Online dispute resolution: An Indian perspective

The time is ripe for courts, the government, advocates, litigants, and concerned entities to go ahead and utilise the ODR to its full potential.

In the era of globalisation, people in the 21st century have witnessed the ultimate impact of information and communication technology on the social, economic, legal, and cultural arena of the globe. The technological revolution brought by the internet has altered the scale according to which human affairs are being conducted. It has also fostered a new medium that has impacted well established legal conceptions, especially concerning the resolution of disputes.

This has resulted in a growing need for the technology-assisted dispute resolution process. Online Dispute Resolution (“ODR”) refers to a broad class of Alternative Dispute Resolution (“ADR”) processes that take advantage of the availability and increasing development of internet technology. ODR is a branch of dispute resolution which uses technology to facilitate the resolution of disputes between parties.

The three critical factors, namely convenience, trust, and expertise, form the essence of ODR. Through ODR, parties may engage in several different ADR methods, including negotiation, mediation, and arbitration, adapted for full online use. ODR is not a new concept but has developed almost in tandem with traditional ADR. In the pioneering book, Online Dispute Resolution (2001), Professors Ethan Katsh and Janet Rifkin broke the early development of ODR into three different stages: The first, which they say lasted until about 1995, consisted of specialised dispute resolution in specific contexts. (The first use of the term “online dispute resolution” was at a conference hosted by the National Conference on Artificial Intelligence Research (NCAIR) in Washington, DC in 1996).

The second period coincided with the growth of the internet, particularly as a medium for commerce. The third period, which began around the turn of the century, was when commercial entities started to show interest in online dispute resolution. The first online arbitration center, Virtual Magistrate, was created in 1995 through grants from the National Center for Automated Information, a private foundation.

The Virtual Magistrate was not a success and attracted only one case. By the end of the decade, ODR experienced a “boom” as consumers became more comfortable with the internet and amenable to using it to resolve disputes online. The online auction site eBay was the first company to truly promote the use of ODR when, in 1999, it used a few hundred auction dispute cases to start its ODR pilot program. Since 1999, many ODR service providers such as Modria, Cybersettle, ClickNsettle.com, SmartSettle, Legal Referee, BBB Online have actively resolved disputes both in public and private domain involving government and commercial entities. In India, organisations such as Perry4Law, NIXI (.IN domain), TLCEODRI have also been advocating and taking the initiative for ODR.

At the domestic level in India, ODR derives its legitimacy from: The Constitution of India (no person shall be deprived of his life or his personal liberty except according to the procedure established by law, which includes right to a speedy trial); Code of Civil Procedure, 1908 (promotion of settlement of disputes by the parties or option for opting for ADR); Arbitration and Conciliation Act, 1996 (the 2015 Amendment gave legal recognition to Arbitration Agreement entered into by communication through electronic means); Evidence Act, 1872 (insertion of Section 65-A and 65-B has made electronic evidence as a secondary copy to be admissible in courts of law subject to the satisfaction of requirements mentioned in section 65-B); and Information Technology Act, 2000 (provides greater certainty to online contracts through legal recognition to electronic records and signature, thereby facilitating e-commerce).

The utilisation of ODR has several advantages and strengths: a) Time and Cost Management; b) Flexible and Informal; c) Trust and Confidence; d) Asynchronous communication; e) Communication through Videoconference; f) Easy to Access, and g) Data Storage. Despite the benefits of ODR, critics have pointed to several challenges and limitations.

According to them although ODR is faster, convenient, flexible and voluntary, several hitches in the process have questioned the claim that ODR is a suitable alternative to litigation or traditional ADR due to issues like a) Security and Confidentiality; b) Enforceability; c) determination of place of the proceeding; d) jurisdictional issues; e) Infrastructure Challenge; f) Lack of Face-to-Face Encounters; and g) cultural and language barriers.

The judicial and quasijudicial fora along with the government have been moving towards promoting ADR as a preferred mode of resolution of disputes primarily commercial disputes due to various reasons including long pendency of cases, a huge backlog of cases, judicial vacancies, slow administrative approach, etc. Though even ADR is not moving at the expected trajectory for many reasons, including procedural complexities, court interference, absence of a world-recognized arbitration center, etc.

This is where ODR can come in handy and help the courts, litigants, and counsels alike. The Supreme Court of India in a suo motu writ petition captioned ‘Expeditious trial of cases under Section 138 of Negotiable Instruments Act 1881’, took note of the observations in Meters and Instruments Private Limited and Anr. v. Kanchan Mehta reported at (2018) 1 SCC 560, which advocated for the use of technology and adjudicating cases online to achieve paperless courts and reduce overcrowding in courts. With the advent of Covid-19, it became imperative for the courts to adopt technology solutions as much as possible, especially the facility of video conferencing.

The Supreme Court in suo motu writ (Civil) No.5/2020 passed comprehensive guidelines on 6 April 2020 for court functioning through video conferencing during the Covid-19 pandemic. It is also noteworthy that international arbitral institutions including Singapore International Arbitration Centre, London Court of International Arbitration, etc. and several courts in countries such as the United Kingdom, the United States of America, Canada, Denmark, etc. actively use the option of online hearings for their usual course of business and adjudication of matters as well as actively making use of the benefits accruing through ODR.

Therefore, the Indian judiciary should not shy away from the change and can learn from the experiences of these courts and arbitral institutions to inculcate the usage of technology to reduce the burden on the Indian judiciary and render justice in a more convenient, a time-bound manner and technology-driven manner. Even though ODR is not a new concept, has existed for a few years now, and continues to grow, its implementation in practice has yet to be established. As is typical with any change, it takes time to become the new normal. At present, it is difficult to imagine that the whole system would become technology-driven once the situation arising from Covid-19 subsides.

Though at the same time, this present experiment will go a long way in establishing the roots of a technologically driven dispute resolution process in India. There are various challenges that will be faced by the parties, and they will continue until it becomes a matter of routine. However, as is reflected by the Supreme Court to give the guidelines in suo motu writ on the usage of technology, our courts are up to the challenge and shall promote the use of technology. It is upon the Government of India to pass relevant law on the applicability and enforceability of awards rendered during online dispute resolutions.

Till the time no guidelines and relevant legislative framework are holding the sway for ODR, grey areas will continue to subsist. Any new technology or process is riddled with issues and challenges, and they have to be overcome. Similarly, ODR at the present moment is still at a nascent stage in India (and to some extent even in developed nations) and will take time to develop. The advent of the present situation shows that courts in India can adapt to the current extenuating circumstances. It needs to be implemented at a larger scale.

Therefore, the time is ripe for the courts and the interested parties such as the government, advocates, litigants, and concerned entities to go ahead and utilise the ODR to its full potential. There are challenges and issues, but none so significant that they cannot be overcome. With the right set of principles and guidelines, the technology-driven court processes and Online Dispute Resolution can become the new norm.

Ajay Bhargava (Senior Partner), Aseem Chaturvedi (Partner), Milind Sharma (Associate) and Shivank Diddi (Associate) are part of the Dispute Resolution practice of Khaitan & Co, New Delhi practicing across different forums nationally–Supreme Court, High Courts and various tribunals–as also arbitrations both domestic and international.