Throwing Out the Baby While Keeping the Bathwater

As we’ve posted in our previous column, this summer, the UNCITRAL working group on ODR – which we have discussed extensively in previous blogs – has been given an ultimatum: “the Working Group was given a time limit of one year or no more than two Working Group sessions to undertake this work, after which the work of the Working Group will come to an end, whether or not a result has been achieved”. In other words, the Working Group will most likely have no more than five months left (the two sessions are scheduled for 30 November-4 December 2015, in Vienna and 29 February-4 March 2016, in New York, although a third session has tentatively been scheduled for 19-23 September 2016, in Vienna) before it is forced to wrap up its work and, if the past five years are any indication, will have nothing to show for it.

Or will it?

It has been well documented that the working group’s mandate was “to undertake work in the field of online dispute resolution relating to cross-border electronic commerce transactions, including business-to-business (B2B) and business-to-consumer (B2C) transactions”. It is also well established that talks stalled during the working group’s last sessions because of disagreements regarding the validity of arbitration clauses found in consumer contracts. In fact, it should be pointed out that the discussions have, for the most part, focussed solely on the “business-to-consumer” element of the working group’s mandate and somewhat ignored business-to-business transactions. Since a consensus on adoption comprehensive B2C ODR rules seems impossible to reach, the UNCITRAL has therefore decided to redefine the scope of the Working group’s mandate.

In a letter participants received in September, we were informed that “the Working Group is instructed to continue its work towards elaborating a non-binding descriptive document reflecting elements of an ODR process, on which elements the Working Group had previously reached consensus, excluding the question of the nature of the final stage of the ODR process (arbitration/non-arbitration)”. In other words, gone is the nego-med-arb model. Rules will now focus on establishing a framework for negotiation (whether one-on-one or assisted by a third party). Furthermore, B2B rules are still not being discussed – although it could be argued that the same non-binding rules should be used for both B2C and B2B disputes.

While we understand the UNCITRAL’s will to move things forward since discussions are at a stalemate, we believe that whatever rules the Working group produces under this limited mandate will have little to no use. The whole point of ODR rules, as we see it, is to ensure that there exists a well-regulated alternative to the courts for low intensity disputes (what some would refer to as high-volume – low-value disputes). If arbitration is taken off the table, what is to force participants (read businesses) to take part in the ODR process? We are all taught from a very young age that there are two ways to make people do what we want them to: the carrot or the stick. Without the looming presence of arbitration or adjudication, why would businesses take part in the process? We learned this lesson the hard way back in 2001 when we launched the ECODIR (Electronic Consumer DIspute Resolution) platform with the European Commission. Although consumer groups touted the platform, the lack of concrete incentives for businesses translated itself into a far less successful endeavour than what had been expected. More comprehensive rules would not have been of use for ECODIR. The only thing that could have guaranteed its success would have been the EU’s intervention in cases where businesses refused to take part in the negotiation process in good faith.

In other words, even if the Working Group comes up with comprehensive guidelines, unless they can find a way to force businesses to take part in any kind of ODR process, we have little hope that anything will come of them… Furthermore, since certain delegations (including Canada’s) and observers (including ourselves) have already decided not to take part in this month’s session, the writing seems to already be on the wall.