“Low-Value, High-Volume” Disputes: Defining the Indefinable

Since 2010, those of us in the online dispute resolution (ODR) community have usually either ended the year or begun the new one reading reports from the November session of the United Nations Commission on International Trade Law’s (UNCITRAL) Working group on online dispute resolution (Working group III or WG3) to see what – if any – strides have been made since the preceding Summer session. We (and others) have discussed at great length the work being done by this working group and have even expressed our doubts as to whether said work would ultimately be useful when so many other initiatives are emerging. However, it remains undeniable that, over the years, WG3 meetings have helped identify and address certain issues that ODR providers and other stakeholders had yet to tackle.

One of these issues is that of which types of cases are best suited for online dispute resolution. We are not among those who claim that ODR is a magical solution to all of Justice’s woes, or even that it can be presented as a valid alternative to the courts for all types of disputes. However, our research on ODR (which has been ongoing for almost twenty years) has helped us identify those cases where current ODR platforms are best suited: “low-value, high-volume” consumer disputes. This is usually seen as the case for one simple reason: these are the types of disputes that rarely appear in front of a court because the financial stakes are usually inferior to the costs associated with the legal process. Even in places like Quebec where the Cour du Québec has a small claims division where, in most cases, litigants must represent themselves, and lawyer fees therefore do not factor into the equation, there is still a minimum amount under which it becomes economically unjustified to sue. When factoring in court fees (between $74.25 and $220.00 depending on the amount in dispute and the type of claimant), transport and parking, time off from work, etc., that amount can range between a few hundred and a few thousand dollars depending on the individual.

Where one sits on this spectrum will obviously vary according to numerous factors such as income, work benefits, distance from the courthouse, etc. Furthermore, those of us who are lucky enough to earn good salaries will often choose to write off possible claims even if the financial benefits outweigh the direct costs simply because we don’t want to deal with the problem, a luxury not afforded to those who make minimum wage.

This rather long prologue goes to show that “low-value, high volume” is a somewhat difficult term to define because it will vary according to income level and priorities – and that’s not even taking into account disparities between countries. As the famous “Big Mac index” shows, goods and services that are perceived as low-value in Canada or the USA can be considered high-value in other parts of the world. The expression can therefore be seen as indefinable. Unfortunately, as pointed out by the Supreme Court on more than one occasion, an undefined term, when used in a legal context, can create great confusion. Therefore, if “low-value, high-volume” is to be at the core of UNCITRAL discussions, this indefinable concept needs to be defined. This is the conundrum that was raised at the last UNCITRAL WG3 meeting. As stated in the report:

23. It was queried whether the term “low-value, high-volume” was sufficiently clear. It was said that the meaning of that term was fundamental to the application of the Rules.

24. In relation to the term “high-volume”, it was said that for a user of the Rules, the fact of whether or not the dispute arising out of that individual’s transaction was one of a number of disputes would not be relevant. Some delegations opposed deleting the term “high-volume”. Following discussion it was decided to delete the words “high-volume” from the preamble.

25. In relation to the term “low-value” in the preamble, diverging views were expressed in relation to whether that term ought to be defined. On the one hand, it was said that providing a definition would increase clarity as to when the Rules applied, and was said to be particularly relevant in that context from a consumer-protection standpoint. It was also said that any abuse of the use of the Rules would be limited if its scope was indeed limited to low-value transactions. On the other hand, it was said that creating a definition would be exceedingly difficult, not least because the definition of “low-value” could change over time and across borders; in that respect, the Working Group recalled its agreement at its twenty-fourth session that such a definition ought not to be included in the Rules, but indicative information set out in guidelines. [References omitted]

The report goes on to state that a “provider would in fact set the threshold of what constituted low-value transactions and that guidelines or guidance might thus be the most realistic means of regulating that concept”.

