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Online Dispute Resolution Mechanism: Prospects and Challenges in India

In era of globalization, people in 21st century have witnessed the ultimate impact of Information and Communication Technology on social, economic, legal and cultural arena of globe. Technological revolution brought by internet has altered the scale according to which human affairs are being conducted and has fostered a new medium that has impacted well-established legal conceptions especially with respect to resolution.[1]

The acceleration of change, increasing complexity of relationships, transactions and the lowering cost of publication accompanied by disputes and in response, there is growing need for the kinds of creative technology-assisted dispute resolution process.[2]

Justice delayed is justice denied.- William E. Gladstone a legal maxim which means if justice is not administered in time then it is effectively equal to no redress at all. Indian Judiciary is overburdened with pending litigation.

Delay in administration of justice and high cost of litigation are its pitfalls. These factors have resulted in loss of faith of people in Indian judicial system. Thus, with advent of Alternative Dispute Resolution emphasis has been shifted from traditional rigid method of solving the disputes through litigation to ADR.

Tremendous development in ICT in 20th and 21st century resulted into online cross-border interactions and e- commerce activities on large scale leading to e-disputes such as domain name disputes, hacking, privacy invasion, e-stalking, e-purchase and sell of goods etc. which called for dispute resolution mechanism to resolve the same.

B. Meaning:
ODR is basically employing of available information and communication technology to deliver ADR services or is implementation of ADR in online environment. It utilizes internet as a more efficient medium for parties to resolve their disputes through a variety of ADR methods similar to traditional ADR.

Hon. Arthur M. Monty Ahalt (ret.) defined ODR as, ODR is a branch of dispute resolution which uses technology to facilitate the resolution of disputes between parties. It primarily involves negotiation, mediation or arbitration, or combination of all three. In this respect it is often seen as being the online equivalent of ADR.[3] According to Katsh and Rifkin, three important factors, namely convenience, trust and expertise forms the essence of ODR.[4]

The assistance of ICT has been named by Katsh and Rifkin as the fourth party since, in addition to the two disputing parties and third neutral party (arbitrator, mediator, negotiator), there is a fourth party[5] in process, which is technology. As a matter of fact, the fourth party is used by third party as a tool for assisting the process.[6] ODR resolves e-disputes as well as traditional disputes which are capable of being resolved by information technology in minimal time and cost. It resolves B2B, B2C, and C2C disputes for eg: Commercial, contractual performance, partnership, industrial, construction contracts, defamation, family, intellectual property rights, business, banking, insurance, privacy concern disputes etc.

ODR involves various methods of dispute resolution including e-Negotiation, e-Conciliation, e- Mediation, e-Arbitration and hybrid mechanisms such as Medola, Mini trial, Med Arb, fast track arbitration, Neutral Listener Agreement, Rent a Judge, Concilio-Arbitration etc. It may adopt either adjudicatory or non-adjudicatory process to have its decision binding or non-binding upon parties.

C. Origin And Evaluation:
While Internet began in 1969, a need for ODR did not emerge until early 1990s as there was ban upon commercial activity from the Internet until 1992.[7] When ban was lifted by National Science Foundation, there was attack of online disputes and there were no organized dispute resolution institutions devoted to ODR. Indeed, the acronym ODR had not yet been invented. [8]The need for a sustained ODR for growing number of disputes arising online activities prompted the National Center for Automated Information Research to sponsor a conference on ODR in 1996[9] leading to funding of three experimental ODR projects.

# The Virtual Magistrate project aimed at resolving disputes between Internet Service Providers and users.[10]
# The University of Massachusetts Online Ombuds Office stressed upon the Internet disputes generally.[11]
# The University of Maryland proposed to see if ODR could be employed in family disputes where parents were located at a distance.[12]

Since 1999, many ODR service providers such as Modria, Cybersettle,, SmartSettle, Legal Referee, BBB Online have actively resolved disputes both in public and private domain involving government and commercial entities. In India, organizations such as Perry4Law, NIXI (.IN domain), TLCEODRI have also been advocating and taking initiative for ODR in India.[13]

D. Shadow of Law:
Apart from various sources of international arbitration law, such as the European Convention on International Commercial Arbitration 1961[14] and Inter-American Convention on International Commercial 1975[15] supplemented by Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards 1979[16], EU Directive on electronic commerce[17], institutional rules and private contractual agreements, at international level, there are two main sources.
# New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 and
# UNCITRAL Model Law on International Commercial Arbitration and Conciliation Rules.

