Minutes of the 2010 ODR and Consumers Colloquium

2010 ODR and Consumers Colloquium

Vancouver, BC, Canada

November 2-3, 2010

Minutes prepared by Doug Leigh, doug@fairshakeodr.com


November 2, 2010

9:00am – 9:10am Dr. Frank Fowlie: Opening Remarks

9:10am – 9:20am Colin Rule: Building a Global Resolution System for Lowe Dollar / High Cost

  • Building a Foundation: First Principles
    • ODR created in 1996 at NCAIR meeting in DC with Larry Lesig, Hank Perritt, and Ethan Katch, among others.
    • ODRAC meeting has similar promise and potential, and more.
    • We are moving closer to the first extrajudicial, global commercial redress system ever created
  • How Did We Get Here?
    • OECD guidelines for consumer protection (1996)
    • FTC/DOC host ADR for consumer transactions in ecommerce (1999)
    • EEJ-Net
    • ECODIR
    • GBDe / Consumers International agreement
    • Global Trustmark Alliance
    • 43rd session of the UNCITRAL Working Group (2010)
  • Agenda: Day One
    • Setting a comment frame
    • Hearing from experts
    • Legal realities
    • Political processes
    • Regional perspectives
      • Via legal/political environment, ICANN experience, system design, regional concerns, stakeholder perspectives
  • Agenda: Day Two (prep for UNCITRAL meeting in December)
    • Small discussion groups
    • Tackle key questions
    • Draft recommendations
    • Get into specifics
    • Design the system
  • At novomeeting.com/vancouver.zip
    • UNCITRAL documents
    • OAS (Organization of American States) documents
  • Proposal for Global ODR Standard Setting body at novomeeting.com/workingpaper.zip

PROVIDING A CONTEXT: ONLINE DISPUTE RESOLUTION FOR ELECTRONIC AND MOBILE COMMERCE

9:20am – 9:30am Vikki Rogers

  • 2010 will be ODR’s turning point now that global system design is a formal debate and discussion among UNCITRAL and the OAS.
  • Is it possible to create a global, cross-border, system for the resolution of e-commerce disputes? It’s always impossible, until it’s done.
    • Without technology and ODR, there can be no way to addressing these disputes.
  • Until recently, while many online merchants are global, they tend to limit themselves to domestic sales.
    • A system will give confidence to buyers, and governments the ability to protect their citizenry through legislation and systems for ODR
  • Brazil, Paraguay and Argentina, and separately the US, are working on a OAS region-wide framework (CIDIP-VII)
    • The prior assumes that high volume / low value disputes will be resolved in local courts. The law most favorable to the consumer is likely to be applied. This creates a rule that limits choice of law and jurisdiction. This exposes merchants to law of 34 states.
    • The latter argues that it’s not reasonable to assume that a system such as the prior will be effective. This has led to the proposal of an ODR system for resolution of such disputes.
      • ECC-net and ICA-net have also developed proposals
      • UNCITRAL agreed to forum on ODR in Vienna
      • Case Western University formally proposed support for B2B and B2C disputes
      • At 43rd general meeting for UNCITRAL there was overwhelming support for a working group on ODR
        • Majority of states supported that it would cover both B2B and B2c disputes
        • 1st working group in Vienna this December to create generic rules for both types of transactions
        • This ODR and Consumers Colloquium is a planning meeting for the December meeting to create greater clarity
  • It’s necessary to think through the complete system, which from less to greater difficulty are:
    • Procedural rules
    • Approval of providers
    • Substantive rules
    • Enforcement

9:30am – 10:00am Zybnek Loebl: Global ODR FAQs

  • Should we aim at developing a global ODR system?
    • Current regional initiatives (ECC-NET or OAS) are looking globally
    • Current cross-border ODR systems (eBay/Paypal, VISA chargebacks) are global
    • Internet is truly global
    • What does this mean for the design and preparation of the ODR systems?
    • Should there be a single system or a number of interconnected systems?
    • Interconnected how?
    • Expedited process v. procedural justice
    • Must be streamlined and fair to both consumers and merchants
  • Should the ODR system be multi-lingual?
    • Should this be a requirement? An international ODR standard?
    • It is in Europe, probably also in Asia
  • How to incorporate existing global ODR systems into the new systems?
    • It is unrealistic to expect that VISA or eBay would abandon their systems
      • At the same time, are these entities interested in lowering the number of disputes they need to handle?
    • Existing ODR systems are proprietary, limited to a dew big market players
  • How to ensure that the new systems include efficient remedies?
    • UDRP and other entities named above include efficient private remedies
    • In e-commerce disputes, such remedy is probably associated with money and a payment intermediary
  • Should the new system be developed as inter-governmental or quasi public-private?
    • What should be the roles of the main players?
    • For public agencies, cross-border ODR is very important for consumer protection and further development of e-commerce, both important political goals
    • Is UNCITRAL the appropriate platform?
    • Should another working group be created that includes both private and public agencies?
    • Who should host the system? Pay for it?
  • What our next steps should be?
    • Meeting in 2 weeks in Europe. UNCITRAL working group. New York meeting.
  • Other questions?
    • How much should merchants, buyers be charged and providers be paid
    • What of arbitration v. judgments? Binding? Conditionally binding?
    • Mike Dennis reached out a year ago to create the OAS recommendations. Gabriela Szlak hosted the first working group in BA. Jan Martinez and Vickki Rogers’ meetings have kept this work going. Dave Bilinsky and Frank Fowlie have worked on organizing this colloquium.

Questions, thoughts and means for framing the discussion?

  • Jim Melamed: This sounds like a means of disseminating truth justice, but perhaps it’s not feasible. Most Bar associations have client security fund, in which the Bar – when bad things happen to clients – compensate clients have been harmed.
    • Wonders if perhaps it might be possible for providers to contribute to a similar regime – especially for low-value claims – as part of their licensing.
      • Colin Rule: eBay has just such a system, in which eBay may pay buyers, and then follow up with nonresponsive sellers. The credit card chargeback systems, as well as the courts, don’t provide such means.
    • Jim Melamed: Is there a consortium of companies that have proposed a joint security fund?
      • Colin: Electronic Retailers Association (QVC, HSN and other TV retailers) have this. The government can’t promise
    • Mike Dennis: With enforcement of awards, the notion exists that businesses would create a common fund.
    • Fred Galves: Insurance works, so long as the complainant doesn’t “game” the system through illegitimate claims or buyer/seller collusion.
  • Jim Melamed: The technical and human requirements differ between online mediation and online arbitration. What’s the current thinking on policy preference for mediation, as there is in the F2F world?
    • Colin Rule: Maybe May-Britt Kollenhof-Bruning and Ernie Thiessen can address this this afternoon. In his experience, eBay users wanted diagnosis and dispute resolution, not mediation. But in Mexico, synchronous models do exist.
  • Fred Galves: To what extent might there be different procedural rules in which “you get what you pay for” in which more complex resolution systems become possible for higher value claims?
    • Colin Rule: And what about setting a higher cap than, say, US$2000?
    • Vikki Rogers: What would be a large amount in a US v. Canadian dispute would be different than a large amount in, say, a Kenyan v. Ghanaian dispute? It might be useful to consider thresholds in something other than dollars and cents.

