Citation:
Ethan Katsh, Bringing Online Dispute Resolution to
Virtual Worlds: Creating Processes through Code, 49 N.
Y. L. Sch. L. Rev. 271 (2004)
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BRINGING ONLINE DISPUTE RESOLUTION TO VIRTUAL
WORLDS: CREATING PROCESSES THROUGH CODEt
ETHAN KATSH*
"Conflict is a growth industry"
- Fisher & Ury, Getting to Yes (1982)
I. INTRODUCTION
Conflict is present in all environments. On the Internet, there
are many new and interesting environments, among the most novel
and most unusual being Multi-player Massive Online Role Playing
Games or MMORPGs. 1 In these virtual "places," where transactions,
interactions, and relationships can begin and end quickly,
where barriers of time and space are not constraints on communication,
where identities can be transformed on the screen, and
where potentially valuable new forms of intellectual property can be
created at the keyboard, it is not surprising that disputes are occurring.
Since dispute resolution and dispute prevention were probably
not thought about and were certainly not high priorities when
these worlds were designed, the questions of whether these disputes
are a problem, how big a problem they are, and what to do about
them are, significant.2
While disputes and dispute resolution may be a growing concern
for game developers and participants, they present an opport
This article is adapted from a presentation made at the "State of Play"
conference, New York Law School, November 14, 2003.
* Professor of Legal Studies and Director of the Center for Information Technology
and Dispute Resolution at the University of Massachusetts at Amherst; J.D. Yale
Law School (1970); B.A. New York University, 1967.
1. Bren Lynne, What Is A MMORPG?, at http://www3.sympatico.ca/iambren/
MMORPG.html (last visited Aug. 30, 2004); see alsoLastowka & Hunter, The Law of Virtual
Worlds, 92 CALIF. L. REv. 1 (2004).
2. "MMORPGs have brought some unique new challenges to developers. I think
that all of the social and moral aspects caught a lot of developers by surprise. The
initial concept of a CRPG with lots of participants seemed simple enough. In reality,
however, human behavior is a lot more unpredictable than most developers imagined."
Paul E. Schwanz II, Morality in Massively Multi-PlayerOnlineRole-PlayingGames, at http://
www.mud.co.uk/dvw/moralityinmmorpgs.html (last visited Oct. 20, 2004).
NEW YORK LAW SCHOOL LAW REVIEW
tunity for the field of dispute resolution. Virtual worlds are
environments created out of informational tools. Dispute resolution
processes are also created out of informational tools. The nature
of a virtual world depends upon the tools provided and the
manner in which the tools can be used. Much the same thing can
actually be said about dispute resolution. A MMORPG or a virtual
world may be more fun to engage in than a dispute resolution process
but the fact that both are informational activities opens opportunities
to experiment with new approaches to dispute resolution
and to integrate new methods for resolving disputes into the fabric
of the virtual world.
The most common forms of dispute resolution, litigation, mediation,
arbitration and negotiation, involve participants working
with information, communicating it, storing it, organizing it, evaluating
it, and shaping how, when, where and to whom it flows. This
was noticed by an early computer pioneer who defined law as "ethical
control applied to communication." 3 What differentiates one
dispute resolution model from another is largely how information
is managed and regulated. One process, for example, may make a
body of information called rules the focal point of decision-making
while in other processes the parties may decide that other types of
information are more important than rules. Very generally,
mediators, arbitrators and judges all have information processing
roles but use different methods for different reasons and with different
goals.
The growing interest in and need for dispute resolution and
dispute prevention in virtual worlds is paralleling a growing interest
in and use of online dispute resolution ("ODR"), a new approach
to dispute resolution that employs Internet-based resources. 4 ODR
recognizes and tries to build upon the centrality of communication
and information processing to dispute resolution. It uses high
speed computer networks to allow parties to communicate in new
ways, at a distance, and powerful information processing capabili-
3. NORBERT WIENER, THE HuMAN USE OF HuMAN BEINGS 143 (1950).
4. See ETHAN KATSH & JANET RIFEIN, ONLINE DISPUTE RESOLUTION: RESOLVING
CONFLICTS IN CYBERSPACE (2001); COLIN RULE, ONLINE DISPUTE RESOLUTION FOR BUSINESS
(2002).
[Vol. 49
DISPUTIE RESOLUTION TO VIRTUAL WORLDS
ties to manage the flow and use of information that is at the heart
of dispute resolution.
ODR's initial efforts were focused on disputes arising out of
online activities. Cyberspace itself is a virtual world, or perhaps
many virtual worlds, and many of the same factors that are now
creating an interest in using ODR in MMPORGs led to the initial
interest in ODR.5 At the time, the most active virtual entities were
ecommerce marketplaces. The largest of these, eBay, was the first
to recognize that it would benefit from an ODR process. In the last
four years, as will be described in more detail below, an Internet
start-up, SquareTrade.com, has handled over one and a half-million
disputes, most linked to eBay transactions. In this short period of
time, SquareTrade has become the world's largest dispute resolution
provider.
