Online Dispute Resolution – Effective or not? An Overview

The burden on the courts has to be reduced by resolving disputes outside of the court. On such way that began in USA is Online ADR which also entails mediation, arbitration, etc. This blog talks about the pros and cons of such resolution and whether or not this will be helpful in India.

In 1998 Online Dispute Resolution (ODR) made its debut in the United States of America. Courts were getting clogged and the procedure of dispute resolution was slow. The internet had become the biggest resource available to man and was making its way into every sphere of human life. Costs were lower under and justice became faster and efficient since the need to travel to courts got reduced significantly. ODR became the new revolution, perhaps even a sustainable mechanism.

What is Online Dispute Resolution?

ODR is one of the branches under Alternative Dispute Resolution (ADR) measures. ODR technology is used for mediation and negotiation, using the internet as a platform for dispute resolution. For this reason, it is often taken as the online equivalent of ADR.

ODR has been used across the world for the resolution of varying disputes, however, the most common usage is for e-commerce and business to consumer disputes.

ODR uses techniques under which negotiation is done by both parties directly or even through a third-party mediator. Everything, under ODR, from the filing of documents to oral hearing (when needed) and evidentiary processes in done online. Settlements are as binding as normal settlements arrived at under traditional courts.

Procedures adopted under ODR

  1. Online Negotiation: There are forums on the internet such as Cyber Settle, etc. that carry out dispute resolution via mediation.

In the closed model online negotiation, blind bidding is used as a negotiation tactic. Demands and monetary offers are compared by computers in rounds, rather than being disclosed to the counterparts. When the demands and claim overlap, reaching a settlement, both the parties are informed via emails.

In an open model, online negotiation offers can be viewed by the concerned parties upon making a demand or offer of their own. Once the offers are within 20% of the demand (either party’s) the settlement is made.

  • Online Mediation: The procedure begins with complainants filling a confidential form on the website f the provider, who then contacts the respondent. Ground rules for the mediation are settled and the mediation begins through joint or individual communication. Agreements are usually made in writing.

Online mediation platforms include Legal Face Off, Smart Settle, etc.

  1. Online Arbitration: The American Arbitration Association is one of the biggest arbitration service provider, having handled several complex cases. It follows initial presentations, rebuttals, etc. until the decision stage through communication between the concerned parties. Simple soft wares are used.
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Characteristics of ODR

  1. Voluntary: Most parties usually sign up for ODR voluntarily. They are also allowed to withdraw at any point, should they wish to.
  2. Informal: Proceedings under ODR tend to be much more informal than face to face mediation. Usually, the terms of interaction are set by the ODR Provider and parties involved. Therefore they have the liberty to make things more informal.
  3. Confidential: Unless the parties agree otherwise, ODR proceedings are confidential.
  4. Assisted: ODR tends to use a neutral third party to act as the mediator. The mediator helps the parties to come to a settlement that is mutually acceptable to both parties.

Advantages of ODR

  1. Cost saving and Convenience: Traditional litigation can be expensive due to the expenditures for court fees, procurement of paperwork, paper-based documents, etc. ODR, on the other hand, is conducted online and uses electronic data significantly, therefore the majority of the cost involved relates to internet services. The travel time and distance get cut down on significantly under ODR and that also helped the parties to save up on costs. The facilities used under ODR such as emails, messaging, etc. can be used flexibly, giving increased convenience to the parties involved. The amount of idle time that disputants experience is similarly reduced because, in contrast to traditional mediation, the mediator can devote time to one party without wasting the time of the other party, who would traditionally sit around waiting for the next mediation stage.[1]
  2. Complex jurisdiction issues can be avoided: One major problem that occurs in disputes is the problem of jurisdiction. When a matter is related to a dispute related to cyberspace, it becomes seven more complexes. Under ODR, the jurisdiction question becomes easily avoidable since both parties would bind themselves to the procedure through a signed agreement.

Disadvantages of Online Dispute Resolution

  1. Impersonal: There could be a lack of personal connection between the parties. When resolving a dispute, a personal connection between parties can help create empathy and positive inclinations, making the proceedings less harsh or cold. The biggest reason for the success of mediation and arbitration is that the parties trust a third person to do right by them; it depends on an atmosphere of trust. Such an atmosphere of trust is difficult, if not impossible, to create in less than face-to-face discussions. It has been noticed that “For many participants, mediation is about the ‘venting’ of feelings and emotions that they would be unable to express in a more formal setting such as a courtroom. The opportunity to tell one’s version of the case directly to the opposing party and to express accompanying emotions can be cathartic for mediation participants.”[2] This is something may not always happen in ODR and cyber meditation.
  2. Inaccessibility to some people: For ODR, the biggest essential is access to internet services and computer resources. However, there are still many parts of the world where continuous and uninterrupted access to internet services is not available. At the same time, there are also people who are not accustomed to or are not comfortable with using the technology involved.
  3. Confidentiality Concern: Protecting a person’s privacy and respecting a confidentiality agreement is very important. E-records are easier to trace and retrieve. Which means information contained in them could be leaked easily, affecting honest exchanges.
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Situation in India

As has been discussed, ODR is a form of ADR, falling within its umbrella head. Under the Section 89 of the Code of Civil procedure, 1908, use of ADR has been allowed and even promoted. Order X of the Rule 1A further allows the court to direct the parties in a suit to choose any method of ADR in order to resolve disputes. This means that ODR would also be included in this.

In India, ODR falls under the provisions of the Arbitration and Conciliation Act, 1996 along with the Information Technology Act, 2000. In keeping with these Acts, the parties must explicitly agree to the resolution of the dispute through these methods. The parties also have the liberty to choose a place of hearing that is suitable for them, which could very well be online. Electronic records, signatures, and documents have been given legal recognition and evidentiary value under the Sections 4, 5 and 65-B of the Information Technology Act, 2000.

In the case of Shakti Bhog Foods Ltd. v. Kola Shipping Ltd.[3] the parties conducted arbitration proceedings via email. The same was also done in the case of Trimex International FZE Ltd. v. Vedanta Aluminium Ltd.[4]

The Supreme Court has also said:

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”.[5]

Use of video conferencing in order to record statements of a witness was allowed by the Supreme Court in the case of State of Maharashtra v. Dr. Praful B. Desai[6].


ODR is a field that holds immense scope not just in India but also around the world. It has the potential to reduce, if not eliminate, the problem of high backlog that the Indian judiciary faces. The judiciary has been made to suffer tremendous criticism for this problem. Proper implementation and provisions for ODR could become one of the easiest ways for the judiciary to tackle this problem. At the same time, it creates for an economical and time effective method for resolution of disputes between the parties involved. Practicing ODR in India is completely valid, so much so that the National Internet Exchange of India uses ODR to resolve disputes related to the domain name. It is nothing but a part of ADR and therefore all laws applicable to ADR are applicable to ODR as well.

Also read Role of Public Policy Notion in Arbitration Regime as Time Effective ADR Mechanism

[1] See WebMediate, Welcome to the Dispute Resolution Revolution, at (last visited 15th September 2017); see also Ryan Baker, WebMediate, Inc. submission to the Department of Commerce and Federal Trade Commission Joint Workshop on Alternative Dispute Resolution for Online Consumer Transactions, available at (last visited on 15th September 2017).

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[2] See Jim Melamed & John Helie, The World Wide Web Main Street of the Future is Here Today, available at (last visited on 15th September 2017).

[3] AIR 2009 SC 12.

[4] (2010) 3 SCC 1.

[5] Grid Corporation of Orissa Ltd. v. AES Corporation, (2002) 7 SCC 736.

[6] (2003) 4 SCC 601.