Date: 14/04/2023
Relevance: GS-2: Alternative Dispute Redressal Mechanisms and Institutions.
Key Phrases: Online Dispute Resolution, Institutional Arbitration, Ease of Doing Business, India International Arbitration Centre Act, 2019, Arbitration and Conciliation Act, 1996.
Context:
- At the Delhi Arbitration Weekend in February 2023, Union Law Minister Kiren Rijiju emphasized the need for institutional arbitration to enhance the ease of doing business.
Key Highlights:
- 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 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; in contrast, it takes just
over two years and costs 22% of the claim value in Brazil.
- In Mexico it is 341 days and 33% of claim value, and Vietnam 400 days, and 29% of claim value.
- Although India introduced its first piece of legislation on arbitration and conciliation in 1996, it acquired a reputation of being ‘arbitration-unfriendly’.
- Singapore, which opened its International Arbitration Centre (the
Singapore International Arbitration Centre) in the 1990s, emerged as a
global arbitration hub and is ranked first in terms of ‘Enforcing
Contracts’.
- Indian companies are among its top users.
- Arbitration is a quasi-judicial proceeding, wherein the parties
in dispute appoint an arbitrator by agreement to adjudicate the said dispute
and to that extent it differs from court proceedings.
- The power and functions of arbitral tribunal are statutorily regulated.
Need for Alternative Dispute Resolution:
- The traditional mode of dispute resolution i.e. litigation is a
lengthy process leading to unnecessary delays in dispensation of justice as
well as over-burdening the Judiciary.
- In such a scenario, Alternative Dispute Resolution (ADR) mechanisms like arbitration, conciliation and mediation etc. offer better and timely solutions for resolution of a dispute.
- These ADR mechanisms are less adversarial and are capable of providing an amicable outcome in comparison to conventional methods of resolving disputes.
Key Objectives of the Arbitration and Conciliation Act, 1996
- Reducing Court intervention
- Providing for speedy disposal of the disputes.
- Amicable, swift and cost-efficient settlement of disputes.
- Ensuring that arbitration proceedings are conducted in a just, fair and effective manner.
- Comprehensively dealing with international commercial arbitration and conciliation as also domestic arbitration and conciliation.
- Facilitating arbitrator to resort to mediation, conciliation or other procedure during the arbitral proceedings to encourage settlement of disputes.
- Provide that every arbitral award is enforced in the same manner as if it were a decree of the court.
India International Arbitration Centre Act, 2019
- It provides for the establishment of an institution of national importance, namely the India International Arbitration Centre for creating an independent and autonomous regime for institutional arbitration.
- It is proposed to develop the Centre as a preferred seat for domestic and international commercial arbitration.
- The India International Arbitration Centre shall, inter alia, provide facilities and administrative assistance for conciliation, mediation and arbitral proceedings, maintain panels of accredited arbitrators, conciliators and mediators, both at National and International level or specialists such as surveyors and investigators; provide facilities and administrative assistance for conciliation, mediation and arbitral proceedings; promote research and study, providing teaching and training, and organizing conferences and seminars in arbitration, conciliation, mediation and other alternative dispute resolution matters.
India’s Potential: Online Dispute Resolution
- India can make use of its strengths in technology and emerge a frontrunner in ODR.
- ODR is about resolving disputes in a virtual environment, and has
several advantages.
- 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 corporations have migrated to ODR to resolve small-value disputes.
- NITI Aayog has rightly claimed that 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.
- To facilitate this, the legislature, the executive, and the judiciary must work together.
- 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.
- The need now is to disseminate these at a mass scale.
Need of Hour:
- Incentivise use of ODR
- There is a need to 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
Catalase ODR’s growth
- It can be done 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.
- Explore ODR as a grievance redress mechanism
- 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.
Conclusion:
- At a time when pendency is gnawing into the very administration of justice, 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 - all online.
Source: The Hindu
Mains Question:
Q. What is Online Dispute Resolution? Discuss the potential of India to establish the hub for ODR. (150 Words).
