that predate the current technological development. She discusses examples of
private ordering within the diamond and cotton industries which have both
created their own systems of private law complete with institutions for dispute
resolution and enforcement. Both of these industries rely on their own reputationbased private legal systems that are considered superior to the public legal system
by the members of the industries.
29
Countless other examples of past private regimes can be found in the medieval
lex mercatoria with its market courts,
30 in the European trade companies
exercising sovereign power in the colonies,
31 and in the Sicilian Mafia,
32 among
others. This is to say that the phenomenon of private governance is not new
either within the legal system or outside it.
33 Noted private enforcement has
much in common with older models of private governance, as all of them answer
to the need of governance in situations where public governance does not exist or
otherwise does not act.
However, there are differences between these old and new instances of private
governance. Firstly, new models of private governance are no longer limited to
offshore colonies or foreigners but are expanding to the core areas of sovereignty,
to the nation-state’s territorial jurisdiction, and to the monopoly on violence
within its own borders. In other words, private enforcement is bringing new
players to a field that had previously belonged mostly to public institutions. For
low-intensity disputes that do not pass the threshold of costs and time to access
public courts, private ordering and enforcement is becoming the mainstream, if not
the only, option. Also, private enforcement, as it employs use of coercion, goes
beyond the earlier models of private alternative dispute resolution that rely on state
enforcement when necessary. Thus, private forms of governance formulate policies
for online transactions that are cross-border and global by definition, not limited to
certain industries, and bypass the state’s monopoly on violence.
Secondly, the mode of operation of this new private enforcement is more
inclusive than earlier spheres of private governance. Private dispute resolution and
enforcement is not limited to close-knit communities or self-regulating sectorspecific industries that operate based on reputational sanctions. Earlier models of
self-governance have emerged within relatively small homogeneous communities
where sanctions effectively mean exclusion from the community and information
about fraudulent behaviour flows efficiently within the network. But the private
enforcement of e-commerce sites or the domain name system does not function
in such small communities based on trust. They are not limited to professional
practitioners within certain industries but encompass consumers and businesses
that earlier had no entrance point to cross-border commerce. Further, it could be
argued that the freedom of choice within these new private regimes is limited;
participants can mostly choose whether or not to participate but have often
restricted or non-existent possibilities to negotiate the terms of participation.
34
Instead, e-commerce communities are not clearly defined or stable and the
adopted sanction mechanisms steer participants’ trust to the intermediaries and
not to the community.
35 Also, the distribution of information is at the discretion
of these intermediaries, whose private nature often makes use of coercion
14 Theoretical implications of dispute resolution technology
private ordering within the diamond and cotton industries which have both
created their own systems of private law complete with institutions for dispute
resolution and enforcement. Both of these industries rely on their own reputationbased private legal systems that are considered superior to the public legal system
by the members of the industries.
29
Countless other examples of past private regimes can be found in the medieval
lex mercatoria with its market courts,
30 in the European trade companies
exercising sovereign power in the colonies,
31 and in the Sicilian Mafia,
32 among
others. This is to say that the phenomenon of private governance is not new
either within the legal system or outside it.
33 Noted private enforcement has
much in common with older models of private governance, as all of them answer
to the need of governance in situations where public governance does not exist or
otherwise does not act.
However, there are differences between these old and new instances of private
governance. Firstly, new models of private governance are no longer limited to
offshore colonies or foreigners but are expanding to the core areas of sovereignty,
to the nation-state’s territorial jurisdiction, and to the monopoly on violence
within its own borders. In other words, private enforcement is bringing new
players to a field that had previously belonged mostly to public institutions. For
low-intensity disputes that do not pass the threshold of costs and time to access
public courts, private ordering and enforcement is becoming the mainstream, if not
the only, option. Also, private enforcement, as it employs use of coercion, goes
beyond the earlier models of private alternative dispute resolution that rely on state
enforcement when necessary. Thus, private forms of governance formulate policies
for online transactions that are cross-border and global by definition, not limited to
certain industries, and bypass the state’s monopoly on violence.
Secondly, the mode of operation of this new private enforcement is more
inclusive than earlier spheres of private governance. Private dispute resolution and
enforcement is not limited to close-knit communities or self-regulating sectorspecific industries that operate based on reputational sanctions. Earlier models of
self-governance have emerged within relatively small homogeneous communities
where sanctions effectively mean exclusion from the community and information
about fraudulent behaviour flows efficiently within the network. But the private
enforcement of e-commerce sites or the domain name system does not function
in such small communities based on trust. They are not limited to professional
practitioners within certain industries but encompass consumers and businesses
that earlier had no entrance point to cross-border commerce. Further, it could be
argued that the freedom of choice within these new private regimes is limited;
participants can mostly choose whether or not to participate but have often
restricted or non-existent possibilities to negotiate the terms of participation.
34
Instead, e-commerce communities are not clearly defined or stable and the
adopted sanction mechanisms steer participants’ trust to the intermediaries and
not to the community.
35 Also, the distribution of information is at the discretion
of these intermediaries, whose private nature often makes use of coercion
14 Theoretical implications of dispute resolution technology