Opportunities in Online Dispute Resolution: 2023
The Landscape And Trends of ODR Activity in India
Online Dispute Resolution (ODR) is a mechanism to resolve disputes through the use of electronic communication technology. It often uses alternative dispute resolution (ADR) tools such as mediation, arbitration and negotiation and is seen as e-ADR with virtual hearings and video conferencing abilities. ODR is not limited to e-ADR. It includes the use of technology systems that assist parties in arriving at solutions; examples of this include collaborative negotiation and mediation platforms. ODR also includes automated, rule-based systems akin to customer grievance redressal services adopted by app-based service providers such as Amazon, Swiggy and Uber.Â
This article explores the implementation and impact of ODR across different domains, highlighting its transformative impact on resolving conflicts and what the future looks like.
History of ODR in India
ODR has taken off in India as a mainstream complement to the formal justice system. From 2018 to 2023, ODR start-ups grew from three to 15+, and enterprises piloting ODR grew from one to over a hundred. Eleven Indian states have conducted their Lok Adalats using ODR platforms amounting to a total of over four crore disputes onboarded; the Reserve Bank of India and the National Payments Corporation of India (NPCI) adopted ODR; NITI Aayog formulated a national policy for ODR in 2020 - Designing the Future of Dispute Resolution: The ODR Policy Plan of India. The development of the ODR movement resulted from the convergence of many powerful forces, including the burden faced by the formal justice system, India’s rapid digitisation, and the COVID-induced collapse of in-person justice systems.
The evolution of ODR was made possible by an act of collective leadership, including the innovators and entrepreneurs who played an instrumental role in demonstrating that ODR could work at scale, the buy-in of big business, judiciary, and government users, the champions who catalysed ODR in the country, and the creation of a recall for ODR as a distinct and powerful new user-centric approach to solving problems. Ultimately, the success of ODR in India has created an irreversible new narrative for ODR as an adaptive, technology-driven solution for a wide variety of dispute categories, old and new.
Where ODR is Moving
ODR has started to make significant inroads across private institutions, public institutions, and emerging public-private digital ecosystems
ODR in Public Institutions: Lok Adalats, Police and SEBI
Over the last two years, over 21932961 cases were filed, and cases worth 705.25 cr were settled in over seventeen Online Lok Adalats across seven states. SEBI has recently expanded the scope of dispute resolution by Market Infrastructure Institutions (MII) and has initiated a framework wherein MIIs are adopting Online Dispute Resolution.Â
Police Departments across Madhya Pradesh and Punjab collaborated/are collaborating with an ODR institution each. Cases in all 52 districts in Madhya Pradesh were filed for online mediation on an ODR platform. It reduces the burden on police officials and ensures that parties can resolve their disputes with the help of professional mediators through their mobile phones. Over 2500 cases in the state have been successfully resolved through this Police Department initiative.Â
In Punjab, an exclusive ODR platform annexed to the Police Station is set up to encourage complainants to settle their cases out of court where possible. The Dispute Intervention & Legal Awareness through Social Alliance (DILASA) is being piloted with the Saanjh Kendras, set up to create people-friendly police stations in Punjab.Â
The State Commission for Persons with Disabilities, Goa, is working with an ODR service provider to create a new notice management system to disseminate information, monitor and evaluate stakeholder feedback, and enforce compliance with statutory/regulatory provisions.Â
ODR in Digital EcosystemsÂ
With the rise in digital infrastructure and digital ecosystems across sectors, efficient, expedient, accessible dispute resolution mechanisms must be built to resolve disputes at scale and foster trust in the digital ecosystem. Ecosystems such as the Sahamati Account Aggregator ecosystem and Open Network for Digital Commerce (ONDC) have adopted Online Dispute Resolution. They are developing frameworks and processes to integrate their ecosystem with multiple ODR service providers to provide users with both convenience and choice of which platform they want to resolve their dispute on. NPCI has also introduced ODR for UPI-related grievances.
