Evolution of ODR Industry
Online dispute resolution (ODR) was developed to circumvent clogged and slow moving courts and the hassle of physical dispute resolution mechanisms. ODR tries to harness the power of internet to resolve disputes, by reducing costs, doing away with the necessity to travel to attend courts and generally making the entire process faster and efficient through use of web based technologies. This is the basic precept on which ODR is built. If possible, this could be a significant improvement over the current alternative dispute resolution methods such as traditional arbitration, mediation etc.
ODR debuted in 1998 in United States and not much is known about it in India. What does ODR really entail? Is it a sustainable mechanism for resolving disputes? This post will try to answer these questions
Cost and Time
ODR is generally considered a more efficient process than ADR/ litigation because it is quicker and less expensive. Given the fact it does not require physical presencce as is the case with ADR and litigation, it saves up on time and cost as may be required.
The mode of proceedings in ODR is often decided by the parties unlike court based suits that follow a strict statute determined procedure. Of course, ODR must follow the rules laid down by appropriate legislations and some basic principles that all legal proceedings should follow, but it has the potential to emerge as a more flexible and convenient mode of dispute resolution. Also, ODR is typically less confrontational because it take place in a much less formal setting on an online platform.
Confidentiality of matter can be protected far better in an ODR process.
ODR is much more flexible as it is governed by party’s agreement or the rules and regulations of the online platform used and is not dependent on the stare decisis (deciding on the basis of precedents) principle just like any other ADR.
Nature of ODR
Online and Offline Model of ODR
The potential use of the Internet to resolve international disputes can be divided into two distinct areas: using Internet-related technology to resolve “real world” disputes online or partially online and using the Internet to resolve disputes arising on the Internet itself.
For instance, in offline dispute, you can have a clause in your contract with your supplier for resolution of dispute using one of the ODR platform. As far as online disputes are concerned, the platform you are dealing with might have an inbuilt mechanism as is the case with EBay
Procedures adopted for ODR
Close Model– Online negotiation thrives on technological changes through blind bidding which is one of the most prevalent dispute resolution services available online. The common characteristic of these processes is the parties’ submission of monetary offers and demands which are not disclosed to their negotiating counterpart, but are compared by computer in rounds. If the offer and demand match, fall within a defined range or overlap the case is settled for the average of the offer and demand, the matching amount, or the demand in the event of an overlap. If the claim is settled, the participants are immediately notified via email
Open Model– Under the open model, a party can view the other’s party offer or demand only after having made a demand or offer. Whenever any offer is within twenty per cent of any demand, there is settlement of the median.
A typical online mediation procedure takes place as follows. The complainant initiates it by completing a confidential form on the provider’s website. Then, a mediator contacts the respondent in order for him/her to participate. Both parties set forth the mediation ground rules.
The mediator communicates with the parties, sometimes jointly and sometimes individually, to facilitate an agreement. If an agreement is reached, it usually takes the form of writing.
Thus, the online process does not differ very much from the offline process, except for the expanded use of technology. Email is the mediator’s best friend for purposes of framing and moving discussion forward. But email was already used by offline mediators. In online mediation, websites such as Smart Settle, Legal Face Off etc. are providing online mediators with new tools to supplement email with other communication tools including electronic conferencing, online chat, video-conferencing, facsimile and telephone.
Online arbitration proceeds along different communication stages (process agreement, initial presentations, rebuttals, consideration, and decision). Arbitration is in general a much less complicated communication process than mediation. In the simplest arbitration, software that allows positions to be stated and documents to be shared may provide a sufficient frame for the process.
There are many arbitration service provider in abroad such as American Arbitration Association. AAA is known for handling large, complex cases. In 2011, 46% of the arbitration filed with the AAA involved claims $1,000,000 or more.
Future of ODR
As said by Jeffrey N. Rosenthal is an attorney with Blank Rome, the attractiveness of ODR services to the world-at-large will likely only increase. The availability of such systems can build trust in a company by reminding consumers and corporations dealing with it that a neutral third-party can cheaply and easily resolve disputes.
Given the fact that its being predicted that the SME Sector would be the driving force for growth in India, there is huge scope for application of ODR Mechanism in resolution of dispute for SMEs as ODR can be a cheap and easy way out of a disputes that are bound to arise during the course of business.
We would write further in this topic in the coming posts. Don’t forget to drop down your comments and suggestions and issues you would like us to cover in the next post.