Gawith, Daril --- "Choosing the Best Remedy: A Methodology for Assessment of Cost-Effectiveness in Competing International Consumer Transaction Redress Methods" [2009] UQLRS 1; (2009) Macquarie Journal of Business Law

This article has been accepted for publication in the Macquarie Journal of Business Law 2009

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CHOOSING THE BEST REMEDY: A METHODOLOGY FOR ASSESSMENT OF COST-EFFECTIVENESS IN COMPETING INTERNATIONAL CONSUMER TRANSACTION REDRESS METHODS

ABSTRACT
This article defines a methodology that can be used for assessing the cost-effectiveness of competing/alternative international consumer transaction (ICT) redress methods. The intention of this methodology is to reduce, at least to some extent, the subjectivity that would otherwise be involved in such assessment, without necessarily achieving “complete” objectivity. Cost-effectiveness is the ultimate criterion that should be used for assessment of any ICT redress method that could be examined, actual or potential: “can I obtain cost-effective redress in connection with my disputed/failed ICT using any available redress method?” and, “if there are more than one redress methods which are cost-effective, which is the best one?” The ability to assess and possibly rank cost-effectiveness is thus the fundamental objective of the methodology described which involves the use of three evaluation criteria: “cost”, “difficulty of enforcement” and “complexity”.

I Introduction
II Cost and Effectiveness
III Defining the methodology
IV Demonstrating the methodology
IV Conclusion

The main contribution of this article is the definition of a reasonable methodology for assessing the cost-effectiveness of competing/alternative international consumer transaction (ICT)[2] redress methods.[3] A “reasonable” methodology, for the purposes of this article, is one which, at least, begins the task of reducing subjectivity, as far as possible, in the assessment of competing redress methods, without necessarily achieving complete objectivity.[4] Such a methodology might be described as a semi-formal or even an informal methodology. It may even be described as “formalised common sense.”

In the pre-Internet era consumers were able to engage in ICTs with foreign vendors through the various means of communication available at the time. For example, consumers could write letters or make long-distance telephone calls to foreign retailers – presuming, of course, that they had some means of knowing what those retailers were selling and how to contact them, and that such information had remained current. Such means of entering into ICTs are still available today.

Since the advent of the Internet, entry into an ICT has become less difficult, less expensive, less time-consuming and therefore more likely to take place (and probably more attractive as an activity than older methods), and involving vendor-supplied information which is far more likely to be up-to-date, about a much larger market. Furthermore, the very nature of the Internet means there are now more retailers presenting their goods to the global pool of consumers, using a technology which assists with the presentation of the goods available through high definition colour imagery and other enhanced representation technology. It is no surprise then, that from the mid 1990s there has been an exponential world-wide growth in the volume of ICTs. According to Australian government data, “on average, approximately one million Australians aged 14 years and over made a purchase online in any given week of 2002-03. This represented an increase of 85 per cent since 2000-01”.[5] This is consistent with international trends. According to OECD data,[6] e-commerce sales in the USA,[7] as a share of total retail sales, increased to 1.2% in late 2001, being valued in excess of US$10 billion in 2001. The same data also notes that an average of 10% of all e-commerce transactions in nine European Union (EU) countries plus Canada involve purchases from sources outside the EU and Canada.

It is likely though, that because of general trust concerns on the part of consumers, such exponential growth has in fact been significantly retarded – relative to what it could have been without trust concerns. According to an OECD survey of online consumers, one of the most significant impediments to engagement in an ICT is consumer concern about the lack of consumer protection, specifically “trust concerns/concerned about receiving and returning goods”.[8] This suggests that a solution to the problem of untrustworthiness (for consumers) would lead to an even greater acceleration of e-commerce sales world-wide, benefiting all involved.

From a lawyer’s perspective, what lies at the very heart of this trust problem, in terms of both global economics and individual consumers, even though many consumers may not be aware of it, is that consumer redress for disputed/failed ICTs involving uncooperative vendors is not practically possible, generally speaking, due to the fact that the cost of obtaining a remedy will be greater than any amount that could be recovered by any of the current means of redress available. In other words, in considering any of the currently available means of redress for a disputed/failed ICT, it is clear that none of them are “cost-effective”, i.e. the cost of redress is greater than any positive effect of any available form of redress (which is especially true the lower the value of the ICT).