CURRENT STATE OF GLOBAL ELECTRONIC AND MOBILE COMMERCE: BLURRING THE DISTINCTION BETWEEN MERCHANT AND CONSUMER

10:00am – 10:20am Mike Dennis: Building a Practical Legal Framework for E-Commerce Dispute Resolution

  • A Decade of Progress/Refinement
    • 1999: OECD
    • 2000: US FTC
    • 2002: ABA
    • 2003: GBDe/Consumers International agreement
  • B2B and B2C e-commerce expanding rapidly
    • $3.1 trillion in e-commerce transacted in 2008
  • The challenge: eCommerce Justice
    • Compared to US “Wild West”
    • Traditionally, redress has been found in courts
    • However, eCommerce issues are difficult for courts to handle because the issues often cross multiple jurisdictions
    • Traditional judicial mechanisms also struggle with eCommerce cases because
      • The transactions are low value
      • Litigation is expensive
      • It is difficult to enforce foreign judgments
    • Benefits from cross-border e-commerce
      • 10% of 11,000 cross border online searches for 1000 popular products could be found less expensively in other EU countries, but many sellers are unwilling to sell cross-border
      • 61% of cross-border online orders were refused by traders
  • The solution: a global ODR system
    • 2003 ADR Guidelines Agreement
    • Rome I Regulation: EU Parliament
    • OAS-ODR Initiative governed by model law / cooperative framework
      • Simple, transparent, enforceable, inexpensive, free for consumers with a small fee for businesses
  • OAS-ODR Overall System Design
    • Central Clearing house processes info electronically
    • National Administrator to monitor progress and enforce awards
    • ODR Providers approved and selected by National Administrator
    • Sellers, who are assumed to voluntarily opt in
  • How it works
    • Consumer initiates by completing form
    • I (Diagnosis) : Parties given 20 days to negotiate settlement
    • II (Negotiation): Case may escalate to 3rd party resolution
      • Most of this anticipated to be settled through automated software
    • III (Facilitated Settlement)
    • IV (Arbitration)
    • V (Enforcement)
  • UNCITRAL launched ODR Working Group last year
  • Fast Track Generic ODR Rules
    • UNCITRAL will likely consider such a model which comply with due process requirements
    • Challenge: System that handles high volume, low value disputes at low cost
    • ODR procedural rules attempt for streamlining via three phase process
      • 1) …
      • 2) On in-person hearing
      • 3) Neutral doesn’t have to be a lawyer
    • Standards for ODR providers
  • Cross-border enforcement protocol
    • UNCITRAL might consider drafting this
    • US ODR attempts to avoid enforcement by providing for arbitration where the vendor is located, with seat at vendor’s state
      • National Administrator in vendor’s home is responsible for compliance
      • Considered final and binding under one of the international arbitration conventions
  • Global principles for e-Commerce Cross-Border disputes: arbitrator shall decide claims and grant relief on an equitable basis based on interpretation with reference or proof to applicable law
    • Consistent with ICANN rules for UDRP
    • EC Blue Button (representing the European flag ) / Common Frame of Reference proposal
    • IICL proposal for Global Principles for International contracts
  • E-commerce disputes will for a significant proportion of complaints in comings years
    • Time is not to build a system that is not addressed by existing systems

10:20am – 10:35am Lou Del Duca

  • Tap existing providers to inform standards
  • Coleen ___ (U of Melbourne) did a study in 2004, identifying 115 ODR systems in the world
    • Identified commercial, family, and labor disputes
    • Updated in 2007 to 60-70 providers
    • Necessary to quantify the existing number of providers in 2010
  • A blurred distinction between merchant and consumer exists
    • Must distinguish high volume low cost from low volume high cost
      • B2B v. B2C is not the issue, small claim v. large claim is
      • Fairness, immediacy and transparency is necessary for small claims
    • “soft law” being discussed as the operating instrument in the EU
      • Patterned on principles of international commercial contract for 20 years
      • Final draft is to be released in a few months
      • Various states have voluntarily elected this body of law, which was developed without necessity for parliamentary enactment
        • Seen so thorough that merchants and consumers will want to include that ideal/model law as applicable to their transactions
        • EU have pursued this as an “optional instrument” that would be voluntary but also immediately biding on member states
          • Would act as 28th system of law in this 27 member union, with it containing 150 separate articles based on a “common frame of reference” among the member states
          • If only option is to pick a single body of law that is not short and easily comprehensible by consumers, it’s unlikely to be meaningful
          • Pablo Cortes’ book is quite an important one

10:35am – 10:45am Q&A

  • Mohamed Wahab: may be some problems in going to the seat of the vendor, considering costs of enforcement when factoring in such matters as challenges, appeals, and nullity.
  • UNCITRAL Article 35 arbitration rules regarding applicable rules of law apart from nation-state laws. Parties can agree on any rules of law under lex mercantoria, and if they choose none, then they must rest on the laws of the nation-state. Equity principles must be explicit.
    • Dave: UNCITRAL article 35 is consistent with ODR principles being discussed here.
      • It’s assumed that the National Administrator and Consumer Protection agencies act on ensuring enforcement of awards.
  • Zbynek Loebl: Should system start locally or globally? Should the system be written as an inter-governemental one, or can it allow for pirvate parties?
    • Profecto via Concilianet has high involvement of consumer protection agency in online mediations. This is not considered realistic for a global system.
    • Regarding the first question, global substantive rules and enforcement mechanisms seem necessary.
      • Pilot projects exist in US and EU that may be expanded to global application.

ADMINISTERING A GLOBAL EXTRAJUDICIAL SYSTEM

11:00am – 11:20am Tim Cole: ICANN’s Role in Domain Name Disputes

  • UDRP primary means of arbitrating domestic as well as cross-border trademark disputes related to domain names
  • Originally Network Solutions, the initial registrar, got sued by trademark holder and countersuits from registrants
    • These disputes left everyone unhappy
    • WIPO called for study, which in October 1999 led to UDRP
  • First complaints followed in December 1999
    • First changes to rules adopted by ICANN Board of Directors in 2009 allowing for electronic submission of certain documents
  • WIPO cases per year: few in 1999, dropped through 2003, grew through 2008, and dropped slightly in 2009
    • WIPO is one of four active ODR complaints
    • Over 20,000 cases filed since 1999
    • UDRP perhaps one of the longest and most successful ODR regimes
  • UDRP developments
    • Complaints for multiple (even thousands) domain names, multiple respondent-aliases, multiple (including class) complaints
    • Respondent is Whois proxy service
    • Partially electronic case management
    • Fully electronic case management
    • Clearinghouse proposal listing all recognized trademarks for UDRP violation avoidance
  • ICANN Oversight of UDRP: ICANN develops has a contract with a registry (e.g., company that runs the top letter domain of 3 letters or more, not country code disputes) and registrar through a registrar accreditation agreement (RAA)
    • The registry and registrar has an agreement with 960-970 registry-registrars
    • The registrar has a registration agreement with the registrant
    • All must agree to the UDRP
  • ICANN Oversight
    • Approves dispute providers based on track record with ADR proceedings, list of panelists, training ,panelists can serve on more than one panel, administration
    • Review effectiveness of dispute policies
    • Handles complaints about implementation of decisions
    • Handles complains about dispute providers: process matters, not decisions
    • Monitors registrars for compliance: implementation issues, contractual provisions, mutual jurisdictions
  • Some country code operators have incorporated the UDRP, others have their own dispute resolution practices (typically based on UDRP), while other use courts exclusively

