Hong Kong University LawTechTalk Resolution of Ecommerce Disputes Hong Kongs role

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Hong Kong UniversityLawTechTalkResolution of
E-commerce Disputes Hong Kongs role

• 18 October 2002 ( 1.00 pm)
• KK Leung Building, Room 425
• University of Hong Kong

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Outline of the Presentation

• General overview of E-commerce
• Matters to consider in relation to E-commerce
• First time shopping online
• Ten basic rules to observe when shopping online
• Concerns with E-commerce
• Addressing the concerns
• Settling online disputes- the traditional way
• Common approaches to settling online disputes
• Advantages of online Arbitration
• Issues and Concerns
• Various dispute resolution mechanisms in the
  market place
• Online dispute resolution process -the Hong Kong
  approach
• The way forward

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Overview of E-commerce

• The number of people in Hong Kong who use the
  Internet stands at 2.08 million. ACNielsen
• The use of Internet Banking in Hong Kong has
  grown by 67 per cent to 618,000, up from 248,000
  from the end of 2000. SCMP 28 May 2002
• The number of people in China who use the
  internet stands at 33.7 million as at December
  2001. CNNIC
• Shanghai has the second-highest number of people
  with at home access to the Internet in the world.
  Wall Street Journal 22 April 2002
• The Boston Consulting Group reports that the
  transaction value of B2B e-commerce is expected
  to reach 2 trillion by 2003 with an additional
  US 780 billion in purchases made over private
  networks using EDI.

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Overview of E-commerce

• eBay reported record net online transaction
  revenues which exclude revenues from third party
  advertising and end-to-end services, of US
  213.7 million (first quarter of 2002) ,
  representing 65 year-over-year growth from US
  129.7 million reported in the first quarter of
  2001.
• Despite a decrease in advertising revenues, eBay
  expects that net revenues for the year 2002 will
  be in the range of US 1.05 to 1.1 billion.
• United States Census Bureau reported that in the
  first quarter of 2001, US 765,227 million of
  Retail Sales were recorded of which US 6,994
  million relate to E-commerce. This compares with
  US 5240 million in the first quarter of 2000, an
  increase of 25 .

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Overview of E-commerce

• 21,392,051 people are online in the UK.
• 66 via home computer, 29 via work computer and
  4 via mobile phone. The other 1 use a PDA.
• 356m annual turnover of Tesco.com, the biggest
  online supermarket operator in the world.
  Covering 95 of the UK population, it has
  delivered to over a million homes.
• 11.5m turnover of Lastminute.com in its
  half-year results to the end of March, compared
  to 7m last year, while pre-tax losses were
  significantly down, from 29.7m last year to
  19.8m this time around. The travel site hit
  operational profitability in the UK and France
  three months ahead of schedule.

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Matters to consider in relation to E-commerce

• Users Issues
• Privacy
• Security and Reliability
• Authenticity, Certification and Electronic
  Signatures
• Consumer Protection and Confidence
• Consumer Rights
• Technological Issues

• Taxation and Payment Issues
• Domestic Taxation
• Practical aspects of collecting Tax Revenue
• Electronic Payment Systems
• Legal Issues
• Jurisdiction
• Intellectual Property Protection
• Contract Law
• Domain Names
• Desirability of Internet Governance
• Civil and Criminal Responsibility
• Dispute Resolution Mechanisms

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First time shopping online ?

• How do you find what you want ?
• How do you compare prices ?
• How do you know whether you can trust a site ?
• When is it safe to give your credit card details
  online ?
• What are your rights ?
• How long should it take for the goods to arrive ?
• And what should you do if something goes horribly
  wrong ?

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Ten basic rules to observe when shopping online

• Finding the products you want portals.
• Getting the lowest price www.winshare.com /
  Copernic Shopper.
• Finding online shops you can trust TRUSTUK a
  non-profit organization endorsed by the UK
  Government to enable consumers to buy online with
  confidence.
• Ensuring your details are secure Security
  Logos, SSL and Password Managers.
• Tracking your order online.
• Returning unwanted goods.
• Settling online disputes.
• Getting more from online auctions.
• Paying for goods in new ways.
• Receiving your goods safely.