At domestic levels in ancient, when there were no courts of law in India disputes were resolved by elder member of family, Sarpanch of Village or by Kulas, Srenis, Phugas or Parishadas. During British Empire, various laws were enacted to promote arbitration such as Madras Presidency Regulation Act, Bombay Presidency Regulation Act, and The Charter Act 1933. But the historical step was taken with enactment of Indian Arbitration Act 1940, which was solely based upon English Arbitration Act. It dealt with mainly domestic arbitration.

i. The Constitution of India:
After the independence, Constitution of India was adopted, wherein, Article 21 declares that no person shall be deprived of his life or his personal liberty except according to procedure established by law. And the procedure must be “reasonable, fair and just.”[18] Supreme Court of India in landmark case[19] held that right to speedy trial is part and parcel of right to life or personal liberty.

ii. The Code of Civil Procedure, 1908:
By Civil Procedure Code Amendment Act 1999, Section 89 (Settlement of Dispute outside Court) and Rules 1A to 1C, Order10 (Direction of Court to opt for any one mode of ADR after first hearing of suit) were inserted which has made it incumbent upon courts where there exists elements of settlement to call upon the parties at their option to agree for one or other ADR methods.[20]

iii. Arbitration and Conciliation Act, 1996:
The Act has been enacted on basis of UNCITRAL Model Law on International Commercial Arbitration, 1985 and Conciliation Rules, 1980 with an important feature to harmonize the concept of Arbitration and Conciliation of different legal systems of the world and to have its universal application.[21] The main object of act is to encourage settlement of dispute amicably via Arbitration, Conciliation at domestic and international level. It permits Mediation, Conciliation or other procedures during arbitral proceedings to encourage settlement of disputes.[22] Act also gives settlement agreement reached by parties as a result of proceedings the status of court judgment under section 73 of this Act.[23] Recently, Arbitration and Conciliation (Amendment) Act, 2015, gave legal recognition to Arbitration Agreement entered into by communication through electronic means, which is a positive initiative towards the promotion of ODR in effective manner.

iv. Information and Technology Act, 2000:
The concepts of writing and signature have been recently significantly modernized to provide greater certainty to online contracts and thereby facilitate e-commerce.[24] The most important step to this end was taken on international level by adopting the UNCITRAL Model Law on Electronic Commerce[25] in 1996. Then, UNCITRAL Model Law on Electronic Signatures[26] 2001 was adopted. Those legislative changes resulted in “a global reform of writing requirement”[27] The Information and Technology Act, 2000 being based on 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 reflects the legal recognition to electronic records and signature.[28]

v. Indian Evidence Act, 1872:
What if the agreements entered into through e-communication are not admissible as evidence in courts of law? For this purpose Section 65-A and 65-B were inserted which has made electronic evidence as secondary copy to be admissible in courts of law subject to the satisfaction of requirements mentioned in section 65-B.

E. Strengths And Challenges:
ODR has number of advantages over traditional courts system where parties have autonomy over proceedings. Such as:
i. Time and Cost Management:
ODR obviates the need for travelling and substantially reduces cost. It allows for better time and cost management, greater flexibility in procedure and more creative solutions.[29]

ii. Flexible and Informal:
ODR promotes speedy resolution in flexible and informal manner if compared with rigid court procedure followed since ages.

iii. Trust and Confidence:
ODR enhances trust and confidence in e-commerce environment due to its speedy access to justice, flexibility, time and cost management which promotes e-commerce and overcomes geographical barriers.

iv. Asynchronous communication:
The asynchronous Internet communications have advantage of being edited in contrast to impulsive responses that often can take place in real time face-to-face mediation discussions.[30]

v. Communication through Videoconference:
Lodder and Zeleznikow argued that it can happen for disputes in which the emotional involvement of the parties is so high that it is preferable that they do not see each other.[31] It has been taken as the most significant disadvantage of ODR due to lack of face-to-face communication. But it’s been argued that videoconferencing is an “obvious solution to the lack of face-to-face encounters” in online dispute resolution.[32]

vi. Easy to Access:
ODR can be accessed anywhere at any time wherever internet is available as per the convenience and necessity of parties.

vii. Data Storage:
Document storage being one of the most usual problems faced in Indian courts has got replaced by ODR mechanism where data storage is secured for saving and transmitting documents as and when necessary without any hassle.

