ODR is a process whereby the ADR process is undertaken by utilizing technology as a medium of interaction.
Since ODR includes the use of the Internet and technology, there are various definitions in the literature. since the disputes are primarily managed thru electronic networks such as the Internet.
Various scholars state that dispute resolutions conducted online reap the benefits of faster communication, which streamlines the process of complaint registration and management.
What does ODR mean? One can conclude that ODR is the utilization of technology to settle disputes between parties as defined by the whole range of alternatives for the settling of disputes outside of court which are conducted via communications and other types of technology, namely the Internet.
ODR spectrum also includes disputes that are initiated offline and are fully or partially settled online.
Read more about dispute examples in 8 Examples of Small Disputes in big Construction and technology acceptance in Applying the Technology Acceptance Theory on Online Dispute Resolution (ODR) Adoption.
The Main Categories of ODR
In the literature, the exact types of ODR are not clearly well-defined. However, the four main categories of ODR are:
1-Automated negotiation
Automated negotiation is an iterative process during which concerned autonomous agents continue to make offers until the dispute is resolved.
Automated negotiation essentially utilizes technology as the “fourth party”.
The types of automated negotiation fall under two broad categories: blind bidding and computer-assisted negotiation.
In the blind bidding process, both parties submit a certain number of confidential bids until a predetermined maximum number is attained.
The computer algorithm then proceeds to settle the dispute by simply determining the median of the total submitted bids.
2-Assisted negotiation
In assisted negotiation, an accepted third party supports both parties throughout the negotiation process until an agreement is reached.
This method is therefore most appropriate for monetary disputes. The second broad category of computer-assisted negotiation relies on technology to perform the tasks of a traditional mediator.
In this process, information management systems facilitate a positive and efficient communication process to streamline negotiation.
3-Mediation
A platform provides the presence of a third party to resolve the dispute. Examples of online mediation providers include Mediation Room and JAMS ADR.
4-Arbitration
Mediation, arbitration, and assisted negotiation involve the presence of a neutral third party.
Both parties are able to directly interact via online chats, web forums, and a variety of other online communication tools that are not strictly limited to the submission of monetary bids, in contrast to the automated negotiation process discussed above.
ODR Providers
ODR providers fall into various and different categories in a similar manner to the flexible definition of ODR.
Scholars have categorized the basic forms of ODR providers into either private or public groups.
Private ODR Providers – What you need to know
As the name suggests private ODR providers are managed as a business with a mission to settle disputes in a commercial manner.
These platforms are currently not regulated and hence, do not have a judicial enforcement mechanism.
Therefore, the outcome of the private ODR process is often imposed by a community approach (Since the success of the Private ODR system depends on the participants, feedback loops, and other related methods that help in improving the process).
In other cases where the outcome is not enforced, a refund is provided. The connection between the participants’ trust in the system—including the ability to provide feedback and resolve disputes—and the willingness to undertake commercial activities online is connected for both Public and Private groups.
Examples of private ODR providers include the e-bay dispute resolution center, the Paypal dispute center, and amazon ODR.
Publice ODR Providers – What you need to know
Public ODR providers are usually compared to a virtual courthouse.
This is because public ODR platforms follow the same rules and regulations as the traditional courthouses and are similarly monitored.
Therefore, Public ODR providers are more robust and capable than corresponding Private ODR providers as they handle a smaller variety of issues in courthouse settings with modifications for the use of technology.
A good example of public ODR provider is Canada’s civil resolution tribunal, discussed at Canada’s First ODR: The CRT and Its evolution.
Advantages and Disadvantages of ODR
The electronic nature of ODR is simultaneously an advantage and a drawback, as this is contingent upon the psychological ability to build trust in a remote setting and the communication skills of the participants involved.
Proponents of ODR highlight the value of establishing standard procedures to facilitate knowledge sharing and a psychologically positive environment.
Unfortunately, problems are likely to arise in ODR environment, mainly due to the inability to fully guarantee rights and fairness without affecting the sought cost-effectiveness and speed.
Other issues might arise during the enforcement phase, as the management of online agreements tends to be more difficult than those established in traditional settings.
Advantages of ODR
ADR is widely expected to be a quicker, cost-effective alternative to traditional litigation as court costs, lawyers’ fees, and expertss’ fees can be saved.
However, the advantages of ODR greatly surpass those of ADR in terms of speed and cost-effectiveness.