Disputes occur for many reasons and some level of disputing in
any environment is inevitable. 6 Disputes can, at times, be a sign of
trouble and poor planning, and can interfere with the accomplishment
of goals. At other times, however, disputes may be a sign of
growth, of creative and competitive energies, even of progress. In
virtual worlds, disputes occur as a consequence of being able to use
informational tools in new ways, and to engage in activities and establish
relationships that could not occur in physical space. In such
a context, it is not the presence of disputes but the presence of too
many disputes, or the absence of any means to respond to disputes,
that is cause for concern.
If dispute resolution processes consist of strings of informational
activities engaged in by the disputants (negotiation) or administered
by the third party (mediation or arbitration), new
technologies allow new interactions between the parties and new
opportunities to work with information. Virtual worlds are an attractive
arena into which to introduce ODR because they have participants
who have demonstrated a willingness to engage in
environments that are themselves an experiment in online interactions.
Thus, these environments not only have a need for ODR but
5. See National Center for Automated Research Conference on Dispute Resolution
(May 22, 1996), Conference Papers, at http://www.odr.info/ncair (last visited
Oct. 5, 2004).
6. STUART HAMPSHIRE, JUSTICE Is CONFLICT (2000).
2004]
NEW YORK LAW SCHOOL LAW REVIEW
have a population that should not be resistant to new approaches to
resolving disputes at a distance.
While ODR in virtual worlds may be most instructive in how to
respond to disputes that arise out of online activities, such environments
can also be development and testing environments for approaches
that may be of value in the physical world. A virtual world
is an environment in which there are only informational activities.
What are physical activities in the physical world, such as constructing
buildings or moving from place to place, are informational activities
in a virtual world. When everything is data and when all data
is collected and resides in a database, opportunities should exist for
innovation in both dispute prevention and resolution. While some
informational activities in the virtual world cannot be duplicated
offline, managing environments through the use of information is
also routine in the physical world. Much of what is learned in a
virtual environment, therefore, should be transferable to a physical
one. As Professor Marc Galanter has observed, law:
usually works not by exercise of force but by information
transfer, by communication of what's expected, what forbidden,
what allowable, what are the consequences of acting
in certain ways. That is, law entails information about
what the rules are, how they are applied, with what costs,
consequences, etc. For example, when we speak of deterrence,
we are talking about the effect of information
about what the law is and how it is administered. Similarly,
when we describe 'bargaining in the shadow of the
law,' we refer to regulation accomplished by the flow of
information rather than directly by authoritative decision.
Again, 'legal socialization' is accomplished by the transmission
of information. In a vast number of instances the
application of law is, so to speak, self administered - people
regulate their conduct (and judge the conduct of
others) on the basis of their knowledge about legal standards,
possibilities and constraints. 7
As will be described in more detail below, ODR has grown
greatly in use during the past few years, in both online and offline
7. Marc Galanter, The Legal Malaise: Or,Justice Observed, 19 LAW AND Soc'y. REV.
537, 545 (1985).
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DISPUTE RESOLUTION TO VIRTUAL WORLDS
environments. In most early experiments with ODR, the goal was
to use the network to connect disputants with a human third party
and allow them to communicate at a distance. This Article suggests
that virtual worlds allow ODR to be extended and enhanced by developing
online tools that exploit the information processing capabilities
of machines. As the number and variety of these tools grow,
the result is likely to be a process in which there is, in addition to
the disputants and the third party, a kind of "fourth party." This
metaphor suggests not that the third party will be replaced, but
that, as software applications are developed, new roles will be created,
different patterns of interaction will be possible, and traditional
approaches will be questioned. Virtual worlds are a
particularly appropriate environment for exploring and experimenting
with technological resources that will someday be of value
in responding to all kinds of disputes.
II. A BRIEF HISTORY OF ONLINE DISPUTE RESOLUTION
ODR began as an offshoot of the Alternative Dispute Resolution
("ADR") movement. During the past twenty-five years, there
has, at least in the United States, been a significant effort to employ
ADR processes such as mediation and arbitration in lieu of litigation.9
Such processes are seen as being quicker, cheaper, and more
flexible than litigation. 0 The increase in use of such processes has
led many to refer to ADR as an acronym for appropriatedispute resolution
rather than alternativedispute resolution. 1
8. KATSH & RIFKIN, supra note 5, at 93-116.
9. Deborah R. Hensler, OurCourts, Ourselves: How the Alternative DisputeResolution
Movement IsRe-Shaping OurLegalSystem, 108 PENN. ST. L. REv 165 (2003); Carrie MenkelMeadow,
Mothers and FathersofInvention: The IntellectualFoundersofADR, 16 OHIO ST. J.
ON Disp. RESOL. 1 (2000); Richard Birke & Louise Ellen Teitz, Mediation in 2001: The
Path thatBrought America to Uniform Laws and Mediation in Cyberspace,50 AM. J. CoMP. L.
181 (2002); Carrie Menkel-Meadow, Symposium On AlternativeDisputeResolution: Introduction:
What Will We Do When AdjudicationEnds?A BriefIntellectualHistory ofADR, 44 UCLA
L. REv. 1613 (1997).
10. Frank Sander, VarietiesofDispute Processing,Address Before the NationalConference
on the Causes of PopularDissatisfactionwith the AdministrationofJustice, 70 F.R.D. 79, 114
(1976).
