Online Dispute Resolution (ODR): Need and Significance – Explained, pointwise

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India’s growth in international arbitration has been slow despite opening up its economy in the 1990s. At the Delhi Arbitration Weekend in February 2023, the Union Law Minister emphasised the need for institutional arbitration to enhance the ease of doing business.

However, India’s low ranking in ‘Enforcing Contracts’ shows it still has a long way to go in becoming an international arbitration hub. Nonetheless, India can catch up with the trend of Online Dispute Redressal (ODR) and make progress in enhancing the ease of doing business.  

What is Online Dispute Resolution (ODR)?

Source: The Print

ODR arose from the combination of ADR and the Information and Communication Technology (ICT) of the digital era. It uses technology to help people resolve their disputes in an easier and more efficient way than traditional methods.

It is similar to Alternative Dispute Resolution (ADR) but uses tools like multichannel communication, case management systems, and digital signatures. ODR also incorporates advanced technologies like blockchain, natural language processing, artificial intelligence, and machine learning. It goes beyond just audio/video conferencing and is designed to streamline the entire dispute resolution process.  

About Online Dispute Resolution worldwide

Several international organizations such as United Nations Commission on International Trade Law (UNCITRAL), Organization for Economic CoOperation and Development (OECD), International Mediation Institute (IMI), and the International ODR Forum have been working towards the development of ODR globally. The European Union, USA, Australia, Singapore, and China have also taken steps to implement ODR for consumer disputes. The Beijing court is notable for its use of AI in dispute resolution.  

What is the need for Online Dispute Resolution in India?

Increasing caseload and backlog in courts: The need for online dispute resolution stems from the fact that India has a huge backlog of court cases, which is only increasing with time. For instance, As of March 2022, there are 4.70 crore cases pending across courts in India. More than 70,000 of those are pending in the Supreme Court. 40 per cent of these have been pending for more than five years. This backlog leads to delayed justice, which in turn erodes public confidence in the judiciary. ODR can help alleviate this problem by providing an alternative and efficient way of resolving disputes.  

Number of digital interactions and transactions increased so did the number of disputes: According to a report, India currently has around 350 million online transacting users across e-commerce, shopping, travel and hospitality, and OTT and the number is set to double by 2030. In this scenario, disputes were bound to outpace resolutions without a technology-infused effective mechanism in place. ODR can provide a convenient and efficient option for resolving disputes.  

Lack of access to justice for remote and underprivileged communities: Many people in India, especially those living in remote areas or belonging to underprivileged communities, do not have easy access to justice. They may face multiple barriers such as high travel costs, lack of transportation, and language barriers. ODR can help overcome these barriers by providing a platform for parties to resolve their disputes without the need for physical travel.  

Need for a cost-effective dispute resolution mechanism: Traditional dispute resolution mechanisms, such as going to court, can be expensive and time-consuming. For many people, the cost of litigation is a significant barrier to accessing justice. ODR provides a cost effective alternative by reducing the need for physical infrastructure and legal representation, thereby lowering the cost of the dispute resolution process.  

Formal and rigid Judiciary: Traditional court proceedings can be formal and rigid, making it difficult for people to represent themselves or to reach an agreement. Online dispute resolution can provide a more informal and flexible process, making it easier for people to resolve disputes. For example, a couple going through a divorce in India can use ODR to reach a settlement without having to go through the formal and often intimidating court process.  

Privacy and confidentiality: Some disputes, such as family or workplace disputes, may require privacy and confidentiality. Online dispute resolution can provide a secure platform for resolving such disputes. For example, a woman in India who has been sexually harassed by a colleague can use an ODR platform to resolve the dispute privately and confidentially.  

What are the various initiatives taken in India to promote ODR?

Source: NLS

Government Initiatives:

National Centre for Dispute Resolution: The Ministry of Law and Justice has established the National Centre for Dispute Resolution (NCDR) to promote alternative dispute resolution mechanisms, including ODR.  

The Online Consumer Mediation Centre (OCMC): It is established at NLSIU, Bengaluru, under the aegis of the Ministry of Consumer Affairs in 2016. The Centre aims to provide for a state-of-the-art infrastructure for resolving consumer disputes both through physical as well as online mediation through its platform.  

Digital India: The government’s flagship program, Digital India, aims to transform India into a digitally empowered society and knowledge economy. ODR is a key component of this program.  

SAMADHAAN portal: It aims to address the delay of payment disputes involving Micro and Small Enterprises by the Ministry of MSME in 2018.  

National Internet Exchange of India (NIXI): The concept of ODR was introduced into the Indian judicial system as early as 2006 when the National Internet Exchange of India (NIXI) was adopted. This was done under the Domain Name Dispute Resolution Policy (INDRP). The policy dictated dispute resolution based on written complaints submitted online regarding registration and use of .in Domain Name. The procedure provided an effective way for an out-of-court settlement.  

