India must board the Online Dispute Resolution bus

Source- The post is based on the article “India must board the Online Dispute Resolution bus” published in “The Hindu” on 13th April 2023.

Syllabus: GS2- Judiciary

Relevance– Alternate dispute resolution mechanisms

News– At the Delhi Arbitration Weekend in February 2023, Union Law Minister Kiren Rijiju emphasised the need for institutional arbitration to enhance the ease of doing business.

What are the issues with the dispute resolution process in India?

India has shown tremendous improvement in the World Bank’s Ease of Doing Business report. It has risen from the 142nd rank among 190 countries in 2014 to 63rd in 2019.

However, India is ranked 163rd, in ‘Enforcing Contracts’, which is a marginal improvement from the 186th rank in 2015. It takes almost four years and 31% of the cost of the claim to enforce a contract in India. In contrast, it takes just over two years and costs 22% of the claim value in Brazil.

Why has India acquired the reputation of being arbitration-unfriendly?

Srikrishna Committee – There is a lack of preference for institutional arbitration over ad hoc arbitration. Frequent interference from the judiciary, from the appointment of arbitrators to the enforcement of awards, has an impact on the process.

There is also the setting aside of arbitral awards on grounds of ‘public policy’.

The amendments of 2015 and 2019 and a few recent judicial decisions have put India on the right path. The scope for using ‘public policy’ as a ground for setting aside awards has been narrowed.

Yet, India is not a preferred arbitration destination, even for disputes between Indian businesses. Many still seek arbitration abroad, even when the dispute is with another Indian entity.

Singapore, which opened its International Arbitration Centre in the 1990s has since emerged as a global arbitration hub and is ranked first in terms of ‘Enforcing Contracts’. Indian companies are among its top users.

What is the potential of ODR in India?

India can use its strengths in technology and emerge a leader in ODR. Universal dissemination of online technology during the COVID-19 pandemic has made it possible.

ODR involves more than just audio/video conferencing. It encompasses the integration of tools such as multi-channel communication, case management systems, automated case flows, digital signatures and stamping.

There is even the application of advanced technologies such as blockchain, natural language processing, artificial intelligence, and machine learning.

Private platforms in India are already resolving lakhs of disputes through ODR. Many corporations have migrated to ODR to resolve small-value disputes.

The Reserve Bank of India, the National Payments Corporation of India, and the Open Network for Digital Commerce and a few other institutions have incorporated ODR mechanisms into several of their initiatives. The need now is to disseminate these on a mass scale.

What is the way forward to increase the use of ODR in India?

There is a need to incentivise the use of ODR by way of legislative measures. ODR can be set up as a default dispute resolution tool for disputes arising out of online transactions.

Fast-tracking enforcement of ODR outcomes and reducing stamp duty and court fees is required.

There is a need to solve infrastructural challenges and curb the digital divide. Existing setups such as Aadhaar kendras can be optimised to also function as ODR kiosks.

Each court can have an ODR cell along with supplemental technical and administrative support. A dedicated fund must be set up for furthering ODR.

Government departments should explore ODR as a grievance redress mechanism. It will not increase trust in the process and will ensure that citizens have access to a convenient and cost-effective means of resolving disputes with the government

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