Online dispute resolution policy is a game changer for online consumerism

The European Union adopted this mechanism of consumer dispute resolution in the year 2013 through a directive on consumer ADR and a regulation on consumer ODR. The European Union model and the technical notes by UNCITRAL lay down the ground for an ODR mechanism to be followed by different nations. ODR mechanism has the potential to be the next big thing in the field of dispute resolution at the world level

The Right Time

 From Exchanging goods in the barter system in the old times to coins, notes, cheques, to digital transactions and crypto-currencies in the present times, the global market system has evolved enormously. This transition from a physical marketplace to a digital marketplace can be attributed to the global internet revolution which started in the 90s era of the twentieth century. In India, online shopping sites started to take small steps in the early 2000s but it saw a rise in the latter half of the decade and today it is a big reality. 

The big reason for a late bloom of e-commerce was spread of internet accessibility in different parts of the country. Consumerism has been given various connotations but according to a Cambridge dictionary it means “protection of consumers against harmful products or business methods.” In India, Consumer Protection Act of 1986, came as a result from global wave of consumerism. But when this act came into force at that time e-commerce was not a thing at all. In the present era, where everyone is shopping at the tap of their fingertips, the consumer disputes arising out of such transactions posed technical barriers which couldn’t be sorted out with the previous act in an efficient manner. 

To overcome the legal and practical obstacles presented by the previous act, a new Consumer Protection Act came in force in the year 2019. An express inclusion of online consumer disputes was made thereunder. There are many provisions in this act which expressly recognizes e-commerce transactions. A Central Consumer Protection Authority is established under this Act for better well-being of the general interest of consumers. For the first time an ADR mechanism is introduced in resolution of consumer disputes. Mediation is adopted as a mechanism for dispute resolution of consumer disputes under this act. Filing of consumer dispute complaints has been made easier in the greater good of the consumers’ community by expanding the jurisdiction of consumer courts. 

Online Consumerism as a concept for safeguarding the consumer interest in the current times is evolving rapidly in some parts of the world such as in the European Union. It has adopted a model of ODR (Online Dispute Resolution) for resolving all the disputes arising out of consumer matters. The United Commission on International Trade Law in the year 2016 adopted a non-binding document in the form of Technical Notes on Online Dispute Resolution. The European Union adopted this mechanism of consumer dispute resolution in the year 2013 through a directive on consumer ADR and a regulation on consumer ODR. The European Union model and the technical notes by UNCITRAL lays down the ground for an ODR mechanism to be followed by different nations. ODR mechanism has a potential to be the next big thing in the field of dispute resolution at the world level. According to a report, India will witness 220 million online shoppers by 2025. It means that there will be a rise in online consumer disputes also. Although the Consumer Protection Act of 2019 covers online consumer disputes under its sphere but it needs a big stride to provide access to speedy and complete justice. Online Dispute Resolution as a channel for resolution of consumer disputes arising out of online transactions should only be covered in the present times under the present Act.

 Online Dispute Resolution: Global Perspective

 It is an extended form of ADR mechanism which takes place on a digital platform. Currently in some parts of the world it has effectively started for resolution of disputes such as in European Union, US, Hangzhou Internet Court of China and Brazil and the data in Brazil shows that 2 million cases were resolved there in the course of 5 years. It doesn’t act as a substitution of existing legal framework or any other dispute resolution mechanism but it complements the existing system to work efficiently and it is to provide “new and better ways to resolve the disputes that arise in connection with [network] use.”

 UNCITRAL Technical Notes on ODR define it as a mechanism to assist parties to resolve disputes without any requirement of physical presence of the parties through various alternative dispute resolution methods and any other type which may be formed. It does not give an exhaustive list of forms and approaches under ODR method. A difference which can be drawn between the ADR mechanism and ODR mechanism is that the former is done through a third party involvement and the latter is done by indulging a fourth party i.e. ‘technology’. Technology acts as a tool to reach the parties without them being required to be present physically. It acts as an aid to the third party to resolve the dispute in hand between different parties.

 ODR: The missing block in Consumer Protection Act, 2019

 The Consumer Protection Act of 2019 has provided Indian consumer rights a whole new direction from the previous act working in the field. Specifically with regards to the aspect of e-commerce and alternative dispute resolution mechanism, the present act has made a path-breaking impact. The previous 1986 Act was not in tandem with the present day problems and situations. It was enacted when there was nothing like e-shopping in India. Amending that act would’ve also not done a great deal. So it became necessitated to bring a whole new legislation with regards to the consumers’ rights. The whole consumer dynamics is changing vigorously so it was required to be done.

