Disclaimer: This essay has been written by a law student and not by our expert law writers. View examples of our professional work here.

Any opinions, findings, conclusions, or recommendations expressed in this material are those of the authors and do not reflect the views of LawTeacher.net. You should not treat any information in this essay as being authoritative.

Legal and Technical Developments in Online Consumer Disputes

Info: 4956 words (20 pages) Essay
Published: 27th Mar 2019

Reference this

Jurisdiction / Tag(s): EU Law

Critically evaluate the current legal and technical
developments relating to consumer online dispute resolution from a European
perspective

Introduction

Nowadays with improvement of technology and globalization of using
internet, it can be observed many disputations from internet commerce are
increasing. Numerous websites have been established due to finding a solution to
detoxify these internet disputes, as well as to facilitate the resolution of
disputes that may occure offline. The explosive expansion of the use of the
Internet makes it possible for businesses to expand their markets and render
services to large groups of e-consumers. While off-line transactions could have
its own problems and disputes, it is the same for online transactions as well.
In the other hand: e-commerce transactions will sometimes result in e-disputes.
To ensure that all parties concerned will feel they can safely participate in
e-commerce transactions it is imperative that e-disputes are resolved
adequately, because uncertainty over the legal framework may inhibit both
consumers from purchasing products or services over the Internet, and companies
from entering into the electronic market place.1

Online dispute resolution (hereinafter—ODR) is a branch of dispute
resolution which uses technology to facilitate the resolution of disputes
between parties. It primarily involves negotiation, mediation or arbitration,
or a combination of all three. There are many different types of ODR which are
based on more traditional forms of alternative dispute resolution
(hereinafter—ADR). Nevertheless, ODR can also supplement these traditional
means of resolving disputes by applying innovative techniques and online
technologies to the process.

ODR is a wide field, which may be applied to a range of
disputes; from interpersonal disputes including consumer to consumer disputes
(C2C) or marital separation; to court disputes and interstate conflicts.2 It is believed that efficient mechanisms to
resolve online disputes will impact in the development of e-commerce. While the
application of ODR is not limited to disputes arising out of business to
consumer (B2C) online transactions, it seems to be particularly apt for these
disputes, since it is logical to use the same medium (the internet) for the
resolution of e-commerce disputes when parties are frequently located far from
one another.3

This paper examines the ODR from European perspective and discusses effective development of ODR deployments to handle online, offline, national and cross-border disputes in Europe. For this purpose, first defining the scope of ODR and reviewing existing services then continue by analyzing the major challenges that ODR faced in Europe and lastly conclude by suggesting some future scenarios.

1. What Is Online Dispute Resolution?

Online
Dispute Resolution (ODR) is generally described as “dispute settlement
which may or may not involve a binding decision being made by a third party,
implying the use of online technologies to facilitate the resolution of
disputes between the parties”‘ and it is described as an enormous
challenge in the field of solving online disputes.4 Hornle defines
ODR as “dispute resolution carried out by combining the information
processing powers of computers with the networked communication facilities of
the Internet.5 The potential to use online settlement was predicted
by many experts,6 however the major reason why it has not reached
the exceptions so far is seen particularly in four aspects. The lack of awareness
of such solution and often complex accessibility is the first obstacle.
Consumers oftentimes do not know about ODR solution and they do not know what
to expect from it, which reduction their confidence in ODR services. The

 Second barrier is the pricey dilemma to extend, specific ODR software to offer full potential of user-friendly and impressive solution. Another problem is seen in the lack of legal standards which would intensify the situation of ODR as convenient tool to solve consumer disputes in European Union.7   The last reason can be seen in,lack of motivation of the parties to take part in ODR  process mainly from the traders”.

European
Union was however confident to promote the potential of ODR almost from the
beginning of its existence when it incorporated the requirement to
amend any legislation which is liable to hamper the use of schemes for the
out-of-court settlement of disputes through electronic channels8
in E-Commerce Directive. After valuable experience with ECODIR9 or
ECC-Net, the European Commission introduced recent legislative framework to
solve disputes out-of-court the ODR Regulation and the ADR Directive.

