Online Dispute Resolution System- A way toward hassle free dispute resolution

This article is written by a Guest Author and Anubhab Banerjee, currently pursuing BBA-LLB (Hons) from the School of Law, Alliance University. This is an article which deals with the concept of Online Dispute Resolution.

Introduction

The legal system around the world is undergoing enormous changes. Most of these changes are associated with moving from the conventional courts to the alternate means of dispute resolution. India as well has been trying to catch up the pace with the rest of the world in promoting such alternate dispute resolution processes.

With further advancements in technology a new concept known as online dispute resolution has evolved. Amid the current situation of lockdown due to the outbreak of COVID-19, it is a very good opportunity for the Indian legal system to encourage the use of Online Dispute Resolution. 

This article deals with Online Dispute Resolution and how the process can help the Indian legal system under the current circumstances and lay a good foothold for the future.

Alternate Dispute Resolution

Alternate Dispute Resolution is a process which is well explained by the name given to it. Alternate Dispute resolution relates itself to all such processes which can be used for resolution of a dispute outside a Court. There are several processes involved under Alternate Dispute Resolution which have been explained further in this section.

Different processes involved in ADR

The following is a brief description of the different processes involved in Alternative Dispute Resolution:

Negotiation

It is a process through which two parties try to resolve their differences by the initiation of a dialogue between them, to try and understand each other and resolve the dispute between them. In the process of negotiation, two people, one representing each party try to enter into a new agreement or resolve conflict with the help of free flow of dialogue between them, understanding the interests of each.

Mediation

Mediation is basically a third-party facilitated negotiation process in which the third party is called a Mediator. The age old tale on conflict resolution is the best way to understand mediation. This is known as the orange story which goes as follows “Once upon a time there was a mother who had two children. One day, the kids came to the mother fighting. There was one orange left in the house and they both wanted it–typical of small children. What is a parent to do?

Luckily, this particular mother is a pro at resolving disputes. She takes the orange from the crying children and asks them why they want it?

When asked why, both the children are able to portray their interests instead of their position of wanting the whole orange for themselves. When asked, one child expresses the desire to make orange juice. The other expresses her need to shave the peel into the recipe for muffins. Instead of only having an equally proportional piece of the fruit each, both the children get what they want by simply portraying their interests out. Subsequently, both have a great time enjoying their respective juice and muffins!

The role played by the mother in this story is exactly the role played by a mediator in a mediation. A mediator has no more involvement in the process than facilitating the free flow of dialogue between the parties and helping them understand their interests better. The agreement if reached by the parties at the end of a mediation is reached as a result of their own considerations without any involvement from the mediator.

Conciliation

Conciliation is a process very similar to that of mediation, the only difference being that a conciliator, unlike a mediator, has the authority to advise the parties in the process. The conciliator in this process is also a signing party in the agreement if reached between the parties in the dispute. As the conciliator has a more active involvement than a mediator and is allowed to pose his own advice to the parties in the process of helping them reach an agreement.

Arbitration

It is a process which can be closely related to litigation. The parties to an arbitration present their case in front of an arbitral tribunal which derives its authority from an arbitration clause/agreement signed between both the parties. The arbitral tribunal passes an arbitration award which shall be held enforceable like a decree of the court.

A case is referred to arbitration only where there is the presence of an arbitration agreement/clause in the principle contract between the conflicting parties, regarding which the dispute has arisen. When such an agreement is present then any disputes arising out of the contract is directed to arbitration. It is a completely consensual process as unless and until the parties agree on an arbitration clause/agreement a dispute cannot be directed to arbitration. 

In the process, both the parties present their individual cases in front of the tribunal, which then decides an award on it accordingly. An arbitrator for the arbitral tribunal is selected solely on the basis of the arbitration agreement/clause decided on by the parties. The only requirement of an arbitral tribunal is that it should constitute an odd number of members. This rule is followed to avoid confusion while making  a decision on passing an award. It allows a majority vote amongst the arbitrators to decide on the awards. An arbitral tribunal may be constituted with a single arbitrator presiding over the proceedings.

Evolution of ODR Industry

Online dispute resolution (ODR) was developed to circumvent clogged and slow moving courts and the hassle of physical dispute resolution mechanisms. ODR tries to harness the power of internet to resolve disputes, by reducing costs, doing away with the necessity to travel to attend courts and generally making the entire process faster and efficient through use of web based technologies. This is the basic precept on which ODR is built. If possible, this could be a significant improvement over the current alternative dispute resolution methods such as traditional arbitration, mediation etc.

