Online Dispute Resolution

See Colin Rule on Online Dispute Resolution

History

Federico Ast:

"Since the late 1990s, as modern technology generated new types of transactions and disputes, it also sparked the development of the new field of Online Dispute Resolution (“ODR”) which suggested the use of technology to solve conflicts fairly and efficiently, in particular to fill the “digital justice gap.”

As early as the 1990s, companies like iCourthouse experimented with collective intelligence to resolve civil cases. In the 2000s, eBay implemented a crowdsourced panel for user disputes. During the early days, ODR was seen as a radical transformation of traditional Alternative Dispute Resolution (“ADR”) systems such as mediation and arbitration. Katsh and Rifkin introduced the concept of technology as a “fourth party” in conflict resolution procedures. The approach focused on the functional role of technology in guiding litigants towards an agreement in the shadow of the law.

Different protocols were developed that could operate without any human involvement. This constituted a significant “legal turn” with respect to previous ADR because the process was being run by a machine and influenced interactions between parties to reach an efficient agreement."

(https://stanford-jblp.pubpub.org/pub/birth-of-decentralized-justice/release/1?)

Status

Federico Ast:

"However, despite a number of advantages over traditional courts, the ODR industry failed to become massive. Some reasons were inherent in the design of the ODR systems. Others refer to ex ante constraints (access) or to ex post limitations (reputation). Most of the automated bargaining systems were developed by private companies and were contractual by nature. It was only through the signature of a contract between conflicting parties that a settlement could be enforced.

Hence, even if a decision was reached through an ODR mechanism, there was no guarantee that it would be accepted by the parties and enforced. Since they lacked an institutional arrangement such as court imperium, ODR solutions only worked under circumstances when they were supported by mechanisms powerful enough to have rulings enforced, such as conflicts between insurance companies or between consumers on large trading platforms like eBay.

As Rabinovich-Einy and Katsh note: “ODR has been successful where its design fulfilled adequate levels of trust, expertise, and convenience and efficiency.” If one of these elements is not present, the system lacks effectiveness. At the heart of dispute resolution lies the concept of legitimacy, which is ultimately premised on trust (trust in the system, trust in the process and trust in its fairness) and therefore a willingness to abide by outcomes.

Legal certainty seemed at the core of the debate. For an ODR solution to be adopted, a central authority is needed that initiates its adoption, follows its implementation, and ensures that such processes operate in a fair and effective manner. However, we can observe that centralized solutions are generally expensive and are not free from problems of trust. For instance, Deffains and Roussey explain that an effective judiciary must not only provide good substantial and procedural rules, but should also inspire citizens with confidence and respect that are not intrinsic dimensions of the judicial system. It also has been shown in law and economics literature that trust in the judiciary may improve the performance of the judiciary itself."

(https://stanford-jblp.pubpub.org/pub/birth-of-decentralized-justice/release/1?)