11:20am – 11:35am Nicolas Vermeys: ECODIR

  • ECODIR has not ‘administered’ a system since 1999
    • In 1996 developed Cyber Tribunal which was one of the first online mediation and arbitration projects
      • Once the grant was spent, created a company called e-resolution, which existed for 3 years
    • Funded by European commission to develop a platform and create a trustmark / seal for websites who joined the project (though this second step never took place)
    • Process: register, email confirmation, entry of 2nd party contact info, completion of forced-response form that limits complaint categories along with a comments field, completion of a desired outcomes page, uploading of pertinent documents, transmission of email to defendant allowing them to view complaint and accept redress or counteroffer, if no resolution can ask for mediation, mediator reviews scenarios and suggests and intermediate solution that expedites standard pool-of-value negotiation
  • Incentive to use the platform was minimal because of the lack of trustmark / seal
  • Enforcement was not much of concern since both parties volunteered to use it

11:35am – Honourable Madame Justice Frances Kiteley: Building a Global Resolution System for Cross-Border Transactions

  • Justice sector still stuck in the Dark Ages: The End of Judges? How Can We Get Back Our Market Share?
    • Courts live in the past. Jurisprudence is based on slow movement from one aspect to the next. Sudden change does not exist within the court system.
    • Even for things so simple as finding location of a trial (which is set the night before), electronic filing, receipt of judgment … none of this is possible electronically.
    • Users of the system are not treated as customers. No performance expectations or accountability exist for them.
    • Courts serve three purposes: 1) When the state prosecutes an individual. 2) When the poor have legal issues. 3) When the rich require an injunction.
    • BC, Alberta, Newfoundland, Ontario, University of Montreal federal courts all doing exciting work regarding electronic filing.
  • American neighbors doing better, but discovering that identity theft can be a shortcoming of such systems given the public nature of the courts.
  • Courts used to be a venue of first resort, but now is venue of last resort.
  • We should start a conversation about how ODR can enhance justice in traditional courtroom.
  • Norm is multi-issue, multi-party, and multi-jurisdiction disputes in business and family law, or wrongful dismissal cases (with or without cause), or state’s litigation (such as probate).
    • Wonders how such complex issues can be addressed in online environments.
  • Opportunity exists for unbundling disputes, such as determining factual matters more parsimoniously, perhaps in real-time. In setting up wikis for class action cases and determining damages.
  • Challenges include the expression of un-moderated anger. Leveling of playing field in which one party self-represents, either by design or default.
  • Tribunals deal with far more legal demands than courts ever will. What role can ODR play in these administrative tribunals and unmet legal needs?
  • Transparency on the public record is critical in open court system.
  • Why is it assumed that the quality of justice is better within the courthouse than outside of it, including online.

1:10pm – 1:30pm Janet Martinez: Dispute Systems Design: An Analytic Framework

  • System: one or more processes designed to prevent, manage or resolve disputes
  • Analytic framework (applied to ODR)
    • Goals: Which types of conflicts does the system seek to address?
      • Small value, high volume, cross border e-commerce disputes
      • Are B2B and B2C characteristics the same or different?
      • Enhance sellers’ ability to sell – and protect buyers’ access to – ecommerce
      • Efficiency, accessible, trust-building, transparent, fair, unbiased, enhance information flow, be enforceable, global integration of system, predictable, consistent, development of norms/precedent, prevention/early resolution, party control over process choice, flexible for diverse cultures, languages, laws and political environments, prioritization and reconciliation of goals
    • Structure & processes options: What does the system seek to accomplish?
      • Negotiation? Mediation? Arbitration?
      • Tiered procedures?
      • Linked or integrated multiple processes?
      • Global and coherent system or linked?
      • New or existing?
      • Incentives and disincentives?
      • Trust in e-commerce v. moral hazard?
      • Interaction with formal legal system for enforcement?
      • Public or public/private auspices for administration?
      • Merchant as first step for redress
      • Technology to structure communication and shape dialogue
      • Soft law v. hard law approach (international principles with or without legislative action)
    • Stakeholders
      • Who are they? What’s their relative power? How are their interests represented?
      • Public, international organizations, private, nonprofit, payment intermediaries, existing and overlapping ODR options, judiciary
    • Resources
    • Success & accountability

1:30pm – 1:55pm Mohamed S. Abdel Wahab: Toward a Glob/(c)/al ODR Culture: System Design between Integration and Fragmentation

  • “Glocal”: applying global standards to local conditions
  • ODR’s de facto existence since 2001 is now becoming de jure via UNCITRAL
  • Exponential growth of e-commerce and mobile or m-commerce applications and transactions
  • Building trust online: efficient dispute prevention/resolution schemes (ODP/R)
    • In some cultures, this means citizens don’t trust a process unless it is government sponsored
  • The law and economics of ODR to low and high value claims
  • A midsummer’s night dream or a procrastinated reality?
    • The consumer contracts dilemma: overriding mandatory/policy considerations, jurisdictional issues
    • Consumer contracts: nationalism v. internationalism
    • Multi-tiered ODR processes and global justice for consumers
    • Fragmentation to integration: why distinguish online from offline consumers? Might be a problem regarding constitutionality.
  • Challenges
    • What do we mean by or want from globalized ODR? Access? Usage? Cooperation? Harmonization? Unification?
    • What level? Centralization / decentralization? Procedural and/or substantive?
    • Legal, cultural, economic, technical and political challenges
    • Developing a lingua franca for ODR?
  • Between Integration and Fragmentation
    • To regulate or not? Who, how, when: soft v. hard law?
    • UNCITRAL as harmonization not unification? Developing model law, or promote a convention?
    • Balancing interests of (consumer orientated) least developed countries and (vendor/business oriented) developed countries.
    • Pro-consumer regulation: regional/global trends
    • Time for a model law on ODR (for B2B and B2C)?
    • Time for international convention on ODR?
    • Developing international standards for certification and accreditation and a global code of conduct for ODR, especially in consumer disputes
    • Globalization of ODR requires: global access, technology neutral, comparable security standards, common standards, model law on ODR or ODR international convention, established system of precedent for ODR awards / substantive principles
    • Today we are more global and more divided, more interconnected and partitioned …

1:55pm – 2:05pm Mitch Chiahara

  • Trustmark Alliance & ICA-Net: safe and secure e-commerce
  • GBDe: Global business dialogue on e-society
    • Founded 1999, has 23 members
    • Projects/issues: consumer confidence, international NFC payment …
  • Consumer Confidence Issue Group Objectives
    • Cross-border trustmark, ADR and data privacy protection
  • Cross-border trustmark
    • ATA: Asia-Pacific Trustmark Alliance originated in 2000
    • ATA and Euro-Label (safe web shopping) consists now of 15 countries’ consumer protections
    • ICA-Net: an international complaint-handling network for cross-border online shopping originally proposed in 2007 and implemented as a 2-year pilot project
      • ERIA (Economic Research Institute for ASEAN and East Asia) established in 2008 for building safe and secured ecommerce infrastructure
      • Started in 2009 on trial basis, now ready for implementation
      • Seeks cooperation from member states and among complaint handling organizations, enforcement authorities, ADR providers, more public recognition, and governmental support

