Are UNCITRAL’s Draft Procedural Rules for ODR Doomed to Fail?

By the time this column is posted, UNCITRAL’s Working Group III, the group charged with the drafting of procedural rules for business-to-consumer online dispute resolution (ODR) services, will be meeting in New-York city for its 27th session, the 6th session dealing with the drafting of said rules (previous sessions dealt with transport and shipping legislation). Ourselves, and others (mainly John Gregory), have reported and commented on these rules on multiple prior occasions, but as time goes on, the major question surrounding said rules is less and less “what should they say”, and more and more “why bother”. At least, those are the echoes we’re starting to hear from others in the ODR community, included some who are taking part in the working group’s discussions.

As we’ve discussed before, negotiations surrounding the rules hit an early snag since some delegations, namely the USA, wanted them to included language regarding legally binding arbitration clauses for both merchants and consumers, while others, namely Canada and most of Europe, opposed this idea as it remains incompatible with their local consumer protection legislation as well as, in the case of Europe, some international treaties. A solution to this virtual stalemate finally arrived at the 26th session in the form of a two-track system that would see online merchants submit to, and ODR providers offer, different processes depending on the consumer’s country of origin. As stated in one of our last columns, this could offer an interesting (although imperfect) solution, but the question remains: is it too little too late?

Although only three years have passed since the launch of this working group, much has changed in the broader ODR landscape, namely the adoption, by the European Commission, of its own rules regarding ODR. Other countries have also followed suit meaning that, by the time UNCITRAL actually publishes its rules, they’ll have to compete with already established and enforceable national regulation. Granted, the final UNCITRAL rules might have a more widespread appeal since they’re meant to address cross-border disputes, but national “private international law” legislation coupled with ODR consumer legislation will probably make their implementation increasingly unlikely.

And then there’s the question of enforceability… Even if the UNCITRAL Rules are adopted swiftly and parties agree to follow them – i.e. to submit their case to an arbitrator – what happens when one party refuses to abide by the arbitrator’s decision? If the USA has its way, the other party will be able to have the ruling recognised under the New York Convention. While this is theoretically interesting, given that the average online purchase is in the sixty-dollar range, is it really a viable option? In December of 2012, Michael Erdle posted a text on Slaw titled “Will UNCITRAL Online Dispute Resolution Rules Work for Consumers?” where he addressed this very problem. Quoting an earlier post by Vikky Rogers, he submitted that other solutions than those currently being discussed are probably better suited for online consumer disputes. For example, one of these solutions, the chargeback option, has in fact, according to some, proven itself to be far more viable than the threat of enforcement under the New York Convention.

As most Slaw readers will remember, back in 2001, the Consumer Measures Committee, took upon itself to draft best practices for business to consumer (B2C) e-commerce. This document, titled Internet Sales Contract Harmonization Template, offers strict guidelines that online merchants should follow regarding consumer information, cancellation policies, and chargeback possibilities. Some provinces have since chosen to incorporate sections of the Template into their existing consumer legislation. This is the case, for example, in Ontario, Quebec, and Alberta.

One important principle residing at the centre of the Internet Contract Harmonization Template is the aforementioned chargeback option. If the merchant refuses to refund a consumer following failure to deliver or defective goods, the consumer can request a refund from his or her credit card company. Obviously, this system isn’t perfect, nor does it offer all the advantages of ODR, but for consumers wishing rapid redress, it seems like a much more viable process than those currently favoured by the UNCITRAL working group.

Therefore, getting back to the question submitted in the tittle of this post, are UNCITRAL’s draft procedural rules for ODR doomed to fail? Who knows… Discussions could pick up this week, and lead to practical and easily implementable solutions that will be welcomed by those in the e-commerce community (buyers and sellers). However, if we were betting men, we probably wouldn’t wager all that much on a rapid and positive outcome…

Before concluding, we would be remiss if we didn’t mention that the Cyberjustice Laboratory has recently posted a short report summarizing the two major issues we have addressed, on this and other tribunes, regarding current UNCITRAL negotiations. Other than the question of arbitration clauses, which the two-track solution tends to settle (although we continue to doubt such a solution is a practical one), the delegates have also yet to settle the question of costs, something we’ve also addressed in a previous post.

Comments are closed.