11. Jeffrey Scott Wolfe, Symposium: Alternative Dispute Resolution In the Twenty-First
Century: Across the Ripple Of Time: The FutureOfAlternative (Or,Is It "Appropriate?")Dispute
Resolution, 36 TUlSA L.J. 785 (2001).
2004]
NEW YORK LAW SCHOOL LAW REVIEW
The Internet has a thirty-five-year history, 12 but it was not until
the early 1990s that online disputes became enough of a concern to
receive attention. 13 Disputes undoubtedly occurred early in the Internet's
history but no one suggested the need for formal dispute
resolution institutions. During its first two decades, the Internet
was used by a limited number of people in a very limited number of
ways. Those with Internet access were associated with either the
military or with academic institutions and even in those environments
relatively few computers had Internet access. What is common
today, such as screens with images and email with
advertisements, was unknown at that time. The World Wide Web
was not invented until 198914 and, perhaps even more significantly,
until 1992 the National Science Foundation banned commercial activity
from the Internet.15
In the early 1990s, listservs began to be employed for group
communication and this form of many-to-many discussion soon
generated disputes categorized as "flaming" and violations of "netiquette."
16 Disputes also occurred in MOOs and MUDs, the ancestors
of today's virtual worlds. 17 MOOs and MUDs allowed people to
come together and interact, as their imaginations directed, facilitated
by a machine that could be located anywhere. Various online
mechanisms were employed to deal with conflicts that arose but
there were no organized dispute resolution institutions that were
devoted specifically to ODR. Indeed, the acronym ODR had not yet
been invented.
The decision by the National Science Foundation in 1992 to
lift its ban on commercial activity was a highly controversial deci-
12. Barry M. Leiner et al., A Brief Histoiy of the Internet, at http://www.isoc.org/
internet-history/brief.html (last visited Aug. 30, 2004).
13. Ian MacDuff, Flames on the Wire: Mediatingfrom an ElectronicCottage, 10 NEGOTIATIONJ.
5 (1994).
14. TIM BERNERS-LEE & MARK FISCHETrI, WEAVING THE WEB: THE ORIGINAL DESIGN
AND ULTIMATE DESTINY OF THE WORLD WIDE WEB (1999).
15. Jay P. Kesan & Rajiv C. Shah, Fool Us Once Shame on You - Fool Us Twice Shame on
Us: What We Can Learnfrom the Privatizationsof the Internet Backbone Network and the Domain
Name System, 79 WASH. U. L. Q. 113 (2001).
16. VIRGINIA SHEA, NETIQUETrE (1994).
17. Julian Dibbell, A Rape in Cyberspace, THE VILLAGE VOICE, Dec. 21, 1993, at 36-
42; Jennifer Mnookin, Virtual(ly) Law: The Emergence of Law in LambdaMOO, at http://
www.ascusc.org/jcmc/vol2/issuel/lambda.html (last visited Aug. 30, 2004).
[Vol. 49
DISPUTE RESOLUTION TO VIRTUAL WORLDS
sion and an enormously significant one. Shortly after the ban on
commercial activity was removed, disputes related to commerce began
to surface. In April, 1994, for example, the first commercial
spain occurred when two lawyers tried to recruit clients to participate
in an immigration scam.18 A few months later, in September,
1994, the U.S. Federal Trade Commission filed its first case of online
fraud. The case involved an AmericaOnline subscriber who advertised
that for $99.00 he could show people how to create new
credit files at all the major credit bureaus. He advertised that the
process was both legal and guaranteed.
The FTC did not consider the process to be legal or guaranteed.
As a result of the FTC action, the subscriber agreed to stop
advertising credit repair programs and to provide compensation to
consumers.
1 9
The idea for online dispute resolution emerged out of a recognition
that disputes would grow as the range of online activities
grew. The origins of ODR, therefore, are traceable to a very simple
insight, namely that the more transactions and interactions there
are online, the more disputes there will be. In addition, it was understood
that the Internet, since it was an information resource,
should be able to support information-dependent activities such as
dispute resolution. In other words, the Internet was part of the
problem, in that it generated disputes, but it was also part of the
solution in that resources might be found online to respond to
disputes.
III. Two EXAMPLES OF ODR
A. EBay: Assisted Negotiation, then Mediation
Ebay is an online auction site with over 125 million registered
users and where over 24 million items are offered for sale each day.
Ebay makes it possible for sellers to sell to buyers who may be located
anywhere. Ebay itself is not a party to any transaction and, in
general, assumes no responsibility for problems that arise between
18. Sharael Feist, The Fatherof Modern Spain Speaks Out, at http://news.com.com/
2008-1082-868483.html (last visited Aug. 29, 2004).
19. Information SuperhighwayPromoterof "CreditRepair"Planto Pay FullRedress Under
Settlement with FTC, at http://www.ftc.gov/opa/predawn/F95/chaseconsult2.htm. (last
visited Sept. 9, 2004).
2004]
NEW YORK LAW SCHOOL LAW REVIEW
buyers and sellers. In 1999, eBay decided that having a dispute resolution
process might further enhance trust between buyers and
sellers. It therefore authorized the Center for Information Technology
and Dispute Resolution 20 at the University of Massachusetts
to conduct a pilot project to test the viability and value of a dispute
resolution process that would allow parties who could not resolve
some problem by themselves to receive expert assistance from a mediator.
