Alternate Dispute Resolution in Banking and Telecom Sectors
Banking and telecom have a very significant impact on and meaning to the
daily life and welfare of consumers. The range of these types of services is
very broad, and their regulation is also changing both at EU and national
(Member State) level. In order to implement the relevant goals, such as high
level consumer rights protection, consumer trust in business sector, proper and
effective functioning of the internal market it is essential to ensure clear and
sufficient legal regulation, establish responsibility of the services providers,
consumer rights and duties as well as to promote, seek for the more effective,
rapid and cheaper ways of solving consumer and business related disputes.
Alternate Dispute Resolution
Alternative Dispute Resolution (ADR) is the procedure and methodology for
settling and resolving various disputes without litigation, such as arbitration,
mediation and negotiation. ADR proceedings are generally less costly and more
expeditious. They are mostly being utilized in disputes that would otherwise
result in litigation, including high-profile labour disputes, divorce actions,
and personal injury claims. One of the many reasons parties may prefer ADR
proceedings is that, unlike adversarial litigation, ADR procedures are often
collaborative and also allow the parties to understand each other's positions.
ADR allows the parties to come up with more creative ways that a court may not
be legally allowed to impose.
Alternate Dispute resolution in Banking Sector
Banks and their customers often have disagreements or disputes over certain
proceedings, fees or other operations. Until recent times, these types of issues
were very difficult to solve because it could take years in the judicial courts.
Now, customers and banks can very easily resolve their disputes with the helping
hand of the Centre for Alternative Dispute Resolution in Banking (CSALB).
What kinds of disputes can we solve with the help of CSALB?
The Centre for the Alternative Dispute Resolution in Banking aims to settle
disputes between banks or non-bank financial institutions and consumers in a
cordial, balanced and timely manner. Procedures are of no cost for consumers and
are conducted outside the judicial courts. Consumers can turn to CSALB for any
kind of problem they have in their relationship with banks or non-bank financial
institutions. For instance, in the first trimester of this year, most claims
were related to issues relating to the loans and a smaller part of claims were
related to some misinterpretations about bank deposits, current accounts, bank
transfers or leasing. The most common claims by the consumers are related to the
reducing loan balances, the elimination of fees and returning the money paid for
such fees throughout the years.
The key feature of all ADR schemes in the field of financial consumer services
is that a so called 'neutral' or a 'third party' helps the consumer and the
service provider resolving their dispute by proposing or imposing a solution or
by bringing the parties together to convince them to find a solution by common
agreement. In the area of financial services, the currently existing ADR schemes
in different Member States either cover financial services in particular sectors
or cover all financial services sectors or handle consumer complaints in
general. Most of the ADR schemes are central but some are regional as well, such
as the Lisbon Arbitration Centre for Consumer Conflicts.
The decision can be binding on both the consumer and the financial service
provider or binding only on the financial service provider. Other ADR projects
only make a recommendation to the parties which the latter are free to follow or
not. A number of ADR plans do not formally adopt a position on the possible way
to resolve the dispute but rather help the parties to come to an agreement,
although sometimes they may propose a solution informally. Some ADR schemes
apply a mix of procedures. For example, at the Dutch Financial Services
Complaints Institute, a dispute is first handled through a mediation procedure,
but if this procedure is not successful in resolving the dispute, an arbitration
proceeding may be initiated.
Relevance of ADR in Banking Sector
There are three crore civil cases pending in Civil/usual forums in various
courts in the Country. In addition, over five lakh cases, involving criminal and
civil laws, were pending in different High Courts for over 10 years in the
country. The expenditure on judiciary in terms of GNP is only 0.2% and of this,
half of the cases are from the banking and financial sectors where compensation
has to be claimed. To curb the burden of cases on the usual courts, ADR is a
huge source of resolving disputes outside the court and not burdening the courts
on less expense.
Alternate dispute resolution in telecom sectors
The telecommunications sector has witnessed an enormous transformation in its
market structure in the past two decades. The traditional confidence in
state-owned monopolies has been replaced with the more effective approach of
privatizing and liberalizing markets. Commercial disputes are a natural outcome
of business game but in the telecommunications context such disputes do become
much more nuanced. Telecommunications disputes may not only hold or surround
technical matter, additionally they also impinge on matters of public policy
like competition law, consumer protection and international commitments of the
country in question.
National laws have stipulations providing for mechanisms of resolving
telecommunications disputes, with the dispute settlement purview allocated
conventionally to the regulator. In addition to the more official forms of
dispute resolution, there has been a marked movement towards promoting of
Alternative Dispute Resolution (ADR) as a more efficient platform for dispute
The policy changes introduced by the Communications Act, 2003 made considerable
modifications to the role of the regulator and industry in resolving disputes.
ADR is now encouraged in a wide variety of disputes, which were conventionally
in the exclusive jurisdiction of the regulator. In the domestic sphere,
inter-operator and consumer disputes are dealt with and on an international
level telecommunications related trade disputes are covered. It is established
that the use of ADR leads to a more efficient and flexible regulatory
environment and also helps preserve business relationships between the different
ADR is becoming increasingly relevant in telecommunications and has reached a
high priority on the policy-makers' agenda at every level of regulation as they
seek to provide timely, efficient and more cost-effective solutions to disputes.
The vast majority of the disputes arise from breaches of legal obligation
imposed by the regulator, or an international body, such as the WTO,
administering trade liberalization policies.
In India, Telecom Dispute Settlement and Appellate Tribunal, TDSAT, is fledging
institution working in line. The working procedures and approaches of these
appellate bodies may have to be made more simple, flexible and not complex and
necessarily court-like. Such bodies should also be capable of drawing upon other
methods of settling and resolving disputes including the alternative dispute
resolution (ADR) before taking up formal processes of adjudication in the court.
An enormous number of cases can be resolved by the method of ADR in the sectors
of Banking and Telecom. This article briefly discusses the ADR systems and its
development in the fields of Banking and Telecom in India.
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