overview

Several guides on this site note problems associated with electronic commerce disputes, particularly those involving activity that cuts across boders. Trans-border commercial disagreements are not new. There have been formal mechanisms for resolving such disputes since at least the 1850s, with some scholars arguing that they are discernable from the late Middle Ages onwards.

E-commerce poses particular challenges -

-   whose law applies when disputants are in different jurisdictions

-   are the costs of litigation (or unfamiliarity with procedures in a particular jurisdiction) a fundamental impediment to effective action by consumers in B2C disputes

-   is the potential cost of litigation in some jurisdictions sufficient to deter many businesses from engaging in e-commerce with consumers in those jurisdictions

There's accordingly growing interest in online alternative/alternate dispute resolution (ADR) mechanisms that might provide timely, low-cost, transparent and accessible responses to those challenges.

This profile looks at e-commerce ADR. This page provides an introduction. The following pages highlight B2C and B2B proposals.

     background

As we noted above, ADR is not new to the offline and online worlds.

For many web-heads the most prominent example is the provision of dispute resolution services by the World Intellectual Property Organisation and other arbitrators as part of the ICANN Uniform Domain Name Dispute Resolution Process (UDRP), discussed in our ICANN profile.

ADR generally involves mediation (parties to a dispute reach a voluntary settlement through the assistance of a skilled facilitator) or arbitration (a legally binding ruling is made by a disinterested neutral arbitrator chosen by the parties to the dispute).

Specialized rules and procedures have evolved from work by law firms and organisations such as the American Arbitration Association, Australian Alternative Dispute Resolution Centre and Australian Commercial Disputes Centre (ACDC).

Proponents of ADR emphasise its privacy, flexibility, timeliness and (relative to many court proceedings) low cost.

Mediation involves an attempt by the parties to resolve the dispute with the aid of a neutral third party. The mediator's role is advisory. The mediator may offer suggestions but resolution of the dispute rests with the parties themselves. Many mediation proceedings are confidential.

Arbitration involves submission of a dispute to one or more impartial persons for a final and binding decision. The arbitrators may be lawyers or others with expertise in a particular field such as domain names, trademarks, computer software or the law of the sea. The parties control the range of issues to be resolved by arbitration, the scope of the relief to be awarded, and many of the procedural aspects. Arbitration is less formal than a court trial. The hearing is private. Because the parties have agreed to be bound by the arbitrator's decision, few awards are reviewed by courts.

Recourse to ADR often reflects provisions in a contract between the parties, for example highlighted in the terms and conditions agreed to by consumers buying a product or service online.

Inclusion of such provisions is recognised in most national legal codes and in proposals from the United Nations Commission on International Trade Law (UNCITRAL). The US Federal Arbitration Act for example provides for enforcement of arbitration agreements and awards in interstate-commerce and international contracts; there's similar legislation in New Zealand and Australia.

     ADR in Australia and New Zealand

ADR law in Australia involves federal and state enactments.

At a national level the International Arbitration Act 1974 (here) reflects the UNCITRAL Model Law on International Commercial Arbitration (here) about procedures for international arbitration, covering all international commercial arbitration conducted in Australia unless otherwise agreed.

The Act also adopts the Convention on the Recognition & Enforcement of Foreign Arbitral Awards - aka 'New York Convention' - (here) and 1965 International Convention on the Settlement of Investment Disputes between States and Nationals of Other States (Washington Convention). It sets out the institutions and procedures that are available for the conduct of international arbitration. It does not deal with other alternative dispute resolution processes for resolving private international commercial disputes.

Each State/Territory has uniform Commercial Arbitration Acts dealing with domestic arbitration -

New South Wales Commercial Arbitration Act 1984 (here)

Victorian Commercial Arbitration Act 1984 (here)

Queensland Commercial Arbitration Act 1990 (here)

South Australian Commercial Arbitration Act 1986 (here)

Western Australian Commercial Arbitration Act 1985 (here)

Tasmanian Commercial Arbitration Act 1986 (here)

ACT Commercial Arbitration Act 1986 (here)

Northern Territory Commercial Arbitration Act 1985 (here)

Arbitration in New Zealand is covered by the Arbitration Act 1996 (here), based on the UNCITRAL Model Law.

A key document is the October 2001 Commonwealth Treasury Department discussion paper (PDF) on the use of dispute resolution in B2C e-commerce.

     reading

Among literature on ADR we recommend Dealing in Virtue: International Commercial Arbitration & the Construction of a Transnational Legal Order by Yves Dezalay & Bryant Garth (Chicago: Uni of Chicago Press 98), International Commercial Arbitration in the United States: Commentary & Materials (New York: Kluwer 94) by Gary Born and Law & Practice of International Commercial Arbitration (London: Sweet & Maxwell 99) by Alan Redfern & Martin Hunter.

For UNCITRAL see A Guide to the UNCITRAL Model Law On Commercial Arbitration: Legislative History and Commentary (London: Kluwer 89) by Howard Holtzmann & Joseph Neuhaus, The New York Convention of 1958 (Deventer: Kluwer 81) by Albert van den Berg and International Commercial Arbitration: A Transnational Perspective (St Paul: West 99) by Tibor Várady, John Barceló & Arthur von Meheren.

For US perspectives see Jack Coe's International Commercial Arbitration: American Principles and Practice in a Global Context (Irvington-on-Hudson: Transnational 97) and papers in International Dispute Resolution: The Regulation of Forum Selection (Irvington-on-Hudson: Transnational 97) edited by Jack Goldsmith.

The major study of what might be involved in taking the arbitration out of the offices of corporate lawyers and onto screens for access by individual consumers, small businesses and other parties is the project under the auspices of the American Bar Association (ABA).

In mid-2001 it released a short preliminary report and concept paper (PDF) on "consensus-based protocols, workable guidelines and standards that can be implemented by parties to on-line transactions and by online dispute resolution providers" in multi-jurisdictional B2B and B2C transactions.

The report reflects ongoing debate about the proposed Hague Convention on Jurisdiction & Foreign Judgements in Civil & Commercial Matters (HCCH), a contentious international agreement applying to most private litigation. It has been the target of severe criticism by commercial interests and by other advocacy groups; examples are the attack by the US Consumer Project on Technology (CPT) and the Harm from the Hague paper from open source guru Richard Stallman. There's a succinct introduction in a Commonwealth Attorney-General's discussion paper.

In Europe the ambitious E-Arbitration-T project, criticised as another way of flushing EC funds into Spain's software industry, is seeking to build ADR systems for disputes between small and medium-sized enterprises. The systems would provide "electronic support" for the appointment of arbitrators, statements of claim and of defence (with any amendments), pleas about the arbitrator's jurisdiction, evidence and hearings, internal processes and awards by the arbitrator.

   next page  (B2C)