There are a number of different forms of Alternative Dispute Resolution that can be employed to solve Disputes arising out of Cyberspace. Those are often classical forms of ADR that are used for a new form of Dispute. Additionally, there are a number of new forms of ADR that are unique to the Cyberspace environment and sometimes take place entirely inside of Cyberspace.
The three classical form of Alternative Dispute Resolution are Arbitration, Mediation and Negotiation. Though with varying procedures, these forms of ADR are still most commonly employed both inside and outside of Cyberspace.
The basic form of dispute settlement is by negotiation. Negotiation is a non-binding conference between the parties without the help on any third party.
Cyberspace, in the form of electronic communication, naturally offers new possibilities for negotiation, just as any new medium for communication.
A special medium of negotiation in Cyberspace are discussion and complaints boards, which are discussed below.
Mediation is a non-binding conference between the parties. Often times mediation is used simply to facilitate discussion between parties who wish to avoid the time and expense of litigation. Mediation offers parties the ability to attempt to resolve their issues without being bound by any result of the conference. Further, confidentiality is one of the hallmarks of any mediation. The confidential nature of mediation allows parties to be completely forthcoming. If the parties are unable to reach any agreeable conclusion, they may accept further mediation, binding arbitration, or litigation.
Mediation is a very formal way of discussing. The rules are either set up by the parties or determined by the Meditator: "The mediation shall be conducted in the manner agreed by the parties. If, and to the extent that, the parties have not made such agreement, the mediator shall, in accordance with these Rules, determine the manner in which the mediation shall be conducted." Article 9 of the WIPO Mediation Rules.
The following overview shows the process of a Mediation as conducted by the WIPO. Read more about the WIPO's Mediation process.
The time and money required by Mediation depends largely on the type of the dispute and the meditator. Administrative fees for Mediation are usually minimal, for example the WIPO charges only 0,1 % of the amount in controversy, or, in absence of such amount, 1000$. The main costs are incurred by the meditators fees. Those of course depend on the expertise and renown of the meditator (the WIPO estimates between 300 and 600$ per hour). Counsel is not stricty necessary for Mediation, though parties may seek advice in terms of good tactics.
The Duration of Mediation completely depends on the type of the dispute. While some administrative issues like appointing a meditator and setting up a place and rules for the Mediation might take time, the Mediation itself can either take only one meeting or dozens.
Mediation Results in a contract agreed on by both parties. This contract is binding and can then be enforced.
Mediation is fitted for Cyberspace Disputes because it is fast, cost effective and avoids jurisdiction issues. That said, Mediation may not be the best choice for Disputes arising solely out of Cyberspace. The Mediation process usually requires physical presence of all parties in front of the meditator. This process cannot be easily translated to a use electronic communication.
Nevertheless, there have been successfull attempts at "Virtual Mediation", most notably the Online Ombuds Office. The Office handles a number of disputes effectively without the parties ever meeting in person, but is no longer operating. Traditional face-to-face Mediation as conducted by the WIPO and other organizations is still the most common form.
Much like mediation, both parties must consent to arbitration. Furthermore, arbitration encapsulates the advantages of mediation in that arbitration also provides confidentiality, ease, and affordability to the involved parties. However, unlike mediation, arbitration offers a binding resolution upon the involved parties. Arbitration is the form of ADR most akin to a traditional court proceeding, with simplified procedural rules and usually the ability of the Arbitrator(s) to decide on reasons of equity.
The following overview shows an example the process of an Arbitration proceeding as conducted by the WIPO. Read more about the WIPO's Arbitration process.
Arbitration is generally more time and money effective than a traditional court proceeding. An Arbitration proceeding is generally faster than a court proceeding. For example, a WIPO Arbitration takes less than 9 months. An expedited Arbitration proceeding with shorter time frames for the filing of documents can conclude in less than 3 months.
Arbitration has the benefit of being far more cost effective than traditional litigation. For example, to ensure that costs are proportional to the dispute at hand, WIPO has a graduated fee schedule which is available at their website. In comparison to Mediation, however, Costs can be significantly higher due to the fact that significant lawyers fees are incurred by dicovery procedures and presentation in front of the tribunal.
The Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958, member states are required to give effect to the decisions of international arbitration panels. At this date, over 140 nations, including the United States have signed on to this treaty. Further, in the United States, Section 2 of the Federal Arbitration Act recognizes that U.S. courts shall enforce the awards of arbitration tribunals, except where traditional forms of contract law (e.g., duress) might traditionally excuse enforcement.