ODR cuts costs and minimizes time even further than in-person ADR due to the elimination of complex ADR procedures and lower attorney fees.
Granted, the form of technology utilized and the required timeframe can result in cost fluctuations; however, they still remain far below those conducted in person ADR.
ODR services also excel in the domain of convenience.
They eliminate the need for travel, allowing both parties to negotiate from their respective cities and offices.
In addition, ODR eliminates impediments that are common in traditional courts and arbitral tribunals, such as limited working hours and time zone complications.
On the contrary, the services can be used at any hour of the day, seven days a week.
Online mediators are also able to offer a unique cost-saving technique, as they are able to devote time to each individual party without requiring the presence of the other.
Problems with ODR
Whilsts there are various advantages to online dispute resolution, there are several disadvantages that may affect the persons right for access to justice and fairness.
Various scholars have studied the factors and conditions affecting ODR and the following are the main disadvantages concluded:
Enforecement of award
The validity and enforceability of foreign providers and electronic signature is not fully assured before many legal systems. This applies to the USA, Canada, UK, the Dubai or DIFC Courts in UAE, and in China.
Relying on ODR to conclude in-person ADR raises some concerns on the enforceability and the formal stipulations pursuant to the New York Convention, with special reference to Article II “agreement in writing”.
As with ADR, there is consensus in the literature that within jurisdiction and enforcement challenges, the safety and security of information provided to the third-party adjudicator is the primary disadvantage of ODR.
In cases of high-value claims sensitive information leaks may have significant implications
Language and litreacy issues
Language and literacy directly affects the disputants ability to express themselves, especially in written communications. This might place them in a compromised position.
Language issues are even more prominenet in cross-border disputes, for example, in a commercial dispute between two parties in China and Africa respectively, via an American or UK mediator.
Such issues can compromise the fairness of the process and favor one party over the other.
Demographical factors such as national culture can also result in further challenges, in addition to more personal parameters such as individual attitudes and gender biases.
Low concessions
The nature of relations and interactions across different communication tools and platforms (Example: direct messaging in comparison to telephone), directly impacts the communications and concession making process.
Correlating the medium used, in this case ODR, with concession and agreement, it is observed that instant messaging can decrease the cost of negotiation and increase its speed, but it also reduces concession.
This might result in time and cost wastge due to failure to reach agreement.
Impersonal
Other problems associated with ODR are mainly
(i) the lack of face-to-face interaction and hence impersonal,
(ii) potential inaccessibility to online means for a temporary or an unforeseen period of time,
(iii) confidential concerns given that any party can simply print and distribute parts of the communications or proceedings, and
(iv) cross-cultural issues due to language barriers and difference in translation and interpretation.
Security and Privacy
Another difficulty associated with the establishment of an Online Dispute Resolution platform is that it needs an absolutely highly secure and confidential system for the use and identification of the contractual parties and document exchange.
This is a very important parameter as any doubts cast on the service platform due to the disputants’ experience from the system will directly result in low levels of trust in the system.
Security issues related to using of technology in courts and information protection issues from the use of technology in courts are major concerns.
For example in Australia, three software companies (Ringtail CaseBook/ CourtBook, Systematics Benchmark series, and Summation iblaze) that provide services to courts are designed to run on the Microsoft Windows operating systems which are is vulnerable to virus attacks and cyber-attacks.
This is due to the fact that Windows operating systems are not fully secured, as evident by ransomware attacks and internet hacking.
Unfortunately, the prime focus is usually directed on adopting available technologies in the proceedings to increase efficiency and effective utilization of courts and technology.
This leaves courts and providers to rely on third-party providers for security and leaves them with no fixed standard to follow for security protocols.
Conflict on interest
Conflict of interest is a primary concern in ODR use and adoption, especially with private ODR providers. Who can gurantee that Amazon ODR platform or Payapl to be 100% neautral , even if against the corporate interests?
An example of this is The Insurance Services Office which is one of the key clients of an ODR provider (Clicknsettle.com) who acquired a 16% stake of it—and benefited from the use of the platform .
Appraisal of Existing ODR platforms
The study and analysis of possible frameworks for the introduction of ODR into the legal system in different countries has been picking up pace rapidly throughout different countries and legal systems.
From the United Kingdom to Canada and China various studies and recommendations have been tackling the pros and cons of ODR and how to utilize it. .
More details with examples can be found here and in Online Dispute Resolution in the UK, Canada and UAE.