Online Dispute Resolution: The Legal Status and Way forward 

The article is authored by Ms. Neha Pandey an intern with LatestLaws.com from Himachal Pradesh National Law University.

Introduction

The need for Alternate Dispute Resolution (ADR) was strongly felt due to the pendency of cases in the Judicial system. In India where the population is more than 1.2 billion, thousands of cases are filed daily which adds to the burden of courts. The outside court settlements are both effective and efficient. The concept of online dispute resolution is not new to us. In the late 1990s, various start-ups began offering e-mediation or online dispute resolution services to common people and different organizations. This process is the latest development in the dispute redressal system and has given new hope to a speedy justice delivery system. Although as we move along this path, it can be said that the path to success is not easy.

Despite some of the shortcomings, Online Dispute Resolution (ODR) has been used very effectively by multiple organisations like the National Internet Exchange of India (NIXI), the World Intellectual Property Organization (WIPO), Perry4law, Presolv360, etc. The companies developed a roaster of trained online mediators, lawyers, and experts who facilitate ODR mainly through e-mail. This service is now offered around the globe. It is particularly in business deals and matters, that ODR has gained a lot of popularity. 

As developments in ODR are at the beginning level, not much literature has been published in India. A lot of foreign literature though is available, however, there is hardly anything about India. The purpose of this research paper is to:

1. Highlight the problem of delay in the judicial system of our country, 
2. Examine the use of ODR as an effective tool in the resolution of disputes, 
3. Examine major hurdles in the implementation of ODR, 
4. Study the ODR model being used by NIXI, 
5. Discuss the future of ODR in India 

Delay in the Indian Judicial System

With a population of over one billion people, a large middle class with significant purchasing power, a rapidly developing economy, and a market the size of a continent, India today cannot be overlooked. Along with these elements, India's democracy, rule of law, and independence of the judiciary make it an appealing destination to do business. In India, there was a huge backlog of litigation cases, so ADR was introduced by Section 89 of the Code of Civil Procedure, 1908 (CPC). Arbitration was given more clear legal status through the introduction of the Arbitration and Conciliation Act of 1996. After several changes to the statute, legal recognition of Arbitration by electronic means was granted by revising Section 7 of the Act, which strengthens the idea of ODR. The English-style court system provides much-needed trust to foreign investors and the business community. ADR has become an important aspect of the legal system in contemporary times since it allows for quick resolutions and often results in outcomes that are beneficial to both parties. The current ADR laws are insufficient to resolve disputes arising from online transactions and failure to satisfy customer expectations. However, several critics have said that India's legal system has crumbled due to the delays associated with it, particularly at the lower court level. "Justice delayed is justice denied," as the cliché goes, has lost its meaning. This, on the other hand, is not a new phenomenon. Although, if we can successfully apply this ODR process, we will be able to counteract the negative impacts of delayed justice in our country.

In 1952 Mr. Motilal C. Setalvad, the first Attorney General of Free India, wrote:

“A burning problem which the citizens, lawyers, and judges face alike is that of the congestion of Courts of law and the consequent inordinate delays in the administration of justice…”[1]

The situation hasn't changed much since then. In India, the word "delay" has practically become synonymous with the Judicial system. The courts are said to be so occupied with procedural problems that cases take a long time to start and then move at a snail's pace once they do. Financial claims and Commercial litigation that does not include interim relief can take years to resolve, and courts are said to be hesitant to award fees or reasonable interest.

Indian courts, especially the High Courts, are generally regarded as unbiased. Trial courts, on the other hand, are under tremendous strain. The Judicial officers at this level (Judges and Magistrates) are government employees of the province in which the court is located. As a result, unlike High Courts and Supreme Court judges, these judges do not enjoy complete financial and other types of independence. They frequently function under the Damocles sword of the State's executive, which can transfer and control other services. As a result, corruption, unethical behavior, and misuse of power are not rare. Political, governmental, or other pressures, as well as the lure of money or threats of harm to the judge's property or person, may influence certain decisions. 

Mr. Timothy Adams, the US Treasury Under Secretary for International Affairs, stated on his recent visit to India that US businessmen were optimistic about India but were concerned about the speed with which the Country's dispute resolution system was being implemented. This does not bode well for the corporate community in particular or the general public too. 

