E-commerce, ODR and cross-border transactions (1/3)

By Kim Panti

This blog post series is part of an assessment for The Global Lawyer at Monash University where Kim currently studies. It was originally published on Linkedin

In an increasingly global and technological era, the ways we interact with each other have evolved to include new genres and applications of technology that create opportunities for us to connect. We are engaging with other nations, transcending our national boundaries, and are in effect, becoming borderless.

In this blog series, I will introduce the concepts of borderless transaction facilitated by online technologies and particularly the relevance of the e-commerce industry in creating such transactions. I will analyse the role of Online Dispute Resolution and its challenges for cross-border disputes, and finally, provide suggestions for the future of ODR.

What is e-commerce?

E-commerce or electronic commerce can be described as a ‘global retail’ that mirrors a traditional commercial relationship but is facilitated by the Internet. This allows users to transact with anyone in the world, from anywhere. While the most conceptually popular form of e-commerce is buying and selling online, there are many other types of e-commerce such as Business to Business (B2B), Business to Consumer (B2C), and Consumer to Consumer (C2C).  There are also specialised forms of e-commerce such as Mcommerce and Fcommerce. In a 2016 survey of global consumers conducted by Pitney Bowes, 66% of consumers shop cross-border, or buy from other countries, with 45% preferring to pay with their credit cards and 34% with e-wallets (like Paypal or Alipay). Countries like Australia (78%), Singapore (77%), Canada (72%), Mexico (71%), and Hong Kong (70%) are leading cross-border shopping.

There are many positives of e-commerce, particularly for consumers whose geographical freedom has allowed them to make purchases from around the world and choose when and where they will receive their product. Businesses also benefit from lowered transaction costs as information can be stored digitally with easy to use apps to manage inventory like Stock Control. It also reduces labour, and the costs involved for typically paper-based administrative tasks that can be eliminated and replaced by email or e-invoicing. Other benefits include the ability to expand an existing business by making its products or services available online, which has the potential to attract new customers. Businesses are also able to readily communicate with their clients within minutes through private messaging or social media. This is becoming increasingly relevant in developing their content strategy.

However, e-commerce also poses some challenges, notably in the method of payment and security of information. There is also the question of how parties can resolve disputes in cross-border transactions where parties are based in different countries, with possibly conflicting jurisdictions. One way this is being resolved is the use of Online Dispute Resolution (ODR). According to NetNeutrals EU, an ADR entity operating in the UK and EU, there were 84 disputes received in 2016, with 17 of them cross-border disputes. Most disputes fell under the category of other (7), late delivery (4), item/service not received (3).

In Australia, ODR is yet to operate on the same scale as those abroad. However, according to the Australian Dispute Resolution Advisory Council (ADRAC), there is potential for ODR to be further implemented in Australia. Use of technology in the Australian justice system has been seen in the Federal Court of Australia’s electronic capabilities and electronic lodgements across most courts and tribunals in Australia. There is also an eCourt.

What is Online Dispute Resolution?

Online Dispute Resolution (ODR) is a form of Alternative Dispute Resolution (ADR) facilitated by either a computer-based software or artificial intelligence (AI). It involves what is referred to as ‘blind bidding’ which describes the way parties negotiate by proposing a settlement offer. After one party makes an offer, the other party can decide to accept or decline it. Blind bidding is primarily used for settling monetary disputes.

What are the strengths of Online Dispute Resolution?

Parties can choose ODR in order to avoid hefty legal costs in litigation. ODR is also particularly useful where cross-border jurisdictions pose uncertainty for parties seeking a certain outcome and where complex conflict laws may further complicate already complex transactions. Compared to traditional court proceedings, ODR is fast, can reduce costs, and is accessible to parties who are not geographically located in the same place. In an article by Harvard University, it is suggested that ODR could replace the role of small claims courts in e-commerce disputes.

What are the challenges?

Goodman identifies that one of the challenges of ODR is that online negotiation lacks the potential to create innovative solutions to disputes, which he says is the “hallmark of many successful negotiations”. Accessibility is also a challenge to those who are less digitally literate, and confidentiality issues arise where electronic records of transactions can be used without the other party’s permission.

Dr Pablo Cortés from the University of Leicester also identifies that consumers are the main challenges for cross-border transactions particularly because of the difference in language, potentially complex law of conflict, and enforcement. Nevertheless, there is promise for ODR in solving cross-border disputes as more and more transactions are conducted online.

About Kim Panti
Kim Panti is a penultimate Arts/Law student at Monash University and is currently part of the Law Ambassador program. Connect with Kim on Linkedin.

Photo by Alexandre Godreau on Unsplash

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