In what was the first large scale use of ODR, the Center
handled over two hundred disputes during a two week period.21
Several months after the completion of the University of Massachusetts
pilot project, eBay selected SquareTrade.com to be its dispute
resolution provider. 22 SquareTrade's approach to ODR
differed from the University of Massachusetts approach in two ways,
each of which represented an important advance in ODR. First,
before providing a human mediator, SquareTrade added a technology-supported
negotiation process in which parties could try to resolve
the dispute themselves before requesting a mediator. Second,
SquareTrade employed the Web rather than email as the means for
communicating with and working with the disputants.
The manner in which SquareTrade employs the Web illustrates
how even relatively small changes in how communication occurs
can have large consequences. Most of the people who file complaints
with SquareTrade have already tried to negotiate via email
and have reached impasse. Not only do parties seem more willing
to negotiate via the Web than via email but the negotiations are
more frequently successful. The Web site designed by SquareTrade
provides a more structured set of exchanges between the parties
than occurs with email. SquareTrade knows that almost all eBay
disputes fall into about ten categories. This allows it to create forms
which the parties fill out and these forms clarify and highlight both
what is dividing the parties and what solutions are desired. While
parties do have an opportunity to describe concerns in their own
20. The Center for Information Technology and Dispute Resolution, at http://
www.umass.edu/dispute (last visited Aug. 29, 2004).
21. Ethan Katsh et al., E-Commerce, E-Disputes, andFDisputeResolution:In the Shadow
of eBay Law, 15 OHIO ST.J. ON Disp. RESOL. 705, 710 (2000).
22. SquareTradecertifiesthe authenticity ofsellerson eBay, Yahoo (via Overture), and other
online marketplaces, at http://www.squaretrade.com/cnt/jsp/prs/npost.052204 (last visited
Aug. 29, 2004).
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DISPUTE RESOLUTION iTO VIRTUAL WORLDS
words, the forms and the form summaries that parties receive inevitably
reduce the amount of free text complaining and demanding
that is done, a result that appears to have the effect of lowering the
amount of anger and hostility between the parties.
Negotiation is, by definition, between the disputants with no
third party present. Using the Web in the SquareTrade manner
adds a novel element to traditional negotiation, a kind of "virtual
presence." The Web site, particularly the forms that are employed,
frames the back and forth communication and provides some of
the value that might otherwise be provided by a mediator. There
are no algorithms at work that analyze responses and thus this is
only a first step toward a more sophisticated online negotiation process.
The more that technology works with the parties in negotiation,
however, the less clear the classic distinction between
negotiation and mediation will be.
When Web-based negotiation fails, SquareTrade provides a
human mediator for a fee of twenty dollars. The Web interface is
still employed but the conversation is facilitated by a human third
party neutral. Use of the Web provides a structure and format that
allows parties to participate whenever they wish and with a mediator
who may be located anywhere.
B. ODR and Arbitration:ICANN and Domain Name Disputes
For the Internet to function, every computer connected to it
must have a unique identifying number or Internet address. Such
addresses typically look something like: 128.119.28.27. Because
humans find it difficult to remember strings of numbers, a system
was developed that allowed a domain name, such as "adr.org." to be
typed in instead of the number string. What occurred when someone
typed in the domain name was that a machine somewhere
translated it into the number string, something the computer could
process to find a particular machine.
The demand for domain names grew as commercial activity on
the Internet grew and as businesses wanted potential customers to
have an easy way to find them. The domain name system had been
designed before commercial activity was permitted on the Internet
and it had not been anticipated that many businesses with similar
names might want the same domain name, or that owners of trade-
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NEW YORK LAW SCHOOL LAW REVIEW
marks would be upset if someone registered a domain name that
was similar to a trademark. The combination of domain name scarcity
and the concerns of trademark holders led to disputes over domain
names.
In 1998, the United States government agreed to allow a new
organization, the Internet Corporation for Assigned Names and
Numbers ("ICANN") to manage the domain name system. One of
the first things ICANN did was enact the Uniform Dispute Resolution
Policy ("UDRP") establishing both a process and a set of rules
for deciding domain name disputes. 23 Both the approach ICANN
chose, a modified arbitration process, and the systems which have
implemented this approach, represent another choice in moving
dispute resolution online.
The process employed to resolve domain name disputes is interesting
in a number of ways. For example, UDRP dispute resolution
occurs without face-to-face meetings and, except in rare
instances, without telephone communication. It is, therefore, dispute
resolution at a distance. The process employed by the current
dispute resolution providers, however, involves limited use of the
Internet. One of the original dispute resolution providers, eResolution.com,
employed a completely online system but it stopped handling
cases in 2001. The two main current providers, the World
Intellectual Property Organization ("WIPO") and the National Arbitration
Forum ("NAF") have online systems that could be employed
and probably will be employed in the future. Currently,
online filings are occurring with increasing frequency and email is
employed sometimes. Unlike the eBay mediations, however, the
Web is not employed and if there is added value that could be provided
by Web-based processes, such value is not yet present.
Furthermore, the UDRP is not classic arbitration in that the
decisions are not binding and enforceable in court.24 UDRP arbitrators
are referred to as panelists since the word arbitrator denotes
someone who can make a decision that is enforceable in court.
