Dispute Resolution and the Internet

By John Zillmer

Traditional Forms of Dispute Resolution

• Litigation

• Mediation

• Arbitration

Benefits to Litigation

• Perceived as fair for everyone– Studies have shown that some litigants would

prefer to have a fair hearing even if they lose.

• Public results– Sets precedent for later cases which may

contain similar situations– Puts the public on notice when a company has

been proven to commit wrongful acts.

Drawbacks to Litigation

• Can be expensive– Court costs

• Filing fee in Cook County for cases over $30,000 with a twelve person jury cost more than $400.

– Attorney fees• Depositions• Copying costs• Exhibits

• Can be sssssllllooooooowwwwwww• Results are public record

Benefits to Mediation

• Allows parties to come to a mutually agreeable solution– Facilitates communication between the parties.– Results can be tailored to meet their situation

• Less expensive than litigation or arbitration– No discovery required– Fees are split between the parties unless otherwise

agreed

• Protects confidentiality of the parties.• Faster than litigation process

Drawbacks to Mediation

• If entered into after onset of litigation, one party may simply be using it as another discovery tool.

• No value as a precedent– Solution may work for one party, but if the

other is a repeat offender, no benefit to later victims

Benefits to Arbitration

• Less expensive than litigation because:– Discovery may be more limited

– Faster than litigation

– Parties may agree to limit the range of any monetary awards

• Less formal procedures• Reaches a final result

– May be limited to a specific issue which is holding up an overall settlement

Drawbacks to Arbitration

• Potential for Abuse– Repeat player status– Contractually limited selection of arbitration– Non-neutral or conflicted arbitrator

• No value as legal precedent– Results not made public– Lack of deterrence

• May preclude broader resolution of issue– Class action lawsuits– Enforcement of civil rights and consumer protection laws

• May be unfairly cheaper for some parties because it eliminates the risk of a “runaway jury” award.

Contracts

• Contracts frequently include provisions which dictate aspects of dispute resolution– Jurisdiction in which a lawsuit can be filed– Choice of law which would be applied in a

lawsuit– Selection of third-party to facilitate resolution– Mandating Arbitration

What’s Changed over the past few years?

• Contracts containing pre-dispute mandatory arbitration clauses have been found to be enforceable.– Federal Arbitration Act allows one party to

use the courts to enforce the provision– States not allowed to regulate arbitration

clauses except on general contractual terms

Advent of Technology

• As use of the internet has expanded, so has the potential for conflicts– Internet Commerce

• Auctions such as e-bay• Internet domain name registration• Internet shopping

– What constitutes a contract?• When does a party enter into a contract involving

an internet entity?

On-line Dispute Resolution

• As internet commerce has increased, so has the availability of resources to resolve conflicts.– ICANN– Squaretrade

• Both of these entities resolve conflicts that arise out of the internet

• Both are highly successful at what they do

ICANN

• Resolves disputes involving internet domain names– Evidence gathering not limited to the internet,

but tends to be documentary in nature.– Requires bad faith on the part of one party– Resolution takes place in an instant

• Flip a switch, the domain name changes.

• Both parties are already internet savvy

SQUARETRADE.COM

• Gained fame as the dispute resolution provider to E-bay.com– Parties to a dispute are internet savvy– Evidence consists primarily of on-line “paper

trail”– Parties can resolve dispute through mediation

or arbitration

ODR vs. Conventional ADR

• On-line Dispute Resolution cannot completely replace conventional ADR– Some disputes may require evidence that is

not suited to presentment over the internet– Some disputes are better resolved through face

to face interaction• Where the parties are in an on-going relationship

ADR vs. Litigation

• Some disputes may still be better suited for litigation– Disputes in which precedent is important

• Employment matters– Enforcement of Civil Rights Statutes

– Business/Consumer Disputes• Class Actions

• Small Claims