, and the nature of cross-border interactions changes because of the progress of electronic commerce, or e-commerce. As a result, both consumers and traders choose to refer to the non-traditional approach in order to regulate their interactions and resolve possible disputes. The focus on advanced technologies in developed states resulted in changing the face-to-face transactions with the online procedures of selling and purchasing different items and services. The obvious consequences of these processes are the focus on new efficient and modernised mechanisms for resolving disputes related to the sphere of online operations because the traditional cross-border litigation for resolving disputes is often ineffective. Rule, Rogers, and Del Duca point at the fact that courts can experience difficulties associated with the number of Internet related claims and with impossibility to determine the appropriate law for discussing this or that case.

The fact that the resolution of Internet related disputes between parties located in different countries can cost higher than the actual cost of operations led to developing the Online Dispute Resolution (ODR) procedure as a way to resolve cross-border e-commerce low-price disputes among the other Internet related questions. Cortes and the other proponents of ODR declare that it is the most optimal choice for regulating disputes associated with electronic commerce and focus on such benefits of the procedure as fastness and appropriateness to address cross-border online disputes. Therefore, referring to the academic research in the field and to the analysis of the existing legislation, this paper will identify the types of Internet related disputes and critically argue whether Online Dispute Resolution can be discussed as the best choice to resolve these disputes in comparison to the cross-border litigation.

Types of Internet Related Disputes

The era of e-commerce and online transactions caused the appearance of a variety of Internet related disputes because of the growth of businessmen’s concerns. Katsh, Rifkin, and Gaitenby note that if a business is focused on the online activities, the problems are usually related to breaches of privacy and to the issues of online fraud. Ponte and Cavenagh also state that the other problems can be associated with licensing and copyrights or with the work of the website. Therefore, it is important to be oriented to resolving Internet related disputes because unresolved questions can affect the work of the organisations and the quality of its further business operations. From this point, the main types of Internet related disputes include licensing, intellectual property disputes such as copyrights and trademarks, domain name disputes, plagiarism, identity issues, breaches of financial relations and monetary issues, and violations of the agreement. If these disputes are associated with the online activities and involve parties developing their business with the help of the Internet, it is efficient when these disputes can be resolved online.

Domain name disputes are usually associated with the procedure of the domain name registration, and they are very frequent. Licensing and monetary issues are less frequent, but they are more costly. These disputes are directly connected with the area of the Internet, and the required arbitration and mediation for resolving the issue can also be conducted online in order to make the process of submitting concerns and discussing the issue easier for the parties and mediators¹¹. Additionally, it is important to focus on the intellectual property disputes and issues of identity in the cyberspace.

Intellectual Property Disputes

Intellectual property questions usually require the development of the online dispute resolution procedure because of the progress of the digital communication and development of Internet technologies. Devack states that in the sphere of online communication and commerce, it is a problematic task to resolve conflicts between intellectual property owners and consumers and identify cybercriminals. As a result, copyright and trademark rights are often infringed, and this fact complicates the relations between intellectual property owners and consumers. In this context, businesses and intellectual property owners operating online need the opportunity for the online arbitration of their intellectual property issues.

Identity and Digital Signatures

The progress of the e-commerce and business relations also resulted in arising disputes associated with the issues of identity and authenticity of digital signatures. These Internet-related disputes are connected with the discussion of the problem of trust in the sphere of online relations. Businesses that operate online need to identify their partners in order to complete online transactions effectively, but the problem is in the fact that it is usually difficult to prove the identity of the party. In this case, the main focus is on digital signatures and on the procedures and policies that protect digital signatures from falsifying. EC Directive on Electronic Signatures 1999 was developed and adopted in order to regulate the issue and guarantee the validity of digital signatures that became equal in their legal role to the traditional signatures made on documents. To improve the approach to regulating the issue, UNCITRAL Model Law on Electronic Signatures was adopted in 2011. The law provided the framework according to which the procedure of discussing the authenticity of digital signatures could be realised. As a result, today, a digital signature is an important aspect to prove someone’s identity in the cyberspace and to ensure integrity of online business operations.

Alternative Dispute Resolution

Alternative Dispute Resolution (ADR) was proposed as a new approach to use arbitration and mediation for resolving different types of disputes with the focus on discussing the issues within the spaces other than the courtroom. However, Wang pays attention to the fact that ADR was developed not as an independent procedure, but only as the alternative approach to the traditional litigation in order to address issues for which the cross-border litigation was inappropriate. Still, Shah argues that ADR became effective to address the disputes “out of court” in order to meet the interests of parties from all over the world. In addition, the focus was on the fact that the developers of ADR proposed such successful methods as mediation, arbitration, and negotiation for resolving a range of out-of-court cases. Methods of ADR became used as a tool to address the problem of differences in countries’ laws. However, the problem was in the fact that ADR itself could not provide the effective means to resolve disputes when there were significant differences in the national laws on arbitration among other procedures. Moreover, the challenges were associated with the different level of the e-commerce or Internet law development. In spite of the active use of ADR, the principles of the procedure often did not respond to the parties’ expected results because of difficulties in enforcing and promoting certain Internet-related decisions. In this case, the development and use of the effective procedure for the online dispute resolution was expected.

Online Dispute Resolution and Legislation

Online Dispute Resolution (ODR) is often compared to ADR because it uses the alternative technologies and approaches to resolve disputes related to the field of business transactions and e-commerce. Moreover, ODR is also based on the principles of mediation, arbitration, and negotiation. Nevertheless, Philippe notes that the main difference is in the fact that ODR mainly uses innovative online technologies or information technologies in order to resolve disputes that are usually related to the sphere of electronic communication. In this context, ODR is used to resolve interpersonal disputes between consumers and businesses, consumers and consumers, and businesses and businesses. While identifying ODR as the procedure different from ADR, it is important to note that ODR uses online technologies to resolve the e-commerce and other Internet related issues such as violation of intellectual property rights or inappropriate domain name registration with the help of the Internet as the main tool. Patrikios claims that in this case, businesses and consumers receive the opportunity to regulate their disputes without leaving the web space. Still, to resolve the Internet related disputes, it is often necessary to involve the third party or an attorney in order to come to the most efficient conclusions. Today, ODR is available for online settling financial claims, for arbitration, for using particular websites to resolve disputes with references to the involvement of arbitrators, for resolving consumer complaints with the help of e-mail, and for mediation based on the work of certain websites.

Mediation and arbitration in the context of ODR depends on a range of legislation, in spite of the fact that the development of the normative framework for supporting online dispute resolution was a long process. However, the first guidelines and standards on arbitration in the sphere of international business relations appeared in 1985, when the UNCITRAL developed the Model Law on International Commercial Arbitration. In 1996, the regulation was added with the Model Law on Electronic Commerce in order to guarantee the neutrality of national sources and the autonomy of mediators and arbitrators in choosing the appropriate aspects of the contract law. Still, the most significant changes in the area of legal regulations were observed in the 2000s, when online dispute resolution became actively used by businesses and consumers, and EC Directive on Electronic Commerce 2000 was adopted. In July 2005, United Nations Convention on the Use of Electronic Communications in International Contracts was adopted to provide more regulations for the discussion of international contracts as well as e-commerce issues in the context of online procedures for resolving the conflicts. These laws provided the significant background and legal framework for the development of the legally-efficient ODR procedures because they were used to legitimise important aspects of the electronic communications, and as a result, online dispute resolution. Therefore, new laws to regulate mediation and arbitration at the international arena appeared. The general legal background was provided with EC Directive on Certain Aspects of Mediation in Civil and Commercial Matters 2008, when UNCITRAL Arbitration Rules 2010 contributed significantly to enforcing ODR in Europe and globally.

