Lex; in Breve
The online supplement to our eponymous journal features concise and insightful articles penned by law students from the University of Malaya, as well as guest writers.
ADR is popular in many jurisdictions no longer as an alternative form of dispute resolution, but rather as a primary mechanism.
I. The Development of ADR – A Brief Overview
Alternative Dispute Resolution (‘ADR’) is evidently not a new phenomenon. Societies have been developing informal and non-adversarial processes for centuries to resolve disputes. As a matter of fact, archaeologists have discovered evidence that ADR processes were used in ancient civilisations particularly in Egypt, Mesopotamia and Assyria. To-date, one of the earliest recorded mediations occurred over four thousand years ago in the ancient society of Mesopotamia. It was discovered that the then Sumerian ruler used a mediation process to help avert war and subsequently developed an agreement in a dispute over land.
There are many examples where ADR processes were developed in traditional societies as a mechanism to resolve disputes. The Bushmen of Kalahari, native people of Namibia and Botswana, developed sophisticated systems in order to resolve disputes’ arising that avoids physical harm and the courts. William Ury held that “when a serious problem comes up everyone sits down – all the men, all the women – and they talk, and they talk and they talk. Each person has a chance to have his or her say. It may take two or three days. This open and inclusive process continues until the dispute is literally talked out.” In China, since the Western Zhou Dynasty approximately two thousand years ago, the post of a mediator has been included in all governmental administration. Today, it is estimated that there are 950,000 mediation committees in China, with at least six million mediators. The said committees handle between ten to twenty million cases annually, ranging from family disputes to minor property disputes. Similarly, in India there has also been a long tradition of using ADR as a tool to resolve disputes. The most adopted and used method of dispute resolution, ‘panchayat’, came into existence somewhat 2500 years ago and was widely used to resolve both commercial and non-commercial disputes. In the western world, the development of ADR can be traced to the ancient Greeks. A public arbitrator position was introduced by the city-state around 400 B.C as the Athenian courts became overcrowded.
Today, ADR is popular in many jurisdictions no longer as an alternative form of dispute resolution, but rather as a primary mechanism. ADR has flourished to the point where it has been suggested that the adjective should be dropped altogether and that ‘dispute resolution’ should be used to describe the modern range of dispute resolution methods and choices. The two most common forms of ADR in this era consist of mediation and arbitration.
II. What is Online ADR?
Online ADR is also vastly referred to as ODR. It uses alternative dispute resolution processes to resolve a claim or dispute. ODR is dispute resolution that “takes advantage of the Internet, a resource that extends what we can do, where we can do it, and when we can do it.” It must be noted that ODR is not just simply an online version of ADR- rather, the former comprises many unique aspects, from both the technological and process perspectives. ODR is relatively new in the ADR continuum, given that the first article on the topic only appeared in law journals in 1996. This article will discuss whether ODR is an avenue for resolving disputes in cyberspace.
One of the most insightful writers on ODR has commented “in essence, legal disputes resolution is complex and highly sophisticated form of information management and processing. For this reason, it lends itself to the use of sophisticated information technology.” ODR has developed and is still rapidly developing as it provides technology to meet the needs for dispute resolution in cyberspace.
ADR primarily focuses on moving dispute resolution away from the conventional litigation and court-based decision-making process. This process is further propagated by designing cyberspace as the forum to adopt traditional offline ADR processes such as mediation and arbitration. Despite ODR being the alternative to offline methods of ADR, it is much more than just electronic ADR. ODR is regarded as a multi-disciplinary enterprise which provides secure and confidential dispute resolution processes. Commercial online dispute resolution services have been offered since 1999, with most ODR facilitators being based in the United States. Over the years, ODR providers globally have steadily increased.
In January 2000, for the first time, parties located in the four corners of the globe successfully resolved international legal disputes completely online. There were no meetings between the parties, but there was an exchange of documents, comments and evidence, which were produced under the vigilant eye of an appointed arbitrators located in a different country. This dispute – concerning domain names - was arbitrated under the dispute resolution policy and rules of the Internet Corporation for Assigned Names and Numbers (ICANN), and was administered by eResolution - the primary organisation providing a complete online resolution service relating to domain name disputes. Today, the usage of Internet as a revenue to resolve a particular dispute is becoming mainstream, although it still raises a few questions.
