Recognition of Online Dispute Resolution in India

The application of Alternative dispute resolution in India has become very popular and most prudent to resolve any dispute between parties. The advantages of resolving the dispute out of the court, that is, through alternative dispute resolution saves lots of time and money to the litigants. There are number of benefits using alternative dispute resolution and more particularly arbitration over litigation. The understanding of arbitration Vs litigation is crucial for appreciating of Alternative Dispute Resolution in India. The application of alternative dispute is well within the legal framework in India through statute of Arbitration and Conciliation Act, 1996. The same has been recognized and encourages by the Indian courts to opt for alternative dispute resolution.

Now, the application of alternative dispute resolution along with the Information Technology Act, 2000 has paved the way of resolving disputes online through alternative dispute resolution and advent of online dispute resolution.

The need, importance and recognition of online dispute resolution in India has been considered to be beneficial in geographically large country like ours, where the businesses are spread across the country and the transactions including B2B and B2C transactions happens on a day to day basis. In the digital world, transactions between businesses of different parts of the India or even with foreign countries are not rare. For instance, an e-commerce website having its registered office at Delhi can provide services to person in Kanyakurami. Such being the case, in case of any dispute or misunderstanding, it is for the parties to decide where and how to resolve such dispute or misunderstanding. Generally the terms and conditions of the site would provide the same and very often the jurisdictions of the courts will the primary objection in case of litigation. Even the application of alternative dispute resolution may not provide for suitable dispute resolution mechanism. As provided in the example above, the requirement of finding a mutually agreeable place of arbitration is a precondition for initiating the process of alternative dispute resolution. Hence, the need for emergence and recognition of online dispute resolution in India.

Additionally, the online transactions are mostly of low monetary value which may not financial sound prudent to spend on physical place for alternative dispute resolution. Hence, the union of Alternative dispute Resolution and e-commerce in India.

In Indian, the legislation is based on United Nations Commission on International Trade Law (UNCITRAL) model and the use of Alternative Dispute Resolution is encouraged through the legislation of Arbitration and Conciliation Act, 1996  and constitution of Lok Adalat  and Naya Panchayat System.

The Indian legal framework promotes the application of Online Dispute Resolution under Section 89 of the Code of Civil Procedure, 1908 that emphasis the application of alternative dispute resolution in India. Furhter, Order X Rule 1A authorises the court to direct the parties to litigation any of the methods of Alternative Dispute Resolution to resolve disputes. The Information Technology Act, 2000 recognises the use of electronic signatures and electronic records.

The Hon’ble Supreme court in the case of Shakti Bhog Foods Ltd. v. Kola Shipping Ltd. [(2009) 2 SCC 134] which has been reiterated in the case of Powertech World Wide Limited Vs Delvin International General Trading LLC (ARBITRATION PETITION (CIVIL) NO. 5 OF 2010) has categorically held that that from the provisions made under Section 7 of the Act, the existence of an arbitration agreement can be inferred from a document signed by the parties or exchange of e-mails, letters, telex, telegram or other means of telecommunication, which provide a record of the agreement. And further it was recorded that any exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other. Also the above proposition was confirmed in the case of Trimex International fze Limited Vs Vedanta Aluminium Limited ARBITRATION PETITION NO. 10 OF 2009. Furthermore, in the case of State of Maharashtra vs Dr. Praful B. Desai (Appeal (crl.)  476 & 477 of 2003) the Supreme Court of India established that Video Conferencing is an acceptable method of recording evidence for witness testimony. Furthermore, in the case of Grid Corporation of Orissa Ltd. vs. AES Corporation (2002) 7 SCC 736 a it has been held as follows:

"when an effective consultation can be achieved by resorting to electronic media and remote conferencing, it is not necessary that the two persons required to act in consultation with each other must necessarily sit together at one place unless it is requirement of law or of the ruling contract between the parties".

Thus, Indian law viz the legislature as well as Hon’ble Supreme Court support the use of technology for dispute resolution through use of technology.

Generally, the parties seek the assistance/guidance of the service provider of Online Dispute Resolution for appointing a neutral panel of judges or panellists to resolve disputes online. Parties prefer a structured and clear procedure where resolution is simple and definite. Institutions of international repute such as World Intellectual Property Organisation (WIPO), Singapore International Arbitration Centre (SIAC) and International Criminal Court (ICC) usually resolve online disputes through mediation and other method of alternative disputes resolution / Online Dispute Resolution. By filing a complaint, the complainant generally seeks monetary compensation or other similar remedies and submits its detailed submissions for which the respondent provide replies with their substantiation. The process may or may not involve oral hearing by use of teleconference or video conference facilities. If the claimant's offer falls within an acceptable range, the disputes between parties are resolved without much delay. In general, the service provider of Online Dispute Resolution serves the function of an administrator and not a judge that decides the disputes.

In the United States, Federal Mediation and Conciliation Service is using ODR to settle labour disputes. Under the principles of e-governance, various governmental departments are using ODR to settle consumer grievances. In Australia, family disputes are required to undergo a mandatory mediation. However, issues related to criminal or constitutional laws fall within the domain of litigation process and remain excluded from ODR, although areas such as telecommunications or labour laws are being added to the domain of ODR.

There are number of socio-cultural imbalance such as access/use of technology, language, practices, culture, issues of confidentiality and security, applicable law and enforcement of award. The use of online dispute resolution in India with guidance and assistance of proper service provider to the parties is believed to overcome the above hurdles.

Hon’ble Justice S Vimala speaking at the 10th Conference of the institute of company secretary of India (ICSI) southern India Regional Council held in Madurai states as follows:

"The arbitration and conciliation act has been amended to make arbitration as a preferred mode for commercial disputes by making it more user friendly, cost effective and leading to expeditious disposal of cases,"

She also stated that a cursory look at the backlog of cases pending before the various courts in India provides sufficient reason to seriously consider bringing in some drastic reforms. And further it was stated:

"But, there are a number of hurdles like access, technology, cultural and language issues. Above all, trust with a new untested system. Of late, the ODR has been successfully used by the National Internet Exchange of India and the judiciary has also shown perceptible shift towards the use of the new technology and methods in the resolution of disputes,"

Also Justice H L Dattu, former Chief Justice of India after inaugurating the National Conference on 'court annexed mediation and role of institutional arbitration as early as 2008 stated that Online Dispute Resolution involving mediation and arbitration with the help of technology was emerging as a branch of dispute resolution.