overview

This profile looks at Alternative Dispute Resolution (ADR) schemes, legislation and issues regarding electronic commerce.

It covers -

• an introduction on this page to key concepts, issues and legislation
• Australia - an outline of Australian legal frameworks regarding ADR
• schemes - information about offline industry and government ADR schemes in Australia
• global - international mediation schemes
• overseas - ADR in Canada, the US, NZ and other countries
• ecommerce - use of ADR in electronic commerce (B2B and B2C)
• social ADR - mediation in family and other law
• online - automated dispute resolution and expert systems developments
• studies - writing about ADR principles and mechanisms

     orientation

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 multiple jurisdictions.

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 -

• commercial 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
• administrative 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
• political 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 negotiations
• emphasis on counselling and conciliation rather than apportionment of blame, damages and costs
• recognition that litigation in courts may be a lengthy and expensive process that is inappropriate to many small commercial disputes
• awareness 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.

Some 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 online.

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 determination.

     concepts

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 statutute law, in international common law or in prior agreement about rules of practice. Arbitration of corporate disputes in Australia, for example, generally reflects the NSW Commercial Arbitration Act 1984 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 role.

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 -

• 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
• are 'clickwrap' terms & conditions (inaccessible fine print legalese inducing site users to relinquish standard consumer protection) inherently weighted against most online consumers?

There 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.

     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 - and the auDRP for the dot-au space.

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 Attorney-General

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.

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.

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