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DR.

RAM MANOHAR LOHIYA NATIONAL LAW UNIVERSITY

LUCKNOW

FINAL DRAFT ON:

“ONLINE DISPUTE RESOLUTION: JURISDICTIONAL ISSUES”

Submitted To: Submitted By:

( ) ( )

Dr. Prasenjit Kundu Faseeha Khatoon

Astt. Prof. (Law) B.A.LL.B. (Hons.)IV

Dr. RMLNLU Sec.: A

Enrol. No.140101059
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CONTENTS

INTRODUCTION .......................................................................................................................... 3
WHY ODR? .................................................................................................................................... 3
DEFINITION OF ODR .................................................................................................................. 4
TYPES OF ODR SYSTEMS ...................................................................................................... 4
DISPUTE RESOLUTION TECHNIQUES: INCEPTION OF ODR ............................................. 5
IN GENERAL, ODR INVOLVES FOUR COMPONENTS ...................................................... 6
ADJUDICATIVE METHODS ....................................................................................................... 7
ONLINE ARBITRATION .......................................................................................................... 7
ODR V LITIGATION .................................................................................................................... 9
KINDS OF DISPUTES HANDLED IN AN ODR ENVIRONMENT ........................................ 10
LEGAL CONCERNS ................................................................................................................... 10
TRUST IN ONLINE DISPUTE RESOLUTION ......................................................................... 12
ONLINE DISPUTE RESOLUTION IN VARIOUS JURISDICTIONS ...................................... 14
ONLINE DISPUTE RESOLUTION IN INDIA........................................................................... 15
JURISDICTION ISSUES RELATED TO AN E-COMMERCE ENTITY .................................. 17
OTHER CONCERNS ................................................................................................................... 19
CONCLUSION ............................................................................................................................. 19

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INTRODUCTION

The origins of ODR can be traced back to 1996 when the Virtual Magistrate project was
established to offer online arbitration system to resolve e-defamation matters.

Online dispute resolution (hereinafter—ODR) is a branch of dispute resolution which uses


technology to facilitate the resolution of disputes between parties. It primarily involves
negotiation, mediation or arbitration, or a combination of all three. In this respect it is often seen
as being the online equivalent of alternative dispute resolution (hereinafter—ADR). However,
ODR can also augment these traditional means of resolving disputes by applying innovative
techniques and online technologies to the process.

ODR is a wide field, which may be applied to a range of disputes; from interpersonal disputes
including consumer to consumer disputes (C2C) or marital separation; to court disputes and
interstate conflicts. It is believed that efficient mechanisms to resolve online disputes will impact
in the development of e-commerce. While the application of ODR is not limited to disputes
arising out of business to consumer (B2C) online transactions, it seems to be particularly apt for
these disputes, since it is logical to use the same medium (the internet) for the resolution of e-
commerce disputes when parties are frequently located far from one another.1

WHY ODR?

Now, the question arises as to why the lawyers, consumers or businesses as well as other
stakeholders should choose ODR as a method to solve their disputes.

To answer this question, there could be several reasons to use ODR, instead of some traditional
litigation processes:

 People who are used to the application of the internet in things like online shopping etc.
know that it is not an unsafe place to make transactions.

1
Bygrave, L. Online Dispute Resolution—what it Means for Consumers. Paper presented at a conference entitled
“Domain Name Systems and Internet Governance” Grace Hotel, Sydney, 7 May 2002, p. 2.

3
 Such people have experienced complex and meaningful interactions which require them
to make decisions regarding trust, risk, uncertainty, information-sharing and relationship.
 People experienced with online learning are used to spending a lot of their time engaging
in different types of interactions (academic, social, administrative etc.) with others in a
virtual space.

DEFINITION OF ODR

As already mentioned above, ODR or Online Dispute Resolution is an innovative way to resolve
grievances, issues or disputes, especially now when both consumers and business have started to
use virtual space for concluding contracts and performing various transactions. Legal action may
not be the most suitable remedy for disputes especially so when such disputes are the outcome of
e-commerce transactions or dealings on the Internet, because the Internet exposes us to a variety
of fields and in turn disputes too seem to be inevitable. Thus, it is best to resolve these
grievances, issues or disputes arising as a result of the Internet in that very same environment,
that is, the Internet.

The collective term “Online Dispute Resolution (ODR)” is used internationally for different
forms of on-line dispute settlement by means of ADR-methods. ODR supplements existing ADR
methods based on the assumption that certain disputes (more specifically e-disputes) can also be
resolved quickly and adequately via the Internet. ODR can be defined as the deployment of
applications and computer networks for resolving disputes with ADR methods. Both e-disputes
and brick and mortar disputes can be resolved using ODR.