2:05pm – 2:30pm Q&A

  • May-Britt Kollenhof-Bruning: What do we mean by “ODR Provider?” Third party? Fourth party? Fifth Party?
    • Janet Martinez: The question concerns the ethics, identity and responsibility of providers.
    • Mohamed Wahab: Whoever provides ODR services, no matter how administered. These may be ad hoc systems in arbitration, though in ODR it’s all institutional.
    • Zbynek Loebl: VISA considers itself an ODR provider when it concerns chargebacks.
    • Jim Melamed: Does it take governmental action to form consortiums? Or can private groups guide this? It seems a mistake to assume that the government will pursue this.
      • Mike Dennis: The OAS will do this first on a trial basis. We don’t need laws to implement the pilot project? See concilianet.profeco.gob.mx
      • Colin Rule: It is a formal proposal of the government, with the general assembly of the United Nations being set to consider it for ratification
      • Mike Dennis: A treaty requires advice and consent of the House and Senate, and the US Department of State wouldn’t seek this until it’s been tested out.
  • Vikki Rogers: Might ICA-Net seek a partnership that might be expanded to private ODR systems?
    • Mitch Chiahara: Participation is currently voluntary, with no funds coming from the government.
  • Vikki Rogers: What would a code of conduct look like?
    • Mohamed Wahab: With UNCITRAL and governments stepping into ODR, there are existing players and providers who must cooperate and merge into a new system. Streamlining processes is what’s necessary in a ODR system to build trust through reliable processes. What happens, then, if a ODR provider wants to provide services but not follow by the standards and instead calls itself something else?
    • Colin Rule: TaoBao and G-Market dominate eBay because they’re escrow-based systems rather than one like eBay in which reconciliation is possible if a problem emerges. A platform that aims to be truly global must be a platform that permits multiple processes. Failing this a platform may be best suited just to one locale.
  • Bill MacLeod: If we’re going to design something, we should be specific. The online aspect of this is important, but at its core this process is about designing a system that’s cost-efficient, developed within a certain time, and meets stakeholder’s expectation and satisfies them.
  • Colin Rule: ODR is the how, not the what. Its goals are what will bring in stakeholders.
  • Dana Haviland: Another goal of ODR is expanding access by providing a new framework. Also, what are the similarities and differences between the OAS process and the UNCITRAL proposals with regard to B2B and B2C applications?
  • Kim Kovach: What are we doing to ensure that consumers don’t get dissatisfied with our process and instead get to procedural justice?
  • Mike Dennis: Governments are interested in ODR because there is no remedy for B2C, cross-border, disputes in the same manner in which they exist domestically.
    • China cannot be ignored because of its population 20 billion. But just because a nation is politically powerful, it cannot receive special treatment.
  • May-Britt Kollenhof-Bruning: Why has ODR not been adopted at local level and yet we expect it to internationally?
    • Dave Bilinsky: UNCITRAL and the OAS deal with trans-national processes only.

Business, Consumer, Government and Provider Perspectives

3:10p – Ernie Thiessen: Rewarding Generosity to Improve Negotiations (Application to Small Cross-Border Claims)

  • Handed out: short article and Powerpoint slides
  • Products: Smartsettle Infinity, Smartsettle One
  • Vision: Resolving conflict in a more peaceful, collaborative & intelligent way throughout the world.
  • 4 problems of negotiation: 1) time and money, 2) significant value on table, 3) relationships damaged, 4) weaker parties at a disadvantage
  • Illustration of buyer-seller dispute
    • 1) build a framework for agreement
    • 2) determine that the case is suitable for Smartsettle One
    • 3) Boil it down to a single monetary issue, say, buyer wants her money back
      • Ex: buyer wants to get $100, seller wants to give $0
    • 4) use Visual Blind Bidding to settle monetary issues
      • Replaces tedious negotiation dance, making generosity possible
      • Ex: $0 $13 $16 $20 $24 $26 $28 $100 might be the range of options with a hidden acceptance range; if ranges overlap, a deal exists
      • Most generous party – the one that has the smallest last move – rewards the one that moves the furthest rather than splitting the difference
      • Dampened pendulum arbitration: seller offers $15, buyer offers $22
        • Smartsettle favors the party closest to what an expert deems as “fair,” weighting the arbitrator’s decision more favorably to them
        • Mohamed Wahab: court judges must see all information to determine what is “fair”
          • Kim Kovach: what if an arbitrator comes up with a fair solution that’s outside of the offers made?
            • Paul Miniato: it depends on what the visible concession is
            • Fred Galves: yes, but party can game the system by starting with an outrageous initial bid, then making large concessions
    • 5) choose arbitration if negotiation does not settle the case

3:30p – 4:00pm May-Britt Kollenhof-Bruning: Juripax

  • System is suited for claim-handling and dispute-resolution practices
  • Built on concept of adding Web 2.0 tech
  • Dedicated to prep and intake solution for employment, divorce, small claims, e-commerce, personal injury
  • Provided as an ASP solution, in that it’s on demand, no software required, paid on a fee per case
  • Believes modern technology and internet aids self-help and self-determination
  • Aims at enhancing efficiency and creating economic value for the public benefit
  • Initial plan was to be a 4th and 5th party ODR provider, partnered with EDR Credit Services, then elected to operate only as 4th party provider
  • What has been achieved?
    • Proved the case for ODR
    • Developed process-driven software, 80% generic and 20% ADR specific
    • Invested in multi-lingual capability and cross-cultural competence (English, German and Dutch)
    • Confidentiality and data security
    • ODR-training: 1) system, 2) dynamics of online negotiation and mediation
      • Accredited by Legal Aids Board and Dutch Mediation Institute, which require online mediators to go through their training
    • Integrating user feedback loops
    • Aims at increasing internationalization, being interoperable, …
  • Technology-assisted / e-negotiation
    • Multi-tiered service via intelligent Q&A: 1) facilitating the handling of questions, issues and/or complains (diagnosis and direct negotiation), then if assistance is required, 2) assisting parties to resolve their issues effectively (facilitated settlement and arbitration)
  • Findings (full reports available by request)
    • Less than 10% of 3000 cases required mediator
    • “Structured” process as well as availability of “redress” options may well be a trust-engendering factor
    • Vast majority of consumers indicate that they are very satisfied in terms of outcome, speed and possibility to “have a voice”
    • Distance sellers have different motives, with middle-sized companies the most satisfied. Larger companies want integration with their existing CRMs.
    • 80% settlement rate, 80% of users would use it again
    • Less than 3% of users used the technical helpdesk
    • 90% reported login problems
    • A 30%-40% cost/time savings is feasible
    • Online setting can help reduce perceptions of biases and power imbalances
  • Online mediation
    • Either fully online or hybrid (online preparation/pre-caucus and subsequent traditional ADR/judicial procedures)
  • Multilingual and cross-cultural capability
    • Suitable for any language character set
    • Option exists to file a complaint/dispute in a pre-slugged questionnaire in the user’s language preference
    • On-demand online translation services (for an extra fee) provided by certified professional translation services
    • GUI changes are immediately notified to translation team
    • Multiculturalism requires taking into account differences in dispute resolution culture, proficiency/literacy among users, and adapting conflict-specific elements to different legal jurisdictions and best practices
  • Confidentiality and data security
    • Personal data: compliance with Privacy Directives
    • Web-based application protected by name and password
    • 256-bit SSL certificate
    • Multiple servers
    • Encrypted downloadable PDFs
    • Communications can be encrypted
  • Data and case management
    • Sees multi-party systems involving, say, social workers, therapists, etc.
    • Saves data for 7 years
  • Business model requires balancing commercial interests and public interest
    • Looking for critical mass for credibility
    • Obtaining legitimacy requires engendering trust
    • Liability issues require complex contractual relationships
    • Lack of clear guidelines/regulations
  • Opportunities
    • Areas where ODR is not a threat because there is no offline alternative
    • Increasing value-added along the value chain
    • Find other alternatives for funding / restructure current funding schemes

4:00pm – 4:30pm Eiichro Mandai: The Construction of Dispute Resolution for the Cross-Border e-commerce

