Online Dispute Resolution (ODR) –Challenges & Prospects
1. Online Dispute Resolution (ODR) UNICITRAL Technical Notes on ODR issued in 2016 defined ODR as ‘a system for dispute resolution through an information technology- based platform and facilities through the use of electronic communication and other information technology. ODR is a process to settle disputes outside courts, combining technology and alternative dispute resolution ("ADR") mechanisms. ODR covers disputes that are settled over the internet having been initiated in cyberspace but with a source outside it i.e. offline. ODR offers a faster, transparent and accessible option for many companies to resolve disputes online particularly those who have high volume and low-value cases. In the past half-decade, India has seen significant growth in the volume of online transactions such as e-commerce,online banking , digital payments, online advisory & investment etc. and there is need to accept ODR as an efficient mechanism to resolve disputes and hence implement a fast and fair dispute resolution system.
In the recent pandemic lockdown there is more services/ activities is being provided online such as teaching /education, healthcare consultation, etc. With the advancement in technology such as 5G, more activities and services will be offered online Such online activities may generate its share of disputes which may need to be resolved through offline ADR or online ADR via ODR.
The collective term “On-line Dispute Resolution (ODR)” is used internationally for different forms of on-line dispute settlement by means of ADR-methods. ODR supplements existing off-line ADR methods as certain disputes (more specifically e-disputes) can also be resolved quickly and adequately via the Internet. ODR can be defined as the deployment of applications and computer networks for resolving disputes with ADR methods. Both e-disputes and offline disputes can be resolved using ODR.
2. Online Dispute Resolution (ODR) through ADR Methods
ODR is the resolution of disputes, particularly small- and medium-value cases, using digital technology and techniques of Alternate Dispute Resolution (ADR) such as online complaint redressal, negotiation, mediation, and arbitration. The Arbitration and Conciliation Act, 1996 (A & C Act) seeks to provide speedy and effective dispute resolution through conciliation and arbitration. Originally, arbitration was intended as an alternative to going to court for various kinds of commercial disputes but with time the method itself became complex and expensive due to party’s seeking court intervention such as for appointment of arbitrator, manner of conducting proceedings, setting aside of award etc. The A & C Act was amended in 2015 and 2019 to minimise judicial intervention in arbitral proceedings and to encourage institutional arbitration.
The Consumer Protection Act, 2019 (CPA, 2019) and the Consumer Protection (E-Commerce) Rule, 2020, (E-Commerce Rule 2020 under Section 101 of CPA 2019) which has come into force from 20/7/2020 provide for grievances redressal of complaints for goods or services generated through online and offline transaction including e-commerce transactions. Complaints can be filed electronically u/s 17 of CPA, 2019 with the jurisdictional forum, the consumer comes under, instead of filing the complaint only at the place of purchase or where seller has the registered office. CPA also, allow for appearance of parties through video conferencing under section 38(6) CPA, 2019. CPA 2019 provides an ADR mechanism of mediation in case where it is deemed reasonable. While courts are becoming digitized through the efforts of the judiciary, more effective, scalable, and collaborative mechanisms of resolution of disputes through ADR methods both online and offline are urgently needed. ODR can help resolve disputes efficiently and affordably by combining technology and ADR and need to be promoted.
3. ODR Methods
Online Dispute Resolution can be seen as an online equivalent of ADR as it primarily involves the use of negotiation, mediation or arbitration for dispute resolution.
The following are the ODR methods :-
· Online resolution of complaints, using e-mail to handle certain types of consumer or investors or depositors or policy holders, pensioners complaints;
· Online settlement, using an expert system to automatically settle financial claims;
· Online arbitration, using a website to resolve disputes with the aid of qualified arbitrators;
· Online mediation, using a website to resolve disputes with the aid of qualified mediators;
The ODR can be real time or not as under: -
· Synchronous ODR is a method of dispute resolution where the parties communicate with each other in real-time by using various video-conferencing applications.
· Asynchronous form is where communication is not conducted in real-time but via email or other such communication applications.
