Online Dispute Resolution (ODR)

Online Dispute Resolution is the resolution of disputes, particularly small and medium-value cases, using digital technology and techniques of Alternate Dispute Resolution (ADR), such as negotiation, mediation, and arbitration. 

Why is it in news?

In June 2020, NITI Aayog, in association with Agami and Omidyar Network India, brought together key stakeholders in a virtual meeting for advancing Online Dispute Resolution (ODR) in India. Senior judges of the Supreme Court, secretaries from key government ministries, leaders of the industry, legal experts and general counsels of leading enterprises participated in it.

Considering the ongoing COVID-19 pandemic, on April 10, 2021, a handbook on ODR, developed by Agami and Omidyar India, in association with NITI Aayog and with the support of ICICI Bank, Ashoka Innovators for the Public, Trilegal, Dalberg, Dvara and NIPFP was released. 

This is an important topic from the perspective of the upcoming IAS Exam and questions based on the same may be asked in the prelims examination. Candidates can refer to the background, origin, objectives and impact of ODR discussed further below in the article. 

Online Dispute Resolution (ODR) [UPSC Notes]:-Download PDF Here

Online Dispute Resolution (ODR) – Origin & Background

The origins of ODR can be traced to the evolution of the Internet in the 1990s, which increased online transactions, and thereby disputes related to such transactions. 

Broadly, ODR’s development across the world can be divided into three phases, with each phase benefiting from the subsequent innovations in Information Communication and Technology (ICT). Discussed below are the three phases:

• First Phase: eBay’s experiment leads the way
  • The first initiatives on ODR projects were launched in 1996 in the University of Massachusetts and the University of Maryland
  • With the development of e-commerce, a robust system was required for operating commercial activities on the internet. ODR offered a solution to this problem
  • In 1999, eBay started a pilot project to provide online mediation facilities for disputes arising between buyers and sellers on its platform
  • By 2010 eBay was handling over sixty million disputes per year through its ODR platform
• Second Phase: Boom of ODR start-ups
  • The success of this model and the rapid growth of the internet kick-started the evolution of ODR and led to the boom of ODR platforms. There were up to 21 new ODR programs that were launched in the year 1999
  • Only a few successful platforms such as Cybersettle, Smartsettle and the Mediation Room were able to make a remarkable impact in the dispute resolution ecosystem
• Third Phase: Adoption by the Government and Judiciary
  • The success of a few of the private ODR platforms drew the interest of governments towards this emerging addition to the dispute resolution ecosystem

Online Dispute Resolution in India

The United Nations Commission on International Trade Law (UNCITRAL) adopted the UNCITRAL Model Law on International Commercial Arbitration in 1985 and the UNCITRAL Conciliation Rules in 1980. In the context of international commercial relations, this Model Law has been recommended by the United Nations General Assembly (UNGA).

India incorporated these uniform principles of ADR in the Arbitration and Conciliation Act, 1996.

In the context of India, given below is the timeline for ODR development in India:

(Source: niti.gov.in)

ODR in India & COVID-19

During the ongoing Covid-19 pandemic, the target is to look into Covid-related disputes (most notably in lending, credit, property, commerce and retail) through ODR, which is an important part of the economic revival.

It will set into motion the use of technology towards efficient and affordable access to justice, especially in post-pandemic times.

Also, read Coronavirus & Digital Solutions: RSTV- Big Picture

Benefits of ODR

• Cost-Effective – ODR has the potential to reduce legal costs. First, by way of reduced time for resolution and second, by doing away with the need for legal advice in the select category of cases
• Convenient and quick dispute resolution – ODR eliminates the need for travel and synchronisation of schedules
• Increased access to justice – As part of India’s commitment and leadership to attain Sustainable Development Goals adopted by the UN General Assembly in 2015, India is committed to ensuring equal access to justice for all. Since ODR tools such as online negotiation and mediation are premised on mutually arriving at an agreement, they make the dispute resolution process less adversarial and complicated for the parties
• Removes unconscious bias – ODR processes lessen the unconscious bias of the neutral while resolving disputes
• Exploring the massive potential of Online Dispute Resolution (ODR) can enhance the Ease of Doing Business in India.

Current Status of Dispute Resolution

• Although we have observed a rise in the ranking of Ease of Doing Business, we have a lot more room to cover in Enforcing Contracts.
• We are ranked 163rd in contract enforcement which is a marginal improvement from the 186th rank in 2015 and 173rd in 2016.
• We also fare poorly in time taken (4yrs) and cost (more than 30% of project cost) for these obligations.
• We have also acquired a reputation for being arbitration-unfriendly as per the Srikrishna Committee (2017) report.

Advantage of Technology in ODR

• It reduces the burden on the courts and saves time.
• It is cost-effective and provides effective resolutions.
• Using advanced technology such as blockchain, natural language processing, artificial intelligence, and machine learning will be a game changer in the coming years.
• Corporates and private players are already using ODR to resolve disputes in lakhs of value.
• Govt. institutions such as the NPCI, and the Reserve Bank of India have led the way by incorporating ODR mechanisms into several of their initiatives.

Challenges of ODR

• Digital literacy – ODR requires a basic level of digital literacy as a prerequisite. In India, digital literacy often varies across age, ethnicity and geography. This digital divide needs to be addressed to ensure that ODR is adopted by society at large and not remain limited to urban areas
• Digital infrastructure – A broad base adoption of ODR will require essential technology infrastructure across the country
• Lack of trust in ODR services – A lot of people in the country do not trust the emerging technology which is a major challenge for the people of India
• Privacy and confidentiality concerns – Greater integration of technology and reduced face-to-face interactions create new challenges for privacy and confidentiality, especially in dispute resolution

 Examples from around the world

• A small country like Singapore, started its Singapore International Arbitration Centre in the 1990s when India was opening up for foreign investment.
• Since then, it has emerged as a global arbitration hub which is exemplified by its top spot in ‘Enforcing Contracts’.
• Ironically, Indian companies are among its top clients. 

Way Forward: Although the amendments along with judicial decisions in recent years have put India on the right path, we need to incentivise the use of ODR as a default dispute resolution tool. With rising online transactions, fast-tracking enforcement of ODR is the need of the hour. As NITI Aayog claims that India is uniquely positioned to emerge as the epicentre for the developments in ODR, we need to solve the issues of funding, infrastructure and public policy support to make it happen.

UPSC aspirants can also read about the in-depth RSTV – Big Picture discussions about Coronavirus & Impact on the Economy at the linked article. 

Online Dispute Resolution (ODR) [UPSC Notes]:-Download PDF Here

Get familiar with the UPSC Syllabus for the prelims and mains examination for the upcoming Civil Services Exam at the linked article.

For the latest exam updates, study material and preparation tips, candidates can turn to BYJU’S for assistance.