Internet Lawyer Blog
International alternative dispute resolution is a necessary variable when it comes to internet and e-commerce transactions. In most cases, the parties have entered into a written agreement that yields an arbitration or mediation clause. Therefore, it is important for legal counsel to ensure the relevant provisions properly address the following issues: (1) choice of forum; (2) choice of law; (3) selection and number of arbitrators; (4) proceeding language; (5) discovery rights; and (6) remedies – e.g., injunctions, attorney’s fees, court costs.
Trustmark providers require the parties to stipulate to some form of alternative dispute resolution. A “trustmark” is a seal or banner on a website that shows the business is compliant with industry standards. So, it promotes self-regulation of e-commerce websites. In addition, the European Union has issued directives for e-commerce transactions to promote using alternative dispute resolution.
The options are clear when it comes to alternative dispute resolution (“ADR”). First, there is “arbitration” which includes a formal determination of the legal rights of the parties. Second, there is “mediation” which facilitates formal negotiation between the parties by focusing on their underlying interests.
It is important to clarify the difference between “international alternative dispute resolution” and “international litigation.” International litigation is time consuming and requires several steps to be taken to reach a solution. The parties can be involved in several years of litigation before reaching the court trial. They may find themselves in the jury selection process which can yield an indefinite result. However, with alternative dispute resolution, the parties have more control over the process. They can select the neutral judge and stipulate to the discovery rules. They can also decide whether the judgment is binding or not.
International alternative dispute resolution comes into play in various situations. Now, whether the involved parties include business organizations or consumers, it should not have a direct effect on providing the option. In most cases, the transactions take place between business organizations that are in different jurisdictions. So, from a practical perspective, the agreement between the parties should have a provision that mandates alternative dispute resolution before instigating a legal action.
Online dispute resolution (“ODR”) has become a substitute to face-to-face arbitrations and mediations in the recent years. It provides the option to select a neutral judge to review the relevant documents and render a decision by using the latest technology. The neutral judge can hold a virtual conference with the parties and render a decision without any kind of physical contact. The parties can submit their evidence (e.g., contracts, letters, reports, witness statements) to the decision maker who should review them and render a final judgment. However, there are several important challenges. First, establishing trust with the parties is more difficult. The arbitrator or mediator should establish trust with the parties in order to procure their confidence. Yet, in ODR, it’s more difficult to gain trust due to the lack of physical interaction. Second, confirming the identity of the parties can be another challenge. So, there must be a way to confirm the identities of the involved parties. For example, they can use digital signatures to confirm their identities when executing legal documents. Third, establishing data security is a challenge which can be overcome by using robust technologies. For example, the parties can send and receive documents through a Virtual Private Network (“VPN”) which uses encryption technology. Therefore, encryption can play an important role in securing private or confidential files. Fourth, privacy is another important component of the process. The neutral arbitrators and mediators should outline their privacy policies for the parties so they would know what precautions are being implemented in the process. In all cases, the privacy policies should be outlined in a clear and conspicuous manner. Finally, there must be a way to ensure compliance with the judgment. In other words, there should be a provision in the agreement that informs the parties as to whether the judgment is binding or non-binding and outlines the consequences of non-compliance.
The American Arbitration Association has made a proposal regarding e-commerce transactions. The International Chamber of Commerce has made similar proposals regarding e-commerce transactions. The World Intellectual Property has also made various proposals in this context. These organizations are designed to promote alternative dispute resolution when it comes to international e-commerce transactions.
It’s important to know your legal rights and responsibilities when it comes to international alternative dispute resolution. Please contact our law firm to speak with an international alternative dispute resolution attorney at your earliest convenience.