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Terminal settlement

1 July 04

A survey of the types of process available for settling disputes online and the scope for practising the lawyer's art

by John Mackenzie

There are now very few practitioners in the Scottish legal profession who do not have an email address, and access to the web. Even smaller traditional law firms boast glossy websites and have seized opportunities previously unavailable. However the networking technology continues to improve and develop at an incredible rate. Technologies and techniques which would have seemed like science fiction in 1990 are reality today.

This article is concerned with the emerging and alternative form of dispute resolution called Online Dispute Resolution (“ODR”). Alternative dispute resolution (“ADR”) has been around for a long time, in the form, for example, of arbitration, mediation or expert determination – essentially anything that does not involve the courts. However each of these processes tends to involve geographical limits, whether through procedure or applicable law.

With the advent of the internet many saw electronic communication as the answer to the problem of spiralling costs in the dispute resolution process. There have been some notable successes. For instance, ICANN created a global process for resolving domain name disputes. Their Uniform Dispute Resolution Policy, administered by a variety of ODR providers, has been used to resolve thousands of domain name disputes.

As ODR systems have become more sophisticated, others have been using ODR techniques. The insurance industry, for example, has begun focusing on ODR as a way to resolve claims. And individual mediators and arbiters are using technology to facilitate progress in or settlement of disputes.

Videoconferencing technology is developing to an extent where its use on a day-to-day basis is possible. As the technology improves it is likely that it will become reliable enough for routine use in a court of law. There then exists the prospect of the virtual courtroom, with parties’ solicitors able to conduct hearings from their own offices. The present systems in Scotland at least, however, do not allow for the use of videoconferencing on a day-to-day basis.

Some ODR providers

There are a number of different ODR providers, but considering some of the models available will assist in identifying what is expected of a party’s representative.

Furthest from traditional dispute resolution procedures is the “blind” bidding system. is a Scottish ODR provider which uses an interactive online bidding system. This system is said to be “the future of settlement negotiation in the majority of cases where the solution to the dispute is financial” ( One of the advantages of such a system is said to be that it is not restricted by the conventional working hours of a lawyer. A bid can be placed anywhere, anytime. This feature removes the disadvantages associated with traditional dispute resolution, namely time and expense. If chosen, the bidding is “blind”. This means that the amount of the offer, or demand, is not made known to the opposition. The reason for this “blind bidding” is said to be to protect a party’s interests should negotiation fail.

With this system there seems little scope for legal input at all, and it is perhaps no more than a tool to be used by claims consultants prior to legal involvement. Indeed there seems to be little scope for persuasion within the system, with the true negotiation process, in terms of persuading the opposition to increase their offer, or reduce their demands, taking place in the “real” world. There is still likely to be a process of communication of positions which must be done by correspondence, but the blind bidding restricts arguments that justify a particular offer or counter offer. In reality of course it is not a “justice” system in the sense of a decision making process.

Online arbitration

A much more sophisticated approach can be seen in services offered in the United States. Online Resolution offers “traditional” services of mediation, arbitration, negotiation and expert evaluation, but does so in the online context. The guidelines in relation to arbitration explain the process:

“Online Arbitration is similar to traditional arbitration, except that all communications take place online. The Online Arbitrator appointed for your case will be an experienced professional, who knows the subject area of your dispute.

“The Arbitrator ‘convenes’ the arbitration, manages the process efficiently, maintains confidentiality, and issues a decision based on the evidence presented. The Online Arbitrator coordinates and schedules the presentation of data, makes rulings on admissibility of evidence, keeps the process moving forward, and renders a decision promptly after the conclusion of the hearing. Of course, in the online setting, all communication, including the presentation of evidence, is supplied in electronic form-text, image, audio, or video. Participants in Online Arbitration agree in advance to abide by the Arbitrator’s decision, and that the award may be filed in any appropriate court” ( index-oa.cfm).

In contrast to the blind bidding process, the Online Resolution model poses problems for the traditional litigator. The blind bidding process involves the selection of a number and typing that into the website. However this online dispute resolution model calls for evidence and submissions. How is the claim to be formulated? How is the arbitrator to be persuaded to attach weight to the evidence submitted or the submissions made? While the answer is not straightforward, falling back on the basic principles of pleading is a good starting point. Why are the parties using the system, who are the parties to the dispute, what is it that the claimant is seeking, what are the facts justifying the process and why is the claim justified? If the submission is built around these basic questions the logic of that party’s position should be clear.

At (, which describes itself as “The Electronic Courthouse”, parties follow the AAA arbitration rules, but the parties meet through a virtual chatroom. Here the parties can enter into discussions about a possible settlement, but also communicate with the arbitrator appointed. This process carries all the dangers associated with email. This is a relatively informal environment where views can be exchanged and expressed, but where the views are committed to writing.

It seems to result in an uncomfortable mix of oral pleading, where the discussion can be reasonably fluid, and written pleading, where thought is given to the drafting of the document in advance. The answer would seem to be to commit to the process, but to take care in expressing the point you wish to make. That is not an easy task, and so the solution can only be training and practice. If the same thought process of analysing a position, and taking care over how it is expressed, is adopted for every email and every letter, then it will, or should, flow naturally in the virtual chatroom.

The reality of ODR?

It is difficult to get hold of statistics, but there does not seem to be a wholesale shift away from real world dispute resolution to the online world. In practice however the courts (or at least the commercial courts in the Court of Session and Glasgow Sheriff Court), arbiters and mediators are all looking for documents to be submitted in electronic form. In ad hoc arbitrations arbiters can, and have, called for an “electronic process” with access by all parties available online. It may be that online dispute resolution is at a halfway house with the process migrating to electronic form, but the ultimate hearing and determination still takes place in the real world.

The future of ODR

It is difficult to say how popular online dispute resolution will become. Individuals are often driven by the notion of justice, and justice being seen to be done. Mediation is often successful as the claimant at last gets to meet the opposition. If the justice process is purely online then that requirement may not be met. However the consistent criticism of the justice system in any part of the world is the cost, and online dispute resolution certainly seems to address that concern.

In the drive to try and streamline the process and so reduce costs in the real world, the courts have sought to restrict the use of written pleadings. The commercial court in the Court of Session does not require formal pleadings as such. Personal injury cases are now dealt with, with minimal pleadings. The courts, and the parties, rely on an effective and “real world” presentation of the case for ultimate decision.

While there are clear opportunities for a fast and effective decision making process, the tension for any online dispute resolution practitioner is that there is no “real world”. Everything is driven by text, or at most documents or other evidence in digital form. From a practical perspective there is little scope to “recover” a case if it is badly pled. If the pleadings or submissions are inadequate there is little scope for reviewing the position under these procedures. Ironically this means that written pleadings acquire greater significance when modern technologies are employed. The drafter of pleadings then has to utilise the principles of good pleading that have been demanded by the courts for hundreds of years.