  • Interested in consumer protections, and increasing the number of e-commerce transactions
  • ICA-net operates in Asia, where 28% (?) of the world will be living by 2013
    • ODR may encourage harmonization among ECC-Net
  • WEIA working groups’ ICA-Net pilot project 2008 December – 2010 March included Japan, Korea, Malaysia, and others
  • “case rooms” exist in which only members can participate in those discussion
  • Filings made through Consumer Advisory Liaison Office (CALO) such as the Better Business Bureau in the US and EC Network from Japan
  • Case management system: Case number, case name, petitioner, respondent, category, registration/termination date, status
  • For screenshots and more info, see http://www.oecd.org/dataoecd/42/6/44262810.pdf

4:30pm – 5:00pm Gabriela Szlak: Online Dispute Resolution: For the Digital Economy – Latin American Perspective

  • About the Latin American eCommerce Institute (ILCE)
    • ILCE serves as the hub for 11 networks in Latin America (total population of 547 million)
    • Non-profit NGO to promote digital economy initiatives in Latin America and consolidate its network of institutions
    • Initatives: ecommerce day events and awards; eBusiness social network online in Spanish; spreading activism through seminars, conferences, etc; training programs and certification; eConfianza Trustmark Program; ODR Regional Program
  • Digital Economy in the Latin American Region
    • US$27.6 billion spent on B2C in Latin America in 2010 (projected)
    • 51% of annual growth from 2003-2009
    • Accelerating factors: maturity of online offer; growth of broadband penetration; availability means of payment; consumers’ maturity and perception of security
    • Ecommerce growth independent of GDP growth (which has been weak and even negative)
    • Challenges: poor logistics and mail services; IT technical issues; broadband penetration; banking and electronic money; lack of trust from the public
    • prepaid systems may be important: mobile phone penetration is high (530 of 547 million have mobiles, though far from all are presently smartphones) , credit cards have about a 50% penetration (205 of 547 million)
    • Data security is important: broadband penetration is low (37 of 547 million) so people use cybercafés
    • Mexico and Brazil are the two largest ecommerce players
  • ILCE’s ODR Regional Program
    • discouraged development of digital economy: 1) growth of e- and m-commerce, 2) disputes growing, 3) existing solution were offline, complex, expense and uncertain
    • ILCE’s role is to promote cooperation, best practices, assisting providers, educating, and providing central administration
    • 2 pilot projects: eConfianza and CACE
      • To be replicated on other geographies
      • Have been approached about ODR for non-e-commerce application

    • Modules for ODR implementation by ODR providers: technology, legal, training
    • Certification: online platforms, legal framework, training programs
    • Consumer’s perspective on ODR: attractive, reliable, provides access to justice, expectation of redress
    • Vendor’s perspective on ODR: creating value for business, allowing efficient solutions, with the expectation that disputes will be resolved
  • ODR experiences in Latin America
    • PROFECO – CONCILIANET program that works to resolve both online and offline disputes
      • A videoconferencing platform which, therefore, may not be useful for a global platform
    • Peruvian Cybertribunal addresses Peruvian domain name disputes
    • ODR Latinoamerica is a social network of mediators of the Latin American region, an interdisciplinary group, with mediators from different specializations, connecting with each other, learning together in a collaborative framework, how to articulate mediation with technology
  • Thoughts regarding a Global Initiative
    • ILCE will lead cultural change for ODR implementation, make ODR an everyday reality in Latin America (Latam), bringing the opportunity to identify domestic and regional characteristics and needs

5:00pm Q&A

  • Mohamed Wahab: Central administration and certification of providers is interesting, but potentially problematic for liability reasons.
    • Gabriela: standards concern generic, commonly agreed-upon, matters; certification might concern matters like equality of access
    • Colin: brands (of sellers) has replaced trustmark seals, at least in developed networks, where they are likely to have their own dispute resolution processes
  • Fred Galves: With uniformity, perfection shouldn’t be the enemy of the good.
  • Tim Cole: Mobile access and payment mechanisms are critical in developing countries.
  • Vikki: a powerful market niche is for payment intermediaries, particular in the developing world, where the ability to pay via credit card may not exist and instead must be gotten via mobile payments

November 3, 2010

GLOBAL ODR SYSTEM: MODEL PRESENTED

9:00am – 9:55am Colin Rule: OAS-ODR Proposal: Functional Case Flows

  • In development since Nov 2009
  • Based on input gathered from a wide variety of stakeholders
  • Should handle millions of cases, not thousands
  • Should minimize bias
  • Should be able to handle large number of low value claims
  • Case: buyer is in Germany and has complaint about US seller; their point of entry is a German-language ODR provider or EU National Administrator; that entity would communicate the case to the case database administered by the Global Administrator; the Global Administrator communicates the dispute to the US National Administrator, who in turn communicates it to the US seller; the US seller then decides how to respond; this response is communicated to the US National Administrator, who passes it along to the Global Administrator, then back down to the ODR provider or EU National Administrator
    • If mutual communication cannot resolve the case, the Central Administrator identifies and selects an ODR provider who evaluates the case and renders a decision
    • The Global Administrator keeps record of all data that has been communicated via XML
    • May-Britt Kollenhof-Bruning: who decides when a case is closed?
      • Zbynek Loebl: perhaps a time-based rule, perhaps the neutral, perhaps the decision of the complainant, perhaps mutual consent of the disputants
      • Vikki Rogers: the arbitrator, if mutual consent is not possible
      • Colin Rule: whenever the buyer decides; when the seller issues a refund; when the neutral decides; within 20 days if there is no escalation the case auto-closes (since buyers who eventually get the merchandise in the mail and fail to close the case)
    • Jim Melamed: Is it a neutral or an arbitrator
      • Tim Cole: at ICANN, they’re panelists
      • Vikki Rogers: under OAS proposals, they’re arbitrators
      • Colin Rule: at issue is enforceability
      • Mike Dennis: whereas ICANN can enforce its decisions, cross-border arbitration decisions are enforceable under conventions
    • ???: What leads to the notion that a Global Administrator will be acceptable?
      • Colin Rule: While this is the OAS’s design, perhaps it will not be appropriate.
      • Vikki Rogers: under OAS proposal, arbitrator has option to do a facilitated settlement, or can ask for additional information and render an arbitration decision without a hearing
      • Zbynek Loebl: multilinguality is an open issue
      • Colin: at eBay, this is not much of an issue since the presumption is that if a sale is made on, say, eBay France, that both the buyer and seller have some fluency in French.
    • Mitch Chihara: Who assigns the National Administrators?
      • Vikki Rogers: The government.
      • Colin Rule: Perhaps private entities have some role in this decision.
      • Mike Dennis: The US would probably delegate it out, however in Latin American countries the consumer protection agencies are actively involved in that dispute
      • Tim Cole: Country codes, which ICANN does not administer, can be resolved under ICANN rules or another scheme, depending on the registrar’s preference.
        • Zbynek Loebl: ICANN is a quasi-private body.
    • ???: data can be collected and analyzed on a real-time basis?
      • Colin Rule: Yes, but the Global Administrator.
  • Enforcement
    • Once a case is decided, the outcome is communicated to the seller’s preferred administrator.
    • The seller is instructed to abide by the decision.
    • After a certain period of time (7 days) the buyer’s ODR provider checks with the buyer to determine if the settlement has been paid.
    • If the buyer indicates no, then notice is sent to the Global Administrator, who coordinates with the National Administrator to press for enforcement. The Global Administrator may also coordinate with the local consumer protection agencies, or may press for chargeback from the payment intermediary.
      • Vikki Rogers: Another option is to take the judgment to an arbitration board, who will ratify the judgment, allowing for an enforceable award via the courts
      • Colin Rule: As Jim mentioned yesterday, a provisional credit might be possible
      • ???: Is there room in this scheme for a process that helps facilitate the negotiation part?
        • Colin: the process is conceived as a) diagnosis, b) technology-assisted negotiation, c) facilitated negotiation, d) documents-only med-arb
      • Ernie Thiessen: What if the decision were binding as a contract?
        • Vikki Rogers: The OAS proposal says that the buyer’s recourse if there is no compliance
        • Gabriela Szlak: In BA, the mediator’s decision is executable as if it were a judge’s
        • Mike Dennis: If it’s a closed system in which the payment networks agree to participate, it would be relatively simple to enforce, but since not all payments will be made with credit cards, involving the courts is likely necessary, which requires having a binding arbitration decision.
        • Mohamed Wahab: In many legal systems, a decision is just a contract; an alternative has been applied in Sweden: when parties make a settlement, just before the settlement is signed, the mediator becomes an arbitrator by consent, allowing for an enforceable decision.
    • Seen as an opt-in process in which sellers pay a fee to participate and they gain the rights to advertise their participation in this scheme
      • Sellers also pay a small fee when a case is filed against them
      • Every approved ODR administrator receives a monthly payment, hopefully removing systemic bias in favor of seller. This fee may be scalable based on volume.
        • Dave Bilinsky: Like an insurance scheme, there is a possibility of gaming.
          • Colin Rule: Perhaps there’s a chance for gaming, but this is not an insurance scheme.
            • Doug Leigh: Though insurance providers might be interested in insuring online sellers.
      • Once a case is closed, the Global Administrator forwards payment to both the buyer and the seller’s ODR provider; if the ODR provider represents both the buyer and seller, then the ODR provider gets both fees
  • Structure
    • Businesses and payment channels may also integrate into the system and represent their sellers directly.
  • Observations
    • Aggregating money at the system administrator preserves independence.
    • Parties can choose their entry point, but the Global Administrator chooses the ODR provider, avoiding selection bias.
    • Seller opt-in improves the likelihood of voluntary resolution.
    • Individual ODR providers can continue to innovate and provide unique features.