Consider that another way. The OECD is telling us what some will probably conclude intuitively: it is risky business purchasing goods from someone far away. You can’t really examine what you’re buying. You can’t size up the trustworthiness of the seller. If something goes wrong with the transaction it may be abnormally difficult to try to get someone to fix the problem given they’re in another country. For example, there may be language difficulties or shipping issues and costs, financial and otherwise, far beyond what would be involved if the goods had been purchased in a local department store.

After all is said and done however, the real bottom line, the most fundamental threat to peace of mind when engaging in an ICT, is that if something goes wrong and the consumer is stuck with an uncooperative foreign vendor, there will need to be at least one potential remedy which presents as likely to be “cost-effective”. The purpose of this article then is to define the means for determining whether any particular method of redress for disputed/failed ICTs is cost-effective. If readers are equipped with a reasonable methodology, they may then use that to evaluate for themselves whether any redress method for a disputed/failed ICT that they may wish to consider would be cost-effective or not. Indeed, with such a methodology, one may compare cost-effective methodologies to see which are the most cost-effective.

The second section of this article considers and defines the basic elements of the term “cost-effective”, which is ultimately defined in the third section.

The third section defines the proposed methodology which indicates how ICT redress methods may be subjected to a cost-effectiveness evaluation. That section suggests that redress methods could be evaluated according to a set of three clearly defined criteria concerning cost, enforceability and complexity, in order to give an overall result regarding any method’s cost-effectiveness. As indicated, once readers are equipped with the methodology, they may then use it to quickly evaluate for themselves whether any particular redress method(s) for a disputed/failed ICT would be cost-effective or not.

The fourth section of this article demonstrates the use of the methodology by applying it to three potential redress methods chosen for illustration purposes. As will be noted however, the reader is invited to apply the suggested methodology to any potential redress methods they care to consider, whatever they happen to be.

Finally, brief mention should be made of the fact that no “theoretical context” is included here concerning such matters as why consumer protection regimes are or are not justified, why consumers should or should not be provided with remedies, and so on. Put simply, an actual user of the redress evaluation methodology proposed here won’t care if a cost-effective redress method derives from justified consumer protection law or not; they will simply want to know what the most cost-effective lawful method is, irrespective of anything else. It will not matter to such a person that one method, such as taking action through a Consumer Protection authority, is based in Consumer Protection Law and another, such as taking action under credit card terms or an escrow service, is not. In some cases, practicality is everything.

Arguably, it is cost-effectiveness that it is the ultimate criterion that should be used for assessment of any ICT redress method that could be examined, actual or potential: “can I obtain cost-effective redress in connection with my disputed/failed ICT using any available redress method?” and, “if there is more than one method which is cost-effective, which is the best one?” When looking at their various options, what more-important questions could an aggrieved consumer ask? The ability to assess cost-effectiveness is thus the fundamental objective of the methodology defined in the next section.

Let us, however, first consider the meaning of the term “not cost-effective”. As defined above, it refers to a situation where “the cost of obtaining a remedy would be greater than any amount that could be recovered” or “the cost of redress would be greater than any positive effect of redress”. The term “cost-effective” itself can mean “economical in terms of the desired result received for the cost incurred”.[9]

The “final” meaning of the term, for the purposes of this article though, depends on consideration of “cost”, “effectiveness”, “difficulty of enforcement” and “complexity” evaluation criteria, the last two of those terms being considered in the next section. The final meaning of “cost-effective” for present purposes then, will be given in that section. The terms “cost” and “effective” will now be considered.

Cost is defined in this article as an outlay or expenditure, tangible or intangible, incurred or anticipated, in exchange for a desired object or outcome. It, therefore, includes both monetary and non-monetary factors. In the context of this article, a cost, for example, might be a monetary outlay to compel the replacement of faulty delivered consumer goods, with goods of merchantable quality as previously contracted for. The wisdom of the bargain then, is a separate issue.

