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Abstract
Effective dispute settlement is regarded as one of the means of enhancing consumer confidence in cross-border purchases over the Internet. Yet, studies of online dispute resolution (ODR) show, on the whole, poor uptake of ODR by the public. This paper is based on a research project carried out by the authors (funded by the European Parliament) which explored why so few people resort to ODR and what are the implications of low uptake for consumer confidence in cross-border e-commerce. The authors expand the traditional definition of ODR and introduce a distinction between what they term ‘hard’ or traditional ODR processes and the more novel ‘soft’ ODR processes. The low uptake of ‘hard’ ODR is critically considered, as are the theoretical advantages and disadvantages of ‘hard’ and ‘soft’ ODR. Successful examples of one ‘hard’ and one ‘soft’ ODR mechanism are reviewed. The authors conclude with considering the implications for EU ODR policy in the short, medium and long term.
Notes
1 This article is based on the findings of a research project carried out by Edwards and Wilson and funded by the European Parliament in January 2007.
2 Consumer Protection in the Internal Market—Special Eurobarometer 252/Wave 65.1—TNS Opinion and Social. September 2006 (report available at http://ec.europa.eu/consumers/topics/eurobarometer_09-2006_en.pdf).
3 See E G Thornburg ‘Going private: technology, due process and Internet dispute resolution’, 34 University of California Davis Law Rev Vol 35, p 151, 2000.
5 www.cybersettle.com. Cybersettle's Automated Negotiation system was used, for example, in 2003 to settle a USD$12.5 million product liability claim.
7 www.Ebay.com, www.ebay.co.uk etc.
9 See P Motion ‘ODR: a view from Scotland’ in L Edwards (ed) The New Legal Framework for E-Commerce in Europe, Hart, 2005, noting that solicitor mediation in the offline world is often successful primarily because of personal relationships of trust between the solicitors, extensive use of telephone as well as text communication, and ability of clients to tell their story to their lawyer if not the other party.
11 Op cit, note 2.
12 See L Edwards and A Theunissen ‘Creating trust and satisfaction online: how important is ADR: the UK eBay experience’, BILETA Conference, 2005, Malta. This project was funded by the Arts and Humanities Research Council Centre for Research into Intellectual Property and Technology Law. A copy of this unpublished survey may be obtained by contacting Lilian Edwards and is forthcoming 2007, Web Journal of Current Legal Issues.
13 See http://www.hartwell.demon.co.uk/nyc_text.htm for full text.
14 Shrink-wrap contracts are those where acceptance is indicated by opening the shrink-wrap packaging that encloses a product subject to the agreement.
15 Click-wrap contracts are those where acceptance is indicated by clicking on a button or hyperlink.
16 Browse-wrap contract is the term used to refer to a contract formed over the Internet simply by the process of browsing through a website; this passive browsing activity is taken to imply agreement to all the terms and conditions of the contract. This contrasts with a click-wrap contract where it is the active clicking on a button that indicates acceptance.
17 Available at http://www.adrchambersinternational.com/arbitrules.htm
18 G Kauffman-Kohler and T Schultz Online Dispute Resolution: Challenges for Contemporary Justice, Kluwer, 2004.
19 See e.g. Art 17 of the EC Electronic Commerce Directive 2000/31/EC.
20 See E Katsh and J Rifkin Online Dispute Resolution: Resolving Conflicts in Cyberspace, Wiley, 2001.
21 C Rule Online Dispute Resolution for Business: B2B, E-Commerce, Consumer, Employment, Insurance and Other Commercial Conflicts, Jossey-Bass, 2002.