Every practicable method of ODR is unique and efficient to itself and it can be tailored as per the needs of the parties.
The CPA, 2019 and E-Commerce Rules 2020 provides for grievance redressal mechanism and an alternate dispute resolution mechanism of mediation and also prescribes mandatory appointment of Grievance Officer by e-commerce entity and provides for setting up of Consumer Mediation Cells (CMC) at State and Centre level for mediation. Complaints can be filed electronically u/s 17 CPA 2019 and hearing can take place through video conferencing u/s 38(6) of CPA 2019. It is expected that such CMC may also encourage online mediation.
4. Global Experience:
Globally ODR witnessed a boom with the e-commerce sector when E-bay and Paypal started resolving their disputes online. Countries like U.S.A, China, Brazil and some European Union nations have already adopted the ODR mechanism by constituting their separate platforms to resolve disputes arising out of e-commerce transactions. Many disputes are successfully resolved in such ODR platforms without resorting to traditional court of law.
5. India’s Experience :
· In India, ODR is still in its infancy stage. Online complaint redressal mechanism provided by various commercial entities such as Banks, Mutual Funds, Telecom, e-commerce companies or regulatory authorities such as TRAI, DCA, SEBI, IRDA etc. .Online Mediation is the most favorable form of dispute resolution with ODR platforms using the same to reach a settlement. Online mediation starts with sending an email to parties that contain basic information about the proceedings followed by virtual meetings to be conducted in the chat rooms.
· Electronic Arbitration is a less popular method of online dispute resolution which are mostly used by some banks or rental companies.
ODR will take a boost, under CPA 2019 and E-Commerce Rules, 2020 where consumer has been given option to opt for mediation with State or Centres Consumer Mediation Cell (CMC) and have been allowed to file complaint electronically u/s 17 and the Act also allows for appearance of parties through video conferencing u/s 38(6). The electronic form of dispute resolution tries to enable new possibilities that were previously unavailable such as the virtual simultaneous presence of all the parties without needing personal attendance at a particular place and time. As per PRS Legislative Research as on August, 2019, 60,000 cases were pending in Supreme Court, 44 lakhs in High Courts and 3.1 crore cases in subordinate courts and it is estimated that the number of new cases filed each year may go upto 15 crore over next three decades which will require atleast 75,000 judges. Thus, there is need of ADR mechanism through more and more ODR platforms to reduce pressures on courts. ODR mechanism being simple and effective has the potential to come into mainstream dispute resolution systems. NITI Aayog, in association with Agami and Omidyar Network India, are seeking to promote Online Dispute Resolution(ODR) in India.
6. ODR Platforms
In recent times more ODR platforms have become operable in the country facilitating particular kinds of dispute resolution for many companies. These ODR platforms have made easy the process of dispute resolution by combining the already existing process of ADR with cutting edge technology, making the process feasible, faster, less expensive and time convenient.
· SAMA facilitates easy access to ADR service providers and helps people to resolve disputes online. SAMA is being used as an ODR platform by ICICI Bank (first bank to apply ODR in India) to resolve nearly 10,000 disputes with values going up as high as INR 20 lakh.
· CODR or Centre for Online Dispute Resolution an institution that will administer cases online end to end.
· AGAMI a non-profit ODR platform that aspires to create a better system of law and justice by providing time-efficient and feasible dispute resolution methods.
· CREK ODR – one of the first to bring ODR in India in 2004.
· CADRE or Centre for Alternate Dispute Resolution Excellence is a website based platform for ODR. First, one party approaches the platform which then contacts the other party. If both the parties agree then an arbitrator is appointed and time-stamped intimations are sent through e-mails or WhatsApp. Usually, the parties do not meet face to face but they make contact electronically via video calls. The decisions that are legally binding come within 20-25 days of time. CADRE has been resolving tenant and rental contract disputes for NestAway an online home rental startup.