The next issue is why cost is used as a criterion here, and how the use of cost as a criterion for evaluating ICT redress methods can be justified.

Along with enforceability and simplicity, cost is used as a basis in this article for comparing different ICT redress methods. If the same outcome for all redress methods could be assumed, the fundamental basis for comparison of the different methods would be cost: the method with the lowest cost incurred in achieving that fixed/known/common outcome would be the best redress method available. That simple proposition, however, becomes complicated where the cost criterion itself has some influence over the redress method selected. In a world where all things are not equal and different redress methods are likely to have different outcomes, the cost criterion may influence the redress method selected, for example, where a greater or lesser amount of funds were available for funding the pursuit of a remedy. In that case the volume of available funds would make the number of potential redress methods either greater or lesser, respectively. So where money was no object, a more-expensive method could be paid for; conversely, limited funds could rule out the more expensive methods. Therefore, in this context, in opposition to the initial proposition that the cheapest remedy would be the best remedy where all other things were equal, the most-expensive remedy that could be afforded could be the best remedy. Alternately, there may be two equally-desirable fairly-expensive outcomes out of (for example) ten available remedies, but at different costs. In that case, the best available remedy may not be either the most or least expensive. Cost, as a criterion where different redress methods may have different outcomes, should therefore be seen as one which interacts with the value available for acquiring the best result, and which is decided by comparative cost. It is therefore a relative criterion and not an absolute one.

In conclusion, both where, apart from cost, the redress methods are equal, and where nothing about the redress methods may be equal, cost is not only a useful means of differentiating between the different redress options available, but is a necessary and unavoidable factor which must be considered by a consumer in pursuit of a remedy for a failed/disputed ICT, since it may be reasonably assumed that no remedy will come without some cost.

Consider now the meaning of “effective”. While “effectiveness” is not itself one of the three assessment criteria (cost, enforceability and complexity), it is considered here as a fundamental aspect of what the proposed methodology aims to achieve, i.e. determination of effectiveness is a desired objective of the methodology and not its means – “effectiveness” must therefore be well understood.

“Effective” has been defined as “having an effect ... coming into operation,”[10] “producing a decided, decisive, or desired effect ... being in effect: operative”[11] and “having an intended or expected effect”.[12] There are both objective and subjective dimensions in these definitions: producing “an effect”, producing “a desired effect”. Thus an ICT redress method might be objectively effective because, for whatever reason, it produces the legally and economically appropriate effect; and a method might be subjectively effective because, for whatever reason, the consumer is satisfied with the effect that the method has produced, whatever that may be.

In the real world of consumers with differing human needs, there is a need for breadth of options and flexibility as regards remedies for failed/disputed ICTs. Furthermore, assuming there is currently no single effective solution, all current methods have some potential value and are treated as such.

A narrow inflexible definition of effective, such as “having an effect”, is therefore unsuitable, and the full scope of the three definitions, including both objective and subjective aspects, must be included. The definition of effective adopted for the purposes of this article is then “having a reasonable, lawful and desirable outcome”.

The remainder of this article is a description of a methodology which could be used to assess the cost-effectiveness of alternative ICT redress methods.

In the interests of clarity and simplicity, in this article a table is used to indicate how a cost-effectiveness evaluation of one or more ICT redress methods could undertaken. ICT redress methods may be evaluated according to the defined set of criteria, with the results used to progressively fill in the blank cells within the table to reach a conclusion. The table is thus a tool for formal and consistent evaluation of one or more ICT redress methods which could be considered, such as litigation, credit card terms, online dispute resolution, and others.

