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Transnational B2C E-Commerce: Legal Harmonization and the Need for a “Second Best Option”

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Access to Justice in Transnational B2C E-Commerce

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Abstract

With the variety of consumer law approaches around the world, the harmonization of consumer protection laws has become a heavily debated issue. In scholarly circles, the harmonization of laws is believed to help eradicate uncertainty that may arise from consumer transactions with foreign parties in the borderless online market. Such harmonization is believed to offer consumers greater access to justice and to facilitate the growth of e-transactions by offering a clear perception to consumers and businesses that their expectations will be met at both the domestic and global levels. As a result, the number of confident consumers who like to shop online and make use of the global e-market will increase.

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Notes

  1. 1.

    From the business perspective, the high burdens and difficulties of e-sale transactions originated from the legal requirement to comply with very fragmented and disparate national consumer protection laws. On the consumer side, it is often said that most consumers who are likely to have very limited knowledge of foreign laws and regulations will not be comfortable and confident enough to enter into transnational e-transactions. This leads to the discussion on the need for harmonization of consumer laws. See P. Cortés, Online Dispute Resolution for consumer in the European Union 16–7 (2011).

  2. 2.

    The regulatory models of consumer protection in e-sales continue to be materially different from one jurisdiction to another and the process of granting remedies appears to be much more difficult for consumers in the e-market. See ibid.

  3. 3.

    See ibid.

  4. 4.

    See C Poncibo, Some Thoughts on the Methodological Approach to EC Consumer Law Reform, 21 Loyola Consumer Law Review 353, 354 (2009).

  5. 5.

    Canadian scholar Richard Lipsey and Australian scholar Kelvin Lancaster explained the theory of the second best in their 1956 literature that if one or more optimality condition cannot be satisfied, it is likely that the following best solution concerns altering other variables away that is presumed to be optimal. See R. G. Lipsey and K. Lancaster, The General Theory of Second Best, 24 The Review of Economic Studies 11–32 (1956–1957).

  6. 6.

    See J. Hill, Cross-Border Consumer Contracts 9 (2008). See also L. E. Gillies, Adapting International Private Law Rules for Electronic Consumer Contracts, in C. E. F. Rickett and T. G. W. Telfer (eds.), International Perspectives on Consumers’ Access to Justice 359, 380 (2006) and F. Cafaggi, H. W. Micklitz (eds.), New Frontiers of Consumer Protection, The Interplay Between Private and Public Enforcement 32 (2009).

  7. 7.

    For example, J. Hill cited R. Schu’s statement that: “The private international law on consumer contracts… has to provide solutions to the question of which is the applicable law to consumer contracts made over the World Wide Web, and it must determine which courts have jurisdiction to hear the case. These questions are not only of academic interest, their answer imply dramatic practical consequences both for the courts and for the people conducting business on Web. If the consumer receives defective goods or if he regrets having made the purchase, he will want to know where to sue the supplier and which law governs his right to damages or to cancel the contract. The supplier, on the other hand, might find himself confronted with foreign consumer protection law which he is not aware of.” See ibid. and R. Schu, The Applicable Law to Consumer Contracts Made over the Internet: Consumer Protection through Private International Law, 5 International Journal of Law and Information Technology 192, 194 (1997). Lorna Gillies makes the same point that consumers have a reasonable expectation of their rights and should be able to imagine where they can enforce their rights regardless of where they are living no matter where the businesses are located. See Gillies, ibid., at 380.

  8. 8.

    There is extensive research with regard to the private international law aspects of B2C e-contracts and the legal harmonization in this area. Nevertheless, the current principles appear to be rather inconsistent and take diverse directions. See e.g. Z. S. Tang, Electronic consumer contracts in the conflict of laws (2009), L. E. Gillies, Electronic Commerce and Private International Law, A Study of Electronic Consumer Contract (2008) and D. J. B. Svantesson, Private International law and Internet (2007).

  9. 9.

    The selection of these two jurisdictions are namely the US and the EU as these two countries always have the highest volumes of B2C e-sales in the global online market. As a result, their private international laws concerning B2C e-sales seem to be the most advanced.

  10. 10.

    See T. Scassa and M. Deturbide, Electronic Commerce and Internet Law in Canada 451 (2004).

  11. 11.

    For example, in the often cited Carnival Cruise Lines, Inc. v Shute, a couple who were domiciled in the US state of Washington bought two cruise tickets from Carnival, a Florida-based cruise service. During the trip, the wife accidently slipped on the ship and was injured. In the ticket sale contract, the jurisdiction clause specified that any dispute must be settled in Florida. The US Supreme Court ruled that the forum selection clause was reasonable and thus valid as such clause was freely bargained for as it was traded off for the low price and it did not cause an undue burden to consumers. The rules set out in Carnival were extensively applied to online transactional disputes. See Carnival Cruise Lines, Inc. v. Shute 499 U.S. 585 (1991). In following cases, named Caspi v Microsoft Network, LLC, the court applied similar reasoning as used in Carnival. In Caspi, the court ruled that a forum selection clause in Microsoft’s online contract was enforceable. See Caspi v Microsoft Network, LLC 732 A. 2d 528 (N.J. 1999). See also Cortés, supra note 1, at 30.

  12. 12.

    Where there is no forum selection clause, the common law countries will generally determine the jurisdiction based on “their presence of territory of the forum at the time of the service or at the time that the originating process is issued, in the case of a defendant who is present then, but subsequently leaves the territory to avoid service”. This traditional approach has become very controversial in internet cases where defendants usually do not have a presence in the territory of the forum, or there are difficulties in identifying the defendants’ presence in the territory of the forum. If the nexus between the action and the forum are not clearly constituted, the assertion of jurisdiction may come with many questions. This has also been an issue in the development of jurisdiction principles in the online market. See ibid.

  13. 13.

    The Zippo doctrine was developed from the leading case on the issue of jurisdiction. See Zippo Manufacturing Company v. Zippo Dot Com Inc, 952 F. Supp. 1119 (W.D. Penn. 1997).

  14. 14.

    This court precedent involved an internet domain dispute where the lighter manufacturer, Zippo Manufacturing Company, located in the US state of Pennsylvania sued Zippo Dot Com, a California website company. The court had to rule on the question relating to the jurisdictions’ assertion as the case was filed in Pennsylvania but Zippo Dot Com objected on the ground of lack of personal jurisdiction as it had neither office nor staff in such jurisdiction. The court rejected Zippo Dot Com’s argument citing that Zippo Dot Com is an active website where consumers in Pennsylvania can subscribe to their services and jurisdiction consequently can be asserted. See ibid.

  15. 15.

    The nature of online trading activities can be divided into three levels. First, “an active website” seeking to establish a contractual relationship with persons in other jurisdictions is always subject to the personal jurisdiction of that other jurisdiction. Second, “a passive website” providing online information without any interaction but merely informative nature will not trigger the personal jurisdiction of the viewer’s jurisdiction. Third, “a mixed website” where the consumer can receive and exchange information but the site is not particularly soliciting those consumers as contractual parties. The courts will use their discretions to identify whether such interactivities will trigger the personal jurisdiction of consumers.

  16. 16.

    Bunmi Awoyemi opines that today, large numbers of websites fall within the mixed classification wherein an individual court have to decide whether the website operator may or may not be subject to the personal jurisdiction of the consumer’s jurisdiction and the Zippo doctrine, which is out of date, fails to provide predictable outcomes and value.. Instead, it may lead to diverse judicial directions and various incoherent interpretations with the US Supreme Court on the jurisdiction cases. See B. Awoyemi, Zippo Is Dying, Should It be Dead?: The Exercise of Personal Jurisdiction by U.S. Federal Courts Over Non-Domiciliary Defendants in Trademark Infringement Lawsuits Arising Out of Cyberspace, 9 Marquette Intellectual Property Law Review 37–62 (2005).

