Arbitration, Mediation & Negotiations Heading The Digital Way

ODR is the resolution of disputes, particularly small- and medium-value cases, using digital technology and techniques of alternate dispute resolution (ADR), such as negotiation, mediation, and arbitration. While courts are becoming digitized through the efforts of the judiciary, more effective, scalable, and collaborative mechanisms of containment and resolution are urgently needed. ODR can help resolve disputes efficiently and affordably.

We all might think that ODR is a new concept floated across the globe recently. This is factually incorrect. ODR has been in existence since 1995, when the first "Virtual Magistrate Project" was launched by the National Center for Automated Information Research and the Cyberspace Law Institute in Chicago. The intention behind the "Virtual Magistrate Project" was to provide rapid initial resolution to some kinds of on-line content disputes in a fast, low cost, and neutral fashion. Its function, as stated in its "concept paper" was to "offer arbitration for rapid, interim resolution of disputes involving users of online systems and those who claim to be harmed by wrongful messages, postings, or files. "Tierney and Email America" was the first ever case filed complaining about Email America "spamming" its ad on America Online in violation of America Online's Terms of Service. The case was decided by a virtual court in a span of twelve days. Unfortunately, the Virtual Magistrate Project's decision has generated a bit of controversy because of the way the complaint was handled. The critics allege that the first decision looks too much like a publicity stunt, regardless of the Virtual Magistrate Project's good intentions.

Since then, a lot has evolved in terms of practice and structure of ODRs across the globe. Technologies and platforms have been created worldwide to facilitate ODR. One of the most successful examples of ODR provider has been Modria Software. The founder of the software, Colin Rule, directed the eBay and PayPal ODR systems since 2003. Officials in Ohio are using Modria's software to resolve disputes over tax assessments and an arbitration association in New York has used it to settle medical claims arising from certain types of car crashes. In the Netherlands, it is being used to guide people through their divorces.

Despite the existence of ODR for more than two decades in different jurisdictions, the Indian system did not acknowledge it until the recent onset of the pandemic. We have been embracing the concept of ADR since 1996. The primary objective of ADR as we know, was containing disputes from proceeding to courts. The contemplation was that ADR would reduce the burden of courts and be less time consuming and cost effective. However, the trend in the yesteryears prove to the contrary. As Richard Susskind, a renowned author in the field of law and technology, rightly said in his book- "Online Courts and the Future of Justice" that ADR has not fulfilled its promise of resolving disputes without recourse to conventional court system. It has become "quiet court like", with complicated processes alongwith time and cost constraints that were originally meant to be provided respite from.

Owing to this unsuccess of the ADR system and the current pandemic, NITI Aayog, in association with Agami and Omidyar Network India and few other stake holders, has floated an initiative to introduce the ODR mechanism in a structured format, which though was prevalent in the sectors like banking, was scattered and without any direction or guidelines. The pandemic is obviously one of the main reasons to adopt ODR due to the increasing number of backlogged cases, which ODR can help tackle overtime. However, in addition to this, the vocal voice of the higher judiciary, the trend and technological development in recent years, increasing digital penetration and the steps taken by RBI to incorporate ODR in digital payment, were definitely a few other boosts to mainstream ODR and accelerated its growth.

The idea behind introducing a robust ODR eco-system in India is that it will have high potential to reduce the load of the courts and absorb the bulk civil cases for example cheque bounce matters or rental disputes, leaving the judiciary to focus on those cases that cannot move out of the courtroom. An organized mechanism will gain confidence and trust in businesses and society by prioritizing collaborative solutions. Another thought behind ODR is allowing access to justice and the ease of doing business by making dispute resolution cheap, quicker and most importantly equally credible as conventional methods.

ODR Model & Methods

As of now, India has followed the opt-in model. It means that option of going into mediation/negotiation is voluntary. The Italian model is the opt-out model. There it is mandatory to enter into mediation for at least one session, and then the parties have the liberty to opt-out if they feel so. India needs to adapt the opt-out model, requiring disputing parties to mandatorily try mediation and negotiation before opting-out of it. Since the default choice has tendency to become the de-facto choice, the decision to enforce the opt-out mechanism for certain cases can lead to widespread of ODR. This will be a smart choice since 88% of civil cases can potentially be resolved by ODR. The implementation of a successful ODR regime will also contribute to India's economy expanding it to USD 26 Billion each year.

The Indian legal framework supports ODR including Section 89 of Code of Civil Procedure, 1908 that promotes use of alternative dispute resolution between parties. Similarly, Order X Rule 1A confers powers on the court to direct the parties to a suit to choose any ADR method to settle its disputes. In addition, the Information Technology Act, 2000 grants legal recognition to use of electronic signatures and electronic records. Even the precedents laid down by the Supreme Court of India support use of technology for dispute resolution and encourage use of ODR practices for instance in Grid Corporation of Orissa Ltd. vs. AES Corporation, the Supreme Court held-

"when an effective consultation can be achieved by resort to electronic media and remote conferencing, it is not necessary that the two persons required to act in consultation with each other must necessarily sit together at one place unless it is the requirement of law or of the ruling contract between the parties".

All that we now need is just need a better structured set of guidelines and an opt-out model to make it mandatory in cases where it is possible to adapt this process.

The process adopted under ODR may either be adjudicatory or non-adjudicatory process. An example of an adjudicatory process is an arbitration where the award passed by the arbitrator is binding on both parties. To the contrary, in a non-adjudicatory process, the principal aim is to arrive at a settlement of the disputes between the parties without deciding on the merits of the matter.

ODR can involve varied methods of dispute resolution including Negotiation, Conciliation, Mediation, Arbitration and hybrid mechanisms including last offer arbitration, Medola, Mini trial, Med Arb and Neutral Evaluation. The following are few of the best practices advocated world-wide under the ODR mechanism:

• Mediation:

The neutral third party suggests solutions to settle disputes between parties and actively takes part in the dispute resolution process.

• Med-Arb or Arb-Med, and MEDALOA

Med Arb, initially mediation is used and if unsuccessful, arbitration is used.

MEDALOA, a procedure in which if the parties fail to reach an agreement through mediation, a neutral person, who may be the original mediator or an arbitrator, will select between the final negotiated offers of parties such selection being binding on the parties.

There are some jurisdictions that combine mediation and arbitration, recognized as Med-Arb or Arb-Med, and MEDALOA, in which the mediator later acts as an arbitrator and chooses a binding decision. Combining the two is beneficial because it allows parties to work collaboratively in mediation and assures them of a resolution at arbitration if mediation fails. This can save time and costs by not having to seek other dispute resolution methods once mediation has failed, and the process would produce an arbitral award that is directly enforceable. There are concerns about having caucuses in this model since there could be a bias from the mediators, but this can be solved by appointing another person to act as the arbitrator.

• Mini trial

The parties file summaries of their cases for assessing their cases on merits and negotiate a settlement with a neutral advisor which involves a non-binding procedure.

• Neutral listener agreement

The parties discuss their offers with a neutral third party in private and after the third party has heard both sides, he recommends the best offer for settlement.

These are the few methods, but we cannot say which one is the right way to design ODR systems. In fact, the best way to refine and improve ODR is to launch many different programs in many different environments and see which one's flourish and which one's wither away.

ODR Platforms

In India, the construction of ODR specific platforms is still in the nascent stage. Organizations like 'perryforlaw' and 'ODRIndia' are currently working on it. They are building software for bringing alternate disputes mechanisms online. National Internet Exchange of India (NIXI) is using online arbitration for resolving domain name disputes.

However, there are certain sector specific and general institutions which are in order. These ODR platforms have made easy the process of dispute resolution by combining the already existing process of ADR with cutting edge technology, making the process feasible and time convenient altogether.

• CADRE or Centre for Alternate Dispute Resolution Excellence is the foremost Indian website-based platform for ODR for arbitral disputes. First, one party approaches the platform which then contacts the other party. If both the parties agree then an arbitrator is appointed, and time-stamped intimations are sent through e-mails or WhatsApp. Usually, the parties do not meet face to face, but they are in contact electronically via video calls. The decisions that are legally binding come within 20-25 days of time. CADRE has been resolving tenant and rental contract disputes for NestAway an online home rental startup.
• SAMA is another ODR platform that facilitates easy access to high-quality ADR service providers and helps people to resolve disputes online. SAMA is being used as an ODR platform by ICICI Bank to resolve nearly 10,000 disputes with values going up as high as INR 20 lakh.
• Juptice positions itself as an institution that will administer cases online end to end, with 24/7 support.
• JustAct is an ODR platform that aspires to create a better system of law and justice by providing time-efficient and feasible resolution methods BFSI, telecom, housing, family and workplace disputes.

ROAD MAP

According to the researchers seven sectors are ready to embrace ODR right away. These include E-commerce, Rental, BFSI, Utilities, Government Sectors, Private Healthcare and Travel. The companies falling under these sectors can adapt to the following steps and self-regulate their ODR mechanism, pending guidelines/policy/legislation by the Government:

• Develop an ODR construct for a business. They should identify the disputes current as well as future where ODR can be applied to.
• Choose forms of ODR (ADR) that would be applicable to their disputes.
• Identify the best and most experience ODR providers.
• Identify in the organization those who can help you evolve your mechanism and implement it.
• Incorporate robust ODR clause where necessary while entering into contracts or another other arrangement where there is a likelihood of a dispute.
• Communicate with industry peers that are exploring or implementing ODR to a industry specific code.
• Implement internal and external learnings. Train you employees and those responsible for the ODR mechanism.

CONCLUSION

The best way to create a successful ODR environment is to build a market of resolution. For example, more than 90% of the civil cases filed in US do not end up before a judge as they are resolved before hand. Companies should develop in-house mechanism and/or engage with third party technology platforms or institution to manage ODR. These can be implemented in wide ways depending on the resources the company is willing to part with. Contracting parties may also under the dispute resolution head specify an ODR process to be followed in the event of issue arises.

Most of the people, no matter how savy, are largely unaware of ODR. The ones who are aware consider ODR to be niche and still prefer the conventional route. For the idea of ODR to have a nation-wide impact, we need to create awareness at the grassroots. Especially, lawyers need to be trained through seminars and campaigns as they are mostly at the forefront.

The Government even has a critical role to play, not only in terms of creating policies or any legislation, but by adapting to ODR themselves. This will help them reduce government litigation on trivial matters, sparing the time of the judiciary.