As
our modern day civilization witnesses a revolution brought about by the
technological phenomenon tenned `Internet', it has created a unique virtual
world of its own connecting people globally and instantaneously. Internet
has rendered the temporal and spacial barriers insignificant, and people
across the world are realizing it's immense potential as a medium of communication,
information dissemination, and a fillip for e-commerce. The accelerated
and multifarious interaction amongst the individuals facilitated by internet
has raised new issues to the fore and inevitably myriad nature of e-disputes.
In simple words, e-disputes encompass the conventional disputes relating
to Sale/purchase of goods, auctions, software development, copyright, defamation,
fraud, privacy, deceptive trade practice, etc although with an added dimension
to the specific issue owing to the peculiar nature of internet as a medium
of communication. On the same lines, "Online dispute resolution" involves
the conventional concept of Alternative dispute resolution with the key
difference being that the entire process is carried out through the use
of internet and not across the table in a face to face situation.
This
write-up aims to explain these two concepts, their sub-categories, applicability,
methodology along with their similarities, differences, advantages, and
the current trends to resolve disputes by means of these concepts. For
a lucid comprehension of the subject our discussion on the two concepts
has been divided into two parts, the first part deals with the alternative
dispute resolution hereinafter referred to as ADR and the second part with
the online dispute resolution, hereinafter referred to as the ODR.
Alternative
Dispute Resolution
To
begin with, alternative dispute resolution process is qualitatively distinct
from the judicial process. It is a process where the disputes are settled
with the assistance of a neutral third party generally of parties own choice,
where the neutral is generally familiar with the disputes of that nature,
where proceedings are informal, without procedural technicalities and are
conducted by and large, in the manner agreed by the parties, where the
dispute is resolved expeditiously and with less expenses, here decision
making process aims at substantial justice ,where the confidentiality of
subject matter of the dispute is maintained to a great extent. In substance,
ADR process aims at rendering justice in the form and content that not
only resolves the dispute but also brings back harmony in the relationship
of the parties.
ADR
techniques are extra-judicial in character, they can be used to resolve
any matter, under law, by agreement between the parties. They have been
employed to settle myriad subject categories of disputes, especially civil,
commercial, industrial, and family disputes. In particular, these techniques
have achieved success in the case of business/commercial disputes such
as banking ,contract performance, and interpretation, construction contracts,
intellectual property rights, insurance coverage, joint ventures, partnerships
differences, personal injury product liability, professional liability,
real estate and securities.
Needless
to say, that ADR offers the most efficacious solution in respect of commercial
disputes of an international nature. However, Alternative dispute resolution
is not intended to supplant altogether the traditional means of resolving
disputes by means of litigation wherein there is an adjudication or final
determination of a dispute which is binding on the parties thereto. ADR
techniques offer only alternative options to litigation and their desirability
increases as they are instrumental in avoiding vexation, expense, and delay.
However, there are disputes pertaining to a number of important areas,
including constitutional law and criminal law which cannot be resolved
without resorting to litigation. ADR may not be appropriate for every dispute
even in other areas or even if appropriate, it cannot be invoked unless
both the parties to a dispute are willing and agree to adopt ADR.
Techniques
of ADR
The
ADR procedures consists of Negotiation, Conciliation, Mediation, Arbitration
and array of hybrid procedures including last offer arbitration, medola
, minitrial, med-arb, and neutral evaluation. In countries like U.S.A several
federal and State judges have incorporated ADR techniques in their court
room practice and encourage litigants to adopt them. Legislations were
also enacted to promote the use of ADR by state instrumentalities. A number
of ADR procedures are hybrids that combine two or more well established
ADR procedures. ADR procedures can be broadly divided into two categories
namely, adjudicatory and non adjudicatory. The adjudicatory procedures
such as arbitration and binding expert determination lead to a binding
ruling that decides the case. The non-adjudicatory procedures contribute
to resolution of disputes by agreement of the parties without adjudication.
