The Hindu Editorial Analysis, India must Board the Online Dispute Resolution Bus

The Hindu Editorial Analysis: The editorial analysis of The Hindu Newspaper Editorial Articles aimed at simplifying various concepts relevant to the UPSC and other State PSC Exams. The Editorial Analysis helps in expanding the knowledge base as well as framing better quality mains answers. Today’s Hindu Editorial Analysis of ‘India must Board the Online Dispute Resolution Bus’ discusses various issues and challenges faced in making India an Arbitration Hub of the World. India must Board the Online Dispute Resolution Bus editorial analysis also suggests ways to adopt online dispute resolution mechanism in India.

Online Dispute Resolution System in News

During the Delhi Arbitration Weekend held in February 2023, Kiren Rijiju, the Law Minister of India’s Union, highlighted the significance of institutional arbitration in improving the ease of doing business.

• India’s ranking in the Ease of Doing Business report by the World Bank has significantly improved over the years, moving from 142nd out of 190 countries in 2014 to 63rd in 2019.

Status of Contract Enforcement System in India

According to the Ease of Doing Business report, India’s ranking in ‘Enforcing Contracts’ is 163rd, which shows a slight improvement from the 186th position in 2015 and 173rd position in 2006.

• The report highlights that enforcing a contract in India takes almost four years and costs 31% of the claim value.
• In comparison, in Brazil, it takes a little over two years and costs 22% of the claim value, whereas in Mexico, it takes 341 days and costs 33% of the claim value, and in Vietnam, it takes 400 days and costs 29% of the claim value.

Status and Issues in Dispute Resolution in India

During the 1990s, India liberalized its economy, which coincided with the growth of international arbitration. With an increasing number of countries signing bilateral investment treaties, institutional arbitration emerged as the preferred mode of resolution.

• Despite introducing its first legislation on arbitration and conciliation in the mid-2000s, India was deemed ‘arbitration-unfriendly,’ as highlighted by the Srikrishna Committee in 2017, due to various reasons.
• These included-
  • Preference for ad hoc arbitration over institutional arbitration,
  • Frequent judicial intervention in matters ranging from the appointment of arbitrators to the enforcement of awards, and
  • Setting aside of arbitral awards on the grounds of ‘public policy.’

Steps taken to Strengthen Arbitration System

The government has amended its arbitration legislations in 2015 and 2019 to make them more effective and comprehensive. Along with these amendments, a few recent judicial decisions have also restricted the use of “public policy” as grounds for setting aside awards and emphasized institutional arbitration.

• Despite these changes, India is still not a favored destination for arbitration, even for disputes between Indian entities. Many continue to opt for arbitration outside of India.
• Meanwhile, Singapore, which established its International Arbitration Centre during India’s initial foreign investment push in the 1990s, has become a prominent global arbitration hub and is ranked first for “Enforcing Contracts,” with many Indian businesses being among its primary users.

Using Technology in Dispute Resolution

Despite India’s lagging position in traditional arbitration, the country has the potential to become a leader in online dispute resolution (ODR), given its strengths in technology and the widespread adoption of online tools during the COVID-19 pandemic.

• As the judiciary has already demonstrated with online hearings, ODR offers many benefits, including the ability to resolve disputes virtually, which can ease the burden on the courts, save time and money, and provide effective resolutions.

What is Open Dispute Resolution (ODR)?

ODR is a comprehensive approach that goes beyond mere audio/video conferencing. It involves the integration of various tools, including multi-channel communication, case management systems, automated case flows, digital signatures and stamping, and even cutting-edge technologies like blockchain, natural language processing, artificial intelligence, and machine learning.

• ODR has already gained traction in India, with numerous private platforms utilizing it to resolve a significant number of disputes. Many corporations have also adopted ODR to handle small-scale disputes.
• Given the demand for an efficient dispute resolution system and India’s technological advancements, the NITI Aayog believes that the country is well-positioned to become a leader in ODR.
• However, to realize this potential, it is essential for the legislature, executive, and judiciary to collaborate.
• Fortunately, entities such as the Reserve Bank of India, the National Payments Corporation of India, and the Open Network for Digital Commerce have already incorporated ODR mechanisms into their initiatives.
• The next step is to ensure that these mechanisms are widely disseminated.

Way Forward

Following three ways can be implemented in order to make India hub for alternative dispute resolutions in the world-

Promoting Adoption of ODR

To encourage greater adoption of ODR, legislative measures could be implemented, such as-

• Making ODR the default dispute resolution method for certain categories of disputes arising from online transactions,
• Expediting the enforcement of ODR decisions, and
• Providing stamp duty and court fee exemptions or reductions.

Creating Infrastructure

To promote the growth of ODR in India, it is necessary to address infrastructural challenges, bridge the digital divide, and leverage existing setups such as Aadhaar kendras, which can also serve as ODR kiosks.

• Moreover, every court can establish an ODR cell supported by technical and administrative staff.
• To support the development of ODR, a dedicated fund similar to the Union Budget 2023’s allocation of ₹7,000 crore for the e-Courts project should be established.

Adopting ODR as Grievance Redressal Mechanism in Government

Government departments can consider using ODR as a mechanism for addressing grievances. By proactively adopting ODR, government entities can boost confidence in the process and offer citizens an affordable and convenient way to resolve disputes with the government.

Conclusion

Given the current backlog of cases, the adoption of ODR could enable access to justice for all, right at their fingertips. Although India may have missed the opportunity to become an arbitration hub, it can still surpass other countries in the digital realm by leveraging the potential of ODR.

Bar Council of India (BCI) Frames Rules for Foreign Lawyers and Law Firms

Bar Council of India (BCI) Frames Rules for Foreign Lawyers and Law Firms

Sharing is caring!