  17. 17.

    The Brussels Regulation forms the forum selection rules in the EU Member States except Denmark. Denmark continues to apply the Brussels Convention, which is an international law ratified by all EU Member States. The Convention subsequently requires all Member States to revise and provide their national laws in accordance with the principles set out in the Convention. In 2000, the Convention was replaced by the Brussels Regulation, another EU regulation directly applicable to all Member States. Any domestic law contrary to the Brussels Regulation will be overruled because the Brussels Regulation as the EU law has the superior status over national laws of Member States. The jurisdictional principles governing international transactions within the EU were generally influenced by “actor sequitur forum rei”, the famous international law rule with the emphasis that “individual should be sued in the court of the place where they are domiciled”. See Article 2 of the Brussels Regulation. For detailed discussion on the actor sequitur forum rei rule, see A. T. von Mehren, Theory and Practice of Adjudicatory Authority in Private International Law: A Comparative Study of the Doctrine, Policies and Practices of Common- and Civil-Law Systems 179 (2002).

  18. 18.

    See Article 15 and 16 of the Brussels Regulation.

  19. 19.

    In addition, it will be consider an unfair term under the UTD. For detailed discussion on the UTD, see Sect. 5.2.

  20. 20.

    See Article 15 of the Brussels Regulation.

  21. 21.

    However, there are diverging interpretations of what are considered direct activities among the Member States. The UK courts, for example, seem to interpret Article 15 (1) (c) very carefully. In Crate v Barrel, the English judge held that the website only targeted Irish consumers, rejecting the recognition of consumer jurisdiction despite the fact that the website was available and accessible by the UK consumers. See Crate v Barrel, unreported (2000, July 24). See also Cortés, supra note 1, at 29. This is in contrast to French jurisdiction where the court ruled against Yahoo!, Inc., a US based company, on the ground of French anti-incitement law infringement. In this case, Yahoo!, Inc. sold Nazi memorabilia via its website in English language only and had a filter function barring French IP addresses. It appeared that the English court tends to conservatively rule against a foreign company in the online market while French courts often interpret the Brussels Regulation broadly, extending French jurisdiction to almost all cases sued in French territories. See French Union of Jewish Students v Yahoo!, Inc.(USA), Yahoo France, Tribunal de Grande Instance de Paris, Interim Court order, November 20, 2000. Further discussion on this case, see R. Ware, The Use of Jurisdiction Arbitrage to Support the Strategies Interest of the Firm, 38 University of Toledo Law Review 307 (2006). Another judgment followed the decision in UFC v AOL. It ruled the e-contract clauses provided on the website of a US company unfair and unenforceable, certifying French jurisdiction over a foreign company offering transaction online. See Union Federale des Consommateurs-Que Choisir (UFC) v AOL R. F. N. 02/03156, Tribunal de grande instance Nanteerre (June 12, 2004).

  22. 22.

    In the Hague Convention, Article 7 of the Proposed Draft of the Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters is subject to most debate. Article 7 specifies that consumers are able to bring an action against traders in the consumers’ home country at the time that the contract was concluded or directed to the consumer’s country. There are three options to application of Article 7: “(i) The above rule would be used as a default rule when the parties have not entered a contractual clause selecting a forum (ii) The states may enter a reservation that would allow them to respect a jurisdiction agreement only when it has been agreed after the dispute arises. (iii) The second alternative will be implemented in all states, in other words, Article 7 applies unless a jurisdiction agreement was entered into after the dispute arise.” See Cortés, supra note 1, at 33. There was the conflict opinion during the negotiation as the US agrees with option (i) whereas the EU prefers options (ii) and (iii), which are consistent with the Brussels Regulation. See P. Nygh and F. Pacar, Preliminary Draft Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters Adopted by the Special Commission (August 11, 2000), available at hcch.net/upload/wop/jdgmpd11.pdf (visited December 26, 2012).

  23. 23.

    See The Convention of the Choice of Court Agreements (July, 2005), available at hcch.net/upload/conventions/txt37en.pdf (visited December 1, 2012).

  24. 24.

    See Article 2 of the Convention on Choice of Court Agreements (concluded 30 June 2005) excludes consumer transactions from its application. See ibid.

  25. 25.

    During the conference, the principal conflict arose from American support of the adaptation of the seller’s country according to the “original rules” rule, whereas the EU prefers the opposite rule, called the “country of destination” which is the place of consumer’s domicile. See Cortés, supra note 1, at 33.

  26. 26.

    See ibid., at 24.

  27. 27.

    See Regulation 593/2008 of the European Parliament and of the Council dated 17 June 2008 on the Law Applicable to Contractual Obligations (The Rome I Regulation). This regulation describes the uniform applicable law principles in contractual transaction for all EU Member States except Denmark. Denmark is still under the Rome Convention 1980.

  28. 28.

    See Article 6 of the Rome I Regulation.

  29. 29.

    There are number of exceptions such as contracts of carriage and transactional contracts concerning immovable property. See Section 6.4 of the Rome I Regulation. See also J. Diuckie, Internet and Electronic Commerce Law in the European Union 86 (1999).

  30. 30.

    This provision divides consumers in B2C e-sales into two types, namely “passive consumers” and “active consumers”. On one hand, the passive consumers are those who are approached and invited to enter into B2C e-sales by traders. On the other hand, the active consumers are those who are looking and seeking e-sale transactions themselves. The determination of whether a consumer is passive or active is based on the nature of traders’ activities, e.g., when a website pursues advertisement through e-mails or webpages directed to a consumer’s country they are usually considered a direct business activity, and the consumers in such jurisdiction are deemed to be passive consumers. See Cortés, supra note 1, at 28.

  31. 31.

    See ibid.

  32. 32.

    The Second Restatement generally guarantees the validity and enforceability of the applicable law chosen by the parties, unless the following are found; (i) the selected applicable law is of a nation that has no substantial connection or relationship to the parties or the transaction; and (ii) the application of such selected law would be contrary to the public policy of a nation “which has a greater interest in the issue, but only when the state would be the chosen one if there was not a contractual clause.” See Cortés, supra note 1, at 27. Similarly, the UCC includes the similar principal governing commercial contracts and transactions, including the consumer cases. The UCITA, which was promulgated with the objective of dealing with e-information transactions, states that the parties to a contract can select the applicable law but, “the choice of law is not enforceable in a consumer contract to the extent it would vary a rule that many not be varied under that law of jurisdiction applicable in the absence of that agreement.” This rule seems to depart from the Second Restatement and the UCC where the choice of law clause will be unenforceable if it does not have a reasonable relationship to the transactions. The reason behind the UCITA is to reduce the undue cost of excessive control on the applicable law clause and to increase transactional certainty. With a valid applicable law clause, the parties can obtain clearer legal certainty and understanding regarding the transaction prior to entering into an e-transaction. See § 109 (b) of the UCITA. See also Cortés, supra note 1, at 30.

  33. 33.

    The Second Restatement specifies that if the parties do not indicate the choice of law, the governing law in an e-contract will be “that of where the consumer is domiciled, that is, the location from where the acceptance was transmitted and to where the goods were delivered.” This rule is similar to the EU applicable law approach. For detailed discussion on this issue, see A. Zaremba, Civil Justice in Crisis-Comparative Perspectives of Civil Procedure 13 (2005). Similarly, in consumer transactions, the UCC provides that the law governing the transaction will be the law of consumer’s location. See § 109 (b) of the UCITA.

  34. 34.

