Updated: February 15, 2011 17:56 IST

Technology as a fourth party in dispute resolution

D. Murali
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India, with its status as a technology hub and an IT destination, is poised to play a significant role in revolutionising the technology for ODR (online dispute resolution), says Chittu Nagarajan, Head - Community Courts, eBay & PayPal (

“Leveraging technology for grievance redressal, customer complaints, or dispute resolution is inevitable. The latest entrant to this is the Tamil Nadu Electricity Board (TNEB) which will soon introduce a unique 10-digit number to every consumer for redressal of grievances,” informs Chittu, during a recent interaction with Business Line. The key technologies which will play the fourth party here are software, algorithms, databases and mobile SMS functionality, and this manifests the power of the “O” in ODR, she adds. Our conversation continues over the email.

Excerpts from the interview.

Why ODR?

When a problem arises with a face-to-face transaction, consumers have a wide variety of options available to help them resolve the issue. The buyers can usually take the item back to the store where they purchased it, demonstrate the problem, and get a refund directly from the seller. If for some reason the seller refuses to take the item back, the buyer can go to local law enforcement to report the problem, or even to the consumer courts to sue the seller. Societies around the world have built these public institutions to ensure redress is always available, which ensures that buyers will trust enough to keep making purchases.

But what about problems arising out of an online purchase? These days, items or services are being bought and sold over the Internet and mobile devices, and redress systems such as those in the face-to-face world are not readily available to online consumers. Buyers cannot walk back into the store where they made the purchase to get a refund directly from the seller.

And if a seller is non-responsive to buyer queries, it is very difficult for a consumer to rely upon local law enforcement to handle the matter. This is even more challenging if the buyer has made the online purchase from a seller in another region, or even on the other side of the world. Maybe they don’t speak the language of the seller’s local law enforcement, or they don’t understand the laws. As of yet, there has not been an investment in online public institutions to address these challenges, which in turn has undermined buyer trust in online transactions.

The solution to this challenge is online dispute resolution, or ODR. ODR is the use of information and communications technology (ICT) to help people resolve their problems. ODR is the alter ego of ADR or alternative dispute resolution, the umbrella under which negotiation, mediation and arbitration mechanisms fall. The marrying of ADR with ICT produced ODR. As the Internet expands its reach around the world, the need for ODR grows more and more acute.

Would you like to talk about the evolution of ODR?

ODR was first conceived in the mid-1990s, as the Internet began to grow in earnest. As people started trading online and making online payments, it was obvious that there needed to be an efficient and fair way to resolve the problems that would inevitably occur. By 2000, new ODR providers were cropping up by the dozens, powered by the spread of the Internet, and by 2005 there were hundreds of ODR providers around the world.

eBay and PayPal were leaders in the ODR field from its inception. eBay’s pioneering role in building person-to-person e-commerce systems led it to understand the need for ODR far before other online marketplaces. eBay partnered with Online Ombudsman Office at the University of Massachusetts to build the first e-commerce ODR system in March 1999, eventually bringing that system in-house and making it a part of every eBay transaction.

PayPal soon followed eBay’s example, and by the end of 2005 eBay and PayPal were handling millions of disputes a year. Now eBay and PayPal’s dispute volume has grown to more than 60 million cases per year, in a wide variety of subject areas (e.g. payments, item receipt, item quality, feedback accuracy, and intellectual property.) This volume is far greater than the number of cases filed annually in court systems around the world.

Another body to introduce ODR in the late 1990s was the Internet Corporation for Assigned Name and Numbers (ICANN). Domain name disputes were cropping up by the thousands. ICANN brought out the UDRP (Uniform Domain Name Dispute Resolution Policy) online arbitration process to address these disputes. The UDRP process currently manages the gamut of domain name disputes.

Year 2001 saw the very first books on ODR – ‘Online Dispute Resolution, Resolving Conflicts in Cyberspace’ by Ethan Katsh and Janet Rifkin, and ‘Online Dispute Resolution for Business’ by Colin Rule. Technology as a fourth party, apart from the disputant parties and third-party adjudicator, playing a very critical in the dispute resolution process resulting in efficiency, convenience, cost-saving and speed were introduced. ODR for e-commerce often being a default rather than an alternative was explained. These two books by pioneers-cum-gurus in this field are still considered to be the ODR bibles.

Where is ODR effective?

ODR does not limit itself to e-commerce transaction; its boundaries are vast. ODR can be helping in privacy disputes, intellectual property matters, family disputes, contractor/service provider issues, or disputes that arise between partners separated by geography, the classic example being the thriving outsourcing and BPO industry.

Also, ODR is not only for online disputes. Increasingly, “face-to-face” disputes are leveraging the power of technology to achieve a rapid resolution. Every dispute – from a car accident to a divorcing family to local zoning disagreements – can benefit from the power of technology.

ODR practitioners are using similar tools to handle labour-management negotiations, workplace disputes, and even violent civil conflict. For individuals in rural areas, far away from courthouses and judges, access to information, education on resolution of issues and ODR over the Internet or mobile phones can be invaluable. The evolution of micro-justice with the aid of technology, a much-needed concept for developing nations, is making a mark around the globe. This can aid the micro-finance industry and rural sectors.

To what extent is human intervention still relevant to ODR?

The tremendous opportunity in ODR has resulted in a revolution in ODR technology. The systems, software and platforms are now looking at innovative ways of offering ODR services. As technology keeps advancing, ODR tools get more sophisticated. Web 2.0 and mobile technology are being considered more.

Technology can help reduce dependency on people to a large extent. The way forward is to maximise technology and reduce human intervention wherever possible. Human intervention cannot be replaced completely but technology can aid the process at least 50 per cent in most cases and to about 90 per cent in the e-commerce space.

Artificial intelligence is being explored to replicate the human touch. The future clearly lies in delivering dispute resolution via the mobile technology. For, the mobile is ubiquitous, cheap, comprehendible and easy to use.

Have there been any interesting innovations in ODR?

Innovation not just in technology but also in the dispute resolution process is a ramification of ODR. When this field started, negotiation, mediation and arbitration were the services rendered via technology and the Internet. Now, at eBay and PayPal, we have the community courts and review forums where dispute resolution is crowd-sourced. Who better than your own community can understand the exact nature of the transaction or dispute to evaluate and make a decision? Expert communities are readily available these days and people want to get involved to make a difference.

Are laws around the globe giving space to ODR?

In the past year or so, a window of opportunity has opened for the global spread of ODR. UNCITRAL (the United Nations Commission on International Trade Law), the UN agency tasked with harmonising global laws, has kicked off a permanent ODR Working Group to help envision how a global ODR system can become a reality.

Governments (e.g. the US Department of State) and regional organisations (e.g. the Organisation of American States and the European Commission) are proposing specific structures to institutionalise ODR into global justice systems. As a result, governments, judiciaries, businesses, and non-profits will need to educate themselves quickly about what ODR means for their work, and how they can best integrate with these new online systems.





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