ODR faces various obstacles in its way of growth in India such as lack of human interaction and communication, lack of literacy, inadequate confidentiality and secrecy of proceedings, lack of trust and confidence, limited range of disputes, cultural, educational and language barriers, negative mindset of lawyers. But one of crucial and pivotal challenge is the admissibility of ODR.

i. i. Challenges as To Admissibility:
a) Mutual Consent and Writing:
For invoking ODR process, mutual consent of parties is essential, whether through an explicit clause in contract or by separate mutual agreement between parties, otherwise any decision rendered by neutral shall not be legally valid and binding on parties. Another essential condition is agreement between parties must be in writing. Article 2 of New York Convention and Article 7(2) of UNCITRAL Model Law requires the agreement must in writing. But at the same time New York Convention is silent upon agreements entered into through electronic communications. Whereas UNCITRAL Model law recognizes the arbitration agreements entered into by electronic communications and the same has been followed by India its 2015 Amendment to Act of 1996.

b) Place of Proceeding:
In adjudicatory process, place of arbitration is geographically determined which constitutes a core element on which numerous legal implications depend.[33] If proceedings are conducted entirely online with parties and neutral in distinct places, prima facie, it seems impossible to determine place of proceedings. This observation led some scholars to conclusion that virtual arbitration has no situs[34]

ii. Jurisdiction:
When disputes are resolved online, question as to applicable substantive law to disputes arises. In case of international arbitration it is important to distinguish four choices of law issues,
a) Substantive law governing merits of parties’ contract and claim
b) Substantive law governing parties’ arbitration agreement
c) Law applicable to arbitration proceedings (curial law or lex arbitri) Conflict of law rules applicable to each of forgoing laws.[35]
iii. Pre-trial Stage:

Important elements of pre-trial stage are discovery, interrogatories and collation of evidence in support respective contentions of parties may be minimized in ODR for speedy resolution leading to failure to discover true and correct state of facts.

iv. Awards:
Taking New York Convention as a starting point for analysis of whether electronic arbitral awards are admissible within current legal framework, it can be noted that convention does not explicitly provide for an arbitral award signed and in writing.[36] Further, Article 8 of UNCITRAL Model Law on Electronic Commerce explicitly states that requirement to present information in its original form can be met by an electronic data message. Article 31 (1) of UNCITRAL Model Law, requires “award shall be made in writing and shall be signed by arbitrator.” Followed from Model Law, in India section 31 of Arbitration and Conciliation Act, 1996 requires the same. But, traditional concept of writing and signature now has been replaced by Information and Technology act, 2000 which has given legal recognition to electronic records and digital signature.[37]

v. Enforcement:
It is the single most important pillar upon which edifice of international arbitration rests. If Act of 1996 is considered following points to be considered:
a) In adjudicatory process decisions are to be enforced through the courts of law.
b) Orders in execution are subject to appeal
c) Intervention of court during and after pronouncement of decision.

This may give rise to issues like jurisdictions or law applicable or place of proceedings for which there is need to apply the conflict of rules or proper laws to avoid forum shopping.

F. Judicial Pronouncement
Landmark cases such as Tata Sons v. The Advanced Information Technology Association[38] and Maruti Udyog Limited v. Maruti Software Pvt. Ltd.[39] Wherein WIPO, the Arbitration and Mediation center was made the medium to solve the Domain name dispute.

In State of Maharashtra v. Dr. Praful B. Desai[40] Supreme Court held that video-conferencing could be resorted to for taking evidence of witnesses by stating that recording of evidence satisfies the object of Section 273 of the Code of Criminal Procedure that evidence be recorded in the presence of the accused.