    In case of the absence of a choice of law clause, the Rome I Regulation provides that the applicable law will be the national law where the passive consumer was a resident at the time the contract was concluded. However, if the conditions of the Rome I Regulation prescribed above (e.g. active consumers) are not met, the law of trader’s location shall be applied. See Art 6 of the Rome I Regulation. In addition, national laws of many Member States will give the presumption in favor of consumers that the consumer contract, unless shown otherwise, was entered into in the habitual county of a consumer. The Spanish law, namely the Spanish Ley 34/2002 (Article 29) is for example. See ibid., at 479.

  35. 35.

    The UCITA provides that the law of the licensor’s place of establishment will be applied, if the products are delivered online or by other e-means (i.e. computer software). See § 109 (b) of the UCITA.

  36. 36.

    See e.g. Cortés, supra note 1, at 28.

  37. 37.

    See e.g. ibid., at 26.

  38. 38.

    In cross border consumer cases, the recognition and enforcement of judgments in a foreign state are similar to other civil and commercial cases, depending on the international agreements or bilateral agreements between the two relevant countries (the original country of judgment and the country where the judgment is recognized and enforced).

  39. 39.

    See Sect. 6.2.

  40. 40.

    This would be relevant in the case where a foreign trader has no branch, representative or asset in the consumer’s jurisdiction, and is likely to occur in the online market where small and medium sized traders are able to enter such market without substantial overhead expenses.

  41. 41.

    From the business perspective, the high burdens and difficulties of e-sale transactions originated from the legal requirement to comply with very fragmented and disparate national consumer protection laws. See Chaps. 5 and 6.

  42. 42.

    The legal harmonization was supported by the United Nations General Assembly. It is recognized that “disparities in national laws governing international trade created obstacles to the flow of trade” and, in 1966, the establishment of the UNCITRAL clearly indicated the UN was taking an active role in removing this barrier. According to the UNCITRAL’s general mandatory rule: “is to further the progressive harmonization and unification of the law of international trade and UNCITRAL has come to be the core legal body of the United Nations system in the field of international trade law”. Although this model law of the UNCITRAL was not initially intended to apply to consumer contracts, it clearly provides that states may extend the scope of this law beyond the commercial sphere. In other words, the UNCITRAL principles may also apply to e-consumer transactions. See United Nations Commission on International Trader Law (UNCITRAL), Origin, Mandate and Composition of UNCITRAL (2012), available at uncitral.org/uncitral/en/about/origin.html (visited December 12, 2012).

    At the national level, for example, the US is increasingly recognizing the need to create a uniform law that is harmonized with international law. “The National Conference of Commissioners on Uniform State Law in recognition of the reliabilities of globalization is working to establish itself in the international arena: With the movement toward globalization, the federal government increasingly participates in the promulgation of private international law conventions that, upon ratification, become preemptive federal law. This disrupts the law in areas such as commercial and family law that historically have been regulated at the state level and that have been the subject to numerous uniform and model laws promulgated by the Conference. The states have a profound interest in, to the extent practicable, having international conventions mesh with their existing laws, influencing the law’s development in other countries so that it is compatible with American legal concepts, and harmonizing their own laws with the laws of other countries.” See A. H. Boss, The Future of the Uniform Commercial Code Process in An Increasing International World, 68 Ohio State Law Journal 349, 401–2 (2007) (which cited a work published by Policy Position on International Activities, namely Uniform Activities E-NEWSLETTER (National Conference of Commissioners on Uniform State Laws), May, 2006. See also J. A. Puplava, E-Commerce: Challenges to Privacy, Integrity, and Security in a Borderless World: Use and Enforceability of E-Commerce Contracting: The State of Uniform Legislation Attempting to Regulate E-Commerce Transactions, 16 Michigan State Journal of International Law 153, 154 (2007). For further discussion on the need for harmonization of consumer law, see Cortés, supra note 1, at 16.

  43. 43.

    See Cortés, ibid., at 16.

  44. 44.

    The EU has a single market system and the EU consumer laws as the central laws governing the State Members. The coordination between the State Members and the domestic regulations relating to consumer protection operates within the line drawn by the EU laws, harmonizing their domestic regulations on consumer protection. This is not to say that the EU system is ideal for legal harmonization of consumer law. Nonetheless, it presents a good and clear example of a recent attempt in doing do.

  45. 45.

    See Poncibo, supra note 4, at 354.

  46. 46.

    See Chap. 5.

  47. 47.

    See ibid.

  48. 48.

    This principle was developed by the ECJ decision and it will be applied when there are no relevant rules at the EU level, allowing states to design the procedural rule and sanctions. See Case 45/76, Commet BV v Produktschap voor Siergewassen [1976] ECR 2043, para. 13. However, there is one procedural rule at the EU level which is the ESCP specifying the procedural rules relating to cross border small claims.

  49. 49.

    See J. Stuych, Public and Private Enforcement in Consumer Protection: General Comparison EU-USA, in F. Cafaggi, H. W. Micklitz (eds.), New Frontiers of Consumer Protection, The Interplay Between Private and Public Enforcement 63, 70 (2009). Today, consumer laws of the Member States are still broad and deep divergences. See e.g. T. Puurunen, Choice of Law in European Business-To-Consumer E-Commerce-A Trail Out of a Political Impasse, Zeitschrift fur Europäisches Privatrecht 789, 790 (2003) and C. Coteanu, Cyber Consumer Law and Unfair Trading Practices 155 (2005).

  50. 50.

    See Cafaggi and Micklitz, supra note 6, at 37. For detailed discussion on this difficult situation in EU (regarding the huge debate on the choice between the minimum or the maximum harmonization approach), see Poncibo, supra note 4, at 353.

  51. 51.

    See Article 11 of the UCPD, for example, requires that “member states shall ensure that adequate and effective means exist to combat unfair commercial practice to enforce compliance with the provisions of this directive in the interest of consumers”.

  52. 52.

    See ibid.

  53. 53.

    See G. Teubner, “Legal Irritants”: Good Faith in British Law or How Unifying Law Ends Up in New Divergences, 61 Modern Law Review 11–32 (1998). On a similar point, a study by K. Freund emphasized the role of interest groups such as politicians, traders and consumers, as well as the relevant institutional structures largely associated with the legal harmonization and foreign legal system transplants. See O. K. Freund, One Uses and Misuses of Comparative Law, 37 The Modern Law Review 1–27 (1974).

  54. 54.

    G. Teubner argues that the legal norms underlying the UCTD, for example, will be very divergent because the natures of institutional structures are very different between the two big countries, namely Germany and the UK. See Teubner, ibid.

  55. 55.

    See Chaps. 5 and 6.

  56. 56.

    See L. Antoniolli, Consumer Law as an Instance of the Law of Diversity, 30 Vermont Law Review 855–82 (2006).

  57. 57.

    The EU is now increasingly developing the relevant e-consumer protection laws and mechanisms. See Poncibo, supra note 4, at 369.

  58. 58.

    For further discussion on the different legal cultures, see N. S. Kim, Evolving Business and Social Norms and Interpretation Rules: The Need for a Dynamic Approach to Contract Disputes, 84 Nebraska Law Review 506, 531–40 (2005).

  59. 59.

    See e.g. W. van. Boom and M. Loos (eds.), Collective Enforcement of Consumer Law (2007), Cafaggi and Micklitz, supra note 6 and S. Wrbka, S. van Uytsel and M. Siems (eds.), Collective Actions: Enhancing Access to Justice and Reconciling Multilayer Interest? (2012).

  60. 60.

    One cannot deny that the different development of power, politics and diversity in different cultures may result in diverse approaches to consumer protection. Ideological diversity, different levels of stakeholder power, and different types of organizations all have an influence on the process of designing and implementing laws in each country. This makes legal harmonization relating to consumer protection an extremely difficult or even impossible task.

