RGI Patiala

Abstract

Advancement in technology has brought many inevitable changes. It makes life of human being easier.  Technological revolution has altered the scale of human affairs and this Benefit of technology shall be incorporated for effective and efficient justice delivery in dispute resolution mechanism. The advent of online dispute resolution (ODR) has revolutionized users to submit their cases online and allow an automated process to resolve the disputes. E-commerce has generated trillions of dollars in economic activity in recent years and it continues to accelerate due to ability of data to move across the borders.  Indian Government has announced policy of initiatives designed for large e-commerce platforms. This article deals with concept of online dispute resolution system, its need in present time and its efficacy in dealing with cases with suitable recommendations.

 

Keywords-ODR, Online mediation, Consumer Protection, E-COMMERCE

  1. INTRODUCTION

 

The future of justice should transcend physical boundaries and traditional courtroom settings. As often emphasized, courts should function as a service rather than just a physical location. This service must offer accessibility, formidable capabilities, clear intelligibility, widespread pervasiveness, resilient robustness, and be meticulously crafted with an outcome-driven framework.[1].

 

In the business system consumers are vital components. It is essential to protect the rights of consumers for betterment of commercial world. With the advancement of technology physical commerce transits to e-commerce. This e-commerce platform has enabled the consumers to cross the boundaries of their states and enjoy the product of their choice.

 

India has witnessed a remarkable surge in e-commerce transactions in recent period. Traditionally, resolving disputes in e-commerce transactions often involved lengthy and cumbersome legal processes, deterring many consumers from seeking redress for their grievances.

 

However, the advent of Online Dispute Resolution (ODR) mechanisms has transformed the landscape by offering a swift, efficient, and cost-effective alternative to traditional litigation. With the enactment of the Information Technology Act of 2000 in India, E-commerce and E-governance received official and legal recognition in India[2]. A Traditional Arbitration Act of India has been reformed and now India has introduced the Arbitration and Conciliation Act, 1969 which meets the harmonized standards of the UNCITRAL model. The UNCITRAL Model Law on International Commercial Arbitration was embraced by the United Nations Commission on International Trade Law (UNCITRAL) in 1985, alongside the UNCITRAL Conciliation Rules, which were adopted in 1980.[3].  An Indian government along with various regulatory bodies has taken proactive steps to promote the adoption of ODR mechanisms across the country.

‘Digital India’ campaign, aims to harness technology to empower citizens and improve governance.

 

 

 

  1. MEANING AND DEFINITION OF ONLINE DISPUTE RESOLUTION

 

Online Dispute Resolution (ODR) is a form of online settlement that uses alternative methods for resolving dispute. This term covers dispute which are partially or fully settled over the internet.

During the latter part of the 1990s, the proliferation of Online Dispute Resolution (ODR) corresponded with the burgeoning expansion of the internet. Online Dispute Resolution primarily involves use of negotiations, arbitration or mediation for resolving the issues. The most common methods of ODR are as follows:

 

  1. Synchronous ODR- A method where parties can communicate with each other by using various video conferencing applications in real time.

 

  1. Asynchronous ODR– In this method communication is via email or other such communication applications. Here communication do not happen in real time.

 

  1. c. Online Mediation-It is mixture of synchronous and asynchronous ODR. Generally online mediation starts with sending an email to concern parties which is followed by virtual meetings conducted in the chatrooms.

 

Farah provided a definition, stating that “Online Dispute Resolution involves the utilization of information technology to facilitate alternative dispute resolution processes[4].”.

 

Hon. Arthur M. Monty Ahalt (ret.) offered his definition of ODR, describing it as a specialized form of dispute resolution that harnesses technology to streamline the resolution of conflicts among parties. Its core methods typically include negotiation, mediation, arbitration, or a blend of these approaches, often regarded as the digital counterpart to Alternative Dispute Resolution (ADR)[5].

 

 

 

  1. ORIGIN OF ODR

 

ODR traces its roots back to the expansion of the internet in the 1990s, which led to a rise in online transactions and subsequent disputes. Its evolution can be categorized into three phases, each leveraging advancement in ICT[6].

