Online mediations: advantages and pitfalls of new and evolving technologies and why we should embrace them.

• Author: Fernandez, Anthony J.
• Position: Newsletters

This article originally appeared in the May 2014 Alternative Dispute Resolution Committee newsletter.

THE growth of the World Wide Web after 1992 and the exponential expansion of Internet usage across most sectors of modern society can best be described as a "Big Bang" in the history of technology. (1) The rise in popularity and extreme commercialization of the Internet resulted in an increased volume of online transactions, which in turn gave rise to a significant number of online disputes. Not before long, the need emerged for an alternative dispute resolution system that could provide as much efficiency and effectiveness as the new online environment required. Thus, e-commerce (2) was essentially the birthplace of what is known as a system of online dispute resolution (ODR). (3)

Broadly described, ODR refers to the use of traditional mediation, negotiation, and arbitration techniques, as well as conducting formal judicial proceedings, in an online environment. (4) ODR avails itself of a wide range of tools, such as emails, instant messaging applications, highly specialized settlement software and video teleconferencing. (5) Technology mediated dispute resolution methods, which encompass all types of ODR, generally incorporate the use of advanced communication technologies, such as mobile phones, tablets or handheld computer devices, satellite transmissions, video-teleconferencing, (6) and even the use of avatars or holography to achieve the core goals of dispute resolution. (7) In fact, some scholars have made a distinction between the terms "ODR" and "technology mediated dispute resolution", in order to reflect the supplementation of Internet communications with audio, video and text capabilities. The above distinction also points out the younger generation's growing preference for the use of cellular phones, text messaging and satellite supported systems for their everyday communication. (8)

Although cross-border commercial litigation was the initial arena for the origination of ODR, the application of new methods of dispute resolution has spread over many other areas of litigation. (9) There is no doubt that established and new ODR technologies represent an essential means to achieve a more cost-effective system of dispute resolution. However, some pitfalls in the ODR system have yet to be overcome. Focusing on the specific topic of online mediations, this article briefly reviews the most pressing issues for litigators to consider when deciding on whether to use online mediation resources as substitutes for face-to-face mediations in general. The article also explores alternative solutions to the most common pitfalls encountered in online mediation practice. Lasdy, this article suggest that practitioners must embrace the new technologies and communications applications currently used for online mediations in light of the fast paced growth of technology and society's increasing tendency towards becoming more technologically savvy.

Common Types of Online Mediations

Unlike traditional mediation, where all the parties are often physically present "at the table" from start to finish, computer-assisted. mediations are conducted with the use of computer communications to facilitate the administration of traditional mediation. In these proceedings, although the mediation may actually require a face-to-face encounter, or a telephonic conference between all parties, the initial process of mediation will require the use of computers to exchange preliminary information between the parties and the mediator. (10)

A hybrid form of computer-assisted mediations can also be devised by the parties and the mediator, wherein both online and in-person mediation techniques are used to conduct the proceedings, such as when a party is present with the mediator and the other party appears remotely through a video-teleconference. In either of the above scenarios, the role of the mediator is not completely obviated by the use of electronic systems or processes inherent to computer-assisted mediations. Clearly, under this particular type of ODR, technology is meant as a supplementing tool to the traditional mediation process.

On the other hand, computer-based mediations are conducted through applications that are especially designed to analyze the data entered by each participant and to suggest compromised solutions to the parties' disputes. This type of ODR presupposes the parties' access to and knowledge of the computer technology necessary to engage in the online mediation process. One such method of computer-based mediation is blind-bidding, which has been dubbed the "software-as-mediator". Unsurprisingly, blind-bidding is most frequendy used in e-commerce disputes, where a merchant typically offers online mediation as an alternative for dispute resolution between buyers and sellers of goods and services. The undisputed precursor of computer-based mediations was SquareTrade, a system originally designed for eBay Corporation to handle its overwhelming volume of online-based transactional disputes. (11) In the last decade, the algorithmic processes that underlie blind-bidding have been patented and refined to handle complex cases. (12)

Computer-based mediation is an arena well known to the blind-bidding giant companies, such as Cybersettle. (13) The technological licenses derived from SquareTrade, granted by eBay/PayPal to other businesses over the last decade, have spawned the growth of ODR services providers that claim to be able to assist in disputes between buyers (B2B), buyers and sellers (B2S), as well as in disputes between insurance companies and their insureds, doctors and their patients, and disputes between governments and citizens over property rights. (14) Labor and employment claims have also been mediated with success through the use of online mediations, according to the American Arbitration Association, since its early implementation of the Webfile system in 2001. (15)

Alongside commercial ODR services, individual practitioners (lawyers and mediators) have increasingly offered online mediation services to their clients, giving them the option to mediate via teleconference, using text, or...