UDRP panelists are empowered by terms in the contract agreed to
23. Elizabeth G. Thornburg, Going Private: Technology, DueProcess, and InternetDispute
Resolution, 34 U.C. DAVIs L. REv. 151, 160 (2000); see Uniform Domain Name Dispute
Resolution Policy, available at http://www.icann.org/udrp. (last visited Aug. 29,
2004).
24. See Thornburg, supra note 23.
[Vol. 49
DISPUTE RESOLUTION TO VIRTUAL WORLDS
when a domain name is registered. Decisions of arbitrators are enforced
by making necessary changes in the domain name registry.
The UDRP created an efficient, although somewhat unorthodox
process, and not without controversy.25
IV. NEW APPROACHES TO DISPUTE RESOLUTION: THE "FOURTH
PARTV' AND VIRTUAL WORLDS
The MOOs and MUDs of the early 1990s, the scene of some of
the earliest online disputes, were extremely creative efforts.26 They
were also, compared to today's online environments, starkly different.
Unlike current applications, for example, they were wholly textual.
Participants engaged in activities not by clicking a mouse or
manipulating images but by typing in textual commands that directed
characters to do something or to go somewhere. There were
no images, no graphics, no video, no sound, nothing except sets of
instructions that told a participant what might be happening.
Someone who wished to cause a problem might be able to do so by
typing in a command such as "hit X." Disputes, of course, could
not be resolved simply by typing in "settle dispute."
One lesson that was learned from these environments was that
the generation of online disputes does not require sophisticated
communication capabilities. Simply providing a method for communication
and interaction is sufficient. With simple communications,
the range of disputes may be limited but the intensity of the
disputes that occur might still be very high. Disputes can, as a result,
be disruptive, and if the context is competitive and value or
values are contested, the need for dispute resolution will only increase
over time.
While simple communication tools provide the opportunity for
dispute creation, they do not enable very effective dispute resolution.
The wizards of LambdaMOO created roles and responsibilities
for human arbitrators but there were few tools that were
available other than sending and accepting messages. Such arbitra-
25. MILTON MUELLER, RULING THE ROOT: INTERNET GOVERNANCE AND THE TAMING
OF CYBERSPACE (2002); Michael Geist, Fair.com?: An Examinationof the Allegations of Systemic
Unfairness in ICANN UDRP, at http://www.udrpinfo.com (last visited Aug. 30,
2004).
26. Pavel Curtis, Mudding: SocialPhenomenain Text-Based Virtual Realities, athttp://
www.scara.com/-ole/literatur/mudding.html (last visited Aug. 30, 2004).
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NEW YORK LAW SCHOOL LAW REVIEW
tors could issue rulings but no software was available to allow the
third party to interact efficiently with the parties. The reason for
having arbitrators was to allow the arbitrator's expertise to be delivered
in some way over the network. This could work if expertise
could be represented in words, such as in documents delivered and
decisions rendered. It would not work, or not work very well where,
as in mediation, more was required than merely delivering words.
Stated another way, mediation requires regulating who hears and
says what when, something that requires software to facilitate organizing,
managing or processing informational exchanges with
parties. Such software was not available at the time.
The most frequently heard concern about ODR has been that
online processes and interactions cannot match the richness of the
face-to-face sessions that are at the heart of offline mediation. Faceto-face
sessions enable a mediator to regulate who says and hears
what simply by physically including or excluding parties from the
room. In addition, the mediator gets feedback from the parties
both by hearing what is said and by seeing how it is said. Other
elements of the mediation process, such as building trust and maintaining
a non-hostile environment, are also assisted by behavioral
interactions.
For those unfamiliar with it, mediation can be a process that is
somewhat hard to analyze and explain because it is so tied up in all
the options for verbal and non-verbal expression that are present in
a face to face setting. Mediators, by definition, do not have authority
to impose solutions or make decisions, and, for various reasons,
tend not even to propose solutions. The manner in which a mediator
leads parties to a successful agreement may seem obscure and
even the mediator, relying on the nuances of language, the rephrasing
and refraining what one party has said, and the behavioral cues
picked up from the parties, may find it hard to explain how consensus
came about.
Mediation has grown rapidly in use offline because litigation
often did not serve the needs of parties to a dispute. Litigation was
costly, slow, formal, and inflexible. ADR was used to avoid court
and was also used by judges to divert cases out of court to save
money and reduce backlogs of pending cases. In addition to promising
cost and time savings, it also provided greater opportunities to
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DISPUTE RESOLUION TO VIRTUAL WORLDS
repair and build relationships, and to be more flexible and creative
in designing outcomes.
As disputes generated by online activities began to grow, what
were recognized to be problems with litigation offline seemed to be
even bigger problems online. There was a need for speed, flexibility
and the other benefits usually claimed for ADR and there was
also the very large problem that one could probably not sue in
court even if one wanted to. Even if one found an online dispute
that seemed appropriate for a court to consider, the parties were
likely to be in different jurisdictions. If courts were costly to users
who lived close by, they were even less accessible to parties who
lived at a distance. As attention began to be directed to online disputes,
therefore, an online version of ADR, rather than litigation,
seemed to be the only realistic means of dealing with conflicts that
arose online.
