The idea that disputes relating to agreements made on the internet could be resolved on the internet itself has now spawned a number of online dispute resolution (ODR) systems, whose ambit is not confined to disputes originating online. The facility is available for traditional old-fashioned disputes and claims – however they arise.
ODR systems were developed in the US where one, called cybersettle.com, claims to have been the first and to have achieved 35,000 settlements since its foundation. It has now been joined by a number of others both in the US and, more recently, here.
Most of the systems work on the same basic concept but, increasingly, with refinements appropriate to different kinds of dispute resolution and the court rules in the UK. Cybersettle’s founders originally intended to open up in the UK but their plans seem to have been shelved – probably because their system didn’t take account of the procedural rules of the English court system.
However as new rules of court set out to foster methods of alternative dispute resolution (ADR) there is clearly more of a place for online systems.
TheClaimRoom.com is the first in the UK to include a facility for online mediation, which is obviously of interest to the courts.
How does ODR? There are a number of variations but the original and basic idea is to use a ‘blind bidding’ system. Where there is a dispute, one party, usually the claimant, will initiate the process by joining the chosen system and identifying the area of the dispute. The opposing party, unless there is prior agreement, will be notified by email and invited to join.
Each side will then put in a bid, which is their offer of a sum to accept or pay. The opposing party is not informed of the bid as the concept is that when the bids come within a given percentage of each other – perhaps 10% or 15%, – the system automatically splits the difference and records a settlement at the midpoint between the two bids.
There are variations on this basic concept, for example in cybersettle each party has to put in a high, medium and low bid and if a settlement is not reached within three bids by each party the process concludes and has to start again.
In the UK there are now several systems each of which includes blind bidding as the main part of the process. The system may fix a time limit within which settlement has to be achieved or the negotiation will lapse.
With esettle.co.uk successive bids have to go in the same direction, thus a claimant’s second bid will have to be smaller than his first and the respondent’s larger. This not a requirement of either wecansettle.com or TheClaimRoom.com Both of those recognise that there may be circumstances in which a party may wish to reverse their bidding sequence, while for instance, further relevant information is obtained and analysed or the costs increase. This may even include putting in a zero bid until the new information is to hand. The bidding system is secure and communications are password protected so that until the settlement point is reached neither side knows what the other has put into the system.
TheClaimRoom, also enables mediations to be conducted online, and incorporates CPR facilities more closely to the system. To develop and encourage online mediations, discussions will shortly be initiated with the mediation organisations CEDR and ADR so as to establish, if possible, a body of mediators familiar with the online mediation process.
In the US there is also a system, onlineresolution.com, which includes facilities to use a variety of different types of alternative dispute resolution online. As well as online mediation it enables parties in dispute to initiate arbitration, what they call evaluation and negotiations online.
It is impossible to describe all of the details of each of these systems – those considering using this method of dispute resolution should have a look at them on the internet.
Clearly there is substantial scope for the development of ODR in the future. It is likely to be less costly than other forms of dispute resolution, it is fully confidential, it can lead to a quicker resolution often with less aggravation. An online mediation has additional advantages over a mediation conducted face to face.
There is be no need to find premises (a ‘live’ mediation needs three or four rooms) or to get all the parties together in the same place. This makes for a speedier resolution as well as a marked reduction in costs.
New developments and the use of confidential virtual negotiating rooms also enables a high degree of flexibility to be introduced. The particular features most appropriate to the individual dispute or the requirements of the parties can be used to enhance this.
Examples of US and UK online dispute resolution sites include:
John Melville Williams QC is a barrister and a consultant with TheClaimRoom.com.