22 E Katsh ‘Online dispute resolution: some implications for the emergence of law in cyberspace’, Lex Electronica Vol 10, No 3, 2006, available at http://www.lex-electronica.org/articles/v10-3/katsh.htm
23 See e.g. Zopa at http://www.zopa.com
24 See e.g. PayPal UK at http://www.paypal.co.uk
25 eBay, for example, has depended in Europe in several disputes on its status as a host exempt from liability under Art 14 of the EC Electronic Commerce Directive 2000/31/EC. See further A Guadamuz ‘eBay law: the legal implications of the C2C electronic commerce model’, Computer Law & Security Report Vol 19, No 6, pp 468–473, 2003. However, national eBay sites do to some extent purport to control the behaviour of users since certain transactions, e.g. sales of controlled drugs, firearms etc, are forbidden by eBay's terms and conditions. See e.g. in the UK, http://pages.ebay.co.uk/help/sell/questions/prohibited-items.html. Interestingly in the USA, eBay was denied the benefit of the equivalent statutory immunity for hosts under the Communications Decency Act 1996, in respect of a claim that eBay had published a libellous statement: see Grace v. eBay Cal.App.4th (No. B168765. Second Dist., Div. Three. Jul. 22, 2004).
26 EU Distance Selling rules have of course attempted to impose regulations requiring the physical address and other details of the website to be provided: see also the EC Electronic Commerce Directive, Art 7. It is not known however how far these requirements are met by websites trading from beyond the EU area.
27 See Eurobarometer, op cit, note 2.
28 M Tyler and D Bretherton ‘Seventy-six and counting: an analysis of ODR sites’, report of research conducted for the Department of Justice, Victoria, Australia Proceedings of the UNECE Forum on ODR 2003, available at http://www.odr.info/une
29 M C Tyler ‘Online dispute resolution’ in M Malkia and A-V Anttiroiko (eds) Encyclopaedia of Digital Government, Hershey/Idea Group Reference, 2007.
30 E Clark, G Cho and A Hoyle ‘ODR: present realities, pressing problems and future prospects’, 17 International Review of Law Computers and Technology Vol 7, pp. 7–26, 2003, note that more research is required into the nature of online communication and that there is some evidence that users are more confrontational online which may alienate female or vulnerable users. On the other hand, the lack of cues as to race or colour or gender online might prevent unconscious discrimination.
31 See J Hornle ‘JISC legal briefing paper: online dispute resolution (ODR)’, 12 October 2004, available at http://www.jisclegal.ac.uk
32 J P M Bonnici and K de V Mestdagh ‘On the use of legal measures to entice participation in online dispute resolution systems for the settlement of online-related disputes’ in J Zeleznikow and A R Lodder (eds) Second International ODR Workshop (ordworkshop.info), Wolf Legal Publishers, Tilburg, 2005, citing figures at http://www.ucd.ie/alumni/html/connections9/2004ucdp38.pdf as of 13 July 2004. These figures are no longer available and the ECODIR home page does not appear to give uptake figures.
33 R Sali ‘Crossing dispute and information technology: the experience of Risolvionline’ in Zeleznikow and Lodder (eds), supra note 32.
34 Ibid.
35 See E Thornburg ‘Fast, cheap and out of control: lessons from the ICANN dispute resolution process’, Journal of Small & Emerging Business Vol 7, p 191, 2001.
36 Comb, et al. v. PayPal, Inc, Cases No. C-02-1227 and C-02-2777 JF (N.D. Cal., 30 August 2002).
37 Commission Recommendation of 30 March 1998 on the principles applicable to bodies responsible for out of court settlement of consumer disputes 98/257/CE (OJ L 115, 17.4 198, p 31).
38 Recommendation 2001/310/EC.
39 Brussels 19.04.2002 COM (2002) 196 final. See also the EC Code of Conduct for Mediators, available at http://ec.europa.eu/civiljustice/adr/adr_ec_code_conduct_en.pdf and the EC Draft Directive on certain aspects of mediation in civil and commercial matters, 2004/0251 (COD) available at http://eur-lex.europa.eu/LexUriServ/site/en/com/2004/com2004_0718en01.doc
40 ABA Task Force of E-Commerce and ADR ‘Addressing disputes in electronic commerce. Final report and recommendations’, available at www.law.washington.edu/ABA-eADR, 2002. There is also a best practices document available at http://www.abanet.org/dispute/documents/BestPracticesFinal102802.pdf and a number of codes of conduct e.g. for mediators on the same site.