 

 

  • First Phase: eBay’s experiment

The inception of ODR projects occurred in 1996 at the University of Massachusetts and the University of Maryland. As the internet expanded in the late 1990s, necessitating a robust system for resolving online commercial disputes, ODR emerged as a solution. eBay, among the early e-commerce pioneers, initiated a pilot project in 1999, providing online mediation for buyer-seller disputes. This project, managed initially by SquareTrade and later by eBay, witnessed significant growth, handling over 60 million disputes annually by 2010[7].

 

 

  • Second Phase: Growth of ODR start-ups

 

The success of this model and the internet’s rapid expansion drove ODR’s evolution, sparking the rise of ODR Platforms. In 1999 alone, 21 new ODR programs launched, compared to only 9 the previous year, reaching 115 by 2004. Even ICANN introduced a Domain Name Dispute Resolution Policy, initially offline but increasingly online. Despite many startups failing, Cyber settle, SMARTSETTLE, and the Mediation Room made significant impacts. Innovation varied; eBay’s online mediation differed from CYBERSETTLE’S blind-bidding negotiation platform[8].

 

 

 

  • Third Phase: Adoption by the Government and judiciary

 

The effective integration and adoption of ODR worldwide have culminated in the emergence of several distinct models, each operating concurrently on a global scale. Several successful private ODR Platforms caught the attention of governments, leading to adoption. In 2004, New York City embraced Cyber settle’s system, cutting settlement time by 85% and achieving a 66% settlement rate within 30 days. This success globally birthed various ODR models running concurrently worldwide.

 

 

  1. INTERNATIONAL JURISPRUDENCE

         

United States courts have developed the “minimum contacts” theory, which allows them to exert personal jurisdiction over individuals or entities that have substantial minimum contacts with the forum state. These “minimum contacts” can include physical presence, financial transactions, participation in the stream of commerce, and the choice of the appropriate court through contractual  agreements[9].

 

  • United Nations Convention on International Settlement

Agreements Resulting from Mediation, 2018

 

India, alongside internal legislative efforts, adheres to global best practices to enhance ADR. It’s worth mentioning that India ratified the United Nations Convention on International Settlement Agreements Resulting from Mediation, commonly known as the ‘Singapore Convention,’ in the year 2020. This convention facilitates direct enforcement of mediated settlement agreements, expediting resolution of international mediation disputes.

 

 

5.ODR IN INDIA AND EXISITING STRUCTURAL POLICIES

 

In the Indian context, there is a promising landscape and readiness for Online Dispute Resolution (ODR). The judiciary has shown unwavering support for ODR, with judges openly acknowledging its potential and judicial decisions laying the groundwork for future ODR integration. Examples include the recognition of online arbitration and electronic records as admissible evidence[10]. Additionally, the Executive branch, represented by Government Departments and Ministries, has taken proactive steps. For instance, the Reserve Bank of India (RBI) introduced an ODR policy for digital payments, the Micro, Small, and Medium Enterprises (MSME) sector witnessed the launch of the SAMADHAAN portal, and the Department of Legal Affairs is currently compiling information on ODR service providers nationwide.

 

 

Recently, various Ministries and Government Departments have recognized the potential of Online Dispute Resolution (ODR) and initiated programs aimed at resolving disputes within sectors under their regulation[11]. Several initiatives facilitating the integration of ODR with the Government have been identified, including:

 

(a) National Internet Exchange of India’s (NIXI) Domain Dispute Settlement Mechanism:

The National Internet Exchange of India (NIXI) has implemented a “.In” Domain Name Dispute Resolution Policy (INDRP). This policy outlines the terms and conditions for resolving disputes arising from the registration and use of the “.in” Internet Domain Name where complaints can be submitted online, and disputes are adjudicated by arbitrators based on written submissions[12]. The procedure does not necessitate in-person hearings for dispute resolution.