Resolving Business Conflicts

Time is money in business. Disputes are similar to cancer in that they should be terminated at the earliest stages. Business conflicts can be between two businesses (B2B) or between businesses and customers (B2C). Litigation is the least preferred way of resolution for both types of disputes for a variety of reasons, the most important of which is a delay.

ADR techniques are the answer. For the resolution of commercial disputes, methods such as negotiation, mediation, conciliation, arbitration, and a combination of these have been utilised and are becoming the preferred choice. Despite being a preferred method of dispute resolution, the limitations of these procedures, particularly the physical attendance of both the parties and the arbitrator/conciliator/mediator at one location for multiple meetings, make even ADR methods ineffectual. 

Due to rapid advancements in ICT (Information and Communication Technology), a great number of online cross-border transactions and e-commerce activities are taking place, resulting in e-disputes such as domain name disputes, hacking, privacy invasion, data theft, and online scams. As a result, an online mediation platform for small and medium-value matters is urgently required.

Technology Providing Solution

Whenever there is a dire need, technology has always given us a solution. The Internet has emerged as one of the most significant and revolutionary inventions of our time. 

With the increased globalisation of business, commercial disputes are becoming increasingly global in nature. Traditional means of resolving commercial conflicts have become prohibitively expensive and time-consuming. Litigation has never been the preferred means of resolving international commercial disagreements. ADR techniques were preferred. With the advent of the internet, a new method of dispute resolution has emerged: Online Dispute Resolution. "Online Dispute Resolution has only one overriding aspect - it takes place online," according to the American Bar Association Task Force on E-commerce and ADR. Furthermore, "ODR comprises several forms of ADR and court processes that use the Internet, websites, e-mail exchanges, streaming media, and other information technology as part of the process."

Even during the COVID-19 Pandemic, ODR grew increasingly popular, with even regular courts using video conferencing to hear cases. Using Online Dispute Resolution as a method for dispute settlement can be beneficial to the parties because it provides benefits such as efficient management, ease of access, synchronised communications, and speedy disposal. Though it is also accompanied by many concerns about compromised confidentiality, literacy rates, and the actual ease of use by all.

At present there are three approaches to ODR[2]:

• Arbitration

The Arbitration strategy stresses rights and legal applications to resolve the issue through the decision of an Arbitrator. The success of traditional arbitration is the driving force behind this strategy. The logic goes that if something works well offline, it should also work well online.

• Non-adjudicative ADR

The Non-adjudicative ADR method to ODR focuses on negotiation and mediation, as well as how to strengthen both parties' interactions and relationships.

• Cyberspace

Cyberspace focuses on information technology and the Internet. The cyberspace method is based on the notion of using technology to identify better, faster, and less expensive ways to resolve conflicts.

Important organisations in ODR

• Government

Governments consider ODR as a mechanism for providing access to justice that Courts are unable to give, reducing court congestion, and advancing the e-commerce sector.

• Business community

Because it is confidential, quick, and economical, the business community prefers ODR. It also promotes customer trust.

• Consumers

ODR enforces consumer rights for consumer organisations.

• ADR institutions

ODR is seen as a way for ADR institutions to achieve a competitive advantage.

Information and Communication Technology (ICT) is becoming a more crucial tool for resolving some types of conflict in the long term. If online commerce and other interactions are to reach their full potential, ODR is a vital component of the necessary infrastructure.[3]

The use of ODR is blooming and has been well documented in the past few years, across the world and consumer disputes are seen as the main area. Globally, Consumer conflicts are seen as the key area of growth, along with human resources, government, and employment issues.[4]

The Advantages of ODR for India

The report of the High-Level Committee on ‘Deepening of Digital Payments on the advice of the Nilekani Panel’ in 2019, which provided for the establishment of ODR for disputes over digital payments, was the first formal step in the creation of ODR in India[5]. Even in the 2012 decision of Shakti Bhog v. Kola Shipping, the Supreme Court[6] found that online arbitration agreements are legal as long as they meet the requirements of Sections 4 and 5 of the Information Technology Act read with Section 65B of the Evidence Act 1872.  Even after all of the legislative and judicial preparation, there are certain critical logistical and infrastructure issues along with the e-rights of the parties, that must be addressed. 

While in India, all of the three different ways stated above could be employed, NIXI is currently using the first option, Arbitration, with great success. When the system and thinking evolve, the other two ways might work. These approaches are not currently used in India. ODR will be used to supplement the offline dispute resolution method.