41 OECD Guidelines for Consumer Protection in the Context of Electronic Commerce, 1999, available at http://www.oecd.org/document/51/0,2340,en_2649_34267_1824435_1_1_1_1,00.htm
42 See primarily the EC Directive on Unfair Terms in Consumer Contracts 93/13/EEC: L 95/29.
43 See http://www.ecodir.org/
44 Only the UNCITRAL Model Law (Art 7(2)), the German Arbitration Act (§ 1031 (1)), the English Arbitration Act (s 5(6)), and the Swiss Private International Law Act (Art 178(1)) consider that the agreement is in ‘writing’ when recorded by electronic means.
45 Arguably this requirement is introduced into law in the EU by the Digital Signatures Directive. However there remains the problem that different EU member states have implemented this Directive in various ways, see e.g. in the UK, the Electronic Communications Act 2000, s 7. See further in much more detail than is possible here, Kauffman-Kohler and Schultz, op cit, note 18 at ch 3.
46 154.78.128.14 in the case of www.soton.ac.uk. The so-called process of resolution of domain names and IP numbers is managed by the Domain Name System. The current identity of the registrant of each domain name (with other details pertaining to their registration) is recorded and publicly available in online databases, called WHOIS databases, held and controlled by each top-level domain registry. It is also possible to search WHOIS data across different TLDs, e.g. see http://www.whois.net/. Thus there is both transparency re domain name information and centralised control of registrations.
47 Unlike telephone numbers, the highest hierarchical level, the so-called top-level domain (TLD) is to be found at the end, not the beginning, of the domain name. So in the www.soton.ac.uk example given above, .uk is the TLD.
48 The authors of this report calculate that, including so-called ‘sunrise’ dispute resolution mechanisms (these are time-limited dispute resolution procedures used when new TLDs are launched), there are approximately two hundred such mechanisms that have been active in the last seven years.
49 Namely, .aero, .biz, .cat, .com, .coop, .info, .jobs, .mobi, .museum, .name, .net, .org, .pro, .tel and .travel (see http://www.icann.org/udrp/).
50 According to T Bettinger (ed) Domain Name Law & Practice. An International Handbook, OUP, 2005 at p 42. One of the UDRP providers—WIPO—has made particular efforts in ccTLD dispute resolution. Currently WIPO provides domain name dispute resolution services for forty-seven ccTLDs (see http://www.wipo.int/amc/en/domains/cctld/index.html).
52 Registrars are accredited by the Internet Corporation for Assigned Names and Numbers (ICANN), the body also ultimately responsible for gTLD registries, the UDRP and the approval of both accredited registrars and UDRP providers.
53 UDRP para 4a. See http://www.icann.org/udrp/udrp-policy-24oct99.htm. These three factors are cumulative.
54 See C Wilson ‘Internationalised domain names: problems and opportunities’, Computer and Telecommunications Law Review 174 at 179, 2004.
55 The Asian Domain Name Dispute Resolution Centre (http://www.adndrc.org/adndrc/index.html). Here there is a further choice—UDRP claims can be administered by ADNDRC offices in Hong Kong, Beijing or Seoul.
56 The International Institute for Conflict Prevention and Resolution (http://www.cpradr.org/ICANN_Menu.asp?M=1.6.6).
57 The National Arbitration Forum (see http://domains.adrforum.com/).
58 The WIPO Arbitration and Mediation Center (see http://www.wipo.int/amc/en/domains/).
59 See http://www.icann.org/cgi-bin/udrp/udrp.cgi (as of 15 January 2007).
60 Which are usually easily established with reference to online WHOIS data (see note 31 supra).
61 UDRP para 7.
62 UDRP para 15. There is no provision in the UDRP for panel members to undertake their own investigation.
63 UDRP para 13.
64 In the first five years of the UDRP, approximately seventy losing registrants went on to file a court case; most of these being filed in the USA (see Bettinger, op cit, note 50 at p 984).