Mediation is different from conciliation only in that in the former the
neutral third party plays a more active role in putting forward his own
suggestions for the settlement of the dispute.
A brief
description of ADR procedures widely used is as follows :
Negotiation
: A non-binding procedure in which discussions between the parties
are initiated without the intervention of any third party with the object
of arriving at a negotiated settlem ent of the dispute.
Conciliation
Mediation : A non-binding procedure in which an impartial third party,
the conciliator/mediator, assists the parties to a dispute in reaching
a mutually satisfactory and agreed settlement of the dispute.
Med-Arb
: A procedure which combines sequentially conciliation/Mediation and
where the dispute is not settled through conciliation/mediation within
a period of time agreed in advance by the parties, arbitration.
MEDOLA
: A procedure in which if the parties fail to reach an agreement through
mediation, a neutral person, who may be the original mediator or an arbitrator,
will select between the final negotiated offers of parties such selection
being binding on the parties.
Mini-Trial
:
A non binding procedure in which the disputing parties are presented with
summaries of their cases to enable them to assess the strengths, weaknesses,
and prospects of their case and then an opportunity to negotiate a settlement
with the assistance of a neutral adviser.
Arbitration
: A procedure in which the dispute is submitted to an arbitral tribunal
which makes a decision (an `award') on the dispute that is binding on the
parties.
Fast
track Arbitration : A form of arbitration in which the arbitration
procedure is rendered in a particularly short time and at reduced cost.
Neutral
listener Agreement :
Parties to a dispute discuss their respective best settlement offer in
confidence with a neutral third party who, after his own evaluation, suggests
settlements to assist the parties to attempt a negotiated settlement.
Rent
a judge : Disputing parties mutually approach a referee, usually a
retired judge, before whom they present their case in an informal proceedings.
The referee judge gives his decision which is enforceable in a court of
law. The fee of the referee is paid by the parties.
Final
offer arbitration : Each party submits its monetary claim before a
panel who renders its decision by awarding one and rejecting the other
claim.
Important
Characteristics of ADR
The
most attractive characteristics of ADR are that it can be used at any point
of time, even when a case is pending before a court of law, it can be used
to reduce contentious issues between the parties and (except in the case
of binding arbitration) it can be terminated at any stage by any one of
the disputing parties. Parties are free to decide how they wish to resolve
their dispute either before the dispute arises e.g. in a dispute resolution
clause contained in their commercial contract or after the dispute arises
e.g in a subsequent agreement to arbitrate the dispute. Parties can agree
on the law governing the contract, including how conflicts of laws are
to be resolved, the tribunal hearing the dispute, and whether the tribunal
will have exclusive jurisdiction to deal with the dispute and where the
tribunal is not a traditional court-where the tribunal will sit and hear
the dispute the procedural rules which the tribunal will apply where the
parties fail to agree on any of the above, the tribunal may decide what
is the proper law governing the dispute, the rules, it will use and even
the extent of its own jurisdiction.
The
advantages of ADR as against litigation have been variously indicated to
be
(a)
The parties can choose their own rules or procedure.
(b)
There is greater scope for minimizing acrimony.
(c)
The costs can be kept low.
(d)
The times and places of hearing can be chosen according to convenience.
(e)
Saving of time.
(f)
The ability of the parties to choose their own judge permits choice of
an expert in the field.
(g)
ADR can be used with or without a lawyer
(h)
It allows parties to keep private the details of dispute.
ADR
is by no means a recent phenomenon, though it has been organized and systematized,
expressed in clearer terms, employed more widely in dispute resolution
in recent years than before. In earlier times, disputes were peacefully
decided by intervention of kulas (family or clan assemblies), srenis (guilds
of men following the same occupation ), parishads ( assemblies of learned
men who knew law) before the king came to adjudicate on disputes. There
were Nyaya panchayats at grass root level before the advent of the British
system of justice. Later on, Lok adalats (people's court) have provided
speedy and inexpensive justice in both rural and urban areas in India.