ODR appears to be the best option for a large number of low-value commercial disputes involving disputants from different geographical locations.[7]

The following are the key characteristics of ODR that make it suited for such commercial conflicts in India:

1. A faster way of dispute resolution:

As already discussed in the above Sections, we know how much delay is caused in the traditional Judicial system. The matters and disputes which are dissolved by litigants in five to ten years can be resolved by the way of ODR in a few months or weeks. As stated earlier, time is money in business, so in business to get the work done the businessmen sometimes litigants use the services of extra-legal institutions (even the mafia) to get a speedy settlement. This is why ODR is preferable in business disputes.

2.  Flexible and easily accessible

ODR is unquestionably more efficient than standard ADR or litigation. It would be a very appealing feature for people who are already familiar with ADR processes. However, convenience is not a deciding factor for the have-nots, who lack access to Justice for a variety of reasons – poverty, illiteracy, lack of awareness, and so on. They want their problems settled as quickly as possible. Therefore, speed and efficacy are far more essential to them than convenience. This makes convenience an added benefit for society's upper crust. However, if ODR proves to be a huge success in India when it comes to commercial conflicts, this convenience would undoubtedly become a requirement. 

3. Cost-effective

Since there is no need for physical meetings in ODR there is a significant amount saved in travel-cost. Moreover, a lot of time is saved during the travel which otherwise would have been lost during travel. This is noticeable in cases involving multinational business issues. Additional expenses such as board and lodging in another area where the Court is located are also avoided.[8]

4. No geographical barriers

It is frequently impossible for parties to travel from remote settlements to district courts, let alone to the High Courts and the Supreme Court. The inconvenient nature of many trips to the courts with no or very little progress in their cases takes its toll on litigants, and many of them become frustrated by the sheer waste of time, effort, and money. Consequently, a large section of people is not able to seek justice.[9]

5. Easy storage of digital data:

In Indian courts, finding a specific file promptly is often impossible due to the abundance of paperwork from floor to ceiling. Digital storage will keep the data organised and allow it to be retrieved as needed. There is no shortage of talent or technology for such storage thanks to the enormous number of software engineers and computer firms.

Challenges with ODR in India – Disadvantages

In India, the road to ODR is rocky. Although ODR has a lot of advantages and unique features that can aid in the resolution of conflicts in India, it also has several drawbacks. The following are some of these issues:

1. Confidence and Trust

The Supreme Court and the High Courts of India are both autonomous and well-respected. This admiration stems from the citizens' faith in them. It's unclear how much faith and confidence individuals have in ODR institutions. 

2. Accessibility

The digital divide between IT haves and have-nots makes access for the less fortunate more challenging at this moment. The availability of ODR will widen the gap. People who have all of the resources are normally familiar with the system and can exploit it for their purposes with some effort. This strengthens the case for empowering the weaker groups by granting them access.

3. Advocates

Once Shakespeare said: “The first thing we do, let's kill all the lawyers”.  ODR supporters will undoubtedly agree. With their combative conflict resolution approach, advocates are one of the largest roadblocks. Also, if ODR is followed, there may be a conflict with lawyers' fee earnings. ODR is not taught at law schools to lawyers in general. This makes it harder for the disputant to choose ODR over litigation when the Advocates strongly support litigation. 

An advocate's principal responsibility is to counsel his clients on proper remedies and actions. Lawyer advice is excellent for court cases, but without sufficient ODR training, who will advise them on ODR mechanisms? As a result, reliance on lawyers should be decreased.

The Impact of Online Dispute Resolution on Privacy

Privacy is one of the major issues in ODR as cybercrimes are more prevalent on online platforms. The use of computer programmes and the issue of cybersecurity are two main problems that can be linked to the introduction of ODR. It is first necessary to examine why privacy is so important. It's also crucial to look into whether using ODR has any implications for privacy concerns.

Privacy has traditionally been regarded as an important aspect of India's justice system since it is necessary not only to ensure that the parties to a dispute receive justice but also to preserve the rights of others involved.

The involvement of larger parties in disputes necessitates such disclosures during the resolution of disputes. Such disclosures can harm an organisation's performance as well as expose trade secrets. Not only can the release of sensitive material influence huge organisations, but it also has a significant impact on individuals or families who choose mediation or other ADR methods.

When using online services for any reason, such as banking, conversation, or dispute resolution, one is hesitant to do so due to the level of security provided by the service providers. Frequently, people are becoming the victim of hacking and losing all their money, reputation, etc. 

