ODR Arbitration Award Enforcement
All around the world, the pandemic has transformed consumer habits, generating an exponential increase in online transactions (e-commerce, and others). As e-transactions grow, disputes related to these kinds of transactions are also growing. This is an issue that challenges us to seek innovative solutions that facilitate the resolution of these types of conflicts, which are usually neglected.
The small amounts involved in these disputes or the physical distance between the parties demotivate the claimants, having in consideration that additionally they are forced to face complex and long processes that, most of the time, do not offer reasonable, fair or timely solutions, having as results, for companies, loss of customers and damage to reputational capital.
At present, it is evident the need to implement strong, convenient, and user-friendly solutions that allow improving access to justice, democratizing the resolution systems for all these disputes, helping to improve satisfaction feelings and social peace. Fortunately, technology has reached the field of conflict resolution, allowing the transformation of processes that are traditionally expensive, complex, not very transparent, and difficult to understand for most people. Richard Susskind, in his book "Online Courts and the future of justice" (2019), shows how litigation is being transformed by the technology called “Online Dispute Resolution” (hereinafter ODR), and proposes it as an alternative solution to the global problem of access to justice.
ODR is applying the most advanced telecommunication technologies to the more traditional methods of conflict resolution, meaning: direct negotiation between the parties; mediation; and arbitration. ODR is a technological tool thought and designed as a facilitating element to help prevent, manage and resolve disputes.
Among the benefits in the implementation of ODR platforms (in particular online arbitration), we can mention that this is the only system capable of handling the explosive and sustained growth of international transactions, allowing anyone to initiate a procedure even when the claims amounts are low and the parties are thousand of kilometers away from each other. Although the number of benefits of the implementation of an online arbitration proceeding are significant, there are still barriers that must be broken down to have an efficient application in international transactions. The parties of an online arbitration could reasonably wonder if it is worth submitting their dispute to an online arbitration procedure, if the final award or decision will be difficult or expensive to enforce in a local-different jurisdiction.
For the new era of e-transactions, and especially for the management of electronic assets, a lot can be accomplished only by the appropriate use of an ODR Platform by the correct institution.
For example, in Chile there is an institution that manages all issues related to the domain names ".cl" on the Internet. NIC Chile is the institution that not only deals with the registration and transfer of those domain names. It also has established an online arbitration system that handles all kinds of conflicts related to this electronic asset. What is most relevant, it does not require any third party to enforce the award arising from the arbitration. In fact, their regulations establish that NIC Chile will not have any participation in the arbitration stage, except to designate the arbitrator according to the procedure and to comply with the arbitration resolution” [2]. Since NIC Chile has full control over the electronic asset in dispute and the Arbitration proceeding is fully recognized by them, parties do not need to go to a local court to have the award enforced if one of the parties does not comply with what was finally decided.
The same can be applied for example to numerous extremely valuable assets that are electronic nowadays. The control over e-assets is generally managed by an institution that allows the creation of “usernames” and “password” that gives full control over the e-assets. If those institutions also established their own ODR Platforms, the same that NIC Chile does can be accomplished.
At the end, it worth to point out that a good complement to the previous ideas and a viable vehicle to achieve the binding of said awards, could be to continue the development of online dispute resolution platforms together with Smart Contracts [3]. Smart Contracts are characterized by being a kind of electronic instruction stored and sealed using Blockchain Technology, that has the ability to self-execute pre-established actions, in a transparent and completely secure way. ODR and Smart Contracts have the potential to eliminate intermediaries, simplifying processes and saving significant costs for the parties by making electronically executable any online arbitration award.
Juan Pablo Prieto
Executive Director, ODR-Chile [3]
[1] https://www.nic.cl/normativa/reglamentacion_funcionamiento_registro.cl.pdf
[2] http://digitalchamber.org/assets/smart-contracts-12-use-cases-for-business-and-beyond.pdf
[3] ODR-Chile (http://www.odr-chile.cl) is an ODR Service Provider company. This article was drafted with the assistance of Jimmy Acevedo, an associate at ODR-Chile.