UK businesses must prepare for online dispute resolution, says expert

Specialist in IT disputes resolution David McIlwaine of Pinsent Masons, the law firm behind Out-Law.com, said it was "reassuring" to see one of the most senior judges in England and Wales focus his attention on the subject of ODR in a recent speech.

Last week, Master of the Rolls Lord Dyson reinforced his backing for the development of a new online court system and other ways of digitising civil litigation processes. He said that technology can play a role in tackling delays that sometimes arise in court cases and help cut costs for companies in dispute.

McIlwaine said there are a number of strands to the emerging ODR agenda, but said that whilst the topic has "developed significantly at an EU and national government level, it remains relatively low-priority within business".

"There are three principal aspects to online dispute resolution: using technology to enable accessibility to the justice system, particularly for low-value items, for example by providing online filing systems and case management processes; enabling a form of online alternative dispute resolution (ADR) service, such as online mediation to facilitate settlement; and allowing judgments to be decided based on the review of online papers, possibly with telephone or Skype-style hearings," McIlwaine said.

It is the online ADR service that "may be the most immediately tangible" and which "will undoubtedly have the most immediate effect on business", McIlwaine said. He highlighted new EU legislation on ADR and ODR which are due to be implemented into UK law before 9 July this year. The UK government previously launched a consultation on the plans (49-page / 386KB PDF).

"The legislation imposes an obligation on the UK to ensure the provision of online settlement mechanisms for consumer complaints in all sectors, with a few exceptions including financial services," McIlwaine said. "The legislation applies to all contractual disputes both domestically and cross-border, where the trader is established in the EU and the consumer is an EU resident. The legislation will enable consumers to participate in online ADR, with the intention of providing an appropriate system for redress with EU businesses, thereby avoiding court."

McIlwaine said the European Commission is also creating an ODR platform for disputes arising from an online transaction as part of the reforms. The platform will be used to assist with the ADR process, and the UK is obliged to appoint ODR contact points to provide information and help.

"Importantly, from January 2016, all businesses which sell goods or services online will be obliged to provide a link to the ODR platform on their website along with further information," McIlwaine said. "There is a question over whether the UK business world is ready for the onslaught of what will be ADR via ODR."

In a speech (20-page /111KB PDF) last week, Lord Dyson said a report published earlier this year on online dispute resolution (ODR) in low value cases "convincingly demonstrates one of the ways in which we should develop the justice system to make it more accessible and more efficient, speedy and affordable than it now is".

The report, by an advisory group within the Civil Justice Council, called for a new system for ODR should be piloted "as soon as is practicable" and said that a new online court could be operational in England and Wales by 2017.

"Quite apart from the advent of an online court, I have little doubt that it will not be long before all claims are filed online, when paper bundles and authorities are past history; and when the court file is an online file," Lord Dyson said. "I can see no reason, in principle, why case and costs management should not be facilitated through the proper use of technology. The potential savings in terms of costs and time to all involved are obvious."

Lord Dyson said that a new ODR system in England and Wales should link ADR mechanisms with the court system. He said France has already developed such a system.

Lord Dyson said: "The system in France encourages more than simply greater efficiency. It allows innovation. One form of innovation has been the creation of a website that provides an e-filing service for litigants-in-person. Individuals are able to attempt to resolve their disputes through an ODR mechanism. If that does not succeed, the website enables the creation of and files electronically the necessary court documents to commence a claim. It is primarily aimed at small – as the website puts it ‘everyday’-- claims."

"That the starting point for the French website is an informal means of ADR cannot but be a good thing," the judge said. "It is right that it is backed-up with access to the court if ADR does not lead to a resolution of the dispute. I hope that something similar will emerge from our own ODR project. We should be looking at similar innovations, to both secure more efficient and cost-effective ADR and formal adjudication."

Lord Dyson said that measures need to be taken to address "systematic delays" and the "excessive costs and procedural complexity" of litigation, but warned that "a rush to justice can be just as dangerous as a leisurely amble". He said that efforts must also be made to ensure that the greater use of technology in the court system does not lead to secrecy.

"Open justice is rightly prized as an essential element of our system of justice. Justice must not only be done, but must be seen to be done," Lord Dyson said. "There is an obvious tension between the preservation of this fundamental principle and the promotion of virtual, internet-based, systems and processes that enhance efficiency and cost-savings. It is one thing to conduct mediations out of the public gaze. This is already done and there can be no objection to it. But we should not allow advances in technology to lead to secret court determination of disputes. It will be a technical challenge to find a solution to this problem. Technology must be the servant of justice, not its master."