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‘Online Dispute Resolution’ system for Ease of Doing Business

  • Published
    13th Apr, 2023

At the Delhi Arbitration Weekend celebrations held on February 2023, Union Law Minister has emphasised the need for institutional arbitration to enhance the ease of doing business.

About the situation:
  • India has shown tremendous improvement in the World Bank’s Ease of Doing Business report, rising from the 142nd rank among 190 countries in 2014 to 63rd in 2019.
  • However, India is ranked 163rd, in ‘Enforcing Contracts’, which is a marginal improvement from its previous ranking.
  • The report says it takes almost four years and 31% of the cost of the claim to enforce a contract in India; in contrast, it takes just over two years and costs 22% of the claim value in Brazil.
  • India opened up its economy in the 1990s, which was the decade of growth for international arbitration.
  • As more countries entered into bilateral investment treaties, institutional arbitration became the preferred choice of resolution.
  • But India is yet not a preferred arbitration destination, even for disputes between Indian businesses.

Online Dispute Resolution: (As a solution)

  • ODR is a mechanism of resolving disputes in a virtual environment.
  • It can reduce the burden on the courts, save time and costs, and provide effective resolutions.
  • ODR involves more than just audio/video conferencing.
  • It encompasses the integration of tools such as multi-channel communication, case management systems, automated case flows, digital signatures and stamping, and even the application of advanced technologies such as blockchain, natural language processing, artificial intelligence, and machine learning.
  • Private platforms in India are already resolving lakhs of disputes through ODR.
  • Many corporates have migrated to ODR to resolve small-value disputes.

The Reserve Bank of India, the National Payments Corporation of India, and the Open Network for Digital Commerce have also led the way by incorporating ODR mechanisms into several of their initiatives.

Some Government initiatives:

  • Project eCourts:
    • It aims to enhance judicial productivity, both qualitatively & quantitatively and to make the justice delivery system affordable, accessible, cost-effective, predictable, reliable and transparent.
    • It also provides efficient & time-bound citizen-centric services delivery as detailed in e-Court Project Litigant's Charter.
  • Integrated Case Management System (ICMS):
    • It was launched In 2017 for integrating the Supreme Court and the High Courts of the country and enabling e-filing throughout the country.
    • Presently, several High Courts in the country including those at Delhi, Punjab, Bombay, Andhra Pradesh, Karnataka and Allahabad have enabled e-filing and presentation of evidence on electronic platforms in their commercial divisions.
  • Budgetary allocation:

The Finance Minister has announced to allocate ?7,000 crore for the third phase of the e-Courts project in the Union Budget 2023 (aimed at digitising the justice system), a dedicated fund must be set up for furthering ODR.

Suggestive measures:

  • To incentivise use of ODR: It can be achieved by way of legislative measures such as setting ODR as a default dispute resolution tool for categories of disputes arising out of online transactions, fast-tracking enforcement of ODR outcomes, and exempting or reducing stamp duty and court fees.
  • To solve infrastructural challenges: Means that to curb the digital divide, and catalyse ODR’s growth by optimising existing setups such as Aadhaar kendras to also function as ODR kiosks.
  • The government departments should explore ODR as a grievance redress mechanism: Proactive use of ODR by government entities will not only increase trust in the process but also ensure that citizens have access to a convenient and cost-effective means of resolving disputes with the government.

International Arbitration:

  • Article 15 of the ‘Hague Convention’ of 1899 provides:
    • Settlement on the basis of respect for law.
    • International arbitration has become the principal method of resolving disputes between states, individuals and corporations in almost every aspect of international trade, commerce and investment.
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