Designing a Global Consumer Online Dispute …colinrule.com/writing/ucclj.pdfhandle cross-border...

Designing a Global Consumer OnlineDispute Resolution (ODR) Systemfor Cross-Border Small Value-HighVolume Claims—OAS* DevelopmentsColin Rule, Vikki Rogers, and Louis Del Duca**

Table of ContentsRecent Developments—IntroductionJurisdictional Issues: The Need for Alternatives

Beyond Domestic Courts to Resolve Small Val-ue—High Volume Cross-Border e-CommerceDisputes

A New Opportunity for Consensus by ODR Resolu-tion of Small Value—High Volume Cross-BorderDisputes

ODR Systems Design ChallengesVolume and ScalabilityComplexity

Diverse Languages and CulturesTechnologyEnforcementCost Di�erentiation Between Large andSmall Claims

A New Opportunity for Consensus by OnlineDispute Resolution of Small Claims Proposed atCIDIP VII at OAS

A Proposed Solution for Small Cross-BorderClaims—How It Works

The Initiation/Negotiation PhaseOnline Arbitration Phase

*Organization of American States.**Director of Online Dispute Resolution, PayPal.

Director, Institute of Institute of International Law, Pace LawSchool and Adjunct Professor of Law.

Professor of Law, Penn State Dickinson School of Law and Execu-tive Director, Global Consumer Law Forum.

221

The AwardFundingEnforcementFeedback

Key PlayersThe Central AdministratorNational AuthoritiesODR ProvidersVendors

Next Steps: The Creation of a Global SystemAppendix A: Online Dispute Resolution ProposalAppendix B: Figure 1: The Overall System Design

for the OASClearinghouseAppendix C: Figure 2: How Disputing Parties andNeutrals Will Interact with the Central Repository

Synopsis:Ever since the �eld of online dispute resolution (ODR)

started in the late 1990s, there has been talk about creating aglobal system for resolving cross-border consumer issues. Sig-ni�cant progress has been made over the years with someimpressive attempts, but none of the e�orts have truly takenroot. Recently a proposal has been made at the Organizationof American States (OAS) regarding the creation of a regionalODR system to handle cross-border e-commerce disputes. Assimilar initiatives are taking root elsewhere in the world aswell, the timing might be right for the creation of a globalODR system. This short article details the challengesconfronting the design of a global consumer ODR system,and o�ers details about the proposed ODR process �ow thatis being advanced at the OAS.

Recent Developments—IntroductionFor the past decade, there has been much discussion about

creating a dispute resolution system to resolve high-volume,small value, cross-border consumer disputes. The need forsuch a system is clear even to a casual observer. The expan-sion of traditional computer networks globally, as well asthe emergence of mobile commerce, has enabled consumersto purchase goods and services from almost any vendor inthe world. But what if something goes wrong? What if the

Uniform Commercial Code Law Journal [Vol. 42 #3]

222

item does not arrive, or what arrives is di�erent than whatthe buyer expected? For small-value cross-border transac-tions, the road for consumer redress becomes verycomplicated. The complexities have led to the erosion ofconsumer con�dence for this category of transaction. Domes-tic e-commerce has grown at signi�cantly higher rates thancross-border e-commerce—even though in some cases, goodsand services can only be found cross-border, or are availableat signi�cantly cheaper rates for the consumer than ifpurchased locally.1 Consumers need to have a way to obtainredress if they are to have con�dence in making onlinepurchases. There is common consensus that a global con-sumer redress system is essential to the continued successand growth of e-commerce.2 Private and public initiativeshave developed around the world to provide redress for do-mestic face-to-face transactions, and in limited cases, privateredress systems have developed for domestic e-commercetransactions (either by third party operators, governmentsor vendors themselves). But the question remains on how tohandle cross-border e-commerce disputes, in which the aver-age transaction is about $100.3 This paper proposes thattraditional domestic judicial mechanisms for legal recoursedo not adequately satisfy the needs of consumers or vendors,but rather, the most reasonable, e�cient and fair systemthat can be o�ered for cross-border e-commerce disputes is aglobal online dispute resolution (ODR) system. A global ODRsystem provides a forum in the same virtual marketplaceenvironment in which consumers purchased their goods orservices, allowing broad accessibility, as well as swift and af-fordable recourse for the parties involved.

1Comm'n of Eur. Cmty., Report on Cross-Border E-Commerce in the

EU 26 (Working Document SEC 283, Brussels, May 3, 2009) available athttp://ec.europa.eu/consumers/strategy/docs/com� sta��wp2009�en.pdf.

2OECD, Empowering E-consumers, Strengthening Consumer Protec-

tion in the Internet Economy, Dec. 8–12, 2009, paras. 11–12, available athttp://www.oecd.org/dataoecd/44/13/44047583.pdf?bcsi�scan� DA3493EE5FC9D524=0&bcsi�scan��lename=44047583.pdf.

3Generally, consumers in the Americas make small purchases over

the Internet for items such as books, DVDs, and clothing and shoes. SeeAMIPCI, Estudio de Comercio Electrónico 2008, Sep. 2008, available athttp://www.razonypalabra.org.mx/N/n67/varia/oislas/emarketer�2000531.pdf (empirical study commissioned by Visa). See also Fred Galves,Virtual Justice as Reality: Making the Resolution of E-Commerce DisputesMore Convenient, Legitimate, E�cient, and Secure, 2009 J.L. Tech. &Pol'y 1 (2009) (noting that the average online transaction is about $150).

Designing a Global ODR System

223

The challenge comes in �guring out how to design a systemthat fairly meets the needs of all involved parties. As thetransaction values in consumer purchases are relatively low,perspectives on consumer protection vary between countries,and because buyers are often unsophisticated about theirrights as compared to vendors, it is quite di�cult to design asystem that fairly meets the needs of all the involved parties.How can we build a global small claims system that navi-gates the complex cultural, jurisdictional, and linguistic dif-ferences internationally, all while keeping costs manageableand scaling to handle the enormous global volume of casesthat are out there looking to be resolved?

While key breakthroughs have been achieved over the lastdecade (including the groundbreaking dispute resolutionagreement between Consumers International and the GlobalBusiness Dialogue on eCommerce,4 the launch of theEuropean Extrajudicial Network5 and the Better BusinessBureau/Eurochambres trustmark alliance), the establish-ment of a seamless global system has proved elusive. Someprivate companies (e.g., eBay) have built redress systemsthat handle millions of cases per year,6 and some interna-tional organizations (e.g., ICANN7) have built processes thathave resolved thousands of disputes across borders withoutgetting bogged down in the speci�cs of local jurisdictions. Inaddition, some countries already provide online systems forthe electronic resolution of Consumer disputes, such as theConciliaNet system run by Profeco in Mexico.8 To date, thesedi�erent elements have not yet come together to establish a

4Global Business Dialogue on Electronic Commerce, Alternative

Dispute Resolution Guidelines, Agreement Reached Between ConsumersInternational and the Global Business Dialogue on Electronic Commerce,Nov. 2003, available at http://www.gbd-e.org/ig/cc/Alternative�Dispute�Resolution� Nov03.pdf.

5“Commission Working Document on the creation of aEuropean

Extra-Judicial Network(EEJ-NET)” http://ec.europa.eu/consumers/policy/developments/acce�just/acce�just07�workdoc�en.pdf — last visited 3/17/2010.

6Rule, Colin and Nagarajan, Chittu, “Leveraging the Wisdom of

Crowds: The eBay Community Court and the Future of Online DisputeResolution” in ACResolution Magazine, Winter 2010. http://www.acrnet.org/publications/acresolution.htm — last visited 3/17/2010.

7“Uniform Domain-Name Dispute-Resolution Policy,” ICANN

website: http://www.icann.org/en/udrp/udrp.htm — last visited 3/17/2010.8In Mexico, Concilianet started as a pilot phase in 2008 with two

companies, moved to small deployment with �ve companies in 2009 (169


224

truly global consumer dispute resolution protocol. However,in the last few months, there are signs that indicate awindow of opportunity may be opening to �nally achieve thiselusive goal.

This paper will more speci�cally discuss (1) jurisdictionalchallenges in domestic systems that raise the need for thecreation of a global ODR system; (2) the design challengesinherent in the creation of a global redress system; (3) theproposals submitted to CIDIP VII at the Organization ofAmerican States (OAS) to provide consumer redress in cross-border business-to-consumer disputes; (4) a detailed descrip-tion of the US proposal to create a regional ODR system;and (5) a description of the work towards the creation of aglobal ODR system.

Jurisdictional Issues: The Need for AlternativesBeyond Domestic Courts to Resolve Small Value-HighVolume Cross-Border e-Commerce Disputes

For decades, the main question in cross-border consumerredress was: where should consumer disputes be legally lo-cated? This has been debated endlessly, particularly as partof the Hague Conference on Private International Law, butwe appear to be no closer to resolution. Prior to the expan-sion of the Internet, at least, this question had two clearanswers: either where the consumer was located or wherethe vendor was located. But the Internet confused the issueeven further. What if the marketplace that hosted the trans-action was in a third location? Should the dispute be hostedthere? Or if the vendor was in one place, but the supplierwas located somewhere else, should the dispute be locatedwith the supplier or the vendor who listed the item? What ifthe servers that hosted the transaction were in a fourth loca-tion? Perhaps the dispute should be legally located there.What was a di�cult question quickly transformed into ahopelessly complex one.

Practically speaking, when consumers seek redress forgoods or services they purchased for $100 in a cross-bordere-commerce transaction, it is unrealistic to assume that theywill cross borders and enter a foreign court to have their

queries) and now has started full national implementation (Dec. 2009/currently ten companies). According to Profeco, the �rst two stages dem-onstrated that use of ODR cut the time for resolving disputes by nearly 50percent and increased the number of settlements to some 96% of thequeries. Ninety-seven percent of the consumers reported that they woulduse the procedure again.


