Law Times

PAGE 10 'Interesting area' for dispute resolution ADR picking up in internet and e-commerce law A BY DEREK HILL For Law Times lthough internet law and e-commerce have been lagging behind other areas of law with respect to alternative dispute resolution, things are beginning to change, Michael Erdle tells Law Times. "This is a really interesting area for dispute resolution," says Erdle of Deeth Williams Wall LLP. "I think it's just been in the last little while that internet and e-com- merce have started to pick up on the possibility of using mediation and arbitration to resolve disputes. So I think it will start to pick up. It's been behind and it will start moving more quickly." Erdle says that ADR is particu- larly desirable in the context of e- commerce, because a lot of internet transactions involve relatively small amounts of money — even when they're business-to-business trans- actions — which means litigation is not very useful. In theory, ADR solves geographical issues, reduces cost, and enables a speedier resolu- tion. For businesses, confidential- ity is an important plus, as it keeps problems with their site, security system, etc. out of the media. It also reduces a lot of the uncer- tainty inherent in going to court. "The courts sometimes have not displayed a good understanding of e-commerce from a consumer per- spective," says Philippa Lawson, director of the Canadian Internet Policy and Public Interest Clinic. "Because it often involves people in multiple jurisdictions, litigation [in internet disputes] is often very difficult. Where do you sue people? So alternative dispute resolution is useful," says Erdle. Of particular use are online dispute resolution programs, or ODR, says Erdle, which are a relatively new phenomenon in internet commerce. For example, in 1999, eBay Inc., the operators of an online auction and shopping web site, introduced an online mediation program provided by SquareTrade, which attempted to resolve dis- putes between buyers and sellers. The idea was that the complaining party filled out a form identifying the other party to the transaction, what the problem was, and what they would like to happen. Then SquareTrade contacted the second party through an au- tomatically generated e-mail, and created a "case page" to which it and both parties had access. Then the buyer and seller contacted each other directly through the case page and negotiated online. If they failed to reach an agreement, SquareTrade would select a media- tor from its roster, who would look at the materials on the case page and attempt to facilitate a resolu- tion. Users had nothing to lose by filing a complaint, as the process was free if they settled without the services of a mediator. "I think online businesses in particular will learn that there is an advantage in having systems in place that create or improve trust in their system," says Erdle. "I just think that they will benefit in the marketplace. I think eBay already has benefited from its efforts to try to prevent ripoffs and to police its own sys- tem and to resolve disputes. "As they learn how to do that more effectively, that will improve and that it will spread further. So I think there will be more." As another example, Cyber- settle Inc. is an American ODR company operating in the field of insurance. It has used a blind bidding system, where the parties agree ahead of time if the offers fall within a certain range the dispute will end by splitting the difference. When the offers are far apart, the machine can keep the offers secret and negotiations can continue. The dispute resolution mech- anism for the domain-name resolution system, the uniform domain-name dispute resolution policy, offers another well-known and effective example, this time of an arbitration-based ADR system for settling online disputes. "The reason the domain name system works is that everybody who registers a domain name has to agree to this process up front," says Erdle. "Otherwise . . . you'd never get people to voluntarily do it if there was a dispute." A business-to-business online marketplace could adopt that model and, as part of its terms and conditions, impose a man- datory mediation/arbitration system that would be fairly effec- tive, says Erdle, as could online networking sites such as Second Life or Facebook. "They have different systems in place now, but they could certainly establish, if they wanted, a man- datory arbitration system, and it would be entirely internal to that world, but it would prevent what happens now if somebody has a dispute on Second Life with an- other participant." Online dispute resolution sys- tems continue to change rapidly as the price of the software drops, he says, and to incorporate new- er technologies, such as video conferencing. "The systems that are in place now are showing people what works well, what doesn't work so well. Those systems I think will be refined over time to make them more effective. "There will always be disputes between people, problems be- tween people in online networks, so it will always be necessary to have effective and fair ways to resolve those disputes without having to go to court." DON'T COURT DISASTER Keep up-to-date on the latest judicial developments by reading Law Times CaseLaw on pages 14-15 www.lawtimesnews.com JULY 28/AUGUST 4, 2008 / LAW TIMES LT

• Cover