Nevertheless, such researchers as Wang and Martin predicted that the legal regulation regarding the resolution of disputes involving international parties and the cases of e-commerce would develop rapidly, while providing improvements to the current directives; and appropriate laws associated with using ADR and ODR were adopted in the 2010s. In 2013, the European Parliament adopted legislative regulations regarding ADR and ODR to improve the approach to resolving consumer disputes. EC Directive on Consumer ADR 2013 and EC Regulation on Consumer ODR 2013 were adopted to promote the active use of not only ADR schemes but also efficient ODR web platforms. This legislation contributed to improving the normative base of ADR and ODR in order to guarantee the effective redress for parties and secure their rights and interests.

Advantages and Disadvantages of Online Dispute Resolution

The use of ODR for dispute resolution is appropriate and effective when the involved parties develop their business in the Internet. As a result, they are familiar with the principles of online operations, develop financial relationship with partners and consumers, and actively work with e-mail facilities. These conditions point at the fact that Internet related disputes like the intellectual property rights violations can be most efficiently resolved online, while making the whole process of discussing the problem easier. The low cost of the dispute resolution process is one of the main advantages of ODR. Lodder points at the problem that in most e-commerce disputes, the cost of its legal resolution is often higher than the value of discussed operations or transactions. In this case, the cost of the traditional cross-border litigation is not proportionate, and ODR schemes are discussed as most viable means in order to address the problem with the focus on the lowest costs. In contrast to ADR, ODR proposes the dispute resolution procedure that is fully Internet-based, without the necessity to guarantee the paper document exchange. It is relevant in cases when the issue of the identity and digital signature needs to be resolved.

The other advantage is time because the parties involved in the dispute as well as arbitrators and mediators do not need to cover long distances in order to settle disputes. E-commerce issues as well as the intellectual property issues involve persons who can live in different countries, and ODR procedures are characterised by the great flexibility in relation to the time issue. In addition, the time-efficient discussion of the case in the online setting allows resolving the issue within the most appropriate time frames. Katsh, Rifkin, and Gaitenby also state that the procedure associated with ODR is also less difficult than the traditional litigation procedure in courts. Today, the parties only need to visit the website and fill in electronic forms as well as provide the necessary documents in the electronic format and arrange the dispute resolution session with arbitrators or mediators, if it is required. In addition, Hörnle emphasises that ODR avoids focusing on jurisdictional issues, and this aspect makes the procedure faster.

However, there are also disadvantages associated with the ODR procedure. Although the simplified approach to discussing the jurisdictional issues is often considered as a benefit of ODR, the problem is in the fact that jurisdiction still matters, and nations continue debates on determining the spheres of influence in relation to nations’ jurisdiction in different types of cases. The results of these debates are the numerous recommendations developed to address the problem. The nature of mediation or arbitration implicates the verbal interaction between the parties and a mediator or arbitrator. The lack of the interaction associated with the online resolution of the dispute can lead to possible misconceptions because of the active use of neutral messages. The other issue is the question of confidentiality and privacy. The problem is in the fact that the aspects of the online resolution process need to be private and protected from being revealed in public. However, in the cyberspace, the issues of confidentiality and privacy as well as the issue of authenticity are still great concerns, and this fact limits the effectiveness of ODR.

Furthermore, it is important to note that ODR cannot be equally used in all Internet related disputes, and more attention should be paid to protecting security and privacy of the parties involved in the dispute. It is significant to state that the drawbacks of the ODR system are associated with the fact that there was the lack of specific laws to regulate the online jurisdiction within the cross-border environment during a long period of time. For instance, the UNCITRAL Model Law on Electronic Commerce 1996 did not contain strict regulations regarding the laws that needed to be referred to during the online dispute resolution process. Still, this law was important because it provided the first regulations regarding the time of the dispute resolution process, communication, and messaging associated with the process.