The increased volume of cases in the courts, as also the imperative need
to provide for their expeditious disposal propelled major reforms in the
law of arbitration in India in order to remove the deficiencies and to
make arbitration an effective ADR mechanism. Accordingly, the Arbitration
and Conciliation Act,1996 was enacted. This Act is more responsive to contemporary
requirements and is on the pattern of model law on International commercial
Arbitration adopted by United Nations Commission on International Trade
Law (UNCITRAL) in 1985 and UNCITRAL set of Conciliation rules adopted in
1980. An important feature of the said UNCITRAL Model law and Rules is
that they have harmonized concepts on Arbitration and Conciliation of different
legal systems of the world and thus contain provisions which are designed
for universal application. It was widely felt that our economic reforms
in India may not become fully effective if the law dealing with settlement
of both domestic and international commercial disputes such as the Arbitration
Act,1940 remains outdated. Therefore, the Arbitration Act 1940 was amended
and is now known as the Arbitration and Conciliation Act, 1996 which has
consolidated and amended the law relating to domestic Arbitration, international
commercial arbitration and enforcement of foreign arbitral awards and has
clearly defined the law relating to Conciliation. This enactment has been
a welcome change in the Indian economic-legal scenario and the most reliable
and effective technique of ADR in India. While the other forms of ADR also
exist in India, the Arbitration and conciliation have been so far most
popular to resolve private disputes especially business/commercial disputes.
Government
contracts generally provide for compulsory arbitration in respect of disputes
arising thereunder. And there is also a permanent machinery of arbitrators
constituted by the Government of India to settle all current and future
commercial disputes between public sector undertakings interse as well
as between public sector under taking and a government department. Statutory
arbitrations are conducted in accordance with the provisions of certain
special Acts which provide for arbitration in respect of disputes arising
on matters covered by those Acts e.g the Land Acquisition Act, 1894, Indian
Electricity Act, 1910, the Railways Act,1890, etc. On the international
scene, India has recently entered into bilateral investment protection
agreements with the United Kingdom, Germany, Russian federation, Netherlands,
Malaysia and Denmark. Each agreement makes provision for settlement of
disputes between an investor of one contracting party and the other contracting
party in relation to an investment of the former through following the
ADR procedures : Negotiation, Conciliation and Arbitration. There are a
number of international agreements in various sectors to which India is
a party containing provisions for dispute resolution through ADR procedures.
Considering the importance of Arbitration Act,1996 in the current Indian
legal scenario it is pertinent to enlist some important features of the
Arbitration and Conciliation Act, 1996. They can be enumerated in brief
outline as under:
(a)
The Act provides for transparency in the matter of decision-making by arbitral
tribunal by providing that the arbitration tribunal must give reasons for
it's arbitral award (section 31[3])
(b)
Delay on the part of the arbitrator is made a ground for termination of
the mandate of the arbitrator. (section 14 [1][a])
(c)
The courts can intervene only after the award is made by the arbitral tribunal
(section 5 and 16 [6]) The Act enables an arbitrator to decide the objections
to his continuance as an arbitrator as also on the extent of his jurisdiction.
The arbitral tribunal could also rule on any objection with respect to
the existence or validity of the arbitration agreement.
(d)
The Act permits an arbitral tribunal to use mediation, conciliation, or
other procedures during the arbitral proceedings to encourage settlement
of disputes. (section 30)
(e)
The Act provides clear provisions with regard to the award of interest
by the arbitrators. (section31 [7])
(f)
The grounds for challenge in the award are made more specific in the Act
(section34 [2])
(g)
The Act also makes it clear that all awards given within India are domestic
awards and all awards given in foreign countries are foreign awards. (Section
2 [7])
(h)
The Act repealed the Arbitration (protocol and convention) Act, 1937, the
Arbitration Act, 1940 and the Foreign Awards (Recognition and Enforcement)
Act,1961.
Apart
from a good law that provides for resolution of disputes, it is rudimentary
to extend or create facilities, services, and infrastructure that shall
enable the implementation of such rules and lead to effective ADR practice.
