What is online dispute resolution?

Recipients of Brodies' litigation e-updates will have seen we have been inviting responses to a short, five question survey about how commercial dispute resolution could work better for those involved. That survey will remain open until 31 December 2021 if you would like to participate. One of the questions asks how likely you would be to consider using a form of online dispute resolution which, of course, may invite the question "what is online dispute resolution (ODR)?"

A broad definition

In the broadest sense, ODR can be thought of as any means of dispute resolution which makes use of the internet and technology. Whilst in the past most 'ODR' was also 'ADR' (alternative dispute resolution), because traditional court hearings were almost exclusively held in person, we now find ourselves in a world in which even traditional litigation would fall under that definition, with arrangements being made for procedural hearings, legal debates and even hearings where witnesses are giving evidence being conducted remotely using video-conferencing technology.

Particular examples of online dispute resolution

Focussing for now, though, on forms of ODR that sit outside (or alongside) formal court proceedings, parties in a dispute have access to many online dispute resolution tools, depending on the type, subject matter and value of the dispute. Some examples include:

• Online mediation – essentially a traditional mediation, but with the parties and/or mediator able to participate remotely using video conferencing.

• Mediator-facilitated blind bidding - the parties each remotely submit a figure at which they would be willing to settle the dispute, noting any caveats in relation to, for example, costs. The mediator informs the parties whether there is a match (in which case the parties then proceed to agree a binding settlement agreement), an overlap (in which case settlement is agreed at the mid-point between the figures) or a gap, in which case the mediator informs the parties of the size of the gap, and the parties are invited to bid again, up to a maximum number of rounds (often three).

• Online blind bidding – as above, but instead of having a mediator facilitate the bidding, it is done using software. There are different products available, but in the simplest versions the software will simply calculate the mid-point if there is an overlap between the figures, so if a pursuer (claimant) submits a bid which says that they would accept (say) £50,000 in settlement, and the defender (defendant) submits a bid in which they would pay (say) £70,000, the system reports that agreement has been reached at £60,000. Likewise, in the event of a gap, the system can advise the parties of how far apart they are before they decide on their next bid. Other systems use a form of artificial intelligence which can analyse bidding patterns and tactics, and then use nudge theory to encourage settlement. This can be a highly efficient and cost-effective method of resolving disputes in appropriate cases, though where there are substantial sums at stake, it seems less likely that it would be attractive. The Law Gazette reported that the tool SmartSettleONE enabled parties to a dispute worth £2,000 to settle within one hour.

• Company-specific tools – companies such as eBay and Paypal have their own ODR systems to enable buyers and sellers to resolve disputes, if possible, without needing to involve any external parties. Generally, such systems involve facilitating communication between the parties via the company's own messaging platform, with the option to escalate the matter for evaluation and determination if no agreement is reached.

The future of dispute resolution is likely to include more ODR, particularly given the increased familiarity many users of the courts and ADR now have with using the internet and technology to help achieve the ends of justice. In the right cases, ODR can provide a route for pursuing claims which would not be worth pursuing otherwise (because the irrecoverable costs would outweigh the possible benefits in the event of success). As with anything, ODR is not a panacea, but may be worth considering if you or your business becomes embroiled in a dispute.