Online Dispute Resolution: Universal Remedy or an Implementation Façade

9th May, 2023 - 6:12 am Categories: Legal Issues 0 Comments

Online Dispute Resolution (“ODR”) is a method of resolving disputes by integrating different sets of technologies, enhancing the core process of Alternate Dispute Resolution (“ADR”) and effectively settling disputes.[1] The need for timely and effective settlement of disputes gave way to the development of ADR. At present, the world is witnessing post-pandemic effects of pushing the world population online. As of 2022, the online world is addressing more than 5 billion people on average every day.[2] The immediate results of this are an augmented number of online transactions, services, and interactions. This interlinkage has affected the global world both positively and negatively. With increasing confrontations comes the baggage of fraud and disputes that are beyond the reach of present legal systems around the world. Therefore necessitating an efficacious online dispute resolution mechanism.

In 2010, the United Nations Commission on International Trade Law (“UNCITRAL”), acted on the sharp increase in online cross border transactions and highlighted the simultaneous need for the development of a mechanism to facilitate the same.[3] In 2016, UNCITRAL came up with Technical Notes on ODR to assist states in developing such ODR systems, specifically those economies experiencing rapid transitions.[4] Though the technical notes were non-binding in nature, they persuasively affected the adoption of ODR methods by various countries.

This article proceeds by conceptualising the proceedings of ODR and its contemporary implementation both globally as well as domestically. Furthermore, the articles highlight the drawbacks and possible solutions to these issues.

The concept of ODR

The concept of ODR is still evolving. The process is growing out of its infant stages, whereby information and communication technology were used to bring ADR online. At this stage, ODR was witnessed as virtual arbitration, mediation, and negotiation. The first of its kind ODR platform was introduced by Ebay for settling consumer-seller disputes effectively and timely.[5] Thus setting the stage for transformation from contemporary methods to newly conceptualized ODR techniques. The second phase of the ODR revolution began with the advent of ODR platforms. Few platforms such as Cyber settle, Smart settle and the Mediation Room made an exponential impact in the development of ODR.[6] These platforms had different models of resolution and were certainly different from Ebay’s. Ebay had a model of online mediation whereby parties to the conflict would participate in an e-mediation process facilitated by Ebay. Cybersettle, however followed a different approach by inculcating a blind-bidding process that did not disclose the maximum settlement amount to either party. The goal of this path was to arrive at an effective settlement with timely resolution. Many start-ups took the lead in introducing multifarious approaches and systems. Those who failed to deliver novel solutions to the issue disappeared quickly after their inception.

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The success of a few ODR platforms caught the attention of the government towards the development of an alternate dispute resolution ecosystem. In 2004, New York became the first government-level adopter of ODR system developed by Cybersettle to clear the backlog and expedite the settlement of personal injury claims. The result was an unprecedented increase in personal injury settlements. Subsequently, the ODR mechanism has been intertwined with the present dispute resolution systems globally.[7]

Methods of ODR

• In-sync ODR process uses real-time online technology to facilitate communication between disputing parties by way of video conferencing.

• Likewise, the resolution is possible with not in-sync processes that construes to resolution by way of emails and related forms of communication.

• With more than 70% of disputes being settled effectively, more and more people are engaging in the process. The process begins with the initiation of mail, followed by virtual meetings.

• This electronic form of arbitration is still less prevalent among the general public, but its use is gaining momentum and taking a central position in the dispute resolution arena.

Post-Pandemic time has witnessed, rather forced everyone to accept this method and thus more and more ODR forums are being experienced. The list of disputing parties is continuously expanding to include small scale businesses, companies, and corporates, along with personal civil disputes.[8] With the interplay of cutting edge technology and traditional arbitration, a new avenue is being realised and utilised to fulfil the need for an effective and timely dispute resolution mechanism both domestically and globally.