Three criteria – “cost” (considered above), “difficulty of enforcement” and “complexity” – are used, with equal weighting, to assess the overall cost-effectiveness of the redress methods considered, such that each method obtains a result, under each of those three criteria, of either “very low”, “low”, “acceptable”, “high” or “very high”. For example, litigation could score a “high” for cost, a “low” for difficulty of enforcement and a “high” for complexity, and so on.[13]

As indicated at the beginning, an issue in this proposal is the presence or absence of subjectivity in the application of these criteria. For example, while “cost” can be a distinctly objective factor, the process of deciding that a particular cost in a particular case is “high” or “very high” could indeed be quite subjective. It was also suggested at the outset that a reasonable methodology, for the purposes of this article, was one which at least begins the task of reducing subjectivity; and that where a person not only uses the methodology described here with ordinary standards of common sense, but also uses their own values regarding such differences as “high” and “very high” in a manner which is both consistent and as reasonable as possible in all the circumstances, the methodology will be as close to “completely objective” as is possible.

As the result of applying the three evaluation criteria – cost, difficulty of enforcement and complexity, any ICT redress methods can be given an overall cost-effectiveness “result” of either “yes” or “no” – on the basis that any method which has any one or more evaluation criteria that is higher than “acceptable”[14] will receive a “no” for its cost-effectiveness result. Thus a redress method whose cost, difficulty of enforcement and complexity were all either very low, low or acceptable, would be cost-effective.

Following a discussion of “difficulty of enforcement” and “complexity” criteria, and consideration of how the final (chosen) definition of “cost-effectiveness” may thus be derived for the methodology proposed in this article, the table described above will be illustrated.

The beginnings of a definition of “difficulty of enforcement” may be found by first considering the meaning of “enforceability”. Enforceability is defined by this article to mean the aspect of an ICT redress method such that the remedy offered by the method may be imposed compulsorily upon a party to the ICT (assuming that physical enforcement in the real world is actually possible and not merely hypothetical) either directly through litigation or indirectly through legal or equitable/moral obligation. Alternatively, enforceability may be thought of as having compulsion in varying degrees of strength. Thus “difficulty of enforcement” is a variable depending on the degree of compulsion involved. By way of illustration, “consumer education” as a remedy for solving ICT problems would normally be understood to involve no compulsion and thus having “high” or “very high” difficulty of enforcement, since the information offered by way of consumer education would normally be unilaterally offered simply as good advice for avoiding such problems in the first place, on a take it or leave it basis. On the other hand, ADR (alternative dispute resolution) and arbitration would generally be understood as having comparatively less difficulty of enforcement associated with them, at least in some cases. ADR may involve enforceability by way of a process which might result in a binding and thus enforceable agreement. Arbitration can be binding where a quasi-judicial judgment may be binding and thus enforceable against the relevant party.[15] Litigation can be highly enforceable (i.e. it can have “low difficulty of enforcement”) when the party being sued is within the relevant jurisdiction because it involves state-backed enforcement powers, but may be less enforceable when the other party is not within the jurisdiction.

Where all current or potential remedies are part of an array of potential solutions of varying degrees of effectiveness, it would be inappropriate to consider only highly enforceable redress methods. This is because less enforceable redress methods still have the potential to provide what a legitimately-aggrieved consumer may be seeking. For example, they may be effective to the extent that a vendor, the subject of action under one or more less-enforceable redress methods, might see an eventual result as inevitable and produce the remedy the consumer is seeking in order to avoid future, more expensive, and strongly enforceable action by a consumer. Enforceability generally, however, must be a criterion for present purposes, because this article is concerned with cost-effective remedies, and such remedies would frequently exclude less enforceable redress methods precisely because they are less enforceable and therefore less effective on the balance of all factors involved.

For present purposes, the definition of complexity is the opposite of or the lack of “simplicity”. Simplicity is the state of being simple, where “simple” is defined as freedom from complications, that is, a state where there is an absence of confusion or complexity.

ICT redress methods are evaluated in terms of simplicity (and thus complexity) according to the extent to which those methods are accompanied by difficulty, confusion or complications. Thus difficulty, confusion or complications may involve a range of factors of various types, such as degree of difficulty in learning, using or applying the remedy, potential waiting time, inconvenience and stress, and may include objective and subjective complications. Such factors can overlap with each other, and they can even overlap with the cost and enforceability criteria. Simplicity is thus a catch-all criterion, a clear advantage of which is to allow for a limitation in the total number of criteria being used to evaluate ICT redress methods.

