Since ODR has emerged as the theoretical frontrunner in dealing with cross-border e-commerce disputes, there is certainly an abundance of scholarly research praising this new form of dispute resolution. ODR is generally extolled for its efficiency, cost-effectiveness and its ability to increase access to the justice system by disadvantaged groups. The benefits of online dispute resolution are most easily illuminated when ODR is compared with traditional litigation. ODR removes some of the burdensome jurisdictional rules, the glacially slow nature of the traditional court process and, at least with respect to voluntary forms of mediation and negotiation, and the problematic conflict of law issues. ODR does have its set of drawbacks which are preventing it from being widely implemented for resolving disputes. This chapter will deal with the merits and demerits of ODR system.


Not only does ODR provide some time-saving procedural benefits, it also has the much-heralded advantage of increasing access to the legal system by sharply reducing costs.  The flexible and often party-friendly nature of ADR, coupled with the remarkable technological features of the Internet, makes ADR an appropriate instrument to resolve online conflicts. The principal reasons in support of the preceding proposition are discussed below.

Speedy Resolution

One of the main advantages of ADR over litigation is that it is less-time consuming. Where offline ADR may help settle a matter in days or months, as compared to the years it may take to resolve litigation, online ADR promises settlement of disputes within days or even hours. [1]  Online Dispute Resolutions can also help to significantly speed up the amount of time it takes to resolve a dispute. Time-consuming jurisdictional rules often burden litigation; however, many of the rules that would extend the timeframe for the resolution of a dispute are not required in online dispute resolution. The borderless nature of the Internet diminishes the communication problems faced by parties and counsel located in different time zones. Further, most of these ODR service providers are functioning round the clock. Interested parties can merely visit the provider's website and fill in certain electronic forms, thereby also eliminating any delays associated with receiving appropriate forms. [2]  Moreover, the Internet enables parties to easily obtain data and other information about their cases in real time. Furthermore, unlike in-person mediation or arbitration in which the parties must find a time when they are both available to meet at a physical venue, and possibly find times to return again in the future, online dispute resolution allows each party to “attend" the negotiation in accordance with its own timeframe. In addition to easy accessibility, e-mail simplifies the task of scheduling ADR proceedings and avoids any phone or fax-tags in the process. E-mail is also a superior and swifter form of communication compared to fax, as it facilitates the sending of documents of multiple parties simultaneously, thus saving time and money.

Expanding the Reach of the Justice System

One of the biggest benefits of online dispute resolution is that such systems can drastically decrease the cost of getting a dispute resolved; thus allowing the opening of the doors of the justice system to traditionally disadvantaged groups. [3] As compared to filing suit in a court, the cost of online dispute resolution is a “mere trifle." There is even a fairly significant difference between the costs of using online dispute resolution as compared to using other forms of alternative dispute resolution. Cost is one of the most crucial factors in dispute resolution, as both sides would eventually like to reach an optimal decision at the lowest possible price. These additional savings tend to revolve around the cost of travel and venue reservation that is required in other forms of alternative dispute resolution, but not in the online dispute resolution setting.

Online Dispute Resolution mechanism best suits the financial demands of both parties. Most of the document exchange in online proceedings takes place via e-mail, as opposed to fax (which is prohibitive) and post (which is slow).  [4]  Therefore, electronic transmission of documents is not only easier and faster, but it is also cheaper compared to litigation, where documentation is both costly and vast. In disputes where the parties are situated in separate countries, atleast one of the parties to the dispute need to travel and incur a high amount of money on it. However, when in such a case, the ODR mechanism is used, then, such miscellaneous expenditure is cut down.  In the event that witnesses are required or face-to-face meetings are necessary, instant messaging, videoconferencing, or chat room conferences can be used to mitigate travel costs.

Non-confrontational Mechanism

While the intangible nature of the Internet is often a drawback in using this medium, these qualities could be advantageous in dispute resolution proceedings. The distance between the parties is also beneficial when the parties are uncomfortable confronting each other or they don’t trust each other. Since most of the communication is online, through e-mails or other modes, the parties get time to think, reflect on their position and accordingly take the next step. Time pressure is absent which provides these parties with time to take into account the situation and the latest developments.

