Judge.me also seems like it has taken a credible first cut at a form of execution that is at least workable. It has avoided the very thorny choice of law issues that can arise where the contracting parties are in different locations by essentially having the parties agree up front to be legally bound by what amounts to a free-floating form of law to be applied by the arbitrator regardless of what technical choice of law issues would normally prescribe. It has avoided the problems that can arise with discovery procedures in arbitration by limiting the whole arbitral process to a 1-day to 3-day exchange of evidence by email exclusively. It has also kept processing costs low by reserving for itself the right to choose and assign the arbitrator, by drawing its arbitrators from an established pool as contractors, and by dispensing with the need for witnesses, transcripts, rules of evidence, and all other technical aspects of judicial hearings (again, the parties agree up front to these limitations and that is why they can be legally bound by them even though they are highly unusual by court standards).
What all this means is that this is an innovative way to extend technology to dispute resolution but it will, of course, only appeal to those who can abide by the limitations. To me, this means that the system may lend itself well to small-dollar disputes but not to anything involving complex facts or larger claims. The absence of live testimony and the absence of discovery are particularly limiting in this context - if you can't find out too much about what the adverse party is going to claim and if you can't get your hands on evidence he holds to rebut it, you may be severely prejudiced. At some point not too far up the dollar scale, this likely becomes too risky (this would depend on the individual facts of a case). Beyond this, arbitration generally does not fit too well into non-monetary claims and judge.me would not be an exception to this. Still, for small-dollar cases, it would seem to be an interesting alternative to the small claims court systems in place throughout the U.S. and elsewhere.
The big challenge here will be to see how technology can be used to allow the service to overcome some of the limitations noted above while still keeping it streamlined and cost-effective. I am not sure this can be done but this is an interesting first step and there clearly would be a huge demand for cost-effective handling of claims at a higher level. It will be fascinating to see how this develops.
What I heard from another entrepreneur in this space (there are several competitors) is that small claims court is effectively not legally binding in most jurisdictions, because very few judges are going to issue a bench warrant or seize your house even if you blatantly don't pay the judgment against you. So even if there is a contract here, it doesn't seem like this would be any different unless there is enough money at stake that it's ultimately no longer under the small claims umbrella if the contract gets violated.
/Not a lawyer
(edit: re-reading what you wrote, I think that is your point)
Judge.me should have a public list of shamed people who haven't paid their bills. If it gets big enough this might be relevant, people might look at judge.me to see if a person they do business with is reputable. Or maybe it could somehow be reported to the credit bureaus.
Another one is if Judge.me holds the potential payments in escrow before the judgement takes place.
Would sort of work against their marketing claim that arbitration activity on their service is private.
I mean: I think it's great that Judge.me is totally upfront about all the other details in their service, and they seem to be on the level as far as their legitimacy according to the New York Convention. What's more, this is really a very useful service - hiring a high-priced lawyer (international law is not a common specialty) for international arbitration over a small $1500 freelance gig seems silly and wasteful.
Still - though I have some faith in the value of this product, and I even feel as though it's relatively reliable and would likely work in most cases for its clients, I sense that there are some problems lurking behind the service simply because of how it represents itself. What I'm envisioning is a situation where the company finds itself a party to some legal action; my feeling is that, no matter where you are in the world, actual judges themselves have very little sympathy or goodwill toward companies that represent themselves as courts.
Again, sorry to be so negative about this; these are just my own feelings about it.
The "Small Claims Court on the Internet" marketing line is only used on the homepage, the actual information, arbitration clause, case filing and arbitration agreement make it very clear that we offer international ex aequo et bono arbitration.
The subtitle also clearly states "alternative to court".
From the arbitration agreement:
Services performed by Judge.me are governed by the laws of the State of Hong Kong. Purchasing the services of Judge.me or any reliance on any condition, representation, warranty or implied warranty (none of which are stated and all being expressly disclaimed) signifies an agreement to submit to the personal and subject matter jurisdiction of the courts situated in Hong Kong. Participants waive any and all rights to challenge venue or to remove the action to any other court.
Also, what happens if judge.me goes out of business? How will parties who enter into a contract with the judge.me arbitration clause resolve conflicts?
The seat of arbitration only matters if you want to challenge the judge.me award.
Still, potentially useful for ad hoc arrangements between smaller firms.
Just so you know ahead of time: no company you do business with that has actual counsel is going to accept an arbitration clause affirming an agreement to use any specific arbitrator you've chosen; in all likelihood, most real companies will flatly refuse mandatory binding arbitration.
That's not correct, Thomas. All kinds of big and small companies include mandatory binding arbitration provisions in B2B and especially B2C contracts.
