Is Online Dispute Resolution The Way Forward For Cross Border Disputes?
Friday, 22nd May 2015
The added layer of complexity inherent in cross border disputes is a concern for businesses of all shapes and sizes. Even the smallest businesses now have access to global markets though their internet connections but the difficulty and expense of resolving problems with overseas customers or suppliers can be ruinous. Even if alternative dispute resolution clauses are included in contracts, it is no guarantee of a simple or low cost outcome.
Issues with cross border dispute resolution
A host of issues can arise in relation to cross border dispute resolution - even the very clauses which aim to keep such disputes out of court can be problematic. In the case of Russian Telephone Company (RTC) v Sony Ericsson Mobile Communication [RUS v A40-49223/2011] the Russian Commercial Court considered the validity of the dispute resolution clause itself.
The clause in question stipulated that while both parties could resolve their disputes in London under the International Chamber of Commerce Rules of Conciliation and Arbitration, only Sony Ericsson could apply to ‘the court of the competent jurisdiction’ to recover money. Despite the fact that these clauses are commonly used, the Russian Commercial Court found the clause to be invalid because of the unilateral right given to Sony Ericsson to pick the arbitration forum.
Other problems arise due to divergence between local laws and the laws which govern the parties’ contracts. There are a number of common areas of law which foster complexity in cross border disputes, including: consumer laws, employment laws and certain areas of public policy. In additional there are procedural issues that crop up such as the disclosure requirements parties from different jurisdictions are used to.
Although alternative forms of dispute resolution, such as arbitration, seek to manage these issues through a consensual process whereby there is agreement on how the process is conducted, they still leave room for disagreement in practice. For example, parties often agree that arbitrators should use a specific set of disclosure rules, such as those of the Chartered Institute of Arbitrators, as a guide and not as a mandatory requirement.
What does the future hold?
The UK, London in particular, has a strong reputation as a forum for alternative dispute resolution but it must continue to innovate to stay competitive. Using the internet to resolve disputes for example may have numerous advantages compared to more traditional dispute resolution methods. According to the Civil Dispute Council the use of online dispute resolution has the potential to broaden access to justice and make dispute resolution cheaper, easier, more accessible and faster.
Many disputes, particularly those relating to small value claims and those involving consumer disputes arising from e-commerce are already resolved successfully using online dispute resolution mechanisms. For example, approximately 60 million disagreements are resolved each year on EBay using online resolution dispute mechanisms. Other websites successfully offer online dispute mechanisms including Online Schlichter, which provides free mediation and offers advice in disputes relating to e-commerce and direct selling. Through that service, independent lawyers make non-binding recommendations, which are accepted by the parties in two-thirds of cases. Similarly, Youstice provides an online dispute resolution forum for dealings with large volumes of low value consumer complaints and claims. The website encourages the parties to reach an agreement between them, while providing assistance in framing arguments and suggesting solutions.
It is unlikely that all the innovations in the sphere of low value dispute resolution will make their way up the value chain, but efficient practices have already been adopted even at a high level. E-disclosure is a good example where documents are shared and reviewed efficiently through online mechanisms. As online dispute resolution itself matures it may well begin to attract more sophisticated parties and higher value cross border claims.