Types of ODR Systems: The different types of ODR systems include:

 Online settlement, which uses an expert system to automatically settle financial claims;
 Online arbitration, using a website to resolve disputes with the aid of qualified
arbitrators;
 Online resolution of consumer complaints, through e-mails to handle certain types of
consumer complaints;
 Online mediation, through a website to resolve disputes with the aid of qualified
mediators;

4
Out of these four, the most used and developed are online settlement and online mediation.

DISPUTE RESOLUTION TECHNIQUES: INCEPTION OF ODR

After voluntary acceptance of the electronic method for resolution, the other party would respond
by choosing the relevant option. In the event of failure to reach a settlement, the parties would be
directed to the negotiation phase. This was supported by the mediator, which communicated with
them using the tool for electronic communication – e-mail.2

Dispute resolution techniques range from methods where parties have full control of the
procedure, to methods where a third party is in control of both the process and the outcome.3

These primary methods of resolving disputes may be complemented with Information and
Communication Technology (ICT).4 When the process is conducted mainly online, it is referred
to as ODR, i.e. to carry out most of the dispute resolution procedure online, including the initial
filing, the neutral appointment, evidentiary processes, oral hearings if needed, online discussions,
and even the rendering of binding settlements. Thus, ODR is a different medium to resolve
disputes, from beginning to end, respecting due process principles.5

ODR was born from the synergy between ADR and ICT, as a method for resolving disputes that
were arising online, and for which traditional means of dispute resolution were inefficient or
unavailable.6 The introduction of ICT in dispute resolution is currently growing to the extent that
the difference between off-line dispute resolution and ODR is blurry. It has been observed that it

2
The web portal Square Trade does not offer the aforementioned services (as of March 2015).
3
Rule, C. Online Dispute Resolution for Businesses: B2B, E-Commerce, Consumer, Employment, Insurance, and
Other Commercial Conflicts. San Francisco: Jossey Bass, 2002, p. 37.
4
Cortes, P. A European Legal Perspective on Consumer Online Dispute Resolution. Computer Telecommunications
Law Review. 2009, 15(4): 90−100.
5
García Álvaro, J. A. Online Dispute Resolution Uncharted Territory. The Vindobona Journal of International
Commercial Law and Arbitration. 2003, 7: 180.
6
Katsh, E.; Rifkin, J. Online Dispute Resolution: Resolving Conflicts in Cyberspace. San Francisco: Jossey Bass,
2001, p. 9.

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is only possible to distinguish between proceedings that rely heavily on online technology and
proceedings that do not.7

Some commentators have defined ODR exclusively as the use of ADR assisted principally with
ICT tools. Although part of the doctrine incorporates a broader approach including online
litigation and other sui generis forms of dispute resolution when they are assisted largely by ICT
tools designed ad hoc.8 The latter definition seems more appropriate since it incorporates all
methods used to resolve disputes that are conducted mainly through the use of ICT.9

In ODR, the information management is not only carried out by physical persons but also by
computers and software. The assistance of ICT has been named by Katsh and Rifkin as the
“fourth party” because ODR is seen as an independent input to the management of the
dispute.10In addition to the two (or more) disputants and the third neutral party, the labeling of
technology as the fourth party is a clear metaphor which stresses how technology can be as
powerful as to change the traditional three side model. The fourth party embodies a range of
capabilities in the same manner that the third party does. While the fourth party may at times
take the place of the third party, i.e. automated negotiation, it will frequently be used by the third
party as a tool for assisting the process.11

In general, ODR involves four components:

 Similar to ADR, companies agree to resolve their disputes outside the courts, the
difference being to use the Internet to enhance the process;
 Professionals guide the parties and apply their ADR experience to support the Internet
process;

7
Hörnle, J. Online Dispute Resolution: the Emperor‘s New Clothes. International Review of Law, Computers &
Technology. 2003, 17(1): 27. See Cf. Hörnle, J. Cross-Border Internet Dispute Resolution. Cambridge: Cambridge
University Press, 2009.
8
Lodder, A. The Third Party and Beyond. An Analysis of the Different Parties, in Particular The Fifth, Involved in
Online Dispute Resolution. Information and Communications Technology Law. 2006, 15(2): 144; Kaufmann-
Kohler, G.; Schultz, T. Online Dispute Resolution: Challenges for Contemporary Justice. The Hague: Kluwer Law
International, 2004, p. 5.
9
Cortes, P. Online Dispute Resolution for Consumers in the European Union. Routledge, 2010.
10
Katsh, E.; Rifkin, J., p. 93−117.
11
Katsh, E.; Wing, L. Ten Years of Online Dispute Resolution (ODR): Looking at the Past and Constructing the
Future. The University of Toledo Law Review. 2006, 38: 31; Gaitenby, A. The Fourth Party Rises: Evolving
Environments of Online Dispute Resolution. The University of Toledo Law Review. 2006, 38: 372; Bol, S. H. An
Analysis of the Role of Different Players in E-Mediation: The (Legal) Implications [interactive]. IAAIL Workshop
Series—Second International Workshop, p. 23−25]. <www.odrworkshoinfo/papers2005/>.