7. Legal Provisions having bearing on online proceedings
The success of ODR is dependent on laws which encourages ADR such as conciliation and arbitration under A&C Act, mediation under CPA 2019, arbitration under special statues e.g.u/s 3(a)(5) of NHAI Act 1956, Section 19 of MSMED Act, 86(1)(f) of Electricity Act, 2013, Section 9(2)(h) of SCR Act, 1956, Section 26(2)(n) of Depositories Act, 1996 etc.Section 9 of A and C Act ,1996 create an obligation upon a court in which proceeding have been commenced by a party, in breach of an arbitration agreement to refer the parties to arbitration, if so required by the other party to arbitration agreement The success of ODR is also dependent on procedural flexibility given under the law. As per Section 19(1) of A & C Act Arbitral Tribunal is not bound by the CPC, 1908 and Indian Evidence Act, 1972 (IEA).
a) Admissibility of electronic record
The law gives legal recognition to digital record. Section 4 and 5 of Information Technology Act, 2002 read with Section 65B of Evidence Act allows admissibility at electronic evidence or electronic record.
Section 2(1) (t) of the Information Technology Act, 2002 (IT Act) defines electronic record as under:
“electronic record means data, record or data generated, image or sound stored, received or sent in an electronic form or micro film or computer generated micro fiche.”
Thus, as per aforesaid definition, it can be said that even scanned copy of the record pertaining to a proceeding, if scanned (which is an image of the record) will becomes electronic record.
Regarding legal recognition of electronic record, Section 4 of the IT Act, provides as under:
“Legal recognition of electronic records. —Where any law provides that information or any other matter shall be in writing or in the typewritten or printed form, then, notwithstanding anything contained in such law, such requirement shall be deemed to have been satisfied if such information or matter is–
(a) rendered or made available in an electronic form; and
(b) accessible so as to be usable for a subsequent reference.”
The Hon’ble Supreme Court in Arjun Panditrao Khotkar Vs Kailash Kushanrao Gorantyal & Others (in Civil Appeal No. 20825-26 of 1917) vide judgement dated 14.7.2020 has held that : -
i) The certificate required under Section 65B(4) of Evidence Act is a condition precedent to the admissibility of evidence by way of electronic record.
ii) The required certificate under Section 65B(4) is unnecessary if the original document itself is produced.
iii) In a fact – circumstance where the requisite certificate has been applied for from the person or the authority concerned, and the person or authority either refuses to give such certificate, or does not reply to such demand, the party asking for such certificate can apply to the Court for its production under the provisions of the Evidence Act, CPC or CrPC.
iv) An application can always be made to a Judge for production of such a certificate from the requisite person under Section 65B(4) in cases in which such person refuses to issue such certificate.
v) The Court may in appropriate cases allow the prosecution to produce such certificate at a later point in time.
The technical rule of evidence as applicable under Evidence Act, and technical procedures under CPC and CrPC are not strictly applicable to ADR such as for Arbitration etc. Section 1 of Indian Evidence Act (IEA) provides that it does not apply to arbitration and under Section 19(1) of A & C Act Arbitral Tribunal is not bound by IEA &CPC. However, Arbitral Tribunal is not prohibited from drawing inspiration from CPC and IEA. The Arbitral Tribunal need not apply law relating to evidence with all its rigour. Thus digital records can be accepted as evidence which has data integrity with particular standards of ICC etc. has prescribed on online Arbitration and the Arbitral Tribunal has power to determine admissibility of digital records.
B) Exchange of pleadings and documents electronically
Exchange of pleadings and document electronically and service of notice by email has sanctity of law. Sec 17 of CPA 2019 allows for e-filing of complaints. Hon’ble Supreme Court vide its order dated July 10, 2020 passed in Suo Moto WP (C) No. 3/2009 [in re-cognizance for extension of limitation (during pandemic lockdown) ] , directed as under:
“Service of notices, summons and exchange of pleadings/documents, is a requirement of virtually every legal proceeding. Service of notices, summons and pleadings etc. have not been possible during the period of lockdown because this involves visits to post offices, courier companies or physical delivery of notices, summons and pleadings. We, therefore, consider it appropriate to direct that such services of all the above may be effected by e-mail, FAX, commonly used instant messaging services, such as WhatsApp, Telegram, Signal etc. However, if a party intends to effect service by means of said instant messaging services, we direct that in addition thereto, the party must also effect service of the same document/documents by e-mail, simultaneously on the same date.”