2. ODR in the European Union

In 1999 the OECD has published
“Guidelines for Consumer Protection in the Context of Electronic Commerce.”10 These guidelines raises the sense of cooperation between businesses,
consumer representatives and governments to work together for providing
consumers meaningful access to fair and timely alternative dispute resolution
and compensate , without considering superfluous costs or responsibility. One
of eye catching point is cross-border transactions. Special concentration is on
using innovative of information technologies in implementing ADR systems.11

The EU has addressed this issue in
the European “Directive on electronic commerce” (98/0325 (COD)).12 The first part of article 17 of the directive states: “Member
States shall ensure that, in the event of disagreement between an Information
Society service provider and the recipient of the service, their legislation does
not hamper the use of out-of-court schemes, available under national law, for
dispute settlement, ‘including appropriate electronic means’”. In March
of 2000 an EU Workshop on out-of-court dispute settlement systems for
e-commerce was held in Brussels. This resulted in a report that also addresses
online variants of dispute settlement in an e-commerce environment.13

Recently the European Commission is
increasingly active on ODR. The advancement of ODR has been contained among the
actions of the European Commission’s Digital Agenda. On page 13 of this Agenda, it is mentioned: “Explore by 2011, via
a Green Paper, initiatives on consumer Alternative Dispute Resolution in the EU
with a view to making proposals for an EU-wide Online Dispute Resolution system
for e-Commerce transactions by 2012.” In a similar way , in the European
Commission’s work program  it is
mentioned that one of the tasks of the European Commission is to “develop an EU
wide strategy to improve ADR systems and propose an EU wide online redress tool
for e-commerce transactions by 2012 to improve access to justice online.”

Due to  globalization of internet and in parallel
e-commerce which is being more global day by day. It would be very difficult to
find the necessities of the key players (i.e. businesses and consumers, for
cheap and efficient multi-lingual cross-border ODR, easy to use by businesses
and consumers and encouraging global cross-border commerce) if the ODR system
is built as only European, only Asian or American only.

Multi-lingual EU with its long
tradition of ADR/ODR and affirmative network of national consumer organizations
and identified ADR/ODR providers can actively contribute to the establishment
of the global ODR system.

 The
majority of multilingual ODR projects are funded by the European Union. Ccform,
for example, as of July 2005, facilitates online resolution of standard
consumer complaints in all the official languages of the “old” European Union.
Although providing translation into less common languages is cost-consuming, it
seems important for sparking wider interest in ODR.

2.1. Online Dispute Resolution in EU Member States

this essay try to clarify how many and what type of alternative
dispute resolution systems exist in EU Member States. From responses to the
presented questionnaire, we can state that in 12 European Union Member States:
Sweden, Slovenia, Czech Republic, Luxemburg Romania, Norway, Slovakia, Ireland,
Latvia, Belgium, Cyprus and Lithuania, there is no such option for online
dispute resolution or ODR system. However Germany, Italy, Austria and Netherlands
have and use alternative consumer disputes resolution systems online and they
use them effectively and very successfully.

Germany.
For example, in Germany using such system are exclusively settled just
e-commerce nature.14 It  is
dealing with e-commerce cases where the trader or the consumer is based in
Baden-Württemberg (region in the South-West of Germany). Since 18 June 2009
i.e. date when this system was launched and started to operate till 31 December
2010,442 cases were registered. 60,19% of all these cases were so called
“internal“ cases i.e. when consumer and trader live in the Federal Republic of
Germany and only 39,81% of all received claims and disputes were of the cross
border nature when one of the relevant persons (consumer or trader) lived and
acted both in Germany and in another EU Member State. Usually such cases were
transmitted from the European Consumer Centre in Germany.15 Even 72,
66% of all cases were settled in this system very successfully. Usually the
value of the claim varies from 50 to 100 Euros, but in some cases there are and
some extremely interesting cases when the consumer applied and for 2,4 Euros
damage. The maximum value of the claim registered in the ODR system was 3399
Euros. It is less time consuming method, because the average term for the
dispute settlement is 49 days.

Italy.
Italian alternative dispute resolution system online is available even in 24
different languages as well and in Lithuanian.16 This system has been created by the Chamber of
Arbitration of Milan. It is designed for the settlement of disputes between
clients and (or) companies in their trade conflicts, giving the priority to the
claims related to the internet and e-commerce. Disputes can be solved
independently from the nationality of the dispute’s parties or value of the
dispute object value. The mediator or councillor in majority of cases does not
have to decide who is right and who is wrong. He or she simply helps, assists
the dispute parties to find the common agreement and works with them in order
to seek and find the contract between these persons.

There are also many other issues that must be
considered before an ODR system can be successful. Just a few of these issues
include:

Building Trust. One of the necessities for ODR to become
more successful is trust. Users of such systems should have enough trust in
this new online environment. Much research is required to investigate how best
to create trust in this new environment.17   one way
is to develop a system of trust marks or seals. For instance, in Japan the
Direct Marketing Association and Japan Chamber of Commerce and Industry have
developed the ‘Online Shopping Trustmark’ to provide information about reliable
online marketers. The scheme also includes a complaint handling programme. In
my opinion other countries especially in European union can use strategy
of  japan for raising their users trust
.Some of  reasons which reduction success
rate of ODR is: distrust in the technology, preference for face-to-face, access
problems, technical phobia, 
unfamiliarity with the technology, mistrust of advisers such as lawyers.

Intellectual Property and Telecommunications Law.
ODR systems often involve the development of software. This in turn raises many
intellectual property issues. For example, if an ODR provider invents a new
online dispute resolution business process, it may be capable of being
protected by a business method patent. Other issues concern domain names and
use of trademarks in an online environment. Also relevant are all the issues
surrounding copyright and operation of a website, including linking to other
sites and related issues.

Validity of Online Contracts. Other legal issues arise from doubts about
the validity of online contracts. For example, in some jurisdictions any clause
mandating the use of a particular method of dispute resolution or forum
selection, must be in ‘writing’; and an online agreement may not meet such a
requirement.

Access. Although ODR increased accessibility to
remote regions and to those who are home- bound, but, meanwhile, there is a
concern about an emerging digital divide between those who    have access to ODR and those who do not.
Barriers could be financial, educational, cultural, age,  physical disability, language or simply a
phobia in using information technology.

Fairness. The online medium may require further
thought about input processes, assessment of adaptability, need for counselling
about dispute resolution processes, some issues like imbalances and unfamiliarity
in IT literacy. It is vital that companies work together with stakeholders to
make sure that online processes are fair and impartial. While Courts are
usually perceived as impartial, when a firm such as eBay offers an online
dispute resolution service, it is likely to perceived differently. Another
element of fairness is transparency. The rules of operation and nature of the
ODR process should be explained to the parties so that they know what to expect
and those expectations are met. Some feel that transparency also requires an
up-front and public disclosure of the ADR provider’s track record.

Online Communication as a Male Domain? Another area where much more research is
required is the nature of online communication itself. It is obviously clear
that there are differences between online and interpersonal communication where
the parties are physically present. There is some evidence emerging that
Internet communications may be more confrontational and that a more masculine
style of communication dominates. It seems to be a more male-dominated medium.
At the same time, dealing with another person from a distance, for example
though text, may be far less intimidating than being physically present in the
same room. There is also some age bias in an online environment, for example ,
younger people, who have grown up with the technology are more likely to use
it.