225

claims resolved.9 Consumers also will not likely hire local orforeign legal counsel to obtain legal advice from the courtthat has proper jurisdiction to hear their dispute, or contestjurisdictional challenges that may be raised by the vendor ina foreign court of law—one hour of legal fees could exceedthe amount of the entire dispute.

Theoretically, to overcome these hurdles, one could proposethe creation of a set of private international law rules provid-ing for jurisdiction/litigation in the forum of the consumerand through application of the mandatory rules of theconsumer's home in certain cases.10 From the consumer'sperspective, this proposal presents a simple solution on its

9See Better Business Bureau System et al., Protecting Consumers in

Cross-Border Transactions: A Comprehensive Model for Alternative DisputeResolution, (Better Business Burau White Paper), available at http://www.underhills.us/Docs/PDFS/Internet�Law�Presentation�2000.pdf (“ourexperience in the North America is that consumers do not utilize theirrights to judicial redress for most problems they encounter in themarketplace”).

10This has been the approach followed in the European Union through

the enactment of the Brussels I and Rome I Regulations. Yet, theEuropean Parliament even pondered at the time of enacting the newRome I regulation that “the protection a�orded to consumers by con�ict-of-laws provisions is largely illusory in view of the small value of mostconsumer claims and the cost and time consumed by bringing courtproceedings.” See, European Parliament, Final Compromise amendment66,Recital 10 a (new), at 9–10. (Nov. 14, 2007) available at http://www.europarl.europa.eu/meetdocs/2004�2009/documents/dv/juri�oj(2007)1119�romei�am�/JURI�OJ(2007)1119�RomeI�AM�en.pdf. Moreover, thisapproach has been rejected by US states. As stated in the paper submit-ted by the O�ce of the Legal Advisor, US Department of State, to theOAS CIDIP VII Working Group on Consumer Protection, dated March 19,2010 (on �le with the authors): “A 2001 amendment to Article 1 of theUniform Commercial Code (UCC) proposed, inter alia, special con�ict oflaws rule for consumer contracts similar in many ways to the Europeanmodel now found in Rome I Regulations. However, no state accepted theamended con�ict of laws rule and, in 2008, the proposal was withdrawnand the o�cial text of the UCC reverted to the original rule permittingparty autonomy in consumer (as well as non-consumer) contracts, providedthe transaction bears a reasonable relation to the jurisdiction whose lawsare chosen and sometimes subject to a court-imposed public policylimitation. In May 2008, the American Law Institute approved a substitutechoice-of-law provision for the UCC, which the Uniform Law Commission-ers had previously approved, that e�ectively reinstated the pre-revisedsection 1-105 of the UCC permitting party in consumer contracts (as wellas non-consumer contracts) provided the transaction bears a reasonablerelation to the jurisdiction whose laws are chosen and sometimes subjectto a court imposed public policy limitation. See Proposal to Amend O�cialText of § 1-301 (Territorial Applicability; Parties' Power to Choose Ap-


226

face, as the consumer's redress channel is local (at least upuntil enforcement), probably in the consumer's nativelanguage, and likely administered by the country of theconsumer's residence.

But that simplicity comes at the expense of vendors, andisn't even the solution adopted by courts of the United Statesfor domestic e-commerce disputes.11 For vendors, the buyer-centered proposal could be a nightmare. A vendor like Ama-zon, which ships items all over the world to consumers indozens of countries, would suddenly be subject to court �l-ings in every jurisdiction where one of their buyers resides.Amazon would need to either send or �nd lawyers to defenditself in every remote courthouse from Nome, Alaska toUshuaia, Argentina. Getting to the courthouses to respondwould only be half the battle, because Amazon would alsohave to understand the local laws in every jurisdictionaround the world where consumers reside. This might beminimally achievable for a big company like Amazon, but itwould prove overwhelming for any small business just start-ing out with a desire to sell internationally. In either case, itwould also likely hurt the consumer as large and small

plicable Law) of Revised Article 1 of the UCC (2008)), available at http://www.ali.org/doc/uccamendment.pdf.

11See, e.g., Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119,

42 U.S.P.Q.2d 1062 (W.D. Pa. 1997) (laying the foundation for the �ndingof “purposeful availment” and speci�c jurisdiction in the context ofelectronic commerce, establishing an amorphous “sliding scale” whichcourts must use to ascertain whether constitutionally-required minimumcontacts have been satis�ed); Gather, Inc. v. Gatheroo, LLC, 443 F. Supp.2d 108 (D. Mass. 2006) (�nding that a website which accepted membersfrom Massachusetts, communicating directly with those members, solicit-ing advertisement revenue, and providing information to them hadpurposefully availed itself to the speci�c jurisdiction of Massachusettscourts by doing business there); ICG America, Inc. v. Wine of the MonthClub, Inc., No. 3:09-cv-133 (PCD), 2009 U.S. Dist. LEXIS 77151, at *9–10(D. Conn. Aug. 24, 2009) (breaking down internet use into three catego-ries—(1) situations where defendants are clearly doing business over theinternet; (2) those interactive websites where a user can “exchange infor-mation with the host computer;” and (3) a “passive” website which doeslittle more than provide information to users). See also Galves, supra note3 at 8, 24–28. In Zippo, the court speci�cally attempted to set theparameters of the sliding scale by stating that “the likelihood that personaljurisdiction can be constitutionally exercised is directly proportionate tothe nature and quality of commercial activity that an entity conducts overthe Internet,” Zippo, 952 F. Supp. at 1124; however, it is clear that thecourt's attempt at guidance has not produced such a concrete test.


227

companies would transfer these additional costs onto everytransaction.

Additionally, the approach raises practical problems. Sincemost consumer purchases are for relatively low-cost productsor services, a dispute rarely warrants use of extremelyexpensive enforcement mechanisms characteristic of ordi-nary civil litigation in all countries. When a foreign supplieris involved in e-commerce transactions, additional barriersimpair the consumer's ability to utilize enforcementremedies. It is unlikely that the vendor will be amendable tosuit in the jurisdiction of the consumer, has assets in thatjurisdiction, or come from a jurisdiction that would recognizeand enforce a judicial judgment issuing from the consumer'shome jurisdiction (and even so at a cost that does not exceedthe value of the claim).12

A New Opportunity for Consensus by ODR Resolutionof Small Value—High Volume Cross-Border Disputes

The creation of a global ODR system provides a consensussolution for high value, small-value cross-border e-commercedisputes. By parties voluntarily opting into an ODR process,traditional problems related to establishment of jurisdictionand resolution in a national court—i.e., legal questions anduncertainties related to personal jurisdiction, accessibility tothe court, neutral legal environment, long durations for theresolution of disputes, attorney fees, issues of identity(impact of race, culture or gender), administrative costs, andtravel—are minimized or reduced by establishing an onlineenvironment for the resolution of disputes.

ODR Systems Design ChallengesThere are many structural issues to be overcome in design-

ing a global system on a scale such as this. Some of the pri-mary challenges focus on volume/scalability, complexity,enforcement, and cost.

Volume and ScalabilityThe biggest challenge in constructing a global system is

volume. Conservative estimates put the volume of globalconsumer disputes in the hundreds of millions of cases a

12See Dr. Antonio Pérez, STATUS OF THE CONSUMER PROTEC-

TION NEGOTIATIONS AT THE SEVENTH INTER-AMERICANSPECIALIZED CONFERENCE ON PRIVATE INTERNATIONAL LAW,CJI/doc.288/08, rev.1), contained in Annual Report of the Inter-AmericanJuridical Committee, at 58, 61.


228

year, and that number will only grow as e-commerceexpands. Designing a program for a couple hundred cases isone thing, but tens of thousands is an order of magnitudemore complicated, not to mention tens of millions. Designsthat must be manually administered, or which are verywork-intensive, become prohibitively burdensome as �lingvolumes rise. Any system that is created has to account forscalability, i.e., its ability to continue to function e�ectivelyas the size of the case loads increase. At the projectedvolumes, the system will have to rely heavily on sophisti-cated software, which can scale, as opposed to human-powered approaches that cannot scale.

Complexity

Diverse Languages and CulturesAnother major challenge is navigating the diverse quilt of

languages and cultures around the world. Any system thatchanges its rules based upon these local speci�cs will quicklybecome too complicated to navigate, both for consumers andvendors. The administrative burden on the coordinating or-ganization will also become unbearable. The system willneed to be �exible enough to encourage the creation of vari-ous user experiences that can account for these di�erences,but it must also insist upon a central structure for data com-munication protocols that ensures all the various endpointsof the network can communicate seamlessly and instanta-neously with each other.

TechnologyThe software architecture required to support such a

complex system introduces its own signi�cant challenges.Every ODR provider or national authority in the world hasbuilt their website on slightly di�erent platforms, rangingfrom Linux/PHP to Windows/ASP to Apple/JSP. Getting allof these diverse web sites to interoperate is not a simpletask, and it is unlikely that any participant in the systemwill be open to recoding their entire web presence just toplug into this new scheme. Data will need to be shared inreal time across this complex worldwide system, and com-mon data de�nitions and structures will need to be strictlyenforced to ensure �lings made in one location will be intel-ligible once they have been sent halfway around the world toa completely di�erent environment. Fortunately commonweb standards have evolved over the last few years to makesuch exchange possible, but integrating and testing themaround the world will not be simple.


229

EnforcementOnce a decision is rendered, the job is only half done. The

real challenge comes in trying to get that decision enforced.All the most successful and sustained ODR programs of thelast two decades are able to automatically enforce theiroutcomes: ICANN can unilaterally change domain nameregistrations in response to UDRP13 proceedings, and PayPalcan freeze funds and then move them unilaterally to enforceclaim decisions. For cross-border consumer cases, though,things are not that simple. An arbitrator can decide in favorof a buyer, but the arbitrator has no power to force a reversalof the buyer's payment from the vendor's account. Building asystem to provide global resolutions independent of jurisdic-tional constraints does not do much good if the resolutionsare dependent on those same jurisdictional constraints forenforcement.