Neutral Forum

A traditional ADR process may take place at the office of some other party or that party’s lawyer, which could make the outside party a little uncomfortable. In ODR, such a thing is avoided as internet provides a neutral location to the parties.

Eliminates Complex Jurisdictional and Choice-of-Law Problems

The Formal Justice systems are restricted by the legal sovereignty and comity and sometimes an injured party may have to travel from one place to another to file a case, and to get justice. In the ODR mechanism this is overlooked as if two parties to a dispute submit to an online ADR provider, then the issue of jurisdiction is avoided.

Facilitates Record Keeping

Another benefit of using online ADR is that it facilitates the process of recording correspondence, pleadings, statements, and any other written, oral, or visual communication transmitted electronically. The documentation of records and other online communication is not only useful, but essential, especially if the ADR process provides for appellate review. 


While online dispute resolution has many benefits, as discussed above, the system also has a fair number of disadvantages as compared to traditional courtroom litigation or other forms of in-person alternative dispute resolution. This part of the chapter will deal with the most prominent disadvantages of ODR.

Presence of a Technological Gap

One of the most prominent problems with ODR is that it entirely depends upon technology and mode of communication. This actually prevents a lot of people from using these methods. This turns out to be a huge disadvantage as these people might be the ones who would be greatly benefited by the cost-effectiveness of these methods. Although increased technology may potentially advance the field of mediation, these advances will not be available to those who do not have access to a computer and the Internet. This may be especially true for online resolution of disputes occurring in the physical--rather than the virtual-- world.

While technological advances have been useful in increasing communication abilities between parties, such advances presume that the users have an understanding of the underlying technology. This presumption, however, is not always warranted as there is a gap between many groups in society in relation to technological knowledge and use, and it seems that this gap may continue to grow. Additionally, many of these individuals simply may not be able to access the technology that is necessary for online dispute resolution (e.g. at the very minimum, a computer and an Internet connection).

A lot of places technology is not as developed as other countries and this proves as a great hinderance in the usage of the ODR process to resolve the dispute. There is a technology gap between countries and due to this gap, ODR processes cannot be used to solve a lot of disputes. The structure of the online systems that is currently in place further exacerbates quite a few of the problems that exist regarding technological gaps between individuals and the effect of such gaps on online dispute resolution. The formatting of many of the current online dispute resolution systems is excessively confusing, thus further adding to the problems that a technological gap causes. Oddly enough, however, advances in technology may actually be the solution to these technological issues.

Further, even if parties and their counsel do have Internet and e-mail access, they may not be sophisticated or savvy enough to use these technologies in the course of dispute resolution. In a real world legal dispute, an attorney assists the consumer in filing complaints and other pleadings. However, in an online ADR situation, the consumer generally drafts his or her own complaint. Sometimes the complaint may not be appropriately drafted; in other words, legally relevant facts may be omitted and unnecessary facts may be included. Since most of the communication with arbitrators and mediators is online, a party that is uncomfortable with organizing and eloquently penning down its arguments may be at a disadvantage. These types of “access issues" potentially span a number of scenarios. For instance, a party involved in a dispute as a result of an online purchase made using a library computer will clearly have difficulty conducting a lengthy, real-time mediation.  [5] 

Furthermore, some of the disputes which are generally resolved by using ODR processes are of complex nature.

Concerns Regarding Procedural and Substantive Fairness

Another commonly discussed issue relating to online dispute resolution is that such a system encumbers procedural and substantive fairness. This argument is generally focused on the fact that many of the due process rights that are associated with courtroom litigation are missing in online dispute resolution. A successful system of online dispute resolution will need to balance these core due process rights with the benefits and cost-effectiveness associated with an online system of dispute resolution. If ODR continues to expand without governing regulations, consumers may have a difficult time finding quality ODR services. Although other quality concerns are important, one of the major issues in online mediation is ensuring consumers can identify quality mediators. While there is no uniform law governing mediator behavior, many traditional mediators belong to organizations that require mediators to follow the organization's ethical guidelines when they mediate on behalf of that organization.  [6] 

Due to the lack of standard guidelines, concern may arise in the mind of the party with regard to the mediator’s ability to resolve the disputes fairly and as a result of this, consumers may be reluctant to try ODR processes.

