Alternative Dispute Resolution

Alternative Dispute Resolution

Alternative dispute resolution (ADR) are the methods of resolving a dispute between parties other than through traditional courts. ADR includes early neutral evaluation, negotiation, mediation, arbitration, and online dispute resolution (ODR).

Mediation

Based upon the consent of the parties, mediation provides for the assistance of an independent third party (mediator) in finding solutions to the dispute. Mediation promotes consensus between the parties but does not provide a binding resolution for the participants.

Arbitration

Arbitration is a dispute resolution mechanism available in place of traditional courts. In arbitrations, decisions are made by one or more independent individuals chosen by the disputants. The mechanism is usually set out in a private contract, which also specifies issues such as the place of arbitration, procedures, and choice of law. The leading international arbitrations are usually attached to chambers of commerce. The main international instrument is the United Nations Commission on International Trade Law (UNCITRAL) 1985 Model Law on International Commercial Arbitration.

The advantages of arbitration include overcoming the potential conflict of jurisdiction and the enforcement of decisions (awards). The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards regulates the enforcement of arbitration awards. According to this convention, national courts are obliged to enforce arbitration awards. Paradoxically, it is often easier to enforce arbitration awards in foreign countries by using the New York Convention regime rather than to enforce foreign court judgement.

The main limitation of arbitration is that it cannot address issues of higher public interest such as the protection of human rights; these require the intervention of state-established courts.

In cases where the subject of the dispute is the Internet and relationships stemming from the use of the Internet, arbitration remains the most effective and timely remedy due to the avoidance of jurisdiction conflicts.

Online Dispute Resolution

Online Dispute Resolution (ODR) is a dispute resolution mechanism involving digital technology. The Internet has brought major changes to the alternative dispute resolution making the procedure more agile and time and cost effective. As with regular dispute resolution, ODR allows for filling the gaps of the current regulations in international private law to deal with Internet cases. In addition, it allows for:

  • Improved early neutral evaluation by enabling to bring in experts regardless of the geographical location;

  • Improving effective negotiation by fostering single or double blind negotiations;

  • Introducing e-mediation where parties are led through automated choices to achieve consensus before working with a mediator;

  • Introducing new forms of arbitration and new rules of procedure (such as the digital submission of evidence and documentation, holding hearings via online media, etc.)

With regards to the new forms arbitration, an example is the Universal Domain-Name Dispute-Resolution Policy (UDRP) developed by WIPO and implemented by ICANN as the primary dispute resolution procedure. The UDRP is stipulated in advance as a dispute resolution mechanism in all contracts involving the registration of gTLDs (e.g. .com, .edu, .org, .net) and for some ccTLDs as well. Its unique aspect is that arbitration is not agreed upon by the parties, rather it is applied to all the contracts. In addition, awards are applied directly through changes in the DNS without resorting to enforcement through national courts.

 

The need to regulate disputes in cross border e-commerce consumer cases in the single market has led the EU to adopt the Directive of consumer ADR No 2013/11/EU. Filling a void, it required the EU nation states to provide ADR bodies for the settlement of consumer to business disputes beginning in 2015. A year later, the Regulation on consumer ODR No 524/2013 came into effect introducing the creation of an online platform to file complaints on e-commerce. This legislation introduces significant change to the existing civil justice system in the EU. It has created an additional way for consumers to achieve accessible, timely, and cost effective redress.

 

ODR is evolving and on track to be included in more arbitral rules. While it has its weak points, such as accessibility and confidentiality issues, it gives parties more convenient, flexible, and effective way to resolve their disputes compared to traditional arbitration.

Ms Pavlina Ittelson

Project Officer, DiploFoundation

Ms Pavlina Ittelson joined Diplo in 2017 and currently serves as a Program Officer at Diplo US. She also monitors the topics of jurisdiction and alternative dispute resolution for the GIP Digital Watch Observatory. Prior to joining Diplo, Pavlina was a legal project manager in the fields of international business, science, and technology. She previously worked as an Attorney in Slovakia and the Czech Republic specialising in international business transactions. Pavlina received her degree in Law from Comenius University, Bratislava, and her LL.M. in International Business Law from Central European University, Budapest. A native of Slovakia, Pavlina now resides in the Washington, DC area.

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