GPSolo Magazine - January/February 2006

The Internet and ADR Educating Lawyers about Online Dispute Resolution

A knitter from North Carolina puts her designs on a website so that her students at a nearby com-munity college can download them and start their knitting projects. A few weeks later, she starts getting e-mail spam with Chinese characters. No big deal—she sets her e-mail filter to put any e-mail that has non-English letters into a junk e-mail file. What she doesn’t know is that a small factory in the north of China has started making sweaters using her designs— downloaded from the Internet. She doesn’t find this out until she attends an international knitting convention and sees her sweaters for sale. She calls her lawyer. What’s next? Filing a lawsuit in North Carolina or China is unlikely to be a solution.

On another continent in the south of Asia, an online advertising scammer hires cheap labor in India to sit in front of computers and click on targeted links all day with no intention of ever buying anything. Back in the United States, a merchant is at first thrilled by the number of click-throughs he is getting to his products on his newly minted website, but he is soon going to find out that he is the target of “click-through fraud.” His competitor paid that scammer in Asia to click on the ads and bust his marketing budget—the merchant pays the search engineby the number of clicks on his banner ad links. He calls his lawyer. What’s next? Prosecutors in the United States are just beginning to understand “click-through fraud,” and by the time they figure a way to combat it, the technology will change and a new crime will be invented.

Across the globe, T-shirts sport the phrase, “Paris Hilton made me change my number!” In a very bad week for privacy advocates in February 2005, ChoicePoint, the Bank of America, and, yes, Paris Hilton became victims of a huge data leak in cyberspace: 145,000 people had their personal information stolen, and who knows where on the Internet it ended up. The New York Times concluded: “Once privacy is gone, there’s no snatching it back. And in cyberspace, everyone is naked” (February 27, 2005). Now, lawyers everywhere are throwing their hands up in the air—who are we going to sue?

Lawyers and the Internet

Lawsuits and criminal prosecutions may have worked in the twentieth century, but no longer. The impact of the Internet and its new and innovative technologies is just beginning to be felt on the legal profession. Other industries—banking and travel, to name the most obvious—have adapted. The organized bar has to come up with a plan to keep lawyers in the game.

The World Wide Web and e-business have helped the globalization of our economy and society in ways that were unimaginable only a short time ago. In general, it has brought us closer together than at any time in our history. But along with bringing us new avenues of communication, information gathering, and storage, the Internet has also brought insecurity and uncertainness. As a result of the Internet’s ever-increasing grasp on our day-to-day lives, it is more necessary than ever to establish specific mechanisms with which we can satisfy the needs of virtual space. The Internet has developed at such a fast pace that the legal community has lagged behind in establishing the necessary mechanisms to adapt to changing technologies, methods of communication, and transactions. As our legal system moves further into the twenty-first century, clients will be looking for uniform laws and global court systems to protect them. Access to justice for wrongs committed through cyberspace is non-existent for all but governments and large corporations with vast legal budgets. The legal community must evolve to work in the virtual space of the Internet to meet the needs of today and innovate to meet the needs of tomorrow.

Dispute Resolution on the Web

As more people take part in a community such as the World Wide Web, new and different types of disputes will arise. Online transactions are now in the trillions of dollars. The Internet is one of the largest and best-connected communities the world has ever seen; as a result, there is a natural need for a tailor-made dispute resolution model. The ability to resolve disputes online is one of the legal profession’s great marketing opportunities today. With such an obvious need we should be able to find feasible ways to deal with disputes that inevitably arise. It will be difficult for e-commerce to evolve or improve its efficiency and user satisfaction if it cannot enhance its dispute resolution mechanisms. People will be reluctant to use the Internet to its full potential if they believe there is no mechanism to resolve disputes in a timely, cost-efficient manner. Trusted processes must be built into the system to ensure authenticity, security, privacy, and confidentiality. By adapting the successful alternative dispute resolution (ADR) model to e-commerce, lawyers have a chance to use their negotiating skills to new advantage in the online world.

ADR in any context requires communication between parties, and even more so in an international setting. Without uniform laws, it is up to the parties themselves, generally working with a neutral third party, to come to terms in a dispute. The focus of this third-party neutral is always on managing the flow of information: sending and receiving information, evaluating this information, and finding a resolution to the dispute. Because the Internet is first and foremost a tool for fast, efficient communication, it should be natural to foresee the Internet as a completely accepted tool for dispute resolution.

People who have traditionally offered ADR—such as arbitrators, mediators, and lawyers—may be interested in adapting this skill to resolve online disputes. The new field is called online dispute resolution (ODR). Ethan Katsh, director of the Univer- sity of Massachusetts Center for Information Technology and Dispute Resolution (, defines ODR as dispute resolution that takes advantage of the technologies available through the Internet. To effectively practice in this area, lawyers must be willing to invest in learning ODR techniques for everyday application.

