access to justice without the need for state intervention outside the material
norms. The argument employs the metaphor of the invisible hand, but it is not
sufficient safeguard from the procedural perspective. As private enforcement is a
matter of technological infrastructure but also holds a function of procedural law,
material norms do not hold the answer for extending state control beyond its
territorial scope to the Internet.
3.2.3 Private enforcement mechanisms and their alternatives
After establishing that private enforcement goes beyond contractual terms despite
its jurisdictional basis on consent and private autonomy, an overview of existing
private enforcement mechanism is needed. These private mechanisms, however,
should be evaluated against the established framework for granting access to
public enforcement for private decisions.
Although it is unclear whether the New York Convention 1958 on the
Recognition and Enforcement of Foreign Arbitral Awards would apply to ODR
decisions, the mechanism demonstrates how the interface between private dispute
resolution and public enforcement is organised by multilateral Convention without bypassing state control.
41 The Convention is intended for international
commercial arbitration, where cases are often of high value, which affects the
organisation of the recognition procedure. Court fees for recognising an award in
an exequatur procedure in the country of enforcement is not a significant threshold for multi-million awards, but might pose an insurmountable threshold for
low-intensity cases, making this established interface mechanism unsuitable for
most of them.
Chargeback procedures have been proposed as another functional equivalent of
enforcement, especially for B2C transactions in the US. Chargeback means that
the credit card company assumes responsibility for allocating money after a
decision is reached within an ODR procedure. The credit card company forcibly
reverses the payment made and returns the money to the buyer if the ODR
decision considers that the seller did not follow through with her contractual
responsibilities.
42 The system is funded through the chargeback fees that businesses engaging in sale of goods have to pay in order to accept payments made
through the payment method. The amount of these fees depends on the track
record of the business and the amount increases if the seller has reoccurring
chargebacks on its transactions.
Chargebacks are an enticing solution for disputes arising from e-commerce,
especially for the typical cross-border, small-value disputes on sale of goods. As
Ichiro Kobayashi states, such disputes are difficult to predict and to enforce,
which has resulted in unique business models in comparison to traditional sale of
goods. It follows from this that ‘cost engineering’ is at the heart of e-commerce
business models. According to Kobayashi, in B2C relations the target is to lower
the ex post enforcement costs.
43 Based on this, it is evident that chargeback
models comply well with the logic of the market, with the rationality of
e-commerce, as they subsidise the costs in dispute situations. However, it is still
Emerging crisis 73
norms. The argument employs the metaphor of the invisible hand, but it is not
sufficient safeguard from the procedural perspective. As private enforcement is a
matter of technological infrastructure but also holds a function of procedural law,
material norms do not hold the answer for extending state control beyond its
territorial scope to the Internet.
3.2.3 Private enforcement mechanisms and their alternatives
After establishing that private enforcement goes beyond contractual terms despite
its jurisdictional basis on consent and private autonomy, an overview of existing
private enforcement mechanism is needed. These private mechanisms, however,
should be evaluated against the established framework for granting access to
public enforcement for private decisions.
Although it is unclear whether the New York Convention 1958 on the
Recognition and Enforcement of Foreign Arbitral Awards would apply to ODR
decisions, the mechanism demonstrates how the interface between private dispute
resolution and public enforcement is organised by multilateral Convention without bypassing state control.
41 The Convention is intended for international
commercial arbitration, where cases are often of high value, which affects the
organisation of the recognition procedure. Court fees for recognising an award in
an exequatur procedure in the country of enforcement is not a significant threshold for multi-million awards, but might pose an insurmountable threshold for
low-intensity cases, making this established interface mechanism unsuitable for
most of them.
Chargeback procedures have been proposed as another functional equivalent of
enforcement, especially for B2C transactions in the US. Chargeback means that
the credit card company assumes responsibility for allocating money after a
decision is reached within an ODR procedure. The credit card company forcibly
reverses the payment made and returns the money to the buyer if the ODR
decision considers that the seller did not follow through with her contractual
responsibilities.
42 The system is funded through the chargeback fees that businesses engaging in sale of goods have to pay in order to accept payments made
through the payment method. The amount of these fees depends on the track
record of the business and the amount increases if the seller has reoccurring
chargebacks on its transactions.
Chargebacks are an enticing solution for disputes arising from e-commerce,
especially for the typical cross-border, small-value disputes on sale of goods. As
Ichiro Kobayashi states, such disputes are difficult to predict and to enforce,
which has resulted in unique business models in comparison to traditional sale of
goods. It follows from this that ‘cost engineering’ is at the heart of e-commerce
business models. According to Kobayashi, in B2C relations the target is to lower
the ex post enforcement costs.
43 Based on this, it is evident that chargeback
models comply well with the logic of the market, with the rationality of
e-commerce, as they subsidise the costs in dispute situations. However, it is still
Emerging crisis 73