Cost Di�erentiation Between Large and Small ClaimsThe �nal major challenge, and in many respects the chal-

lenge that has doomed most past e�orts to build a globalconsumer protection system, is cost. The existing globaljudicial system for B2B transactions is enormously expensiveas legal fees and costs quickly mount in this sort of system.However, because of the large dollar values at stake, theparties are usually willing to pay those costs. For consumerdisputes, however, the challenge is di�erent. How muchmoney are the disputing parties going to be willing to pay toresolve a dispute over a $50 purchase? If the fees are higherthan the value of the dispute, then the fees might as welljust go to pay o� the buyer. Any ODR proposal that attemptsto deliver for consumer disputes the same type of juridicalproceeding used in million dollar disputes is doomed to fail-ure as a result of this basic cost-bene�t analysis. So, eventhough there may be as much money moving around in theB2C space as in the B2B space, the average transactionvalues are lower, and that creates a very di�erent kind of costpressure requiring a di�erent system to handle such disputes.

13Cho, Soohye. “Reforming UDRP Arbitration: The Suggestions to

Eliminate Potential Ine�ciency” from the Cornell Law School Inter-University Graduate Student Conference Papers, 2006. http://scholarship.law.cornell.edu/cgi/viewcontent.cgi?article=1027&context=lps�clacp—lastvisited 3/17/2010.


230

A New Opportunity for Consensus by Online DisputeResolution of Small Claims Proposed at CIDIP VII atOAS

In 2003, the General Assembly of the Organization ofAmerican States (OAS) convened the Seventh Inter-American Specialized Conference on Private InternationalLaw (known as CIDIP-VII). These conferences produceinternational instruments which shape the private lawframework for OAS member states. In 2005, the OAS Per-manent Council's Committee on Juridical and Political Af-fairs, after consultation with the Member States, recom-mended an agenda for CIDIP VII to focus on consumerprotection14 and secured transaction registries.15 These topicswere approved by the General Assembly as the agenda forCIDIP VII.16

The next meeting of CIDIP VII is expected to take placesometime in the latter half of 2010. It will focus on the threeproposals that have been submitted regarding consumerprotection.17 Two of the proposals submitted not only assumedomestic courts are the appropriate forum for the resolutionof small-value, high volume, cross-border e-commercedisputes, but that—in contraposition with our observationsabove—disputes should always be resolved in the consumer'sforum. Speci�cally, in December 2009, the Brazilian,Argentine and Paraguayan delegations to the CIDIP VII ne-

14See also, Antonio Perez, Consumer Protection in the Americas: A

Second Wave of American Revolutions, 5 U. St. Thomas L.J. 698, 705(2009) (discussing why international consumer protection matters in theOAS).

15“Based on these recommendations, the General Assembly, through

resolution AG/RES 2065 (XXXV-O/05), formally approved the agenda forCIDIP-VII, as follows: (topic one) Consumer Protection, Including Ap-plicable Law, Jurisdiction, and Monetary Redress (Conventions and ModelLaws); and (topic two) Secured Transactions, Electronic RegistryImplementation of the Model Inter-American Law on Secured Transac-tions.” See CIDIP-VII: PREPARATORY WORK FOR THE SEVENTHINTER-AMERICAN SPECIALIZED CONFERENCE ON PRIVATEINTERNATIONAL LAW, Department of International Legal A�airs,Organization of American States, October 20, 2005 at http://www.oas.org/DIL/CIDIP-VII�home.htm. The Model Inter-American Law on SecuredTransactions produced via the e�orts at CIDP VII can be found at http://www.oas.org/DIL/CIDIP-VI-securedtransactions�Eng.htm.

16Id.

17Three public meetings of the OAS CIDIP Study Group have already

been held on December 14, 2009 and January 15 and February 1, 2010, tocontinue the discussion of issues relating to the OAS CIDIP VII process.


231

gotiations submitted a revised proposal for a convention thatwould void choice of forum clauses in consumer e-commercecontracts and locate all cross-border consumer disputes atthe location of the consumer or in another forum if theconsumer so elects.18 The Canadian delegation later in Janu-ary 2010 resubmitted a proposal for a model law that wouldrequire all e-commerce disputes to be litigated in the forumof the consumer.19 Both proposals also included provisionsthat would e�ectively void choice of law provisions inconsumer contracts and apply the mandatory laws of theconsumer habitual residence in most cases.

The intent of these two proposals is to decide the issueclearly so that countries could then begin to tackle the knottydownstream problems proactively. However, these proposalshave the potential to cause more problems than they couldsolve.20

It does not appear that these proposals, in practice, willadequately address the needs of, or provide adequatesafeguards for, consumers or vendors seeking to resolvecross-border e-commerce disputes. As the 2003 Agreementbetween Consumers International and the Global BusinessDialogue has recognized:

18On �le with authors and available from the O�ce of Legal Adviser

upon requests ([email protected]).19

Id.20

Not only does court resolution not protect consumers because theyhave to ultimately go to another court to enforce any judgment where theassets are located, but the threat of litigation in a foreign court utilizingthe law of that court (i.e., the consumer) seems to be driving up costsand/or limiting product availability. The point was earlier recognized inthe 2003 consumers international/GBD agreement and more recently inthe October 2009 European Commission study showing the bene�ts ofcross-border shopping by pointing out that orders are not processed 61percent of the time because traders refuse to serve the consumer's country.An earlier March 2009 European Commission study reported that while51% of the EU27 retailers sell via the Internet, only 21 percent sell crossborder (this is a decrease from 29% in 2006). The European Parliamentalso recognized this during the Rome I negotiations. The EU is trying tocome up with a single set of consumer protection laws for the EU throughEU Directives but that is clearly not going to work on a global basis. TheUS cannot even come up with a single set of consumer protection laws.The Pace Institute of International Commercial Law has launched itsGlobal Forum for Consumer Law to �ll this gap, and it currently undertak-ing an e�ort to create a set of Global Principles for International ConsumerContracts (for further information go to http://www.pace.edu/page.cfm?doc�id=35520).


232

Recourse to courts in disputes resulting from internationalInternet transactions is often complicated by the di�cult ques-tions of which law applies, and which authorities have juris-diction over such disputes. Furthermore, international courtproceedings can be expensive, often exceeding the value of thegoods or services in dispute . . ..For consumers this principle [special jurisdiction and con�ictsof laws rules] may only provide illusory protection, as in manycases the cost and complexity of crossborder enforcementstands in the way of e�ective redress. Probably the best wayout of this dilemma and an important catalyst for consumercon�dence in electronic commerce is that Internet merchantso�er their customers attractive extra-judicial procedures forsettling disputes [i.e., ODR] as an alternative to the cumber-some and expensive resort to courts.

A similar sentiment was expressed during the negotia-tions concerning European Union Regulation (EC) No. 593/2008 of the European Parliament and Council of June 17,2008 on the law applicable to contractual obligations (RomeI).21 In proposing a compromise amendment for consumercontracts during the negotiations, the European Parliamentwas skeptical about the e�ectiveness of the protection af-forded by a special con�ict of laws rule for consumers:

With further reference to consumer contracts, recourse to thecourts must be regarded as the last resort. Legal proceedings,especially where foreign law has to be applied, are expensiveand slow . . . the protection a�orded to consumers by con�ict-of-laws provisions is largely illusory in view of the small valueof most consumer claims and the cost and time consumed bybringing court proceedings. It is therefore considered that,particularly as regards electronic commerce, the con�icts ruleshould be backed up by easier and more widespread avail-ability of appropriate online alternative dispute resolution(ADR) systems. The Member States are encouraged to promotesuch systems.22

In e�ect, while the goal is to build a system that can protect

21For the Rome I Regulations, see (EC) No. 593/2008 of the European

Parliament and Council of June 17, 2008 on the law applicable tocontractual obligations (Rome I). Article 3 of Rome I provides thatcontracts are governed by the law chosen by the parties. Under Article6(2), the freedom to contract applies to consumer contracts in certainmarketing cases, so long as non-derogable provisions of the law whichwould otherwise have applied are una�ected.

22Cristian Dumitrescu, Proposal for a Regulation of the European

Parliament and of the Council on the Law Applicable to ContractualObligations (Rome I), Compromise Amendments 2-44, Eur. Pprl.Rep. (PE374.427v01-00, at 7–8 (Comm. On Legal A�airs, Draft Report), available


233

consumers when they make online purchases, it is at thesame time to avoid the development of a system that utilizesobjectively simplistic approaches which impose unmanage-able (jurisdictional and con�ict of law) burdens onto vendors.What is needed is a new process, one that can deliver thegoals of the Brazilian and Canadian proposals (i.e., consumerprotection and national sovereignty) without creating themassive churn of endless litigation focused on jurisdiction.This objective could possibly be obtained via the third pro-posal submitted by the United States.

After reaching out to experts on the subject, the O�ce ofthe Legal Advisor, US Department of State, came to theconclusion that a global consumer online dispute resolutionsystem, running parallel to existing judicial processes, mightmeet the objectives of the Brazilian and Canadian proposalswithout generating all the downstream challenges aroundjurisdiction and consequent unfairness and burdens onconsumers and vendors.23 In accord with the general senti-ments and observations from the international community,the US has proposed a solution to redress for cross-bordere-commerce disputes that is more closely aligned to interna-tional consensus regarding this issue, and is in greater ac-cord with the idea of the creation of a global ODR systemproposed in this paper.

In February, 2010, the U.S. submitted its revised proposalto the OAS. The US revised proposal focuses on building apractical framework for consumer protection through: (1) anOAS-ODR Initiative for electronic resolution of cross-bordere-commerce consumer disputes designed to promote con-sumer con�dence in e-commerce by providing quick resolu-tion and enforcement of disputes across borders, languages,and di�erent legal jurisdictions; (2) a model law for alterna-tive dispute resolution of cross-border B2C e-commerceclaims whereby payment card issuers are responsible forconsidering the claims of the consumer against a vendor forunauthorized use, non-delivery or non-conforming goods andservices; (3) a model law for low cost expedited small claimstribunals o�ering consumers access to monetary redress at a

at http://www.europarl.europa. eu/meetdocs/2004�2009/documents/am/681/681958/681958en.pdf.

23Michael Dennis, Developing a Practical Agenda for Consumer

Protection in the Americas, XXXIV CCURSO DE DERECHO INTERNA-CIONAL (2007) Dennis serves as the head of the US delegation for CIDIIPVII.


234

cost and burden not disproportionate to the amount of theirclaim; (4) and a legislative guide on redress and dispute res-olution including provisions that would recommend Statespermit collective or representational legal actions for com-mon consumer injuries; and (5) a model law for establishingcompetent consumer protection authorities vesting themwith the authority to obtain redress for consumers; enablingthem to cooperate with their foreign counterparts; andfacilitating the enforcement of certain judgments forconsumer redress across borders.24

The O�ce of Legal Adviser convened three public meet-ings of the OAS CIDIP Study Group, held on December 14,2009 and January 15 and February 1, 2010, to discuss theODR proposal with representatives from a variety ofconsumer regulators, businesses, industry associations,consumer groups, academic bodies and civil society.25 Afterseveral re-drafts around protections, coverage, language,and scope, the proposal was vetted with national consumerprotection authorities, both in the Americas and around theworld. Other regions, such as Europe and Asia, are alreadyhard at work on their own system design processes for solv-ing this challenge; so e�orts began around harmonizing theproposals to ensure interoperability. It now appears for the�rst time that critical mass is building and a uni�ed solutionto this di�cult problem could be on the near horizon.

A Proposed Solution for Small Cross-Border Claims—How it Works

This section focuses in particular on the US proposal forthe OAS-ODR Initiative for the electronic resolution of cross-border e-commerce consumer disputes.26 The structure of theproposal is tiered. The over-arching document is a Draft[Model Law/Cooperative Framework] for Electronic Resolu-tion of Cross—Border E-Commerce Consumer Disputes(“Model Law/Cooperative Framework”). Addendum 1 to theModel Law/Cooperative Framework is the Draft Model Rulesfor Electronic Resolution of Cross-Border E-CommerceConsumer Disputes. Addendum II is a copy of the ElectronicInitiation Form for claims. Addendum III is the Electronic

24On �le with authors. Available on request from the O�ce of Legal

Adviser ([email protected].).25

The O�ce of Legal Adviser intends to convene another public meet-ing of its OAS CIDIP Study Group on April 9, 2010.

26See Appendix A.


235

Award form, and Addendum IV is the Sample OnlineQuestionnaire to Consumers About ODR Providers. In thepast several months, the ODR process �ow described in thesedocuments was constantly changed and updated based onfeedback in the public meetings from a wide variety ofexperts and stakeholders. The description below representsthe latest systems design as of the writing of this article.(Please note that much of the language in this article describ-ing the process has been copied directly from the Model Rulesbecause accuracy of phrasing is important in such adocument.)

The process utilizes ODR technology to provide negotia-tion, mediation and arbitration for cross-border consumerclaims up to USD $10,000. The buyer retains full rights topursue other forms of redress, including protection programsprovided by third party organizations or payment channels.Both parties also retain the right to be represented by an at-torney, though representation is not mandatory.

Under this process, a buyer may �le a cross-border com-plaint online against a registered vendor if they both residein countries that have agreed to participate in the system.The default language of communication during the processwill be the language used to conduct the transaction in the�rst place.

By way of overview, the process is divided into threephases: the initiation/negotiation phase, the online arbitra-tion phase, and the award. During the �rst phase of the pro-cedure, the Buyer and Vendor are provided an opportunityto exchange information and proposals, and negotiate a bind-ing settlement, through electronic means. If the parties can-not reach an agreement, they move to the second phase,where a quali�ed online dispute resolution (ODR) provider isappointed to mediate and, if necessary arbitrate, the caseand issue a binding award. If an award is rendered, the pro-cess moves to the third phase, where relevant local organiza-tions take steps to ensure that the vendor complies with theaward. Each stage is more fully described below to establisha complete picture of how the entire system works.

The Initiation/Negotiation PhaseThe Initiation/Negotiation phase is designed to be man-

aged entirely by software, without requiring the involvementof a human case manager. It is also designed to be e�cient,using software to move the process along. Leveragingsoftware in this manner will help the process be e�cient,


236

contain costs (ensuring these services can be delivered evenfor low-dollar value cases) and minimize Buyer frustrationassociated with long delays.

To begin the process, the buyer visits the web site of one ofa variety of approved national ODR providers and completesthe online initiation form available there. As a general rule,this form must be �led within six months of the purchasedate to be eligible. On the form, the buyer states his or herversion of the facts and any proposed solutions to resolve thedispute.

Once the form is electronically submitted, the vendor isnoti�ed and is given seven calendar days to respond. If thevendor does not respond within the seven day period, thecase automatically moves to the online arbitration phase.However, if the vendor does respond, it can either accept orreject the buyer's proposed solutions. If the vendor does notaccept the proposed solution, it can present its perspectiveand propose solutions of its own. If none of the solutionsproposed by the vendor are accepted by the buyer, the par-ties can either continue to negotiate or either party canrequest to move the case on to the online arbitration phase.

The parties have twenty calendar days to negotiate andexchange as many proposals and as much information asthey wish from the date the �ling form is electronicallysubmitted. If after the twenty day period the parties havenot reached a settlement, they will be noti�ed that they musteither escalate the case to the online arbitration phase orterminate the process.

Online Arbitration PhaseOnce the case is escalated to the arbitration phase, an

online arbitrator will be selected by the ODR provider fromits approved panel of neutrals. The neutral cannot be work-ing for either the buyer or vendor. The parties may object tothe arbitrator's appointment within forty-eight hours of thenotice of appointment in order to request a new arbitrator.

Once the online arbitrator is appointed, he or she will beprovided access to all of the communications regarding thedispute sent by the buyer and vendor during the negotiationphase. The online arbitrator will then determine whetherthe dispute would bene�t from a facilitated settlement. If so,the arbitrator may communicate with the buyer and vendorto attempt to reach an agreement. If the parties reach anagreement, the arbitrator can render an award on that basis.

If the arbitrator determines that no resolution through


237

facilitated settlement is possible, the online arbitrator willgive the parties a �nal opportunity to explain their perspec-tive on the issues at hand and to provide any last pieces ofinformation they believe to be relevant. In exceptional cir-cumstances, the online arbitrator may request additionalwritten evidence from the parties.

The AwardOnce all the relevant information is collected, the arbitra-

tor will make his or her decision based on the documentssubmitted, without a hearing. These deliberations will becompleted within 20 days of the arbitrator's appointment,but in exceptional cases, the arbitrator may request anextension of time to render an award. Possible outcomesinclude payment of money, return of a product or service,and/or replacement of a product or service. An arbitratorcannot compel a consumer to provide any monetary refundto the vendor, if applicable. Once the award is rendered, itwill be electronically delivered to the parties by their ODRProviders.

The award will be �nal and binding. By participating inthe process, vendors will be indicating that they haveconsented to the award being enforced in any court with ap-propriate jurisdiction. Once the decision is rendered and theparties have been noti�ed, the vendor will have seven daysto abide by the outcome (unless the award indicatesotherwise). The buyer will be asked to con�rm that thevendor has followed through with the terms of the onlinearbitrator's decision. If the buyer indicates that the vendorhas not complied with the terms of the award, the case maybe referred to the vendor's local consumer protection agencyfor enforcement. [Clarify?]

FundingThe ODR Initiative is designed to be free for buyers and

inexpensive for vendors. Vendors will be charged a modestmonthly fee, scaled to transaction volume, to participate inthis program. Vendors will also be charged a very modestper-�ling fee which will also be paid to the NationalAdministrator/Central Clearinghouse. The fee shall notexceed 10% of the buyer's claim. Vendors will pay these feesdirectly into a shared fund.

ODR providers will be paid from this shared fund for theirservices. Based on volume and economics, modest member-ship fees may be levied on participating vendors to defray


238

the costs of program administration. The proposal also envi-sions that the Vendor will receive a signi�cant bene�t fromthe customer trust that participation in the system willconfer. The Vendor will be entitled to advertise theirparticipation in the program, perhaps through the use of on-site web seals and the like.

The proposal has included additional safeguards to enablethe system to operate at a minimal cost. For example, it doesnot provide a neutral at the conciliation stage as occursunder the system developed by PROFECO in Mexico.27

Instead, it is designed to be managed entirely by software atinitiation/negotiation stage, without requiring the involve-ment of a human case manager. The start-up software costswill be higher, but the cost to use the system should besubstantially lower. It also does not provide for a hearing atthe arbitration stage, consistent with other B2B ODR rules.28

The proposal does not envision that the neutrals would nec-essarily be lawyers (EBay, for example, uses very low costneutrals to resolve disputes); yet, they would probably haveto be �uent in di�erent languages to resolve cross-borderdisputes. Moreover, the award form in Annex II only requires“a statement of the nature of the contract at issue, theamounts in dispute, the arbitrator's determination on themerits [and provide a brief description of the reasonstherefore].” As such, costs associated with the drafting of adetailed reasoned award are avoided.

EnforcementAn arbitration award generated through this process will

be �nal and binding but subject to review in accordance withapplicable member state statutes governing arbitrationawards. Local agencies in a vendor's home country will beempowered to pursue vendor compliance with awards,including taking direct enforcement action, requesting assis-tance from payment networks, or referring cases to collec-tion agencies.

FeedbackEvery user of the system will receive a survey at the

27See http://concilianet.profeco.gob.mx/concilianet/faces/inicio.jsp

regarding the conciliation process o�ered by Profeco in Mexico.28

See, e.g., ICDR Protocol for Online Manufacturer/Supplier Disputescreated by the International Centre for Dispute Resolution, AmericanArbitration Association.


239

conclusion of the process asking questions about how theprocess went, such as, “Was your ODR provider well-quali�ed to handle your dispute?” or, “Was your experiencewith this ODR provider accessible/convenient?” The feedbackwill then be used to evaluate the performance of the systemand the individual actors within it.

Key PlayersRecognizing a cross-border process cannot be adequately

implemented without multi-party participation, this processinvolves many di�erent actors, from the buyer and vendor,the neutral, the ODR provider, to the national consumerauthorities and the Central Administrator.

Below is an overview of the roles of these players withinthe system as outlined in the US proposal.

The Central AdministratorThis system design centers on a Central Administrator

who manages the process for all regional OAS member stateparticipants. This administrator provides a single securedatabase for storing the documents and other informationrelated to the resolution of claims. The Central Administra-tor also maintains a public list of eligible vendors who haveagreed to be listed on the home page and have claimsprocessed/arbitrated against them. The Central Administra-tor will maintain this list based on information provided byNational Administrators in participating member states.

The Central Administrator and each National Administra-tor will work together to ensure that all communicationsand information exchanges involving them, Buyers, Vendors,and ODR providers will be secure enough to prevent thedisclosure of con�dential information. The administrator willalso host an ODR Committee that consists of representativesfrom each of the participating member states. This commit-tee will periodically report out on the performance of thesystem.

National AuthoritiesAny ODR member state that wants to participate in this

process can opt in. Once a state opts in, it will join into across-border network for resolving cross-border e-commercedisputes by implementing commonly agreed reciprocalprocedures for data exchange and case management. Allparticipating states will also regularly provide informationto consumers in their jurisdiction on options for achievingresolution to cross-border e-commerce disputes.


240

Each opted-in state will either establish or designate aNational Administrator to monitor the progress, resolutionand enforcement of cross-border e-commerce consumerdisputes. This National Administrator may be part of thestate's Consumer Authority, or it may be a di�erent entity,but it will act as the primary contact into the systemsadministered by the Central Administrator.29

ODR ProvidersThe Central Administrator will maintain a list of indepen-

dent ODR providers approved to undertake dispute resolu-tion responsibilities as a part of this process. Before addingan ODR provider to its list, the Central Administrator willsecure written certi�cation of the ODR provider's compliancewith the Recommendations to ADR Service Providerscontained within the Alternative Dispute Resolution Guide-lines of the Global Business Dialogue in E-Commerce andConsumers International, as well as a commitment to complywith the process requirements.

All approved ODR providers will report back to the CentralAdministrator after the closure of every case, indicatingwhether the claim has been resolved by mediation, aban-doned, or resulted in an arbitral award.

The Central Administrator will monitor each ODR provid-er's continued compliance with the requirements of theprogram. If an ODR provider falls out of compliance, theCentral Administrator will be able to remove that ODRprovider from its o�cial list.

ODR providers will be required to gather aggregated infor-mation about their case volumes and to submit that infor-mation to their respective National Authorities by the end ofeach June and December. The Central Administrator shallcompile the data received from its approved ODR providersand report yearly.

VendorsVendors will be able to participate in this program once

they opt-in to the system. The National Administrators willencourage vendors in their state to enter into agreements tobe listed on the Central Administrator's web site and haveclaims processed through this process. If a complaint is �ledagainst a vendor that has not yet signed on to this system,the National Administrator can encourage that vendor tojoin.

29See Appendix B.


241

Each vendor must agree to participate in the dispute reso-lution procedure, keep its contact information current, andabide by arbitral awards. Once a vendor is accepted into thesystem, it has the right to advertise its participation in theprocess by displaying a seal prominently on its home page toreassure buyers that redress is available. Vendors will alsoreceive notice of new �lings through their preferred ODRprovider or national administrator.30

Each National Administrator will monitor individualvendor compliance. If a vendor fails to comply with rules ofthe program, the National Administrator will notify thevendor and allow a reasonable time to re-establishcompliance. If the vendor fails to comply within a reasonabletime, the National Administrator shall remove that vendorfrom the program, and shall notify the relevant ConsumerAuthority and Central Administrator promptly about suchaction.

Next Steps: The Creation of a Global SystemThis proposal (which will undoubtedly evolve and change

over the coming months) also bene�ted from a colloquiumthat took place at the end of March 2010 at the United Na-tions Vienna International Centre in Austria.31 Hosted byUNCITRAL, the Institute of International Commercial Lawof Pace Law School, and Penn State's Dickinson School ofLaw, this gathering convened an international group ofexperts to discuss the creation of a global ODR system forB2B and B2C disputes, and undoubtedly in�uenced themodel described above and fostered further feedback. It isexpected that the UNCITRAL Secretariat will make a rec-ommendation to the Commission on the basis of the resultsof this colloquium on future work with regard to the theseproposals. It is the hope of the authors that the Commissionwill move on the basis of that report to establish a workinggroup to further elaborate these proposals in the fall of 2010.These developments will be addressed in subsequent issuesof the Uniform Commercial Code Law Journal.

The current activities at the OAS, the European Commis-

30See Appendix C Figure 2.

31U.N. Comm'n on Int'l Trade L. [UNCITRAL], June 29-July 17, 2009,

Possible Future Work on Electronic Commerce—Proposal of the UnitedStates of America on Online Dispute Resolution, U.N. Doc. A/CN.9/681/Add.2 (June 18, 2009)(proposing a colloquium to discuss ODR for disputesfor e-commerce transactions).


242

sion and UNCITRAL have also prompted a vision for a seriesof meetings to take place over the Summer and Fall of 2010to circulate ideas regarding the creation of a global ODRsystem, culminating in a �nal wrap up meeting, hosted byICANN, in Vancouver during November. If all the cards fallthe right way, the hope is to have a consensus design inplace that can be approved regionally or internationally andlaunched on a pilot basis in 2011.

The challenge of providing redress to global buyers acrossthe Internet, for all e-commerce purchases regardless of sizeor venue, is unquestionably a formidable one. The variety ofpayment types, the wide spectrum of vendors, and the riskof buyer fraud all complicate things even further. But it doesappear that the time has come for such a system, evenconsidering all of the di�cult challenges it will need tosurmount.


243

Appendix A ONLINE DISPUTERESOLUTION PROPOSAL

Draft [Model Law/Cooperative Framework] forElectronic Resolution of Cross-BorderE-Commerce Consumer Disputes

1. Purpose2. Model Rules3. Network and Central Website4. Operation of Central Clearinghouse5. Consumer Authority and National Administrator6. ODR Providers7. Con�dentiality and Reporting Requirements8. Participating Vendors9. Enforcement of Arbitration Awards and Agree-ments10. De�nitions

Addendum IDraft Model Rules for Electronic Resolution ofCross-Border E-Commerce ConsumerDisputes

1. Purpose2. Types of Claims3. Vendor Acceptance of Procedure4. Online Initiation/Negotiation Phase5. Online Arbitration Phase6. The Award7. Representation and Assistance8. Language9. Cost of ODR

Addendum IIElectronic Initiation Form

Addendum IIIElectronic Award Form

Addendum IV


244

Sample Online Questionnaire to Consumers AboutODR Providers

Draft [Model Law/Cooperative Framework] forElectronic Resolution of Cross-Border E-CommerceConsumer Disputes

1. Purpose

This Model [Law/Cooperative Framework] (“Model Law/Cooperative Framework”) establishes a state-sponsored ini-tiative to help resolve cross-border e-commerce disputes us-ing online dispute resolution (“ODR Initiative”). The ODRInitiative is designed to promote Consumer con�dence byproviding quick electronic resolution and enforcement ofsmall Consumer disputes across borders, languages, and dif-ferent legal jurisdictions.

The ODR Initiative creates a multi-state electronic systemto provide negotiation, mediation and arbitration for smallconsumer claims. Under this ODR Initiative, a Consumer(“Buyer”) may �le a cross-border complaint online against aregistered Vendor in another participating state. During the�rst phase of the procedure, the Buyer and Vendor are al-lowed to exchange information and proposals, and negotiatea binding settlement, through electronic means. If the par-ties cannot reach an agreement, a government agency orgovernment authorized entity where the Vendor is locatedappoints a quali�ed online dispute resolution (ODR) providerto arbitrate the case and issue a binding award.

The ODR Initiative is designed to be free for Buyers andinexpensive for Vendors. It is also structured so that Vendorsand ODR providers are monitored as to compliance with theterms in this Model Law/Cooperative Framework.

Comment: Experts at Porto Alegre in 2006 called forconsideration of a role for central authorities in internationalalternate dispute resolution, including whether to providealternative draft model provisions re�ecting the di�erentdispute resolution mechanisms that are possible. This instru-ment is intended to ful�ll that vision for ODR and is designedas a framework for implementation of the OAS Model Rulesfor Electronic Resolution of Cross-Border E-CommerceConsumer Disputes, attached as Addendum I.

Regarding the form of this document, OAS states have dif-ferent existing legal regimes in place regarding ODR. Some


245

states have functioning ODR systems that permit consumersin other states to �le a cross-border complaint online againsta registered Vendor in that state. Those states might be ableto participate simply by endorsing an informal reciprocal co-operative framework with other OAS states. Other OAS statesdo not have functioning ODR systems, and depending ontheir legal systems, may need to implement provisions of thisdocument as a model law in order to participate in the ODRinitiative. The document is therefore cast as a model law orin the alternative a cooperative framework. Additionally, thelanguage of the document has been drafted in a way to facil-itate both possible uses. When the content and form of thedocument are determined the language may be adjustedaccordingly.

Participating states would likely operate the ODR Initia-tive initially as a pilot project for a limited period to time,with the structure of the project a�ected by the fundingavailable. At the end of that period, participating stateswould confer to decide whether to continue, modify, orterminate the ODR Initiative.

2. Model Rules

Participating OAS states operating under this ODR Initia-tive agree to use the Model Rules for Electronic Resolutionof Cross-Border E-Commerce Consumer Disputes (“ModelRules”), attached as Addendum I to this Model Law/Cooperative Framework, for the resolution of claims handledpursuant to this ODR Initiative.

Comment: The Model Rules and ODR Initiative are notintended to interfere with the operation by participatingstates of their own alternative dispute resolution systems, tothe extent those systems supplement and are consistent withthe operation of the Model Rules.

3. Network and Central Website

3.1 OAS states adopting/entering into this Model Law/Cooperative Framework [will/ intend to] join a cross-bordernetwork for resolving cross-border e-commerce disputes byimplementing commonly agreed reciprocal procedures foronline dispute resolution and providing information toConsumers on the resolution of cross-border E-commercedisputes.

3.2 The central clearinghouse and administrator for thenetwork (“Central Clearinghouse”) shall endeavor to provide


246

a single secure website and database for storing informationrelated to the resolution of claims covered by this ODRInitiative.

3.3 The Central Clearinghouse will use best e�orts tomaintain on its web page a list of Vendors from participat-ing OAS states that have agreed to be listed on the homepage and have claims processed/arbitrated against them.The Central Clearinghouse should maintain this list basedon information provided by National Administrators inparticipating states.

3.4 After a Consumer �les a complaint through the CentralClearinghouse's website, the Initiation/Negotiation phase[will/should] be managed automatically by software withoutrequiring human involvement. If the complaint is elevated tothe Arbitration phase, the Central Clearinghouse [will/should] ensure that the relevant documents are directed tothe appointed ODR provider.

Comment: Some OAS states already provide a securesystem web site for the electronic resolution of Consumerdispute including inter alia listing Vendors that have agreedto have claims processed against them under the ODRprocedures. See e.g., http://concilianet.profeco.gob.mx/concilianet/faces/inicio.jsp.

4. Operation of Central Clearinghouse

4.1 The Central Clearinghouse should consist of a Com-mittee on Inter American Consumer Dispute Resolution (the“ODR Committee”), which should provide the Initiative'soverall direction and supervision, and the [name of o�ce] atthe [OAS Department of International Law/other designatedinstitution], which, subject to direction from the ODR Com-mittee, shall endeavor to provide ongoing website, databaseand administrative support and coordination.

4.2 The ODR Committee should consist of representativesfrom each of the participating states.

4.3 The members of the ODR Committee intend to elect aChair among them at the beginning of each calendar year.The ODR Committee should attempt to meet in person or bytelephone at least once per month.

4.4 Two years after the beginning of this ODR Initiative,the ODR Committee shall endeavor to draft a report detail-ing the ODR Initiative's activities and signi�cant develop-ments regarding the cross-border Consumer dispute resolu-tion mechanism outlined in this document. The ODR


247

Committee should deliver copies of the ODR CommitteeReport to the Consumer Authorities in participating states.

5. Consumer Authority and National Administrator

5.1 Participating states [shall/should] designate a nationalConsumer Protection Authority (“Consumer Authority”) tooversee the implementation of the terms of this ODR Initia-tive in their respective state. The Consumer Authority [shall/may] be any national public body that has as a principalmission implementing laws against fraudulent, misleading,or unfair commercial practices a�ecting consumers and haspowers (a) to conduct investigations or (b) to pursue enforce-ment proceedings, or (c) to do both.

5.2 Each Consumer Authority [shall/should] establish ordesignate a National Administrator/s to monitor the prog-ress, resolution and enforcement of cross-border E-commerceConsumer disputes covered by this ODR Initiative. TheNational Administrator/s may be part of a Consumer Author-ity, or may be a di�erent entity, and need not be a govern-ment agency.

Comment: Most OAS member states have ConsumerAuthorities like that envisioned in this section. Some OASstate Consumer Authorities already oversee online disputeresolution processes including for cross-border Consumerdisputes.

6. ODR Providers

6.1 Each National Administrator [shall /should use itsbest e�orts] to maintain a list of independent ODR providerswilling to undertake dispute resolution under the terms ofthis ODR Initiative. Before incorporating an ODR providerinto its list, the National Administrator [shall/should]require that an ODR provider submit written certi�cation(“ODR Provider Certi�cation”) of its (1) compliance with theRecommendations to ADR Service Providers containedwithin the Alternative Dispute Resolution Guidelines of theGlobal Business Dialogue in E-Commerce and ConsumersInternational (November 2003) (“ADR Guidelines”); and (2)a commitment to comply with the Model Rules. The NationalAdministrator [shall/should use its best e�orts to] providethe Central Clearinghouse with at least monthly updates ofits list of opted in Vendors to be posted on the CentralClearinghouse web site.

6.2 At the end of each individual dispute referred to an


248

ODR provider pursuant to Section 5.1 of the Model Rules,the ODR provider [shall/should] to report back to the CentralClearinghouse whether the claim has been resolved bynegotiation, abandoned, or resulted in an arbitral award.

6.3 At the end of each individual dispute resolutionproceeding, the Central Clearinghouse [shall/should] ask theBuyer to complete a brief and optional online feedbackquestionnaire about the ODR provider assigned to thatdispute (see Addendum IV). The National Administrator[shall/should use its best e�orts to] review the responses tothese questionnaires on a periodic basis to monitor thecontinued compliance of each ODR provider it has listed pur-suant to Article 6.1 with the ADR Guidelines and ModelRules.

6.4 If an ODR provider appears not to be in compliancewith the ADR Guidelines or Model Rules, the NationalAdministrator [shall/should] give the ODR provider an op-portunity to explain any such issues and to remedy them in30 days, or as soon thereafter as possible for good causeshown. If the ODR provider fails to do so, the NationalAdministrator [shall/should] remove that ODR provider fromits o�cial list, and notify the Central Clearinghouse, within15 days.

Comment: The U.S. Federal Trade Commission andConsumer Authorities in Mexico, Canada and other countrieshave maintained an International ADR directory containingcontact information of dispute resolution service providersthat can help Consumers resolve problems with cross-borderVendors. Each of these ADR providers has certi�ed theircompliance with the ADR Guidelines approved by the GlobalBusiness Dialogue in E-Commerce and negotiated withConsumers International. Available at http://www.econsumer.gov/english/resolve/directory-of-adrs.shtm. Similarly, theEuropean Commission currently maintains a central data-base of ADR bodies which are considered to be in conformitywith the Commission's Recommendations on DisputeResolution. Available at http://ec.europa.eu/consumers/redress�cons/adr�en.htm.

7. Con�dentiality and Reporting Requirements

7.1 Except as provided in Section 7.3, or as otherwiserequired by a participating state's law, all information ordocuments submitted by a Buyer or a Vendor under thisODR Initiative to any ODR provider is to remain con�dential.


249

7.2 The Central Clearinghouse, and each National Admin-istrator, [shall/should use their best e�orts to] devise andimplement a system so that communications and informa-tion exchanges involving them, Buyers, Vendors, and ODRproviders, can be conducted through secure electronic meansdesigned to prevent disclosure of con�dential information.

7.3 A Consumer Authority may request information aboutparticipating Vendors from National Administrators andODR providers during the course of any investigation theyare otherwise authorized to conduct, and ODR providersmay alert a National Administrator or Consumer Authorityin both the Buyer's and Vendor's state about possible in-stances of fraud. Moreover, ODR providers [shall/should] berequired to gather the following aggregate information, andto submit that information to their respective NationalAuthorities by the end of each June and December:

a. number of disputes assigned to them;b. number of those disputes that were abandoned;c. number of those disputes that were resolved through

settlement;d. number of those disputes that were resolved through

arbitration;e. number of those disputes in which monetary redress

was awarded to a Buyer;f. average ratio of amounts in Buyer demands versus

settlement agreements;g. average ratio of amounts in Buyer demands versus

arbitral awards;h. the range and average for monetary awards in favor of

Buyers;i. number of disputes resulting in the Vendor being

required to undertake some corrective action (other thanmonetary redress) and the types of corrective actionsinvolved in such disputes.

j. the range of times and average time elapsed from theODR provider's receipt of a complaint until issuance ofan award, and in the case of abandoned cases fromreceipt of a complaint until the claim is abandoned.

7.4 The Central Clearinghouse [shall/should use its beste�orts to] compile the data received from the listed ODRProviders and submit a yearly report by the end of Marchevery year, covering the previous calendar year. This Report[shall/should] also include input from the National Adminis-trators, including a section outlining Buyer feedback aboutODR providers (see section 6.3).


250

8. Participating Vendors

8.1 The National Administrators [shall/should] encourageVendors in their state to enter into agreements to be listedon the Central Clearinghouse web site and have claimsprocessed/arbitrated against them under this process.Vendors should only register with the National Administra-tor of the state of their principal place of business.

8.2 Before a Vendor in a participating state may join thisODR Initiative it must provide a written certi�cation to theNational Administrator that it will:

a. participate in the dispute resolution procedure set outin this Model Law/Cooperative Framework and ModelRules and have claims processed through a listed ODRprovider;

b. be listed as being a participant on its own website andon the Central Clearinghouse website;

c. provide updated contact information to the NationalAdministrator to notify the Vendor of any claims orother issues;

d. satisfy the requirements of an agreement formalizingsettlement and an arbitration award in a timely man-ner;

e. compensate the Buyer [cost of recovery / liquidateddamages] for the cost of any additional action to collecton an arbitration award that is not satis�ed;

f. withdraw from the dispute resolution procedure onlyafter providing 30 calendar days email notice to theCentral Clearinghouse and its National Administrator,and removing the references to participation from itsown website;

g. after withdrawal, continue to participate in the disputeresolution procedure with regard to any consumertransaction that occurred during the period that thevendor was registered with the program.