Delhi High Court has also issued a circular dated June 09, 2020 permitting service of notices/summons/daks through e-mail/fax/WhatsApp.
Online ADR being voluntary proceedings pursuant to an agreement exchange of pleadings, documents service of matters etc. need not replicate court proceedings and simpler methods like exchange of pleadings, documents, service of notice etc. can be exchange via emails, WhatsApp as agreed by the parties or procedure of arbitral institution can be adopted.
c) Virtual hearings
Virtual hearings has also been recognised under certain circumstances. Section 38(6) of CPA 2019 allows for appearance of parties through video conferencing. During Pandemic Lockdown Supreme Court and High Court and Tribunals have conducted hearings and oral arguments through WebEx or video conferencing or virtual courts.
Virtual hearings in online ADR proceedings need not totally replicate virtual court or offline ADR proceedings as online ADR are required to provide procedural flexibility as convenient to parties. ODR need to consider new methods whether attendance of all parties in all proceedings necessary, or disputes can be resolved on basis of documents and written submission only or examination of many witnesses on expert may not be necessary.
d) Applicability of rule of evidence or procedure to Arbitration proceedings or ODRs
The technical rules of evidence and procedure are not strictly applicable to Arbitral Proceedings or ADRs.
The High Court of Bombay in the case Sahyadri Earthmovers Vs. L and T Finance Limited and Anr. examined the scope of applicability of CPC during the arbitration proceedings and held that although the Code and the Evidence Act are not applicable strictly, (Section 19), but their settled principles do apply. The court further took the view that,
"Section 19 of the Arbitration Act, which is reproduced contemplates when the parties agree on a particular procedure to be followed by the Arbitral Tribunal, all are bound to follow the same, but in its absence, the Arbitral Tribunal is bound to conduct the proceeding in the manner it considers appropriate. It also means that the Arbitrator has power to determine the admissibility, relevance, materiality and weight in evidence though the provisions of the Code of Civil Procedure and/ or Indian Evidence Act, are not binding upon the Tribunal.
The principles of natural justice, fair play, equal opportunity to both the parties and to pass order, interim or final, based upon the material/evidence placed by the parties on the record and after due analysis and/or appreciation of the same by giving proper and correct interpretation to the terms of the contract, subject to the provisions of law, just cannot be overlooked."
The aim and objective of A & C Act, is to provide quick and effective remedies to dispute and all the requirements of this objective is fulfilled by Online Arbitration.
The CPA 2019 and E-Commerce Rules 2020 also enables e-filing of complaints and appearance of parties through video conferencing and also promotes mediation as ADR.
International Chamber of Commerce (ICC) Report dated 2004 and updated in 2017 on Use of Information Technology in International Arbitration and its NetCase platform, ICC has issued standards on common technical ability, electronic exchange of documents, data integrity issues and video conferencing.
The ICC has framed certain Standards for Online Arbitration which are as follows:
i. the rules for giving file names with a unique name/identifier for each electronic document.
§ To identify the originator,
§ Class of document
§ Place of arbitration
ii) This file naming system shall be used throughout the arbitration for all electronic documents.
iii) The file name and the date of the original document (e.g. the date shown on a letter that is submitted as evidence) shall appear on the first page of the electronic document, either at the top right corner or at the bottom.
iiii) If data loss occurs and the affected participant cannot itself reconstitute the lost electronic documents, the other participants shall help to reconstitute the electronic file(s) by providing copies of the pertinent files that they control.
ivi) Mode of transmission and storage of emails
vi) Whether any confirmation of receipt of email has to be given.
vii) File format for sending attachments, like. PDF, Doc, HTML, ASCII
viii) Rules for audio and video conferencing
The arbitral tribunal, in consultation with the parties, will issue directions giving details for the conference, such as:
i) day and hour and applicable time zone;
ii) places where a conference front-end is required;
iii) who shall participate and number of persons at each front-end;
iv) special requirements, such as visualization of documents;
v) any other requirements.
