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Phelps, Greg --- "President's page: The cyber 'courts'" [2016] PrecedentAULA 2; (2016) 132 Precedent 3


By Greg Phelps

The old expression was to ‘sign your life away’. In the cyber age it is, more often than not, to ‘tick the box’. Every day, online consumers commit to complex legal contracts, ‘terms and conditions’ (usually unread), with a single click of their mouse. The jurisdictions committed to are virtual and potentially encompass any country on the globe.

This edition of Precedent focuses primarily on the interaction of the internet with our existing courts. Meanwhile, the internet is seeing the birth of new forums acting as ‘courts’, to whose jurisdictions we commit ourselves by ticking the box.

Facebook, eBay, PayPal and a plethora of other internet sites have seen the rise of online dispute resolution (ODR) processes in an attempt to provide controls on e-commerce and an access to ‘justice’. These forums generally act at no cost, for claim amounts that are sometimes as small as $1. The outcome of ODR processes is often criticised; the primary driver being seen not as a genuine search for justice but rather a pragmatic means of settling disputes and keeping the e-show on the road. A common criticism is that ODR decisions appear to best serve the interests of the internet vendors which contribute the most to the income stream of the relevant website.

In response to these flaws, another tier of independent cyber ‘justice’ offering ODR has evolved. Recognising the scale of opportunities, eBay executive, Colin Rule, has started his own company, Modria Resolution Center. It promotes itself online as:

‘... a cloud-based platform that companies use to deliver fast and fair resolutions to disputes of any type and volume. Built by the team that created the world’s largest online dispute resolution systems at eBay and PayPal that process 60 million cases per year...’

How many law courts around the world, with their associated ADR mechanisms, could ‘process 60 million cases per year’? Many of the disputes that are dealt with by ODR would, of course, never be put in the hands of lawyers in the first place, on the basis of cost alone.

It is true that e-commerce creates new types of problems and disputes; we cannot hold what we buy in our hands before we press the PayPal button. At the same time, e-commerce is creating its own styles of resolution. Modria, and others of its ilk, aim to settle not only online disputes, but also those arising in traditional commerce.

The innovative key to ODR is the introduction of the so-called ‘fourth party’, information and communication technology (‘ICT’). A traditional court or resolution process has the two disputants and the intermediate judicial officer, mediator or arbitrator. ODR relies on ICT to expedite the process and to keep down the costs. ODR by definition is ADR reliant on ICT.

The ‘fourth party’ will replace the function of the judge or other intermediary. At this stage, ICT is being utilised to process facts, as distinct from submissions, but those in the trade speak of highly complex logarithms to position ICT more and more in the role of arbitrator. This brand of ‘courts’ is moving towards ‘justice by formula’. The reality is that ODR is creating a new quasi ‘common law’, which is moving at an unfathomable speed but without the transparency and consistency of the common law as we know it.

The impetus for refining and improving ODR is to build and protect the reputation of e-commerce websites; the likes of eBay and PayPal will obviously suffer if clients are left dissatisfied following disputes. While commercial influences prevail, there is an underlying imperative for ODR to deliver a form of justice to instil faith in the system.

I thank the contributors to this edition of Precedent and commend their cyber law articles as significantly more relevant to our practices than my observations here on ODR, a process which is designed to inter alia exclude the role of lawyers.

There will be opportunities for lawyers to play a role in ODR, especially to ensure that its development includes sound legal principles. At the end of the day, when ODR fails, the ultimate right of ‘appeal’ will rest with the brick and mortar courts, which will decide just how bound the parties are by ticking the box.

Greg Phelps is a Partner with Ward Keller in Darwin, EMAIL

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