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Alternate Dispute Resolution in e-Commerce: A Human Approach to Commercial Laws and Online Resolution

The subject matter of commercial laws is to govern business transactions. No matter the business is conducted in-office or virtually, the commercial laws manage to make their place in this dynamic environment. As long as the commercial laws are needed in conducting smooth managerial functions of the business, likewise there also comes the need for a dispute Resolution Mechanism which can effectively handle the disputes along with the consumer grievances and there emerges the ADR (Alternate Dispute Resolution) which incorporates means like Mediation, Arbitration, Conciliation, and Negotiation as well.

The ADR mechanism is often favored by the firms as their savior because firms can't afford to wait for long for their dates and pending hearings in courts. Thus, ADR proves to be of a great help for them. In general, ADR is less expensive and faster than going to court. Additionally, the decisions are confidential, which is helpful when settling disputes involving potential trade secrets or commercially sensitive terms of trade. Also, the company can easily focus upon its day-to-day activities, relieving the officials from the stress of managing the disputes.

One of the primary obstacles confronting e-commerce is the resolution of cross-border conflicts within the electronic commerce landscape. (ADR) mechanisms would provide speedy, low-cost redress for claims arising from online interactions. The same laws and principles that apply to ADR in the brick-and-mortar regime will also apply to e-commerce disputes. When ADR takes place using computer-mediated communications in the online environment, it is often referred to as online dispute resolution (ODR).

Consequently, it should be considered that if e-commerce allows the development of online relationships, conflicts arising from these relationships also must be resolved online. reason is that it would not be logical to approve the e-commerce relational virtues and break them from the moment the conflict arises.

"Kauffman-Kohler and Schultz state that the B2C environment is characterized by dematerialisation, desocialisation and judicialization. By this they imply that as far as consumers are concerned there is no real-world business environment in which transactions take place, no "bricks and mortar"; that the transaction takes place uninformed by a community and the norms and associated trust relationships, and that institutions other than state courts resolve most disputes generated by e-commerce. All of these factors are said to reduce consumer trust in and satisfaction with the online e-commerce environment."

Following are the methods which are frequently used under the ADR Mechanism:

Arbitration: In traditional arbitration, a third party is neutral and renders a ruling that the parties must abide by. This is a dispute resolution clause (commonly called as the Arbitration Clause) in a contract that the parties have agreed to that gives the jurisdiction and powers to the arbitrator. The final award (Decision) given by the Arbitrator is binding on both the parties, and in either case the aggrieved party can challenge the award. Using binding or non-binding online arbitration depends on the existence of trust between the parties.

The components of arbitration frequently differ throughout legal systems, which makes it difficult to give a universally applicable definition that is precise and unique. There are several definitions available, however the ones listed below might be the most helpful to us:

"Two or more parties, faced with a dispute which they cannot resolve for themselves, agreeing that some private individual will resolve it for them and if the arbitration runs its full course� it will not be settled by a compromise, but by a decision."

"Arbitration is a device whereby the settlement of a question, which is of interest for two or more persons, is entrusted to one or more other persons � the arbitrator or arbitrators � who derive their power from a private agreement, not from the authorities of a State, and who are to proceed and decide the case on the basis of such an agreement."

It should be highlighted that an arbitration clause imposed in normal contract terms that requires the consumer to submit a disagreement to arbitration is likely to be regarded as unfair in the majority of European states. Therefore, it is not possible to enforce a normal arbitration agreement against a customer. As a result, the arbitration clause may be mandatory for the company but voluntary for the client. Nonetheless, the customer has the option to proceed to arbitration if they so desire.


Mediator, being a third person and is impartial is involved in mediation, but the mediator is not empowered to make legally enforceable decisions. Mediators collaborate with the parties to create a compromise that both sides can live with. Generally speaking, the decision of a mediator is not binding, and talking about the function of a mediator is more of bringing the parties into a definite conclusion rather than pronouncing judgments.

"Online mediation is one of the Online Dispute Resolution (ODR), that is, one of the Alternative Dispute Resolution (ADR) which uses Information and Communications Technology (ICT) as a key element in resolving process. In summary, it is evident that online mediation offers a number of significant benefits (faster, cheaper, etc.). On the other hand, in spite of the benefits of online mediation, certain drawbacks may also become apparent (difficulties with certain citizens' ICT use, issues with Internet connections, etc.). Consequently, consideration should be given to these dangers."

Negotiation: In negotiation no third party is involved. The parties make an effort to handle the issue on their own. When talks don't work, arbitration or mediation may be the next best course of action. Meetings in person are often how negotiations are conducted. When two parties need to conduct negotiations from faraway locations, they can speak with each other via phone, fax, email, or video conference.

Real-time communication is possible through phone conversations and video conferences, but thorough document coordination is not supported. Document interchange can occur via fax, email, and file transfer, but there is no real-time communication. Exchange of documents and real-time contact are required to facilitate online negotiation. A number of real-time Internet collaboration software programs have recently been developed, including Microsoft NetMeeting, VocalTec's Internet Conference Professional, and Netscape Conference.

Online Dispute Resolution (ODR) is more important in business-to-consumer (B2C) e-commerce than business-to-business (B2B) e-commerce because, although an arbitration clause in B2B contracts can be enforced amongst merchants, it might not be enforceable against the customer (in B2C contracts). Also, this medium of ODR proves to be of more help especially in B2C E- commerce as the ODR provides with the needed interface for the consumers to put forward their complaints to the actual business officials.

There are high chances that these complaints would be entertained expeditiously, compared to the online filings. As the company will be taking the grievances one on one so there is also less possibility of arising the excuses related to geographical barriers as majority of the communication problem is being resolved by the introduction of this online interface.

The Delhi and Bombay High Courts have indicated that contracting parties have a propensity to take advantage of the situation for personal gain. For example, retailers and other commercial tenants are requesting rental waivers due to shopping mall closures; various electricity distribution companies (DISCOMs) are withholding monthly payments to power producers citing reduced consumer demand; OYO has decided to suspend payments to partner hotels citing commercial unprofitability due to loss of revenue.

Changing scenario Post COVID 19

Covid-19 has transformed our lives in unimaginable ways, which inevitably also included the way courts operated�with physical hearings giving way to virtual ones. The transition was difficult for everyone, including advocates, litigants and even court staff. However, while this process was initially slow, the concept of virtual hearings eventually came to find its place in the judicial ecosystem. Things have broadly changed especially in the arena of E- Business, Digital Marketing, Online Shopping etc.

The increasing number of transactions followed by this COVID period upto now have also led to an increase in the number of online complaints related therewith. With the increase of online shopping, acceptance of bills through QR Codes, scan to pay facilities there are also a number of grievances that people were facing from that time, especially this was problematic for the people who were having a nil experience with these resources.

In one such meeting being conducted by the NITI Aayog, addressing the utilities and challenges faced by the Indian economy in facing online disputes. Repeated discussions had happened on this subject where strong emphasis was laid on ODR as Covid-19 had instilled an urgent need for ODR, with the likelihood of a spurt in disputes before courts�most notably in lending, credit, property, commerce, and retail.

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