 The legislature has taken care of most of the situations and problems of the present day and has presented a quite comprehensive act. The present act has brought a lot of new dimensions to consumer rights. The major highlights of the current act is introduction of mediation as an alternative method of resolving the disputes, introduction of the concept of product liability for differentiating the liabilities of product manufacturer and product seller, establishment of a Central Consumer Protection Authority, specific recognition to the e-commerce transactions etc. The missing block which can make the present act fully comprehensive consumer protection legislation is inclusion of an ODR scheme as a method of dispute resolution. According to a report India will surpass United States by the year 2034 to become the second largest e-commerce market in the world. Though the present act has given recognition to the e-commerce market but a modern world requires a modern solution to its problems. ODR will provide a simple, secure, feasible and a fast method of dispute resolution. In the present times where Artificial Intelligence is also taking shape it can be used as a great tool for a smoother functioning. The recently formed Central Consumer Protection Authority can play a major role in setting up a ODR platform in India and administering the affairs. An ODR platform common for all in the country acting as a single point of entry of disputes just like EU will be effective when combined with the stages of dispute resolutions laid down in the UNCITRAL Technical Notes.

 A Possible Indian Model We don’t have many models in the world to look around to see how the effectively a system like Online Dispute Resolution is working. There are very few countries which are having such a system. Member states of European Union follow the Regulation on consumer ODR, which we’ve seen above. The others are the US model where few county courts are adopting this mechanism as the first step, else it is done privately by the e-commerce companies since 2000 itself, in China an Internet Court is set up in the city of Hangzhou for resolution of e-commerce disputes through ODR mechanism, Brazil also allows companies to directly resolve their disputes online with the customers. In India also many companies have started to using ODR mechanism for resolution of disputes so it is a good sign to introduce this system in a nationwide aspect. The Indian Model which can be imagined can be made through a culmination of all the above mentioned models and the model presented by the UNCITRAL.

Firstly, the newly established Central Consumer Protection Authority, shall be made the principal body managing and running the Online Dispute Resolution system in India acting as an ODR Administrator as mentioned in the technical notes. It shall be the governing and supervising body under which the functioning of ODR machinery shall take place.

Secondly, an ODR platform should be created and that shall be the only platform running in the country and no other private firms should be allowed although they can become a part of this platform where they can provide their services. It shall be done to bring a level of uniformity in the dispute resolution system.

Thirdly, rules shall be framed for the governance of the dispute resolution of the process. Again this will bring uniformity to the system as different rules will again act as a hindrance in enforcement of consumers’ right.

 Fourthly, all the e-commerce websites shall be registered on this platform and shall be provided with a certificate. And it should be made a mandatory requirement for such companies. And following the EU model the websites should provide a link to the ODR platform increase awareness in the consumer. 

Fifthly, the dispute resolution clause in the standard form contracts shall be in accordance with the guidelines which shall be formed by the Central Consumer Protection Authority. And violation of this rule shall attract heavy penalty as it will act as a protection of consumers from unfair terms made by the companies.

Sixthly, due to low awareness and low digital literacy it shall not be made a compulsory first step. Otherwise it will create more havoc than helping people.

Seventhly, the dispute resolution process as provided in the Technical Notes, should be multitiered. Firstly there should be negotiation, then mediation, and then it will be on the authority to decide whether to send it for arbitration or any other method. 

Sometimes many person from different places are affected by a single cause of action e.g. deficiency in services by an airline company. With the present act where a consumer has been given an option to file a complaint where he resides or where the business takes place of the service provider, increases multiplicity of complaints against the trader. For this ODR mechanism will be of great use where all the complaints can be clubbed into a single one when the relief claimed is common. It will reduce hardship on such a service provider also.

 Issue Of Arbitrability

 Introduction of an ADR mechanism in the form of Mediation for resolution of consumer disputes is a big welcome step. But the Indian courts have always shown apprehension in promoting ADR mechanism such as Arbitration in resolving consumer disputes because of unfair terms provided in the standard form contracts. These unfair terms jeopardize the consumers’ interest at a great extent. But the present act specifically deals with unfair terms provided in the contract between a trader and consumer which prejudicially affects consumer’s rights. But still the issue of non-arbitrability haunts the consumer disputes. 