  61. 61.

    See M. Rutherford, Documents-only Arbitrations in Consumer Disputes, in J. Tackaberry and A. Marriott (eds.), Bernstein’s Handbook of Arbitration and Dispute Resolution Practice 638, 638–9 (2003). There seems to currently be a common international understanding of what types of trading practices should be regulated, controlled or even prohibited. See also K. J. Cseres, Enforcement of Collective Consumer Interests: A Competition Law Perspective, in W. van. Boom and M. Loos (eds.), Collective Enforcement of Consumer Law 125, 130, 168 (2007).

  62. 62.

    See Hill, supra note 6, at 358.

  63. 63.

    See K. Zweigert and H. Kötz, An Introduction to Comparative Law 546–7 (1992).

  64. 64.

    See Hill, supra note 6, at 358–9.

  65. 65.

    An example of a legal question is the cooling off period issue. If a consumer in the EU purchased a product from a US trader, he or she may expect to return the good within a certain period under the withdrawal right normally granted by the EU legislation, the law of the consumer’s domicile. Unfortunately, there is no such law in the US for some kinds of certain products. However, in the online context, it has previously been observed that, even though the US and Canada have no law relating to a withdrawal right, such a right is widely recognized in practice. This means the EU consumers are subject to minimal risk on such issue.

  66. 66.

    See Hill, supra note 6, at 358.

  67. 67.

    Some scholars seem to set the premise on the opinion that, if the law allows a consumer to sue in its own jurisdiction under a familiar national law, the burden of litigation in transactional disputes on consumers will be eradicated. This idea can be found in the EU law, the jurisdictional protection for consumers appears in the Brussels Regulation and the conflict of laws rule based on consumers’ interest is included in the Rome I Regulation. See Hill, supra note 6, at 128. Nevertheless, consumers in practice are not interested in exercising their right in accordance with the law. See Commission of the European Communities, Green Paper form the Commission, Legal Aid in Civil Matters: The Problems Confronting the Cross-Border Litigant 9.2.2000 COM (2000) 51 final (2000), available at eur-lex.europa.eu/LexUriServ/site/en/com/2000/com2000_0051en01.pdf (visited June 12, 2013).

  68. 68.

    See Hill, ibid., at 127–30.

  69. 69.

    See Study Centre of Consumer Law (Katholieke Universiteit Leuven), An Analysis and Evaluation of Alternative Means of Consumer Redress other than Redress Through Ordinary Judicial Proceedings (January 17, 2007), available at ec.europa.eu/consumers/redress/reports_studies/comparative_report_en.pdf (visited December 12, 2012).

  70. 70.

    See International Chamber of Commerce, Business to Consumer and Consumer to Consumer Alternative Dispute Resolution (ADR) Inventory Project (2002). However, this is not to say that there will be no chance for the third hand intervention in consumer disputes. If the direct negotiations fail, the third party then comes to assist with the settlement (e.g. online arbitration).

  71. 71.

    See European Commission, Evaluation of the Pilot Project on Use of European Consumer Complaint form for Consumer Disputes (2000), available at ec.europa.eu/consumers/redress/compl/cons_compl/acce_just13_en.pdf (visited December 12, 2012).

  72. 72.

    See Eurobarometer, Consumer Protection in the Internal Market (September, 2006), available at ec.europa.eu/public_opinion/archives/ebs/ebs252_en.pdf (visited December 12, 2012).

  73. 73.

    See Hill, supra note 6, at Chapter 9.

  74. 74.

    See ibid.

  75. 75.

    See I. Ramsay, Consumer Redress Mechanisms for Poor-Quality and Defective Products, 31 University of Toronto Law Journal 117, 129 (1981). See also H. L. Ross and N. O. Littlefield, Complaint as a Problem Solving Mechanism, 12 Law & Society Review 199–216 (1978).

  76. 76.

    However, one theoretical concept differently argues that the law still plays a significant role in bilateral negotiations, although it might not directly determine the consequence of the disputes. See S. Roberts and M. Palmer, Dispute Processes: ADR and the Primary Forms of Decision Making 114 (2006). “The terms of any settlement are a product of an assortment of the strengths and weaknesses of each party’s case; in cross border cases, these strengths and weaknesses include an assessment of the likely outcome of jurisdictional and choice-of-law questions if the case were to go to court.” See Hill, supra note 6, at 362. This picture of the negotiation process was initially referred by R. Mnookin and L. Kornhauser as “bargaining in the shadow of law” in divorce cases, see R. Mnookin and L. Kornhauser, Bargaining in the Shadow of the Law: The Case of Divorce, 88 Yale Law Journal 950–997 (1979). Nevertheless, it is likely to occur only if the litigation can possibly ensue if the bilateral negotiation fails. See H. Jacob, The Elusive Shadow of the Law, 26 Law & Society Review 565–90 (1992). See also B. G. M. Main and A. Park, The British and American Rules: An Experimental Examination of Pre-Trial Bargaining in the Shadow of the Law, 47 Scottish Journal of Political Economy 37–60 (2000). Unfortunately, litigation in transnational e-sales appears to be very rare, “that any threat of litigation (if there is no negotiation settlement) is almost entirely illusory.” Phrased differently, if the negotiation is not successful, there is no credible threat that consumers in e-sales will undertake an action through a more formal method. As a result, bargaining in the shadow of law may actually occur in transnational e-sales. See Hill, supra note 6, at 366. However, the bargaining in the shadow of law is not supported by any empirical evidence. In contrast, evidence suggests that social norms play a very important role in certain types of negotiation processes rather than the legal rules. See e.g. H. Jacob, The Elusive Shadow of the Law, 26 Law & Society Review 565–90 (1992).

  77. 77.

    See Hill, supra note 6, at 359–9.

  78. 78.

    Clearly, they provide protection in some degree when consumers purchase online. However, the previous chapters show that the designed protection may only be a novelty as consumers find that unfair business practices are prevalent in the online market because of the fast development of technology that makes it very difficult to vindicate their rights once infringed, especially in transnational e-sales. Thus, the past efforts may be of more symbolic and theoretical significance than of real practical value. See Chaps. 5 and 6.

  79. 79.

    See e.g. Cseres, supra note 61, at 130 and Eurobarometer, European Union Citizens and Access to Justice (October, 2004), available at ec.europa.eu/consumers/redress/reports_studies/eurobarometer_11-04_en.pdf (visited December 12, 2012).

  80. 80.

    One scholar suggests that it requires “the change of focus away from the idea of the vindication of rights on an individual basis through the courts and towards dispute avoidance on the collective basis and alternative dispute resolution”. See Hill, supra note 6, at 377.

  81. 81.

    See G. P. Calliess and P. Zumbansen, Rough Consensus and Running Code, A Theory of Transnational Private Law 152 (2010).

  82. 82.

    The private ordering mechanisms can generally be divided into dispute avoidance and dispute resolution. This classification is similar to the division of ex ante and ex post mechanisms, which are based on the time of intervention. However, the dispute avoidance mechanisms include the resolution of the disputes at early stages without the full participation of consumers and traders in the settlement processes. See Cortés, supra note 1, at 59 and Hill, supra note 6, at 47.

  83. 83.

    There are many types of dispute avoidance mechanisms for preventing cross border disputes at earlier stages and the following discussions are on those currently and prevalently utilized in e-sales.

  84. 84.