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 ADR rules and practices are adapted to the Internet environment, and
 Software tools are used to enhance Internet exchanges. New Web-based services offering
ODR are being tested and introduced which feature software that enables parties and
arbitrators to: • Meet online and work in shared, protected work spaces, • Access
databases with precedents, • Retrieve and manage key documents, and • Hold meetings
with voice and video conferencing as desired and with translation services as needed.

The range of terms and acronyms used to describe the field augments the confusion often felt by
those unfamiliar with the new field of ODR. These terms include: • Internet Dispute Resolution
(iDR); • Electronic Dispute Resolution (eDR); • Electronic ADR (eADR); • Online ADR
(oADR).

ODR has emerged as the most used term in recent years. It is uncertain whether these processes
form a new discipline of ADR or a tool to aid existing methods of dispute resolution. The most
appropriate view would be to view ODR as an interdisciplinary field of dispute resolution.

ADJUDICATIVE METHODS

Online Arbitration: Arbitration is usually defined as a process where a neutral third party
(arbitrator) delivers a decision which is final, and binding on both parties. It can be also defined
as a quasi-judicial procedure because the award replaces a judicial decision. However, in an
arbitration procedure parties usually can choose the arbitrator and the basis on which the
arbitrator makes the decision. Furthermore, it is less formal than litigation, though more than any
other consensual process. It is often used to resolve businesses’ disputes because this procedure
is noted for being private and faster than litigation. Once the procedure is initiated parties cannot
abandon it. Another feature of arbitration is that the award is enforceable almost everywhere due
to the wide adoption of the 1958 New York Convention on the Recognition and Enforcement of
Foreign Arbitral Awards.12

12
The New York Convention has currently more than 150 signatories [interactive], Accessed At:
<http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration.html>; Cf. Matthews, J. M., “Consumer Arbitration:
Is it working Now and Will it Work in the Future?” The Florida Bar Journal. 2005, 79: 1.

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The e-disputes not only involve new kinds of disputes that are peculiar to the internet but also
include traditional disputes relating to sale and purchase of goods or unfair trade practice,
defamation, intellectual property infringements amongst other conventional disputes where
internet has a role to play. The disputes could arise between individuals and/or corporate entities
or involve the government of a particular State. Whenever two parties belong to different
jurisdictions, the parties are wary of submitting its disputes to the courts of different jurisdiction
that will decide the disputes based on a different governing law. Contrary to the conventional
litigation process, ODR provides a practicable solution to parties to e-dispute where they need
not submit their disputes for adjudication before the courts within the jurisdiction of a particular
state. In ODR, independent set of laws/rules of an ODR service provider may apply to resolve
disputes and an independent panel of judges could be appointed on request of the parties for
settling their disputes.13 ODR procedure The ODR procedure entails filing of e-documents
wherein the parties may use encryption or electronic signatures to safeguard the integrity of the
documents and authentication of the transactions. Generally, the parties seek the assistance of an
ODR service provider for appointing a neutral panel of judges or panelists to resolve disputes
through online means. Parties prefer structured and clear procedure where resolution process is
simple and definite. Institutions such as WIPO, SIAC and ICC have an established reputation in
resolving online disputes through mediation or other alternative disputes resolution methods. By
filing the complaint, the complainant seeks compensation or other remedies and the respondent if
consents to take part in the process submit its detailed replies. The process may or may not
involve oral hearing by use of teleconference or video conference facilities. Sometimes
automated software could resolve a dispute without the necessity of appointing any third party.
In case the claimant’s offer falls within an acceptable range, the disputes between parties are
resolved. Generally, an ODR service provider serves function of an administrator and
infrastructure provider and not a judge that decides the disputes. ODR is known for its efficient
and cost effective dispute resolution that also reduces acrimony between parties.

Recently, in State of Maharashtra v Dr. Praful B. Desai14, the Supreme Court of India
established that the Video conferencing is an acceptable method of recording evidence for

13
India Reports, “Future Potential and Direction of e commerce in India”, Accessed at:
http://indiareports.in/internetadvantage/future-potential-and-direction-of-ecommerce-in-india/.
14
Maharashtra v Dr Praful B Desai (2003) 4SCC 601.