Arbitration is widely used for the settlement of Cyberspace Disputes. Classical Arbitration in a physical location is often used to litigate expensive Intellectual Property Disputes. In Addition, there are various adapted Arbitration procedures that take place purely in Cyberspace.
E-Bay and PayPal use a procedure that is very similar to Arbitration and that is conducted completely online to resolve E-Commerce Disputes concerning their services. Read more about E-Bay's Buyer Protection System.
The WIPO's system of setteling Domain Name Disputes is essentially a simpliefied Arbitration system and has proved very effective in solving Cyberspace disputes purely inside of Cyberspace. Read more about the Resolution of Domain Name Disputes.
Expert determination is another alternative dispute resolution tool utilized by WIPO. Expert determination has all of the advantages of other forms of ADR in that it is quick, effective and cost efficient. Expert determination is a consensual agreement between interested parties to have an issue or entire dispute resolved by an expert. Parties may be bound by this procedure just as in arbitration, although this is not a necessary requirement. One important aspect about expert determination is that its ease of use makes it quite easy to use in conjunction with arbitration or litigation on individual issues. Furthermore, parties are able to chose an expert in the complicated IP field in which a dispute has arisen-a result which is certainly not guaranteed in traditional litigation.
As with mediation, there are two fees associated with expert determination: Administrative Fees and Expert Fees.
As with mediation, the Admiministrative Fee is usually minimal. For the WIPO, it equals .1% of the value in dispute, with a maximum of $10,000.
Experts supplied by WIPO may charge anywhere from three hundred to six hundred dollars as in mediation. However, experts also may charge a daily rate which ranges from fifteen hundred to thirty-five hundred dollars. Naturally, outside experts may be anywhere more or less expensive
Contrary to Mediation, however, the determination of the appropriate fee is made by the Organization itself. The organization will take into account the complexity of the issue and the traditional rate of experts in the field, among other similar factors.
Expert Determination is an excellent procedure to solve Disputes arising out of Cyberspace that require specialized knowledge. In addition to disputes about Intellectual Property, there are a number of disputes in Cyberspace that might require extensive knowledge about the technological underpinnings of the web. In such disputes, expert determination is a good way to ensure fair results without the parties having to employ a variety of different "experts" in front of a court.
Another advantage of expert determination is that it does not require physical presence of any party. It can therefore easily conducted entirely in Cyberspace.
That said, given the high fees for experts, this method of Dispute Resolution is probably not an option for customer disputes.
Perhaps the most common dispute resolution method used in Cyberspace is a credit card chargeback. A credit chargeback is a very basic form of dispute resolution and that may be the reason why it is so efficient. While this method of resolution is confined to e-commerce cases, it is perhaps the most accesible and most buyer-friendly method of resolving a dispute.
The legal underpinnings of a credit card chargeback are supplied by the Fair Credit Billing Act. In short, the Act allows a customer to challenge any transaction on his credit card. Sine the vast majority of e-commerce is conducted with credit cards, credit card chargeback are frequently used and give the customer a very potent tool to resolve disputes.
For more information on Credit card chargebacks, see the E-commerce section.
It is obvious that Credit Card Chargebacks are very effective for resolving disputes in Cyberspace. The international character of a transaction does not matter, since the customer needs only to contact his own local credit card issuer.
Chargebacks therefore offer quick dispute resolution accross borders. Since most transactions in cyberspace are conducted via credit card, chargebacks may be the most common means of dispute resolution in cyberspace and can be used in almost any e-commerce dispute.
Blind bidding systems like Smartsettle or Cybersettle are a unique new form of Alternative Dispute Resolution only found in Cyberspace. These systems seek to mix dispute settlemen with game theory in order to promote aggreement.
The system is simple: Both sides register their dispute with the system and a dispute number is assigned. After that, both parties, each sitting in front of his own computer, enter a number of bids. The bids represent how much the party is willing to pay, or willing to accept as payment, for each round of the negotiation. If the values entered for the first round do not match (the offer was lower than the demand), the system proceeds to round 2, and so on. Since offers get higher and demands get lower with every round, the idea is that an agreement is eventually reached.
A method of dispute resoltion that is commonly overlooked are discussion and complaints boards set up by merchants. The internet provides a uniquely fast and easy way to get into contact with a seller and at the same time magnifies the impact of bad publicity.
That has lead to the fact that many merchants or producers maintain discussion or complaints boards and online support. These allow for quick negotiation between the customer and the seller to solve disputes. The fact that these boards are public promotes agreement since the seller is interested in showing good support.
The Agreement is therefore promoted by two factors: