Online Dispute Resolution for Consumers in the European Union

Front matter

Online Dispute Resolution for Consumers in the European Union

Pablo Cortés

N

Introduction

Background Electronic commerce in the European Union The need for online dispute resolution (ODR) Setting the tone Summary of contents Methodology Location and contribution of the book in the existing academic debate

Consumer protection and access to justice in the era of electronic commerce: A European perspective

1.1 Introduction 1.2 Consumer protection policy in the online market 1.2.1 The legal definition of consumer 1.2.2 Consumer protection 1.2.3 Consumer protection in the field of e-commerce 1.3 Consumer access to justice: Small claims procedures 1.3.1 Introduction 1.3.2 Small claims procedure in Ireland 1.3.3 Small claims in England and Wales 1.3.4 Small claims court in Spain 1.3.5 Assessment vill

Contents

1.4 Conflict of laws 1.4.1 Introduction 1.4.2 Choice of law 1.4.3 Forum selection 1.4.4 Assessment 1.5 Enforcement 1.5.1 Introduction 1.5.2 Judicial enforcement in the EU 1.5.3 Administrative enforcement 1.5.4 Assessment 1.6 Conclusion Notes

Online dispute resolution: An emerging option for consumer redress

2.1 Introduction 2.2 Definition and growth of ODR 2.2.1 Defining ODR 2.2.2 A brief history of ODR 2.2.3 Advantages and difficulties in using ODR 2.2.4 Dispute avoidance 2.2.5 Dispute resolution 2.2.6 European initiatives promoting the use of consumer ODR 2.3 ODR challenges 2.3.1 Challenges to ODR 2.3.2 Funding 2.3.3 Directing disputants to ODR services 2.3.4 Fairness and due process 2.3.5 Enforcement 2.3.6 The role of technology 2.4 Conclusion Notes

Consumer adjudicative processes supported by technology: Court processes and arbitration

3.1 Introduction 3.2 Online judicial processes 3.2.1 Domestic disputes: The incorporation of technology into the judicial process

51 52 52 54 56 59 64

94 95

3.3

3.4

3.2.2 Cross-border disputes: European small claims procedure

Online arbitration

3.3.2 Obstacles to the online arbitral process

3.3.3 Domestic arbitral procedures: The Spanish Consumer Arbitration Boards

3.3.4 The UDRP: An international adjudicative process similar to arbitration

Conclusion

Online mediation for consumers: The way forward

4.1 4.2

4.3

4.4

Introduction

From offline mediation to online mediation

4.2.1 The difference between online and offline mediation

4.2.2 Types of mediation

4.2.3 Two ODR examples: SmartSettle and SquareTrade

4.2.4 Benefits and limitations in using online mediation

4.2.5 Appropriate cases for online mediation

4.2.6 Building trust in online mediation

4.2.7 Dynamics of computer mediated communications

Self-regulation and soft law: Procedural aspects of

mediation

4.3.1 Flexibility, legal certainty, confidentiality and transparency

4.3.2 Independence, fairness and protection of the weaker party

4.3.3 The mediator’s status

4.3.4 Accountability

Regulatory approach in the EU: The Mediation

Directive

4.4.1 The purpose of regulating mediation in the EU

4.4.2 Mandatory mediation

4.4.3 Enforcement of settlements

4.4.4 Suspension of limitation periods

Contents ix

98 106 106 107

112 114 133 135

144 145

145 146

163 164 x

Contents

4.5

4.6

Regulatory approach at the domestic level, particularly in England and Wales

4.5.1 Mediation under national law

4.5.2 The approach to mandatory mediation in

England and Wales 4.5.3 The way forward Conclusion

A proposal 5.1 Introduction 5.2 The need for a regulatory balance in the field of ODR

5.3

5.4

5.2.1 Increasing access to justice through ODR

5.2.2 Failed expectations in ODR

5.2.3 Creating a balance between regulation and self-regulation

5.2.4 Risks of self-regulation

5.2.5 The objective of regulating ODR

5.2.6 International initiatives

5.2.7 Regional regulatory initiatives

Proposal for a regulation in the field of ODR

5.3.1 The purpose of regulating ODR at the EU level

5.3.2 The need to increase awareness of ODR

5.3.3 Mandatory ODR clauses

5.3.4 Procedural legal standards for accredited ODR

5.3.5 Enforcement of ODR decisions

Conclusion

Conclusion

Summary

Findings

Tiered ODR systems

Future dynamics and recommendations for ODR Notes

Index

165 165

166 171 172 174

181 182 182 183

184 184 187 188 190 191

213 214 221 222 223

225 233 255

Table of cases

I. European Union

Alassini and Others v Telecom Italia C-317/08, 18 March 2010 179, 180 Di Pinto, C-361/89, 14 March 1991 10 Case Francesco Benincasa/Dentalkit, C-269/95, 3 July 1995 10, 44 Océano Grupo Editorial SA and Salvat Editores SA C-240/98,

