A recent trend in the Indian service sector has been the growth of e-commerce sites. Online retail shopping was largely restricted to eBay or Amazon, but online retailing has come a long way since then, with the rise of e-commerce companies such as Flipkart, Myntra, Jabong etc, with Flipkart being a pioneer in online shopping.
Online Arbitration as a system of dispute resolution is largely unexplored in India, partly due to the inherent issue of judicial enforcement with respect to determining jurisdiction etc. However case studies and comparison with foreign models such as the one existing in the European Union shows online ADR mechanism getting developed into one of the preferred choices of dispute settlement as it is cost-effective and faster.
In the Indian context, the mechanism is based on traditional Arbitration and Conciliation Act, 1996 (‘AC Act’) and some elements of the Information Technology Act 2000 (‘IT Act’). Electronic records and signatures can be submitted as evidence as is provided under sections 4 and 5 of the IT act, read with section 65 B of Indian Evidence Act. It could be initiated either through an online arbitration clause in a normal contract or in the alternative having an e-contract. This process was recognized by the Supreme Court in Shakti Bhog vs Kola Shipping Ltd and Trimex International vs Vedanta Aluminium Ltd. The essence of the agreement depends on compliance with section 7 and 12 to 18 of the AC act. The parties should be fully aware of determining the nature of dispute resolution and in selecting the governing law etc.
In certain instances, dispute resolution on a Business2Customer model is constructed in a two level model. With one level concentration on a mediation and conciliation platform, assisted by technology and the second model to engage a mediator at a nominal fee. However in most jurisdictions, with respect to arbitration there have been issues relating to jurisdiction as it is in an online platform.
However in the Indian context, there are enough provisions in the IT act as well as the AC act which can assist the parties in formulating an ADR clause. In-fact, less time consuming system of technology assisted mediation system with respect online claims can be used by e-commerce companies in India. The International Chamber of Commerce (‘ICC’) has enumerated certain guidelines for conducting online arbitration. These guidelines can be used by companies while framing an online ADR model. If the admissibility of e-documents is permitted under the law, the scope of the arbitral tribunal can be determined by engaging the parties through video conferencing and such similar interface.
The largest investment in online dispute resolution model was granted to Mordia, a start-up, started by the Online Dispute Resolution (ODR) head of eBay. This was completed by the new rules formulated by the European Commission on ODR Regulation, which encourages and promotes ODR and allows customers to place complaints online. Mordi’s business model is based on diagnosing customer issues and with the help of legal experts, engages a platform through which dialogue in the form of mediation, arbitration or conciliation is explored before it becomes a litigation matter.
Parties are given a hierarchical system of dispute settlement models and they can have a mutual agreement to determine the same; and if it fails to find consensus, they can engage a third party arbitrator. The technology involves a client interface which provides the different dispute settlement options and clients could use customized versions such as presenting of questionnaires, transparent discussions, uploading online “evidence” etc to make their claims.
With respect to arbitration it allows customers to making online payments, select arbitrators, manage documents; all through a virtual platform. The success of Mordia has made them expand to other parts of the EU and companies involved not only in e-commerce but tax, real estate etc are approaching them as it is considered to be the most advanced platform available for handling tax assessment appeals, especially in United States and Canada.
Given the scope of Online ADR mechanism under the existing legal framework in India, it is a viable model that could be used by companies. The issue of judicial pronouncements can be addressed by having a comprehensive arbitration agreement which specifically stipulates the nature of documents used, the governing law of arbitration and the curial law. As much as it can be argued that scope for judicial intervention essentially counters the purpose of an online ADR mechanism, the existing platforms shows that it provides much liberty and discretion on the part of the customer and the service provider before the matter reaches the courts.
In fact it is largely becoming a popular choice primarily due to its cost effectiveness, in bringing down litigation expenses, as well as providing a comprehensive list of claims that customers can choose from. And companies such as Mordia, SquareTrade has shown that online tools can be used with more precision than through a third-party.
However, online ADR mechanism in India has its shortfalls with respect to not having adequate technology or infrastructure, and there is a general lack of trust in the public to such tools. Further, the lawyers themselves should be persuaded in suggesting online platform as a better alternative. Nevertheless, it is a model which has immense scope for growth, especially in light of the proliferation of e-commerce companies in India and invariably all transactions are done online.
