This profile looks at Alternative Dispute Resolution (ADR)
schemes, legislation and issues regarding electronic commerce.
It covers -
introduction on this page to key concepts, issues and
- an outline of Australian legal frameworks regarding
- information about offline industry and government
ADR schemes in Australia
- international mediation schemes
- ADR in Canada, the US, NZ and other countries
- use of ADR in electronic commerce (B2B and B2C)
social ADR - mediation
in family and other law
- automated dispute resolution and expert systems developments
- writing about ADR principles and mechanisms
The concept of alternative dispute resolution encompasses
a range of 'non-curial' mechanisms for dealing with disagreements,
ie seeking to settle disputes outside courts.
Those disputes might be between nations. ADR has been
used to address disagreements over the determination of
borders, over the management or use of resources such
as rivers, over trade and over action by a particular
government such as seizure or destruction of assets.
The disputes might instead be between businesses, whether
within a single jurisdication or involving parties in
In Australia ADR for many years was associated with attempts
to resolve disagreements between trade unions and businesses
or between individual employees/contractors and businesses.
It has gained recognition as a mechanism for handling
family law disputes, with a particular emphasis in Australia
under the 2005 family law reforms.
As noted elsewhere on this site, ADR has been used to
deal with e-commerce disputes (particularly B2C conflicts)
and disagreements about domain name registrations (for
example the auDRP and UDRP).
ADR is not an ersatz version of courts or justice. As
might be inferred from the preceding paragraphs, it may
be an intellectually rigorous and formal way of solving
problems that involve many people and very large amounts
of money. Recourse to different forms of ADR may reflect
convenience, for example using an arbitrator to solve
a business dispute may be far quicker, often less costly
and generally more private than litigation in provincial
or national courts
convenience, avoiding for example protracted negotiation
about which court will hear a dispute and which system
of law will be used in disagreements involving parties
in multiple jurisdictions
convenience, avoiding loss of national pride (or merely
erosion of the standing of leaders) and indefinite delay
by turning to an agreed arbitrator rather than bilateral
on counselling and conciliation rather than apportionment
of blame, damages and costs
that litigation in courts may be a lengthy and expensive
process that is inappropriate to many small commercial
that there is value in community-based justice schemes
such as circle sentencing, particularly for young offenders
and for members of Indigenous or other communities who
are overrepresented in the Australian prison system.
ADR does not involve face to face contact in a surrogate
of a court room. Instead it may feature presentation of
short factual statements by non-specialists for consideration
Not all practitioners of ADR come from a legal background.
Some instead have expertise in information technology,
architecture, engineering, quantity surveying, geology,
social work or other fields. They may act as individual
mediators or arbitrators in formal or informal settings.
Some, such as panelists in auDRP disputes, work as small
teams to provide determinations.
Given the range of mechanisms and types of disputes -
unhappiness about a defective toaster, who gets the family
cat after the divorce, what penalties are paid when a
billion dollar engineering program goes wrong - there
is no single type of ADR. Interaction with legal systems
and courts varies.
Some ADR thus essentially serves as intervention to prevent
problems escalating to the stage where they must be dealt
with by a court. Other ADR offers a full alternative to
litigation, with for example parties to a commercial contract
binding themselves in advance to seek determination outside
the courts of particular disputes and to abide by that
Practitioners of ADR typically highlight three key concepts:
arbitration, mediation and conciliation.
Arbitration (aka adjudication) is a formal
dispute resolution process in which two or more parties
refer their dispute to an independent entity (the arbitrator)
for determination. In commercial disputes it is typically
grounded in a particular jurisdiction's statute
law, in international common law or in prior agreement
about rules of practice. Arbitration of corporate disputes
in Australia, for example, generally reflects the Commercial
Arbitration Act 1984 (NSW) and similar enactments
in the other states/territories.
Subject to adherence to natural justice the nature of
the arbitration may be varied by the parties to suit the
basis of their dspute, its complexity and desired outcomes.
A small case, for example, may be decided on the basis
of documentary submissions, significantly reducing costs
and delays. More complex cases may involve a judicial
style of hearing in which formal claims are submitted
by lawyers, evidence (in the form of documentation and
expert testimony) is provided, claims and evidence are
tested by cross-examination, and defences are offered.
The determination, often referred to
as the Award, is binding and enforceable in the same manner
as a court judgment. The process is private and may be
speedy; it has thus attracted support within the business
community as a way of handling disagreements outside the
courts and many contracts accordingly feature an 'arbitration
clause' specifying that arbitration will be used if things
sour. Some disputants instead agree, consistent with Australian
contract law, once a contract is in effect, to submit
disputes to arbitration.
In contrast, mediation is a confidential
process in which the disputants seek the assistance of
an independent entity in negotiating a decision about
the dispute. The mediator does not provide a determination,
ie cannot impose a decision on the parties. The mediator
instead relies on experience with past disputes, technical
expertise and facilitation skills in helping the disputants
to explore the issues and ideally reach the best joint
decision that is achievable in the circumstances.
It is valuable in environments where there is ongoing
contact between parties, for example where parents have
joint custody of a child or where a construction project
or software development project involving several parties
is still underway. Contracts sometimes specify that parties
must agree to participate in mediation (although the outcomes
of that participation may not be binding); the current
Australian family law regime similarly emphasises participation.
Proponents note the usefulness of engaging in mediation
as soon as as possible after a dispute arises, both because
an exchange of information and meeting of minds is more
likely before disputants paint themselves into corners
and because it is likely to be more cost-effective than
either litigation or arbitration.
Conciliation is a process through which
a conciliator (a neutral entity) assists parties to a
dispute to identify the basis and extent of their disagreement,
develop options, consider alternatives and endeavour to
reach an agreement. The conciliator does not have a determinative
The conciliator may advise on or determine the process
of conciliation whereby resolution is attempted. The conciliator
may also suggest terms of settlement, offer expert advice
on settlement terms and may actively encourage the disputants
to reach agreement.
ADR and ecommerce
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 -
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
the potential cost of litigation in some jurisdictions
sufficient to deter many businesses from engaging in
e-commerce with consumers in those jurisdictions
& conditions (inaccessible fine print legalese inducing
site users to relinquish standard consumer protection)
inherently weighted against most online consumers?
is 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 page provides an introduction to e-commerce ADR.
Subsequent pages consider ADR law and schemes in Australia,
international arbitration schemes, ADR in other jurisdictions,
e-commerce questions and major research.
As we noted above, ADR is not new to the offline and
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 - and
the auDRP for the dot-au
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),
and the Australian National Alternative Dispute Resolution
Advisory Council (NADRAC)
- a body that provides advice on ADR to the Commonwealth
Proponents of ADR emphasise its privacy, flexibility,
timeliness and (relative to many court proceedings) low
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 is similar legislation
in New Zealand and Australia.
Arbitration is not a panacea. Not all parties to a dispute
may be equal. Some may not have read the fine print (one
reason why readability
is an issue, online and offline) and realised that particular
arbitration requirements are inappropriately onerous.
IT vendor Gateway, for example, is reputed in the past
to have required arbitration through the International
Chamber of Commerce, with a non-refundable US$4,000 filing
fee that exceeded the cost of most of its products.
(ADR in Australia)