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CASE FOR ONLINE DISPUTE RESOLUTION IN INDIA

Bhaven Shah (Co-founder of Presolv360).


Understanding the Indian Legal Scenario:


India houses the largest democracy in the world. The Constitution of India – the country’s supreme legal document safeguards the rights and outlines the responsibilities of Indians. In addition to this, the three pillars of our system – Executive, Legislative and Judiciary, are collectively working to provide great governance, greater laws and the greatest level of enforcement.


Any citizen can approach the judiciary in case of infringement of his right. However, the Indian judicial system has been plagued with the below mentioned challenges, which is hampering its function of dispensing timely, cost-effective and efficient justice:

  1. Lack of use of technology

  2. Exorbitant ‘cost of litigation’

  3. Insufficient budgetary allocation

  4. Complex procedures and inefficiencies

  5. Massive backlog of cases and vacancies

Thus, it has become imperative to adopt quicker, cost-effective and accessible alternatives to traditional dispute resolution mechanisms. Alternative Disputes Resolution (ADR) and its branch, Online Dispute Resolution (ODR) serve as a viable solution to these challenges.


Alternative Dispute Resolution (“ADR”):


ADR mechanisms have stood ground since time immemorial. ADR has also found its place in law by way of:

  1. Section 89 of the Civil Procedure Code, 1908 read with Civil Procedure – Alternative Dispute Resolution Rules, 2006 enables the court to formulate the terms of a possible settlement and refer the same for arbitration, conciliation, mediation or Lok Adalat if it appears to the court that there exists elements of settlement.

  2. Section 12A of the Commercial Courts (Amendment) Act, 2018 mandates pre-institution mediation for matters above Rs. 3 lakhs.

  3. Section 19(5) of the Legal Services Authorities Act, 1987 empowers Lok Adalats to determine a settlement for those matters that are not even brought before any court.

  4. Section 442 read with the Mediation and Conciliation Rules, 2016 of the Companies Act, 2013 provides for the use of mediation and conciliation.

  5. Section 32(g) of the Real Estate Regulation Act, 2016 enables conciliation mechanisms to arrive at a settlement for disputes.

  6. Chapter V, Consumer Protection Act, 2019 provides for structured mediation for consumer disputes.

  7. Section 4, 5 and 6 of the Industrial Disputes Act, 1947 talks of ‘Conciliation Officers’ and ‘Board of Conciliation’ for the purposes of reaching a settlement.

  8. Section 9 of the Family Courts Act, 1964 empowers Courts to attempt a settlement before litigating or matters which are sub-judice.

  9. Section 10 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 provides for the use of mediation and conciliation in relation to matters covered under the Act.

  10. Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 enables the Micro and Small Enterprises Facilitation Council to undertake conciliations on receipt of references.

  11. The Government proposes to amend the Insolvency and Bankruptcy Code to facilitate dispute resolution through mediation.

  12. The Hindu Marriage Act, 1955, Special Marriage Act, 1954 and the Family Courts Act, 1984 embody a flavor of mediation and conciliation as a method of settling disputes within their scope.

  13. Rules and schemes of the Supreme Court of India, various High Courts and District Courts.

ADR mechanisms has helped the judiciary to dispose of plethora of cases, but the impact of ADR can be multiplied if it is coupled with technology. Therefore, it is important to catalyse the concept of Online Dispute Resolution in the country.


Online Dispute Resolution (“ODR”):

ODR, believed to be the ‘future of justice’, is a branch of dispute resolution which facilitates resolution of disputes using Information and Communication Technology. It is the modern counterpart of ADR mechanisms like mediation, arbitration, negotiation, or a combination of any two or all three. ODR has extensive application and can be used to resolve a wide variety of disputes ranging from commercial civil disputes to compoundable criminal disputes.


ODR in India – Benefits & Challenges:

The use of ODR in India is at a nascent stage and is starting to gain prominence day by day. A joint reading and interpretation of various provisions and rules of the Arbitration and Conciliation Act, 1996, Information Technology Act, 2000, and Indian Evidence Act, 1872, provides for resolution of disputes via ADR and the applicability of the same in an online environment. However, none of the laws provide a clear recognition to ODR and an air on multiple legal standpoints remains.


