I’m the legal head of a small organization, and I want to resolve our disputes through Online Dispute Resolution (ODR). Is ODR is recognised/permissible in India?
As the operators of an ODR platform, one of our most-asked questions is whether or not ODR in general and online arbitration specifically, is permissible and is legally binding. The answer is a resounding yes. Over the past year and a half, the need to improve the technology that supports our legal and judicial systems, to ensure improved dispute resolution and access to justice has become an overwhelming priority for the Indian judiciary. The Supreme Court of India has observed that implementing standard procedures electronically can be as effective, if not more than traditional counterparts for certain kinds of cases.[1] Many critical elements of ODR, such as allowing e-filings and video conferencing have been already adopted by the Indian judiciary.
There is also a move from the central government to regulate ODR by forming guidelines and mandating ODR in some cases. To make the transformational changes required and to build a framework for ODR in India, NITI Aayog has constituted a high-level committee under the chairmanship of former Supreme Court judge, Justice Sikri.[2] The Sikri Committee will examine the current status of ODR, both globally and in India, identify the current and potential challenges, and officially map the way forward for ODR in the Indian context.
The enabling statutory framework for ODR, specifically for online arbitration, comprises principally of three statutes, the Arbitration and Conciliation Act, 1996 (Arbitration Act), Information Technology Act, 2000 (IT Act), and Indian Evidence Act, 1872 (Evidence Act).
The Arbitration Act is the primary legislation governing arbitration in India. While it provides disputing parties the flexibility to define the manner of conducting the arbitration, it also specifies certain elements that are essential to a valid arbitration. These are the existence of a binding arbitration agreement; consent of disputing parties; adoption of procedural rules; compliance with fundamental elements of due process; and passing of an enforceable arbitral award. As long as these essential elements have been assimilated into the ODR process, it remains valid. The Arbitration Act also states that the parties are free to choose the place of hearing, which could be online. There are relevant precedents from the Supreme Court that reaffirm this position.[3]
The IT Act and the Evidence Act provide legal recognition to the existence and admissibility of electronic records, documents, and signatures. These two legislations ensure the validity of online arbitration agreements, submission of electronic copies of documents, and passing of electronic awards. The working of these three statutes together thus provides statutory backing to ODR and enables the entire arbitration proceedings to be conducted online, right from a party’s request for arbitration, collection, and appraisal of documents and evidence, considering parties’ submissions, and finally, passing of a definitive arbitral award.
[1]In the case of Meters and Instruments Private Limited & Anr. vs. Kanchan Mehta (2017 TaxPub (CL) 0840 (SC)), the Supreme Court held that ‘Use of modern technology needs to be considered not only for paperless courts but also to reduce overcrowding of courts. There appears to be a need to consider categories of cases which can be partly or entirely concluded “online” without the physical presence of the parties by simplifying procedures where seriously disputed questions are not required to be adjudicated.’
[2]https://theprint.in/india/governance/national-platform-new-law-how-sikri-panel-wants-online-dispute-resolution-to-work/590560/, last accessed on July 28, 2021.
[3]In Grid Corporation of Orissa Ltd. vs. AES Corporation ((2002) 7 SCC 736)), the Supreme Court explicitly mentions that ‘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.’
