Online dispute resolution (ODR) is a form of Alternative Dispute Resolution (ADR) which takes place with the speed and convenience of the internet. It is a broad term, covering a range of online technologies (including email and videoconferencing) - or a combination of online and offline methods - which are used to help resolve primarily high volume and low value disputes.
How does it work?
ODR generally involves the application of technology to a combination of mediation, arbitration and negotiation. It is designed to streamline traditional methods of resolution, reducing time, cost and associated formalities. It often consists of a variety of online tools which merely assist with negotiations or automate the process, but it can also provide adjudication. One example of ODR is 'blind bidding' which involves each party making a settlement bid unknown to the other party; ODR software combines each party's suggested offer (where these are both within certain bounds) and provides a binding settlement figure which falls in the midpoint of the two offers.
What are the pros and cons of ODR?
As a modern take on ADR, ODR potentially has the advantages of cost effectiveness (compared to litigation and traditional ADR), speed and convenience. A perceived disadvantage is that ODR can be impersonal, leading to greater distance between the parties and mediator.
The EU ODR platform (see below) has been designed to encourage cross-border purchasing by consumers across the EU. It can ease both jurisdictional and, due to a translation function, language issues.
EU Online Dispute Resolution Platform
The European Commission’s ODR platform offers a single point of contact that allows EU consumers and traders to settle disputes for both domestic and cross-border purchases. This is achieved by channelling the disputes to ADR bodies that are connected to the platform and have been selected by the Member States according to quality criteria. The platform went live on 15 February 2016 and, in its first year of service, 24,000 consumer complaints were lodged; over a third concerned cross-border purchases within the EU.
What are the ODR Regulations?
Since the launch of the EU ODR platform, the majority of online traders who sell goods, services or digital content to consumers must comply with certain requirements Alternative Dispute Resolution for Consumer Disputes (Amendment) Regulations 2015. One of the main obligations is to make their customers aware of the existence of the ODR platform (ie provide a link to it on their website). They must also provide a valid email address on their website.
How can ODR be harnessed by law firms?
A report commissioned by Thomson Reuters – The Impact of ODR Technology on Dispute Resolution in the UK – argued that “London’s pre-eminence as a hub for international commercial arbitration is expected to drive adoption of ODR among UK legal and private arbitration and mediation bodies and practitioners.” Law firms could theoretically implement their own ODR platforms, just as many online services have done – either building these themselves or adopting a third party platform (eg. Modria provides an online platform for dispute resolution to eBay and PayPal).
But most of the lawyers and mediators interviewed for the report see the deployment of technology as something which should be applied where appropriate, on a case by case basis, rather than forming a blanket approach to resolving disputes. One barrister noted: "Where ODR is most useful is where a dispute starts online e.g. buying or selling goods or services online. The most natural thing is to resolve the dispute online if there is an appropriate forum to do it.”