The specialized firms or organizations are certainly more promising and
reliable in this sphere and people choose to consult them and engage their
services for dispute resolution. There are some important organizations
making significant contribution in promoting ADR services in India which
need a special mention herein namely ICA and ICADR, the Federation of Indian
Chambers of Commerce and Industry, Indian Chamber of Commerce, the Bengal
Chambers of Commerce and Industry. The Indian Council for Arbitration (ICA)
established on April 15, 1965 provides arbitration facilities for all types
of domestic and international commercial disputes and conciliation of international
trade complaints received from Indian and foreign parties, for nonperformance
of contracts or noncompliance with arbitration awards. It maintains comprehensive
international panel of arbitrators with eminent and experienced persons
from different lines of trade and professions for facilitating choice of
arbitrators. The council has launched on internet a special web site called
COMLAWNET to provide information on arbitration and commercial laws. We
need more organizations such as the ICA, ICC and FICCI that render specialized
services and promote ADR. One would agree that these organizations have
a vital role to play in resolving disputes, in particular, commercial disputes
across the globe!
With
this background knowledge of concept of ADR understanding the concept of
ODR becomes fairly simple. In broad terms, ODR is same as ADR except that
the dispute resolution process is carrid out completely online i.e through
the use of intemet. We shall now deal with the second part of our discussion
with the aim to explain ODR and highlight the differences between the two!
Online
Dispute Resoluion
With
the unprecedented growth of e-commerce and facilitated global consumer
transactions over the internet, a number of disputes have resulted which
often involve parties from different jurisdictions. To resolve such disputes,
Mediation and the like methods can be extremely useful mechanisms. E-commerce
disputes that cannot be informally resolved call for dispute resolution
methods that are enforceable internationally. The European parliament has
also indicated that online dispute resolution should be a priority, to
be linked with any progress to be made on the proposal for a council regulation
(EC) jurisdiction and the recognition and enforcement of judgements in
civil and commercial matters.
In
quintessence, ODR System is the same as the traditional dispute resolution
model. The key difference in the two concepts lies not in the substance
of the concept but in the mode/medium of practice. ODR system is entirely
intemet based, meaning that the users may conduct the procedures through
a website, or that of a service or content provider. Digital communication
tools allow the parties to file requests by completing electronic forms
and to exchange information online through secure channels. The parties
and neutrals communicate electronically, also through audio and video facilities.
The system includes such functions as automatic notifications.
Also,
procedural rules have been framed by organizations providing ODR in their
respective specialised areas of e-disputes. This institutional dispute
resolution practiced online has attracted public confidence and provided
an efficient alternative to litigation in national courts, especially in
case of e-disputes wherein parties to a dispute, are often from different
jurisdictions and the issue of jurisdiction itself becomes a point of preliminary
objection. However, this point of contention never arises in ODR as parties
mutually agree to resolve their cross border e-disputes employing the mode
and the manner they both agree on. The parties may have entered into an
agreement containing an arbitration clause providing that in the event
that a dispute arises between the parties it shall be resolved by means
of arbitration conducted electronically, OR later as and when the dispute
arises they may agree to resolve it through ODR. Many parties wish to incorporate
organizational rules to ensure that all the important clauses have been
inserted and a fair and secure agreement is arrived at.
The
following organizational rules are the most common rules which serve as
model clauses for the parties-
ICC
Rules of Arbitration and ICC Rules of Optional conciliation
International
Center for settlement of Investment Disputes model clauses
WIPO's
Arbitration and Mediation rules.
UNCITRAL
Arbitration and Conciliation Rules
London
Court of International Arbitration's model clauses for arbitration rules.
American
Arbitration Association`s model clauses for arbitration rules
While
there are several advantages of resolving disputes through ODR , the important
advantages could be listed as under:
(1)
Parties can choose arbitrators/mediators from around the world.
(2)
Greater quality and satisfaction at reduced cost.
(3)
Professional and institutional administration by ODR service providers.