ADR also was attractive because the network allowed easy communication
between disputants and a human third party with expertise
in mediation or arbitration. The first efforts at ODR
assumed that the network alone was a sufficiently rich conduit for
effective intervention by a mediator or decision-making by an arbitrator.
These efforts had some success and, for online disputes
where there were no realistic alternatives for using land-based systems,
had clear benefits. Yet, it was also clear that fostering communication
and exchanging messages was only part of the offline
expertise of mediators. Face-to-face mediations also involved managing
communication, knowing when parties should be talking with
each other, and knowing when to stop and start communication.
Simply allowing disputants to exchange messages, in other words,
permitted only some of the expertise of a third party to be employed
online.
One noted authority has written that mediation is essentially
negotiation that includes a third party.27 The most widely known
book about conflict resolution, Gettingto Yes, also focuses on negotiation,
not on mediation or arbitration. Negotiation is, almost always,
the first process employed to resolve a dispute and it is, as
these works suggest, appropriate to view mediation and arbitration
not as parallel processes to negotiation but as extensions of negotia-
27. See CHRISTOPHER MOORE, THE MEDIATION PROCESS (1996).
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NEW YORK LAW SCHOOL LAW REVIEW
tion. For ODR, this is a very helpful perspective to have and one
that early ODR efforts did not have. Early efforts, my own included,
tended to ignore negotiation because few tools were available at the
time to help parties resolve disputes themselves and parties who requested
assistance already seemed to have negotiated and reached
impasse. These early efforts recognized that there were novel capabilities
for linking to experts who might be anywhere and hoped
that simply making an expert available online to parties who were
in conflict could be beneficial.
The metaphor of the "fourth party" suggests that the novel element
in ODR may be less the online connection to a human third
party than the connection to software tools that can help parties
negotiate and, if that fails, assist interactions with a mediator or arbitrator.
Looked at in this way, ODR can develop in several different
ways. It can be perceived of as a new process or set of processes
when the network is the exclusive mode of interaction. Or, ODR
over time may transform all three ADR approaches by using online
tools even when face to face sessions occur. In the latter case, all
negotiation in the future will be online negotiation in that online
tools will be recognized to be of value to disputants and will be
routinely employed, and all mediation and arbitration will be online
mediation or online arbitration in a similar way.
ODR has already moved out of the stage it was in when disputants
simply conversed online with a mediator. The SquareTrade
approach indicates that software that only organizes and focuses a
conversation on a Web page can be a powerful improvement over
communication via email that is less structured. In addition, in
ways that parties may not be aware of, SquareTrade forms can be
modified on the basis of data provided previously and opportunities
for using graphics in lieu of text can be exploited. These techniques
do not aim to duplicate the richness of face-to-face sessions
online but to take advantage of some of the capabilities that information
processing and communication together provide that are
not present offline.
ADR off-line emphasizes face-to-face meetings and ADR training
stresses techniques that can be employed in working with parties
face to face. A concern about ODR has been that techniques
that are part of traditional mediator training may not be effective in
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a non-face-to-face environment using current communication
software. Many of the goals that such techniques try to accomplish,
however, might still be achieved through the development of online
tools that allow parties to brainstorm, to identify priorities, and
to identify interests and needs. These tools recognize the value not
simply of transmitting data but of collecting, storing and using it.
Third parties online, in other words, can try to use techniques they
were taught but they should recognize that various new means will
be appearing that can be employed at a distance and that can be
effective in leading to the same ends.
ADR was the original model for ODR and many goals of ADR
will remain goals of ODR. The process for reaching these goals,
however, need not mimic processes employed by offiline mediators.
In one respect, ODR is in the process of diverging from offline ADR
by employing the language of tools in lieu of or in addition to techniques.
In another respect, offline mediation is becoming ODR, as
the value of using online tools in addition to traditional techniques
and face-to-face meetings is understood. What the offline ADR process
instructs us is not that face to face meetings are indispensable,
but that a mediation process consists of a very large number of
managed informational exchanges, some of which can be managed
very effectively through software.
While the goal of the "fourth party" is to make information
processing and information management resources available, this
does not minimize the importance of any improvements that may
occur in the future as to how efficiently data moves online from one
party to another. When video conferencing is more cost effective
and improved technologically, mediation may even occur online
without losing very much of what is present when parties meet face
to face. Yet, the maturing of ODR, something that can be expected
from its use in virtual worlds, will consist as much in designing new
online tools to process data as in tools to transmit data. In the absence
of video conferencing, and probably in most disputes even
when video conferencing is available, ODR will have to have tools
that may have the same overall goals as offline mediation and arbitration
but lead there in very different ways.
Virtual worlds, where the resistance to experimentation may be
less than in the physical world, may be the environment in which
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such applications first appear and are first used. In a world where
avatars are commonplace, a virtual "fourth party" with an array of
tools and approaches to conflict resolution should seem almost natural,
and certainly not as alien a concept as it might offline. There
should also not be anything startling about the "fourth party" avatar
becoming more skilled and intelligent over time. At first, the avatar
might be of most value in simple disputes, disputes that involve two
parties and one or two issues. Experience with version one of such
an avatar might lead to more skilled avatars or avatars that can interact
with human third parties to provide users with a combination
of human and machine expertise.