Lack of Human Interaction and Miscommunication

The lack of face-to-face interaction also deprives the mediators and arbitrators of the opportunity to evaluate the credibility of parties and witnesses.When online disputes are settled over e-mail, the parties may engage in caucusing without the mediator's knowledge. While the physical separation of parties can help the neutral third-party focus on the substantive issues rather than on the parties' emotions, such physical separation also leaves ample opportunities for miscommunications between the parties or between one of the parties and the neutral third-party. Even if a sender is able to adequately express him or herself in writing, the recipient may still misinterpret the message. This is especially likely to occur when parties are located in different countries and speak different languages. Moreover, the fact that the parties do not know each other may as it is cause tremendous misunderstanding between them. A party to the dispute may also frustrate the process by not responding to e-mail other requests. This makes it almost impossible for the ADR provider to distinguish between a genuine technical difficulty and an uncooperative party. 

Service of documents and non-repudiation

In some instances, it is necessary to send a message in such a way that the recipient cannot deny having received the message. This is the reason why in the physical world some documents are sent by registered mail or served personally on the intended recipient. Where the sender of a message requires proof that the other side has received the contents of the message in an unaltered, legible format, email and other forms of electronic communication may not fulfil this purpose. Emails sometimes arrive with considerable delay, with corrupted contents or not at all. Most email software does provide for an electronic receipt, which is automatically sent back to the sender of the original email either when the email has arrived in the recipient's mailbox or when the recipient has opened the messages. Unfortunately these receipts are not reliable- they were not designed to be a legal acknowledgement.

Confidentiality and privacy on the Internet

E-commerce emerged and still largely exists as “stranger-to-stranger" commerce, thereby making transaction and communication security and confidentiality one of the biggest concerns. [7] In most arbitration proceedings the parties will wish to maintain all aspects of the proceedings private. The Internet being an open, public network, communications per email or communications via a website platform may be less secure than mail, fax or telephone. There is a risk that unauthorised persons could intercept communications transmitted over the Internet and hackers may break into computers connected to the Internet. from a trusted computer base, i.e. a computer base secure from attacks. Users of ADR are greatly concerned about the privacy of their proceedings and the privacy of any personal information that they supply to ADR providers before, during, or after the proceedings.  [8] It is therefore crucial that the same level of security and confidentiality is obtained in cyberspace. Inadequate Internet security has been a major deterrent in the growth of e-commerce and may also have a direct bearing on the use of online ADR. 

Unable to Meet the “Writing" Requirement for Arbitration of Disputes

Many arbitration laws require the arbitration agreement to be in writing, or recorded in writing or something similar. This requirement is not completely fulfilled by electronic communications. Agreements to arbitrate online are usually entered into online. Most domestic laws, however, do not consider an agreement to be in writing when it is recorded by electronic means. In the absence of some international consensus on this issue, it may be difficult to enforce an online arbitration award in domestic forums that do not legally recognize online arbitration agreements as being “in writing." Even if online arbitration agreements are said to satisfy the “writing" requirement, not all formally executed and valid arbitration agreements may be enforceable. 

Enforcement of Online Decisions

In the case of online arbitration proceedings, once the award has been rendered, the same has to be enforced in the appropriate court.  [9]  It may be difficult to locate the other party on the Internet or, for that matter, where the party's assets are located, which would be necessary to effectively enforce the award in that jurisdiction. Unless parties are ensured that the awards rendered will be enforced, or that a remedy is automatically meted out at the end of a proceeding,  [10]  they may not gain confidence in such online proceedings.

Limited Range of Disputes

Online ADR is best suited to resolve certain types of disputes, particularly e-commerce disputes and domain name disputes. Each type of ADR mechanism, however, may not be suitable for every kind of online dispute. For instance, negotiation and mediation may be suitable in resolving money issues arising out of basic contractual disputes. However, since neither of these methods create a binding decision, they may not be suitable for resolving significant issues that often require assistance from courts or administrative authorities. [11]