Online Dispute Resolution (ODR)

Researched and drafted by Ms. Liyana Shaji, student at Symbiosis Law School, Pune

Indore, August 30, 2023

The United Nations Commission on International Trade Law (hereinafter UNCITRAL) Working Group defines online dispute resolution (hereinafter ODR) as “…a mechanism for resolving disputes facilitated through the use of electronic communications and other information and communication technology”. The need for an online mode of dispute resolution was felt after a sharp rise in online cross-border transactions that subsequently necessitated a mechanism that would resolve disputes arising from such transactions.

E-Bay, a renowned and pioneering online marketplace, was one of the first organizations to experiment with the use of the internet for resolving its unconventional consumer disputes that would entail from the transactions conducted on its platform. Typically, such disputes involve individuals situated in different geographical locations and the monetary value in contention could range from measly amounts to large sums of monies. Since then, the attraction towards ODR has only risen in numerous jurisdictions across the world, given the inherent limitations of the traditional judiciary to expeditiously deal with commercial disputes. Given the prevalence of multiple online marketplaces for all kinds of services and goods, a combination of alternative dispute resolution (hereinafter ADR) mechanisms to resolve disputes via ODR platforms has become a particularly attractive alternative to the judiciary. This successful integration of technology to improve efficiency in ADR processes has naturally led to an increasing interest in experimenting with online platform-based approach by the judiciaries in different countries. While the disputes are resolved online, ODR tends to reduce the number of cases that make to the court and the time that is taken to resolve them.

India has also incorporated these uniform principles of alternative dispute resolution in the Arbitration and Conciliation Act, 1996 that was amended in the year 2015. It adds to Section 7 of the principal Act, in sub-section (4), in clause (b), after the words “or other means of telecommunication”, the words “including communication through electronic means”. The Information Technology Act, 2000 being based on the UNCITRAL Model Law of e-commerce was enacted in India to facilitate e-commerce and gives legal recognition to e-transactions. Section 4, 5, 10-A, 11-15 of the Act reflect the legal recognition to electronic records and signature. The insertion of sections 65-A and 65-B to The Indian Evidence Act, 1872  has made electronic evidence, as secondary copy, admissible in courts of law subject to the satisfaction of requirements mentioned in section 65-B.

STRENGTHS

• Higher Chances of Settlement: As the online trader is informed about the complaint early on, he has a chance to solve the issue with the consumer directly if not done already.
• Low Cost: If the parties do go ahead with the process, the dispute resolution body deals with the consumer complaint at negligible costs or no costs at all. 
• Two-Way Process: In a few Member States, the traders are also allowed to file a complaint against the consumers. This largely depends on the jurisdiction of the dispute resolution body which the parties have chosen. 
• Expertise, Independence and Impartiality: The dispute resolution body dealing with the complaint has technical expertise on various forms of ADR and can only deal with the complaint if it does not have any conflict of interest. 
• Transparency: The dispute resolution body has to display all the relevant information on its website which provides an opportunity to the party to decide whether they wish to participate in the process. 
• Efficiency: The Regulation provides for resolution of the dispute within 120 days of the filing of the complaint. 

CHALLENGES FACED

• Arbitration Proceedings not widely practiced in India: To add to it, a still spreading technology of access to internet connectivity in the remote areas impedes a quick and welcoming approach towards online arbitration/ODR proceedings in the Indian milieu.
• Infrastructural and Institutional Limitations: Such limitations curtail the rapid growth of ODR in almost all developing countries, including India.
• Unsuitable in Criminal Matters and Matrimonial Disputes.
• The education barrier and lack of access to technology is another main drawback behind the implementation of online arbitration in India.
• The ODR mechanism has not been able to inculcate trust and confidence amongst people for obvious constraints of technology, awareness and apprehensive, skeptical approach of people. The trust and confidence in such an online methodology can be developed only with time and be built on experience.
• Limited by lack of physical existence and face-to-face interaction between the parties to the dispute. Therefore, the mechanism is also deemed to be limited to resolve disputes of online business and online transactions.
• The uneven distribution of technology, internet and e-commerce opportunities in the developing countries impedes the acceptance and recognition of ODR mechanism.
• Lack of training to lawyers impedes quick and healthy acceptance of the phenomenal dispute resolution mechanism, thereby implying the need to spread awareness through seminars, training, and campaigns to make lawyers and people legally conscious of the possible measures of dispute resolution.

ODR : A CROSS JURISDICTION OVERVIEW

• European Union: It is mandatory for all online traders to provide a link to EU’s ODR platform.
• United States: E-commerce companies began offering ODR in the early 2000s; various county courts in the US now mandate ODR as a first step.
• China: Hangzhou Internet Court for ecommerce disputes offers ODR platform.
• Brazil: Consumidor platform allows consumer and Internet companies to solve disputes directly; resolved 2 million complaints in 5 years.