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New Rules for Selling online in the United Kingdom

• UK law has been brought into line with European
  directives on electronic commerce with the
  introduction of the Electronic Communications
  2002 Act. ( took effect on August 21, 2002)
• The rules cover the provision of information,
  electronic marketing and forming contracts. The
  essentials are that customers must be able to
  read the codes of conduct relevant to their
  order, unsolicited commercial e-mail is clearly
  labelled as such, and that discounts and
  promotions are labelled and easy to find.
• Website will have to change to comply with the
  new Act. (23 October 2002)
• The new EC directive still has grey areas that
  are wide open for debate or interpretation,
  particularly around what information advertisers
  have to put on their advertising and other
  promotional communications.

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The Basics of Compliance of the UK Electronic
Communications 2002 Act

• Provide full name and contact details on the
  website, even if people can only buy
  electronically.
• Put VAT number and membership of any trade
  associations to which seller belongs on the site.
• Make sure prices, sales taxes and delivery costs
  are clear.
• Ensure customers understand the contracts and
  when they have committed to a purchase.
• Send email acknowledgment of orders.
• Let customers check orders before placing them.
• Make sure the terms and conditions are clear and
  that customers can store them.

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Concerns with E-commerce

• Many organizations have studied and identified
  the concerns of consumers in relation to online
  transactions
• See http//www.consumersinternational.org/campaig
  ns/index.html
• Typical concerns include
• Lack of confidence in online financial
  transactions -possible misuse of debit and
  credit cards
• Internet fraud Almost HK 22 million was lost
  to cyber criminals compared with HK 3 million in
  2000, even though the overall number of Internet
  crimes fell from 368 to 235. as reported in the
  SCMP on 9 April 2002
• Non-delivery or late delivery of goods
• Hidden costs, such as VAT, duties, delivery
  charges, postage and packing
• No clear guide to the sellers rules and
  procedures
• Lack of independent certification of website
  policies and practices
• Concerns about the unrestricted or hidden
  collection of personal data a general failure to
  protect the consumers privacy
• No clear guidance on how to lodge a complaint or
  how disputes are to be resolved if they occur
• Lack of available, plain language information.

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Addressing the concerns

• The need for increased consumer education.
• Disclosure by e-Merchants and other stakeholders.
  Refer to Consumers International
  report Should I Buy? Shopping Online 2001 An
  International Comprehensive Study of Electronic
  Commerce
• Adoption of internationally recognized best
  practices. In September, 2000,
  the United Kingdom company Clicksure examined
  business websites in Europe and the United States
  focusing on privacy, security, website
  information, transaction management, quality and
  monitoring and concluded that there was a clear
  failure to measure up to international recognized
  standards.
• Use of recognized Trustmarks and codes of conduct
  by e-Merchants. WebTrust Hong Kong Society of
  Accountants and Hong Kong International
  Arbitration Centre
• The need to establish a formal means of on-line
  preventative and final resolution of disputes.
• Establishment of a Global entity with the mandate
  of establishing online standards and guidance in
  E-commerce business and regulatory affairs.

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Settling online disputes -the traditional way

• Avoidance
• Negotiation
• Mediation
• Adjudication
• Arbitration
• Litigation
• Violence

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Common approaches to settling online disputes

• Complain to the site.
• Complain to the Boss if the customer service
  officer offers to do nothing.
• Complain to the Kitemark.
• Follow the Kitemark complaints procedure.
• Complain to the Press.
• Complain online.
• The last resort - revert to costly litigation in
  the courts ? But which court or courts should
  you file the complaint?

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Advantages of online Arbitration

• Convenient for those with access to the Internet
  and saves on travel and hotel costs.
• Disputes have the potential to be resolved more
  quickly.
• Delays associated with waiting for paper forms to
  be received and processed are eliminated in steps
  of registering a complaint, appointing an
  arbitrator and serving other parties with the
  complaint.
• It has been suggested that the physical
  separation of the parties created psychological
  distance, reducing emotional hostility. This may
  help the parties focus on the substantive issues,
  rather than the proximity of the other.
• Reaches a larger population, whereby everyone has
  the chance of being heard and justice can be
  affordable to all.
• Wider access to qualified and skilled
  Experts/Neutrals/Arbitrators.