ODR in the Private SectorÂ
In 2019, ICICI Bank adopted ODR to resolve financial disputes by piloting 10,000 retail loan disputes with an ODR service provider. This pilot saw a drop in the average lifespan of a case from three years to forty-five days. Many banks and financial institutions followed suit and engaged an ODR platform/service provider to facilitate the resolution of disputes, Bank of Baroda, Kotak Mahindra Bank, Orange Retail Finance (an NBFC operating in rural markets), Shubh Loans and Home Capital being notable examples.Â
ODR platforms working in the insurance sector have also seen many adopters, with the resolution of more than 14,000 B2B complaints and 500 hospital complaints servicing over 10,000 customers.Â
Beyond financial institutions, e-commerce providers such as Snapdeal and Udaan (India’s largest B2B eCommerce platform) also used ODR platforms to resolve payment disputes. In 2021, Udaan resolved 1800 cases relating to payment defaults made to MSMEs, and the average resolution time was recorded to be only 126 minutes!
ODR services in the private sector are not only limited to big financial institutions or corporations but have also been successfully used by grassroots organisations and NGOs to help individual citizens secure payments. Aajeevika Bureau, a non-profit dedicated to enabling migrant workers to claim their rights and dues from employers, adopted a hybrid ODR model using WhatsApp and mediation. Before the COVID-19 lockdown, Aajeevika Bureau enabled 200-250 workers each month to recover 30 lakhs of rupees in unpaid compensation. During the 2020 COVID lockdown, Aajeevika Bureau helped recover a whopping 1.35 crores of rupees.
ODR Digital Infrastructure to Empower Multiple Use Cases
As ODR is becoming a mainstream pathway for dispute resolution, the ODR community has started identifying the underlying digital infrastructure needed to integrate with multiple ODR institutions and empower various use cases across sectors.Â
The Market Infrastructure Institutions, ONDC, and Sahamati are looking to integrate with multiple ODR institutions to provide citizens with choices and enable innovation across dispute types.Â
Currently, the ODR community is developing a unified ODR Protocol that different institutions and ecosystems can use/adapt to integrate with multiple ODR institutions. This unified protocol will enable the discovery, assignment, and tracking of ODR services uniformly, and each ODR institution can innovate and focus on the value-added services they’re looking to provide.Â
Eventually, we may see new players in the ODR ecosystem that can build on top of this unified protocol.Â
How ODR is Empowering Contracts
Insofar as contracts are concerned, ODR has proven to be highly versatile, functioning as a performance tool, an enforcement tool and a dispute resolution tool -Â
Contract Performance: Before ODR, when a contract stuttered and threatened to be violated, there was little parties could do to bring it back on track other than directly engage with the potential defaulter. This direct engagement is/was not always effective. A good example is loan contracts, where lenders usually take recourse to assertive calls or collection agents once a delay or default has happened. With ODR, parties have more options to bring the contract back on track. For example, Online Mediation gives parties a dialogue mechanism to discuss why challenges arise, make accommodations or even renegotiate terms. Online arbitration serves as a persuasive nudge where the lender can get an award that clarifies to the defaulter that a legal recourse exists and can be availed of expediently. This usually brings the defaulter back to the negotiating table to, once again, perform the contract in the same or modified form.
Contract Enforcement: Once a contract has been positively reneged, and there is no dispute as such, ODR allows for both a quick determination of the fact of breach and the rights and liabilities associated with it as well as a pathway for enforcement. Taking once again the example of a debt contract— once a default has happened, the typical result would be a long period of uncertainty with the lender trying to recover the dues through persuasion, and sometimes coercion, and the defaulter laying low or pointing to a protracted court process. But with ODR, either enforcement can be found through a mediated settlement - particularly effective for enforcement since both parties agree to it - or an award can set out the facts, consequences and expectations. The recognition of the award under Indian law gives the claiming party a strong tool to work with.Â
Dispute Resolution: Where the contract has broken down owing to a genuine disagreement on terms, then ODR affords a rapid way for actual dispute resolution. Negotiation, mediation and arbitration can be applied in a combination suitable for that particular dispute category. Even if parties can’t come to an agreement through negotiation and mediation, the impasse can be broken through arbitration, including through arbitrators skilled in that type of dispute.
