Arbitration

Pallavi Modi on Online Dispute Resolution – The Future of Dispute Resolution in India

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Alternative Dispute Resolution (“ADR“) as a process for resolving disputes between parties has come a long way in India. The growth and beneficial utilization of the ADR process especially within the corporate sector is noteworthy. Today when, more than three crore cases are pending in Indian courts, the ADR process has enormous prospects for application and development. Due to the growing saturation in litigation and continually improving ADR infrastructure in the country, the ADR process has reached a stage of unprecedented popularity and recognition. Since the enactment of the Arbitration and Conciliation Act, 1996(“the Arbitration Act“), various amendments have been made. The most recent development is the Arbitration and Conciliation Bill, 2019(“the Amendment Bill“). The bill is a step forward and is reflective of the legislative intent in the direction of encouraging institutional arbitration for settlement of disputes and to make India an advanced center of ADR.

However, evolution and progression in law is not the only factor transforming the ADR process.  The technological revolution has not left any aspect of life untouched. Thus, the advancement of ADR can also not be imagined without utilization of technology. In the recent years, the Department of Justice under the Ministry of Law and Justice in India has also been actively involved in exploring alternative methods of dispute resolution, contemporaneous with technological advancement. The newest trend seeking to further advance the dynamic ADR process is the concept of Online Dispute Resolution (“ODR“). ODR is the modern and digitized iteration of traditional ADR with the main difference being the usage of technology, Essentially, ODR is a mechanism for resolving disputes through usage of electronic communication and has future potential to make use of advanced technology like artificial intelligence.

With the rapid development of the internet and online commerce, ODR has been labeled as the’ logical and natural step’ as it facilitates expeditious resolution of disputes in transactions which are in themselves quick and easy. The concept of ODR is only two decades old, originating in the works of American professors, Ethan Katsh and Janet Rifkin, who wrote a book on the subject in 2001. Subsequently the concept has achieved global recognition and has successfully arrived in the exploratory radar of world renowned institutions such as the World Intellectual Property Organization, the Hague Conference on Private International Law, the United States Department of Commerce and others. The process has, in a short period of time, garnered a ready acceptance by governments of various counties. The reason behind the world wide welcome of the concept is the increasing rate of international businesses and arrangements and the incremental advantages that the concept offers over & above traditional ADR. It offers tremendous flexibility in terms of location; not needing to be physically present at a particular place. Since the parties can communicate from their places of work, homes etc., the process is also more comforting and freer.

Noting the sharp increase of online cross-border transactions and the parallel need for mechanisms for resolving disputes arising from such transactions, the United Nations Commission on International Trade and Law (“UNCITRAL“) agreed at its forty-third session to undertake work in ODR. The UNCITRAL acknowledges the substantial opportunity for access to dispute resolution for both buyers and sellers in international commercial transactions. The UNCITRAL Working Group has deliberated on the creating ‘Procedural Rules for Online Dispute Resolution for Cross-border Electronic Commerce Transactions’. In 2017, it also brought out the UNCITRAL Technical Notes on Online Dispute Resolution. Thus, the UNCITRAL is taking various steps to make the ODR process an effective and far reaching reality.

Presently, there is no specific legislation dealing with ODR in India but there is presence in practice. In the recent times, various agencies offering and using ODR have been set up, like the Online Consumer Mediation Centre, Consumer Online Resource and Empowerment Centre, Techno Legal Centre of Excellence for Online Dispute Resolution in India, Perry4law, ODR India, Myshikayat, Yesettle, Grievancesolutions, ODRways, Preslov360 etc. Each of them offers unique services and operates in different ways. Even government bodies such as the National Internet Exchange of India are using ODR for domain name disputes’ resolutions.

While there is no express provision in the current legal regime in India permitting ODR, there is also none creating an express prohibition or embargo against the process. Thus, following the principle; what is not prohibited is permitted; there is space for ODR within the Indian legal framework. In fact, laws in India create a stimulating landscape and aids headway of concepts like ODR. The Indian legal framework, through Section 89 of the Code of Civil Procedure, 1908 (“CPC“) promotes use of ADR between parties and Order X Rule 1A of the CPC confers powers on the court to direct the parties to a suit to choose any ADR method to settle disputes. Thus, the ambit of the provision is wide enough to include ODR as well. The Arbitration and Conciliation (Amendment) Act, 2015 also has an expansive outlook, allowing an arbitral tribunal to use mediation, conciliation or other procedures during the arbitration proceedings to encourage dispute settlement. Moreover, the scheme of the arbitration act provides considerable freedom to the parties with regard to the place and proceeding for dispute resolution.

Vis-à-vis the legality of proceedings carried out on or through electronic platforms and admissibility of electronic evidence, the Information Technology Act, 2002 read with the Indian Evidence Act, 1872 establishes that, electronic evidence can be introduced and given legal recognition under the Indian legal system. The Apex court in the case of State of Maharashtra vs. Dr. Praful B. Desai[1]acknowledged the use of video conferencing to record witness statements. Even the Arbitration Act enumerates that subsequently in an ADR process, when the award is declared; it can be exchanged via emails by sending scanned copies. This stance has considerable legal backing and there are various cases in which the courts have upheld the validity of dispute resolution using electronic communication. The Supreme Court in the case of Grid Corporation of Orissa Ltd vs. AES Corporation[2]made a noteworthy observation that, “when an effective consultation can be achieved by resort to electronic media and remote conferencing, it is not necessary that the two persons are required to act in consultation with each other must necessarily it together at one place, unless it’s a requirement of law or a contract between the parties” .Thus, it is reasonable to conclude that the ODR process comes well within the ambit of the existing legal framework in India.

The ODR process has applicability in various areas of law. In the Indian context, wherein the e-commerce market is booming, and e-commerce disputes are an inevitable everyday reality, ODR has immense potential to be an effective tool for resolving such transactions. Divergently ODR would be a beneficial process in disputes relating to employment, real estate, banking etc. as the ODR process is a more convenient way of maintaining cordial business relations over physical distances. Further, in intellectual property disputes, due to the possibility of cross-border transactions, parties can directly monitor and participate in the proceedings and sue and be sued without the hindrance of territorial limit.

The ODR process is also especially suitable for India because the requirements of the country complement the advantages of the concept. One major benefit accruing to ODR is cost saving. In comparison to traditional litigation, ODR offers an opportunity of dispute resolution at a substantially lower cost. Currently, the economic and political environment in India is inclined towards encouraging small businesses, online start-ups etc. Thus, the lower cost advantage is extremely favorable for businesses and customers for whom price is the major impediment to justice. In a longer run, the growth of ODR would also facilitate achievement of legislative goal to make India a hub for international ADR.

Thus, it can be said that the ODR process is already an emerging method of dispute resolution in India fixing perfectly within the Indian legal structure. It is a cheap, neutral, quick fix for small scale disputes and is an obvious choice for the new technology friendly India. It wouldn’t be inaccurate to say that ODR is the future of dispute resolution in India.

[1](2003) 4 SCC 601

[2](2002) 7 SCC 736

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