The e-Courts Integrated Mission Mode Project: The Government of India has launched the e-Courts Integrated Mission Mode Project in the country for the computerization of District and subordinate courts with the objective of improving access to justice using technology.  

e- Lok Adalat: During the Covid-19 pandemic, Chhattisgarh state high court organized the nation’s first state-level e-Lok Adalat and resolved cases through mutual agreement through video conferencing.  

Private initiatives:  

E-Alternate Dispute Resolution (E-ADR) Challenge: Technologists, legal experts, and social and business leaders together launched E-ADR Challenge in 2019. The objective of this challenge was to welcome innovation to the field of law and build an ADR platform that could accelerate the process of dispute resolution with the help of advanced technology.  

Private companies and platforms have taken the lead in providing ODR services in India. Some of the popular ODR platforms in India include ODRways, Presolv360, and SAMA 

What are the recommendations given by the NITI Aayog report titled ‘Designing the Future of Dispute Resolution?

Read here: NITI Aayog Pushes for Online Dispute Resolution for Speedy Access to Justice

What are the advantages of Online Dispute Resolution?

Convenience: ODR allows parties to resolve disputes from anywhere, anytime, and without the need for physical presence. This is particularly useful for parties who are geographically dispersed or unable to travel due to health or financial reasons.  

Cost-effective: ODR is often more affordable than traditional methods of dispute resolution, as it eliminates the need for travel, lodging, and other related expenses.  

Time-efficient: ODR can often lead to faster resolution of disputes compared to traditional methods. With ODR, parties can avoid lengthy court proceedings and settle their disputes in a matter of days or weeks.  

Increased access to justice: ODR makes dispute resolution accessible to a wider range of people, including those who are economically or socially disadvantaged. It also eliminates barriers to justice, such as language and literacy issues, by offering translation and other support services.  

Improved confidentiality: ODR provides a more private and confidential environment for parties to resolve their disputes, as it eliminates the need for public court proceedings and allows for secure communication channels.  

Sustainability: ODR is often more sustainable than traditional methods of dispute resolution, as it reduces the need for paper-based documentation and travel-related emissions.  

What are the challenges in developing effective Online Dispute Resolution?

Lack of awareness: One of the significant challenges in developing effective ODR systems is a lack of awareness among the general public about the existence and benefits of these systems.  

Technical difficulties: ODR systems rely heavily on technology and require robust infrastructure to ensure their smooth functioning. Technical difficulties such as slow internet connections, system crashes, and other technical glitches can significantly hinder the effectiveness of ODR.  

Security concerns: Confidentiality and security are major concerns in ODR as sensitive information is shared electronically. It is vital to ensure that ODR systems are secure and tamper-proof, and information exchanged between parties is protected.  

Cultural and linguistic differences: ODR systems must be sensitive to cultural and linguistic differences. Language barriers and cultural differences can make it challenging to resolve disputes in an online setting effectively.  

Legal framework: There is a lack of a comprehensive legal framework for ODR in India, which can create confusion and uncertainty for both parties in a dispute.  

Trust issues: Many people may not trust ODR platforms and prefer to resolve disputes through traditional methods like courts and tribunals.  

Accessibility issue: ODR platforms may not be accessible to people with disabilities or those who lack digital literacy.  

Implementation issue: Even if ODR platforms are developed, there may be challenges in their implementation due to resistance from traditional dispute resolution mechanisms, lack of trained mediators, and the need for continuous technological updates.  

What should be done?

Simplify the process: The ODR process must be simplified so that it is easily accessible and understandable to people. The language used in online platforms should be simple and clear.  

Enhance infrastructure: The government can invest in better infrastructure to improve the ODR platform’s performance, speed, and security. This can increase people’s trust in the system and encourage them to use it more frequently.  

Encourage participation: The government can introduce incentives for parties to participate in the ODR process, such as reduced fees or faster resolution times. This can help increase the number of cases being resolved through ODR.  

Develop specialized platforms: Specialized ODR platforms can be developed for different sectors such as e-commerce, insurance, banking, and so on. This will ensure that the ODR process is tailored to the specific needs of each sector.  

Expand ODR to more sectors: ODR can be extended to more sectors such as real estate, labor, and family disputes. This will enable people to resolve disputes quickly and efficiently without having to go through lengthy court procedures.  

Collaborate with other countries: The Indian government can collaborate with other countries to develop ODR infrastructure, exchange knowledge and expertise, and enhance cross-border ODR mechanisms.   

Sources:  The Hindu (Article 1 and Article 2), Deccan Cronicle, Times Of India and Financial Express

Syllabus: GS 2: Governance – Important aspects of governance, transparency and accountability, e-governance applications, models, successes, limitations, and potential.

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