Imagine you, as an individual, purchase a car for €5000 from a private person. Money changes owner, so does the car, but before you know it, the car breaks down and turns out it’s nothing the vendor has promised it to be. Worst yet, the vendor refuses to pay you your money back.
Another example. Imagine your company signs a contract worth €5000 with another company (sound more familiar?). Contract agreements are not met and boom, a full blown dispute is at your hands, along with a million other things you need to worry about since you’re running a business.
In cases such as these, and cases below €20 000 in general, the incentive to go to court is low. Why? Because the law is insufficient or unavailable when smaller amounts are involved. Besides the shallow legal protection, it’s worth noting that taking a dispute to court is excruciatingly time and energy consuming, and very expensive. Well, unless you give Swiftcourt a try.
Swiftcourt is a Swedish digital court that launched their new and regionally rather unheard of service platform last July. They saw a problem in the fact that a vast majority of filings, around 80% to be precise, never go to court. For that, they saw a solution in private arbitration, a law largely harmonized worldwide which allows certain kind of disputes to be solved between individuals and companies outside of courthouses.
The way Swiftcourt’s private arbitration works in basics is quite simple, as explained by Swiftcourt CEO Johan Héden Hultgren:
“Two parties in dispute can choose to settle the matter through private arbitration, in this case Swiftcourt, instead of the court of justice. Once agreed upon, the suing party makes a case, stating the offence, desired compensation and providing evidence (images, documents, videos etc…), to which the defendant replies within a maximum of two weeks. Then, the suing party can choose to provide more material to the case, to which the defendant can reply once more, after which the case goes to Swiftcourt’s arbiters, who pass on a verdict, which will be fully enforceable by law. Whoever lost the case has to pay the sum defined in the verdict, plus a cut to Swiftcourt”.
It’s worth noting that should the other party refuse to use Swiftcourt, then the case will taken to the traditional court.
The company was architected and established by two young Swedish lawyers, Hultgren (right) and the company’s current CTO Hampus Sahlin (left). The two spent a long time rounding the legal framework around which the company could be built.
“It was a long and difficult journey to get the legal structure in place, but it paid off. We established about a year ago and launched our product the first of July and we’re planning on launching the next product, SwiftCommerce, once the summer is over”, Hultgren said.
Straightforward and fast, the Swiftcourt verdict can be achieved in a maximum of six weeks (compared to a conventional court’s average verdict time of 7,6 months), and the whole ordeal will cost much less for both the parties who are suing each other, as well as the taxpayers who eventually cover the costs of all the legal experts who spend time solving the case should the dispute go to a tribunal.
The main reason why running such a service has good cost efficiency is because everything is done online and because the Swiftcourt’s arbiters are carefully chosen law students, for whom the cases work as excellent training.
Swiftcourt’s second business model, Swiftcommerce is pretty much the same as the current product, except it would be a plug-in sold as a form of insurance for online transaction businesses. The two parties doing a transaction would agree on paying Swfitcourt a certain fee in case a legal dispute takes place in the future. Should that happen, the procedure remains the same as before, reaching a verdict in no more than six weeks.
The company’s proof-of-business is done in Sweden, but Hultgren says the ultimate goal is to take the business to the U.S. where District Courts handled over 2,6 million filings 2012 alone, making it a multi-billion dollar market for a service such as Swiftcourt.
Swiftcourt faces some competition, mainly from the U.S., however, Hultgren feels confident it their competitive advantage.
“There are companies like Zipcourt, Modria and Netarb that work in online arbitration, but their legal costs remain high and their technology innovations are low. In comparison, Swiftcourt’s business models and market focuses are unique, not to mention its crowdsourcing elements which only add to our dynamic service”
Currently Swiftcourt is looking to solve 30 cases in Sweden and for a seed investment of €500 000. The funding would largely be used to sales purposes and expanding the products target markets.
For now the service is only available in Swedish, but since private arbitration is indeed harmonized globally, Hultgren says taking Swiftcourts to other countries wouldn’t be expensive, so maybe the service will be available elsewhere in the close future.