Online Dispute Resolution Sites Assessed

115 and Counting: The State of ODR 2004

Melissa Conley Tyler

Program Manager, International Conflict Resolution Centre, University of Melbourne

Abstract

This paper will present a survey of the current state of online dispute resolution (ODR) through an analysis of 115 ODR sites and services launched to date around the world. ODR refers to dispute resolution processes such as mediation, arbitration or adjudication assisted by information technology, particularly the internet. ODR can be used for both online and offline disputes.

The paper will present statistical information and trend analysis of the ODR sites identified, including services offered, communication methods used, type of disputes dealt with and trends in ODR.

Introduction

Most of the literature on online dispute resolution (ODR) to date has dealt in conjecture. By contrast, this paper takes an empirical approach by outlining developments in ODR since 1996, offering a portrait of the state of the field.

ODR refers to dispute resolution processes assisted by information technology, particularly the internet. This can include facilitative processes such as mediation, advisory processes such as case appraisal and determinative processes such as arbitration and adjudication. An outline of terminology used is included in the glossary in Appendix 1.

As of July 2004, at least 115 ODR services had been launched worldwide, settling more than 1.5 million disputes. ODR services offer examples of using technology to resolve everything from eBay disputes to commercial litigation; from family disputes to the Sri Lankan peace process. There are now ODR services in all regions.

The continuing growth of ODR, particularly in Europe and Asia and in courts and other institutions suggests that ODR will impact on dispute resolution practice and should be of interest to all conflict resolution practitioners.

Methodology

This paper updates research conducted for the Department of Justice Victoria in 2003 that identified 76 ODR sites and services worldwide (Conley Tyler and Bretherton 2003 summarised in Conley Tyler 2003). This original research was prepared using the following methodology:

• Comprehensive literature review of 128 books, articles, reports and other resources on ODR, including review of previous site surveys (Center for Law, Commerce & Technology 2000, Schultz et al 2001, Consumers International 2001, International Chamber of Commerce 2001)
• Analysis of 76 ODR sites identified through internet indices and search engines, academic indices, informational sites and literature review
• Liaison with ODR researchers and the expert community.

These results were then updated in May-June 2004 through the following:

• Search of (list of ODR providers, ODR blog to June 2004)
• Review of ODR Library (Conley Tyler 2004)
• Review of Proceedings of Second Annual Forum on Online Dispute Resolution (Katsh and Choi 2003)
• Review of Cyberweek 2004 conference discussions at and Network Lawyers group
• Google Search for “ODR” and “online dispute resolution” (first 100 entries)
• Contact with UN Expert Working Group on Online Dispute Resolution, Site Committee organising the Third Annual Forum on Online Dispute Resolution and confirmed speakers at the Third Annual Forum.[1]

ODR services identified and assessed in this paper are listed in Appendix 3.

State of the Art of ODR

Growth and Availability

ODR has been available since 1996. Its development can be defined as passing through three broad stages:

• a "hobbyist" phase where individual enthusiasts started work on ODR, often without formal backing
• an "experimental" phase where foundations and international bodies funded academics and non-profit organisations to run pilot programs
• an "entrepreneurial" phase where a number of for-profit organisations launched private ODR sites (adapted from Katsh and Rifkin 2001:47-72).

The hobbyist phase lasted until around 1996 when the first four ODR services were launched. The experimental phase was around 1997-1998 and the entrepreneurial phase was marked by the many sites launched in 1999-2000.

Since 2001, ODR has been entering a fourth "institutional" phase where it is piloted and adopted by a range of official bodies including courts and other dispute resolution providers.

Given the essentially experimental nature of this field, ODR services have proved surprisingly durable with the majority of services launched still operating.

Of the 115 sites identified, 82 appear to be operational, 30 are no longer providing services and three are unknown. However it should be noted that many of the sites that are nominally offering ODR do not appear to be highly active. Services that are no longer operating are marked in italic type in Appendix 3.

ODR sites and services have continued to be launched with 30 new sites or services established in 2003-2004. ODR sites not included in Conley Tyler 2003 are listed in Appendix 5.

Location

Most of the early activity in ODR took place in North America. However both Europe and Asia have now started to develop significant ODR initiatives.

These three regions account for almost all ODR activity, however there are two South American, one African and one multi-region ODR service.

The early-launched Cibertribunal (Peru) shows it is possible to offer ODR in a less developed context while the newer ChinaODR, TrustEnforce (South Africa) and Disputeresolution.ph (Philippines) are optimistic about extending ODR into these areas. See Appendix 4 for a list of ODR services by region and Wahab 2004 for a discussion of information and communications technology development factors and their impact on the development of ODR.

Types of ODR Offered

ODR has adapted standard dispute resolution processes for use online, including complaint handling, arbitration, mediation, facilitated negotiation and case appraisal. Each traditional ADR mechanism has an analogy online: for example iCourthouse offers mock trials using panels of volunteer jurors. A description of ADR processes is included in the glossary in Appendix 1.