9:55am – 10:45am BREAK-OUT SESSION #1: STAKEHOLDER GROUPS

  • Consumer Breakout Questions (Moderator: Fred Galves)
  • Business Breakout Questions (Moderator: Gabriela Szlak)
  • Payments Breakout Questions (Moderator: Esther Vilalta)
  • Government (Moderator: Mike Dennis)

10:45am – 12:00pm Breakout Group Debriefs

Business Breakout Group Debrief

  • Q1: Businesses would like to use as proposed? Would they opt-in? If not, what changes would be necessary?
    • Businesses will adopt if it helps their sales and/or reduces their costs.
    • Fess, if any, must be low.
    • Trustmarks may be useful for small to medium sized businesses.
    • The participation of large vendors is important. Increasing cross border sales seems to be a valid motivation.
    • If vendor’s ordering system is automated at the beginning steps (e.g., auto-emails regarding order and shipping confirmation) so too might the initial steps of the complaint process.
    • Consumers would have to have a preference for safety over the allure of low costs if they are to service only participating vendors over other, possibly lower cost, businesses.
  • Q2: How much should businesses pay to use this system?
    • Perhaps free at first. Scale up fees over time? Based on number of claims?
    • Should consider a pay scale that does not put at a disadvantage either vendors who sell few high-value items or those who sell many low-value items.
    • Pricing based on gross sales would not be effective given that some businesses maintain poor accounting records or simply avoid doing so to minimize taxation.
  • Q3: Do businesses want a single global redress system, or a series of regional systems that are interconnected with each other?
    • Either a single global system, or a set of global systems, based on NY Convention, other international commercial arbitration regimes or the UDRP model.
    • Clarify is required as to whether it would be better to have many or (like ICANN) few approved ODR providers.
  • Q4: What incentives should exist to encourage businesses to join?
    • Low cost or participation. A trustmark seal combined with a marketing campaign related to how it can improve consumer confidence.
    • Even vendors with few claims may be interested in participating because the ones they experience are difficult to resolve.
    • Vendors might like to have claims marked as “closed” by a third party.
  • Q5: Should businesses be shielded from future legal liability if they resolve a case through this system?
    • Yes, if the consumer is satisfied. No, if the consumer is not, as it would prevent them from access to justice.
    • Or, if the decision made is binding and final, that ruling would apply both to the buyer and seller, as an EULA. This may create a means by which decisions rendered are certified and forwarded to governments so that it’s clear that the dispute may not be litigated.
  • Main topics recommended for further discussion: What is a” business?”
    • May be online vendors who have both have merchandise and ability to accept payments (though these payments may or may not be made online, and full or partial payment may or may not be made online).
    • This may also include resellers or other intermediaries.
    • Unclear if it would apply to individual sellers, such as those who sell on auction sites but do not run a formal business operation. If required to participate, would they be required to pay into the system?
    • What of multiparty transactions in which the merchant is actually a reseller?
    • What if transactions are emailed? What of SMS messages? Or some future hybrid of Internet and non-internet sales?
    • What if a single business has multiple aliases or websites? Or what if they close their online presence? How is the “seller” identified and located?

Consumers Breakout Group Debrief

  • Q1: Do you think consumers would like to use the system as proposed? Would it generate interest and loyalty? If not, what changes would make it more favorable to consumers?
    • fast, cheap and free; with no practical alternative; giving up right to sue may present a disincentive
  • Q2: Should consumers pay to use this system?
    • free for consumers
  • Q3: What incentives should exist to encourage consumers to use the system? How should consumers be informed of the existence of the system?
    • trust and neutrality especially for those with no advocate (such as a consumer protection agency), convenience
  • Q4: Should the system be only opt-in at the time of dispute or could they be bound to use it at the point of purchase?
    • the system should be at the time of dispute, not purchase, so as not to generate fear/concern among unaware consumers
  • Q5: Should all consumers be able to participate in the system in their first language?
    • consumers should participate in their first language, or the language in which they made the purchase; however, it may be that a consumer can make a purchase on a point/click and fill-in-form basis but not negotiate in that language; perhaps the regime provide translation services
  • Q6: Should consumers have the right to go to court if they don’t like the results?
    • If structured like arbitration, then it ought be binding
  • Q7: Will consumer advocacy organizations be willing to surrender buyer access to judicial remedies?
    • buyer should not surrender access to judicial remedies
  • Main topics recommended for further discussion: opt-in at time of purchase; language

Payments Breakout Group Debrief

  • Q1: Who are the principal payment intermediaries? (e.g. banks, credit card systems, mobile, etc.)
  • Q2: Do you think payment intermediaries would support the system as proposed? If not, what changes do you think they would like to see?
    • Incentives for intermediaries: potentially reduced liability; increased cross-border sales; possible profit center
    • Disincentives for intermediaries: loss of control; lack of clarity regarding incentives for merchants; possible abuse by buyers
  • Q3: How can we incorporate payment intermediaries into the global ODR system?
    • Through accredited ODR providers
    • Payment intermediaries might be interested in reducing their chargebacks and dispute resolution caseload.
    • By providing them another line of service they can market
  • Q4: Closed (private enforcement) or open (with arbitration awards) system?
    • Better would be a closed system, though in the end a hybrid system may be necessary to enforce noncompliance.
    • Chargebacks may not be the only option
    • Connect remedy with payments
  • Q5: What remedies should payments companies be required to provide for cases resolved through this system?
    • If payment intermediaries opt-in, they should be excluded from liability for enforcement of payment, like as is the case in the UDRP.
  • Main topic recommended for further discussion: how to make the system closed?