II. United Kingdom Aird and Aird v Prime Meridian Ltd [2006]

EWCA (Civ) 1866 176 Bowman v Fels [2005] EWCA (Civ) 226 176 Burchell v Bullard [2005] EWCA (Civ) 358 137, 167, 178, 210 Cable & Wireless v IBM United Kingdom Ltd [2002] EWHC

(Comm Ct) 2059. 166, 178 Campbell v MGN Ltd [2005] UKHL 61; [2002] EWCA (Civ) 1373 49, 167 Dunnett v Railtrack ple [2002] 2 ALL ER 850 178 Egan v Motor Services (Bath) [2007] EWCA (Civ) 1002 166 Flowers Inc v Phonenames Ltd [2001] EWCA (Civ) 721 4] Halsey v Milton Keynes General NHS Trust [2004]

Hurst v Leeming [2001] EWHC (Ch) 1051; [2003] 1 Lloyds Rep 379 178 Max Mosley v News Group Newspaper Limited [2008]

EWHC (QB) 1777 178 Multiplex Constructions (UK) Ltd v Cleveland Bridge UK Ltd

and another (No 7) [2008] EWHC 2280 178 Palfrey v Wilson [2007] EWCA (Civ) 94 179 P4 Ltd v Unite Integrated Solutions plc [2006] EWHC (TCC) 2924 168

R (Cowel) v Plymouth City Council [2001] EWCA (Civ) 1935, [2002] 1 WLR 803 179 xii Table of cases

Rowallan Group Ltd v Edgehill Portfolio No. 1 [2007] EWCA (Ch) 32 179

II. France French Union of Jewish Students v Yahoo! Inc. Tribunal de Grande

Instance de Paris. Interim Court Order (20 November 2000) 47 Sté V 2000 and Sté XJ 220 Ltd c M. Meglio and M. Renault Cass Civ Ire

Union Fédérale des Consommateurs-Que Choisir (UFC) v AOL R. EN. 02/03156 Tribunal de Grande Instance, Nanterre (2 June 2004) 30, 47

IV. Australia De Rose v State of South Australia [2003] FCAFC 286 97, 136

V. United States

Advanced Bodycare Solutions, LLC v Thione International,

Inc., No. 07-12309 (11th Cir. 21 April 2008) 138, 165, 178 Allied-Bruce Terminix Cos. v Dobson (1995) 513 U.S. 265 109, 138 Brower v Gateaway 2000 Inc 676 N.Y.S. 2d 569, 572 (1998) 110, 138 Calder v Jones 465 U.S. 783, 788 (1984) 48 Carnival Cruise Lines, Inc. v Shute, 499 U.S. 585 (1991) 30, 48 Caspi v Microsoft Network, L.L.C. 732 A.2d 528 (N.J. 1999) 30 Comb and Toher v Paypal, Inc (US District Court, ND Cal,

San José Div 2002) 110, 138 Dale v Comcast Corp. 998 F3rd (11th Circuit 2007). 138 Decker v Circus Hotel 49 F. Supp. 2d 743 (D.N.J. 1999) 48 Euromarket Designs, Inc v Crate & Barrel Ltde 96 F Supp 2d

824 (NDIII 2000) 29 French Union of Jewish Students v Yahoo! Inc 379 F.3rd (2000) 29 Green Tree Financial Corp. v Bazzle, 123 S. Ct. 2402 (2003) 110, 138 Green Tree Fin. Corp.-Ala. v Randolph 513 U.S. 79 (2000) 111, 138 Helicopteros Nacionales de Colombia, S.A. v Hall 466

U.S. 408 (1984) 48 Hill v Gateaway 2000, Inc., 105 F.3d 1147 (7th Cir. 1977) 31, 48 Hy Cite Corp. v Badbusinessbureau.com, 297 F. Supp. 2d 1154,

1160 (W.D. Wis. 2004) 48 International Shoe Co. v Washington, 326 U.S. 310 (1945) 30, 48 Parisi v NetLearning, Inc., 139 F. Supp. 2d 745 (2001) 139 Perkins v Benguet Consolidated Mining Co. 342 U.S. 437 (1952) 48

Ross v Bank of America F.3d. 2008 WL 1836640 (Cir.2d. N.Y.) 110, 138 Thompson v Handa-Lopez, Inc., 998 F. Supp. 738 (W.D. Tex. 1998) 48