 

 

  1. Initiatives by the Department of Consumer Affairs

 

The Department of Consumer Affairs initiated the National Consumer Helpline (NCH) in 2005 to provide information and support to consumers. In August 2016, they expanded their services with the Integrated Consumer Grievance Redressal Mechanism (INGRAM), allowing consumers to address complaints directly with participating companies. Additionally, a dedicated “Consumer App” was launched to streamline complaint handling. The Consumer Protection (E-Commerce) Rules, 2020 further bolstered this effort by encouraging e-commerce entities to collaborate with NCH. Recognizing the significance of Online Dispute Resolution (ODR), the Department established the Online Conciliation and Mediation Centre (OCMC) at the National Law School of India University in 2016, aiming to promote online mediation as the primary method for resolving consumer disputes[13] .

 

The Department has been at the forefront of recognizing the significance of Online Dispute Resolution (ODR) for effective dispute resolution. In 2016, the Online Conciliation and Mediation Centre (OCMC) was established at the National Law School of India University, supported by the Ministry of Consumer Affairs, to promote online mediation as the preferred method for addressing consumer disputes. Additionally, following the enactment of the “CONSUMER PROTECTION ACT, 2019”, the Department has taken significant strides in integrating information and communication technology (ICT) into Consumer Dispute Redressal Commissions. This includes the development of the e-daakhil portal to facilitate electronic filing, which could play a vital role in mainstreaming ODR within the consumer protection framework.

 

  1. SAMADHAAN Portal

 

In October 2017, the Ministry of Micro, Small and Medium Enterprises introduced the SAMADHAAN portal, offering electronic filing and online resolution services for dues owed to Micro and Small Enterprises (MSEs) by Public Sector Enterprises, Union Ministries, Departments, and State Governments, which constitute approximately 94% of total dues. MSEs can also utilize the platform to file due payment applications against private enterprises and other entities through State-specific MSE Facilitation Councils. Since its inception, the SAMADHAAN portal has facilitated the resolution of 3982 payment disputes amounting to Rs. 721.59 Crores[14].

 

 

 

  1. Draft National e-Commerce Policy

 

During  February 2019[15], the Department for Promotion of Industry and Internal Trade (DPIIT) introduced the Draft National e-Commerce Policy.. The policy advocates for an electronic grievance redressal mechanism, proposing the electronic distribution of compensation to resolve disputes arising from e-commerce transactions. The draft emphasizes the importance of having an online grievance redressal system for transactions conducted online, aiming to enhance consumer confidence.

 

 

 

  1. RBI’s ODR Policy on Digital Payments

 

In 2019, the High-Level Committee on Deepening Digital Payments, led by Nandan Nilekani and established by the RBI, proposed the establishment of a two-tiered Online Dispute Resolution (ODR) system to address issues arising from digital payments. This system would feature an initial automated tier driven by machine learning, followed by a second tier involving human intervention[16]. Additionally, the committee suggested providing disputing parties with the opportunity to appeal the outcome of the ODR process to an ombudsman body.

 

 

 

 

  1. LEGAL FRAMEWORK IN INDIA

 

As evident from this section, there exists a regulatory framework governing Online Dispute Resolution (ODR) in the country, albeit in its current state. A variety of supportive legislations address both technological and Alternative Dispute Resolution (ADR) aspects of ODR. Notably, within the ADR domain, the Arbitration and Conciliation Act, 1996, stands out[17]. This legislation has been reinforced by the Arbitration and Conciliation (Amendment) Act, 2019, proposing the establishment of a regulatory body, namely the Arbitration Council of India. Furthermore, the Arbitration and Conciliation (Amendment) Act, 2020, has eliminated qualification requirements for arbitrators, enhancing accessibility to arbitration processes.

 

Additionally, various other legislations in India incorporate provisions for the utilization of Alternative Dispute Resolution (ADR). These include:

 

 

  1. A. The Family Courts Act, 1984: Section 9 of this Act, along with its ‘statement of object and reasons’, mandates courts to facilitate and encourage parties to reach a settlement through conciliation[18]. Furthermore, in the case of K. SRINIVAS RAO V D.A. DEEPA[19], the Supreme Court has emphasized mediation as a necessary step to be pursued in matrimonial disputes.