ODR has made an impact already because the first two largescale
uses of ODR have occurred in two high visibility situations,
eBay and ICANN. Yet, ODR is still in an early stage of its development
because software applications and tools are emerging slowly.
ODR, as the eBay experience has demonstrated, can respond to
large numbers of disputes if appropriate software is available. It will
also be able to respond to more complex disputes, such as multiparty
or multi-issue disputes, when appropriate software is available.
ODR is also being adopted by government agencies involved in dispute
resolution and this can be expected to accelerate use of
ODR.
28
Generic communication and information processing applications
such as threaded discussion software, project management
software or collaboration software of various kinds provide some
support to ODR efforts in the absence of software that is both powerful
and targeted to specific tasks. For ODR to mature, however,
what is needed are tools that are linked more to processing information
than to transmitting data. Virtual worlds are an exciting
development for ODR because not only is the need present and not
only are the game designers in a position to make some tools available,
but users themselves might see opportunities in creating dispute
resolution tools and applications.
The "fourth party," in some instances, will encroach upon and
displace techniques employed by third parties and in other situa-
28. Alternative Dispute Resolution (ADR) and Online Dispute Resolution (ODR), at
http://www.nmb.gov/adrservices/adrmenu.html (last visited Aug. 29, 2004).
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tions will enhance third party capabilities. Here are only a few
examples:
1. Computational. We already have a tool with a computational
focus that manages the flow of information and employs the
network. It is called "blind bidding" and virtual worlds provide an
opportunity to make the tool more accessible and make its use commonplace.
Blind bidding is used when parties are negotiating
about money or something else that is quantitative. In its most generic
form, each party submits an offer over the network, a computer
compares the offers and if the difference is 30 percent or less,
the parties have agreed to split the difference. 29 If the offers are far
apart, the process can be repeated through several rounds or it can
be ended with neither side having lost anything since nothing was
revealed to the other party. Blind bidding can be accomplished
with a human third party who accepts the offers and makes the calculations
but the process is cumbersome. Yet, when done online,
blind bidding appears to be almost too simple to be considered any
more of a dispute resolution process than flipping a coin or drawing
a card from a deck. Unlike these other techniques, however, in
which the outcome has nothing to do with the needs or interests of
the parties, blind bidding allows parties to reach an agreement, not
simply an outcome or result. It does so through a calculation but
rules on disclosure are as much a part of blind bidding as is the
calculation. Blind bidding may be simpler than tools for other tasks
because the rules governing it are very clear and understandable
and the calculation is elementary. These are also its virtues.
2. Building Trust. This is an important component of any dispute
resolution process and one of the first tasks undertaken by
mediators. By achieving trust, it is felt that parties will be more
forthcoming and willing to work with the mediator. Trust, it has
been written, "is earned through a mediator's behavior during the
mediation process. °30 Yet, building trust is a process that can be
redesigned to be more informational than behavioral. Questions
implicit in the trust building process, such as how it can be guaranteed
that communications will be kept confidential, and what expe-
29. What is Cyrbersettle?, at http://www.cybersettle.com (last visited Aug. 29, 2004).
30. Richard Salem, Trust in Mediation, at http://www.beyondintractability.org/m/
trustmediation.jsp (last visited Aug. 29, 2004).
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NEW YORK LAW SCHOOL LAW REVIEW
rience and expertise does the mediator have, can be responded to
online not by verbal assurances but by software that can provide
information, and monitor and secure messages.
3. Identfying Interests. Identifying interests and distinguishing
interests from positions is a fundamental part of mediation sessions.31
Parties may not themselves understand clearly what they
really want and mediators may have to meet with parties more than
once to identify what their needs are as opposed to what they claim
they want as an end result. This can be a difficult challenge for a
mediator and we do not yet have interactive applications that can
achieve this or assist the mediator in this task and that are as easy to
use as blind bidding.3 2 There is no reason, however, that such applications
cannot be developed.
4. Ascertaining Facts. Many disputes arising out of online
transactions involve facts, such as whether something was delivered
or paid for. Experience thus far has been that ascertaining what
occurred in a transaction, because it occurred at a distance, is more
difficult than when someone can be "looked in the eye." Disagreements
about facts, however, can frequently be prevented by systematic
record keeping about such facts as when something was
shipped or whether a payment was made. The delivery of virtual
goods in virtual worlds is today a problem that will be solved better
by a software application than by an arbitration proceeding.
5. Designing Solutions. Many solutions to problems in the
physical world are built around the qualities of physical space. Parties
who have been fighting with each other might agree to visit a
place at different times or to erect a fence between their properties.
These can be effective solutions but a virtual world has the potential
to be more creative. A property dispute offline might result in the
placement of a physical barrier. Virtual world technology could be
applied in a way that would make an ugly neighboring property
invisible to the person who is bothered by it.
6. MonitoringAgreements. In the physical environment, there
are very limited tools for monitoring performance. When record
31. See ROGER FISHER & SILLIAM URY, GETTING TO YES (1982).
32. But see http://www.smartsettle.com (last visited Aug. 30, 2004) (online
"eNegotiation system" that claims to assist parties in negotiating dispute resolutions
through "patented optimization algorithms").