(4)
Greater speed, saving of time, easy accessibility.
(5)
More convenient as physical presence and face to face meetings are not
required.
(6)
Higher probability of bringing back harmony in the relationship of the
parties.
(7)
Encryption ensures secure data communication.
E-disputes
that can be resolved through ODR are of diverse categories namely, Sale/
purchase disputes, auction, software development, construction license
agreement, cyber squatting, consumer complaints, copyright, defamation
trade secret, and could involve issues like censorship, access, privacy,
fraud, deceptive trade practice and so on and so forth. The methods or
techniques of ODR are basically same as ADR although we could prefix an
"E" to them and they could be called as e-mediation, e-conciliation, e-arbitration,
e-minitrial, and so on and so forth. The Swiss Supreme court has decided
that arbitrators need not meet in person and are free to conduct deliberations
by electronic means, including e-mail, provided precautions are taken "
the only mandatory requirement is that all the arbitrators must participate
in a real way in each discussion and decision."
E-mediation
has been quite successful (Jeffrey K Adjunct professor at Pepperdine University
Law School and a Private Mediator recounts a case he handled a few years
ago, CPR news monthly alternatives, Vol. 4, No 10 Nov 96). The online ombudsman
office in Massachusetts also reports experience of online mediation since
it was set up in 1996. Several other online mediation services have also
been established recently in U.S and Canada including the Cyber Tribunal
in Montreal whose services are offered free of charge. At present, there
are already a number of ODR service providers conducting ODR successfully
in a wide range of E-disputes. In the U.S the first website to offer online
settlement of financial claims was cybersettle, followed by clicknesttle..
cybersettle
deals with insurance claims, clicknsettle with any type of monetary
claims. BBB Online is developing the online handling of consumer complaints
in the U.S. Gimmeabid dealer auction site, www.gimmeabid.com provide services
to facilitate dispute resolution between buyers and sellers. There are
web sites like www.mediate.com, www.novajorum.com, www.icaarthouse.com,
www.etribunal.com, www.hellobrain.com, www.virtualmagistrate.org Providing
ODR services across the globe effectively pertaining to multitude of e-disputes.
www.emediator.com is first online dispute resolution service provider pertaining
to business/commercial and personal disputes.
WIPO
has already developed an ODR system for administering commercial disputes
involving intellectual property. To be administered by WIPO Arbitration
and Mediation center, The WIPO system is used for disputes involving internet
domain names. Domain names, in simple words, are an easy to remember alias
which point to a specific IP address. It is a unique name used to identify,
among other things, a specific website, e.g. www.indiainfoline.com WIPO
has framed the Uniform Domain name dispute resolution policy which was
adopted by Intemet Corporation for Assigned Names and Numbers on 26 August,
1999.
Although
the policy provides that most domain name disputes will be resolved by
the courts, it also calls for administrative dispute resolution proceedings
to enable streamlined economical resolution of disputes arising from alleged
abusive registrations. Under the policy, each administrative proceeding
will be administered by a dispute resolution service provider approved
by ICANN. At present, there are four domain name dispute resolution service
providers that have been approved by ICANN, namely, WIPO, National arbitration
forum, e-Resolutions, CPR institute for dispute resolution. These service
providers give effect to UDRP policy and in addition to it follow their
own supplemental rules to administer and provide arbitrators for disputes
alleging abusive registration. WIPO Arbitration and Mediation Center and
ICANN were recently awarded the 2000 CPR award for excellence in ADR for
its Domain name dispute resolution service.
At
this point it is pertinent to note the main features of the ICANN policy.
The ICANN policy is between the registrar and its customer. Thus, the policy
uses "we" and "our" to refer to registrar and it uses "you "and "your "to,
refer to domain name holder. This policy has been adopted by all accredited
domain name registrars for domain names ending in com, net, org. lt has
been adopted by certain managers of country code top level domains ( e.g.
nu, .tv, .ws)
Main
Features of ICANN Policy
1.
