Don’t Be Afraid of ODR

Although ODR is gathering much support among consumer associations, governments, and private enterprise, lawyers and members of the judiciary seem to be the most outspoken critics of the use of technology to help litigants reach an otherwise unassisted settlement. If cynics like to point to the fact that those in the legal community might simply be afraid to lose their monopoly on brokering settlements and, therefore, their jobs, we believe that this isn’t the case, but rather that their reservations are linked to an unfounded fear that ODR might contribute to the erosion of the rule of law.

For example, in Quebec, the Department of Justice has been working on updating procedural rules to favour alternative dispute resolution. Section 1 of the Draft Bill to enact the new Code of Civil Procedure reads as follows:

Private civil justice is founded on private modes of dispute prevention and resolution that are chosen by mutual agreement by the parties concerned in order to prevent an eventual dispute or resolve an existing one.

The principal such modes are negotiation between the parties, and mediation and arbitration, which bring a third person into play to assist the parties. The parties can resort to any other process that suits them and that they consider appropriate, whether or not it borrows from the negotiation, mediation or arbitration models.

Parties must consider the private modes of prevention and resolution before referring their dispute to the courts.

The idea that parties should have to consider whether ADR (or even ODR) is a viable alternative to the Courts before choosing to undertake costly proceedings has gotten many members of the legal community in an uproar. This notion, added to the fact that parties would also, according to section 5 of the Draft Bill, be able to use “norms or criteria other than legal norms or criteria” when reaching out of court settlements was even described by the Quebec Branch of the Canadian Bar association as being [translation] “a clear affront to […] the rule of law”.

In British-Columbia, the ODR-based Civil Resolution Tribunal has similarly come under fire. This time, it seems that the BC branch of the CBA is leading the charge, with the Trial Lawyers Association following suit. Again, the idea that parties could be left to their own devices to reach a settlement is seen as an unconscionable option.

When lecturing to members of the Bar or the judiciary in Canada and abroad on the topic of ODR, we are constantly asked how we could propose that parties settle a dispute outside of the realm of the Courthouse since they could reach an agreement that doesn’t comply with the laws of the land or, rather, how we could suggest, as we did in a previous post, that the state sanction processes that would allow for this to happen.

The answer is very simple: it already does. Settlements reached using ODR are nothing more than transactions, i.e.: “contracts by which the parties prevent a future contestation, put an end to a lawsuit or settle difficulties arising in the execution of a judgment, by way of mutual concessions or reservations” (as defined in section 2631 of the Quebec Civil Code), and they are deferred to and enforced by the Courts on a regular basis. Could ODR platforms help parties reach a settlement that goes against a given rule or law? Absolutely. Is that problematic? No.

ODR platforms that offer negotiation and mediation in no way force the parties to reach a settlement. This is why ODR systems are usually represented as a three-stage process (negotiation, if that fails, mediation, and if that fails, arbitration or, if the platform is integrated into the state’s legal process, judicial intervention). Therefore, if the parties reach a settlement before they appear in front of a judge, they should be satisfied with it. Could one party have gotten more than he deserves? Possibly. However, as the old saying goes, “a bad settlement is better than a good judgment at trial”.

Parties who choose to settle during an ODR process will usually do so because they have weighed the costs of going to trial (both financial and time-based), and came to the conclusion that a trial isn’t worth their while. This in no way impedes upon their right to legal counsel (ill-informed litigants could always consult to see if a settlement is the best avenue), nor does it take away their right to a trial. It simply gives them the option to use criteria and arguments to reach a settlement that they find just, even if said settlement is not the one a court would come up with.

Furthermore, we often forget that some litigants don’t want to go to Court because the legal process is, in itself, quite intimidating. The theatricality of the courtroom, the confrontational nature of the process, and the imposing stature of the judge might simply reflect a conflict-resolution method that parties do not identify with or, even, one that they fear. ODR therefore gives these individuals a platform to resolve their issues within a less daunting structure.

There is, as in any case where the parties settle out of Court, a risk that one will exploit the other’s naiveté. However, a Court’s role isn’t to protect those who fail to get proper information before signing a binding contract: “Error of law is not a cause for annulling a transaction” (Quebec Civil Code, section 2634). Furthermore, since “a transaction may be annulled for lesion or any other cause of nullity of contracts in general” (Quebec Civil Code, section 2634), if a party is really duped into signing an ODR facilitated agreement, it will always be able to turn to the Courts to get it annulled.

Therefore, those in the legal field shouldn’t fear ODR; they should embrace it. Lawyers can use ODR to generate new clientele while judges will profit from a smaller caseload allowing them to feel less rushed when drafting their judgements. As for litigants, they’ll be able to settle their cases in an arena that better suits their needs and wallets.