ISSUE V : Online dispute resolution: A step in the right direction

Online Dispute Resolution: A Step in the Right Direction


As we all know, the judicial process is marred by delays and even the use of Alternative Dispute Resolution (“ADR”) for resolving disputes invariably end up in a courtroom. Swathed by such an environment, Online Dispute Resolution (“ODR”) comes as the newest entrant to the family of ADR. ODR essentially is a techno-savvy mechanism for resolving disputes by using: (a) internet related tools like e-mail; and (b) videoconferencing and teleconferencing. But just like litigation and other ADR mechanisms, ODR is plagued by a number of problems.

The present bulletin examines the benefits of ODR, the hurdles faced by it and finally makes a few suggestions to remove some of the glitches.

1. ODR: general characteristics, benefits, drawbacks and suggestions

1.1 General characteristics: ODR is a branch of dispute resolution which uses technology to facilitate the resolution of disputes between parties. It primarily involves arbitration, negotiation or mediation, or a combination of all three. In this respect it is often seen as being the online equivalent of ADR. Thus, ODR augments the traditional means of resolving disputes by applying innovative techniques and online technologies, such as teleconferencing to the process.

The disputes that can be resolved through ODR are those arising out of online contracts, software development, cyber squatting, consumer complaints, domain name disputes, intellectual property disputes and issues such as censorship, privacy, fraud, e- commerce, etc. Globally, at present the two approaches adopted by disputants to ODR are:

(a) non-adjudicative ADR, which focus on negotiation and mediation; and (b) arbitration, which is adjudicative. Currently the National Internet Exchange of India (“NIXI”)1 uses only the second approach. Arbitration, negotiation and mediation may work when the system develops and the process of ODR has evolved further.

Across the globe various procedural rules have already been framed by various organizations which provide ODR in their respective specialized areas of e-disputes. The following are some of the organizational rules and procedures which have been adopted and adapted to serve as model clauses for the parties choosing ODR to resolve their disputes: ICC Rules of Arbitration, ICC Rules of Optional Conciliation and the rules and procedures of International Center for Settlement of Investment Disputes and London Court of International Arbitration. Once the disputants mutually agree, either by means of an agreement entered into between the parties or when the dispute arises to follow the procedural rules of a specific organization which is conducting the ODR, the said procedural rules shall be binding on the parties

1.2 Benefits : The principal advantages of ODR are as follows:

Economically viable: Cost is one of the most crucial factors in dispute resolution, as disputants like to reach an optimal decision at the lowest possible price. ODR best suits the financial demands of all parties to a dispute, as most of the document are exchanged via e- mail and the proceedings take place online as opposed to exchange of documents by post. The costs related to travel and accommodation, venue for conducting the proceedings is also eliminated. Therefore, carrying out ODR is not only easier and faster, but it is also significantly cheaper.

Speedy resolution: One of the main advantages of ODR over conventional ADR is that it is less-time consuming. Where, in ADR it may take several months to resolve a dispute, ODR promises settlement of disputes within a few weeks. Further, the borderless nature of the internet diminishes the communication problems faced by parties and their counsels who may be located in different time zones. Moreover, the internet enables parties to easily obtain data and other information about their cases in real time. In addition to easy accessibility, e-mail simplifies the task of scheduling ODR proceedings and avoids any phone or fax-tags in the process. The internet is also a superior and swifter form of communication, as it facilitates the sending and storing of documents of multiple parties simultaneously, thus saving both time and money.

Non-confrontational mechanism: By removing the physical presence of the adversary, ODR enables the adjudicating body to dispassionately resolve the dispute, purely on basis of the merits of the case. Further, since most of the arguments or dialogues take place asynchronously over the internet, it allows the disputants to reflect on their positions before articulating their response. Additionally, such a mechanism neutralizes any economic or other power disparities that may obtain between the disputants, as there may be several instances  where  one  party  to  the  dispute  is  a  small-time  manufacturer/supplier  and  the opposite party is global entity.

Neutral forum: The internet offers a neutral forum for adjudication and the “home advantage” one of the parties hitherto enjoyed.

Facilitates record keeping: ODR facilitates the process of maintaining the record of the correspondences, pleadings, statements, and other written, oral or visual communications, by relying solely on digital records. This in-turn saves time and money of the parties.

1.3 Drawbacks: The following drawbacks prevail in the ODR process which hampers its growth as an efficient mechanism for resolving disputes:

Lack of human interaction and miscommunication: The lack of face-to-face interaction deprives the adjudicating authority of the opportunity to evaluate the credibility of parties and the witnesses. Moreover, the impersonal nature of the internet can potentially cause miscommunication between the parties, which is likely to occur when parties are located in different countries and speak different languages.

Limited range of disputes: Like ADR, ODR is also best suited to resolve only certain types of disputes, like, e-commerce and domain name disputes. The ODR mechanism may not be suitable for resolving every kind of online dispute, for example, negotiation and mediation may be more suitable in resolving issues such as the damages that may be payable for breach of contract. Further, tortious disputes, such as defamation and trespass, may require discovery, interrogatories, recording the testimony of a witnesses and the cross- examination, which may not be convenient to process over the internet.

Inadequate confidentiality and secrecy of proceedings: The secrecy of proceedings is fundamental to the process of dispute resolution, which ODRs inherits from ADRs. Accordingly, ODR providers have made technological arrangements, such as, installation of various software’s, firewalls, etc., to protect the data sent by the parties from data interception, alteration, etc. Though substantial efforts have been made towards creation and implementation of data protection laws, these measures do not ensure 100% protection from hackers and other cyber offenders and require constant updating, despite which there may still exist loop-holes which can be exploited. Thus, inadequate internet security may act as a major deterrent in the growth of ODR.

