E-commerce transactions and significance of effective dispute resolution mechanism
THIS article briefly explores the modus operandi of e-commerce and some challenges associated with online trading. It also explores dispute resolution mechanisms that are in place and offers suggestions on processes that may be adopted to resolve disputes between merchants and buyers which have increased in recent times.
E-commerce or electronic commerce is described by the Black’s Law dictionary (eighth edition) as “the practice of buying and selling goods and services through online consumer services on the Internet.”
The growing popularity of e-commerce as an alternative means of retailing goods in Nigeria is largely responsible for this article.
A few years ago it would have been unlikely to expect that Nigerians will use alternative avenues to purchase goods distinct from long established methods of physically visiting retail outlets, inspecting goods and paying for them directly by cash or cheque.
Undoubtedly, the emergence of online trading and successes attained by facilitators of such portals is pertinent evidence of the global influence of the internet. A thorough understanding of online portals and the mechanics of trading on such portals is crucial at this point.
However, it is vital to enter a caveat as the e-commerce facilitators referred to contextually are those with established presence and platforms which allow interface between buyers and sellers and not run of the mill facilitators that often become conduits for fraud.
Furthermore, this article concentrates on transactions between merchants and buyers using the platform of e-commerce providers.
Generally, direct transactions between credible e-commerce providers and buyers have more safeguards and offer broader protection. Such direct transactions are not the focal point of this article. At this point, a concise explanation of the role of e-commerce providers and their interface with merchants using their platform is vital.
Basically, an established provider or facilitator of an e-commerce transaction opens a platform hereinafter referred to as ‘marketplace’ and the seller/merchant registers and uploads the pictures, price and quantity of available goods. Marketplace plays the significant role of facilitating interface between buyers and sellers.
When merchandise becomes visible on the platform prospective buyers can view product details and purchase goods or services. The purchase transaction involves selection of product(s) and payment for merchandise through diverse gateways such as debit cards or direct debit. Cash may also be paid on delivery.
If the seller does not have the product he rejects the buyer’s order and the buyer is notified that the seller cannot fulfill his request. Where goods are available the buyer is informed that his order has been dispatched.
If it’s a pay on delivery scenario the buyer pays through his preferred gateway. The above represents a smooth transaction however in some scenarios disputes may arise between buyers and sellers.
A dispute may arise where the buyer paid online and the goods did not get to the appointed destination within the time-frame contracted. This could be caused by the sellers’ failure to ship promptly or failure to deliver the goods by courier companies instructed by the seller. Secondly, goods may actually have been shipped but the buyer could have rejected them for being substandard or fake.
In this case, the facilitator of the portal will investigate and resolve the issue through its internal dispute resolution mechanism (mediation). Obviously, the option of mediation or arbitration offers a clement atmosphere for resolution of disputes and should be encouraged.
The Internal dispute resolution process is often incorporated into basic sale contracts which merchants and retailers sign in e-portals by clicking a button agreeing to prescribed terms and conditions. Some disputes may be arbitrated where the online facilitator fails to effectively resolve the dispute via mediation. In circumstances where the seller or buyer is fraudulent such acts may be referred to relevant authorities for prosecution and the seller may be delisted from marketplace to ensure portal integrity.
In circumstances involving breach of contract (without compensation) it is imperative that another dispute resolution option is availed the aggrieved party in order not to jeopardise the integrity of online trading portals.
This is quite pertinent when alternative dispute resolution (ADR) fails to resolve a dispute between a merchant and buyer. It is a fact that mediation or arbitration despite its swiftness and informality does not always provide closure for aggrieved persons in all circumstances.
Given the facts elucidated, the next option when mediation or arbitration is unsuccessful should be the provision of a fast track system which ensures prompt compensation. An independent small claims court or alternatively one anchored on existing court structures with flexible rules will serve as an excellent venue for adjudication by experienced magistrates.
A ceiling could be placed on claims brought to such courts probably in the region of N500, 000.00 and below. Claimants should also have the option of channeling their matters to the regular court system where writs are issued.
The option of recourse to regular courts is a fundamental part of our legal system and litigants may decide to have their matters adjudicated if they so wish. The establishment of small claim courts will guarantee buyers and sellers swift adjudication. Parties may also represent themselves to avoid enormous costs.
Apart from on-line trading matters other disputes involving retailers/buyers, and consumer protection may be taken before a small claims court as practised in other countries.
It will be unrealistic to ignore possible objections to the argument for establishment of small claim courts. Some critics may suggest that our court system is robust enough for a variety of claims and does not require new specialised courts. Others may argue that since parties are not compelled to appear before a small claims court it could be difficult to have concrete adjudication.
There is also the issue of determining jurisdiction which though pertinent will not be as contentious as those involving cross border e-commerce transactions. On the issue of jurisdiction, the location of the seller or buyer could be important in determining whether a small claims court will be seized of a suit.
Another contentious issue is that of legal representation as self representation may be resisted on account of its novelty.
Objections will be multifaceted, however, it is humbly submitted that the advantages of having a small claims court far outweigh the disadvantages.
The process contemplated is specialised; it involves limited sums and is likely to be speedily resolved where other arbitral processes have failed. The establishment of small claims courts as argued in the foregoing does not require separate infrastructure as it can be absorbed within the current court system especially in states like Lagos. Trading is essentially built on trust.
Online trading in Nigeria often involves the sale of household equipment, mobile phones and information technology gadgets. Undoubtedly, parties to such transactions require an effective means of dispute resolution.
The use of the internal dispute resolution process is often an efficient means of resolving disputes however the small claims template is an alternative option when mediation or arbitration fails.
Obviously, it will be necessary to incorporate the arbitral/dispute resolution process in the e-commerce legal framework.
E-commerce is novel in Nigeria and will eventually receive in-depth attention from policymakers and researchers. Once an effective dispute resolution system is entrenched through a sustainable legal framework, merchants and buyers will conduct business transparently thereby enhancing the integrity of e-commerce in Nigeria. • Akinbisehin is a legal practitioner in Lagos State.
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