Registrars receiving complaints concerning domain names they have registered
on trademarks or service marks will take no action (i.e cancellation, transfers,
changes to domain names) until they receive instructions from the domain
name holder or any order of a court arbitrator, or other neutral deciding
the parties dispute.
2.
There is a mandatory administrative proceeding in the event that complainant
asserts to ICANN approved service provider that domain name of the party
is identical or confusingly similar to a trademark or service mark in which
the complainant had rights, and the party has no rights or legitimate interest
in respect of domain name, or domain name of the party has been registered
and is being used in bad faith.
3.
Neutral persons selected from panels established for it decide the dispute
which is entirely administered online by the approved dispute resolution
service providers.
4.
Procedure is handled online- takes less than 45 days- costs about dollar
thousand fees to be paid to entities providing the neutral persons.
5.
Parties to a dispute can also opt to go to a Court (before administrative
proceeding commences) to resolve their dispute or contest the outcome of
the procedure within 10 days from the date of its decision.
The
world today acknowledges the accomplishment of WIPO online dispute resolution
system. It has extended to thousands of intemet users easily accessible
and reliable means of dispute resolution and delivered substantial justice
in a very short span of time. There are a number of cases of domain name
disputes which have been successfully resolved online. A land mark case
in the Indian context is the TATA case wherein WIPO Arbitration and Mediation
center in its administrative panel decision held that the domain name "tata.org
"standing in the name of the Advanced Information Technology Association,
Mumbai should be transferred to the complainant being Tata Sons Ltd. As
it was a bad faith registration. Another recent case decided by WIPO is
the Maruti Udyog Limited v Maruti Software Pvt Ltd wherein it was held
that the respondents domain name "marutionline.com " is identical to trademark
name MARUTI in which complainant has rights, the respondent has no legitimate
interest in domain name and it is a bad faith registration. The panel decided,
that the domain name "marutionline.com" should be transferred to the complainant.
In this way many e-disputes in the present times are being amicably settled
without having to resort to cumbersome process of litigation and the same
is done expeditiously at more convenience and at reduced costs.
Conclusion
It
is definite that this journey from ADR to ODR has been extremely fascinating.
While it invokes an ever challenging thought process in each one of us,
it stimulates us to ponder over certain issues that are currently emerging
and will very soon aid in improvisation and extension of ODR system application
to new areas worldwide. Law which exists as of today in its binding force
can be categorized in three layers. The basic layer which can be said to
constitute the first layer is the domain of National/domestic law which
is bound by territorial/physical boundaries. The third layer can be said
to comprise of International legislative texts which serve as model laws
and help nations modernize adapt or adopt or amend or make more uniform
their domestic laws e.g UNCITRAL has framed laws on procurement of goods,
construction and services, law on International credit transfers and laws
that are more procedural laws by nature as that of International commercial
arbitration. The second layer is a new and emerging layer that has helped
bring about uniformity of laws worldwide and has a binding force and is
enforceable everywhere such as the Uniform dispute resolution Policy adopted
by ICANN for resolution of domain name disputes.
With
the world becoming closer and free of physical boundaries through the virtual
world of cyberspace and internet, there is certainly a great scope of bringing
about uniformity in laws and their application and uniformity in procedures
adopted to resolve disputes between individuals across the globe. Apart
from success of ODR mechanisms, it would not be a far fetched idea to conceive
of an online International Court of justice to meet the demands of e-disputes
though it would require political reconciliation between main trading blocks
and will take some time. Within European Union there have been already
developments to examine provision of mediation and arbitration services
for electronic commerce through National Chambers of Commerce. In some
time, an organization or system of law could find its way to regulate and
determine the bulk of e-disputes through uniform means. Considering the
effectiveness and desirability of ODR, online arbitration/mediation should
be introduced in all model international legislative texts, national laws
as an internationally accepted uniform method of dispute resolution. To
sum up in a sentence. ODR system in essence not only offers a promising
mechanism of dispute resolution worldwide, but serves as a facilitator
of global harmony and a wholesome e-commerce interaction and growth!