 

  1. Securities and Exchange Board of India (Ombudsman) Regulations, 2003: This regulation offers ombudsman services to resolve disputes concerning various aspects of securities, such as allotment, share-certificate receipt, dividends, and debenture interests. Regulation 16(1) specifically directs the Ombudsman to seek settlement through agreement or mediation between the complainant and the listed company or its intermediary.

 

  1. The Companies Act, 2013, supplemented by the Companies (Mediation and Conciliation) Rules, 2016, mandates the Central Government to maintain a pool of experts known as the ‘Mediation and Conciliation Panel’. The Ministry of Corporate Affairs has further elaborated on this provision by releasing the Companies (Mediation and Conciliation) Rules, 2016, which govern the selection of mediators and outline the mediation process[20].

 

  1. Under the Consumer Protection Act, 2019, Section 74 establishes Consumer Mediation Cells in each district to facilitate mediation services for consumers. Chapter V of the Act encourages parties to engage in mediation at any stage of the proceedings[21].

 

  1. Consumer Protection Act (E-Commerce) Rules, 2020, derived from this legislation, mandate e-commerce entities to establish internal grievance redressal mechanisms within their organizations, laying the groundwork for Online Dispute Resolution (ODR)[22].

 

  1. Information Technology Act, 2000

Section 1 (2) of the Information Technology (IT) Act read along with section 75 of the IT act provides that:

 

  • The jurisdiction of the Act shall encompass the entirety of India, and unless specified otherwise within the Act, it shall also encompass any offense or contravention committed outside India by any individual. Moreover, the Act shall be applicable to any offense or contravention committed beyond the borders of India if the actions or conduct constituting the offense or contravention involve a computer, computer system, or computer network situated within the territory of India[23].

 

 

  1. Indian Evidence act, 1872:

 Section 65-A and 65-B of the Act recognizes electronic evidence and provides conditions for its admissibility. Such provisions can provide guidance to regulate sharing of virtual documents and conducting virtual hearings[24].

 

 

  1. BENEFITS OF ONLINE DISPUTE RESOLUTION SYSTEM

 

At its core, Online Dispute Resolution (ODR) entails utilizing technology to address and resolve disputes. It encompasses more than mere technological integration, such as simply scheduling sessions electronically. Rather, it involves actively employing technology to aid in the resolution process, such as utilizing video conferencing for hearings or electronic document sharing for filing purposes[25]. While ODR shares roots with Alternative Dispute Resolution (ADR), its advantages surpass those of merely enabling ADR through technology, extending to innovative applications of technology[26]. ODR harnesses tools powered by AI/ML, including automated dispute resolution, script-based solutions, and curated platforms tailored to specific categories of disputes.

 

ODR presents numerous advantages compared to traditional court systems, offering parties autonomy over the proceedings. Such as:

 

  1. Time and Cost Management:

 

ODR eliminates the necessity for travel and significantly diminishes costs, enabling superior time and cost management, increased procedural flexibility, and the exploration of more innovative solutions.

 

 

  1. Flexible and Informal:

 

ODR advocates for swift resolutions in a flexible and informal manner, in stark contrast to the rigid procedural norms typically observed in traditional court proceedings.

 

iii. Trust and Confidence:

 

ODR contributes to fostering trust and confidence within the e-commerce landscape by providing swift access to justice, flexibility, efficient time and cost management, thereby promoting e-commerce and overcoming geographical barriers.

 

  1. Easy to Access:

 

ODR is accessible anywhere and anytime, as long as there is internet connectivity, catering to the convenience and needs of the involved parties.

 

vii. Data Storage:

 

Document storage, a common challenge encountered in Indian courts, has been effectively addressed by ODR mechanisms. Through secure data storage, documents can be saved and transmitted as needed, eliminating the associated hassles.

