Has India missed out on becoming an international arbitration hub? Even if it is, India can still get to grips with Online Dispute Redressal (ODR).
At the Delhi Arbitration Weekend in February 2023, Union Law Minister Kiren Rijiju emphasized the need for institutional arbitration to enhance ease of doing business. India has shown tremendous improvement in the World Bank’s Ease of Doing Business report, moving from 142nd rank in 2014 to 63rd in 2019 among 190 countries.
However, India ranks 163rd in ‘Enforcing Contracts’, which is a marginal improvement from 186th rank in 2015 and 173rd rank in 2006. The report states that it takes about four years to implement the contract and 31% of the cost of the claim. in India; In contrast, it takes just two years and costs 22% of the claim value in Brazil. In Mexico it is 341 days and 33% of the claim value, and in Vietnam it is 400 days and 29% of the claim value.
India opened up its economy in the 1990s, which was a decade of growth for international arbitration. As more countries entered into bilateral investment treaties, institutional arbitration became the preferred option for resolution.
fixing things
Although India introduced its first law on arbitration and conciliation by the middle of the decade, it gained a reputation for being ‘arbitration-unfriendly’, as the Srikrishna Committee pointed out in 2017, for a number of reasons – lack of preference for institutional arbitration on ad hoc arbitrations, frequent interference by the judiciary from appointment of arbitrators to enforcement of awards, and setting aside arbitration awards on grounds of ‘public policy’.
The amendments of 2015 and 2019 and some recent judicial decisions have put India on the right track. The scope for using ‘public policy’ as a basis for setting aside awards has waned, and the focus has shifted to preferring institutional arbitration. Nevertheless, India is not a preferred arbitration destination even for disputes between Indian businesses. Many still seek arbitration abroad, even when the dispute is with another Indian entity. Singapore, which opened its international arbitration center (Singapore International Arbitration Centre) in the 1990s, when India was opening up to foreign investment, has since emerged as a global arbitration center and has been involved in ‘enforcement of contracts’ matters I am in first place. Indian companies are among its top users.
technology as an advantage
India can still harness its strength in technology and become a leader in ODR, thanks to the near-universal spread of online technology during the COVID-19 pandemic, when the judiciary pioneered online hearings. ODR, which is all about resolving disputes in a virtual environment, has several advantages. It can reduce the burden on the courts, save time and cost and provide effective solutions.
ODR involves more than just audio/video conferencing. This includes 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 forums in India are already settling lakhs of disputes through ODR. Many corporates have moved to ODR to resolve small-value disputes. NITI Aayog has rightly claimed that India is “uniquely positioned to emerge as the epicenter for development in ODR” due to the need for an efficient dispute resolution system and advances in technology.
The legislature, executive and judiciary must work together to facilitate this. 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 including ODR mechanisms in many of their initiatives. Now the need is that they should be publicized on a wide scale.
steps to consider
Three major approaches can be considered. One, encourage the use of ODR through 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 results, and waiver or reduction of stamp duty and court fees.
Two, address infrastructural challenges, bridge the digital divide, and catalyze the growth of ODR by adapting existing setups such as Aadhaar centers to function as ODR kiosks. Each court may have an ODR cell with supplementary technical and administrative support. A dedicated fund should be set up to take ODR forward, 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 (with the aim of digitizing the justice system).
Three, government departments should explore ODR as a grievance redressal mechanism. Proactive use of ODR by government entities will not only enhance confidence in the process but also ensure that citizens have access to a convenient and cost-effective means of resolving disputes with the government.
At a time when pendency is crippling the administration of justice, ODR has the potential to ensure justice for all. India may have missed out on becoming an arbitration hub, but it can still catch up and overtake them all – all online.
Rajendran Nair is Senior Manager (Policy) at Presolv360, an online dispute resolution company in Karakulam. Siddharth Kapoor is Manager (Legal Strategy & Policy) at Presolv360, an online dispute resolution company