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Commercial Benefits of ODR Systems

Commercial Benefits of ODR Systems

How does having an effective Online Dispute Resolution system benefit a business?

 

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There was a paper written by Colin Rule, who did a very interesting experiment. Because I remember that he looked at a sample of disputes that arose on eBay, during a period of a few months, and compared with other transactions that had disputes. The findings are very, very interesting because with the exception of those disputes that took longer to be resolved. Those who resolved the disputes quickly, then they spent more money on eBay than those who had never had a dispute.

 

But the most interesting part, I think, for this context of mediation is that the people who seem to spend more money were those who resolved the problem amicably. So they reached a settlement.

 

They spent more money in the subsequent period of time than those who won the case, but a third party decided who wins the case. So even if the winners spend less money than those who have settled amicably. So it seems that . . . We’re talking about millions of transactions that are being compared during a period of time.

 

So it seems that people have greater faith in the process, the dispute resolution process, when they construe their own settlement, their own decision, even more than when they win the case where a third party decides on that. In this case, on eBay, most of the time it’s PayPal.

 

So equivalent to the escrow account that you were talking about with eLance. So these are very interesting findings. I remember Colin mentioned that an executive said, “Well, it is that easy. Let’s give everyone a dispute.” This works with the first type of dispute.

 

The argument that Colin Rule was making is that it you get the loyalty of consumers, whilst you have to resolve a problem. Once you have a problem, if you help them with that problem, then you trust that provider.

 

It happens often with . . . Amazon has a different angle to face. Amazon doesn’t resolve disputes. You don’t receive something. They send you a new item. You trust them as a result, but you remember a particular provider. No one leave them because you expect the things to go well. But how things are dealt when things go bad . . . So if they help you to resolve the issue, then you can . . . Well, this is the argument that Colin Rule was making. Then you have loyalty to that company or to that provider.

 

When you reach a settlement, sometimes you have to reach some sort of compromise. So you might not get all you were asking for, but you might feel empowered about getting your own decision. The funny thing is . . . I mean, this finding on eBay was quite interesting because the expectation was that winning was more important than winning your own settlement or finding a compromise, but they found out that was not the case. At least in the eBay context. We’re talking about a huge number of cases that have been compared. So yeah, enable parties to reach a settlement to construe what they think is fair and just. It seems to be more powerful than just telling them who wins and who loses. Even for the winner party.

 

Aled: Doesn’t this argument of empowerment apply to mediation more generally?

 

Sure. Although, in the consumer context, because of this imbalance of power, there are some concerns, that the consumer could be bullied into a settlement that does not respect their entitlement or their rights. Also, in a family context, some research has shown that when you go to mediation, often women get less money than when they end up in trial, when the judge decides how much compensation or ancillary relief a woman or ex-wife with kids is entitled to have.

 

So I think there are also other sets of concerns that need to be addressed. The good thing of technology is that it can be very useful also as a tool to informing parties about what are their rights. Then it’s up to the parties to construe what they think is fair as a workable solution for them.

About the mediator

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Pablo is a Senior Lecturer and a non-practising Spanish attorney. He conducts research in the field of dispute resolution, civil procedure and consumer law. He was invited to be a keynote speaker in two international conferences, and he has been invited as a speaker at many other conferences in 15 different countries. He was invited to participate in expert meetings by various organisations, including the UN Commission for International Trade Law... View Mediator