III. The Internet
Previously, the technical skills and experience required to operate a computer communications software or equipment was far beyond the capabilities of a non-specialist. However, in the present day, even extremely sophisticated and advanced information technology is easily accessible to non-specialist users. The Internet itself is a global connection of interconnected computer networks, and the World Wide Web was designed specifically to facilitate the society’s accessibility to information.
The growth of Internet has been exponential. As early as 1994, it was estimated that there were 15 million users online, approximately below one percent of the global population. Presently, there are approximately 3.5 billion users online accounting for over forty percent of the global population.
The leading factor causing the development of ODR is e-commerce, covering both elements - business-to-business (B2B) and business-to-consumer (B2C). The Census Bureau of the Department of Commerce of the United States in November 2016 released that the estimate of the United States retail e-commerce sales for the third quarter of 2016 itself sums up to $101.3 billion. Due to this large amount of transactions, e-commerce requires an effective and efficient system of dispute resolution that allows a trader to maintain consumer confidence, as the traditional institutions that create trust are absent.
IV. Online Mediation
Online mediation is the most frequently used mechanism of ODR for the simple reason of there being few, if any, legal or process restrictions on mediation. Most, if not all, ODR providers offer mediation for any dispute that is perceived as ‘amenable to mediation’. This covers the entire spectrum of e-commerce disputes to employment, insurance disputes and personal injury matters.
The mode of communications used in an ODR includes e-mail, fax, telephone, and of course web-based communication such as chat, instant messaging, online conferencing, web-posting and video conferencing. The fact that there has been a significant increase in the quality of video technology over the recent years combined with the advancement in Internet speed will directly amount to the growth and importance of ODR.
A mediation process, whether conducted online or offline, is a confidential process on a non-prejudicial basis. These conditions are required as pre-requisites in order to facilitate open communication and disclosure of information by parties to achieve a sustainable resolution covering each party’s needs and interest. However, it is crucial to take into account that the protection of electronic communications from any form of accidental disclosure is not covered by general statements specifying confidentiality. Further, a specific policy on this crucial issue is also absent on almost all ODR provider websites.
V. Online Arbitration
Online arbitration is available for all sorts of disputes whether arising online or offline. It is most commonly utilised in disputes arising from commercial matters and online activity. Over fifty percent of ODR providers offer online arbitration as an available service. Further, the American Arbitration Society (AAA) provides for arbitration services under various institutional rules and its supplementary procedures for online arbitration permits for arbitration processes to be conducted online. As of 2006, 3,000 out of 160,000 arbitration cases which were handled by AAA were conducted on a digital basis. This shows that there is acceptance to online arbitration by society and the numbers are growing on a rapid scale. This is a significant fact illustrating that online arbitration maintains the level of formality required.
Additionally, the ADR Institute of Canada National Arbitration Rules provides that an arbitration by means of electronic communication, and a part or all of the arbitration may be conducted by telephone, e-mail, Internet, or any other electronic communication if the parties agree. An express provision in the rules of the World Intellectual Property Organisation (WIPO) Arbitration and Mediation Centre – who offers arbitration and mediation focusing on intellectual property and commercial disputes, including domain name disputes – allows for parties to opt for an online process. To the contrary, the International Chamber of Commerce International Court of Arbitration situated in Paris and the London Court of International Arbitration provide arbitration services but do not at the moment have specific ODR rules. Similarly, the Hong Kong International Arbitration Centre offers international arbitration and its rules governing electronic transactions permits for the resolution of e-commerce disputes.
VI. Advantages of Online ADR
Similar to offline ADR, online ADR allows the neutral to first adapt the process to address the particular needs of the disputants. Additionally, there are also advantages to resolving disputes over the Internet. “The process will allow for greater flexibility, more creative solutions and quicker decisions”.
Traditional ADR and cyber ADR both provide substantial savings when compared to litigation, which is extremely costly. As a matter of fact, ODR is a more feasible option in comparison to offline ADR for disputants who are unable to afford travelling long distance or for those involved in e-commerce disputes for low monetary value. More often than not, online disputes arise between individuals from great distances, where at least one party will be required to travel the distance if the offline mode of ADR is relied upon. Therefore, with the existence of ODR, parties can now participate in an ADR process from their respective preferred location and this simultaneously reduces cost and travelling time. There is also no need for the parties to incur additional cost for the rent charges in booking a neutral facility in order to conduct the respective ADR process.
There are also significant benefits that stem from the very nature of e-mail mode of communications. E-mails, listservs and web postings can be written, responded and posted at any time making online mediation much more convenient. The traditional mediation process requires scheduling whereby it is absolutely necessary to arrange the time and venue for a meeting and frequently, this requirement poses some difficulties. On the contrary, online mediation allows for the parties to participate in the mediation process when they are available and at convenient times.
Another crucial advantage of online mediation is that the amount of idle time that the disputants experience is significantly reduced because unlike conventional mediation, the mediator can devote time to one party without wasting the time of the other party, who would otherwise sit around waiting for the next mediation stage. As Jim Melamed stated, “Experienced mediators are well aware of the benefits of asynchrony. This is a big part of the reason many mediators ‘caucus’ with participants. Mediators want to slow the process down and assist participants in crafting more capable contributions. This concept of slowing the process down and allowing participants to safely craft their contributions is at the heart of caucusing. Surely, the Internet works capably as an extension of individual party caucus and is remarkably convenient and affordable. Internet communications take less time to read and clients do not hear the professional fee meter clicking. When the Internet is utilised for caucus, the ‘non-caucusing participant’ does not need to sit in the waiting room or library reading Time magazine or growing resentful at being ignored.
It may also be argued that more thoughtful, well-crafted contributions are a direct result of the ability of the parties to edit messages prior to sending them. Also, many online mediation mechanisms are available all day, every day of the year. Therefore, disputants can proceed to negotiate and commence their mediation process immediately.
It is also important to note that participants in the ODR process can access expertise that would not otherwise be available locally, which has a direct potential benefit for the people in areas where skilled or specialised dispute resolution assistance is not available or limited. Further, ODR minimises jurisdictional issues and also works as a good tool for security where one party wants to keep their location secret; for example, where there is a record of domestic violence between the parties.
VII. Challenges in Online ADR
Whilst using cyberspace as a platform to resolve disputes has many advantages, i.e. faster and cheaper resolution, there are typically a number of drawbacks that need to be considered.
Due to the borderless nature of the Internet, online ADR faces issues concerning enforcement; enforcing the agreement to conduct an ADR proceeding and enforcement of the actual award. When a contract is entered into between the parties online, it is created in an electronic form. The issue arising from that fact is that in many jurisdictions, as well as on the international plane, ADR agreements must be in writing in order for it to be recognised. In the United States, the Federal Arbitration Act and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 requires agreements to be in writing. That clearly implies that for any person living in the United States, an ADR agreement included in an electronic format may not be recognised. However, it has been suggested that the term ‘in writing’ should be interpreted to include electronic agreements. Nonetheless, there has been no decision to-date on that matter, thus leaving such agreements as void.
Even if the matter above is met and a decision is achieved, that particular decision will then need to be enforced by a particular state. The issue here is the choice of law to be adopted. Naturally, the agreement itself may provide a provision expressing the choice of law rule. Despite that fact, rules for discovery and evidence differ greatly between jurisdictions and procedural differences might also be an issue. More importantly, the key element to be noted is that a particular state may refuse to enforce any awards obtained in a jurisdiction which has procedures which are in conflict with the particular state legal framework.
Additionally, among the ever-present issues in the cyber world is security. Safe and reliable communication between counsel and client, between the court and a party, or even in between the parties is absolutely required for online ADR to work. Security of communication is a major concern in the cyber world. Taking into account the fact that new encryption technologies are constantly created and updated, every encryption can eventually be broken. One such technique where unauthorized access is commonly gained is ‘spoofing’ where the unauthorized person assumes the identity of an existing authorized user to access confidential information. Sniffer packages are easily available online and may be used to intercept and manipulate particular data. A more secured mechanism would be the use of closed systems, which are screened from the Internet. In other words, close systems used dedicated private lines to transmit communications. Therefore, it is arguable that the internet poses higher level of threats to confidential information when compared to a face-to-face communication during a conventional ADR process.
Another challenge faced by online ADR is the element of trust on the very basis that in all human relations whether commercial or private, trust plays an important role. Therefore, one does not know the personalities of the neutrals or worse, what to expect from the provider. If the parties decide to proceed nonetheless, the lack of trust between the parties might cause a negative atmosphere, causing less willingness to compromise on the disputed matter.
Conventional ADR involves a triangle, i.e. the parties and the presence of a neutral. The online ADR process introduces a fourth party, which is the technology that works with the neutral. The fourth party does not replace the existence or position of the neutral and it is not of coequal influence, but rather functions as an ally, collaborator and partner. In other words, the fourth party is essentially a more sophisticated version of a pen and pencil. Appropriate use of technology in the present day of changes is critical to any successful ODR process. One of the biggest challenges in building and running an online dispute resolution process is to balance and integrate the human and the automated dimensions of the cyber world.
VIII. Best Practices
Smartly designed online ADR systems can enable superior outcomes, much higher quality services, and greater engagement between the neutral and the disputants. An ADR process will not be used, or be successful, until and unless it is capable of facilitating access and participation, and more importantly offers value to its users.Online ADR initiatives were derived from governments, industry, consumer associations and dispute resolution providers. Suggested best practices of ODR have been developed by various groups including the American Bar Association Task Force on Ecommerce and ADR, Consumers International, the National Alternative Dispute Resolution Advisory Council (Australia), and the Working Group on Electronic Commerce and Consumers (Canada).
Best practices of ODR suggested by these groups include; independence, transparency, availability, affordability, effectiveness and voluntary participation. Some guidelines further suggested that, “While formal training is not required, they [the service providers] should be familiar with basic legal concepts.” Additionally, guidelines also suggested that an online dispute resolution system shall also include ensuring the necessary level of security, and storing information only for so long as it is required in order to achieve the purpose for which it was collected. The destruction of data shall be irreversible.
IX. Online ADR Effectiveness
At present, there are millions of online transactions and as a direct result there are a significant number of disputes. Annually millions of cases are handled across eBay and PayPal platforms in more than 16 different languages which clearly indicates the need for an online dispute avenue.
Many are in the view that online ADR makes most sense typically in cases where legal costs would exceed what could be recovered. However, many large organisations, particularly insurance companies, find that online ADR saves them money even in big-money cases on the basis that cases can be handled at a much faster speed. As an example, Cybersettle, an online dispute service provider, focuses on online insurance claims. Cybersettle states that it “…expedites settlement by eliminating egos and posturing. Both sides get to the bottom line quickly and confidentially, knowing that their figures will not be revealed to the opposition. Even if parties do not settle online through Cybersettle, the dispute can settle shortly thereafter through traditional negotiations, or with the assistance of our telephone facilitators because Cybersettle moves parties closer to resolution.”
Despite its difficulty to obtain, published statement rates for online ADR are very much comparable to the conventional ADR statement rates, ranging in between 60 percent to 85 percent. One study in relation to the effectiveness of online ADR particularly mediation conducted in 2001, opined that “…with a commitment to process, proper organisation and an experienced mediator, neither the nature of the dispute nor its characteristics would change the potential of the online process to achieve a final and mutually acceptable solution where that is the goal of the process.”
This article has illustrated how beneficial online ADR has become for dispute resolution as well as the challenges around it. Failures of many e-commerce companies do not encourage trust in the future of online ADR. Due to this, one may be inclined to ask the question whether online ADR is merely a fad with no real impact on the world of ADR. As this paper has demonstrated, the definite answer to this question is certainly in the negative.
The main reasoning behind this answer lays in the fact that online ADR techniques offer way too many benefits for dispute resolution to be ignored. On the whole, online ADR is still rapidly growing and constantly changing with technology. As the market for dispute resolution becomes increasingly competitive, cost savings are always an important factor, even in large scale arbitration. The slow rate of adoption in online ADR dealing with the high value dispute resolution matters can be explained by two factors. The first factor relates specifically to technological matters, i.e. security and trust. Technology must first be sufficiently developed to create secure and trusted online systems. The other reason for the slow uptake of online ADR is in relation to the human factor. Many users find the use of technology to be impersonal and is therefore inhibiting the art of a skilled neutral. It can be argued that technology will only be accepted once users start becoming comfortable with the idea and competent to start exploiting the potential and benefit of the technology. Perhaps to bridge the gap in existence between law and the information technology infrastructure, information technology assistance must be provided to the neutrals.