Lack of in-person interaction. considered the most
significant disadvantage of ODR by many commentators, may also prove to be an
advantage in certain circumstances. Lodder and Zeleznikow argued that it can
happen for disputes in which the emotional involvement of the parties is so
high that it is preferable that they do not see each other.18 Arguably,
the “impersonal” nature of online communications could help the parties to be
better able to distinguish between the person and the conflict (as is suggested
in principled negotiation19). In addition, many participants of
“one-shot transactions” do not want to enter into a closer relationship with
the other party, or even wish to remain anonymous (hidden under an online “nick
name” or other kinds of pseudonyms). As noted by Hang, “anonymity is highly
valued over the Internet”, and ODR may preserve anonymity and resolve the
dispute at the same time.20

The European Union gave a lead by establishing
such initiatives as European Extra-Judicial Network for cross-border dispute
resolution (EEJ-NET)2[1], an ADR/ODR general clearing house, and its financial counterpart FIN-NET22,
which deals with financial disputes. Two recent EU-funded ODR projects are
CCform23, launched in early 2004, and Electronic Consumer Dispute
Resolution (ECODIR) providing a mechanism similar to SquareTrade24,
yet on a pilot basis and free of charge for both business and consumers.

And finally for reduction of some of those problems;

The European Commission has also developed seven principles to which out-of-court Settlement schemes should adhere.  These principles include:

(1) Transparency: This requires that all details of the ODR
procedure be made clear, including   coverage,
costs, language, applicable law, nature of decisions dealt with, extent to
which decisions are binding, rights of appeal.

(2) Consumer awareness and freedom: Consumers should have access to courts and no
decision of the neutral party to an ODR process should be binding unless the
consumer agrees to this in advance.

(3) Impartiality: It is unclear what this may mean in
particular instances. For example, does it require a completely neutral party
or one that is acceptable to both parties, even though that person may not be
‘neutral’ in the strictest sense of the word.

(4) Adversarial procedure: In essence, this principle requires that parties have the right to                   present their case.

(5) Representation: Right of a party to be represented or supported by a third party

(6) Legality: Consumers cannot contract away protection that is mandated by legislation.

(7) Efficiency and accessibility: ODR services should be accessible at either no or low cost.

Conclusion

It is safe to conclude from the preceding pages that Europe has played a major role to date in the development of ODR, starting with the emergence of the first entrepreneurial launches– chiefly with private blind biddings sites – and, on the institutional side, with the launch of the International Forum on ODR, the annual event providing a privileged space for the emergence of a heterogeneous, international ODR
community.

The EU public funding initiatives have also constituted a major driver for the development of ODR. A case in point is ECODIR, a service which has been in
place for a decade now.

However, some other projects ended with no conclusive results in terms of prototypes or proofs of concept. In this line, some lessons could be also extracted at this point on how to adequately fill the gap between initial prototypes – raising high expectations – and the effective provision of ODR services to customers.

One minor, but nevertheless helpful lesson that comes out of the European experience over the first ten years of the 21st century is the need for some pan-European co-ordination of all those involved in the development of ODR.

for the reasons set out in this paper, that not only has Europe made a substantial contribution in the past to ODR, but will continue to do so at an increasing pace in the future.