    See S. Panther, Non-Legal Sanction, in B. Bouckaert and G. De Greet (eds.), Encyclopedia of Law and Economics Vol. I 999–1028 (2000). Generally, the gathering and processing of information of the experienced consumers are usually costly because it is unorganized and widespread. See Calliess and Zumbansen, supra note 81, at 154. Fortunately, the e-communication allows for the first time the emergence of large scale consumer groups and a shared experience network at low cost. The establishment of feedback mechanisms in the information technology sector has brought about a better organized and formalized reputation tool. See C. Dellarocas, The Digitization of Word of Mount: Promise and Challenges of Online Feedback Mechanisms, 49 Management Science 1407–24 (2003).

  85. 85.

    Generally, consumers do not engage in transactions with traders who are likely to be involved in opportunistic behavior or are well-known as bad traders. See E. A. Posner, Law and Social Norms (2000).

  86. 86.

    See M. E. Schneider and C. Kuner, Dispute Resolution in International Electronic Commerce, 14 Journal of International Arbitration 5, 26 (1997).

  87. 87.

    See ibid.

  88. 88.

    See ibid.

  89. 89.

    See also Hill, supra note 6, at 249.

  90. 90.

    See L. Edwards and A. Theuniseen, Creating Trust and Satisfaction Online: How Important Is ADR?: The UK eBay Experience, 5 Web Journal of Current Legal Issues (2007), available at webjcli.ncl.ac.uk/2007/issue5/edwards5.html (visited June 12, 2013).

  91. 91.

    Prior to entering into the eBay market forum, sellers and buyers have to register their information online to become members and the databases are available for sellers and buyers to mutually assess each other. See Calliess and Zumbansen, supra note 81, at 154.

  92. 92.

    See ibid.

  93. 93.

    See Deloitte and Touche, Biz Report (2007) and OECD, OECD Conference on Empowering E-Consumers, Strengthening Consumer Protection in the Internet Economy, Background Report, Washington D.C., 8–10 December 2009 (2009), available at oecd.org/ict/econsumerconference/44047583.pdf (visited January 12, 2013).

  94. 94.

    See OECD, ibid.

  95. 95.

    “Trustmarks offer a functional equivalent to trademarks in that both bundle information on a supplier in an easily accessible form and, thus, replace individual investigations into its reputation.” See Calliess and Zumbansen, supra note 81, at 154.

  96. 96.

    See Cortés, supra note 1, at 62.

  97. 97.

    See also Hill, supra note 6, at 51, 307.

  98. 98.

    See ibid.

  99. 99.

    Trustmarks assist consumers in distinguishing traders, who hold trustmark seals, as having high standards in their trading practices and also give the significant benefit to the Small and Medium Enterprises who do not have widely recognized brands and have difficulties in establishing their own trademark in the e-market. See Calliess and Zumbansen, supra note 81, at 155 and Cortés, supra note 1, at 60, 63.

  100. 100.

    A trustmarks regime is usually aimed at addressing particular problems and it usually subject to debates within a nation as a means to protect privacy, security of payment, transparent policy (e.g. information, delivery, refund) and so on. See T. Wagemans, An Introduction to the Labeling of Websites, (2003) available at ec.europa.eu/information_society/activities/sip/archived/docs/pdf/reports/qual_lab_bkgd.pdf (visited December 12, 2012) and C. Spletter, The Significance of Trustmarks in B2C E-Commerce, LLM Thesis, University of Strathclyde (2003).

  101. 101.

    See Cortés, supra note 1, at 62.

  102. 102.

    See Better Business Bureau (BBB), Better Business Bureau, Start with Trust, available at bbb.org/online/consumer/default.aspx (visited January 12, 2013).

  103. 103.

    See ibid.

  104. 104.

    Many big brands are now joining and holding TRUSTe seals such as Microsoft, Yahoo, AOL and Amazon. See P. Balboni, Trustmarks in E-Commerce: The Value of Web Seals and the Liability of their Providers 36 (2009).

  105. 105.

    See Cortés, supra note 1, at 62.

  106. 106.

    See ibid., at 63.

  107. 107.

    See Trusted Shops, Trusted Shops Guarantee, available at trustedshops.co.uk/ (visited January 12, 2013).

  108. 108.

    See ibid.

  109. 109.

    Trusted Shops also requires the participating traders to settle consumer disputes through an alternative dispute resolution and thus far there have been no court cases between consumers and Trusted Shops traders. Furthermore, the set criterion is regularly updated by the advisory board comprising, among others, traders, consumer protection agencies and scholars. See Calliess and Zumbansen, supra note 81, at 156.

  110. 110.

    See ibid.

  111. 111.

    See I. Ramsay, Consumer law and Policy, Text and Materials on Regulating Consumer Markets 153 (2007).

  112. 112.

    See Calliess and Zumbansen, supra note 81, at 157.

  113. 113.

    Revocation of trustmark seals can be an effective sanction, having substantial effects and putting traders at a competitive disadvantage, only if such trustmarks have enough influence in the market. “Only economically successful trustmarks providers can afford to lost vendors as clients”. This means that some trustmarks may not willing to withdrawal the trustmark seal from the traders who fails to comply the set trading standard because the trustmark operation is relied on their membership fee. See ibid.

  114. 114.

    It has been suggested that these can be well achieved not only by a certain period of time (for recognition of branding) but also with financial assistance from public authorities.

  115. 115.

    This may be because traders have to bear the cost of distance delivery of the products and are under the risk of non-acceptance of the delivered product by consumers as well. However, there is an excepted circumstance (in some countries, namely, Japan and the Nordic countries) where the payment can be made upon the delivery of goods or services.

  116. 116.

    See Coteanu, supra note 49, at 31.

  117. 117.

    See Calliess and Zumbansen, supra note 81, at 160 and ibid., at 32.

  118. 118.

    See Calliess and Zumbansen, ibid.

  119. 119.

    See Visa, Rules for Visa Merchants-Card Acceptance and Chargeback, Management Guidelines (2006), available at uiowa.edu/~fustreas/visa_new_acceptance_merchant_responsibility.pdf (visited January 12, 2013) and Mastercard, Merchant Rules Manual, (December 12, 2012), available at mastercard.com/us/merchant/pdf/BM-Entire_Manual_public.pdf (visited January 12, 2013).

  120. 120.

    See J. Hörnle, Cross-Border Internet Dispute Resolution 39 (2009).

  121. 121.

    See Calliess and Zumbansen, supra note 81, at 160.

  122. 122.

    See Hörnle, supra note 120, at 42 and Calliess and Zumbansen, supra note 81, at 161.

  123. 123.

    PayPal seems to fill the existing gap of the chargeback system. See Calliess and Zumbansen, ibid.

  124. 124.

    The assistance deals with the two types of cases, where (1) the goods have never arrived and (2) where the goods significantly differ from the advertisement or description. PayPal, Help Center Answers, available at paypal.com/helpcenter/main.jsp;jsessionid=Q151LhgWG9yLRt1JfbDtTjB2yfvVjY0QG6VLNq2FC0yxFLQn5TzL!397506396?t=solutionTab&ft=homeTab&ps=&solutionId=203832&locale=en_US&_dyncharset=UTF-8&countrycode=RO&cmd=_help-ext&serverInstance=9002 (visited June 1, 2012). In 2002, PayPal was acquired by eBay and their services have expanded. For example, the money back-guarantee service has been promoted. This service enables eBay customers to receive up to US$ 1,000 in reimbursement in case of non-delivery or products not being as advertised or described. See Calliess and Zumbansen, supra note 81, at 161.

  125. 125.

    This number is according to the statement of Mr. Colin Rule, the PayPal’s Director of Online Dispute Resolution Practice. See Practice Ecommerce, Insights for Online Merchants, ‘Quick Query: PayPal Exec on Payment Disputes (April 7, 2008), available at practicalecommerce.com/articles/709-Quick-Query-PayPal-Exec-On-Payment-Disputes (visited March 10, 2013).

  126. 126.

    See Cortés, supra note 1, at 60.

