2012 was a big year for online dispute resolution (ODR) culminating in the introduction of the world’s first piece of legislation specific to ODR.

Ten years after the United Nations Economic Commission for Europe launched the annual International Forum on ODR, the shaping by online technology of a global justice system is coming of age and finally beginning to prove the prediction of Professor Richard Susskind in his keynote speech at the 5th International Forum on ODR in 2007, that the technology will “fundamentally change the way litigators function and become mainstream”.

In addition, we saw the launch of a new ODR provider called Modria spun out of eBay and PayPal, bringing together under one roof some of the leading experts and proponents of the subject and also the publication of two comprehensive books.

Background

How much ODR is taking place at the beginning of 2013? This depends on how you define “disputes” and also the technology implied by “online”. In its broadest sense, commencing with complaints by consumers resolved by retailers without outside assistance, ie the equivalent of the customer complaint desk, ODR would embrace a whole area in which representation by lawyers will rarely be found. Also, as to the technology involved, email, as the most common medium of communication, fits strictly within the definition of “online”, yet will not be of much interest to lawyers reading this newsletter.

ODR for mediation and arbitration is the area in which most professional interest will lie. Use is growing in the field of consumer complaint mediation, with the Attorney General’s office in British Columbia being the first to set up an online resolution platform for the consumer protection authorities and the South African authorities currently preparing an ODR element in collaboration with a local mediation network.

In the UK, changes next April in jurisdiction levels for the Small Claims Track and mandated mediation awareness sessions will probably see the introduction of online technology beyond the existing telephone mediation.

In other parts of the world, a number of cities in the USA have begun to pilot ODR for appeals over property value assessments. Various court administrations in Central and Eastern Europe are beginning to examine how ODR can help ensure their current court processes begin to lead in the development of justice systems.

In personal terms, I have seen a growing interest within internet circles, from being invited to chair an ODR workshop at this year’s Internet Governance Forum in Azerbaijan, to being asked to present on the subject at a number of mediation and law conferences.

Legislation

The European Union has become the first legislative body to enact an ODR specific law with the Regulation on Consumer ODR, on course to be passed by the European Parliament in late January. As a piece of legislation designed to promote awareness and use of ODR, it is responsible for much growing interest in the subject. People and organisations are beginning to realise they must be ready although they may not always be quite sure what it is that they have to be ready for.

The Regulation does not mandate what ODR should look like or set any standards itself (save for the underlying ADR – see below) but does require all who engage in cross-border (albeit see below as to a possible extension to domestic) consumer e-commerce to link to a platform to be built by the European Commission. This platform will act as a single online point of entry at which to initiate a dispute and from where the details will be passed to the retailer and ADR provider, if any, used by the retailer (use will not be mandatory). The Regulations require that each Member State appoints an ODR Facilitator who will assist the directing of consumers to the various ODR providers.

In its original form, the Regulation was limited to transactions in which the supplier was based in a different EU country to the consumer. A recently proposed amendment removes that limitation and extends the Regulation to domestic transactions. Whilst the intent was to encourage more cross-border consumer trade to underpin the Single Market objective of the European Union, it makes perfect sense to give equal encouragement of the benefits of ODR to the much greater number of domestic transactions both on and offline.

A further last minute amendment that is being considered by the EU is to extend the scope of the Regulation to include complaints by businesses against consumers. This is controversial. There are those in the Commission who feel that the primary objective is to support consumer rights and not to encourage and facilitate claims against consumers. However, I presented argument in support of this change since I believe it is needed in the face of the problems businesses are currently suffering as a result of the fast rise in online consumer reviews. The threat posed to online businesses from false and defamatory reviews is growing due to Google now aggregating the review driven star ratings of review sites it finds on the Net when computing the star ratings of Google Sellers (as well as displaying snippets of those reviews) and Amazon taking reviews into its assessment of its own version of ODR (Order Defect Rate) to decide whether or not to suspend sellers. In the States, a $750,000 lawsuit has recently been issued by a building contractor against a home owner who posted a critical review on Yelp.

The Commission will refer on the platform to those ADR organisations who have applied for, and been included, in the existing ADR notification system managed by the EU. To date that qualification appears to cover many public providers of ADR services, such as adjudication based ”˜ombudsman’ services for utilities and other major services. The message for these services is to begin to decide on the nature of the ODR element to attach to their existing resolution processes.

The Regulation is a little brother to a connected Directive on Alternative Dispute Resolution. This requires Member States to ensure that all consumers in online transactions have access to an ADR service. Various standards are being set for such ADR providers to include impartiality, transparency (annual reports published by each ADR provider), accessibility, moderate or zero cost to the consumers and speed as well as other more detailed requirements over the nature of the processes.

Although both the Directive and the Regulation apply only to consumer disputes, I was invited earlier in the year to join a working party at the European Commission to begin the discussions on subsequent legislation on using ODR for B2B transactions.

Modria

The new ODR provider Modria has brought together, under one US-UK-India corporate “roof”, all the leading government, academic, legal, ADR and IT experts in the field to build the “Fairness Engine” for the internet.

Modria’s experts, headed by Colin Rule, for many years the Director of Online Dispute Resolution at eBay and PayPal, created and ran the technology that has solved more than 400 million cases for eBay and PayPal members. The software has been licensed by Modria and developed to include mediation and arbitration platforms integrating asynchronous discussions and negotiations with a live conferencing platform.

Modria is currently pioneering development in Technology Facilitated Resolution that includes the profiling, and knowledge management, of the characteristics of individual disputes and disputants, so as to not only reduce time and cost in resolution but improve the actual quality and consistency of solutions. These developments have been focused on a wider range of dispute than consumer, to include family, international commercial, insurance claims, personal injury, consumer protection, telecoms and utilities disputes, property valuation assessment etc and a number of partner projects in these fields are now operational. I was pleased to be invited to head up the European operation of the business.

Books

For those with more than a passing interest, 2012 also saw the publication of two books on ODR: a book on an EU project measuring the quality of ODR (emcod.net), Cost and Quality of Online Dispute Resolution, and Online Dispute Resolution: Theory and Practice.

The future

With this year seeing internet access proliferating on multiple devices beyond the desktop/laptop to embrace tablets, smartphones, smart TVs, games machines and, no doubt shortly, washing machines and fridges as the “Internet of Things” takes a hold, and the cloud becomes more the norm, there will continue to be substantial developments in 2013 and beyond.

There are exciting and productive times ahead for lawyers who embrace online technology and want to join with others in building the justice systems of the future rather than trying to extract what’s left from the fast diminishing returns of the systems of the past.

Graham Ross has a long history of IT for lawyers. He was the author of the original Quill legal accounts software and also founder of Lawtel. He co-founded the first ODR service in the UK, WeCanSettle, and then The Mediation Room, and is now head of Europe for Modria, an eBay/PayPal ODR spin off. He was a member of the European Committee on Standardisation on ODR and currently of another body creating a facility for the EU for the measurement of the quality of ODR.

Email graham@modria.com.

Follow Graham’s ODR/ADR tweets @mediationroom.

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