Table of cases xiii

Yahoo!, Inc. v La Ligue Contre Le Racisme Et L’Antisemitisme

169 FSupp. 2d 1181 (N.D. Cal. 2001) 47 World-Wide Volkswagen Corp. v Woodson, 444 U.S. 286, 291 (1980) 48 Zippo Manufacturing Company v Zippo Dot Com. Inc., 952

F.Supp. 1119 (W.D. Penn. 1997) 31, 48 VI. Ireland Harrison v Ennis 1967 IR 286 178 Superwood Holdings ple. v Alliance (unreported, SC 12 April 2002) 178

VII. ODR Service Providers

Amazon.com, Inc. v Steven Newman alkla Jill Wasserstein alkla Pluto

Newman, WIPO/D2006—0517 141 America Online, Inc. v Johuathan Investments, Inc., and Aollnews.com

WIPO/D2001-0918 141 Arthur Guinness Son & Co. (Dublin) Limited v Dejan Macesic

WIPO/D2000-1698 141 AT&T Corp. v Amjad Kausar WYPO/D2003-0327 141 Bloomberg L.P. v Secaucus Group, NAF/FA97077 141 Bridgestone Firestone, Inc., Bridgestone/Firestone Research, Inc., and

Bridgestone Corporation v Jack Myers W1PO/D2000-0190 141 CBS Broadcasting, Inc. v Gaddoor Saidi WYPO/D2000-0243 142 Chivas USA Enterprises, LLC, et al v Cesar Carbajal WIPO/D2006-—

Fleischwarenfabrik WWIPO/D2003—0474 141 Control Techniques Limited v Lektronix Ltd WIPO/D2006-1052 141 Daniel J. Quirk v Michael J. Maccini NAF/FA94964 141 David Gilmour, David Gilmour Music Limited and David Gilmour Music

Overseas Limited v Ermanno Cenicolla WYPO/D2000-1459 141 Dr. Michael Crichton v In Stealth Mode WYPO/D2002-0874 141 Dreamgirls.com v Dreamgirls Entertainment WWIPO/D2006—0609 140 Excelentísimo Ayuntamiento de Barcelona v Barcelona.com Inc.

WIPO/D2000-0505 140 Gobierno de Asturias v Diego Miras Silva WIPO/D2007-1392 141 His Holiness Phakchok Rinpoche v Kim Joe WIPO/D2006—0328 143

Jazeera Space Channel TV station v AJ Publishing WIPO/D2005—0309 140 Jerome Stevens Pharmaceuticals, Inc. v Watson Pharmaceuticals

WIPO/D2004-1029 141 John Ode dba ODE and ODE — Optimum Digital Enterprises v Intership

Limited W/TPO/D2001-0074 140 Joseph Dello Russo M.D. v Michelle Guillaumin WYPO/D2006-1627 141

Julia Fiona Roberts v Russell Boyd W/YPO/D2000-0210 141 xiv Table of cases

Justice for Children v R Neetso / Robert W. O’Steen WIPO D2004—0175

L'Oreal S.A. v Munhyunja WWYPO/D2003-0585

Ladner v Wetmore NAF/FA 305190

LifePlan v Life Plan clo Relational Dynamics, Inc., NAF/ FA0005000094826

Lockheed Martin Corporation v Dan Parisi WYPO/D2000-1015

Mobile Communications Services, Inc. v WebReg RN WIPO/D2005-—1304

National Dial a Word Resgistry Pty Ltd and others v 13000

Directory Pty Ltd WIPO/D 2008-0020 139,

PC Mall, Inc. v Pygmy Computer Systems, Inc. WWYPO/D2004-0437

Playboy Enterprises International, Inc. v Joao Melancia W/YPO/D2006-— 1106

Proto Software, Inc. v Vertical Axis Inc/PROTO.COM WIPO/D2006-— 0905

Royal Bank of Scotland Group and NatWest Bank v Personal and Pedro Lopez WIPO/D2003-0166