In addition, a number of online-specific techniques have been developed to take advantage of the new technology; these include automated negotiation (without human intervention) and negotiation support (see Kersten 2004 and Bellucci; Zeleznikow 2004). Mediation support such as online document sharing is beginning to be offered. Collaborative peace-building tools are also starting to be developed online (Balvin 2004).

Mediation and arbitration have been the most prevalent forms of ODR. The breakdown of types of ODR among the 115 sites is as follows:

The communication tools used in ODR have changed as online technology has developed. Early ODR sites tended to rely mainly on email meaning that communication was delayed, text based and insecure. By contrast, the most common technology for services launched since 2001 is a secure web site encrypted by Secure Socket Layers (SSL) technology where parties are given a password to access a web site area dedicated to their dispute. See Appendix 1 for a description of online communication methods and their characteristics.

Sites can either allow asynchronous communication through threaded discussion (bulletin boards) or real time chat facilities. Instant messaging is being used by some sites, as is "secure email" via an encryption program. Caucusing (the ability for one party to meet among themselves or with the neutral without the other party) is a basic feature in newer systems. Some sites offer facilities such as case tracking and document editing.

A number of providers integrate ODR methods with traditional tools such as phone, fax, teleconference and face-to-face meetings. Videoconferencing is offered by a number of sites. Broadcast-quality videoconferencing is expensive, however lower quality videoconferencing is becoming more affordable and may be the next phase in technological development (NADRAC 2002).

Type of Disputes

The range of disputes resolved by ODR has been broad: from family law to internet domain name disputes; from consumer transactions to peace negotiations.

ODR has been used to resolve both “online disputes” arising through or because of online activity and “offline disputes” such as family, neighbourhood and employment disputes arising in the “real world”.

It is becoming more common for providers to offer services for both online or offline disputes. This includes some providers who launched exclusively dealing with online disputes. There have been cases where offline disputants have demanded that online methods be extended to them even when the provider had intended only to deal with online disputes (Rule 2002:222).

The areas of dispute handled fall into the following broad categories:

1. Consumer disputes
2. Internet disputes, especially domain names
3. Commercial, family, workplace and neighbourhood disputes
4. Complex litigation
5. Peace and conflict

Examples of services dealing with each area are given below.

e-Commerce and other Consumer Disputes

Given that the need to resolve online disputes was one of the key drivers for the development of ODR, it is not surprising that many sites were established mainly to resolve disputes arising through or because of online communication.

Consumer ODR tends to be provided as a service for consumers in a particular “marketplace” or those residing in a particular geographic area.

The largest provider in this area is Square Trade, a private U.S. company that offers facilitated negotiation and mediation of mainly online disputes, including for the eBay, Google, Yahoo! and other online marketplaces. Square Trade now offers ODR for Californian Association of Realtors disputes.

Other examples of consumer ODR include:

• ECODIR, the European Union’s prototype online consumer dispute resolution site
• Online Confidence, an initiative of Eurochambres, the membership organisation of 1300 European chambers of commerce
• NotGoodEnough.org, an Australian “gripes” site where disgruntled consumers can post complaints to be forwarded to the company involved
• FSM, a German site that handles complaints about internet sites
• eCOGRA, a British site that provides ODR for users of online gaming.

Internet Disputes

ODR has also been adopted as a method for resolving disputes relating to internet addresses (“domain names”).

There have been five service providers approved under the Uniform Domain Name Dispute Resolution Policy (UDRP) adopted by the Internet Corporation for Assigned Names and Number (ICANN) in 1999. These deal with disputes over the ownership and use of “.com”, “.org” and other high level domains:

• Asian Domain Name Dispute Resolution Centre
• CPR Institute for Dispute Resolution
• eResolution (no longer operating)
• National Arbitration Forum
• World Intellectual Property Organisation.

ODR is also offered for some national domain name disputes, such as:

• Nominet (“.uk” domains)
• CIETAC Domain Name Dispute Resolution Centre (“.cn” domains)
• American Arbitration Association (“.us” domains)

Commercial, Family, Workplace and Neighbourhood Disputes

At the other end of the spectrum, ODR has been adopted for quintessentially “real world” disputes such as commercial, family, workplace and neighbourhood disputes. ODR is now being used in situations where face-to-face dispute resolution might have been possible but, for some reason, ODR is preferred.

Some providers offer ODR as a stand-alone facility. For example, U.K. company The Claim Room offers a series of “rooms” where dispute resolution practitioners can conduct mediations and other dispute resolution procedures. These can be “hired out” by practitioners in the same way as physical rooms.

Others integrate online communication into existing dispute resolution services. For example Family Mediation Canada provides web-broadcast teleconferencing and joint document collaboration facilities as a service to its members mediating family disputes (Brannigan 2004).

ODR is also being offered as a pro-active service, such as the International Chamber of Commerce’s “Paction” which enables parties to prepare, negotiate and complete contacts for the international sale and purchase of goods online.

Some of the ODR services that assist in “real world” disputes focus on providing analytical rather than communication tools. For example Canadian company SmartSettle helps people prepare for negotiation by analysing their preferences and the potential options on the negotiation table while the Department of Justice Victoria’s disputeinfo service uses Acumentum’s Scenario Builder to guide disputants through the options for dealing with their dispute.