It is necessary that the parties should decide the procedural requirements of having the virtual proceedings which have to be clearly spelt out in the Arbitration Agreement including the details for exchange of pleadings, documents through emails, standards of acceptance of electronic record, video conferencing and audio conferencing.
In certain circumstances, parties and the arbitrators may be placed at different ends of the system in different geographical areas. Various combinations may arise, for instance, a party may be sitting with an arbitrator at one end while the other two arbitrators may be sitting at the second and the third end and the other party may be sitting at the fourth end. Therefore, in such cases like the instance mentioned above the allegations of noncompliance of Section 12 and Section 18 of A & C Act, may arise. Hence, the rules for holding the arbitration proceedings should be formulated in such a manner that in holding of virtual proceedings, equality and impartiality to the parties is ensured.
The CPA 2019 and E-Commerce Rules 2020 included the option of availing the services of a mediator for dispute adjudication as an ADR method. Further section 17 of CPA 2019 allows e-filing of complaint and section 38(6) of CPA 2019 allows appearance through video conferencing. Thus there is scope for online mediation through good offices of Centre or State Consumer Mediation Cell.
8 Challenges for ODR
ODR is suitable only for certain categories of disputes. There are certain hindrances and challenges for ODR.
i) Use of Internet
There is still a large group of people who are not yet used to the Internet and non-internet user may be hesitant for acceptance of online dispute resolution as a fully-fledged alternative to ADR and litigation. It is essential to create confidence in ODR, not only as a means of getting ODR accepted by the general public, but also to enhance trust in e-commerce or digital transaction for banking or payment etc. By creating an online form of dispute resolution, e.g. online mediation or arbitration, that takes issues like data security and privacy seriously, uses encryption techniques and digital signatures confidence can be created. CPA 2019 and E-Commerce Rule 2020 provides for filing of complaint online. The provisions includes the requirement that the company will agree to solve any dispute involving consumer products and services by online dispute resolution such as through mediation of CMC if the consumer should wish to do so. The CPA 2019 and E-commerce covers product liability, unfair trade practices, mis-leading advertisement and e-commerce transaction in its ambit and disclosure of information on products, seller etc. mandatory and brings concept of informed consumer. The E-Commerce Rule 2020 is expected to enhance consumer confidence in e-commerce and digital transaction.
ii) ODR Awareness
Online dispute resolution is not yet very well known to the legal profession and public. It might take some time for online mediation and online arbitration ODR to become accepted as fully fledged forms of alternate dispute resolution. The pandemic lockdown has created a need for virtual hearing and even some judicial proceedings are also conducted in virtual courts. The first step towards the acceptance of Online Alternate Dispute Resolution, is making the public aware of offline ADR. Section 17 of CPA, 2019 & E-Commerce Rules 2020 allows for e-filing of complaints and gives option of Mediation as an ADR. ADR under C & A Act, 1996 and CPA 2019 will help to alleviate the pressure on the judicial system, thus lowering the caseload for the courts and at the same time raising the ‘quality’ level of the cases that do go to court. ADR is based on confidentiality. Success stories of ADRs are not publicized or used as examples to try and persuade potential users to try ADR. The mediation or arbitration process is unfamiliar to most people and as it is a voluntary process, it is not likely many people will volunteer to take part in a process they do not know and do not understand. The A&C Act provides for Arbitration Promotion Council of India for promotion of ADR and also as depository of arbitral award. CPA 2019 provides for mediation through CMC and thus both the Acts are expected to enhance awareness of ADR and which may ultimately encourage ADR through ODR.
Parties need to have trust in the online mediation or arbitration process. The parties need to have trust in online Mediator or Arbitrator and various online platforms which provides such services.
The CPA, 2019 provides for Consumer Mediation Cells (CMC) as ADR and if mediation is allowed electronically, consumer is expected to have trust on CMC who are expected to be neutral and independent of parties.
Amendment in Arbitration Act, 2019 vest power of appointing Arbitrator with Arbitral institution designated by Supreme Court or High Court and such Arbitrator are expected to be neutral and independent and if appointed for online Arbitration may likely to have acceptance of parties who prefer neutral, independent and expert Arbitrators.
iv) Identity and digital signatures
The parties do not know actual identity of counterparties in virtual transaction. The CPA 2019 Act and E-Commerce Rule, 2020 makes disclosure of particulars of aggregators, sellers and products mandatory. I.T. Act gives a digital signature or record sent through cyberspace the same legal validity as a paper document. The fact that a digital signature and digital records have the same legal validity as written documents, makes it far easier to check someone’s digital identity. Further such electronic records need to meet particular standards as per ICC standard for cross border international online Arbitral proceedings.
v) Data security and Confidentiality
It has to be ensured that the data or document sent and received through electronic mode have not been tampered with and that no unauthorized third parties have access to the information which is subject matter of dispute in online mediation or Arbitration.
In an offline mediation, most communication is oral; transcripts of conversations are usually not made. Any written documents that do exist only circulate in a very small group of people. However, in online communication, communication takes place in written form over insecure networks and there is transfer of data and exchange of drafts over the Internet. The mediator must take all possible precautions to make sure that (automatic) backups are kept no longer than necessary and temporary or permanent copies are not accessible to unauthorized third parties.
The way to protect data and to guarantee confidentiality is through encryption or asymmetric crypto system. The system uses two different keys (a public and a private key) for encryption and decryption of data. Without the right key no one can read the message. The key, needed to read the message, is sent to the recipient separately from the message and reaches him by another route than the message itself. There is need to adopt such secure system for maintaining confidentially in online ODRs.
vii) The applicability of the Law in cross – border transaction
For a cross border e-disputes what law applies is an contentious issue. Normally party’s agree to governing law in Arbitration Agreement. However, in cross-border e-commerce transaction a consumer may not be aware of the country of origin of the product or the governing law. The E-Commerce Rule 2020 makes it mandatory to provide with country of origin of each product and seller information.
In case of Arbitration, Law applicable is of as agreed by parties or seat of Arbitration. Parties need to take the governing law into consideration when setting out a strategy in the ADR procedure and agreement.
The substantive law chosen by the parties is the law that governs the underlying agreement. The parties may also provide separately for the law governing the arbitration agreement if arbitration is silent it is usually deemed to be the same as the law of the seat. Parties are free to agree on the ‘place’ i.e. seat of the arbitration. If there is no agreement between the parties, the venue and seat will be determined by the arbitral tribunal having regard to circumstance of the parties, and the convenience of the parties. The seat of the arbitration is important, unless it is specified in the agreement, the seat of arbitration determines the procedural law applicable to the arbitration. When the arbitration agreement does not specifically specify a ‘seat, Courts examine provisions relating to governing law of the underlying agreement, designation of arbitral institutions and other facts to determine the location of the seat.
OECD in a paper (ODR as a solution to cross-border – E-Disputes) referring to an article of David Post (governing cyberspace) has deliberated on whether there is need to eliminate the choice to party’s by imposing a single, uniform legal standard worldwide. There may be need for uniform legal standards, through multi-lateral treaties and/or the creation of new international governing bodies along the lines of the World Trade Organization, the World Intellectual Property Organization, and the like.
It has alternatively suggested that a kind of "electronic federalism” model, where individual network access providers, rather than territorially-based states, become the essential units of governance; users in effect delegate the task of rule-making to them – confer sovereignty on them - and choose among them according to their own individual views of the constituent elements of an ordered society. The "law of the Internet" thus emerges, not from the decision of some higher authority, but as the aggregate of the choices made by individual system operators about what rules to impose, and by individual users about which online communities to join. Mobility- ability to individual to move unhindered into and out of these individual networks with their distinct rule-sets - is a powerful guarantee that the resulting distribution of rules is a just one. Very conception of what constitutes justice may change as the kind of law that emerges from uncoerced individual choice."
