GPSolo Magazine - January/February 2006

The Nuts and Bolts of ODR

By Ethan Katsh

In 1996 a forward-thinking Washington lawyer, David Johnson, and a Villanova University Law School professor (and later Dean of the Chicago-Kent School of Law), Henry H. Perritt Jr., designed an online arbitration project called the Virtual Magistrate. The Virtual Magistrate, it was hoped, would allow quick resolution of disputes between Internet service providers and subscribers. It was an ingenious idea but also an idea that was ahead of its time. It was asked to resolve only one dispute.

Three years later, in March 1999, another innovative online dispute resolution (ODR) project called the Online Ombuds Office conducted a pilot project for the online auction site eBay and, over a two-week period, mediated more than 200 cases. That was the first large-scale online dispute resolution effort and marked the beginning of a period of growth and exper-imentation in using the Internet and the web for dispute resolution. It is likely that a new milestone will be reached in 2005: a single ODR company, SquareTrade, will handle more than 1 million disputes, most of which come from problems involving buyers and sellers on eBay.

In a 2004 study of ODR efforts around the globe, prepared for the Third UN Forum on Online Dispute Resolution, Melissa Conley Tyler found that “at least 115 ODR services had been launched worldwide, settling more than 1.5 million disputes. ODR services offer examples of using technology to resolve everything from eBay disputes to commercial litigation; from family disputes to the Sri Lankan peace process. There are now ODR services in all regions” ( www.odr.info/unforum2004/ConleyTyler.htm).

Online dispute resolution, like offline dispute resolution, employs a wide variety of techniques and approaches. A few of the most prominent are the following:

SquareTrade handles large numbers of cases by using specially designed websites to help parties negotiate constructively. Web-based forms guide parties and assist them in identifying options for settlement and in selecting among them.

A firm called Cybersettle uses a blind bidding process to encourage parties to make settlement offers online. Blind bidding allows offers to be made privately and to remain private unless the machine they are submitted to finds that they are within a certain range of each other. When that happens, the parties split the difference and settle. If offers are out of range, they are never revealed. Blind bidding can be a powerful tool for resolving monetary disputes, and Cybersettle claims to have handled more than 100,000 transactions worth upward of $750 million in settlements.

Disputes over domain names, such as yahoo.com or abanet.org, are being resolved through an arbitration-like process in which parties participate at a distance. More than 8,000 of these cases have been decided.

Software developed by SmartSettle.com can handle complex disputes involving multiple parties and issues. The software allows parties to identify interests and priorities and, if resolution is reached, the software suggests combinations of solutions that the parties might not have thought of and that might be more attractive than the settlement that was reached.

A Federal agency, the National Mediation Board (NMB), uses online technology to handle labor grievances involving airlines and railroads. The Center for Information Technology and Dispute Resolution at the University of Massachusetts recently received a $700,000, three-year grant from the National Science Foundation to further NMB’s work and to see if ODR can be expanded to other government agencies.

The Internet is a global medium, and ODR is growing in use in many countries. Regional United Nations organizations have sponsored several conferences on ODR, and interesting experiments are under way in Sri Lanka, the Philippines, Great Britain,and Malaysia. In Australia courts are using online technology and online hearings to facilitate interaction between parties located at a great distance from the court.

 

Professor Ethan Katsh is the director of the Center for Information Technology and Dispute Resolution at the University of Massachusetts. He can be reached at katsh@legal.umass.edu. For more about ODR, see www.odr.info.

 

 

 

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