Therefore complexity (lack of simplicity) is used as a criterion to evaluate the redress methods that might be listed in the table because, firstly, it would be an advantage to a consumer to be able to avoid unnecessary complications as between similar or equal redress methods and, secondly, the criterion is general enough to cover a wide range of factors left over after consideration of cost and enforceability factors in relation to the methods. On that basis, an ideal redress method might be one which was cheap, enforceable, not too difficult to use, speedy and relatively stress-free.

A definition of “cost-effective” could be “economical in terms of the desired result received for the cost incurred”,[16] where “economical” means not wasteful or extravagant. An alternative definition of cost-effective is “economical in terms of tangible benefits produced by money spent”,[17] but given the previous definitions of cost as involving more than just money, and effective as including subjective effectiveness, the former definition is preferred here. Consistent with that definition, solutions which are completely free of financial cost but which fail to achieve sufficient results will not be cost-effective. The final definition of “cost-effective” for the purposes of this article then, is “where, in the pursuit of a remedy for a failed or disputed ICT, cost, difficulty of enforcement and complexity, are not high”.

We can now represent the table described at the start of this section. By way of example, 14 potential redress methods have been suggested as possible subject-matter for evaluation by the methodology proposed. To illustrate use of the table, just three examples will now be considered.

Methods

Cost

Difficulty of enforcement

Complexity

Cost-effective?

2 – Credit card terms
3 – Foreign lawyers
4 – Foreign public consumer protection authorities
5 – Alternative Dispute Resolution / Online Dispute Resolution
6 – Arbitration
7 – Industry-based consumer dispute resolution schemes
8 – Industry codes of conduct
9 – Escrow services

10 – Transaction insurance
11 – Trust marks
12 – Consumer education
13 – Consumer complaints bulletin boards
14 – National deregistration of vendor websites

From those 14 possibilities, consider three worked examples given to illustrate how the following table was derived. Explanations, following the table, of the three examples are for illustration purposes only. Therefore, while the reasoning described as to how the various conclusions were reached is arguable, it is not the conclusions which is the point here, but the suggested methodology for reaching them. The reader is free to apply the suggested methodology in their own way[18] to reach their own conclusions.

Methods	Cost	Difficulty of enforcement	Complexity	Cost-effective?
3 – Foreign lawyers	Acceptable	High	Acceptable	No
4 – Foreign public consumer protection authorities	Low	Very High	Acceptable	No
6 – Arbitration	Acceptable	Acceptable	High	No

Appointment of foreign lawyers (i.e. those who reside in the vendor’s country) is considered here as a means by which a consumer might respond to a disputed/failed ICT where such response covers all manner of negotiations with the vendor – but extending up to litigation in the vendor’s country, should that be required.

Such appointments, apart from cost, language and private international law issues is potentially an excellent solution to problems associated with ICTs. Furthermore, such appointments won’t alter the fact that the ICT itself has transborder-related difficulties (e.g. delivery of goods), but it may make the subsequent handling of the matter easier through use of the lawyer’s local knowledge and skill. In other words, it may be more effective for a lawyer in the vendor’s country to negotiate with the vendor than for the consumer’s local lawyer to attempt the same. The possibility of appointing lawyers in the country of the offending supplier might potentially reduce the complexity of such situations down to the level found in the situation facing a consumer involved in a dispute with their local supplier pursuing the usual methods of redress. Unfortunately, however, cost, language[19] and private international law issues are potentially inherent in situations involving foreign lawyers, and such issues may create serious difficulties for the average consumer.

Assessed in terms of cost, the “foreign lawyers” redress method may be no better than litigation, and possibly even marginally worse. In other words, if the use of this method is taken to include litigation costs, the cost of this method would clearly be comparable with the cost of litigation. Furthermore, if litigation involved any extra costs for foreign lawyers, this method could be worse than straightforward litigation. If the foreign lawyer method is used without resort to actual litigation, the relative cost would be better than the cost of litigation, being exclusive of the costs of litigation.