ODR debuted in 1998 in United States and not much is known about it in India. What does ODR really entail? Is it a sustainable mechanism for resolving disputes? This post will try to answer these questions

Why ODR?

  • The processes involved under the head of Online Dispute Resolution are all forms of fast track dispute resolution and processes such as mediation, negotiation and conciliation are even amicable ways of dispute resolution. Shifting the whole system online helps us improve the connectivity and convenience for the conduct for such processes. Under the present circumstances with courts around the country shut, it is the best time for online dispute resolution to come up as a sufficient alternative where ever possible.
  • The process of ODR can be considered to be a lot more cost-effective as compared to Litigation. It has a lot of benefits when associated with cutting down on costs. Online Dispute Resolution is a process which cuts down a major expense on travelling, as people who are a part of a dispute can discuss such matters through online means rather than having to travel to places for their hearing. Secondly, the process cuts down on the hefty court costs that are paid on behalf of the parties.
  • Usually, an award passed under the means of dispute resolution or an agreement reached is enforceable under the law due to the different transnational agreements, such as the New York Convention on Enforcement of Arbitration Awards, 1957 and the Singapore Convention on Mediation having been entered into by India. India has incorporated the UNCITRAL Model Laws, 1985 in its Arbitration and COnciliation Act. All of this is done for the purpose of making such processes seamless and legally recognizable. Thus, such awards passed can serve the same purpose which is served by the Courts in India.
  • Cost and Time- ODR is generally considered a more efficient process than ADR/ litigation because it is quicker and less expensive. Given the fact it does not require physical presencce as is the case with ADR and litigation, it saves up on time and cost as may be required.
  • Modus Operandi- The mode of proceedings in ODR is often decided by the parties unlike court based suits that follow a strict statute determined procedure. Of course, ODR must follow the rules laid down by appropriate legislations and some basic principles that all legal proceedings should follow, but it has the potential to emerge as a more flexible and convenient mode of dispute resolution. Also, ODR is typically less confrontational because it take place in a much less formal setting on an online platform.
  • Confidentiality- Confidentiality of matter can be protected far better in an ODR process.
  • Flexibility- ODR is much more flexible as it is governed by party’s agreement or the rules and regulations of the online platform used and is not dependent on the stare decisis (deciding on the basis of precedents) principle just like any other ADR.

The process involved in Online Dispute Resolution

  1. The first and foremost requirement for resolving a dispute through Online Dispute Resolution is an agreement between the parties signifying that if any such dispute arises it’ll be resolved by some means of ODR. The parties may also opt-in for such processes even after the Dispute arises.
  2. The next thing is the selection of a suitable ODR provider. An ODR provider is a platform which provides the parties with a space online where they can register their disputes. The ODR provider should be competent enough to help resolve the disputes between the people. The people working on behalf of the ODR provider should be impartial and unbiased while hearing such disputes. If any person who is a part of the ODR provider shares any kind of relationship with the parties to the dispute, which he/she has been assigned, then such person should opt-out of such a setting.
  3. There is no specific setting required to prepare for a session on an ODR platform. The only requirement being that the parties should be well aware of their rights and obligations before starting such a session.
  4. The process for resolution of a dispute depends much on the rule of the ODR provider with regards to resolution of disputes on their platform. These are the rules for mediation, conciliation, arbitration, etc. specified by such ODR platforms. Usually, the process begins with one party to the dispute contacting the other with a request to resolve their dispute through the means of Online Dispute Resolution.
  5. There are a few things for the parties to keep in mind while they are resolving their disputes through ODR forums. A few of those things are as follows:
  • The parties trying to resolve their dispute show concentrated interest rather than their positions. The best way to portray what interests are is with the help of the orange example. As per the example, there are two kids fighting over an orange. When their mother gets to know about the dispute between the kids, she interferes. She asks each of them: “why do you want the orange”. One answers that he wants the pulp of the orange to make orange juice and the other answers he wants the peel of the orange. Thus, the mother here is able to amicably resolve the dispute between the kids by getting to know their interest. To make it simpler, as per this example the position for both the kids was the orange though their interests differed when asked about why they want it. Thus, people should not use techniques such as positional bargaining while trying to resolve their disputes through ODR.
  • Effective communication between the parties is necessary.
  • Parties should be well aware of the BATNA (Best Alternative to a Negotiated Agreement) as well as WATNA (Worst Alternative to a Negotiated Agreement), which helps provide them with a range between which they might consider to resolve the dispute.
  • Though keeping a bottom line which goes into a negotiation or mediation is never advisable i.e. keeping a bottom line is fine but constantly sticking to it might not end up being beneficial at the end of the day.

