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Constraints to Scaling Online Dispute Resolution in India

6th April 2021
Constraints to Scaling Online Dispute Resolution in India
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In our last article, Bharath and I touched upon the potential of Online Dispute Resolution (ODR) or e-Alternative Dispute Resolution (e-ADR) and how it could transform both access to justice as well as ease of doing business. In this one, we discuss the five constraints that we believe need to be addressed for ODR to deliver impact at scale.

1. Awareness
Daksh’s Access to Justice Survey (2015) shows that 54% of Indians are not aware of alternative dispute resolution (ADR) mechanisms such as mediation and arbitration. This challenge also extends to our legal community – one commentator recounted how J. Chandrachud, then a judge at the Bombay High Court, convinced litigants and their lawyers to settle the dispute through mediation, only for one of the lawyers to come back and ask him “Sir, what is mediation?” This lack of awareness amongst citizens and lawyers ensures that few disputes use ADR in the first place.

2. Dispute Resolution Professionals & Institutions

In countries such as the United Kingdom and the United States, dispute resolution is a well-recognized sector with professionals building entire careers as dedicated mediators or arbitrators.  This, however, is not the case in India. Given that few businesses and citizens seek to resolve disputes through ADR (low demand), and that the practice does not pay, we do not have a thriving market of dispute resolution professionals and institutions that can resolve disputes at scale. This situation leads to two adverse outcomes: 

  • One, because the practice does not pay, dispute resolution professionals are not incentivized to build the skills required to be an effective mediator or arbitrator (quite different from the skills that make you a good lawyer). 
  • Two, the only type of disputes resolved through arbitration are high-value commercial disputes. The arbitrators for these disputes are most often retired judges. This leads to, what one of the general counsels I spoke to termed as “due process paranoia”, where the dispute resolution process is slow and expensive and is often similar to what happens in courts. 

These two issues sometimes result in a less than ideal experience for the disputing parties and end up negatively impacting the reputation of the sector. 

3. Support from Lawyers

A related point to dispute resolution professionals is that of support from lawyers, who, even in relation to disputes where they believe the best course of action might be to settle it through mediation or negotiation, might not advise the client along those lines, since recommending “settlement” or “mediation” is perceived as a weak position to take. Further, the current revenue model where lawyers are paid per hearing discourages them from advising clients to resolve disputes quickly. The lack of training on ADR also leads to a lack of familiarity and limited support from lawyers.

4. Support from Courts

Although existing legislation and case management rules often direct courts to refer appropriate cases to ADR, in practice this is rarely the case. When disputes are referred to ADR, as sometimes is done for those relating to family matters, they are referred to court-annexed services, and not private mediation centres. This is also the case when it comes to MSME’s Samadhan portal, where disputes related to delayed payments are referred to government facilitation councils and not private dispute resolution firms.

5. Enforcement 

The current act that regulates alternative dispute resolution in India allows arbitral awards to be challenged in very narrow circumstances. For example, the award can be challenged if the neutral is deemed to be partial or not independent, or if there is evidence to suggest that disputing parties have not been given enough time to put forward their case. However, appeals and challenges are often entertained by courts.  And, once it enters the courts, these cases are subject to the same delays that other civil cases are subject to. This is also the case when it comes to getting an enforcement award from courts. When it comes to mediation, the lack of comprehensive legislation on mediation also adds to uncertainty regarding enforcement.

These challenges, in no way insurmountable, are beginning to be addressed by several ecosystem stakeholders: policy discussions on online dispute resolution, along with private sector initiatives such as ‘Suljhao Magar Pyaar Se’ have popularised ADR mechanisms; several startups have started courses to train India’s next generation of dispute resolution professionals; the Supreme Court has set up a mediation committee to draft comprehensive legislation to support the growth of mediation, and higher judiciary and leading law firms have signalled their support and enthusiasm for the sector.

To support these initiatives, and further accelerate the adoption of online dispute resolution, we believe that the community needs to make six public investments. We will outline these ideas in our next article!

Photo credit: Bar and Bench