Assessed in terms of enforceability, and continuing to assume that the foreign lawyer method is being used without resort to actual litigation, the method is not especially effective as it is basically concerned with negotiation (and the threat of litigation) and, as such, has very little actual coercive force, while retaining, arguably, a degree of psychological coercive power through the involvement of court officers.

Assessed in terms of complexity, and continuing to assume that the foreign lawyer method is being used without resort to actual litigation, the method is simple compared with actual litigation. It would be fairly straightforward, once the initial step of retaining the foreign lawyer was achieved and assuming potential language difficulties can be avoided, for the consumer to supply the foreign lawyers with whatever statement and evidence was required.

An overall result of “no” for the foreign lawyers redress method is calculated as follows. This method achieves a result of “acceptable” for cost; being cheaper than the cost of litigation but still expensive. This method (without litigation) does not involve actual coercive power but may have some persuasive power; its result for difficulty of enforcement is therefore “high”. Finally, the foreign lawyers method of redress for complexity results in “acceptable”. It is likely then, according to this methodology, that appointment of foreign lawyers would not be cost-effective as a means of solving problems with low-value ICTs – due, in this case, to problems with enforceability. Tabulated, the overall result for foreign lawyers is as follows.

Methods	Cost	Difficulty of enforcement	Complexity	Cost-effective?
3 – Foreign lawyers	Acceptable	High	Acceptable	No

Obtaining help from “foreign public consumer protection authorities” refers to a scenario where the consumer approaches the consumer protection authorities in the country of the foreign vendor (if any) either directly or through a local consumer protection authority, hoping that their local authority has a co-operation agreement with an equivalent institution in the vendor’s country. While this is a promising development,

Enforcement agencies do not typically co-operate in support of consumers bringing actions for civil remedies ... [and] ... domestic law may pose barriers to enforcement agencies entering into co-operation agreements. For instance, the wording of domestic laws may explicitly link enforcement powers to a specific law. Depending on how narrowly these powers are drawn, this may preclude enforcement agencies from providing assistance in respect of matters which do not come within their jurisdiction.[20]

Depending on the exact nature of the powers held by such bodies, they are likely to be in no better position than the consumer’s local authority to resolve the problem. The Australian authority for example – the Australian Competition and Consumer Commission (ACCC) – may act against a local offender at the request of a foreign consumer in relation to serious offences (not low-value ICTs), usually referring problems with ICTs to “econsumer.gov”.

The ACCC is also a member of the International Consumer Protection and Enforcement Protection Network (ICPEN), which is

a membership organisation consisting of the trade practices law enforcement authorities from more than two dozen countries. The mandate of the Network is to share information about cross-border commercial activities that may affect consumer interests, and to encourage international cooperation among law enforcement agencies.[21]

Bodies like the ACCC and its equivalents in other countries, “econsumer.gov” and “ICPEN” appear to have a long way to go to provide dependable and cost-effective remedies for low-value ICTs.

Assessed by the cost criterion, the “foreign public consumer protection authorities” redress method is excellent as it is normally completely free of charge, all costs of pursuing a remedy being borne by the public authority. This, however, is a generalisation, a full survey of public consumer protection authorities around the world being beyond the scope of this article. Typically however, such public authorities provide complaint handling and investigation without charge to members of the public. The only cost involved for the consumer would be the incidental costs (if any) of submitting complaints with copies or originals of relevant evidence.

Assessed in terms of enforceability, the method is not especially effective. As noted above, the ACCC, for example, may act against a local offender at the request of a foreign consumer in relation to offences other than low-value ICTs, usually referring problems with ICTs to “econsumer.gov” which, itself, is likely to refer such matters onwards to ODR (online dispute resolution) providers. In the best case scenario, however, where the public authority decided, for example, to take on an offender in order to set an example, it could conceivably litigate. In that case, costs would be low (being borne by the authority), and the enforceability would be as high as the foreign enforcement powers would allow – and as effective as they could be, given the amount of assets of the vendor remaining in the jurisdiction. “Taking on an offender in order to set an example” would, however, occur only in exceptional circumstances and would not be available to consumers as of right.