The Legal Framework in India

Apart from various sources of International Arbitration Law, such as the European Convention on International Commercial Arbitration 1961[10] and Inter-American Convention on International Commercial 1975[11] supplemented by the Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards 1979[12], the EU Directive on electronic commerce[17], institutional rules and private contractual agreements, there are two main sources of International Arbitration Law at the international level:

1.  The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which came into effect in 1958, and
2. Model Law on International Commercial Arbitration and Conciliation Rules (UNCITRAL Model Law).

The implementation of the Indian Arbitration Act of 1940, which was primarily based on the English Arbitration Act, was a momentous step in the Indian legal system. It mostly dealt with Domestic Arbitration.

1. The Indian Constitution: Following independence, the Indian Constitution was adopted, with Article 21 declaring that no person shall be deprived of his or her life or personal liberty except in accordance with legal procedures. And it has to be "reasonable, fair, and just."[13] In a landmark case[14], the Supreme Court of India ruled that the right to a quick trial is an integral aspect of the right to life or personal liberty.
2. The Code of Civil Procedure, 1908: Section 89 (Settlement of Dispute Outside Court) and Rules 1A to 1C, Order 10 (Direction of Court to opt for any one mode of ADR after first hearing of suit) were inserted by the Civil Procedure Code Amendment Act 1999, making it mandatory for courts to call upon parties to agree to one or more ADR methods where there are elements of the settlement.[15]
3. Arbitration and Conciliation Act, 1996: The Act was enacted based on the UNCITRAL Model Law on International Commercial Arbitration, 1985, and the Conciliation Rules, 1980, to harmonise the concepts of arbitration and conciliation in various legal systems throughout the world and make them universally applicable.[16] The major goal of the act is to foster amicable conflict resolution through arbitration and conciliation on a national and international level. It allows for the use of mediation, conciliation, or other techniques to encourage the settlement of disputes during arbitral proceedings.[17] Under section 73 of the Act, a settlement agreement made by parties as a result of proceedings is given the status of a court judgment.[18] The Arbitration and Conciliation (Amendment) Act, 2015, recently extended legal legitimacy to arbitration agreements entered into through electronic communication, which is a great step toward effective ODR promotion.
4. Information and Technology Act, 2000: The principles of writing and signatures have lately been extensively modified to provide better confidence to online contracts and hence facilitate e-commerce.[19] The adoption of the UNCITRAL Model Law on Electronic Commerce[20] in 1996 was the most significant move in this direction. The UNCITRAL Model Law on Electronic Signatures was then adopted in 2001. These legal reforms resulted in "global writing requirement reform."[21] The Information and Technology Act, of 2000, was enacted in India to stimulate e-commerce and give legal status to e-transactions. It was based on the UNCITRAL Model Law of E-Commerce. Electronic records and signatures are legally recognised under Sections 4, 5, 10-A, and 11-15 of the Act.[22]
5. Indian Evidence Act 1872: What if agreements reached by e-communication are not admissible as evidence in courts of law? Sections 65A and 65B were included for this reason, making electronic evidence as a secondary copy admissible in courts of law if the standards outlined in Section 65B are met.

Way Forward:

In recent years, especially during the 2019 pandemic the number of ODRs has increased dramatically. Their platforms use complex software to handle many simultaneous uploads and downloads of files in real-time and ODRs' technological developments make them suited for fulfilling the rising needs of security in the face of many cyber dangers. Platforms have implemented and incorporated several of the unique features offered by various cybersecurity instruments, such as the 2020 Protocol and international standards (ISO)[23]

To make ODR approach more effective and secure from cyber-attacks certain suggestions can be adopted:

• Multi-factor authentication

Many ODRs have two-step verification as a key element that reduces the risk of data disclosure. This feature adds an extra layer of security ensuring that only authorised users have access to important data. This is critical since the majority of ODRs run on browsers that leave a digital trail, making them accessible to hackers who have access to weak browser data. As a result, access should be controlled on a "need to know" basis, which has a benefit over self-created passwords. For example, e-Arbitration[24], an ODR platform, has implemented two-factor authentication, where every user receives a unique ID connected with their user profile known as a "token," which must be validated by a second factor/device upon login – such as a phone or e-mail. This allows people to access only the information that they have access to, which is significant given that some platforms, such as Zoom, which is now used by some virtual hearings, have had issues with unauthorised users accessing meetings for the goal of compromising their security.