8.3 Each National Administrator [shall/should make itsbest e�orts to] maintain and publish a current list ofparticipating Vendors on its web site. Each NationalAdministrator should monitor compliance with the VendorCerti�cation. If a Vendor fails to comply with the VendorCerti�cation, the National Administrator [shall/should]notify the Vendor and allow it a reasonable time to return tocompliance. If the Vendor fails to comply within a reason-able time, the National Administrator [shall/should] remove


251

that Vendor from its list of participating Vendors, and [shall/should make its best e�orts to] notify the relevant ConsumerAuthority and Central Clearinghouse promptly about suchaction.

8.4 The Vendor [will/may] be charged a modest and rea-sonable fee for participation in this process and for each case�led under this process. See Section 9 of the Model Rules.Vendors [shall/should] pay these fees directly to [its NationalAdministrator/the Central Clearinghouse].

Comment: Under the Model Rules it is envisioned that, forthose Vendors registered with the Central Clearinghouse, thecomplaint will be automatically transmitted to themelectronically. It might also be possible for the NationalAdministrators, upon receiving a claim against entities thathave not registered, to contact the entity and request itsparticipation in the complaints process. In this regard, somestates require that before concluding any e-commerce trans-action with consumers, the supplier must provide to theconsumer its email address, physical address, telephonenumbers and other means by which the consumer could becontact the supplier. Some states further require that allVendors participate in state sponsored mediation/arbitrationmechanism for consumer claims. Other states permit theconsumer to enter into a pre-dispute and or post-disputemediation or arbitration agreements. The Model Law/Cooperative Framework does not address these issues.

Vendors may be charged a modest monthly fee, scaled totransaction volume, to participate in this program. The pay-ment will be made directly to the National Administrator/Central Clearinghouse, and in return the Vendor will beentitled to advertise their participation in the program,perhaps through the use of on-site web seals and the like. Itis envisioned that Vendors will receive a signi�cant marketbene�t from the consumer trust that participation in thisprogram will confer. Vendors may also be charged a verymodest per-�ling fee which will also be paid to the NationalAdministrator/Central Clearinghouse. Upon the completionof a case, the National Administrator/Central Clearinghousewill use these accumulated funds to compensate the involvedODR Providers for their services.

9. Enforcement of Arbitration Awards andAgreements

9.1 An Arbitration Award [shall/should] be �nal and bind-ing on all parties to the individual dispute, with preclusive


252

e�ect up to [US$10,000] solely with respect to those parties,but subject to review in accordance with applicable statestatutes governing arbitration awards.

9.2 The National Administrator or Consumer Authority ina vendor's home country may take such steps as it deemsappropriate to pursue that Vendor's compliance with arbitra-tion awards rendered pursuant to the Model Law, includingtaking direct enforcement action, non-governmental orprivate standards monitoring/enforcement agencies request-ing assistance from payment networks, or referring cases tocollection agencies.

9.3 Except as required by law, or as is necessary for ap-plication of the provisions of this Model Law/CooperativeFramework, there [shall/should] be no review of the meritsof the Arbitration Award.

Comment: In addition to direct interactions with Vendors,National authorities may also elect to partner with paymentnetworks (for example MasterCard, Visa, PayPal, or debit-card associations) to recoup and enforce outcomes. Privateorganizations (such as private “Trustmark” organizations)may also have an important role to play in enforcement ofawards.

10. De�nitionsFor purposes of this Model Law/Cooperative Framework

and the Model Rules in Addendum I:10.1. “Arbitration Award” is any arbitral award rendered

pursuant to the Model Rules.10.2. “Business-to-Consumer Transaction” means a com-

mercial transaction for value between a Vendor anda Consumer.

10.3. “Central Clearinghouse” means the coordinator ofthe entire ODR process providing ongoing database,website and administrative support.

10.4. “Consumer” or “Buyer” is a natural person whoenters into a Consumer Transaction for personal,family, or household use, and not for resale or othercommercial activity.

10.5. “Consumer Authority” is the government consumerprotection agency designated by each participatingstate to oversee the implementation of the terms ofthe Model Law/Cooperative Framework in their re-spective state.

10.6. “Consumer's State” is the contracting state in which


253

the Vendor renders a service, delivers or shoulddeliver or make available the thing purchased orleased by the Consumer.

10.7. “Consumer Transaction” is a transaction by aConsumer with a Vendor.

10.8. “Court addressed” is a court, board, or panel, what-ever it may be called, authorized by the Vendor'sstate to recognize and enforce an arbitration award,and which is presented with such an award for rec-ognition or enforcement by the buyers or the state-designated entity.

10.9. “E-commerce” means transactions over computermediated networks.

10.10. “Economic Harm” means actual monetary losssustained by a Consumer in a ConsumerTransaction.

10.11. “National Administrator” is the entity establishedor designated by the Consumer Authority to man-age the progress, resolution and enforcement ofcross-border E-commerce Consumer disputes.

10.12. “ODR Committee” is the Committee on Inter Amer-ican Consumer Dispute Resolution, consisting ofrepresentatives from each of the participatingstates.

10.13. “Seto�” means a defense to the whole or a portionof the Consumer's claim arising under the transac-tion in question but not amounts owing under othertransactions.

10.14. “Vendor” is a natural or legal person entering intoa consumer transaction as part of its business, com-mercial, or professional activities.

10.15. “Vendor's State” is the contracting state in whichthe vendor has its principal place of business.

10.16. “Writing” and “Written” includes data messages inboth physical and electronic form, so long as the in-formation contained therein is accessible to the Par-ties and Arbitrator so as to be usable for subsequentreference.

Addendum I. Draft Model Rules for ElectronicResolution of Cross-Border E-Commerce Consumer

Disputes

1. PurposeThese Rules are intended for use in conjunction the OAS


254

Model Law/Cooperative Framework establishing a state-sponsored ODR Initiative to help resolve cross-bordere-commerce disputes. They are designed to resolve disputesin a simple, transparent, swift, and inexpensive mannerthrough online negotiation, mediation, or arbitration.

2. Types of Claims2.1 These Rules only apply to contract disputes involving a

Business-to-Consumer Transaction where:a. the amount claimed by the Buyer is not more than

[US$10,000], or the equivalent in other currency, and to anyseto� claims up to that amount raised by the Vendor;

b. the dispute arises between a Buyer domiciled or legallyresident in one contracting state, and a Vendor both doingbusiness and engaging in the transaction in anothercontracting state, at the time of the transaction; and

(i) involves a claim that the goods sold or leased orservices rendered were not delivered, not timely deliv-ered, not properly charged or debited, not provided tothe Buyer or his or her designee in accordance with theagreement made at the time of the transaction; or

(ii) there was a misrepresentation in connection withthe transaction that reasonably a�ected the Consumer'sdecision to enter into the transaction; or

(iii) the Parties earlier reached a settlement underthis procedure, but the Vendor failed to comply with thesettlement contract.

2.2 Addendum II (Electronic Initiation Form) provides theBuyer with the exclusive list of the claims covered by Sec-tion 2.1.

2.3 No provision in these Rules shall be construed as limit-ing the freedom of the Buyer to pursue other forms ofredress, such as non-binding mediation, arbitration, orprotection programs provided by third party organizations orpayment systems.

2.4 No provision in these Rules shall be construed as waiv-ing the right of the Buyer or Vendor to bring any claims thatare beyond the scope of the claims identi�ed in this sectionbefore the state channels for redress.

3. Vendor Acceptance of Procedure3.1 Claims may be brought by a Buyer using this process

against Vendors that have agreed to have claims processed/arbitrated against them under this procedure in accordancewith Article 8 of the Model Law/Cooperative Framework.


255

4. Online Initiation/Negotiation Phase

4.1 The Buyer may only initiate this process for a purchasewithin six months of paying for the purchase or contracteddelivery of the product or service, whichever is later. In thecase of installment sales, the Buyer may only initiate thisprocess within 6 months from the date of purchase orcontracted delivery of the product or service, whichever islater. In the case of claims initiated pursuant to section2.1(b)(iii) of these Rules for unsatis�ed settlement contracts,the Buyer may reopen his/her case within three months ofthe date set for completion of the terms of the settlementcontract. The Buyer may reopen his/her case at the sameprocess level it had reached when the settlement was�nalized.

4.2 In order to begin the process, the Buyer must visit theCentral Clearinghouse web site and complete the online Ini-tiation form available there. See Article 5.3 of the ModelLaw/Agreement and Addendum II.

Comment: It is also possible to structure this part of theprocess to include National Authorities and/or ODRproviders. For example, the process could permit Buyers to�le their complaints either through the central website orthrough other web portals that collect the same complaintdata and pass it through the central database.

4.3 On the online Initiation form the Buyer states his/herversion of the facts and any proposed solutions to resolve thedispute.

4.4 Once the form is submitted, a notice of the new �lingalong with the information collected is sent automatically bythe Central Clearinghouse to the National Administratorand the Vendor. After this notice is sent, the Vendor willhave seven (7) calendar days to respond.

4.5 If the Vendor does not respond within the seven (7)day period, the Vendor is presumed to have refused to negoti-ate and the case automatically moves to the online Arbitra-tion phase.

4.6 If the Vendor responds to the invitation to negotiatewithin the seven (7) day period and accepts a solutionproposed by the Buyer, a message is sent automatically tothe Buyer evidencing the agreement and the case isterminated. An Agreement form formalizing the onlineSettlement is generated and sent to both parties.

4.7 If the Vendor responds to the invitation to negotiate


256

within the seven-day period and does not accept any of thesolutions proposed by the Buyer, the Vendor will also begiven an opportunity to state the Vendor's version of thefacts and any proposed solutions to resolve the dispute.

4.8 If none of the solutions proposed by the Vendor is ac-cepted by the Buyer, the Parties can either continue tonegotiate or either party can request to move the case to theonline Arbitration phase.

4.9 After the Buyer's submission of the online Initiationform, the Parties have twenty (20) calendar days to negoti-ate and exchange as many proposals and as much informa-tion as they wish. If after the twenty (20) day period theParties have not reached a settlement, a message will besent to give them the opportunity to either move to the nextphase or terminate the process.