From ADR to ODR

As an alternative to the formality, time, and cost often involved in litigation, ADR has existed in some form since the Roman Empire. In recent years the approach has gained acceptance among both the general public and the legal profession in circumstances where it can reach a fair and equitable result. But ADR is more than simply a time- and cost-cutting alternative; many have seen the process help parties to build stronger relationships, even after disputes have arisen. ODR involves adapting ADR techniques to the online world, taking into account the cross-cultural aspects and conflicts of law involved. Before the Internet, the need for an alternative global justice system like ODR was basically nonexistent because it was rare for small companies to be involved in international transactions.

The extent to which e-commerce has expanded international transactions was inconceivable just a few years ago.When commerce was done abroad, it usually involved huge multinational corporations licensing technology or exporting and importing goods or raw materials. These companies had large and powerful resources at their disposal and employed international lawyers with specialized legal backgrounds. For such companies, it was relatively easy (but very expensive) to send their lawyers abroad to solve disputes. Today, e-commerce has taken away the mystique of performing international trans- actions. But how can the small-scale businesses of today handle conflicts of law? Is a small-scale business selling goods over the Internet able to pay a lawyer familiar with the applicable e-commerce laws of varying jurisdictions worldwide? Small-scale business will eventually be cut off from participating in world markets if there are no dispute resolution mechanisms in place that they can afford.

And so a lot of smaller businesses that previously had discovered the advantages of ADR in the offline world are beginning to discover the benefits of ODR in the online world. They want a dispute resolution process that will save time and the cost of legal representation and travel when dealing with international and e-commerce disputes.

In their 2005 book Cyberjustice: Online Dispute Resolution (ODR) for E-Commerce, Lucille M. Ponte and Thomas D. Cavenagh offer a brief description of how the ODR process can work:

The emerging field of online dispute resolution refers to a collection of conflict resolution methods that utilize online technologies to help resolve disputes. Parties might decide to negotiate a conflict through an exchange of e-mails or by posting a message to each other in a secure chat room. A mediator may work with two disputants in real-time online conversations over the Web or use information distributed through a listserv. Disputants may agree to have the outcome of their dispute determined through a virtual jury. Others might present information to an arbi-tral panel via streaming video over the Web. . . . [I]n some instances, parties may blend together traditional offline forms of communication, such as fax, telephone, and standard mail to augment their use of online technologies.

Parties utilizing ODR find that they do not have to attend the negotiation process at the same time. This is a decisive advantage when dealing with different time zones and business hours—a typical challenge in an era of increasing globalization. Another advantage is that power dynamics are changed in an online environment. The power of venue is reduced because parties cannot see each other, and each involved party is located in its own office in its own territory. Many peo- ple insist that face-to-face meetings are the core of traditional mediation. But ODR is a far more efficient and realistic method of dis- pute resolution in circumstances where distance or lack of time or money makes face-to-face meetings less desirable.

Law Alone Cannot Work

There have been efforts to enact law to deal with disputes on the Internet. But technology changes at such a fast pace that the law alone cannot keep up with it. Just look at how law has failed to regulate consumer conduct in the entertainment industry. Many people now believe that it’s okay to download music and movies without paying, but they would never steal a CD or DVD from the local store.

ODR is a fast-evolving, flexible, and efficient means to resolve conflict when the law is unable or unwilling to adapt quickly enough to changing technologies and its resulting effects on business. For example, online communities such as eBay use self-enforcement ODR mechanisms to protect online contract rights.

The legal profession is not yet capitalizing on the opportunity to shape the future of both the profession and the Internet by participating in ODR as skilled, principled advocates. Developing cyberspace law jurisprudence is left to today’s merchants and academics, such as the people at eBay who know that fair and just dispute resolution systems are a necessary condition to build trust and grow their community and user base. One day it could be commonplace for every user of the Internet to utilize ODR to resolve any dispute arising on the web. As Justin Schuman, a Suffolk Law intern at Aresty International, once noted: There is no international “Erie Doctrine” in cyberspace. If a buyer in the United States has a conflict with a seller in Germany, whose laws will decide the matter? Users of the Internet need to develop a new common law for cyberspace.

Challenges for ODR

There are technological challenges that ODR faces, such as how to build trust and security requirements for ODR systems, including developing standards for authenticity, privacy, and confidentiality. Also, because the system is global, independent ODR services must work together in a coor- dinated framework to develop enforcement mechanisms. For example, each country might have a supervising ODR service that could work together with services from the other countries or work with a single specialized service in different operating fields.

There are also cultural and generational challenges. Among the first steps, the public must be taught how to assert rights of redress online. Many people still think that there never will be a method to assert these rights, or that the existing methods will not work with online disputes. We have to create a general public sense of trust and ease with the use of online services and confidence in regards to redress mechanisms. For example, a multilingual dispute resolution environment, which involves systems that could be used without specialized tactical know-how, could be developed.