AI and ODR
The impact of Artificial Intelligence (AI) on ODR is profound and is likely to revolutionise the field. ODR is a human system that combines expertise, process, and communication to resolve disputes. The expertise required includes facilitation expertise and legal expertise. At the same time, the process involves a well-scripted set of steps, and the communication involves guiding the disputants through the process, facilitating dialogue, and helping them understand their situation.
So far, most ODR systems have been built on basic IT systems, including submission forms, case management systems, ready-to-use templates, and signing and stamping. These systems have been revolutionary, cutting down time and cost sharply. However, with AI-powered systems, ODR can achieve even more dramatic reductions in time and cost, and this will be a necessity rather than a luxury as more people enter the formal economy, interacting almost entirely digitally.
AI can help in several ways. AI can help disputants and potential system users self-diagnose and self-empower even before they bring their disputes to providers - one can imagine that Jugalbandi type of systems - developed by OpenNyAI and AI4Bharat - could power chatbots to enable this. AI can assist in the initial screening of disputes to identify those that can be resolved without human intervention. This would help reduce the workload of human dispute resolution professionals, who can focus on more complex cases. AI can also assist in the collection and analysis of data, allowing for more effective case management and dispute resolution. Furthermore, AI can improve the quality and speed of decision-making in ODR by generating possible solutions to disputes and making recommendations based on legal and procedural knowledge. This will be particularly important for cases involving large volumes of disputes or complex legal issues.
AI has the potential to dramatically improve ODR by reducing time and cost, improving case management and decision-making, and allowing for the resolution of a much larger number of disputes. As ODR continues to evolve, AI will likely play an increasingly important role in this field.
Data from ODRÂ
ODR generates vast amounts of data that can be used to improve solutions and outcomes. Data on types of disputes, the background of disputants, time taken at different stages of the process, and so on. Additionally, public data (laws, judgements, etc.) can be used to create better ODR solutions. Unlocking data for ODR can document and validate the efficacy of ODR, surface trends and statistics that can also help build trust in the ODR ecosystem and promote its visibility. It can also clarify the successes, gaps, and opportunities of ODR. The patterns and insights derived from data present the possibility of a positive feedback loop of innovation that builds futuristic ODR on the shoulders of data. Developing the data standards for creating a data collaborative that will allow various ODR players to speak with each other can act as a model for the rest of the justice system.
Court Performance TrackerÂ
Traditional methods of measuring and reporting court performance are presently in the form of annual reports that are often on an aggregate basis (such as total disposal rate for the year or total workload of the court for the year) and are usually focused on those parameters that are useful for administration of the courts.Â
A team of researchers at xKDR are developing court performance metrics to periodically measure courts’ performance in India on parameters that matter to litigants. This includes metrics such as time taken to disposal, time taken to get a first hearing, number of hearings required to dispose of a case, estimated cost involved, ease of access to and navigation within courts, etc. This performance tracker can also be mapped against data from ODR, providing a clearer picture of the effectiveness of ODR in comparison to traditional methods of resolution and increasing its adoption.
Concluding Notes
The ODR movement in India began a little over five years ago and has since included within its fold - citizens, businesses, service providers, regulators, digital ecosystems and even Lok Adalats. This article presents the areas where there is already some ODR activity. Still, there are other areas where ODR is likely to make its presence felt, e.g. bill receivables in public systems, grievance redressal pertaining to government schemes, more court-annexed processes, and many more business use cases, particularly in the digital ecosystems. ODR is an essential area of innovation because it is a confluence of many innovations in a flexible form -Â
Technology innovations that can be used in a variety of contexts - and borrowed by other formal and informal systems
Developing communities of resolution professionals, including a new class of young case managers, that could bring their skills to other contexts.
Process innovations in the resolution approach themselves could be indicative of how things can be done in other systems.
Finally, it is also powerful because a growing community of innovators is committed to changing how we approach and resolve our disputes. This portends a cultural shift that could be important for the country’s future.Â