Government Breakout Group Debrief

  • Q1: What is the appropriate role of STATES in the development of ODR process?
    • Procedural rules for ODR providers, substantive rules, enforcement plan
    • Structural possibilities: global/international, regional, local … with the preference being at the global/international level, though a more grass-roots pilot might be more likely to succeed
  • Q1b: Should the major functions of the ODR process (selecting ODR providers, collecting fees) be the function of the National Administrator or the Central Authority? Should the National Administrator be a government or private entity?
    • There’s no way to keep
    • Have a central clearinghouse provide the day-to-day operations regarding providers and fees.
  • Q1c: governing agency private or public?
    • In US, outsource it. Other states may elect to use a public governing agency
    • Governments will have to be convinced that the need exists for a system such as this, based on volume of sales, number of complaints, number of cross-border transactions voided because of the buyer existing in another state.
  • Q2: Do you think public agencies [OR, STATES?] would support the system as proposed? If not, what changes do you think they would like to see?
    • UNCITRAL would be a good place to start this process as expertise exists beyond just states themselves.
  • Q3: Should public agencies [STATES] pay for the creation of this system? Should the system rely on public financing for its continued operation?
    • States would have to pay for the creation of the system, the software
    • Once the system is created, it should be self-financing, with fees paid by businesses.
  • Q4: What role should government agencies play in enforcing outcomes?
    • If a closed system, then government involvement is minimal beyond initial agreements with payment networks. Difficult, however with systems such as Automated Clearing House (ACH) network.
    • If an open system, final and binding awards under the NY Convention would be appropriate.
    • Perhaps the Department of Justice pursues enforcement.
  • Other issue: Will there be a difference between online int’l, online domestic, and offline domestic dispute resolution options? Does that skew incentives?
  • Main topic recommended for further discussion: What role should government agencies play in enforcing outcomes?

12:00pm – 12:15pm Dave Bilinsky: How to increase stakeholder buy-in regarding these main issues?

  • Colin Rule: A final and binding process?
    • Jim Melamed: Only when after negotiation and perhaps mediation a dispute does not resolve.
    • Mike Dennis: Pre-dispute binding arbitration is common in international commercial contracts. States will have to resolve this.
    • Jim Melamed: Where and how the terms and conditions are stated is problematic, and friction is created from a buyer’s perspective because of the education process necessary.
    • Mike Dennis: The problem with post-dispute arbitration is that a seller could decline and force the issue to the courts.
    • ???: What about creating a system in which businesses are obligated to binding arbitration if the consumer elects it. Then again, consumers may be illiterate or not read the fine print.
    • Colin Rule: At eBay, it’s in the account sign-up EULA. Therefore buyers wouldn’t have to agree to the process each and every time they make a purchase, only when they register as a new buyer. Also, class-action liability may exist if 100% of buyers aren’t enrolled.
    • ???: Perhaps have binding arbitration with an escrow account built into it.

1:25pm – 2:30pm Peter Fogh Knudsen: Dealing with Cross-Border Consumer Complaints: The European Experience

  • What the ECC-Net is
    • The European Consumer Centers Network, consisting of 29 centers in the EU plus Norway and Iceland, staffed with individuals trained in law.
    • Set up by the European Commission to increase cross-border trade within the EU and increase consumer confidence in that internal market, and paid by the Commission and members states.
    • Since consumer protection differs from state to state, the organization differs from state to state.
    • Since 2005, addresses 40,000 to 60,000 cases per year, at a moderately growing rate.
      • About half of these cases are information requests from consumers regarding their rights.
    • About 56% of cases concern e-commerce, 22% concern on-premise transactions.
  • How ECC-Net deals with complaints
    • Offers legal and practical advice (such as seeking a chargeback from a credit card provider)
    • Can direct consumers to ODR and ADR schemes
    • May contact the seller to facilitate resolution, though no enforcement abilities exist
  • Problems faced trying to settle complaints
    • All consumers have a national ECC and can file complaints and manage the dispute in their own language, with translation services if necessary.
    • Traders not responding, not complying with the law. Disagreement about the facts of the case. Burden of proof (such as defective products) and expert opinions. Disagreement about the legal issues of the case. Lack of enforcement.
    • Cases were not transferred to ADR because: no competent ADR; ADR with only regional competence; ADR requires that a merchant is a member of a certain trade association; ADR requires that the merchant accepts ADR-handling on a case-by-case basis; consumer not interested due to ADR fees
  • Cross-border ADR in Europe
    • 1) Consumer and merchant seek resolution. 2) Consumer ECC contacted. 3) ECC evaluates validity of claim, looking at applicable law. 3) Valid claims transferred to an ADR or ODR body in the merchant’s country. 4) Decisions are sent back to the central ECC who renders a decision which is then forwarded to the consumer and merchant. 5) If settlement is not consistent with the consumer’s expectations, the local ECC advises the consumer.
    • About 50% of cases reach an amicable settlement.
    • 70% of cases with no settlement reached are due to lack of agreement from the merchant. About 20% are deemed unfounded claims. Of the remainder, an equal split exists between merchants that do not respond and consumers who do not agree with the settlement.
    • Comprised of 153 full-times employees at a cost of US$11.1 million.
    • The service is free for both consumers and merchants.
    • Of about 20000 cases, no solution was found for about 4500. Of the 911 forwarded to ADR, 367 closed, 160 reached and amicable settlement, and no solution was found for 80.
  • Where we need ODR the most
    • Complaints per activity sector: 30.6% transportation services. 26.2% recreation and culture. 13.3% restaurants, hotels and accommodation services. 8.3% miscellaneous goods and services.
    • Nature of complaints: 29% product/service. 21% delivery. 18% contract terms.
      • Product/service: 43.6% defective. 27.3% not in conformity with order.
      • Delivery: 78% non-delivery. 11% delay.
      • Contract terms: 63% rescission of contract. 17% cooling off.
  • Some basic ODR requirements
    • 257 (1998) and 310 (2001): Independence, transparency, adversarial principle, effectiveness, legality, liberty, representation.
  • Peter’s ideal ODR
    • Consumers can complain about almost anything.
    • Most areas are covered by private complaint boards set up in cooperation between business and consumer organizations.
    • Remaining areas
    • Small fee.
    • Online system that the consumer and merchant can access.
    • Lawyers prepare the cases.
    • Cases are dealt with no matter if the merchant participates or not.
    • The ADR provider pays for expertise, if necessary.
    • Decisions are made by a board with two consumer representatives, two business representatives, and a judge.
    • Decisions are based on law.
    • Merchant has 6 weeks to inform if the decision will be followed, after which the decision becomes binding as a court ruling.
    • If the merchant informs the board the decision will not be followed, the buyer is informed that her/his case can be brought to court at state’s expense.
    • Traders added to blacklist if they don’t follow the decisions of the board.
    • Merchants who lose cases forced to pay an enforceable fee of between US$800 and $US3000.

Q&A

  • Jim Melamed: Since about half of the ECC-net’s cases are resolved via mediation, then it would seem that if UNCITRAL were to have an arbitration-only scheme, then about half the cases that might otherwise resolve without adjudication wouldn’t.
  • ???: How are consequential damages determined?
    • Traditionally
  • Colin Rule: If the OAS proposal were brought before the ECC, what might they think of it?
    • That it would be relevant to consumers outside of the EU.
  • Eiichiro Mandai: Since the ECC-net is financed by the government, what accountability does it have in terms of reporting?
    • Budget, expenditures, activity on accounts, statistics on cases brought forth and resolved, etc.
  • Mohamed Wahab: Are consumers’ complaints verified as valid before moving forward?
    • Local ECC office evaluates initial claims based on applicable law.
  • May-Britt Kollenhof-Bruning: does the ECC website provide consumer education and self-help?
    • Yes, including check for trustmark.