In conclusion, due to the benefits attached to it, online ADR is an excellent avenue in order to resolve issues on the cyberspace.
This article was written by Premjit Singh Kolwant Singh, a postgraduate student at the Faculty of Law, University of Malaya. (Edited by Caysseny Boonsiri)
 Nelson, R.M., “Adapting to Different Cultures”, CPR Institute of Dispute Resolution 2002 Winter Meeting (New York, 31 January 2002)
 Fuller, L.L. (1970). Mediation – Its Forms and Functions. Southern California Law Review, 44, pp.305
 Ury, W. Must We Fight? From the Battlefield to the Schoolyard – A new perspective on Violent Conflict and Its Prevention. (San Francisco: Jossey Bass, 2002)
 Shone, M. “Law Reform and ADR: Pulling Strands In the Civil Justice Web” Australasian Law Reform Agencies Conference (Wellington, New Zealand, 13-16 April 2004)
 Rifkin, J. (2001). Online Dispute Resolution: Theory and Practice of the Fourth Party. Conflict Resolution Quarterly, 19(1) at pp. 117
 Hornle, J. ‘‘Disputes solved in cyberspace and the rule ¨ of law’’, 16th BILETA Annual Conference (University of Edinburgh, Scotland, 9-10 April 2001)
 See http://www.internetlivestats.com/internet-users/
 U.S. Census Bureau. (17 November 2017). Quarterly Retail E-Commerce Sales, 3rd Quarter 2017 (Report No. CB17-182). Washington, DC: U.S. Department of Commerce. <http://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf>
 Krause, J. ‘‘Settling It On the Web: New technology, lower costs enable growth of online dispute resolution’’, ABA Journal, October 2007 < http://www.abajournal.com/magazine/article/settling_it_on_the_web>
 ADR Institute of Canada, Inc. National Arbitration Rules, December 2002. See Rules 6, 8, 9, 20, and 49.
 Lide e. C. (1996). ADR and Cyberspace: The Role of Alternative Dispute Resolution in Online Commerce, Intellectual Property and Defamation. Ohio State Journal on Dispute Resolution, 193(12) at pg. 208
 See footnote 11 above, pg. 219
 Gibbons, L.J., Kennedy, R.M., and Gibbs, J.M. (2002). Frontiers of Law: The Internet and Cyberspace: Cyber-mediation communications Medium Massaging the Message. 32 N.M.L. REV. 27 at pg. 42
 Melamed J., Helie J. (n.d.): The World Wide Web Main Street of the Future is Here Today. MIRC Mediation Information Articles <http://www.mediate.com/articles/jim mjohn.cfm?plain=t>
 Divorce Mediation and The Internet, Melamed, J., January 2002 <https://www.mediate.com/articles/melamed9.cfm>
 Manevy I., ‘‘Online dispute resolution: what future?’’ Thesis, D.E.A. de droit anglaisetnord-american des affaires, (University of Paris, 1 June 2001) at pg. 11
 See footnote 5 above at pg. 121
 See footnote 17 above at pg. 120
 American Bar Association Task Force on Ecommerce and ADR, Recommended Best Practices for Online Dispute Resolution Service Providers (American Bar Association, 2002)
 Working Group on Electronic Commerce and Consumers, Canadian Code of Practice for Consumer Protection in Electronic Commerce
 Consumers International Office for Developed and Transition Economies, Disputes in cyberspace: Online dispute resolution for consumers in cross-border disputes — an international survey at pg. 18
 Tyler, M.C. & Bretherton, D., Research into Online Alternative Dispute Resolution: Exploration Report, (The University of Melbourne: The International Conflict Resolution Centre, Department of Psychology, 2003)
 Hammond, A.G. (2003). The Effectiveness of Online Dispute Resolution. Conflict Resolution Quarterly, 20(3) at pg. 261-286