Assessed in terms of complexity, the method would be comparatively simple. It would be fairly straightforward, once the initial step of locating the foreign authority was achieved – assuming language issues, if present, were not insurmountable – for the consumer to supply that authority with whatever statement and evidence was required.

An overall result of “no” for the “foreign public consumer protection authorities” redress method is calculated as follows. This method achieves a result of “low” for cost: quite cheap but still not without some expense. This method does not normally involve actual coercive power but may have a little persuasive power; its result for difficulty of enforcement is therefore “very high”. Finally, the method, for complexity, results in an “acceptable”. It is likely then that the “foreign public consumer protection authorities” redress method would not be cost-effective as a means of solving problems with low-value ICTs. Tabulated, the overall result for foreign lawyers is as follows.

Methods	Cost	Difficulty of enforcement	Complexity	Cost-effective?
4 – Foreign public consumer protection authorities	Low	Very High	Acceptable	No

The term “arbitration” can possess at least two distinct meanings: “the system of determining disputes by a private tribunal constituted for that purpose by the agreement of the disputants”[22] with non-binding decisions because tribunals do not exercise judicial power; or “the system of permanent public arbitral tribunals constituted not by the choice of the parties but by public authority”,[23] not empowered to make binding decisions and not bound to administer the rules of evidence strictly. It is the first meaning which is of interest here as the public variety is inapplicable to ICTs.

Noting that the dictionary definition of “arbitration” alludes to the idea of a difference between public and private tribunals, “tribunal” has been defined as:

A person or body of persons, other than a court ... who is required by law to act in a judicial manner to the extent of observing one or more of the rules of procedural fairness in arriving at decisions: for example, Administrative Law Act (1978) s2 (State of Victoria, Australia) ... an [Executive/quasi-Judicial] body which usually reviews “administrative” action ... a tribunal may not exercise the judicial power of the Commonwealth (that is, make enforceable determinations of legal rights and obligations) due to the doctrine of separation of powers.[24]

That is taken here to be a definition of public tribunals. Having a definition of public tribunals assists with distinguishing between public and private tribunals.

A private tribunal might thus be defined as a person or body of persons, usually with a commercial interest, empowered by agreement between private disputants to act on an ad hoc basis for the purpose of dispute resolution, and which is required to act in a judicial manner to the extent of observing one or more rules of procedural fairness in arriving at decisions, but without judicial power to make enforceable determinations of legal rights and obligations.

The major distinction then between the two types of tribunal is that in the former (public) case the body is permanently established by a government mostly to review the decisions of the Executive branch of that government, while the latter is either established by request of the parties to a private contractual dispute, or is resorted to by them, to resolve a private contractual dispute. Thus there are some fundamental similarities (aims, methods and absence of enforcement powers) and some fundamental differences (motivation, identity of the clients and permanency) between public and private tribunals. Further, the activities of the former are governed by Administrative Law, while the latter may be governed by the rules of procedural fairness and the Law of Contract.

In considering the relationship between “ADR” and “private tribunals,” a private tribunal could correspond to a process by which ADR could be achieved (e.g. “unenforceable dispute resolution involving a neutral third party, observing rules of procedural fairness ...”); a private tribunal could correspond to a type of ADR (e.g. mediation, conciliation); and both “ADR” and “private tribunals” can exist for the same purpose (dispute resolution). “Private tribunal” may also be understood as a name for one type of commercial ADR-provider. Consequently there is much overlap between the two terms (and thus between the terms “ADR” and “arbitration” as used here), but they are not interchangeable terms and therefore each must be used deliberately and precisely.

Assessed in terms of cost, the arbitration redress method is cheaper than litigation but still not without monetary cost. It would (generally speaking, in relation to matters like low value ICTs) be conducted by commercial dispute resolution providers[25] and thus would involve no court costs and fewer fees (legal or other advisory) – as compared with litigation. Assessed in terms of enforceability, the method is not especially effective because it is basically concerned with negotiation (or, in some cases, the threat of litigation[26]) and, as such, has very little actual coercive force, as litigation can have.[27]

Assessed in terms of complexity, the method is comparatively simple as compared with litigation. It will be relatively straightforward, in many cases, for the consumer to supply the arbitration service provider with whatever statements and evidence is required, but to properly prepare for arbitration could involve almost as much time and effort as preparation for litigation.

