Online Dispute Redressal in India

Why in news?

Union Law Minister, in a recent event held in Delhi International Arbitration Centre, emphasized the need for institutional arbitration to enhance the ease of doing business.

What is Arbitration?

• It is a legal technique for the resolution of dispute outside the courts.
• It allows parties to avoid the normal lengthy recourse to the local courts for settlement of disputes.
• It is a part of the Alternative Dispute Resolution (ADR) mechanism.
• The Indian arbitration is governed and regulated by the Arbitration and Conciliation Act 1996.
• The Act derives its basis from the 1985 UNCITRAL Model on International Commercial Arbitration and the UNCITRAL Arbitration Rules of 1976.

What are the advantages and disadvantages of ODR?

Advantages

• Reduce the burden on the courts
• Saves time, litigation costs, and provide effective resolutions.
• Encourages consensual rather than an adversarial approach
• Geographical limitation can be avoided through ODR

Disadvantages

• Impersonal, leading to greater distance between the parties and mediator.
• Inaccessible due to lack of infrastructure for technology
• Lack of protection of confidential material in ODR

Why India has to focus on arbitration?

• Preferred choice - As more countries entered into bilateral investment treaties, institutional arbitration became the preferred choice.
• Ease of doing business - Despite its tremendous improvement in the World Bank’s Ease of Doing Business report, India ranked 163^rd, in Enforcing Contracts category.

India’s Ease of doing business ranking improves from 142 in 2014 to 63 in 2019

• Unfriendly legislation - Although India introduced its arbitration legislation in 1996, it acquired a reputation of being ‘arbitration-unfriendly’.

What are the challenges in India?

• Srikrishna Committee in 2017 pointed out several reasons which includes:
• Lack of preference for institutional arbitration over ad hoc arbitration.
• Frequent interference from the judiciary from the appointment of arbitrators to the enforcement of awards.
• Setting aside of arbitral awards on the grounds of ‘public policy’.

What are the measures taken so far?

• The Arbitration and Conciliation (Amendment) Act, 2015 - To make arbitration process user friendly, cost effective and ensure speedy disposal and neutrality of arbitrators.
• It amended the Arbitration and Conciliation Act 1996.
• B.N. Srikrishna committee - To prepare a road map to make India a hub of international arbitration.
• It recommended the creation of the post of an International law adviser (ILA) to advise the government on international legal disputes, particularly Bilateral Investment Trade disputes.
• New Delhi International Arbitration Centre - It is an independent and autonomous body for facilitating institutional arbitration.
• Established by the New Delhi International Arbitration Centre Act, 2019.
• The Arbitration and Conciliation (Amendment) Act 2019 – It provides for establishment of the Arbitration Council of India.
• Arbitration Council of India - It will frame, review and update norms to ensure satisfactory levels of arbitration.
• It will also frame policies governing the grading of arbitral institutions.

How India can be made an arbitration hub?

• Incentivise - Incentivise the use of ODR by way of legislative measures.
• Infrastructure - Create infrastructure to curb the digital divide, and catalyse ODR’s growth by optimising existing setups such as Aadhaar kendras to also function as ODR kiosks.
• Dedicated fund - On the lines of e-Courts project (aimed at digitising the justice system), a dedicated fund must be set up for furthering ODR.
• Increase trust - proactive use of ODR as a grievance redress mechanism by government departments will increase the trust in the process.

References

1. The Hindu│ODR
2. PIB│Year End Review, 2022 | Department of Legal Affairs