Société Air France v Virtual Dates, Inc. WIPO/D2005—0168

Sormac BV v Domains by Proxy, Inc. and James McCrory, WIPO/D2007— 1338

Telstra Corporation Limited v Nuclear Marshmallows WYPO/D2000-0003

The Royal Bank of Scotland Group v Personal and Pedro Lopez WIPO/ D2003-0166

Tom Cruise v Network Operations Center! Alberta Hot Rods WIPO/ D2006-0560

141 142 141 142 141 142

143 141

143 143

141 141

141 142

ODR providers

I. List of ODR providers

All American Dispute Resolutions Online (AADROL) available at http://www.medi84u.com American Arbitration Association (AAA) available at http://www.adr.org Asian Domain Name Dispute Resolution Centre available at http://www.adndtc.org Appellex Bargaining Solutions available at http://www.appellex.com Better Business Bureau Online available at http://www.bbbonline.org Camera Arbitrale di Milano available at http://www.camera-arbitrale.com Chartered Institute of Arbitrators available at http://www.arbitrators.org Centre for Effective Dispute Resolution available at http://www.cedr.co.uk Cibertribunal Peruano available at http://www.cibertribunalperuano.org Conflict Resolution.com available at http://www.conflictresolution.com Concilia Online available at http://www.conciliaonline.net Confianza Online available at http://www.confianzaonline.org CPR Institute for Dispute Resolution available at http://www.cpradr.org CyberSettle available at http://www.cybersettle.com Czech Arbitration Court available at http://www.adreu.eurid.eu Dispute Manager available at http://www.disputemanager.com eBay Community Court available at http://www.ebaycourt.com Electronic Consumer Dispute Resolution available at http://www.ecodir.org Electronic Courthouse available at http://www.electroniccourthouse.com Freiwilligen Selbstkontrolle Multimedia available at http://www.fsm.de European Institute for Conflict Management available at http://www.eucon-institute.com Fair Shake available at http://www.fairshakeodr.com Hong Kong International Arbitration Centre available at http://www. hkiac.org iCourthouse available at http://www.icourthouse.com International Chamber of Commerce available at http://www.iccwbo.org The Internet Ombudsman available at http://www.theinternetombudsman.com xvi List of ODR providers

Der Internet Ombudsman available at http://www.ombudsmann.at

JAMS available at http://www.jamsadr.com

Juripax available at http://www.juripax.com

Mediate.com available at http://www.mediate.com

Mediation Arbitration Resolution Services available at http://www.resolvemydispute.com

Médiateur du Net available at http://www.foruminternet.org

Mediation Now available at http://www.mediationnow.com

The Mediation Room available at http://www.themediationroom.com

The National Arbitration Forum available at http://www.arb-forum.com

ODRWorld available at http://www.odrworld.com

PayPal/eBay Resolution Center available at http://www.paypal.com

Risolvi Online available at http://www. risolvionline.it

SettleToday available at http://www.settletoday.com

SmartSettle available at http://www.smartsettle.com

Telecommunications Industry Ombudsman available at http://www.tio.com.au

TRUSTe available at http://www.truste.org

Web Assured available at http://www.webassured.com

World Intellectual Property Organization available at http://www.arbiter. wipo.int/domains

Acknowledgements

This book is based on the research that I undertook while writing a PhD thesis, which I successfully submitted to the Faculty of Law, University College Cork, in October 2008. Thanks are first due to the Irish Council for Humanities and Social Sciences, whose financial support was essential in the writing of the thesis.

Many thanks go to my doctoral supervisor Professor Steve Hedley, who has been instrumental in completion of the first version of this research. He wisely guided me from start to finish with the foresight of an experienced supervisor. I am also grateful to Professor John Mee, who gave me invaluable advice and helped to resolve all types of challenges.

In the past years I have discussed my ideas with judges, lawyers, academics and students. It is a long list of people and thus it would be difficult to name all to whom I am indebted. A special mention, however, must include Professor Dermot Walsh, to whom I am grateful for his kind assistance at the start of my research career. I would also like to thank Judge David O’Riordan as well as the Faculty of Law at University College Cork. A special word of thanks needs to be said to my fellows of the National Centre for Technology and Dispute Resolution, especially to Professor Ethan Katsh, Colin Rule and many other ODR experts such as Dr Thomas Schultz, Dr Julia Hérnle and Professor Arno Lodder from whom, as noted in this book, I have learned so much.

Many thanks go to my friends and colleagues, Dr Olufemi Amao and Dr Patrick McCarthy, whose understanding, advice and support were paramount in the completion of this book. I wish to thank John McNally for kindly reading a first draft of this book and spotting typos and inconsistencies. He ensured a more readable version of this book.

Without family and friends writing would be intolerable. For moral support I would like to thank my wonderful family: my loving mother, my inspiring late grandmother and my dear brothers and sisters whose love I treasure. I have been particularly fortunate to benefit from the guidance of my sister Myriam and her husband Norberto; without their initial support it would not have been possible for me to pursue a research career.

Finally, I owe my greatest debt of thanks to my fiancée, Anne-Marie xvili Acknowledgements Murphy. I could not have concluded this book without her continued love, support and generous help.

Leicester, May 2010

Pablo Cortés School of Law University of Leicester