Public ODR… Could There Really Be Such a Thing?

In one of our earliest blogs, we suggested that, if we want Online Dispute Resolution (ODR) to flourish, it should somehow be incorporated into the judicial process. This is not to say that private ODR mechanisms are doomed to fail, but rather that, as many unsuccessful ODR experiments have demonstrated, the incentives to take part in private ODR mechanisms are often lacking, especially with regard to consumer contracts. Other than places like eBay, where refusal to take part in the platform’s dispute resolution process results in exclusion from the community, there is no real reason for merchants to take part in an ODR process. After all, many (sometimes erroneously) believe that the only real consequence to their refusal to take part in negotiations is losing a consumer’s future business, something that a successful dispute resolution process won’t necessarily change. Of course, advertising that it will take part in ODR should there be a conflict may give an e-retailer a competitive edge, but not if said mechanism implies higher costs for the same product.

For these and other reasons, we still believe that a thriving ODR industry needs to somehow be incorporated into the legal process. If ODR becomes mandatory or, at the very least, if refusal to take part in an online dispute resolution process can be punished (for example by allowing the other party to collect costs), it will properly incentivise merchants to not only try to reach a settlement, but also to do so in good faith.

Furthermore, this is a win-win scenario for the courts (and the state) since successful ODR processes will free up court time, making the system more efficient and accessible without needing to increase funding. At a time where applying austerity measures seems to be the new norm, courts, like all other public institutions, are in dire need of identifying cost-cutting measures that won’t negatively impact citizens’ rights, and ODR could be one such measure.

By the time this blog is posted, we will probably be in Spain taking part in the Association Henri Capitant’s annual international meeting, which, this year, revolves around intangibles (from a technological perspective). The panel we were asked to take part in aims to discuss electronic court processes and one of the questions submitted to participants goes as follows: “In your jurisdiction, does the State directly offer ODR services to its citizens?” After reading through the national reports produced by other participants (Belgium, Brazil, Germany, Italy, Portugal, and Turkey), we were somewhat disheartened to learn that, in most of the countries surveyed, public ODR wasn’t even being considered. In fact, other than Italy and Germany, none of the surveyed countries has made strides in including ODR into the general legal vocabulary. The only real standout seems to be Belgium, where the federally funded Belmed platform allows for online consumer dispute resolution. According to the service’s flyer: “Belmed is a tool the Federal Public Service (FPS) Economy puts at the disposal of business and consumer for the out-of-court online resolution of consumer disputes with the help of an independent mediator”. The service is offered for disputes concerning:

• Sales of consumer goods (furniture, household appliances, new technologies, second-hand cars…)
• Services offered to consumers (insurance, bank, construction, energy, travel…)
• Cross-border disputes between a consumer residing within the European Union and a company registered with the Crossroads Bank for Enterprises

As we understand it, Belmed can be consulted for free, but costs could be charged to the parties should they decide to take part in mediation. Furthermore, for those citizens left on the wrong side of the digital divide, computers and assistance are available at “the Public Computer Rooms (PCR or EPN)”. Unfortunately, as the process remains voluntary and outside the court system, parties are free to leave the virtual negotiating table at any given time. Belmed therefore offers no supplementary incentives when compared to private ODR platforms, making it publicly funded, but not operated as an integral part of the public justice system.

As for the other countries that are taking part in the Henri Capitant meeting, it would be interesting to circulate the same survey in five years to see how things have evolved. With pilot ODR projects being conducted in Canada, South America and some European countries, and with both the European Union and UNCITRAL working on model rules for ODR, it’s just a matter of time before ODR makes it way into “mainstream” conflict resolution.

Of course, like with more classic dispute resolution processes such as offline mediation or conciliation, detractors keep pointing out that mandatory ODR is somewhat of a misnomer. One cannot force an individual to negotiate in good faith, and bad faith negotiation is a waste of time. While this is true, it remains that, without making ODR mandatory, consumers – most notably those who purchase their goods online – are left with no real recourse. This is why the European Union has adopted its regulation (EU) no 524/2013 of the European Parliament and of the Council of 21 May 2013 on online dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Regulation on consumer ODR, and why mandatory ODR, no matter how it could be perceived by detractors, needs to be looked at seriously as a way of giving access to justice to those who, for now, can’t turn to the courts since the costs associated with the legal process are simply prohibitive…