Complex Litigation

ODR is also being adopted by courts and tribunals seeking to improve access to justice and streamline the litigation process.

The Federal Court of Australia’s eCourt initiative enables electronic filing and document management and offers a “virtual courtroom”, including videoconferencing, particularly for Native Title hearings in remote areas (Tamberlin 2004).

An unusual example is Justica Sobre Rodas, a mobile court in Brazil that uses an artificial intelligence program to analyse witness statements and assessors’ reports to enable a Judge to hand down a decision at the scene of a vehicle accident.

Courts and tribunals in Singapore (e@dr), the United Kingdom (MoneyClaimOnline) and Ireland (Irish Commercial Court) have similarly adopted ODR for some of their processes. A U.S. experiment, the Michigan Cybercourt, remains under development.

LegalGrid Online has launched its Court21 product to assist courts and tribunals to incorporate ODR into their operations.

Peace and Conflict

Finally, online tools are being used to assist in peacebuilding and conflict resolution.

For example Info-Share brings the parties in the Sri Lankan peace process together electronically in a situation where it would be impossible for them to meet face-to-face. Its aim is to promote conflict transformation by knowledge-sharing, information and communications flow and offering shared spaces for stakeholder dialogue (Hattotuwa 2004).

The Cultures of Peace News Network (CPNN) works preventively to promote a culture of peace through a global network of sites created by UNESCO to enable people to exchange information on media and events (Balvin 2004).

What is striking about these results is the rapid growth of ODR and the variety of contexts and locations in which it is being adopted.

Case Statistics

There is very wide variability in the number of cases dealt with by ODR sites: from only one case to more than 1.5 million disputes.

Statistics on cases attracted were available for 31 of the sites surveyed (27%). Lack of information for the other sites makes it difficult to make comprehensive judgements (Consumers International 2001). While some sites that do not include this information may have attracted fewer cases (Schultz et al 2001), there are also other factors such as client confidentiality requirements that may prevent some providers from reporting on their results.

The sites that have handled the most disputes appear to be the following:

• Square Trade: over 1.5 million cases handled
• Cybersettle: over 90,000 disputes handled
• iCourthouse: 11,094 cases filed
• World Intellectual Property Organisation: over 6,000 decisions administered
• National Arbitration Forum: 4,259 decisions listed
• TRUSTe: thousands of complaints
• clickNsettle, iLevel, SettleOnline and WebTrader: over 2,000 cases each
• Nominet: 1,614 cases resolved.
• FSM: over 1,179 complaints

Some of the online complaints handling services have had a large volume of complaints filed. BBBOnline had 1.3m complaints filed (but not handled) online in 2000 while NotGoodEnough.org had 3,000 complaints filed in its first day.

A further seven services have settled over 100 cases and another 10 have settled under 100 disputes. The least successful sites are The Virtual Magistrate and intelliCourt recording one case each. Some services, such as Internet Neutral, appear never to have handled a case.

The key to viability of an ODR service appears to be the quality of its referral sources. For example the majority of Square Trade’s cases have come directly from its link to the eBay site, the “place” where the disputes occurred. A number of incentives are built into the eBay system to encourage parties to resolve their disputes, including a buyer and seller ratings system and web seal program. Cybersettle has been the preferred provider for the Association of Trial Lawyers of America and the Canadian Bar Association.

There is less data on the settlement rates achieved by ODR services with only 18 sites including these statistics (including seven domain name arbitration services that publish case results on their sites). Other international surveys of ODR sites have been unable to gather significant data on this issue (Consumers International 2001; International Chamber of Commerce 2001).

The following settlement rates have been reported:

• Word&Bond: 100% settlement rate
• WebAssured: over 95% success in complaints against member firms
• Square Trade: 85% of cases settled through facilitated negotiation, as well as further cases settled through mediation and case appraisal
• IRIS Médiation: 53 of 61 mediations (87%) settled in its pilot year
• Resolution Forum: 75% of cases successfully resolved
• SmartSettle: 80% settlement rate for real cases
• Bankers Repository Corporation: 60% settlement rate (5% annual variation)
• Nominet: 50% settled
• clickNsettle: 50% settled
• Online Ombuds Office: 50% settled
• USSettle.com: 40-50% success rate

This is broadly comparable to settlement rates for alternative dispute resolution generally which range from 50% to over 85% (NADRAC).

User satisfaction is rarely tracked; however one site that collects this information has positive data. 80% of Square Trade users say they would use the service again.

Funding

ODR sites have grown from a number of environments, including government and international bodies, academia, consumer organisations, business organisations and entrepreneurial start-up companies. They have been motivated by both business opportunities and a sense of social need.

ODR sites make use of a number of funding mechanisms including:

• grant funding (such as the Online Ombuds Office)
• government funding (such as Singapore’s Dispute Manager service)
• user fees for one or both parties (such as Word&Bond)
• membership fees (such as Nova Forum)
• advertising revenue (such as Complain.com.au)
• subsidy from other services.

User fees have been the predominant funding mechanism for ODR. User fees can take a number of forms including: