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Online Dispute Resolution in India - The Need of the Hour

The author, Preeti Pethe, is a student at IFIM Law School, Bangalore. This article has been specially edited by Thangam Chandy, editor at The ParaleGal.


The COVID-19 pandemic, and all its accompanying consequences have wreaked havoc in various spheres of our lives. Naturally, it is the effects on the economy that have been in the spotlight. A slightly overlooked fact is that simultaneously, the situation of our overburdened judiciary, has worsened. This article focuses on these issues, and the way forward - for us to overcome these unprecedented challenges, and potentially transform our legal system entirely.

The Indian judicial system has been gravely affected by the current global pandemic. The pivotal need for social distancing measures has exacerbated the existing problem of backlogs in the system. ADR mechanisms which include Arbitration, Mediation, Conciliation and Lok Adalats have proven to be an effective mode of assisting the courts in dealing with pendency and recurrence of frivolous matters at the pre-litigation stage. However, it is not enough to solve the problem of millions of pending cases, and 20-30% of High Courts and District Courts having unoccupied vacancies.

Even ADR mechanisms have been affected by the the new safety requirements in various ways, yielding them quite ineffectual. To overcome the situation and help the judiciary get back on track, the system must adapt, and utilize new age solutions with the help of technology, in the form of E-ADR or ODR (Online Dispute resolution). Online Dispute Resolution systems shall not only ease the current situation, but also pave the way for even more flexible and durable forms of resolution. A society that is looking for a paradigm shift in approach to dispute resolution has to aim to make ODR the default response.

The introduction of arbitration as a dispute mechanism has been inculcated by the British Empire in the form of various acts such as the Madras Presidency Regulation Act, Bombay Presidency Regulation Act, and The Charter Act, 1933. But the most important historical step so far, was taken with the enactment of the Indian Arbitration Act, 1940, which was solely based upon the English Arbitration Act. The UNCITRAL Model Law with regards to its article 7(2) suggests that there should be necessary written consent to invoke arbitration. However, it also talks about consent via other electronic means and can be liberally interpreted to include ODR in it.

In terms of international arbitration, while India has adopted the UNCITRAL Model Law on electronic signature in 1996; electronic signature with regards to contracts, gained its reputation with the IT Act in 2000. The Civil Procedure Code amendment with S.89 urges parties to opt for an alternative form of dispute resolution. Furthermore, necessary sections with regards to the Evidence Act, 1872, have been entered to support the admissibility of online evidence, thereby making acceptance of online platforms of dispute resolution much simpler.

There are numerous sectors where ODR may prove more than efficient, and subsequently aid in the process of ridding the judiciary of its burden. Areas like Income Tax payment, payment of loan disputes (in banking especially), insolvency disputes, E-commerce disputes, personal and consumer disputes and pre-trial litigation, are just a few examples. For instance, the Income Tax department of the Government has introduced an EAS- E-assessment Scheme which shall scrutinize some 50,000 cases without human or judicial interference for the previous assessment year. This initiative shall result in transparent and fair assessment since the opportunity for bureaucratic corruption will be eliminated. This procedure may very well cause online disputes to arise, and subsequently ODR could play a major role in resolution.

The adoption of ODR methodologies would result in faster and more economical resolutions. Additionally, these methodologies also ensure the appointment of an arbitrator or an arbitration panel that is qualified to grasp the necessary details and decide upon the disputes presented to them. Another benefit of ODR would be in tackling the problem of data storage. While the primary data at courts may be stored in data banks and software, it is still not enough for the vast number of documents that pass through the courts on a daily basis. This problem may be solved by secure and efficient cloud storage, which is possible with an ODR system. Along with ease of access and synchronous communication, the ODR system also provides for extraordinary simplicity and flexibility, especially once participants gain comfort with the new system.

The e-commerce sector worldwide began exploring the potential of ODR when eBay and PayPal started resolving their disputes online. Countries like the U.S.A and China have already adopted the ODR mechanism by constituting their separate platforms to resolve disputes arising out of e-commerce transactions. Millions of disputes have already been dealt with successfully without even filing a single suit in a traditional court of law. For the litigation part of it, Italy's example of compulsory pre-litigation mediation, makes ODR even more desirable.

It is a proven fact that technology improves with time, and since technology is a main component of ODR methods, newer and more innovative techniques will certainly arise soon. In India, ODR is still in its infancy stage, but it is just a matter of time before it is implemented on a larger scale. With the growth of ODR, certain issues such as privacy, data protection, jurisdiction in certain cases, statute restrictions and place of the proceeding etc. will arise, and these issues must be addressed and dealt with as they come. As for now, the biggest challenge at hand is raising awareness and ensuring that ODR gains popularity and acceptance in our country. This can be done through social media and various other platforms. We are living under exceptional and unforeseen circumstances, and the rate at which things are changing is alarming. We must therefore adapt as need be in order to deliver justice efficiently.

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