Colin Rule, eBay’s Director of Online Dispute Resolution, recently described the importance of building trust in communities such as eBay by saying, “Trust can create a self-reinforcing cycle, where one member’s trust urges them to behave in a trustworthy way to other community members. . . . Trust is built up over time” (from Cyberweek 2005 Discussion Forum,

Finally, there are business challenges. Or-ganizational models and business processes applied to cross-border dispute-resolution procedures must be promulgated. The performance and scalability of international ODR models should be measured.In order to build trust, we have to create codes of conduct for ODR services and provide for their certification. And we have to integrate these ODR codes of conduct with existing codes of conduct for e-commerce, assuring fairness, consistency, and harmonization of the value system across diverse cultures and generations and in order to gain the trust and reputation of the e-commerce community in ODR as an efficient and reliable resource for dispute resolution.

How Does ODR Work?

In Online Dispute Resolution: Resolving Conflicts in Cyberspace (2001), Ethan Katsh and Janet Rifkinposit that ODR has three fundamental features: convenience, trust, and expertise. ODR systems will never be entirely accepted if they are difficult to use or discriminate against certain people from various socioeconomic backgrounds or access to resources (e.g., those with slow Internet connections, outdated computer systems, unreliable supplies of electricity, or restricted access to the Internet). The system also has to provide its users with a degree of trust if ODR is one day to become the norm for dispute resolution in the e-commerce sphere. Users are increasingly reluctant to give away personal information because of fears of identity theft and the constant evolution of technology that benefits cyber-criminals. Finally, ODR has to deliver expertise. Katsh and Rifkin suggest that delivering expertise is different from delivering information. Expertise requires an interactive informational process. ODR goes beyond the mere information exchanged; the information involved in ODR will be processed and evaluated in some way to the benefit of one party and the detriment of another.

ODR and the Legal Profession

The Internet is a resource that gives us the possibility to extend what, where, and when we do things. In the beginning it was all about the simple exchange of information. Dispute resolution, however, is a process rather than a mere exchange. Parties do not merely want to exchange information but to evaluate this information either by themselves or, more commonly, with a neutral’s assistance.

Because the legal profession has not entirely recognized the necessity of building such a system in cyberspace, we have to educate and train lawyers. The supply of information has to be the first step. Lawyers all around the world have to accept ADR as a necessity and understand ODR as a natural extension of existing ADR processes.

In June 1999 the Federal Trade Com-mission (FTC) held a workshop on the subject of “U.S. Perspective on Consumer Protection in the Global Electronic Marketplace.” At the workshop, the FTC observed that the “number of direct, international business-to-consumer transactions involving electronic commerce is expected to increase significantly in the future.” The FTC felt that this growth would be slowed “until consumers develop confidence in commercial activities conducted online and businesses are assured of a stable and predictable commercial environment. Accordingly, the present challenge is to encourage the development of a global marketplace that offers safety, transparency, and legal certainty” (quoted in Katsh and Rifkin, 2001). The workshop summary issued by the FTC acknowledged that the business community has taken some initiative and has actively pursued multilingual ADR mechanisms and international partnerships for conducting ADR.

In 2003 the UN held the Second Forum on Online Dispute Resolution. The preface of the Forum ( stated:

ODR shares a close relationship with the judiciary, and the emergence of ODR must be coordinated with the goals of the judiciary bodies around the world if it is to become ubiquitous. ODR is therefore a critical issue for e-policy in advancing the Internet economy, not only as a preoccupation of the judiciary with rights management, physical or digital, but as a global preoccupation of the cyber-judiciary community whose ultimate aim should be lowering barriers and increasing access to justice. In that regard, development of ODR may be essential to the continued expansion of the knowledge-based economy, which in return can impact the digital and justice divide.

ODR is an ever-evolving arena of dispute resolution that the legal community needs to embrace. In taking a leading role in developing and implementing ODR, not only in the sphere of e-commerce and international business transactions but also in spheres where traditional forms of ADR are currently dominant, the legal community will take a proactive role in partnering itself with technology before technology and innovation by others supersede the role of the legal community. As advances in technology make the world smaller, people will no longer expect face-to-face meetings to resolve conflicts with parties they may never actually meet—whether they are located across town or across an ocean. Technology is changing society’s interpersonal interactions on every level, and it is the duty of the legal community to ensure that we are at the forefront of dispute resolution in what is no longer a technological revolution of the future, but reality today.


Jeffrey M. Aresty is the founder of Aresty International Law Offices, P.C., which helps businesses to go online in accordance with developing e-commerce rules, resolves online business disputes, and uses the latest Internet communications technologies to deliver legal information and services in cyberspace. He has recently organized­, an online community of lawyers learning and working together in cyberspace to harness the power of collective intelligence to transform the legal profession. He can be reached at



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