This seems like the simplest solution to a complex problem, but it is not necessarily a satisfactory one. For WG3, it also raises the issue of stepping outside its mandate, since not defining the scope of “low-value, high volume” disputes would make “the Rules applicable to any transaction conducted by use of electronic communications, not just low-value, high-volume transactions”, something that is seen as “contrary to the mandate of the Working Group”. Furthermore, for ODR in general, it creates the risk of making ODR services and platforms available to resolve disputes for which they were not designed and are therefore ill adapted. Since ODR providers – whether state-sponsored or private endeavours – will want to cast as wide a net as possible to maximize the use of their platforms and, therefore, their profits, this risk is far from being theoretical.

Some could say that this will simply weed out the bad seeds in the ODR field, but since ODR is still, in many ways, in its infancy, and since there are those who oppose it on principle, the ODR community cannot afford too many missteps before naysayers start heralding the “death of ODR”…

So how does one define “low-value, high-volume”? Obviously, a fixed dollar amount, even adjusted for inflation and adapted according to the minimum wage in a given country or state, is impossible. This is where the “high-volume” half of the equation enters into play. It could be argued that “low-value” can be defined by what is high-volume. For example if, in a given community, 70% of all claims fall under the $300 mark, then that could be set as the threshold for a “low-value” in that community. Unfortunately, these numbers are difficult to establish since “low-value” claims are often abandoned for financial reasons. Furthermore, even if said numbers were available, the approach would still be flawed since, as stated above, “low-value” doesn’t have a fixed meaning even within a given community. However, since we can’t find a better way of establishing a workable definition, this method seems like the best alternative keeping in mind that “low-value” cannot be defined collectively, no matter how small the community.

This leads us to submit that maybe the problem with the “low-value, high-volume” concept is that “value” is a loaded term. Whether one uses the financial definition of the word, i.e.: “the amount of money that something is worth”, or defines it as “usefulness or importance”, value is inherently linked to a personal evaluation. Worth, usefulness and importance are not neutral concepts and, therefore, value cannot be defined in a neutral manner. For this reason, we’ve been trying to find a suitable replacement. For the moment, we favour “low intensity” over “low-value” since intensity is seen as a more neutral concept. It also has the added value (bad pun intended) of not attacking a person’s problem for being of insufficient value – something that can be extremely insulting to a given individual who believes that the value of his case is quite high even if the amount in play is relatively small (and who are we to judge on this matter of perception?). This is not to say that substituting “intensity” for “value” is a perfect answer to WG3’s conundrum, but it could be of use to better apprehend which types of disputes current consumer ODR platforms are best suited for…

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  1. A useful and perceptive commentary, as usual. It makes sense to get rid of the ‘high volume’ criterion from the official text, because it looks at the question only from the point of view of the merchant (or the system), not the consumer who may have only a single dispute. However, it’s still useful shorthand, because building an economical ODR system for these disputes will depend on economies of scale: an ODR platform may operate cheaply case by case but not be cheap to design and build.

    The value question is also tricky for reasons discussed. One of the things it points to is the effectiveness of the traditional court system to deal with the questions. Can someone with a complaint seriously expect to use the courts (internationally, in the UNCITRAL scenario) to resolve the dispute? The ‘cost’ (not necessarily in money) of doing so may be too high for a number of reasons, but it may vary from country to country.

    So ‘low value’ would mean, at least, ‘below the value at which a court action is worth while for the party or parties’. That may not include the ‘intensity’ criterion propose by the learned authors here, which is more part of a ‘legal remedy vs no remedy’ calculation. (However, some cases do to go court because of the ‘principle’ or the intense desire of a party to tell his/her story, regardless of the expense.)

    It may be, in the end, that the value/cost/volume question can be answered by the design of the ODR system itself. Look at some of the proposals on the table (UNCITRAL has quite a catalog on its web site, and Slaw has talked about some too.) The ones most likely to work for the ‘low value/high volume’ disputes are pretty rudimentary – but effective in many cases. Disputants will to some extent self-select for that process. Would the parties to a serious international dispute involving sophisticated parties and a lot of money agree to submit to something like Youstice? I doubt it – but that system could be very appealing to many consumers.

    So the prospect of overuse or use by the ‘wrong’ type of disputant does not concern me much.

    It’s all fascinating. I look forward to further reports.

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