BIBLOGRAPHY

  • Wang F, Online dispute resolution: technology, management and legal practice from an international perspective (2009)
  • Reginald M, Out-of-court dispute settlement systems for e-commerce. Report of an exploratory study, Joint Research Centre (20th April 2000)
  • Mirize P, Where is everyone going with online dispute resolution (ODR)?International Business Law Journal, (2002)
  • Hornle J,  Cross – border Internet Dispute Resolution, Cambridge: Cambridge University Press (2009)
  • Cortes  P and Lodde A  ‘’Consumer Dispute Resolution Goes Online: Reflections on the Evolution of European Law for Out-of-Court Redress’’. Maastricht Journal of European and Comparative Law (MJ), (2014)
  • Eugene C , Cho G &  Hoyle  AOnline Dispute Resolution: Present Realities, Pressing Problems and Future Prospects, International Review of Law, Computers & Technology(2003)
  • Bygrave L , ’’ Online Dispute Resolution ,What it Means for Consumers’’. Paper presented at a conference entitled “Domain Name Systems and Internet Governance” Grace Hotel, Sydney (7 May 2002)
  • Roger F, William U and Bruce P, Getting to Yes: Negotiating Agreement Without Giving In (New York, N.Y.: Penguin Books, 1991)
  • Loutocky P ,Online Dispute Resolution To Resolve Consumer Disputes From The Perspective Of European Union Law: Is The Potential Of ODR Fully Used? ,(2016)
  • Katsh E and Rifkin J ,Online Dispute Resolution: Conflict Resolution in Cyberspace (2001)
  • Commission Working Document on the creation of European Extra-Judicial Network: <http:// europa.eu.int/comm/consumers/policy/developments/acce just/acce/just06 en.pdf> accessed 2 April 2017
  • Bogdan M, The New EURegulation on Online Resolution for Consumer Disputes, Masaryk University Journal for Law and Technology ( 2015)
  • CORTES P and LODDER A , Consumer Dispute Resolution Goes Online: Reflections on the Evolution of European Law for Out-of-Court Redress, Maastricht Journal of European and Comparative Law (MI). (2014)
  • Hornle J,  Encouraging Online Dispute Resolution in the EU and Beyond- Keeping Costs Low or Standards High? ,European Law Review ( 2013)
  •  Katsh E, ODR: A Look At History. In: Abdel Wahab, M., Katsh, M. and Rainey, D. (2012). Online dispute resolution. The Hague: Eleven International Pub.
  • Micklitz, H and Sartor G. Assessing The Scope Of European Online Dispute Resolution Platform [online]. Directorate General For Internal Policies Policy Department A: Scientific and Economic Policy. Available at: <http://www.europarl.europa.eu/RegData/etudes/note/join/2012/475102/IPOL-IMCONT(2012)475102 EN.pdf>accessed 1 April 2017
  • Online Dispute Resolution – European Commission’ (Ec.europa.eu, 2017) <http://ec.europa.eu/consumers/odr> accessed 14 April 2017
  • Guidelines for Consumer Protection in the Context of Electronic Commerce [interactive]  <http://www.oecd.org/document/51/0,2340,fr_2649_34267_1824435_1_1_1_1,00.html> accessed 12 April 2017
  • WIPO – World Intellectual Property Organization (Wipo.int, 2017)
  •  <http://www.wipo.int> accessed 14 April 2017
  • <http://www.WEBdispute.com> accessed 14 April 2017
  • <http://europa.eu.int/eur-lex/en/dat/2000/c 128/c 12820000508en00320050.pdf> accessed 5 April 2017
  • Perritt H ,‘Electronic dispute resolution’ NCAIR Conference (1996) <http://www.law.vill.edu/ncair/disres/perritt.htm>  accessed 8 April 2017
  • ‘Building trust in the online environment: business-to-consumer dispute resolution’ at <http://www.oecd.org/dsti/sti/it/secur/act/online trust workshop.htm> accessed 16 April 2017
  • ‘Dispute Resolution in Electronic Commerce: Discussion Paper’ Consumer Affairs Division, The Treasury, Canberra, AGPs, (2001); also available at <http://www.treasury.gov.au> accessed 3 April 2017
  • ‘Commission Working Document on the creation of European Extra-Judicial Network’ <http:// europa.eu.int/comm/consumers/policy/developments/acce just/acce/just06 en.pdf> accessed 9 April 2017

1 Morris Reginald , Out-of-court dispute settlement systems for e-commerce. Report of an exploratory study, Joint Research Centre, p. 2 (20th April 2000)

2 www.odr.info accessed 14 June 2011. National Centre for Technology and Dispute Resolution, Standards of Practice [interactive]

3 Lee Bygrave , ’’ Online Dispute Resolution ,What it Means for Consumers’’. Paper presented at a conference entitled “Domain Name Systems and Internet Governance” Grace Hotel, Sydney (7 May 2002)

4 Philip Mirize , Where is everyone going with online dispute resolution (ODR)? International Business Law Journal, (2002), p. 167-211.