In Trimex[41], the Hon’ble Supreme Court held the online arbitration agreement is the most important document of arbitration and since parties do not meet personally but rather virtually, it is pertinent that the agreement clearly defines all particulars of dispute resolution mechanism. There must be meeting of minds and the agreement must be according to Section 7 of the Arbitration and Conciliation Act 1996.

In Shakti Bhog Food Ltd. v. kola Shipping Ltd.[42], communication and acceptance by telex, telegram and other mode of communication has been accepted as valid mode of communication.

G. Suggestion And Conclusion
With the immense growth of online market, ODR mechanism in order to fasten its leg needs mass awareness and training through social media, education, street plays, advertisement, conferences, workshops and campaigns etc at gross root level. Participation of government also plays very important role to grant financial aid to ODR projects and to assist in creating technical and administrative infrastructure required to set up an ODR process.

The issues as to privacy and confidentiality needs to be tackled by using privacy enhancing techniques and stronger security mechanisms such as privacy design methods[43], privacy engineering[44], and privacy self-synchronization[45] etc. to maximize the benefits of new breed of technology led disputes. There is also need for codification of laws, uniform standards and rules including implications of conflict of law rules which will ultimately provide for recognition, admissibility of ODR process nationally as well as internationally.

The necessity is to ensure access to justice at affordable cost to all sections of society. A sound communication infrastructure is necessary for easy access and justice must be delivered in minimal time and in adequate manner by increasing literacy rate, reducing language and cultural barriers, and easy access to e-courts which may put a hand for growth of e-commerce and e- governance. Initiatives at national as well as at international level are to be taken to flourish the wings of ODR thereby reducing burden on judiciary. Thus the step to advance ODR is a key to facilitate global harmony and to encourage international relationship in cross-border disputes.