Inadequate authenticity: Closely related to the issue of security is the issue of authentic identification of the user. In an ADR process, one party can be certain that the other party it is dealing with is the party actually involved in the dispute. However, in cyberspace, it is not easy to verify the authenticity of messages received and it is relatively easy for a third party to impersonate or misrepresent one of the parties in the dispute, causing confusion, thereby defeating the very purpose of adopting ODR.

Jurisdiction: Internet being a borderless medium transcends and challenges traditional concepts of jurisdiction. This leads to problem in deciding the applicable substantive law which is to be applied to the dispute. This issue can only be resolved by parties clearly identifying the applicable substantive and procedural laws in the clause whereby they agree to submit the dispute to resolution by ODR. Ultimately, the resolution of this issue would be contingent upon the pronouncement of the court systems in different jurisdiction which would examine and interpret such ODR clauses, but this process is inescapable and inevitable and cannot be circumvented.

Hindrances at pre-trial stage: A significant component of the pre-trial stage is discovery, interrogatories and collation of evidence in support the respective contentions of the parties. This discovery or fact-finding process may be minimized in the ODR process to speed the process of settlement of dispute. However, in a situation where the facts are disputed, a limited discovery procedure may serve to limit the fact finding capacity of the adjudicating authority to discover the true and correct state of facts. Further, limiting or eliminating the

discovery process may offend the due process, causing the courts to strike them down as they do not meet the minimum requirements of due process.

Publication of proceedings and award: If ODR is to be encouraged as a popular mode of dispute resolution, details of proceedings and decisions would be required to be published which ensures transparency. But, this contradicts the very essence of ODR, which is respecting the confidentiality and right to privacy of the parties. Thus, the fate of ODR hangs in balance with one school of thought demanding absolute secrecy of proceedings and the other school seeking publication of proceedings and the decisions. As a matter of practice, currently, all ODR providers keep the proceedings confidential and release information only if both the parties agree to publish the decision.2

Difficulty in enforcement of online awards: Like ADRs, in the case of online arbitrations, once the decision has been rendered, the same has to be enforced in the appropriate court. In several jurisdictions, including India, the orders in execution are subject to appeals and this serves to protract the process of execution. Going by this principle, unless the parties are assured of the enforcement and implementation of the decisions, disputants may not have much faith in online proceedings. Further, enforceability of foreign decisions pronounced after completion of ODR proceedings is also an issue which must be considered while agreeing to an ODR clause.

Challenging an award: Since ODR proceedings are conducted online, another issue requiring clarity is the intervention of a court during or after the completion of the proceedings and/or pronouncement of the decision. This will again raise the question of: (a) the enforcement of the decision of the court in the country where the opposite party operates/resides; and (b) appeals against the decision of the court and enforcement of the said decision.

1.4 Suggestions: In the absence of an enforceable international regulatory regime, the following suggestions are proffered to establish ODRs as an effective mechanism of dispute resolution:

Creation of national and international body: By an international treaty of the community of nations, an international ODR body needs to be created which would establish its own substantive and procedural law. Every member country should have a national body conducting ODRs, providing the infrastructural facilities and the panel of arbitrators/mediators, based upon the guidelines set out in the treaty to which the country is a signatory/member. This international body should be independent and should be vested with appellate powers. Hence, in case the disputants wish to challenge the decision, they can only have recourse to this appellate forum and not to the national civil court system. Further, the decisions should be final and binding upon the parties and the said international body should also have the power to enforce the award.

“Due process” and “fair play”: To be a successful means of resolving disputes, ODR must satisfy all requirements of “due process” and “fair play,” such as the appointment of an unbiased decision maker to settle disputes by allowing parties to choose from a panel of arbitrators or mediators, which may be made available on the website of the ODR provider; providing background information of arbitrators or mediators to facilitate the process of selection; and pronouncing a reasoned decision.

Security technology: ODR providers should be certain that they adopt security mechanisms to ensure the safety of the parties information, such as, allow only authorized access to their websites and adopt the latest security technology available and update it regularly. ODR providers should also mandate that parties use digital signatures in their online communications. The purpose of such digital signatures is two-fold: (a) it encrypts the online message or document, thereby providing security to the transmission; and (b) it allows the receiver to verify the authenticity of the message.


Owing to the adaptable nature of ADR, traditional forms can be modified to resolve most online disputes. While there are several challenges to ODRs becoming a viable mechanism of dispute resolution, it is only a matter of time before these challenges are overcome. Further, the rapid growth of ODR providers in the last few years is evidence that ODR is a far more effective mechanism for resolving online disputes than traditional ADR or litigation. A concerted effort by the governments, consumer groups, and the online industry could go a long way in facilitating the establishment of speedy and economical resolution of disputes employing the ODR mechanism.

Authored by: Rohan Jhusiwala

1 NIXI is a non-profit organization established in the year 2003 to provide neutral internet exchange point services in the country. It was established with the Internet Service Providers Association of India to become the operational meeting point of internet service providers in India. Its main purpose is to facilitate handing over of domestic Internet traffic between the peering internet service provider members, rather than using servers in the US or elsewhere. This enables more efficient use of international bandwidth and saves foreign exchange. NIXI also improves the quality of services for the customers of member internet service providers
2 The only exception is ICANN Domain Name Dispute Resolution Policy, which publishes all decisions over the internet, except when the panel decides otherwise


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