To surmount the aforementioned challenges faced by the Indian judicial system and scale ADR in India, infusion of technology in dispute resolution is inevitable. Usage of ODR as a means for resolving disputes has a number of benefits, especially in the context of the Indian scenario. Here are a few mentions:

  1. Overcomes jurisdictional issues

  2. Eliminates geographical barriers

  3. Automation of administrative procedures

  4. Improves the efficiency and productivity of dispute resolution professionals

  5. Eco-friendly process as paper-based trial is minimised

  6. Encourages an environment that is liberative and not litigative

  7. Delivers a quick, economical and effective solution to disputes


The implementation of ODR in India, however, is facing the following challenges due to which it has not been able to reach its full potential:

  1. · Lack of awareness amongst the masses

  2. · Stagnant / no technology system to support ODR

  3. · Insufficient legislative and judicial recognition to ODR


Potential of ODR in India:

With a backlog of 32 million cases and a daily addition of over 40,000 cases on one hand, and the hope of over a billion people for India to become a super power on the other, ODR has the potential to transform one of the core values enshrined in our constitution – JUSTICE.


Major steps taken by our three branches to optimize our legal and justice delivery system also make it conducive to formally induct ODR in mainstream dispute resolution. Some recent steps in this direction are:

  1. In 2018, the Indian Parliament passed the ‘Pre-Institution Mediation and Settlement Rules’ in terms of Section 21A(2) of the Commercial Courts Act, which makes it mandatory for commercial disputes over INR 3,00,000 rupees to undergo mediation before filing proceedings in court.

  2. The Finance Ministry had unveiled the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, in the budget for 2019-20 with the objective of settling pending disputes of Service Tax and Central Excise as. Over 133,661 taxpayers had submitted their application by 31st December 2019 whereby the applicable tax dues of Rs 69,550 crores were settled at Rs 30,627 crores.

  3. In May 2019, a high-level committee constituted by the Reserve Bank of India submitted a report on 'Deepening of Digital Payments' in India. The committee was of the view that payment systems should move towards using a machine driven, online dispute resolution (ODR) system to handle complaints expeditiously.

  4. The National Consumer Disputes Redressal Commission drafted the Consumer Protection (Mediation) Regulations, 2019 under the Consumer Protection Act 2019. These regulations set out the procedure for empanelment of mediators at District, State and National level consumer grievance forums, procedure of mediation proceedings, fees and costs.

  5. Recently, His Excellency President of India Shri Ram Nath Kovind and Hon’ble Chief Justice of India Shri S.A. Bobde stressed on the adoption of mediation as a tool for dispute resolution and integrating artificial intelligence in judicial processes.

  6. The Finance Ministry recently expressed the need for a new law to safeguard foreign investments by speeding up dispute resolution in the country. An unpublished draft of the Finance Ministry has proposed appointing an expert and setting up fast-track courts to settle disputes between investors and the government.

  7. The Finance Ministry recently unveiled the Amnesty Scheme ‘Vivad se Vishwas’ in the 2020 budget for Direct Taxpayers to settle appeals pending at various forums. Under this scheme, the taxpayer will get a complete waiver on interest and penalty on the disputed tax amount, if the scheme is availed by March 31, 2020, now extended to June 30, 2020 in view of the current COVID-19 situation.


Conclusion:

Trade, investment, industrial policy and promotion are the backbone of an economic superpower, but India’s progress is being weighed down due to lack of conflict management creativity and an overburdened court machinery. While it is commendable to witness these momentous steps to promote ADR in our country, infusion of technology will only speed up the disposal of cases and help us create a conducive environment for commercial and overall growth.


Today, there are millions of people in the remotest of our cities, towns and villages who have no access to justice, but they do have access to smart phones. With the help of technology, we can improve the access to justice significantly and bring equity at the fingertips of each and every Indian irrespective of their location. Promoting a technology enabled dispute resolution system will not only help the litigants but will also help in easing the burden and improving the efficiency of the Indian legal ecosystem.





Bhaven Shah is a co-founder of Presolv360 – a legal-tech company that specializes in online commercial dispute resolution. With an academic background in finance and law, he has a decade of experience in understanding law, human relations and conflict resolution.


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