2:30pm – 3:30pm BREAK-OUT SESSION #2: SYSTEMS DESIGN combined with BREAK-OUT SESSION #3: IMPLEMENTATION

  • Process (Moderator: Janet Martinez, Stanford University)
  • ODR Providers and Standards (Moderator: May-Britt Kollenhof-Bruning, juripax.com)
  • Roles (Moderator: Zbynek Loebl, adr.eu): cancelled
  • Enforcement (Moderator: Zbynek Loebl, adr.eu in place of Frank Fowlie, ICANN)
  • Legislation (Moderator: Lou Del Duca, Dickinson School of Law, Penn State)
  • Technology (Moderator: Colin Rule, PayPal): cancelled
  • Regional Concerns (Moderator: Mohamed Wahab, Professor of Private International Law)

3:45pm – xx Group Breakout Debriefs

ODR Providers and Standards Breakout Group Debrief

  • What is an ODR provider? The entity or business that ratifies and communicates the decisions made by 4th or 5th parties.
    • 4th party: any type of ITC that supports or substitutes for the expertise of a neutral
    • 5th party: commercial entity that provides ODR technology (4th party) combined in most cases with the provision of neutral services (3rd party)
  • Q1: What standards should ODR providers working under this system be held to? (e.g. transparency, independence, accessibility, etc.)?
    • Disclosures as to who the ODR provider consists of
    • Information regarding the nature of the dispute resolution services offered
    • Independence from the parties and no conflict of interest.
    • Transparency: explication of the provider’s requirements regarding their neutrals and how they will be appointed, the number of panelists involved in decision-making
    • Adversarial principle: merchants must be formally accused of a transgression before formal dispute resolution begins
    • Effectiveness: consumers should have access to procedure without obligation to use legal council
    • Legality: any decision may not deprive the consumer of protection to which they would otherwise be permitted in their home state
    • Liberty: decisions can only be binding if disputants are informed of this in advance of the dispute resolution process being undertaken
    • Representation: right to representation by a third party
    • Data security
  • Q2: What should the relationship be between national consumer protection authorities and ODR providers?
    • Data sharing and interoperability, that claims filed with a national consumer protection authority can be forwarded to the National Administrator, and that data from the National Administrator can be reported back to the national consumer protection authority for public dissemination.
  • Q3: How can we best ensure that ODR providers will be able to innovate under this global system?
    • Perhaps when non-profit develop technological solutions and business processes they should be encouraged to release the source code into the public domain (at least for the use of other nonprofits). Alternately, what if no government or university competition were permissible?
    • Perhaps commercial entities ought be encouraged to license their patented innovations – perhaps through an encrypted API – at a low cost to other authorized ODR providers.
  • Q4: How much money should an ODR provider be paid for supporting a buyer in one of these processes? How much money should they be paid for supporting a seller? How much for providing a neutral?
    • Whatever the market will bear, being cognizant of avoiding collusion.
    • A minimal charge should be levied on claimants, refundable if they prevail.
  • Q5: How can we enable ODR providers to compete with each other for cases?
    • A public report card of resolution rate, results of a satisfaction survey.
    • Reward investment of early ODR developers.
  • Q6: Should we assign ODR providers to certain regions where they can accept cases, or enable them to accept cases from around the world?
    • Let the marketplace bear this out.

Process Breakout Group Debrief

  • Goals should include accessible technology, access to justice and enhancing e-commerce.
  • Process criteria: efficiency, effectiveness, satisfaction, legal/justice norms, transparency, independence, and cultural differences
  • process design
  • ODR 3P

Enforcement Breakout Group Debrief

  • Q1: Realistic to assume that sellers will voluntarily comply with settlement agreements?
    • No.
  • Q2: Will public enforcement be adequate?
    • No. The answer has to be private enforcement.
  • Q3: Should the seat of arbitration be at the place of enforcement?
    • Yes.
  • Q4: Can we protect against business collapse and fraud?
    • No. At eBay businesses get overcommitted and put into receivership.
  • Q5: Is the OAS-US design for enforcement going to work on a global level?
    • No. Private enforcement mechanisms (collections) is all that is scalable.

Legislation Breakout Group Debrief

  • low cost / high volume
  • role of soft law (convention v. model law v. guidelines) ought be decided at end rather than the beginning of the process; Blue Button system being developed in the EU; set of parameters on regarding upper limit on claim and/or price providers could charge would have to be sensitive to local economies
  • location and specialization
  • limited use of reservations

Regional Concerns Breakout Group Debrief

  • Redress
  • Empathy: listen to the idiosyncrasies local consumers and businesses
  • Glocal: adapted to local conditions
  • Interstate cooperation
  • Operability: accessible in local languages
  • Normalization and harmonization

Q&A

  • ???: Which “local” are you referring to, especially when there are so many irreconcilable differences even within proximally close geographies.
  • Colin Rule: leaving the market to decide the price of resolution seems irresponsible in that it presumes that the cost of the system is neither too high nor too low.
    • Nicolas Vermeys: IP should be protected or at least rewarded, especially among early developers with deep sunk costs.
    • May-Britt Kollenhof-Bruning: private companies may be willing to cut down on processing fees, but this is a matter of scalability depending on the volume that presents itself
    • Jim Melamed: The existing industry doesn’t have the ability to respond to the possible onslaught of claims.
  • Fred Galves: Missing the political element by focusing only on the economic and legal. Perhaps sellers might have a retainer, bond or account reserve that pays them interest. This retainer would have to be replenished.
    • Colin: but do we have the power to leverage this? And will sellers be likely to buy in to such a model?
  • Colin Rule: Convince payment providers to cooperate.
    • Doug Leigh: Regarding enforcement, what if the system were to be funded by a cut from payment providers for effectively allowing them to outsource their dispute resolution processes?

5:00pm – 5:30pm Colin Rule: Wrap-up

  • Some consensus: binding nature of process
  • Process of communiqué development: based on notes and the typewith.me documents, Doug Leigh and Colin Rule and will generate the initial document, then share with the community of participants
  • ODR Study Group: 5th public meeting on Nov 22 (10a – 12:30p) at the Department of State, Office of Private International Law, 1800 N. Kent Street, Suite 4095, Arlington, Virginia. 888-684-8852 (US) or 1-215-446-0155 (internationally). Access code 4293620
    • See the Federal Register, Vol 75, No. 208, Thursday, October 28, 2010, Notices, p. 66420
  • Zybnek Loebl: this is a good start, and this group should continue collaborating together, on the document, on the blog and as the proposal moves forward to UNCITRAL; it is now time to involve stakeholders (payment intermediaries, governments from across the globe, ecommerce companies and business associations)
    • Colin: a one-day will be done at the 2011 ODR Forum in Chennai; once we engage stakeholders we’ll get hammered with questions to which we will often find that we have answers
  • Mohamed Wahab: central administration will be a major challenge
  • Fred Galves: possibilities exist for hybrid systems (such as doing pre-trial work, and notification of awards, online)
  • Doug Leigh: please reach out to your contacts in developing and least developed countries to solicit their ideas and concerns regarding this undertaking as prior commitments and travel expenses prevented the participation of most from this contingent

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