(In B2C contracts, a big part of the appeal of an arbitration provision is that the U.S. Supreme Court recently said, in AT&T Mobility v. Concepcion , that B2C contracts can essentially eliminate consumer class-action lawsuits by requiring individual arbitrations and jumping through a few minor hoops.)
 http://en.wikipedia.org/wiki/AT%26T_Mobility_v._Concepcion; see also http://scholar.google.com/scholar_case?case=1708881634152670...
You're the expert: what do you think the odds are here? My experience is limited to watching the redlines ping-pong over simple choice of state law in our own contracts.
I think this is a cool idea for a business, by the way.
Not least, I'd welcome the chance to put disputes into an informal, comparatively-inexpensive forum, where the risk of a runaway jury deciding the case mainly out of sympathy for the freelancer is essentially eliminated.
I would almost certainly object, though, to the ex aequo et bono standard that judge.me proclaims --- that standard, in essence, gives the arbitrator carte blanche to do whatever seems good in his or her eyes, regardless what the contract or the law says. That, coupled with the extremely-limited right of appeal of arbitration decisions, could definitely be a show-stopper.
For those interested, as part of the materials for a law-school course I teach, I've posted an extensively-annotated model arbitration provision .
[Disclosure: My wife is a full-time labor- and employment arbitrator.]
It's certainly not uncommon.
> even a website redesign puts outside people into contact with confidential business information, poachable employees, company IP, and liability if the website e.g. includes IP from other companies.
All the more reason for arbitration, which by agreement can be made private and confidential, whereas confidentiality in litigation can be very dicey under open-court laws .
 See, e.g., http://www.nytimes.com/1990/04/23/us/texas-high-court-cuts-i...
It's hard to imagine any corporate counsel ever accepting binding arbitration using an arbitrator they hadn't hand-selected; with choice of arbitration rules comes concessions regarding discovery, regarding appeal, fees, rules of evidence, potentially regarding maximum awardable damages, the list goes on & on.
Choice of arbitration procedures is a much bigger wild card than choice of governing state law. An arbitration clause is more or less a binding promise not to sue, but instead resolve any dispute under an opaque and drastically simplified set of rules. Arbitration clauses are also, as far as I can tell, very much more enforceable when they occur in contracts between businesses.
This sounds like an obvious win when the dispute is over at most 5 figures of web site design; who would want to deal with years of court drama over that? The problem is, real lawyers won't be thinking of the 5 figure contractual amount; they'll instead be thinking of things like liability and IP protection, which are issues that can be denominated in sums that dwarf legal process costs.
Another alternative would be to work with an up and coming Valley law firm ultimately gunning for WSGR's business, but willing to start by automating arbitration.
This reputation transfer trick is the key way to bootstrap a new enterprise that needs to establish itself. Get a few of the most farsighted members of the old guard to invest, endorse, join, publicize. That is why Coursera and Udacity are so much more likely to succed than the University of Phoenix: because they have Stanford faculty who defected. All they need are a few defectors.
Looks really interesting. Can you tell me how lawyers are reacting to the pricing you are paying them for being arbitrators? (assuming you are paying them) and if you are not paying them, how are you getting them to agree.
When I look at $300 for a case, I think, well, most attorneys bill at $400+ an hour (many for as much as $1,000), and they may get $100/hour+ personally after splitting with the law firm, so if a case takes more than 3 hours to arbitrate it seems hard.
On the other hand, there are no law jobs out there, so maybe you are getting fresh graduates?
I'm just curious I guess.
2. Some libertarian scholars apply who love the idea so much they want to work below market rate.
By the way, I am planning to apply to the next batch of Ycombinator.
Edit: this doesn't seem like a better solution than escrow or milestone payments.
I had to do this once. It takes a lot of time to figure it all out. I'd prefer to stick with milestones and escrow and avoid the whole legal fight.
The video was nice, it explained why I would want to use the service, but it didn't explain how it works. Who's doing the judging? How is fairness ensured? How long does it take to get a judgement?
Some of my arbitrators:
1. Stephan Kinsella, former Duane Morris partner, www.stephankinsella.com
2. Patrick Tinsley, co-editor with Mr. Kinsella of The Digest of the Commercial Laws of the World
3. Jacob Huebert, Porter Wright Morris & Arthur in Columbus, Ohio + author 'Libertarianism Today'
Also: wow would I kill the Bitcoin stuff. Topple pillars of western capitalism one at a time. :)
Also, they might get some business via this, as bitcoin businesses need some sort of arbitration system. Perhaps this could be a court for large scale elicit businesses, though I don't know if they want to tred in those waters.
So my question is: What qualified arbitrator would be willing to:
* review the documents submitted by the parties;
* conduct a hearing (via Skype or G+ Hangout?); and
* explain in writing the reasons for his/her award, as required by the "Timeline" section of the arbitration agreement ;
all for an absolute maximum of US$299 per case?
2. Young CIArb arbitrators who have a hard time getting into the very small market of very lucrative multimillion dollar arbitration claims.
Edit: The arbitration hearing is email based. So the process is totally asynchronous, takes only about 2 hours (3 max) of the arbitrator's time.
Judge.me might in these respects be a difficult sell. If it is ideologically anarcho-capitalist, then that provides robustness against corruption: but it also means that your 'judges' might simply say "yes there is this nuance in your country's law, but I don't like it and it seems too complicated, so I'm just going to ignore it." There doesn't seem to be an appeals process if this happens. So the lawyers of large corporations might be very hesitant to turn over their contracts to something so seemingly whimsical. I don't know. I am not sure that this acts to further anarcho-capitalist idealism, but it will probably work for its purpose as long as that idealism exists in the first place.
2. Judge Judy is indeed arbitration, where parties waive their right for privacy in return for a free arbitration.
3. Ancapistan would fundamentally be a Kritarchy (rule of judges), so arbitrator reputation is crucial and case law can develop from that. Also, even "ex aequo et bono" arbitration simply means applying contract law in practice.
I have been wondering why there is not organization that makes it easy in 2012 to have a company that operates across several countries. I thought that simply creating a legal framework was taking some time but that finally legislators would manage to get there, they are just lagging behind.
But this... I don't want this. I don't want a private justice, I don't want "arbitration" to become the norm in the way conflicts are handled in the global village. No, this must not happen, this is the root of too many dystopian visions.
Arbitration : this artificial "court" decides arbitrarily who is right and once this is done, the initial dispute is still there. If the "loser" does not accept the arbitration, you still have to go to court. It solves nothing.
You know what is the next step ? A private police to enforce the decision of the arbitration court. You would sign in the initial agreement all the necessary authorizations for that. It would work. It would be legal. And even if illegal, an army of lawyers would delay several years the application of the real law.
I don't want that.
Most jurisdictions will add the cost of court recognition to the amount of assets to be seized.
2. Awards can be recognized in 146 countries.
3. In 96% of the cases recognition is not even needed, the losing party pays up.
2. That just means that you found 146 countries where a breach of contract is illegal.
3. How do you measure the 96% ? I am doubtful of such a high statistic. Do you provide legal help if going to court is necessary to enforce the arbitration ? With such a high rate of success, it would be profitable for you and be really helpful.
My basic claim is that your service is indeed cheap but is logically probably worth little more than what you charge. Going into court is much more expensive and I doubt that you really can avoid such an event.
2. It means 146 countries have signed the 1958 New York convention.
3. The 96% is a CIArb statistic.
Ping me if you have UX needs.
Particularly: "Every 6 months, the entire team votes on hire / fire for each team member." - You've just been voted off the island!
Interesting concept, would be cool if it caught on! Suffers from a chicken-egg problem, though.
Have you thought about brainstorming through a specific set of model cases: for instance, construction contracting (apparently an arbitration mainstay), or web design, or stuff like that, and then building a "product" around each of those cases so you can tune your marketing and built industry-specific social proof?
(1) At some point in a conflict it's not the technical expertise anymore which one may get with a lawyer—no, it's that there's is somebody who is not emotionally involved, who doesn't fear to loose, finally someone whose mind is at 100%, who is fully aware and who has no emotions like fear, hate and lack of self-control which could impair negotiations in court.
That's the main reason one should get a lawyer: those who are involved in a case cannot perform as good as the not involved lawyer. And latter is important because the court shall get a truthfully and entire picture in order to reach a fair verdict which is in your very best interest.
With Judge.me, it's strongly recommended to get a lawyer or another not involved third party who is in favor with me anyway and this person would just say, 'hey I don't know Judge.me, even worse I don't know the people there and I do not know their history of cases and how their decision making process is. I cannot prepare you carefully as I could do if we went to a normal court and thus, I cannot tell if you gonna win. So, I'd suggest to go to a normal court (2)"
From reading up on pitfalls of arbitration clauses, it seems the opposite problem is stickier: arbitration is by design not subject to legal appeal, and attempts to carve out rights of legal appeal in arbitration clauses have failed in court.
But I agree: arbitration vs. litigation is typically an "either or" scenario; you don't get the best of both worlds.
But why are so many [things] in the [How it works] page [wrapped] with [brackets]?