  127. 127.

    However, the freezing payment can be done only if the trader has not yet withdrawn the payment and in such circumstances. PayPal will not be responsible for the consumer’s loss. See Clause 10 of the PayPal’s User Agreement, PayPal, User Agreement (January 10, 2013), available at cms.paypal.com/us/cgi-bin/?cmd=_render-content&content_ID=ua/UserAgreement_full (visited January 28, 2013).

  128. 128.

    See Escrow.com, Escrow.com Safeguarding Your Online Transactions, available at escrow.com (visited January 28, 2013).

  129. 129.

    “According to Escrow.com’ s terms of trade, after 60 days the matter is passed on to the American Arbitration Association to come to a binding decision. In the meantime, the involved parties are free to turn, for instance, to Square Trade, an online dispute settlement service provider to find an amicable decision.” See Calliess and Zumbansen, supra note 81, at 162–3.

  130. 130.

    In recent years, the notion that the technological communication employed to conclude e-contracts can be logically used to establish an alternative dispute resolution for settling disputes involving such contracts has received wide attention. In fact, this idea started in the mid 1990s. See D. G. Post, Anarchy, State, and the Internet: An Essay on Law–Marking up Cyberspace (1995), available at temple.edu/lawschool/dpost/Anarchy.html (visited January 12, 2013), M. C. Karanon, ADR on the Internet, 11 Ohio State Journal on Dispute Resolution 537–48 (1996) and F. A. Cona, Application of Online Systems in Alternative Dispute Resolution, 45 Buffalo Law Review 975–88 (1997).

  131. 131.

    See Calliess and Zumbansen, supra note 81, at 157–8 and W. Krause, Do You Want to Step Outside? An Overview of Online Alternative Dispute Resolution, 19 John Marshall Journal of Computer & Information Law 457, 460 (2001).

  132. 132.

    In other words, ODR merely replicates the main traditional forms of alternative dispute resolution and adapts them into the online environment through the transformative arms of technology. See Hill, supra note 6, at 277.

  133. 133.

    Generally, the main forms of alternative dispute resolution include; the first and second parties being the disputants, the third party being the neutral party such as the mediator or arbitrator. See E. Katsh and J. Rifkin, Online Dispute resolution 93–4 (2001). See also Hörnle, supra note 120, at 86.

  134. 134.

    These selected ODR providers discussed in this section seem to be more successful than the others in the online marketplace. An Australian study conducted in 2003 revealed that there were 42 ODR providers established between 1999 and 2000 but 19 of them have closed down. The reasons that some are more successful than others may be that their designed pages can be easily accessed in the online market, their trustmarks are recognized, or their ORD can be used for free or at a very low charge. See M. C. Tyler and D. Bretherton, Seventy-Six and Counting: An Analysis of ODR Sites, in A. R. Lodder, E. Clark, T. F. Gordon, E. Katsh, C. Rule, E. M. Thiessen, B. Verheij, D. N. Walton and J. Zeleznikow (eds.), Essays on Legal en Technical Aspects of Online Dispute Resolution 13–29 (2004).

  135. 135.

    See A. Lodder and E. Thiessen, The Role of Artificial Intelligence in Online Dispute Resolution, in E. Katsh and D. Choi (eds.), Online Dispute Resolution (ODR), Papers and Proceedings of the 2003 United Nations Forum on ODR (2003).

  136. 136.

    See Calliess and Zumbansen, supra note 81, at 158.

  137. 137.

    The software support system calculates a binding settlement sum “based on the arithmetic means of all offers and given that the final sum remains within a certain range.” See Calliess and Zumbansen, ibid., at 158. See also Hörnle, supra note 120, at 81–2.

  138. 138.

    See Cortés, supra note 1, at 65.

  139. 139.

    See ibid.

  140. 140.

    See J. Zissu, Cybersettle® RapidFund® System to Provide Attorney/Claimant Settlement Funds in Less Than 72 Hours (October 18, 2004), available at prnewswire.com/news-releases/cybersettler-rapidfundstm-system-to-provide-attorneyclaimant-settlement-funds-in-less-than-72-hours-74396727.html (visited January 12, 2013).

  141. 141.

    CyberSettle also jointly works with the American Arbitration Association (AAA) offering the twin alternatives of the ODR and ADR systems. The parties can initially enter into an automated negotiation made available by CyberSettle. If the negotiation is unsuccessful, they can opt for the ADR services (conciliation, mediation or arbitration) provided by the AAA. See Cortés, supra note 1, at 65.

  142. 142.

    The success may be because of the fact that it facilitates and encourages the parties to resolve disputes, and offers an easier, cheaper and faster way of communication. See ibid.

  143. 143.

    Negotiation, conciliation and facilitation are in fact different terms for mediation. See e.g. P. Jacobs, Mediation Now and Then, in M. P. Barbee, Newsletter Mediation, International Bar Association Legal Practice Division, July 2007, at 14.

  144. 144.

    See Cortés, supra note 1, at 66.

  145. 145.

    In doing so, the complaining party has to answer a web-based questionnaire that helps classify the claim type and identify possible solutions.

  146. 146.

    See Cortés, supra note 1, at 67 and Calliess and Zumbansen, supra note 81, at 159.

  147. 147.

    See Calliess and Zumbansen, ibid., at 158.

  148. 148.

    See Cortés, supra note 1, ibid., at 67.

  149. 149.

    See ibid.

  150. 150.

    See Calliess and Zumbansen, supra note 81, at 158.

  151. 151.

    See S. Abernethy, Building Large-Scale Online Dispute Resolution and Trustmark Systems’ Proceedings of the UNECE Forum on ODR 2003 (2003), available at mediate.com/Integrating/docs/Abernethy.pdf (visited 12 January 2013) and O Rabinovich-Einy, Technology’s Impact: The Quest for A New Paradigm for Accountability in Mediation, 11 Harvard Negotiation Law Review 253, 258 (2006).

  152. 152.

    See Hill, supra note 6, at 285.

  153. 153.

    The service under the agreement allowed eBay customers to use an assisted negotiation provided at SquareTrade without any charge and an assisted mediation for only US$15. See Calliess and Zumbansen, supra note 81, at 159. After the expiration of such agreement, eBay established its own system to assist its members in settling claims and problems. eBay, Resolution Center, available at resolutioncenter.ebay.com (visited February 12, 2013). During SquareTrade’ existence, it has been shown that online mediation can be an effective option for settling consumer claims. According to SquareTrade, it could manage those claims through technology allowing meditators to settle a wide range of disputes from low to medium value consumer claims in an economically efficient way. In other words, small value consumer cases can be practically handled by using a simple, convenient, and inexpensive process where the assisted mediation is conducted via e-mails or web pages. See Abernethy, supra note 151, at 2.

  154. 154.

    As previously discussed in Chaps. 5 and 6, an arbitration clause is usually allowed under the US law, but the situation differs in the EU where it is legally prohibited. Due to this uncertainty on the legally binding effect of an arbitration clause, online arbitration may be considered an unsuitable mechanism for transnational consumer disputes. See M. S. Martin, Keep It Online: The Hague Convention and the Need for Online Dispute Resolution in International Business-to-Consumer E-Commerce, 20 Boston University International Law Journal 125–53 (2002).

  155. 155.

    See E. Katsh, The New Frontier Online ADR Becoming a Global Priority (2006), available at umass.edu/cyber/katsh0300.PDF (visited March 5, 2013).

  156. 156.

    See CIArb, The Professional Home of Dispute Resolution-Worldwide, available at arbitrators.org/WebTrader/index.htm (visited November 13, 2012).

  157. 157.

    See ibid.

  158. 158.

    See ibid.

  159. 159.

