SynopsisLegal tech firms are helping government bodies as well as enterprises quickly resolve disputes online, which may potentially reduce workloads of traditional courts and save litigation fees.
The government is the largest litigator, contributing to over 46% of all legal disputes in the country, according to an analysis by its own policy think tank Niti Aayog.
This has put a tremendous burden on courts and imposed a prohibitive cost on the public exchequer.
But enterprises are not too far behind in litigation either.
For instance, legal-tech company Sama, which helps government bodies, companies and individuals resolve disputes through the online dispute resolution (ODR) mechanism, gets 80,000 to 100,000 cases from enterprises in a year.
In the re-drafted Digital Data Protection Bill released on Friday, a provision for alternate dispute resolution has been provided for.
The provision says “if the Board (referring to the Data Protection Board of India) is of the opinion that any complaint may more appropriately be resolved by mediation or other process of dispute resolution, the Board may direct the concerned parties to attempt resolution of the dispute through mediation by a body or group of persons designated by the Board or such other process as the Board may consider fit”. This is a huge step to encourage ODR in the country.
Sama says its settlement rate is over 50% and the average time taken to resolve disputes is 15 days.
It says it has so far resolved over 2.2 million cases virtually, entailing a settlement amount of more than Rs 550 crore. Sama has over 42 enterprises such as
,
, Udaan, Snapdeal and OLX, as user clients.
To be sure, Sama is not the only legal tech firm that companies are relying on to quickly resolve disputes. All such firms – including CADRE and CORD – are helping e-commerce, banking and other entities in not only resolving disputes quickly but also reducing the workload of the Indian judicial system.
“A culmination of factors – increased appetite for change, the need to decongest our courts, the demand for affordable and effective dispute resolution mechanisms, and the availability of technology – has prepared India for a potential game-changing transformation in the justice delivery framework – Online Dispute Resolution,” said Justice (Retired) AK Sikri, the chairman of the Committee to Formulate an Action Plan for Online Dispute Resolution, in the foreword to a November 2021 paper by the Niti Aayog.
In short, ODR is a magic wand that is already helping and is certain to further help courts save time as well as cut case pendency.
“ODR will assist them (companies) in alternative dispute resolution (resolving disputes without a trial) through processes like arbitration, conciliation and mediation. This can be done online completely and saves time and money,” Pranjal Sinha, co-founder and CEO of Sama, told ET.
It will take 400 years to resolve all the cases pending before the courts currently, he added.
Long timelines
The long resolution timelines that companies and individuals are facing have been further aggravated by the Covid-19 pandemic.
“After 2019, ICICI Bank had 10,000 cases and some 76 ODR companies came forward to take them up. We won that challenge and took up their credit card disputes, personal loan disputes; we also took up cases for
,” Sinha said.
He added that around 40-50% of cases for Snapdeal were settled online, as the ecommerce firm took a “progressive approach” and, without wanting to fight with customers, resolved these collaboratively online.
According to Sama, more than 8,000 cases have been filed against business to business (B2B) platform Udaan, of which 1,800 – with a settlement amount of about Rs 3 crore – have been settled online.
“Our work is across financial institutions, e-commerce and insurance companies. Now, there are more than 100 companies using ODR via various ODR firms,” Sinha said.
ODR, when applied to e-commerce, increases trust in transactions as the value of e-commerce purchases on average is not more than Rs 10,000 in most cases.
“It doesn’t make sense to pay lawyers’ fee and cab fee etc, especially when e-commerce companies offer ODR free of cost. In the worst-case scenario, consumers can go back to fighting the case in court,” Sinha said.
The government’s Account Aggregator (AA) and Open Network for Digital Commerce (ONDC) frameworks, which are still evolving, have also opted for ODR for quick resolution of disputes.
The AA ecosystem, which is being facilitated by non-profit Sahamati, already has an ODR mechanism pre-plugged into the system.
ONDC, a government-backed e-commerce platform, has also put out a draft dispute resolution framework, and will enlist third-party ODR platforms like CADRE (The Centre for Appropriate Dispute Resolution) and CORD (Centre for Online Resolution of Disputes) for resolution of customer complaints.
The AA ecosystem has also enlisted these two firms for ODR.
“Several government-backed ecosystems like AA and ONDC have enlisted us for grievance redressal. The speed of resolution, cost-savings and reputation-management are some of the benefits of ODR,” Kanchan Gupta, co-founder of CADRE, which specialises in arbitrations, told ET. “We have a 100% success rate because every dispute comes to a resolution.”
An arbitrator listens to both sides of the story and passes an order – called an arbitral award – which is legally binding on both parties. CADRE documents arbitrations, Gupta said.
While CADRE caters to hospitality chain Oyo, it has also dealt with nearly 60 cases from rental network Nestaway and trucking platform Blackbuck.
CORD has dealt with 500 disputes for ecommerce companies, of which parties involved in 100 cases received arbitral awards and settlements were reached in 70 cases.
“Be it e-commerce majors like Amazon or a home-based entrepreneur, there is bound to be friction between customers and vendors. What ODR enables is to aggregate grievances in one place and holistically approach the resolution process,” Badarivishal Kinhal, co-founder, CORD, told ET. “Our portfolio largely has financial disputes, but we have e-commerce clients, too.”
In its paper, the Niti Aayog said that integration of emerging and contemporary technologies, including AI and ML tools into the ODR processes can take ODR beyond the contours of dispute resolution and offer services directed towards improving legal health and awareness in society.
“Effective use of AI and ML can widen the possibilities for ODR by improving the efficiency of the system, assisting disputing parties and introducing new models for dispute resolution,” it said.
Niti Aayog has also suggested the development of a nationwide platform to offer ODR services. Such a platform, and affordable services, will increase access to dispute resolution using ODR, it said.
“The government may also consider a more proactive role in regulating ODR by introducing a permanent auditing and accreditation mechanism,” it said.
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