In a recent article, we discussed online courts and how the pandemic was a catalyst for their adoption. Similarly, the pandemic also was a catalyst for online dispute resolution (ODR) systems. So, that is what we are having a look at in this article. We answer the following questions: What is online dispute resolution? What are the methods of online dispute resolution? What are the benefits? What are the limitations and risks?

What is online dispute resolution?

Wikipedia explains it well: “Online dispute resolution (ODR) is a form of dispute resolution which uses technology to facilitate the resolution of disputes between parties. It primarily involves negotiation, mediation or arbitration, or a combination of all three. In this respect it is often seen as being the online equivalent of alternative dispute resolution (ADR). However, ODR can also augment these traditional means of resolving disputes by applying innovative techniques and online technologies to the process.“

So, online dispute resolution systems are digital platforms that facilitate the resolution of disputes without requiring parties to meet in person, and without lawyers. They started appearing as soon as online transactions did. Many online retailers preferred to have a system to settle disputes online, rather than having to go through lawyers and the courts. So, at first, online dispute resolution was to settle online disputes, and mainly with online retailers. But because it proved to be an effective way to solve disputes, it soon started being used for other disputes as well. And its popularity increased during the pandemic. In recent years, ODR systems have evolved significantly and represent a major shift in how conflicts can be resolved.

What are the methods of online dispute resolution?

Initially, online dispute resolution happened almost entirely outside of the courts, and by consensus. By now, we mainly have two categories of online dispute resolutions. They are consensual and adjudicative solutions.

Consensual methods

Consensual ODR methods focus on mutual agreement between the parties.

Online negotiation is one of the simplest forms. It can be entirely automated, with software platforms facilitating the exchange of offers. It can also be assisted, involving digital communication tools such as email, chat, or video conferencing. This method is especially common for minor disputes, like those arising from online marketplaces.

Online mediation involves a neutral third party (the mediator) who assists the disputing parties in reaching a voluntary settlement. The mediator does not impose a solution but helps clarify issues, encourage dialogue, and explore possible compromises. Mediation is well-suited for cases where the parties have an interest in maintaining a relationship, and it benefits from the confidentiality and flexibility that online platforms can offer.

Hybrid systems are a combination of negotiation and mediation, using structured phases and automation to encourage resolution. For example, platforms like eBay and PayPal use hybrid ODR processes that automatically prompt parties to negotiate, and if that fails, escalate the case to human mediators.

Adjudicative methods

On the adjudicative side, ODR includes mechanisms where a decision is made by a third party or authority, and this decision is binding.

Online arbitration replicates traditional arbitration processes, with a neutral arbitrator reviewing submissions and rendering a binding decision. This method is commonly used for commercial or contractual disputes and may involve document-only reviews or virtual hearings.

Another form of adjudicative ODR is platform-based adjudication. These systems are often used by e-commerce websites. First, users submit their evidence, such as communication logs or transaction record. Then, a decision is made by a platform official or through an automated system. This approach is efficient but can sometimes lack transparency or the option for appeal.

Finally, some jurisdictions are now developing online courts that offer digital litigation options. These systems allow parties to file claims, submit evidence, and receive rulings entirely online. The UK’s online civil money claims court is one example of a government-led effort to modernize access to justice.

What are the benefits?

Online Dispute Resolution (ODR) provides several key advantages over traditional conflict resolution methods.

A first benefit that already was mentioned before it the efficiency of ODR. Digital ODR platforms allow to streamline the processes. They do so by automating scheduling, communication, and document submission, which significantly reduces the conflict resolution time compared to court proceedings.

Another benefit is accessibility. Disputes are resolved online, which mean parties do not have to travel to meet in person to resolve their disputes. This is especially beneficial for cross-border commerce.

ODR systems also are cost-effective. Online dispute resolution reduces expenses such as travel, venue hire, legal representation, and court fees. Online dispute resolution makes dispute resolution more affordable, particularly for low-value disputes.

Online dispute resolution offers a higher degree of convenience. Parties can engage in resolution remotely, at their preferred time, using their own devices. It makes it ideal for small businesses and individuals with busy schedules.

ODR is less adversarial. Virtual mediation or negotiation tend to create a more constructive atmosphere. The fact that parties are trying to avoid going to court helps them express themselves more openly and makes it easier to find common ground.

The final benefits of ODR are transparency and accountability. The entire dispute resolution process is recorded in digital records, which provide an auditable trail of communications. This ensures fairness, prevents misunderstandings, and aids enforcement or appeals.

What are the limitations and risks?

While online dispute resolution offers many benefits, it also has several limitations that may affect its fairness and effectiveness.

For starters, there is an aspect of digital inequality. Not all users have equal internet access, suitable devices, or digital literacy, creating imbalances between parties, especially in cross-border disputes.

We also must take procedural unfairness into account. Some platforms use opaque processes or automated decisions without clear explanations or appeal options. This can easily make users feel like the system lacks empathy.

As with all online services, there are always privacy and security concerns. Sensitive data is collected and exchanged, and inadequate cybersecurity measures can lead to data breaches or identity theft.

Another possible problem with ODR are the enforceability issues. While online arbitration can be binding, negotiation or mediation outcomes may require traditional legal enforcement, reducing ODR’s time and cost benefits.

Experience has also taught that ODR is unsuitable for complex disputes. Emotionally sensitive or legally intricate cases may need human judgment and face-to-face interaction that ODR cannot fully replicate.

When using an ODR platform, there also is a risk of platform bias. If the platform is controlled by one disputing party, neutrality and fairness may be compromised, whether intentionally or through algorithmic influence.

Finally, there also is the issue of lack of regulation. Many ODR systems operate in legal grey areas. This makes it difficult to ensure consistent quality, transparency, and accountability.

Conclusion

Online dispute resolution presents clear advantages in terms of accessibility, efficiency, and affordability. Yet, at the same time, it is not without significant risks. There are many issues such as digital inequality, procedural opacity, privacy concerns, enforcement difficulties, limited suitability for complex cases, potential platform bias, and regulatory uncertainty. All these risk and limitations point to the need for a cautious implementation. Ensuring that ODR complements rather than replaces traditional legal mechanisms – especially in sensitive or high-stakes disputes – is essential for maintaining trust and fairness in its process.

PS: the EU had its own ODR platform, but that has been discontinued as of 20 March 2025, in favour of a more encompassing alternative dispute resolution approach.