    This is to guarantee that the designed model corresponds to the EU law, which specifies that an arbitration clause that binds consumers is legally void, by ensuring the fairness of arbitration as an alternative dispute settlement. See ibid.

  160. 160.

    Private ordering mechanisms can work at two levels. They can be employed as a dispute avoidance mechanism, limiting possible disputes arising from B2C e-sales or as a dispute resolution mechanism with the assistance of neutral parties, for resolving consumer disputes.

  161. 161.

    Private ordering, which allows the use of technological communication, provides meaningful channel to overcome great distances by providing easy and quick communications, reducing costs, time and potential delays, and making dispute settlement processes faster, cheaper and easier to access. See G. Kaufmann-Kohler and T. Schultz, Online Dispute Resolution: Challenges for Contemporary Justice 76 (2004), R. Gordon, The Electronic Personality and Digital Self, 56 Dispute Resolution Journal 8, 10–1 (2001) and E. Clark, G. Cho and A. Hoyle, Online Dispute Resolution: Present Realities, Pressing Problems and Future Prospects, 17 International Review of Law, Computer and Technology 7, 9 (2003).

  162. 162.

    Consumers are often subjected to clauses indicating a foreign location or venue for any dispute resolution because of the emergence of global e-contracting as previous discussed. It is suggested that a fair arbitration clause should indicate the location of the hearing “at a location which is reasonably convenient to both parties”. See American Arbitration Association, Consumer Due Process Protocol (April 17, 1998), available at docs.google.com/viewer?a=v&q=cache:It1QnKtSQV8J:www.adr.org/cs/idcplg%3FIdcService%3DGET_FILE%26dDocName%3DADRSTG_005014%26RevisionSelectionMethod%3DLatestReleased+consumer+due+process+protocol&hl=ja&gl=jp&pid=bl&srcid=ADGEEShaF6NUeTZI_Y9dhn29PxICidhaXZYx4wIFBQ-lkMVd62rjC4I80LONhZNxqLx8RNEfONpynKFry7Q17RcLw4zR_NKc7_MZlPLH8ntZ98Ftz-Zl1G_NIOuByuI2B6q84cupFzI-&sig=AHIEtbQCDjAOsJS-3GCGppE_M2okLX6WkQ (visited January 4, 2013).

  163. 163.

    See L. M. Ponte and T. D. Cavenagh, Cyberjustice, Online Dispute Resolution for E-Commerce 24 (2005).

  164. 164.

    See e.g. Kaufmann-Kohler and Schultz, supra note 168, at 23, A. Shah, Using ADR to Resolve Online Disputes (2004), 10 Richmond Journal of Law & Technology 20, 25 (2004) and B. Baumann, Electronic Dispute Resolution (EDR) and the Development of Internet Activities, 52 Syracuse Law Review 1227, 1233 (2002).

  165. 165.

    See Hörnle, supra note 120, at 89.

  166. 166.

    See C. Rule, Online Dispute Resolution for Business 66, 72 (2002), R. Gordon, supra note 161, at 10–11 and Clark, Cho and Hoyle, supra note 161, at 9.

  167. 167.

    See R. L. Wissler, Mediation and Adjudication in the Small Claims Court: The Effect of Processes and Case Characteristics, 29 Law and Society Review 323, 324 (1995).

  168. 168.

    Please note that the applicable law can be an issue in online arbitration because its decisions are of a similar nature to judicial judgments, with strict losing and winning parties. For detailed discussion on the applicable law issues in online arbitration, see Hörnle, supra note 120, at 63–6.

  169. 169.

    See Clark, Cho and Hoyle, supra note 161, at 9. The divergent approaches of private international law in different countries, which have been discussed in the previous part, may also add some difficulties.

  170. 170.

    Some predict that private ordering mechanisms, especially online dispute resolution, “will grow in the coming years due to its ability to transcend borders and escape the constraints of other legal processes less-suited for resolution of e-commerce and international disputes.” See e.g. International Institute for Conflict Prevention & Resolution, More More More: CPR Meeting Highlights, 27 Alternative to High Cost Litigation 125, 128 (2009) and A. J. Schmitz, “Drive-Thru” Arbitration in the Digital Age: Empowering Consumer through Binding ODR, 62 Baylor Law Review 178, 182 (2010).

  171. 171.

    See Hörnle, supra note 120, at 90.

  172. 172.

    See Chaps. 5 and 6.

  173. 173.

    The traditional unaddressed dimensions of consumers’ access to justice according to the Framework (Section 4.14 Recognition of consumer rights and their roles in the market) as a result will be positive.

  174. 174.

    See R. Baldwin, The New Punitive Regulation, 67 Modern Law Review, 351–83 (2004).

  175. 175.

    See Calliess and Zumbansen, supra note 81, at 163. However, it should be noted that there are some concerns relating to consumer rating and reviewing systems as they can be negatively manipulated by some group of market players, leading to a reduction of their value. See OECD, supra note 93, at 26.

  176. 176.

    See Hill, supra note 6, at 361.

  177. 177.

    See C. Schulze and J. Baumgartner, Don’t Panic! Do E-Commerce, A Beginner’s Guide to European Law Affecting E-commerce (2001), available at signelec.com/content/download/dont_panic.pdf (visited March 12, 2012). See also M. Schellekens and L. van. der Wees, ADR and ODR in Electronic Commerce in J. E. J. Prins, P. M. A. Ribbers, H. C. A. van Tilborg, A. F. L. Veth and J. G. L. van der Wees (eds.), Trust in Electronic Commerce 271, 299 (2002).

  178. 178.

    See Hill, supra note 6, at 361.

  179. 179.

    See Hill, ibid. The author refers to the study of A Best and A. R Andreasen, Consumer Response to Unsatisfactory Purchases: A Survey of Perceiving Defects, Voicing Complaints, and Obtaining Redress, 11 Law and Society Review 701,712–3 (1977).

  180. 180.

    See Hill, supra note 6, at 361.

  181. 181.

    The term socio-legal bond is used in a very board scope. It includes not only legal boundaries according to contractual relationships but all kinds of social obligations and responsibilities established by market forces (even though they are not required or described in laws). This includes private ordering regimes. See Calliess and Zumbansen, supra note 81, at 160.

  182. 182.

    They are the main stakeholders in the combined approach. The traders (including the third parties who offer private ordering services) will establish their codes of conduct under the supervision of, and monitoring by, the competent state authority to fulfill what consumers’ need as indicated by their signals given through feedback and online reputation systems.

  183. 183.

    Cristina Poncibo proposed a so called hybrid approach. This method will help to understand the consumers’ problems “as a mix of government regulation, market forces and self-regulation”. See Poncibo, supra note 4, at 362.

  184. 184.

    See Ramsay, supra note 75, at 127 and Coteanu, supra note 49, at 90.

  185. 185.

    Today many countries and supranational bodies have shown their enthusiasm in establishing an environment where consumers can be confident of fair trading practices and have an effective mechanism for resolution of their dissatisfactions and obtaining redress relating to e-transactions. However, such efforts have been very slow because in the past several initiatives have produced very little value in practice.

  186. 186.

    See Chap. 4. It is likely to achieve the objectives of various or even all of the dimensions of the framework without creating substantial negative effects on other dimensions.

  187. 187.

    See P. Gilliero, From Face-to Face to Screen-to Screen: Real Hope or True Fallacy?, 23 Ohio State Journal on Dispute Resolution 301, 325 (2008).

  188. 188.