[1] Mohamed S. Abdel Wahab, Ethan Katsh and Daniel Rainey ( Eds.), Online Dispute Resolution: Theory and Practice. A Treatise on Technology and Dispute Resolution at 13. Published, sold and distributed by Eleven International Publishing, The Hague, Netherlands, available at: (Visited on 28th November 2017).
[2] Ibid
[3] Hon. Arthur M. Monty Ahalt (ret.), What You Should Know About Online Dispute Resolution, available at: resolution.cfm
[4] Katsh E, Online Dispute Resolution: some implications have emergence of law in cyber space, Lex Electronica, vol.10n.3,hiver/winter2006, available at:
[5]E.Katsh and J. Rifkin, Online Dispute Resolution: Resolving Conflicts in Cyberspace, Jossey-Bass,San Francisco2001, Jossey-Bass; 1 edition (April 26, 2001).
[6] Katsh and Wing: Ten years of Online Dispute Resolution (ODR): Looking at the Past and Constructing the Future 38 (2006) U. Tol. L. Rev., at 35)
[7] Jay P. Kesan, and Rajiv C. Shah. Fool Us Once Shame On You - Fool Us Twice Shame On Us: What We Can Learn From the Privatizations of the Internet Backbone Network and the Domain Name System, available at: 9&context=law_lawreview
[8] Supra Note 4
[9] Dispute Resolution Conference May 22, 1996 Washington, D.C. Sponsored by NCAIR, available at:
[10] Robert Gellman. “A Brief History of the Virtual Magistrate Project: The Early Months” (1996), available at:
[11] Ethan Katsh, “The Online Ombuds Office: Adapting Dispute Resolution to Cyberspace” (1996), available at:
[12] Supra Note 4
[13] See
[14] European Convention on International Commercial Arbitration, United Nations, Treaty Series, vol. 484, No. 7041 (1963-1964) entered into force in 1964, available at:
[15] Inter-American Convention on International Commercial Arbitration (Organization of American States, Treaty Series, no. 42) entered into force in 1976, available at:
[16] Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards (Organization of American States, Treaty Series, no. 51) entered into force in 1980, available at:
[17] Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (Directive on electronic commerce), published in Official Journal of the European Communities dated 17.7.2000, L 178/1, available at:
[18] Maneka Gandhi v. U.O.I, AIR 1978 SC 597.
[19] Hussainara Khatoon (1) v. Home Secretary, State of Bihar (1980) 1 SCC 81
[20] Code of Civil Procedure, 1908, available at: cedure,%201908
[21] Justice Dr. B.P. Saraf and Justice S.N. Jhunjhunwala, Law of Arbitration and Conciliation, 5th Edition 2009 published by Ketan Thakkar for for Snow White Publications Pvt. Ltd. at 11.
[22] Dr. Anupam Kurlwal, An Introduction to Alternative Dispute Resolution System (ADR), at 181-188, (Central Law Publications, Allahabad, Second Edition, 2014).
[23] Arbitration and Conciliation Act,1996, available at: onciliation%20Act,%201996
[24] H. Yu & M. Nasir, “Can Online Arbitration Exist Within the Traditional Arbitration Framework?” (2003) 20 J. Int’l Arb. 455 at 459.
[25] The UNCITRAL Model Law on Electronic Commerce was adopted by the General Assembly Resolution 51/162 of 16 December 1996, and amended in 1998, available at:
[26] See
[27] Hörnle, “Online Dispute Resolution: More than the Emperor’s New Clothes” in E. Katsh & D. Choi, eds., Online Dispute Resolution (ODR): Technology as the “Fourth Party”. Papers and Proceedings of the 2003 United Nations Forum on ODR (2003), available at:
[28] Information Technology Act, 2000 available at:,%202000
[29] Hörnle, Online Dispute Resolution, Julia Hörnle, “Online Dispute Resolution” in John Tackaberry and Arthur Marriott, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice, at 783, Volume 1 (Sweet & Maxwell, London: 2003) and E. Casey Lide, “ADR and Cyberspace: The Role of Alternative Dispute Resolution in Online Commerce, Intellectual Property and Defamation” (1996) 12 Ohio St. J. on Disp. Resol. at 219.
[30] Jim Melamed, “The Internet and Divorce Mediation”, available at: .
[31] Lodder and Zeleznikow, Arno R. Lodder and John Zeleznikow, “Developing an Online Dispute Resolution Environment: Dialogue Tools and Negotiation Support Systems in a Three-Step Model” (2005) 10 Harv. Negotiation L. Rev. 287 at 302: “It can happen when parties have a history of violent conflict, the costs of being in the same room are exorbitant, parties are in different time zones, or parties cannot agree upon a joint meeting time.”
[32] Ethan Katsh, Janet Rifkin and Alan Gaitenby, “E-Commerce, E-Disputes, and E-Dispute Resolution: In the Shadow of ‘eBay Law’,” (2000) 15 Ohio St. J. On Disp. Resol.705 at 718.
[33] D. Girsberger & D. Schramm, “Cyber-Arbitration” (2002) 3 European Business Organization Law Review 605 at 617.
[34] P. Carrington, “Virtual Arbitration” (2000) 15 Ohio St. J. on Disp. Resol. 669 at 669.
[36] It must noted, however, that according to some writers such requirements should be construed under the NYC – See: M. E. Schneider, Ch. Kuner, “Dispute Resolution in International Electronic Commerce”, (1997) 14 J. Int’l Arb. at 24. Certainly, in 1958, all arbitral awards were written on paper and signed, in ink and by hand, by arbitrators.
[37] Supra Note
[38] Tata Sons v. The Advanced Information Technology Association (“AITA”), available at:
[39] See
[40] State of Maharashtra v. Dr. Praful B. Desai (2003) 4 SCC 601, available at:
[41] Trimex International FZE Ltd. v. Vedanta Aluminium Ltd. (2010) 3 SCC 1, available at:
[42] See
[43] The principle of privacy by design states that privacy and data protection are embedded throughout the entire life cycle of technologies, from the early design stage to their deployment, use and ultimate disposal.
[44] The practice of constructing, ostensibly, software or information systems that adhere to given privacy policies and relevant compliances is a developing area and is known as Privacy engineering.
[45] Privacy self-synchronization is the mode by which the stakeholders of an enterprise privacy program spontaneously contribute collaboratively to the program's maximum success. The stakeholders may be customers, employees, managers, executives, suppliers, partners or investors. When self-synchronization is reached, the model states that the personal interests of individuals toward their privacy is in balance with the business interests of enterprises who collect and use the personal information of those individuals.

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