The OECD paper referring to the eBay project, the researchers of the University of Massachusetts came to the conclusion that the context of the dispute resolution system provides the relevant “law” that will encourage parties to participate in online mediation and makes sure they comply with the outcome of the procedure.
The Massachusetts researchers state that the mediation on the eBay site takes place in the ‘shadow of eBay law’. The ‘eBay law’ is the ‘law of the Internet’. emerged as the aggregate of the choices made by eBay as the individual system operator about what rules to impose, and by the eBay-users in choosing to join the eBay community.
ix) Production or inspection of original documents
For ODR production or inspection of original documents becomes challenging if in online proceedings one of the parties insist for the same. Further section 65B(4) makes requirement of certificate for admissibility of electronic record mandatory in judicial proceedings and one of the party may insist for such requirement.
The ICC standards on online arbitral proceedings provides that the arbitral tribunal in consultation with parties give direction with respect to visualization of documents.
x) Cross-examination of witness/experts
Examination/cross-examination of witness or experts also becomes challenge in video conferencing or ODRs. The ODR need to adopt methods such as secure video links to avoid need for witnesses or experts to travel to an evidentiary hearing.
xi) Implementation of awards
The A & C Act provides that the parties are required to resort to Civil Courts for enforcement of award u/s 36 & 37 of Act. Further, enforcement of Awards in relation to International Arbitration is a complex issue. Section 44-52 of the A&C Act provides for enforcement of foreign award passed under New York Convention and Section 53-60 of A&C Act provides for enforcement of foreign award passed under Geneva Convention. Thus resort to Civil Court cannot be altogether avoided.
As per OECD paper, the offline mediation compliance is high, because the mediation agreement that is usually the outcome of the process, can be made legally binding according to the applicable law.
As the researchers found out in the eBay project, compliance with the result of an online mediation procedure was high as a result of ‘eBay Law’. The party that ‘lost’ did not want to jeopardize his or her position in the eBay community and was therefore willing to comply with the outcome.
The researcher also noted that if a virtual marketplace would choose online arbitration or some other form of binding rulings, compliance could be achieved by using the threat of exclusion from the virtual marketplace.
In the eBay experiment, it proved not necessary to obtain a writ of execution to achieve compliance. The Square trade initiative, which resulted from the eBay experiment, uses the same basis of people not wishing to jeopardize their position in the eBay society. With the online mediator initiative, that is not restricted to ecommerce transactions, parties can either accept the outcome as it is, or assure compliance by making the outcome legally binding in a contract. However, where stakes are high party’s prefer judicial proceedings or offline ADR.
xii) Confidence on Courts and its Remedial powers
People have faith in independence and impartiality of Courts. Further Courts have power to enforce judgement and inherent power to act in the interest of Justice. Courts can order various remedies such as specific performance of contract and ADR mostly awards damages or compensation.
An ADR body does not have the power similar to Courts. In case of an award, the same is required to be filed with Court for execution of award. It may not always be in the best interest of a party to choose to participate in ADRs and therefore they may not opt for ADR or ODR.
xiii) Prerogative of Court on interpretation of Laws
It is well recognised that an Arbitral Tribunal is competent to interpret terms of contract. Further in some cases adjudication of disputes may be dependent on interpretation of law. It is the higher judiciary I.e. High Court or Supreme Court who are competent to give interpretation involving interpretation of Acts/legislation which also act as a precedent and the party would prefer court rather than the ADR .
xiv) Special Judicial Forum
There are special Judicial Forum or courts such as under Rent Central Act, , Labour courts, DRT or consumer courts. Labour court can order reinstament, Rent Control Act gives protection against eviction, secured creditors can take over management under SARFAESI Act, Consumer Courts can order replacement of goods etc. Thus entities may prefer these forums with specific types of remedies rather than ADR who mainly award compensation/damages.