The Aspects of Cross-Border Litigation

If ODR is discussed as an alternative progressive approach to resolve the disputes in the sphere of e-commerce, cross-border litigation can be discussed as a traditional court procedure that is oriented to resolve the international commerce issues. Cross-border litigation is traditionally discussed as an effective approach in order to resolve disputes in the area of international trade because the litigation procedures are developed to address the complex legal, political, and financial issues that are typical for the international business. The international commerce cases and disputes often involve different jurisdictions, and it is necessary to refer to the assistance of experienced lawyers in order to resolve the dispute from the point of legal appropriateness. Thus, Stadler points at many obstacles associated with discussing cases between EU courts. Lazic also focuses on weaknesses of the cross-border litigation in the EU. In addition, the examples of problematic international disputes are cases on contracts involving individuals and corporations situated in different countries, as it is in Abogados v AT&T, INC (2000); and disputes between manufacturers and harmed consumers of services, as it is in Melgares v Sikorsky Aircraft Corp (2009). Therefore, in spite of the obvious efficiency of the cross-border litigation to be used for discussing complex international disputes, it is not relevant for resolving low-cost online disputes that are characteristic for the developed international e-commerce.

Cross-border litigation can be discussed as a non-efficient approach to resolve Internet related disputes because in situations when parties can rely on resolving the dispute with several clicks of a mouse, face-to-face contacts that are typical for litigation become unnecessary. From this point, cross-border litigation can be discussed as a time-consuming and inconvenient process in order to regulate issues that are related to e-commerce and online operations. In addition, litigation is usually discussed as an expensive procedure, and it is associated with a range of jurisdictional problems because of the necessity to correlate the interests of the parties who are often from different countries or even world regions. With the focus on the aspect of time and on the complicated character of the cross-border litigation, experts in the field point at the difficulties connected with the transmission of documents because it is a time-consuming process, and it is cheaper and faster to use the online resources for the document exchange. While discussing the aspect of cost in detail, it is also possible to state that offline litigation leads to spending significant financial resources for receiving the assistance of lawyers and specialists in courts.

In this context, the cross-border litigation can be discussed as an appropriate variant to discuss complex disputes related to the international business and commerce when the presence of all the parties cannot be avoided, and it is required according to the standards and rules. Nevertheless, the situation is different when the Internet related disputes are discussed, and it is possible to provide businessmen and consumers with more efficient strategies and procedures to resolve their conflict questions. Although the proponents of the cross-border litigation focus on the advantages of the procedure for providing the efficient decisions, it is also important to accentuate the idea that in the sphere of e-commerce, the main focus is on the speed of interactions and their low cost.

Conclusion

Referring to the tendencies in the modern e-commerce progress, it is possible to note that such types of the Internet related disputes as the violation of intellectual property rights as well as the issues associated with the domain name and the issues of authenticity and identity can be most appropriately resolved with the focus on the ODR procedures instead of the traditional cross-border litigation and even ADR methods. The reason is that it is more advantageous for a great number of disputants having problems with protecting their copyrights and trademarks to use the assistance of third parties in online dispute resolution procedures because of the reasonable time frames and geographical separation of parties. The convenience factor seems to play the key role while discussing the alternative variants for the dispute resolution because of the necessity to receive the solution quickly and at the lowest cost. In this context, the websites and software supporting ODR are considered as effective tools to involve multiple parties to participate in mediation, arbitration, or negotiation, depending on the purpose of the procedure.

ODR proposes the most efficient approach to resolving online disputes because of being focused on optimization and accessibility of resources for mediation, arbitration, and negotiation. Furthermore, the parties receive a chance to rely on the quick and efficient solutions supported with the appropriate normative base because modern international communication and commerce regulations and laws are regularly improved. As a result, in contrast to the traditional cross-border litigation, ODR can be discussed as the new paradigm for the dispute resolution of online cases. The European Commission and the European governments focused on the advantages of ODR, and today these authorities advocate the use of ODR procedures and systems for resolving any Internet related disputes because of the efficiency of the procedure. In addition, to ensure the effectiveness of the ODR systems and associated out-of-court schemes, European Commission and the European governments proposed the appropriate legislation to guarantee the quality of decisions and address the principles of independence and the respect of law. In this context, ODR is an efficient fast procedure for resolving online disputes, and it is effectively supported with laws.

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