How is Online Dispute resolution convenient under the present circumstances

Online Dispute Resolution is the perfect solution for matters that can be resolved through the means of ADR online under circumstances like that of now. The present circumstances have forced us all to be locked down inside our homes. Under these circumstances, most of our disputes registered at the courts have come to a halt. This moment should be used by people to make themselves well aware of the different processes available under Online Dispute Resolution and their advantages. 

Several Practitioners of different forms of ADR around the world are shifting to online means during this time, under the present circumstances. Thus, India and its legal fraternity as well should take a leap towards moving into such online means for the use of ADR. ADR itself is not a popular concept among the Indian public. Thus, it is an extremely hard task to promote ODR in India. 

Though the present circumstances of a lockdown might just be the perfect opportunity to make people aware of the process. Once people realise the benefit of the processes under Online Dispute Resolution i.e. Mediation, Arbitration, Conciliation, etc. they might just want to get used to resolving their disputes through such means rather than going through the conventional means of approaching a court in case a dispute arises.

With the present situation in hand, it is of great uncertainty as to when the courts will reopen for normal proceedings to take place. People should try shifting to such online means for resolving their disputes in such times. As that would not only help them with the fast resolution of the dispute, but also with the resolution of such disputes within the time frames they want to. Online Dispute Resolution is a process which can be carried out from anywhere at any time. So with the availability of an expert mediator, arbitration or conciliator as per the requirements and the agreement between the parties, the parties can go forth with resolving their disputes instead of waiting for the Indian Courts to reopen. 

This would also release some pressure from the shoulders of the Indian Courts. As there might be a lot of unresolved issues and unsatisfied parties who are waiting for the courts to reopen to file a suit. If the suits, out of these which can be resolved by the means of Online Dispute Resolution, are actually resolved by using those means then the courts would be relieved of the unnecessary burden of cases which are to follow. 

People being locked down in their houses, which they are not used to under normal circumstances, might lead to a rise in domestic issues at their homes. These domestic issues may be between family members, between spouses, between children, etc. Maybe under normal circumstances, these issues would not even have come up. There might also be serious cases like that of domestic violence between spouses during this period. Since the courts are no longer a place which can be approached under the present circumstances, people facing such issues can look out for Online Dispute Resolution forums to help resolve their issues amicably. As amicable, settling their issues and mitigating their losses accordingly would even end up saving the relationship shared between the people involved in such a dispute.

How the use of Online Dispute Resolution under the present circumstances can lay a path for the future

The future is global and even Alternate Dispute Resolution over time has become a global concept which has eventually helped resolve several transnational disputes between parties. When we talk about Alternate Dispute Resolution being a global concept we should also consider the advantages that Online Dispute Resolution has in making the whole process of dispute resolution from a global perspective, even more, simple and effective.

If India and Indians in general start becoming aware of these means of Online Dispute Resolution even just because of the present lockdown scenario regarding COVID-19, then such would eventually leave its presence on the society as a whole. As once people start becoming familiar with the ways of Online Dispute Resolution it can be beneficial for the public as well as for the Courts in India.

Indian Courts having a huge backlog of cases i.e. around thirteen lakh cases being pending in the Indian Courts, there is a lot of pressure on the Courts for the completion of these cases. If Online Dispute Resolution can be appropriately promoted then a lot of such burden can be shifted on such ODR platforms which would be beneficial for both the courts and the public.

As it is also an important point to be noticed that the average time span for a case at an Indian Court is of Thirteen years i.e. if both the parties have the required finances to keep on appealing and approach the Supreme Court of India. Thus, this costs the clients dearly and also ends up permanently spoiling the relationship shared between both the parties to the dispute. Instead, if such people opt-in for the resolution of their dispute through the means of Online Dispute Resolution, not only will such be fast but also help them save the relationship they share as well as their money.

