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Public Investment to Scaling Online Dispute Resolution in India

12th April 2021
Public Investment to Scaling Online Dispute Resolution in India
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Note: This is the concluding part of a three-part series on Online Dispute Resolution. The first part of the series spoke about how ODR is at an inflection point in India and the second article looked at the constraints to scaling ODR through the private market. This article looks at the public investments needed to scaling Online Dispute Resolution in India.

In our last article on constraints to scaling online dispute resolution, Bharath and I shared our diagnosis of why a private market for dispute resolution has not taken off in India. In this piece, we articulate a prioritized set of interventions to drive the sector forward, some of which have found expression in NITI Aayog’s in-depth policy paper on online dispute resolution.

We believe that the sector will go through three phases over the next few years. In the “proving the model” phase, it’ll be all about generating evidence that ODR can deliver faster and more affordable justice at least for certain dispute categories such as debt recovery and consumer disputes. The “scaling” phase will be about getting “early adopters” on board. Effective market segmentation and understanding of where ODR can be deployed at scale will be critical in this phase. The last “mass adoption” phase will all be about ODR becoming the first port of dispute resolution.

While there is no doubt that technology and markets will usher in access to affordable dispute resolution over the next decade or so, policymakers and civil society can implement a targeted set of interventions in each of the three phases to accelerate the scaling of Online Dispute Resolution in India.

Phase 1: Proving the Model

1. Enable Experimentation through Large Scale Pilots

Given that ODR represents a paradigm shift in the way disputes are resolved, businesses and citizens will be wary of jumping into this whole different way of doing things. To address these inherent barriers to adoption, sector stakeholders should work together to develop multiple low-stakes “ODR Experimentation Structures” that businesses and citizens can access to resolve their disputes. This could include providing parties using Lok Adalats and Court-Annexed Mediation the opportunity to resolve disputes through private service providers.

While private service providers are reaching out to businesses and citizens directly and working together to do “pilots”, formal experimentation structures endorsed by government and industry bodies can lend credibility to the sector, and incentivize more businesses and citizens to dip their toes in ODR.

2. Setup Data & Research Initiatives To Drive Ecosystem Learning  

While experimentation structures will result in a large number of pilots, it’s important to complement this with research initiatives. 

“Show me the evidence” is one question that anyone remotely excited about ODR keeps getting asked, and rightly so. While there is some data coming in from early experiments, there is very little India specific research to show that these mechanisms can work well. This needs fixing. 

The sector desperately needs to set up research programs that collect data related to dispute resolution time and costs, savings and benefits across multiple dispute categories and resolution mechanisms. This will help generate evidence that these models can work, and more importantly, this data can start to point to challenges and opportunities in the sector. One such initiative is the ODR Handbook developed in collaboration with NITI Aayog, Agami and other leading stakeholders. While this is a good start, we need many more such initiatives to galvanize the movement.

Phase 2: Scaling the Model

3. Ease Enforcement Bottlenecks

Even though existing legislation provides adequate support for arbitration and conciliation awards to be executed, enforcement continues to be a challenge. While experts have noted that things have become better in the last few years, the government and judiciary should continue to work to systematically identify enforcement bottlenecks through empirical research and resolve them through technology, administrative and policy changes.

4. Drive Awareness Through Media Campaigns 

Once the “early adopters” are on board, and there is sufficient confidence in the ability of ODR to resolve disputes at scale, it’ll be the right time to mass market ODR. Leading organizations in the sector should come together with civil society and the government to conceptualise and drive a media campaign along the lines of the “Mutual Funds Sahi Hai” campaign. Stakeholders should complement such a campaign with detailed information on various service providers as well as FAQs.

The timing for this will be critical. Too early, and there will simply not be enough evidence and success stories to sell the model. Too late, and we will miss the opportunity to reap the societal gains of a well functioning ODR sector sooner than later.

Phase 3: Diffusion

As ODR starts scaling and starts becoming the first port of dispute resolution, it’s important to put a few sector-level structures in place to ensure users gain the most out of it. This is still some time into the future, but nonetheless, it’s important to call this out.

5. Consumer Protection

As more and more businesses and individuals start using ODR to resolve their disputes, we need to evolve a consumer protection framework that ensures a minimum level of service but also does not stifle innovation. This could take the form where a sector body develops norms and accreditation standards for ODR platforms and neutrals, and works with the service providers to ensure compliance. 

These should cover standards related to dispute resolution professionals, technology platforms, and data privacy. We should also be careful to not undertake premature regulation as this could restrict innovations and entry into the sector.  For example, there should not be restrictions on who can be a mediator, since anyone can be trained for this. 

6. Mandate Pre-Litigation ADR 

Government should bring forward legislation that mandates parties to resolve certain categories of disputes through ODR before approaching the courts. This will enable courts to use their scarce capacity for the most important types of disputes. The selection of dispute categories should be done in a careful and graded manner, starting with low-stakes, low-value disputes, and then moving towards higher-value disputes. Easing the enforcement bottlenecks and ensuring there is adequate acceptance of the ODR mechanism amongst business and citizens is a critical prerequisite for this. 

One example of this is Italy’s ‘opt-in’ model, where parties engaged in disputes related to real estate, business and commercial leases etc. are required to do at least one mediation session before approaching the courts. This has resulted in a significant reduction of cases before the courts, specifically in the case of joint ownership of real estate (by 30%), rental apartments (by 40%), and adverse possession (by 60%). In addition to pre-litigation ADR, courts could also form detailed case management rules that will enable judges to recommend ADR even for disputes in court.

Finally, as the sector evolves, we will not be able to predict the opportunities or challenges that come up. What we will need is an industry body that represents the sector and cultivates a community of service providers, lawyers, judges, technologists and entrepreneurs willing that proactively identify challenges and resolves the, This sector body should be empowered to undertake research, recommend policy measures, accredit service providers, conduct awareness campaigns, and build a suite of public goods including open-source technology platforms that strengthens the sector. 

Photo credit: The Business Times