The arbitration redress method may now be given an overall result. For cost, the method achieves a result of “acceptable”; cheaper than litigation but still not cheap.[28] As this method does not involve judicial power but would have some persuasive power; its result for difficulty of enforcement is therefore an “acceptable”. Finally, the method’s result for complexity is “high”; arbitration would not be as simple as, for example, the foreign lawyers redress method. Arbitration is therefore not cost-effective as a means of solving problems with low-value ICTs. Tabulated, the overall result for arbitration is as follows.

Methods	Cost	Difficulty of enforcement	Complexity	Cost-effective?
6 – Arbitration	Acceptable	Acceptable	High	No

It is worthwhile noting, in conclusion, that the above examples might give the impression that using the proposed methodology need be a fairly laboured or excessively formal process. It is suggested though, that it is merely the description in the three examples that is somewhat laboured – care has been taken to provide good descriptions. Actually using the methodology will, of course, be or become possible as a simple, even purely mental process.

[1] B.App. Sc.(EDP), Grad Dip Ed, LLB, PhD, Lecturer, Solicitor, T C Beirne School of Law, University of Queensland.

[2] An example of what is meant by an ICT here would simply be where a consumer in one country contracts to purchase goods (such as clothes) from a foreign retailer, for personal use. The scope of this article is limited to consideration of ICTs which do not involve intermediaries (such as Ebay transactions, for example).

[3] A redress method, in this article, means any reasonable method, by which a consumer, who is an aggrieved party to a disputed/failed ICT, would justifiably seek a remedy for that ICT.

[4] It is suggested that where a person uses the methodology described, with ordinary standards of common sense, the methodology will be as close to “completely objective” as is possible.

[7] There is no national perspective in this article. Data on the growth of e-commerce in the US is used simply because it is available, from a reliable source. All data in this paragraph is seen as indicative of international trends within an international phenomenon (international consumerism), as indicated by circumstances in the US and elsewhere.

[9] Adapted from Oxford University, Concise Oxford Dictionary of Current English (1980).

[10] Oxford University, Concise Oxford Dictionary English of Current English (1980).

[13] Other consumer protection criteria such as honesty, fairness, safety, knowledge, choice, privacy, peace of mind, and the right to a remedy for abuses, are either implicit within the three criteria chosen, or (with the exception of the right to a remedy for abuses) are irrelevant to the objectives of this article as discrete criteria.

[14] “Higher than acceptable” means, in terms of the scheme proposed, either “high” or “very high”. That would mean that either cost, difficulty of enforcement or complexity would be unacceptably high in respect of any particular redress method.

[15] Butterworths, Business and Law Dictionary (2nd ed, 2002) - under entry on “Arbitration”.

[16] Adapted from Oxford University, Concise Oxford Dictionary of Current English (1980).

[18] Recall that “complete” objectivity for this methodology is not claimed. What is claimed is a methodology which is less subjective than using no methodology at all.

[19] Foreign lawyers, being “foreign”, will not always speak the language most commonly spoken in the consumer’s country. There may therefore, at the very least, be communication problems as between the foreign lawyer and the consumer. Such problems may involve misunderstandings, delays and increased expenses as both the direct and indirect result of the language barrier.

[22] Butterworths, Business and Law Dictionary (2nd ed, 2002) – emphasis added.

[26] Litigation could be threatened through binding outcomes – e.g. through the enforcement of contracts formed through the arbitration process.

[27] While arbitration would have little coercive force, it may retain, arguably, a degree of psychological coercive power through the involvement of potentially binding court–like procedures.

University of Queensland Law Research Series

Gawith, Daril --- "Choosing the Best Remedy: A Methodology for Assessment of Cost-Effectiveness in Competing International Consumer Transaction Redress Methods" [2009] UQLRS 1; (2009) Macquarie Journal of Business Law