In the case of Fair Air Engineers Pvt. Ltd. and Anr. v. N.K. Modi, the Supreme Court of India for the first time gave precedence to the Consumer Protection Act of 1986 over the Arbitration Act of 1940, despite the presence of a valid arbitration agreement between the parties. Regarding the consumer legislation as a lex specialis (special law) and the arbitration act as a lex generalis (general law) the court should give precedence to a welfare legislation. In the case of Thirumugugan Cooperative Agricultural Credit Society v. M. Lalitha, the remained firm with previous stand by giving the reason that if arbitration will be allowed in the consumer disputes then the Consumer Protection Act of 1986 will become redundant. Again in the case of A. Ayyasamy v. A. Paramasivam and Ors., the court took the stand by providing the reason that the parties cannot opt out of the exclusive jurisdiction of the consumer forum. But in many cases it has been held that it is at the option of the consumer to decide whether to arbitrate or not and remedy provided under the Consumer Protection Act is an additional remedy and is not in derogation to other remedies. So the biggest problem which can arise by making consumer disputes arbitrable will be that traders will take undue advantage of consumers by forming unfair terms of contract. 

They can make terms like the seat of arbitration will be at a foreign place and many such other terms which can prejudice the consumers’ interest. The issue of arbitrability can be settled after inclusion of the ODR mechanism in the consumer dispute resolution scenario. As we have seen in the above discussed probable Indian model, the Central Consumer Protection Authority’s role becomes pivotal in balancing both the consumers’ interest and access to justice through ADR/ODR mechanism. After the setting up of the Central Authority in regards to consumer protection, it can lay down a specific dispute resolution clause and through incorporation method it should be adopted in all e-commerce and standard form contracts for the protection of consumers’ interest. 

The Covid Times

 Instances of hoarding of necessary items witnessed a steep rise in the early phase of coronavirus pandemic. The consumers were in middle of a life threatening pandemic and non-sympathetic greedy traders. Online shopping rose up as the most viable and efficient option in the hands of consumers. The whole country went through months of lockdown and is still opening up in phased manner. During such hard times e-commerce proved to be a boon for the society. Just imagine being under lockdown in the year 1920, the conditions would’ve been worse. 

Though e-commerce acted as succour in such gloomy times but the consumers went through many hardships dealing online. Consumers faced regular ecommerce challenges like frauds, bad quality, etc. but now they were completely handicapped in legal sense. People could not file their complaint and remained vulnerable to such challenges. The lockdown phase in India became witness to an unprecedented surge in e-commerce market. But it also reflected the need of establishing an Online Dispute Resolution mechanism for the purpose of enforcement of consumers’ rights. Had there been any such mechanism in place, the consumers could’ve easily placed their problems in front of the appropriate authorities. 


 New problems require new solutions. ODR is that new thing which is going to bring further changes in dynamics of consumer protection. A consumer will be able to file a complaint without being required to go to a physical court. He can file all the pleadings and evidences through the online platform. It is on the consumer to get a help of a lawyer or not. Though the same was in the case of forums and commissions where they can represent themselves by their own. But the fear of a common man to go into the court stopped them from representing themselves. The world is witnessing the new age consumers who prefer to stay at home and do all the shopping and book services ranging from getting a massage at home to shopping gym equipment. Everything is getting done on a finger tap on the screen. 

Though ODR is in a nascent stage right now but will certainly be the dispute resolution mechanism in future. Adopting it early when there will be less traffic, the lacunas will be done away with in a more swiftly manner rather than when adopting it will be the urgent demand of the time. The meteoric rise of internet penetration India is witnessing in the current times shows how things are going to be changed and a robust system shall be in place to handle the problems arising out of it. With great internet penetration the e-commerce sector is also witnessing a sharp rise. In India currently few ODR firms are working and some e-commerce and banking sites are also using it. Starting with consumer disputes is a first step in the direction of getting internet courts in India. Consumer disputes being not of much legal nature involving any question of law shall act as a testing object for achieving a complete ODR mechanism for resolving other kinds of dispute also.

 It will certainly help in clearing the backlogs of the cases in the Indian courts. India requires such a system as soon as possible because the numbers of cases pending to the numbers of judges is really worrying state of affairs. Online dispute resolution policy is a game changer for online consumerism ANALYSIS The Indian model which can be imagined can be made through a culmination of all the above-mentioned models and the model presented by the UNCITRAL. First, the newly established Central Consumer Protection Authority shall be made the principal body managing and running the Online Dispute Resolution system in India, acting as an ODR Administrator as mentioned in the technical notes.