The Indian Perspective

India momentarily witnessed an increase in alternate methods of resolving disputes, that being the post pandemic effect. But, surprisingly, this huge leap forward is being steadily maintained by increasing escape from the tough grind of judicial processes towards efficacious and punctual ADR proceedings. India has matched its pace among various forms of ADR. The latest inclusion to this list is ODR processes.[9] The first two decades of the twenty-first century experienced the greatest push in technological outcomes, and this has only jumped many-fold in the past two years. The Indian domain of ODR is witnessing positive collaboration and bringing ADR to not only those with deep pockets but to the common man as well. There has been a significant rise in small scale legal start-ups facilitating ODR systems as against traditional ODR. Covid resulted in forcing courts and adalats to shut down completely, and they had to opt for online hearings. This led to a significant rise in the importance of the ODR mechanism and expanding its reach. Country today is witnessing reducing digital disparity bringing many Indians on board with online technology thus resulting in adoption of ODR as part of dispute resolution ecosystem. Further, the environment surrounding both ADR and ODR needs more trust building for everyone to accept and move on to make these systems part of an active justice delivery mechanism along with a cost efficiency model.[10]

Start-ups like Presolv360 and the Centre for Online Resolution of Disputes are bridging the gap between offline systems and online infrastructure. They are actively involved in bringing arbitration online and resolving disputes by way of mediation that is being processed as an over the internet service. On these lines, RBI has also taken steps to cultivate the benefits of ODR by integrating these mechanisms with payment gateways and interfaces. This step is to provide a pilot trust building platform for users as well as service providers. The ideology will be to familiarise as many people as possible with this technology to launch it soon as a big institutional change. India is experiencing uninterrupted growth in digital service platforms and these levels are being maintained by the population, strengthening the position that ODR services are not a long way now. It will be normalised as a problem solving mechanism in our day-to-day lives.[11]

Fallacies in the ODR system

ODR is an all beneficial pill to the old judicial system, people prefer to take this dosage rather than expensive judicial hospitality. Just like many asset-building liability issues, ODR comes with its own baggage of impediments that counter its growth in India as well as on the international stage.[12] The common links that hurdle its growth are lack of adequate technological infrastructure, lack of a trust-efficient system, jurisdictional barriers and preconceived notions of lawyers that negatively impact ODR processes and its development. Furthermore, lack of consensus among disputing parties is a major issue that is hindering the process of ODR. For invoking any ADR form, mutual consent of the parties is necessary to initiate the proceedings. Most parties don’t agree to submit the dispute to online dispute resolution. Another important factor that is pulling ODR down is jurisdictional confusion and the place of proceedings. In ADR, it is one of the major factors as to which set of laws would apply to the issue. Thus, ODR fails to address these problems, primarily resulting in a lack of confidence and reliability in the outcomes. These issues need to be addressed if a country plans to move forward in resolving disputes in a structured manner with timely results. This would further promote the legal health of a country by allowing new ideas to evolve.[13]

Feasible remedies for the ODR processes

The ODR mechanism will be preferred for its feasibility and affordability. Another important factor that is inflating the demand for ODR mechanisms is the need for a time-effective dispute resolution mechanism that allows trustworthy proceedings and an unbiased solution. Firstly, governments around the world should focus on enhancing awareness regarding the processes involved and should take policy based initiatives for pilot projects. These pilot projects should start by focusing on basic disputes and then expand their scope of disputes, for example, electricity disputes, vehicle disputes, etc. Furthermore, corporations should be mandated to develop in house online dispute resolution mechanisms to address workplace disputes, among other things. This would create a positive atmosphere, facilitating the ODR processes. Moreover, the focus should also be on reliability, so governments should work on implementing proper laws addressing online dispute resolution. Once the government of a country starts backing a system, people develop trust and find reliable alternatives to an exhaustive prevalent system. Lastly, both ODR and ADR need support from judicial authorities to develop systems and to have a flawless method in place for choosing techniques and technologies. This would promote effective justice delivery and uphold the principles of the law. Lastly, no system of law is completely isolated from rest of the general practices but gradual developments in the process would allow more fundamental based solution delivery mechanisms.