 

viii. Limits implicit bias caused by human judgment:

 

To mitigate the effects of biases, prejudices, and stereotypes on decision-making processes and outcomes, there is a growing awareness of issues related to racial, caste, and gender justice. Research indicates that implicit biases and apprehension when communicating with individuals from diverse communities can significantly impact the outcomes of mediation sessions[27].

 

 

  1. PROBLEMS ASSOCIATED WITH ONLINE DISPUTE RESOLUTION

The growth of ODR in India encounters several obstacles along its path. These problems classified under three heads.

 

9.1 STRUCTURAL PROBLEMS-

 

9.1.1 Lack of Digital infrastructure -A pre condition to ODR integration is robust technology infrastructure across the country. It includes access to computers, smart phone and medium to high bandwidth internet connection. The lack of such requirements is cause problems to those that have limited access to digital infrastructure.

 

9.1.2 Lack of Digital Literacy -The Ministry of Electronics and Information Technology reported that only 38%of households are digitally literate in India. Therefore, there is need of programmers which focus on boosting internet accessibility and provide skilling set services[28].

 

    9.2 OPERATIONAL PROBLEMS

 

9.2.1 Privacy and Confidentiality concerns-It includes online impersonation and tampering of digital evidence. There is fear of breach of confidentiality by circulation of documents and sharing of data during ODR processes. In the realm of e-commerce platforms, it is nearly impossible to execute any online transaction without acquiring some form of personal information from users, including details about their identity and financial information.

Hence, an important consideration for every e – commerce platform is to maintain the privacy of its users. Users of e-commerce platforms typically have two primary concerns:

 

(i) Unauthorized access to personal information.

(ii) Misuse of such personal information.

 

 

9.2.2. Enforcement of outcome of ODR process– It is true that enforcement of arbitral awards in India is complex. It requires stamp duties. An archaic requirement to attach e-stamp certificate create barriers in this process

 

9.3 BEHAVIOURAL PROBLEMS

Lack of Trust in ODR Service -A mistrust stems at several levels from skepticism regarding Technology to questions regarding enforceability of ODR result.

 

 

9.4 JURISDICTIONAL CONCERN

 

In any dispute, one of the primary issues a court considers is whether it has jurisdiction to try the case. This involves jurisdiction over the parties involved and territorial jurisdiction. With the increasing use of the internet, traditional concepts of territory become less applicable, leading to complications in determining jurisdiction. According to traditional rules, courts have jurisdiction over individuals within the country and transactions occurring within its borders[29] . Therefore, in e-commerce transactions, if a business benefits from customers in a specific country via its website, it may be required to defend litigation in that country.

Jurisprudence concerning jurisdiction and enforcement issues in e-commerce is still evolving in India[30].

 

 

  1. THE JUDICIARY IS LEADING THE WAY

 

In India, the judiciary has been at the forefront, spearheading numerous significant initiatives such as the eCourts Mission Mode Project. The effects of these initiatives are anticipated to spread both vertically and laterally. Nevertheless, to enhance the effectiveness of dispute resolution, there exists a requirement for a streamlined framework capable of resolving disputes prior to their escalation to the courts. This committee is dedicated to crafting such a framework, leveraging previous endeavors and advancing towards the realization of the constitutional ideal of ensuring ‘access to justice’  for all[31]. Lok Adalats have evolved into digital counterparts known as e-Lok Adalats. This technological integration has the potential to enhance the accessibility and convenience of dispute resolution, making it more cost-effective.

 

  1. AUTOMATED ONLINE DISPUTE RESOLUTION

 

Automated dispute resolution is predominantly employed in cases where disputes arise due to inadequate agreement or negotiation of terms. In such scenarios, automated systems facilitate negotiations between the conflicting parties, typically guiding them towards a mutually beneficial resolution, thus fostering a win-win outcome. There are many software packages available, which assist in negotiation through blind-bid negotiation . In this process, the disputing parties input their respective acceptable amounts into the online portal or software system. Subsequently, the software evaluates the entered amounts and determines whether a mutually agreeable deal can be reached between the disputing parties or not.