• Encryption of data

Encryption is a cybersecurity strategy that secures data by mixing up data and preventing unauthorised users from understanding sensitive data It aids with the protection of sensitive data such as trade secrets, financial information, and personally-identifying information. Without this functionality, such sensitive material may be vulnerable to assault, resulting in a loss of secrecy, which is an important pillar of Arbitration. Routine audits are required for encryption, during which the platform is evaluated for potential security flaws. Both e-Arbitration and Immediate ODRs, for example, perform routine verifications to determine and guarantee that sensitive data is encrypted.

• Managing security breaches

Despite strong security precautions, data breaches are sometimes unavoidable. This was notably true during the COVID-19 era when many internet firms experienced an increase in phishing attacks, mal spam, and ransomware attacks. These platforms should respond quickly to mitigate a data breach and recover lost or stolen information in these situations. This can be accomplished by conducting routine platform audits and developing a well-thought-out plan of action to respond to an incident. Meditation and e-Arbitration have both created frequent audits to detect new security weaknesses or threats.

• Role of Government

The government will play an important role in promoting ODR. Governments can provide financial assistance to ODR projects in India and work towards developing a strong technical infrastructure. It can create plans for people so that they would shift their mindsets to detach the concept of justice from the location known as a court and begin to believe in Digital Justice. The government should set up a technologically advanced framework to ensure that the ODR mechanism functions well.

Conclusive Remarks:

In conclusion, while the expansion of Online Dispute Resolution has relieved the Judiciary of the burden of cases, the efficiency of the rulings has not been up to par due to a lack of sufficient infrastructure and technology. Only individuals who are technologically literate and have access to appropriate gadgets are eligible for the incentive. Due to covid-19 people got aware of things that can be done digitally and even the knowledge that conflicts may be addressed through online channels.

The success of NIXI has given Advocates of ADR in India a boost. Parties involved in domain name disputes will not face any of the obstacles outlined above, yet given the early stages of ODR in India, even this much success is to be commended. Apart from NIXI's success, ODR is having a difficult time in India. However, given India's potential as a country and Indians' ability to quickly absorb cultures and technologies, the future of ODR is bright. However, there is still more to be done.

The first step is to raise awareness that individuals are entitled to efficient and low-cost justice. Further, that high-quality justice can be obtained at a minimal cost if some effort is put out. It is far from utopian. It is well within their grasp. The judicial profession in general and lawyers in particular must adapt their mindsets. Above all, politicians must reconsider their approach to keeping innovative techniques of dispute resolution out of the hands of the general public to protect their interests. Liberalization and giving people more power have resulted in more peace, growth, and wealth around the world and India is no different. It would be with the collective help of multiple stakeholders, that India would be able to climb up the ladder and truly enforce the concept of speedy justice in letter and spirit. 

Bibliography

1. Statutes:

• Information Technology Act, 2000 (No 21 of 2000)
• Arbitration and Conciliation Act 1996
• The Code of Civil Procedure, 1908
• Indian Evidence Act, 1872

2. Online Sources:

• Chitranjali Negi, Concept of ODR in India, 19 April 2015, available athttp://ssrn.com/abstract=2596267
• Colin Rule, Online Dispute Resolution for Business (John Wiley & Sons Inc., 2002).
• E. Clark, G. Cho & A. Hoyle, Online Dispute Resolution: Present Realities, Pressing Problems, and Future Prospects, International Review of Law Computers & Technology, 17(1), 2003.
• E. Katsh & J. Rifkin, Online Dispute Resolution: Resolving Conflicts in Cyberspace (John Wiley & Sons Inc., 2001).
• G. Kaufmann-Kohler & T. Schultz, Online Dispute Resolution: Challenges for Contemporary Justice (The Hague, The Netherlands: Kluwer Law International, 2004).
• M. C. Setalvad, Problems before Legal Profession, All India Reporter (Journal Section), 39, 1952.
• Prathamesh Popat, Online Dispute Resolution In India, 2003, available athttp://unpan1.un.org/intradoc/groups/public/documents/apcity/unpan021307.pdf
•  PTLB, Resolve E-Commerce Disputes In India Through ODR, 9 February 2015, available athttp://ptlb.in/ecommerce/?p=411 
• Shrishti, Online Dispute Resolution System- A way toward hassle-free dispute resolution, 28^th September 2012.