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EDITORIAL ANALYSIS : India must board the Online Dispute Resolution bus

 

 

Source: The Hindu

  • Prelims: Governance(Adhar, UIDAI, KYC, ODR, Enforcing Contracts, Srikrishna Committee etc
  • Mains GS Paper II: Government policies and interventions for development of various sectors and issues arising out of them etc
  • ARTICLE HIGHLIGHTS
  • The Union Law Minister emphasized the need for institutional arbitration to enhance the ease of doing business.
  • The 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.

INSIGHTS ON THE ISSUE

Context

Online Dispute Resolution:

  • It is the resolution of disputes, particularly small and medium-value cases.
  • It uses digital technology and techniques of Alternate Dispute Resolution (ADR), such as negotiation, mediation and arbitration.
  • It utilizes information technology to carry out ADR.
  • The information management and communication tools in ODR may apply to all or part of the proceedings and also have an impact on the methods by which the disputes are being solved.

 

ODR 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.
  • The United Nations General Assembly (UNGA) has recommended the use of the said Model Law and Rules in cases where a dispute arises in the context of international commercial relations and the parties seek an amicable settlement of that dispute by recourse to conciliation.
  • India has incorporated these uniform principles of ADR in the Arbitration and Conciliation Act, 1996 which has been amended several times.
  • The Arbitration Act provides for ADR mechanisms like arbitration, conciliations, etc. for national and international stakeholders.

 

Status of India in Dispute Resolution:

  • World Bank’s Ease of Doing Business report: rising from the 142nd rank(among 190 countries in 2014) to 63rd in 2019.
  • ‘Enforcing Contracts: India is ranked 163rd, marginal improvement from the 186th rank in 2015 and 173rd in 2006.
    • The report says; It takes almost four years and 31% of the cost of the claim to enforce a contract in India
    • Brazil: It takes just over two years and costs 22% of the claim value.
    • Mexico: It is 341 days and 33% of claim value
    • Vietnam: 400 days, and 29% of claim value.

 

Background of ODR development:

  • India introduced its first legislation on arbitration and conciliation by the middle of the decade.
  • It acquired a reputation of being ‘arbitration-unfriendly: Srikrishna Committee(2017) pointed several reasons:
    • 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 arbitral awards on grounds of ‘public policy’.

Challenges:

  • India is not a preferred arbitration destination, even for disputes between Indian businesses.
  • Many still seek arbitration abroad, even when the dispute is with another Indian entity.

 

Global example:

  • Singapore, opened its International Arbitration Centre (the Singapore International Arbitration Centre) in the 1990s when India was opening up for foreign investment
    • It has emerged as a global arbitration hub and is ranked first in terms of ‘Enforcing Contracts’.
    • Indian companies are among its top users.

 

Use of Technology in ODR:

  • 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
    • 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.
  • 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 and a few other institutions have led the way by incorporating ODR mechanisms into several of their initiatives.

 

Way Forward

  • The amendments of 2015 and 2019 and a few judicial decisions have put India on the right path.
    • The scope for using ‘public policy’ as a ground for setting aside awards has been narrowed, and there is a focus on prioritizing institutional arbitration.
  • Incentivise use of ODR 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.
  • Solve infrastructural challenges, curb the digital divide, and catalyze ODR’s growth by optimizing existing setups such as Aadhaar kendras to also function as ODR kiosks.
  • Each court can have an ODR cell along with supplemental technical and administrative support.
    • On the lines of the Finance Minister allocating ₹7,000 crore for the third phase of the e-Courts project in the Union Budget 2023 (aimed at digitizing the justice system)
      • A dedicated fund must be set up for furthering ODR.
    • 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.
    • ODR has the potential to ensure justice for all, at everyone’s fingertips.
      • India may have missed the bus to become an arbitration hub, but it can still catch up and overtake them all online.
    • NITI Aayog claims: India is “uniquely positioned to emerge as the epicenter for the developments in ODR” due to the need for an efficient dispute resolution system and advancements in technology.

 

QUESTION FOR PRACTICE

The emergence of Fourth Industrial Revolution (Digital Revolution) has initiated e-Governance as an integral part of the government”. Discuss.(UPSC 2020) (200 WORDS, 10 MARKS)