5 Julia Hornle , Cross – border Internet Dispute Resolution. Cambridge: Cambridge University Press, (2009), p74- 75

6 Pablo Cortes and Arno Lodde ‘’Consumer Dispute Resolution Goes Online: Reflections on the Evolution of European Law for Out-of-Court Redress’’. Maastricht Journal of European and Comparative Law (MJ), p. 19,(2014)

7 Lawrence Lessig, ‘’ Such barrier is however arguable as the positive experience with ODR solution was offered mainly byprivate service providers, who designed not-formalized but highlyeffective rules built from bottom-up including the enforcement of their decision.’’ Lessig is primarily mentioning domain name authorities. (Code version 2.0. New York: Basic Books, p. 321, 2006)

8 Recital 51. Directive 2000/31/EC of the European Parliament and of the Council of (8 June2000) on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’). In EUR-lex.

9 ECODIR [online], [cit. 12-28-2015].Available at: http://www.ecodir.orgaccessed 3April 201

10 Guidelines for Consumer Protection in the Context of Electronic Commerce [interactive] http://www.oecd.org/document/51/0,2340,fr_2649_34267_1824435_1_1_1_1,00.htmlaccessed 12 April 2017

11 The Guidelines for Consumer Protection in the Context of Electronic Commerce, principle VI under B (sub iv).

12 Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‚Directive on electronic commerce‘). Official Journal L 178,) 17 July 2000, P. 1-16 )

13 Out-of-court dispute settlement systems for e-commerce. Report of an exploratory study, supra note 1.

14 https://www.online-schlichter.de/de/index.php accessed 7 April 2017

15 http://www.eu-verbraucher.de/en/accessed 7 April 2017

16 http://risolvionline.com/?lng_id=36accessed 7 April 2017

17 See J E J Prins, P M A Ribbers, H C A vanTilborg, A F L Veth and J G L van der Wees ,Trust in Electronic Commerce Kluwer Law International, The Hague,( 2002)

18 Lodder and Zeleznikow, “It can happen when parties have a history of violent conflict, the costs of being in the same room are exorbitant, parties are in different time zones, or parties cannot agree upon a joint meeting time.”

19 Roger Fisher, William Ury and Bruce Patton, Getting to Yes: Negotiating Agreement Without Giving In (New York, N.Y.: Penguin Books, 1991) at 17-39.

20 Hang note.

21 European Extra-Judician Network for Cross-Border Dispute Resolution, online: < http://www.eejnet.org> accessed 11 April 2017

22 FinNet, online: http://finnet.jrc.it/enaccessed 11 April 2017

23 CCForm Online Complaints Platform, online: http://ccform.interbyte.be/ accessed 11 April 2017

24 Electronic Consumer Dispute Resolution, online: http://www.ecodir.org. See also Brian Hutchinson, “Online Resolution of Consumer Disputes – An Introduction to ECODIR: Electronic Consumer Dispute Resolution” (2002) (paper presented at the 2002 UNECE Forum on ODR).


Cite This Work

To export a reference to this article please select a referencing stye below:

Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.

Related Services

View all

Related Content

Jurisdictions / Tags

Content relating to: "EU Law"

EU law, or European Union law, is a system of law that is specific to the 28 members of the European Union. This system overrules the national law of each member country if there is a conflict between the national law and the EU law.

Related Articles

DMCA / Removal Request

If you are the original writer of this essay and no longer wish to have your work published on Lawteacher.net then please click the following link to email our support team::

Request essay removal
Prices from

£ 99

Estimated costs for: Undergraduate 2:2 • 1000 words • 7 day delivery

Place an order

Delivered on-time or your money back

Reviews.co.uk Logo (292 Reviews)

Rated 4.2 / 5

Give yourself the academic edge today

Each order includes

  • On-time delivery or your money back
  • A fully qualified writer in your subject
  • In-depth proofreading by our Quality Control Team
  • 100% confidentiality, the work is never re-sold or published
  • Standard 7-day amendment period
  • A paper written to the standard ordered
  • A detailed plagiarism report
  • A comprehensive quality report