9. Prospects of ODR
a) ODR can exist as an alternative only even if ODR will prove to be successful, it will never completely replace litigation or ordinary courts. Even for enforcements of Awards under Arbitration, party has to resort to Civil Court. ADR is voluntary and ADR solutions do not create precedents. ADR is private, contractual means that it is not possible to achieve precedents through ADR nor is it possible to force parties to participate in an ADR procedure.
Similarly, ODR is voluntary, means they cannot be forced to participate. This may be a reason for the other party to opt for litigation. ODR will always be an alternative and will become more important than they are now for reasons of speed, cost-efficiency and cross-border issues. ADR will remain an alternative way of dispute resolution, be it online or offline
b) Given the expected large scale adoption of digitization of financial transaction, e-commerce transaction, education and health services, online transaction or activities are going to see expontial growth and may also ultimately lead to awareness of ADR and ODR. There is increasing awareness and use for ADR under A&C Act and options of availing services of mediator under CPA will give further push to ADR. E-filing of complaint u/w 17 and appearance through video conferencing u/s 38(6) under CPA & E-commerce Rules 2020 will give further push to ODR.
c) ODR mechanisms will come to play an important role in cross-border e-disputes worldwide. ODR will become more important as more people start using the Internet and become involved in electronic transactions through e-commerce for goods or cross border financial transaction.
d) ADR through ODR will be more accepted where issues may be resolved on the basis of documents only, without witness or expert evidence and can be resolved through video conferencing for hearing.
e) The disputes in respect of which parties are entitled to conclude a settlement can be settled by ODR. The ODR can be adopted for following disputes:
i. E-commerce transaction
ii. Digital payments or online banking transactions
iii. Online booking by airlines, railways, hotels
iv. Real Estate – flat booking, construction projects, possession
v. Landlord & Tenant- Leave & Licence – (Tenant & Rental Contracts)
vi. Securities transaction in Stock Exchanges
vii. Family law disputes
viii. Service contracts
ix. Property disputes amongst family members.
x. Joint Ventures
xi. Contract interpretation
f) Technology improves with time and technology being the main ingredient of different ODR methods, it is certain that ODR will come up with new and more desirable techniques.
a) ADR and ODR need to be promoted as a service. - Justice DY Chandrachud, of Supreme High Court of India speaking on technology and access to justice, remarked, ‘Above all there needs to be a fundamental change in the mind set—look upon dispute resolution not as relatable to a place, namely a court, where justice is “administered” but as a service that is availed of.’
b) ADR may be made mandatory for disputes of small financial transactions under financial laws and small value transaction under CPA or E-Commerce Rules 2020 . Justice Indu Malhotra ‘Making ODR or ADR voluntary may defeat the purpose. It should be made mandatory [for specified categories],’.
c) Hybrid model of justice delivery -Nandan Nilekani, Non-Executive Chairman of Infosys, gave his vision for justice delivery. ‘The future will be a hybrid model that combines the best of both worlds—offline courts, online courts and ODR. We will have to reimagine the whole process of justice delivery to work in the hybrid system.’
d) Pandemic Lockdown has instilled an urgent need for ADR and ODR. As justice cannot be kept in abeyance whether in a war or pandemic lockdown, the courts have come out with novel method of service of summons, notices and exchange of pleadings and hearing through virtual courts. Online ADR would be most appropriate resolving disputes involving small value transactions relating to consumer products and services, lending, credit, property, commerce, family disputes, landlord tenant- leave & licence service and retail. ODR through ADR could be the mechanism that will help achieving expedient resolution with minimum cost and therefore need to be promoted under C & A Act, CPA and special statues which promotes ADRs .
1. Arbitration and Concilliation act 1996
2. Consume Protection act 2019 ,E commerce rule , 2020
3. International chamber of commerce reports on use of information technology in international arbitration
4. OECD paper - ODR as a solution to cross border e disputes - by Esther Van den Heuvel
5. Various articles on ODR