Nature of ODR

Online and Offline Model of ODR- The potential use of the Internet to resolve international disputes can be divided into two distinct areas: using Internet-related technology to resolve “real world” disputes online or partially online and using the Internet to resolve disputes arising on the Internet itself.

For instance, in offline dispute, you can have a clause in your contract with your supplier for resolution of dispute using one of the ODR platform. As far as online disputes are concerned, the platform you are dealing with might have an inbuilt mechanism as is the case with EBay

Procedures adopted for ODR

Online Negotiation

Forums such as Cyber Settle uses Negotiation for Dispute Resolution. Online negotiation can be of two types, closed model and open model.

Close Model– Online negotiation thrives on technological changes through blind bidding which is one of the most prevalent dispute resolution services available online. The common characteristic of these processes is the parties’ submission of monetary offers and demands which are not disclosed to their negotiating counterpart, but are compared by computer in rounds. If the offer and demand match, fall within a defined range or overlap the case is settled for the average of the offer and demand, the matching amount, or the demand in the event of an overlap. If the claim is settled, the participants are immediately notified via email

Open Model– Under the open model, a party can view the other’s party offer or demand only after having made a demand or offer. Whenever any offer is within twenty per cent of any demand, there is settlement of the median.

Online Mediation

A typical online mediation procedure takes place as follows. The complainant initiates it by completing a confidential form on the provider’s website. Then, a mediator contacts the respondent in order for him/her to participate. Both parties set forth the mediation ground rules.

The mediator communicates with the parties, sometimes jointly and sometimes individually, to facilitate an agreement. If an agreement is reached, it usually takes the form of writing.

Thus, the online process does not differ very much from the offline process, except for the expanded use of technology. Email is the mediator’s best friend for purposes of framing and moving discussion forward. But email was already used by offline mediators. In online mediation, websites such as Smart Settle,  Legal Face-Off etc. are providing online mediators with new tools to supplement email with other communication tools including electronic conferencing, online chat, video-conferencing, facsimile and telephone.

Online arbitration

Online arbitration proceeds along different communication stages (process agreement, initial presentations, rebuttals, consideration, and decision). Arbitration is in general a much less complicated communication process than mediation. In the simplest arbitration, software that allows positions to be stated and documents to be shared may provide a sufficient frame for the process.

There are many arbitration service provider in abroad such as American Arbitration Association. AAA is known for handling large, complex cases. In 2011, 46% of the arbitration filed with the AAA involved claims $1,000,000 or more.

                   

Future of ODR

As said by Jeffrey N. Rosenthal is an attorney with Blank Rome, the attractiveness of ODR services to the world-at-large will likely only increase. The availability of such systems can build trust in a company by reminding consumers and corporations dealing with it that a neutral third-party can cheaply and easily resolve disputes.

However, India is yet to exploit the benefits of ODR. There is an acute lack of legislative action or awareness in this regard. This problem is teamed up with the lack of ODR institutions in India.

Given the fact that its being predicted that the SME Sector would be the driving force for growth in India, there is huge scope for application of ODR Mechanism in resolution of dispute for SMEs as ODR can be a cheap and easy way out of a disputes that are bound to arise during the course of business.

Conclusion

Online Dispute Resolution is the way for our future and promoting its use during this lockdown period is going to have a huge impact on the legal system post the lockdown. One of the main issues on Online Dispute Resolution not being a preferred platform is that people are not satisfied until and unless they reach a court for their disputes and have their cases heard. Such a mentality will have to change gradually. 

Another problem is that people are not aware about the several advantages associated with the different ADR and ODR mechanisms. If such can be promoted then a lot of load can be shifted from the Indian COurts to ODR mechanisms. In India these mechanisms have not been looked upon to be as effective as the courts, and people should be accustomed with the use of such mechanisms. As it will not only be beneficial for these mechanisms but also for the Indian Judicial system as a whole. Thus, it can be rightly said that Online Dispute Resolution is certainly an aspect to be focused on under the current circumstance as well as looked upon as a mechanism of general use for the future.


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1 COMMENT

  1. Hi, I just would like to bring to light that there are Indian websites that provide online arbitration, mediation services such as legalreferee.com, onlinemediationcentre.ac.in etc. I think mentioning them will help the Indian readers.

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