Comment: The Initiation/Negotiation phase is designed tobe managed entirely by software, without requiring theinvolvement of a human case manager. It is also designed tobe e�cient, using software to move the process along. Studieshave shown that buyers want E-commerce resolution processesto complete expeditiously, and that drawn-out procedures cre-ate dissatisfaction, even if they eventually work out in thebuyer's favor. This type of design will help both to containcosts (ensuring these services can be delivered even for low-dollar value cases) and minimize Buyer frustration associ-ated with long delays.

5. Online Arbitration Phase

5.1 If the Buyer decides in writing through an electronicsubmission to pursue online Arbitration, the NationalAdministrator in the Vendor's State will select an onlineODR provider from the list of ODR providers maintained bythe Central Clearinghouse. The seat of arbitration is theVendor's State.

Comment: It might be possible to further centralize thesystem, so that the Central Clearinghouse could perform theministerial task of appointing ODR providers in each partic-ular case pursuant to more general directions from theNational Administrators.

5.2 The ODR provider will proceed with online arbitrationby appointing a single online arbitrator and notifying theparties of the arbitrator's name and any disclosures byelectronic communication. The parties may object to thearbitrator's appointment within forty-eight (48) hours of the


257

notice of appointment. If no objection has been received bythe ODR provider within forty-eight (48) hours, the arbitra-tor will be rea�rmed. In the event of an objection, the ODRprovider will invite electronic comments from the other partyto be submitted within 48 hours and then either rea�rm thearbitrator or appoint a new arbitrator.

Comment: The Article is drawn from the AAA-ICDR OnlineProtocol for Manufacturer/ Supplier Disputes. The Article isnot intended to restrict the future development of onlinearbitration panels such as jury pools or other innovative ODRdevelopments.

5.3 Once the online Arbitrator is appointed, the CentralClearinghouse shall give the Arbitrator access to all of thecommunications regarding the dispute sent by the Buyer orthe Vendor pursuant to these procedures.

5.4 The online Arbitrator shall then evaluate the casebased on the information submitted and determine whetherthe dispute would bene�t from a facilitated settlement. If so,the Arbitrator then may communicate with the Buyer andVendor to attempt to reach an agreement. If the Partiesreach agreement, the Arbitrator shall render an award onthat basis.

Comment: Consideration might be given to having the ODRProvider conduct any online mediation before the onlinearbitrator is selected. There is disagreement among the ADRstakeholders about the propriety and bene�ts of mixingmediation and arbitration.

5.5 If no resolution through mutual agreement/facilitatedsettlement is possible, the online Arbitrator gives the Par-ties a �nal opportunity and deadline to explain each Party'sperspective on the issues at hand and to provide any lastpieces of information they believe to be relevant.

5.6 In exceptional circumstances the online Arbitrator mayrequest additional written evidence from the parties.

5.7 Except as other provided in this section, the onlinearbitration shall be completed by an award within 20 days ofthe arbitrator's appointment or, in case of a challenge, his/her rea�rmation. The ODR provider on behalf of the onlinearbitrator may in exceptional cases request an extension oftime from the National Administrator to render an award.

5.8 All communications will be in electronic form unlessotherwise directed by the online Arbitrator.

6. The Award6.1 The online Arbitrator deciding a disputed claim shall


258

make a �nal decision as to the appropriate outcome byreviewing all the documents and statements. In arriving athis/her decision, the arbitrator shall consider the claims theBuyer has made from the checklist; the pertinent facts andcircumstances; and the terms and conditions of the contract.If a solution is not found in the terms of the contract, theArbitrator shall decide such claims and grant such relief onan equitable basis, based on an interpretation of these rulesand without referencing or requiring proof of applicable law.In granting relief, the Arbitrator may order, consistent withthese rules, payment of money, return of a product or ser-vice, and/or replacement of a product or service. The Arbitra-tor shall in calculating economic harm take into account anyeconomic value the Buyer retains as a result of thetransaction. The Arbitrator may use a Vendor's claims aris-ing from the same transaction to reduce or eliminate theamount owed by a Vendor, but otherwise shall have noauthority to enter an award for such relief against a Buyer.Whether a claim involved a misrepresentation (see section2.1(b)(ii)) shall be determined by the net impression reason-ably created by the seller's advertising, and hidden disclaim-ers shall not prevent advertising from being amisrepresentation. The arbitrator should treat claims involv-ing a previous, mutually agreed-upon settlement negotiatedunder these Rules (see section 2.1(b)(iii) as a contract be-tween the parties).

6.2 The online Arbitrator will �le a decision using the formattached as Addendum III within seven days after the Par-ties make their �nal submissions to the Arbitrator or withinthe extension of time authorized by the National Administra-tor pursuant to section 5.7. The decision will be automati-cally delivered electronically to the Parties. Failure to ad-here to this time limit shall not constitute a basis forchallenging the award.

6.3 The award of the online Arbitrator shall be �nal andbinding upon the Parties and shall constitute a duly exe-cuted award for purposes of enforcement. Parties to arbitra-tion under these rules shall be deemed to have consentedthat judgment upon the Arbitration award may be enteredin any court having jurisdiction thereof.

6.4 Once the online Arbitrator has rendered a decision andthe Parties have been noti�ed, the Vendor will have seven(7) days to abide by the outcome, unless otherwise indicatedby the Arbitration Award.


259

Comment: Seven days may not always be su�cient, forexample, where a Vendor has to await return of a productbefore issuing a refund. The online Arbitrator is best situatedto make this determination.

The parties should be able (short of an appeal to ajurisdictional court) to mutually seek to have the “perfor-mance issue(s)” re-examined by the arbitrator where extenuat-ing circumstances arise.

6.5 The Buyer will be asked by the Central Clearinghouseto con�rm that the Vendor has followed through with theterms of the online Arbitrator's decision.

6.6 If the Buyer states that the Vendor has not compliedwith the obligations under the arbitral award within thetime limits set forth in section 6.4, the Buyer, the NationalAdministrator or Consumer Authority in the Vendor's Statemay take steps in accordance with Section 9 of the ModelLaw/Cooperative Framework for enforcement of the Award.

7. Representation and Assistance

Parties may choose to be represented or assisted by an-other person. Representation by an attorney shall be permit-ted but not mandatory.

8. Language

The online mediation/arbitration shall be conducted in thelanguage used in connection with the transaction in dispute,unless another language is agreed upon by the Parties afterthe dispute arises. In the event of any dispute about thelanguage used in connection with the transaction, thelanguage of the arbitration shall be determined by the onlineArbitrator.

9. Cost of ODR

The Vendor will be charged a modest and reasonable feefor each case involving the appointment of an onlineArbitrator. Payment will be made directly to the CentralClearinghouse/National Administrator]. See Article 8.4 ofthe Model Law/Cooperative Framework.

Addendum II. Electronic Initiation Form

——————————— ——————————— ———————————Buyer Name Physical Address Email


260

——————————— ——————————— ———————————Vendor Name Physical Address (if

known)Email

Check whether the claim involves any of the following:——— Vendor failed to deliver goods or services after the

Buyer was charged;——— Vendor failed to timely deliver the goods or services;——— Vendor sent the wrong quantity;——— Vendor sent damaged goods;——— Vendor sent goods or provided services di�erent from

the goods or services contemplated in the transaction;——— Vendor sent goods that were not suitable for the

purpose for which goods of this nature are ordinarily used;——— Vendor sent goods that were not customized as

contemplated in the transaction;——— Vendor made misrepresentations about the goods;——— Vendor did not comply with its express warranty;——— Vendor charged or debited the Buyer's �nancial,

telephone or other account without authorization;——— Vendor charged or debited the Buyer's �nancial,

telephone or other account an amount for the transactiondi�erent from that agreed to;

——— Vendor failed to comply with the terms of a settle-ment agreement entered with the Buyer during the Negotia-tion Phase of these RulesAmount Claimed/Solution Sought

The Buyer agrees to mediate and/or arbitrate in accor-dance with the OAS Model Rules for Electronic Resolution ofCross-Border E-Commerce Consumer Disputes.

————————————————Electronic Signature of Buyer

NOTES TO FORM

CommentaryThe procedure assumes that both the Buyer and the Vendor have

entered into some form of agreement consenting to the arbitration. Ifthe outcome is an Arbitration Award, enforcement processes almostuniformly require such consent in order that an agreement to arbitrateis valid and enforceable. The initiation form should also provide for


261

disclosures to inform the Buyer about the process, and mightincorporate elements from the initiation form on www.econsumer.gov.

Addendum III. Electronic Award Form

The award form shall specify the nature of the contract atissue, the amounts in dispute, the arbitrator's determinationon the merits [and provide a brief description of the reasonstherefore].

Addendum IV. Sample Online Questionnaire toConsumers About ODR Providers

1. Did you have any reason to question the impartiality ofyour ODR provider?

If so, please explain:2. Was your ODR provider well-quali�ed to handle your

dispute:

O 1 Unquali�edO 2O 3 Reasonably quali�edO 4O 5 Very quali�ed

3. Was your experience with this ODR provider accessible/convenient?

O 1 Very inaccessible/inconvenientO 2O 3 Reasonably accessible/convenientO 4O 5 Very accessible/convenient

4. How quickly did your ODR provider handle your dis-pute?

O 1 SlowlyO 2O 3 Reasonably fastO 4O 5 Quickly


262

Appendix B Overall System Designfor the OAS Clearinghouse*

*This slide was drawn from the presentation made by the O�ce ofthe Legal Advisor, US Department of State to the OAS CIDIP VII Work-ing Group on Consumer Protection on February 25, 2010 (on �le with theauthors).


263

Appendix C *

*Id.


264

Designing a Global Consumer Online Dispute …colinrule.com/writing/ucclj.pdfhandle cross-border...

Documents

Transcript of Designing a Global Consumer Online Dispute …colinrule.com/writing/ucclj.pdfhandle cross-border...