    See M. C. Tyler and M. McPherson, Online Dispute Resolution and Family Disputes, 12 Journal of Family Studies 1, 11 (2006). Some argue that this challenge may be compensated in some particular ways with the use of technology that replicates face-to-face communication such as video conference or other online technological contacts. See e.g. Clark, Cho and Hoyle, supra note 161, at 14. But the technological tools may not be able to completely mitigate or substitute for face to face interaction. For instance, body gestures may not be correctly utilized as much as those in a face-to-face meetings when there is a lack of physical contact. Technology is not only an important factor but neutral third parties also have an important role to play in delivering meaningful messages and establishing trust between parties. It is suggested that the training for neutral third parties is necessary. See Cortés, supra note 1, at 58. Nevertheless, there is an argument that distance communications may be advantageous for dispute resolution by cooling down the angers of the parties as previously mentioned. In addition, the absence of face-to-face interaction may make the parties better off as it avoids possible biases based on sex, physical appearance, religion or nationality. In this regards, the use of asynchronous communication allows parties to truly self-represent without unfair favors or prejudices. See L. J. Gibbons, R. J. Kennedy and J. M. Gibbs, Cyber-Mediation: Computer-Mediated Communications Medium Messaging the Message, 32 New Mexico Law Review 27, 27, 44 (2002) and Rule, supra note 166, at 68.

  189. 189.

    This imbalance situation is sometimes called the “digital divide”. See F. Senekal and K. Benyekhlef, Groundwork for Assessing the Legal Risk of Cyberjustice, 7 Canadian Journal of Law and Technology 41, 54–6 (2009).

  190. 190.

    See also T. D. Halket, The Use of Technology in Arbitration: Ensuring the Future is Available to Both Parties, 81 St. John's Law Review 269, 305 (2007).

  191. 191.

    A private ordering scheme may be operated by three different types of organization: private bodies, trade cooperatives or associations, and consumer organizations. For example, a Trustmark regime is now operating by the three different types of bodies. These include private entities (such as SafeBuy and WebTraderUK of the UK), commercial associations (such as ABTA) and consumer organizations (such as the Better Business Bureau of the US). See Hill, supra note 6, at 296. In addition, these three bodies may involve two different systems. The first system may be totally private, where the code owners are a private body formulating the code of practice and running the scheme. In the second system, a governmental or quasi-governmental agency may be involved in the scheme operation by approving or promoting relevant codes of practice designed by a private body. See e.g. Hill, supra note 6, at 290, 297 and OECD, Legal Provisions Related to Business-to-Consumer Alternative Dispute Resolution in Relation to Privacy and Consumer Protection (July 2002), available at oecd-ilibrary.org/science-and-technology/legal-provisions-related-to-business-to-consumer-alternative-dispute-resolution-in-relation-to-privacy-and-consumer-protection_233318385765 (visited January 12, 2013).

  192. 192.

    For example, a 2002 report indicated that there were over 25 different approval seals and logos for e-transactions across Europe. See E. Delgado, E-Commerce and Trustmarks: Results from SATURN (2002), available at hosteddocs.ittoolbox.com/Delgado022004.pdf (visited January 12, 2013).

  193. 193.

    See also M. Doyle, K. Ritters and S. Brooker, Seeking Resolution: The Availability and Usage of Consumer-to Business Alternative Dispute Resolution in the United Kingdom (January 2004), available at ncc.org.uk/protectingconsumers/seeking_resolution.pdf (January 3, 2010).

  194. 194.

    Additionally, the imbalance of power between traders and consumers (e.g. technological ability, information, etc.) seems to discourage consumers from trusting private ordering regimes. Many academic works express concern about the transparency issue in ODR. See e.g. Cortés, supra note 1, at 78, 79, Coteanu, supra note 49, at 94–8. For a detailed discussion on fair and due process in ODR, see Hörnle, supra note 120.

  195. 195.

    Many governments are not willing to spend public funds to support the development of private ordering mechanisms. An exception is ECODIR (Electronic Consumer Dispute Resolution) which is funded by the official authorities, namely the European Commission and the Irish government.

  196. 196.

    See Hörnle, Online Dispute Resolution, in J. Tackaberry and A. Marriott (eds.), Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (2003), at 779–835 and See Hill, supra note 6, at 282–3.

  197. 197.

    A number of studies confirm that many ODR services charge service fees exceeding the amounts of typical consumer disputes. The cost charged by the automated settlement system is not always well received by consumers. For instance, SettlementOnline requires 300 US dollars for each claim, whereas CyberSettle costs a minimum of 100 US dollars, depending on the amount of the claim. See SettlementOnline, Settlement Online Pilot Program Proposal, available at settlementonline.com/Proposal.html (visited March 1, 2013) and Cybersettle, Cybersettle Online Settlement and Payment Resolution, available at cybersettle.com/ (visited March 1, 2013). In addition, a 2001 study concluded that thirteen out of twenty nine ODR providers provided dispute settlement services for small value consumer disputes with free or affordable rates. Consumers International Organization, Disputes in Cyberspace in 2001: Update of ODR for Consumers in Cross-Border Disputes (November 26, 2001), available at consumersinternational.org/media/304196/disputes%20in%20cyberspace%202001.%20update%20of%20online%20dispute%20resolution%20for%20consumers%20in%20cross-border%20disputes.pdf (visited January 2, 2013) and Consumers International Organization, Disputes in Cyberspace: Online Dispute Resolution for Consumers in Cross-Border Disputes-an International Survey (December 2000), available at consumersinternational.org/media/304925/disputes%20in%20cyberspace-%20online%20dispute%20resolution%20for%20consumers%20in%20cross-border%20disputes%20-%20an%20international%20survey.pdf (visited December 12, 2012) and J. W. Goodman, The Pros and Cons of Online Dispute Resolution: An Assessment of Cyber-Mediation Websites, 2 Duke Law and Technology Review 1–16 (2003).

  198. 198.

    This is especially true in ODR services. See e.g. Consumers International Organization, ibid., OECD, Recommendation on Consumer Dispute Resolution and Redress 23 (2007) and D. Gawith, Non Litigation-Based Redress for International Consumer Transaction is Not Cost Effective-A Case for Reform?, 3 Macquarie Journal of Business and Law 115–50 (2006).

  199. 199.

    One of the main difficulties of private ordering regimes is that they have not yet achieved the critical mass of utilization, not because they are not useful or too costly, but rather because the consumers not being aware of their existence. See also United Nations, United Nations Conference on Trade and Development, E-Commerce and Development Report 2003, Chapter 7 Online Dispute Resolution: E-Commerce and Beyond (2003), available at unctad.org/en/Docs/ecdr2003ch7_en.pdf (visited December 1, 2011) and Hill, supra note 6, at 295.

  200. 200.

    A large number of consumers, including those that are well educated, are not likely to be aware of the codes of conduct and the various and fragmented associated private ordering schemes. In addition, it has been claimed that even those who are aware of the available mechanisms, do not trust or have confidence in the private ordering as a tool for reaching a satisfactory solution for problems in B2C e-sale transactions. See e.g. Eurobarometer, European Union Citizens and Access to Justice (October 2004), available at ec.europa.eu/consumers/redress/reports_studies/eurobarometer_11-04_en.pdf (visited November 12, 2012) and Cortés, supra note 1, at 78. For example, some evidence indicates a limited success of ODR in the e-market as some pioneering ODR service providers were unable to survive and closed down their operations in recent years. One reason attributable to this unsuccessful experience is the lack of consumers’ awareness and understanding over the ODR concept and procedure. See e. g. Hill, supra note 6, at 298 and Coteanu, supra note 49, at 103–5.

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    Sutatip Yuthayotin

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Yuthayotin, S. (2015). Transnational B2C E-Commerce: Legal Harmonization and the Need for a “Second Best Option”. In: Access to Justice in Transnational B2C E-Commerce. Springer, Cham. https://doi.org/10.1007/978-3-319-11131-5_7

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