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Issues and Concerns

• Will online notice of the commencement of the
  proceedings constitute adequate notice.
• Can notice of the time and place of any hearing
  be given effectively online.
• May the parties be required to submit all
  evidence, including documents electronically.
• How does one ensure the authenticity of and
  integrity of documents, electronically.
• Will communication of the award to the parties
  electronically be considered adequate
  communication.
• How are the arbitrators to sign such an award.
• Maintaining standards and quality of the
  Arbitration process.

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Issues and Concerns

• Accountability and impartiality of neutrals and
  arbitrators.
• Confidentiality of information gathered during
  the Arbitration process.
• Will national courts recognize awards rendered
  online.
• For the purposes of statutes and treaties such as
  the New York Convention, where will an online
  arbitration take place, and where will the award
  have been made.
• If the arbitration stems from an online contract
  containing an arbitration provision or an online
  submission agreement, will such an agreement be
  considered to be in writing.
• How is an online agreement to be signed to meet
  the requirements of various national statutes and
  the New York Convention.

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Various dispute resolution mechanisms

• ClickNSettle www.clicknsettle.com
• Cybersettle www.cybersettle.com
• NovaForum www.novaforum.com
• The On-line Ombudsman Office www.ombuds.org
• Online Resolution www.onlineresolution.com
• Squaretrade www.squaretrade.com
• WebAssured www.webassured.com
• WordBond www.wordandbond.com

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Asian Domain Name Dispute Resolution
CentreADNDRC

• Website address www.adndrc.org
• Joint venture between HKIAC and CIETAC with
  Tradelink as our technology partner. ( Designed
  and developed in Hong Kong using Hong Kong talent
  )
• A totally online system for the resolution of top
  level domain name disputes. ( can be adapted
  relatively easily to handle online transaction
  disputes technology in place )
• Four organizations approved around the world
  ADNDRC, CPR, National Arbitration Forum and WIPO.
• The only provider in Asia.
• With injected resources Hong Kong could be the
  pioneer in this form of dispute resolution. The
  timing is right and to succeed we must act
  quickly and collectively to capture the Asian
  market ( by feeding other peoples unwanted
  disputes to Hong Kong, creating inward
  investment).

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The way forward

• Online Arbitration represents an interplay of
  technical, human, legal, economic and policy
  factors. It can open doors to many people who
  would not otherwise be able to seek redress for
  their grievances. Provided the key elements of
  online redress are adhered to-
• Independence impartiality of the arbitrators
• Transparency clearly laid down rules and
  procedures
• Visibility publicity is needed
• Affordability
• Timely
• Security of Information
• Competent body to administer the disputes
• Emergent technology over the next few years will
  reduce technical barriers by providing full
  interactivity using high quality media
  integrating visual, audio and text formats, along
  with facilitative software at relatively low
  cost. All of which helps make online dispute
  resolution affordable at a much reduced cost to
  the consumer.
• Integrity and effectiveness are the keys to
  success without them online dispute resolution
  would lose creditability and would be a step
  backwards towards creating a global trading
  platform that all would come to trust and reply.
• The adherence to an international recognized
  standards for e-business best practices is
  fundamental to the success of a companys long
  term survival in this competitive global market
  place.

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Conclusion

• As the aftershock of the dotcom crash dies away,
  the
• business potential of the internet is returning
  and its more
• than just increasing sales. It can also cut your
  costs and
• expand your customer relationship management.
• Nevertheless preventative measures to redress
  difference
• must be put in place to maintain this
  relationship for years
• to come. As John F. Kennedy stated
• World Peace, like community peace, does not
  require that
• each man love his neighbor it requires only
  that they
• live together with mutual tolerance,
  submitting their
• disputes to a just and peaceful settlement.

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Questions

• Thank you for patiently listening should you have
  any questions please feel free to either discuss
  them now
• or
• you may contact me at a later date at
• christopher_at_hkiac.org
• Tel [phone] Fax [phone]
• www.hkiac.org
• Hong Kong International Arbitration Centre
• 38th Floor, Two Exchange Square, Central, Hong
  Kong SAR.
• Thank You