65 UDRP para 11.
66 E.g. WIPO has managed UDRP proceedings in twelve languages (see http://www.wipo.int/edocs/prdocs/en/2006/wipo_pr_2006_464.html).
68 $US1,000 is the cost of a one-person UDRP panel provided by ADNDRC and $US5,000 is the cost of a three-person UDRP panel provided by WIPO. The complainant will bear the cost of a one-person panel (which costs between $US1,000–$1,500, depending on the UDRP provider). Where the complainant has requested a three-person panel the complainant pays for this and where requested by the domain name registrant, the fee is split equally between the complainant and the registrant. Irrespective of the number of panel members, all UDRP providers charge higher fees when more than one domain name is in dispute.
69 E.g. the WIPO UDRP decisions can be found at http://www.wipo.int/amc/en/domains/search/index.html
70 E.g. A Kur ‘UDRP: a study by the Max-Planck Institute for foreign and international patent, copyright and competition law, Munich’, available at www.zar.uni-karlsruhe.de/admin/get_data.php?resID=95
71 Namely that domain name transfer is ordered by the UDRP Panel in the majority of proceedings. Kur's study (op cit, note 70) found that transfer was ordered in 76.68% of proceedings. A later study by Bettinger (op cit, note 50) found that transfer had been ordered in 80% of proceedings.
72 Mueller ‘Success by default. A new profile of domain name trademark disputes under ICANN's UDRP’, Convergence Center, Syracuse University School of Information Studies, June 24, 2002. Available at http://dcc.syr.edu/markle/markle-report-final.pdf
73 E.g. see Bettinger op cit, note 50 at p 939.
76 Number as of January 2006. Ibid.
77 Nielsen/Netratings, January 2006. See http://www.nielsen-netratings.com/news.jsp?section=new_pr&thetype=date&theyear=2006&themonth=0
78 See calculations by net monitoring company Envisional published in 2005: http://news.bbc.co.uk/1/hi/technology/4468745.stm
79 E Katsh ‘Online dispute resolution: the next phase’, Lex Electronica Vol 7, No 2, 2002, available at http://www.lex-electronica.org/articles/v7-2/katsh.htm
80 Ibid.
81 See note 12, supra.
82 See note 2, supra.
83 See Bonnici and Mestdagh op cit, note 32.
84 T Schultz ‘Does online dispute resolution need governmental intervention? The case for architectures of control and trust?’, North Carolina Journal of Law & Technology Vol 6, p 71, 2004. IT may be questioned if an EU ODR kitemark that does not displace other competitors from the market will do anything other than further confuse consumers. Notably, the attempt to implement a general EU trustmark for e-commerce has already failed.
85 B Edelman ‘Adverse selection in online “trust” certifications’, 5th Workshop on the Economics of Information Security (WEIS 2006), Cambridge, 2006, available at http://weis2006.econinfosec.org/docs/10.pdf
86 Supra note 12.
87 The idea follows on from the ‘Web 2.0’ concept of distributed identity management or ‘Identity 2.0’. In simple terms, if I am recognised as ‘rainbowgirl’ on site A, I should be able to use that identity and its reputation wherever I go. Early attempts at this ideal included ‘digital wallets’ of personal details handled by a single central party, such as Microsoft's discredited Passport scheme. Modern research into this area attempts to create a transferable distributed identity that is nonetheless not owned by, or accessible to, a single commercial party who may or may not be trusted: see Kim Cameron's ongoing CardSpace project as chronicled at Identity Weblog at http://www.identityblog.com/. Sites investigating portable reputations as opposed to identities include http://www.opinity.com/ and http://www.ikarma.com/ (see discussion at http://mashable.com/2005/11/11/actually-mary-reputations-are-portable/
88 B Rietjens ‘Trust and reputation on eBay: towards a legal framework for feedback intermediaries’, Information & Communications Technology Law Vol 15, p 55, 2006.