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DISPUTE RESOLUTION TO VIRTUAL WORLDS
keeping and data collection is part of performance, however, notification
of problems and defaults can occur as soon as the problem
occurs. In addition, criteria can be established for early warning
signs, measures that would alert parties if something occurred late
or out of sequence. The importance attached to written agreements
is a consequence of the ability of words on paper to be both a
record of what happened at a particular time and place and to be a
reminder as to what was agreed would happen in the future when
the parties may not be in contact. In a pre-electronic world, paper
contracts may have been the best alternative for structuring performance
but it will be increasingly open to question in the future
whether such documents are the best of all existing alternatives. 33
Written agreements will not go away in the near future but tools to
monitor performance, particularly using graphical means in lieu of
text, such as the use of a "red flag" icon appearing on screen when
an item has been agreed upon, will be increasingly employed.
7. Buildingon Experience. Virtual worlds present opportunities
to obtain feedback from users and to learn more about disputes
that have arisen. Data collection can facilitate the resolving of disputes
but, in many situations, can be even more valuable when used
proactively to understand why disputes occur and then to prevent
them from occurring.
In their fascinating article "The Laws of the Virtual Worlds,"
Gregory Lastowka and Dan Hunter ask about what might be done
in the following dispute:
A twelve-year-old castle owner alleges that his giant avatar's
virtual goose, which laid golden eggs (worth U.S. $
100 daily), was stolen by a virtual juvenile (and real-world
adult) who climbed a giant beanstalk to get it. The plaintiff
alleges trespass, invasion of privacy, and conversion.
The defendant, in turn, counterclaims against the virtual
world's wizards who made the goose in question capable
of being stolen, and throws in an additional charge
against a third party of fraud involving a virtual cow.3 4
33. See M. ETHAN KATSH, LAW IN A DIGITAL WORLD (1995).
34. F. Gregory Lastowka & Dan Hunter, The Laws of Virtual Worlds, 92 CALIF. L.
REv. 1, 71 (2004).
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ADR and ODR are normally not of value in cases of fraud or theft,
in situations where one party wants the other punished, or where
there is a need for a legal standard or principle to be established or
clarified. On the other hand, ODR could be employed if the goal is
restitution or if what appears to be theft turns out to be something
different. In this particular case, an individual claims to have suffered
harm but there is also a need for understanding how such
actions can be prevented, or at least discouraged. While one party
considers the other a thief, it would not be impossible, at the end of
a successful dispute resolution process, for the "thief' to be transformed
into a buyer/seller of the golden eggs.
This dispute is brought by an individual who claims to have
been wronged. This is also a dispute that has implications for the
game designers, since it is their design that has allowed such a problem
to occur. It may not be possible to anticipate every dispute that
might arise in an environment as novel and as creative as the one
described. The suggestion in this article, however, is that an environment
that can create a market in golden geese should also be an
environment in which there are effective alternatives other than appealing
to an outside court.
V. CONCLUSION
This article was not intended to be a precise blueprint for dispute
resolution in virtual worlds but an exploration of how and why
such worlds might employ and enhance relatively new online dispute
resolution processes. Every dispute arises in a setting or context,
and the setting from which it arises may shape the
expectations of the parties, the timing of settlement, the perceived
urgency of resolution, the consequences of and available alternatives
to failure, the role of the third party, and even the form of
dispute resolution.3 5
Professor Frank Sander has suggested that in
determining what dispute resolution system to employ, one should
35. Context can
influence the approach of the neutral, the choice of process, and the behavior
and attitudes of disputants. In any environment, context can affect
the kinds of disputes that are likely to arise and also affect who the parties
are who are likely to be involved in the dispute. Context implicitly feeds us
information about the extent or nature of the injury as well as how the
injury or dispute is perceived by those involved. Context situates a dispute
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DISPUTE RESOLUTION TO VIRTUAL WORLDS
try to match the "forum to the fuss."3 6
Virtual worlds are intriguing
because they present us with new forums and new fusses. They also
present us with opportunities to develop new tools that might be
employed in both online and non-online environments.
Marshall McLuhan wrote that "when cultures change, games
change."37 McLuhan took games seriously and, indeed, devoted a
whole chapter in UnderstandingMedia to the subject of games. He
did so because he considered games, along with art and literature,
to be early warning systems, artifacts that react to and inform us
about the nature and direction of early shifts in a culture. The
theme of this article has been that network-based online games and
virtual worlds may be more than early warning systems. The games
or virtual worlds that are the subject of this article are not simply
contests but new environments. As such, they may not only suggest
something about the future direction of dispute resolution but
allow us to design and experience new models, systems and
approaches.
in a particular time and place, and we react and adjust accordingly as the
parameters of the environment become clear to us.
Ethan Katsh, The OnlineOmbuds Office: AdaptingDisputeResolutionto Cyberspace, at http://
www.umass.edu/dispute/ncair/katsh.htm (last visited Aug. 30, 2004).
36. Frank E. A. Sander & Stephen B. Goldberg, Fittingthe Forum to the Fuss:A UserFriendly
Guide to Selecting an ADR Procedure,10 NEGOT. J. 49, 50 (1994).
37. MARSHALL McLUHAN, UNDERSTANDING MEDIA: THE EXTENSIONS OF MAN 221
(1964).
2004]