 

  1. The eCourts Mission Mode Project, launched in 2005, aimed to integrate information and communication technology (ICT) across all levels of the judiciary, starting from Tehsils up to the Supreme Court.

 

  1. E-filing of cases: The Supreme Court issued Practice Directions for eFiling to enable Advocates-on-record to file cases online through an e-filing platform.

 

 

  1. Integration of Artificial Intelligence: Expanding beyond ICT integration, the Supreme Court has embraced artificial intelligence with the creation of SUVAS (Supreme Court Vidhik Anuvaad Software). This AI-powered tool translates legal documents, including judgments and orders, from English to nine vernacular language scripts.

 

 

  1. LANDMARK CASES

 

  • TATA SONS V. THE ADVANCED INFORMATION TECHNOLOGY ASSOCIATION[32] and MARUTI UDYOG LIMITED V. MARUTI SOFTWARE PVT. LTD[33].

In cases of domain name disputes, the World Intellectual Property Organization (WIPO) Arbitration and Mediation Center serves as the designated medium for resolution..

 

  • IN STATE OF MAHARASHTRA V. DR. PRAFUL B. DESAI[34]

 

      The Supreme Court has affirmed that video-conferencing can be utilized for recording the evidence of witnesses, emphasizing that such recordings fulfill the objectives outlined in Section 273 of the Code of Criminal Procedure, which mandates that evidence be recorded in the presence of the accused.

 

 

  • The Hon’ble Supreme Court has ruled that the online arbitration agreement stands as the cornerstone of arbitration proceedings. Given that parties convene virtually rather than in person, it is imperative that the agreement comprehensively outlines all aspects of the dispute resolution mechanism. It is essential for there to be a meeting of minds, and the agreement must adhere to the provisions laid down in Section 7 of the Arbitration and Conciliation Act, 1996.

 

  • IN SHAKTI BHOG FOOD LTD. V. KOLA SHIPPING LTD.[36]

 Communication and acceptance through telex, telegram, and other modes of communication have been recognized as valid methods of conveying messages and reaching agreements.

 

 

 

  1. SUGGESTION AND CONCLUSION

 

With the immense growth of online market, ODR mechanism in order to fasten its leg needs mass awareness and training through social media, technical education, conferences, workshops and campaigns etc at gross root level. The involvement of the government is crucial in providing financial aid to ODR projects and facilitating the establishment of the technical and administrative infrastructure necessary for setting up an ODR process.

 

While numerous challenges have been highlighted previously, the future of Online Dispute Resolution (ODR) in India appears promising. Achieving widespread adoption of ODR will necessitate concerted efforts from all stakeholders. Therefore, the recommendations put forward are not solely directed at the Government but encompass various influential stakeholders.

 

An essential prerequisite for all technology-related innovations, including Online Dispute Resolution (ODR), is the widespread accessibility of digital infrastructure. Accessing digital infrastructure goes beyond physical availability; users must also possess digital literacy to fully utilize its potential.

 

Reduce digital divide through targeted policies. Scaling up ODR in India requires enhancing the capacity of professionals and service providers alongside ensuring access to digital infrastructure. Mainstreaming ODR relies on cultivating trust in its processes among individual disputants, businesses, and governments alongside infrastructure and capacity-building efforts.

 

Furthermore, there is a requirement for the codification of laws, establishment of uniform standards and rules, including addressing the implications of conflict of law rules. This framework will ultimately facilitate the recognition and admissibility of ODR processes both nationally and internationally.

 

The paramount goal is to ensure access to justice at an affordable cost for all segments of society. A robust communication infrastructure is indispensable for facilitating easy access, while justice must be dispensed swiftly and efficiently. This can be achieved by enhancing literacy rates, minimizing language and cultural barriers, and ensuring easy access to e-courts. These measures can catalyze the growth of e-commerce and e-governance. Both national and international initiatives are required to foster the expansion of ODR, consequently alleviating the burden on the judiciary.

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