Conclusion

As the scope of the legal system continues to grow manifold with the advent of new technologies, the issue of resolving these disputes is becoming formidable every day. Countries around the world are indulging in practises that reduce the burden of judiciaries and implementing strategies to provide effective remedies in various situations. ODR is an ongoing and upcoming forum that reduces this burden to provide a novel solution to multiple problems like online consumer disputes, various trade disputes, and inter-personal disputes relating to civil matters that are plausible without excessive judicial intervention.[14] ODR is the need of the hour as the world is globalising at unprecedented rates, thus inviting challenges to present judicial systems and jurisdictional issues. Unless the system is backed by some solid pronouncements and government support, it will continue to lack growth and desirable outcomes.

Author: Shashwat Sharma, A Student at Rajiv Gandhi National University of Law, Punjab, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at Khurana & Khurana, Advocates and IP Attorney.

[1] María Mercedes Albornoz and Nuria González Martín, Feasibility Analysis of Online Dispute Resolution in Developing Countries, 44, University of Miami Inter-American Law Review, 39-61, 2012

[2] Statista, https://www.statista.com/statistics/617136/digital-population-worldwide/ (last accessed 15 June 2022)

[3] UNCITRAL, https://uncitral.un.org/en/texts/arbitration/contractualtexts/arbitration (last accessed 15 June 2022)

[4] UNCITRAL, Technical Notes on Online Dispute Resolution, 62^nd Plenary meeting, 2016

[5] Id at 1

[6] Cybersettle, http://www.cybersettle.com/; The Mediation Room, https://www.themediationroom.com/; Smart Settle https://www.smartsettle.com/

[7] Jeanne M. Brett, Mara Olekalns, Ray Friedman, Nathan Goates, Cameron Anderson and Cara Cherry Lisco, Sticks and Stones: Language, Face, and Online Dispute Resolution, The Academy of Management Journal , Feb., 2007, Vol. 50, No. 1 (Feb., 2007), pp. 85-99.

[8] Jeffrey M. Aresty, The Internet and ADR: Educating Lawyers about Online Dispute Resolution, JANUARY/FEBRUARY 2006, Vol. 23, No. 1, Cyber-Law: Uncharted Waters (JANUARY/FEBRUARY 2006), pp. 30-35, American Bar Association.

[9] Designing the Future of Dispute Resolution : The ODR Policy Plan for India, The Niti Aayog Expert Committee on ODR, India, October 2021

[10] Amal K. Ganguli, NEW TREND IN THE LAW OF ARBITRATION IN INDIA, Journal of the Indian Law Institute , JULY-SEPTEMBER 2018, Vol. 60, No. 3 (JULYSEPTEMBER 2018), pp. 249-281

[11] Andreas Baumgartner, Commercial Dispute Resolution: Unlocking Economic Potential Through Lighthouse Projects, International Organizations and the Promotion of Effective Dispute Resolution, Brill, 2019.

[12] Steven Shavell, Alternative Dispute Resolution: An Economic Analysis, The Journal of Legal Studies , Jan., 1995, Vol. 24, No. 1 (Jan., 1995), pp. 1-28 Published by: The University of Chicago Press for The University of Chicago Law School.

[13] Harry T. Edwards, Alternative Dispute Resolution: Panacea or Anathema?, Harvard Law Review , Jan., 1986, Vol. 99, No. 3 (Jan., 1986), pp. 668-684 Published by: The Harvard Law Review Association.

[14] Catherine Kessedjian and Sandrine Cahn, Dispute Resolution On-Line, The International Lawyer , WINTER 1998, Vol. 32, No. 4, Symposium on Jurisdiction and the Internet (WINTER 1998), pp. 977-990, American Bar Association.