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witness testimony. In Grid Corporation of Orissa Ltd. v. AES Corporation,15 the Supreme Court
held-

“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”.

Thus, the legal framework as well as the precedents laid down by the Supreme Court of India
support use of technology for dispute resolution and encourage use of ODR practices.

ODR V LITIGATION

In ODR, cost and time efficiency is typical characteristics as opposed to a judicial process with
consumes substantial time and cost for adjudication of disputes. Tyler and Bretherton aptly
stated- “the difficulty of utilizing traditional dispute resolution methods in low value cross border
disputes has led to interest in low cost cases, cross jurisdictional dispute resolution methods”.
ODR denotes greater flexibility as it can be initiated at any point of a judicial proceeding or even
before a judicial proceeding begins. ODR can also be terminated if the parties mutually decide
that it is not leading to a workable solution. The parties have the autonomy to decide the mode
and procedure for online dispute resolution in case disputes arise from a particular e- contract.
Even in the absence of a written contract declaring ODR as method of dispute resolution, the
parties may adopt ODR methods to resolve their disputes when such disputes arise. Contrary to
litigation, the parties are free to choose their governing law of contract, the procedure to resolve
disputes, decide on an ODR service provider and provide for other incidental matters. Use of
ODR also allows selection of neutral third party from an experienced panel of
mediator/arbitrators which means greater impartiality and parties may present their case on their
own without apprehension that their private disputes will flow into the public domain through
judicial precedents. The disputes and the negotiations that ensue between parties remain
confidential at all times. In B2C transactions, ODR encourages customer loyalty; in C2C

15
Grid Corporation of Orissa Ltd. v AES Corporation 2002 AIR SC 3435.

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transactions it minimizes acrimony and risk of fraudulent transactions between concerned
parties.

KINDS OF DISPUTES HANDLED IN AN ODR ENVIRONMENT

ODR implies a change of medium to solve disputes. It is a catalyst to help people solve their
disputes. If any dispute has arisen, then the parties can very well contact the ODR institution
through its Web site services, submit its disputes, choose the method for solving their disputes
and proceed further. For example, if there arises a contractual dispute between two businessmen
and they agree to have an online mediation, they can approach an ODR institution, submit their
dispute, have an online mediator appointed, and proceed with the mediation process online. In
case a settlement is reached at, it can be reduced to writing, signed and ultimately, can be
enforced as a decree of court under the provisions of the Indian Arbitration and Conciliation Act,
1996.16

LEGAL CONCERNS

There might be certain legal concerns regarding implementation of ODR in India. After all, if,
through an ODR institution based at Delhi, arbitration is conducted while the arbitrator is in
Mumbai and one party is in Chennai and the other in Bangalore, certain legal questions do arise
for consideration. Foremost is the legal sanctity of such system itself. Then arises the question of
legal sanctity of proceedings, of e-mails exchanged, of documents and written submissions sent
through e-mail, of award rendered which is to be written and signed and lastly, the court which
will have the jurisdiction to enforce the award. For this purpose, one needs to read the Indian
Arbitration and Conciliation Act, 1996 (Arbitration Act) with the Information and Technology
Act, 2000 (IT Act). A few issues are considered below to demonstrate the point.

(1) Arbitration agreement shall be in writing: Section 7(3) of the Arbitration Act provides that
the arbitration agreement shall be in writing. However, if the parties agree online to refer the
matter to an online arbitration through an ODR service provider, the question arises as to

16
See, ss. 30, 36 & 74 of the Arbitration and Conciliation Act, 1996.

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whether such an online agreement will be valid in law. Presuming that both parties admit that
such an online agreement was made, it will have the sanction of law due to operation of
section17410 of the IT Act. By reading section 4 of the IT Act into section 7(3) of the Arbitration
Act, such an online agreement will be a valid one in the eyes of law. The same goes for written
submissions, if any, made by the parties online.18

(2) Award to be in 'writing' and 'signed': Section 31(1) of the Arbitration Act requires the
arbitral award to be in writing and signed by the members of the arbitral tribunal. In such case,
would an e-award have the same legal sanctity as the offline award. As far as the 'writing'
requirement is concerned, that is answered by section 4 of the IT Act. As regards the 'signature'
requirement, section 519 of the IT Act provides that digital signature would have the same legal
effect as a paper signature.

(3) Enforceability of the e-award: Another concern relating to the use of ODR is the
enforceability of the online award rendered. Which court should a party approach to enforce the
award? Will it be the court of the place where the arbitration agreement was signed? Or will it be
the court of the place where the arbitrators were sitting? Or will it be the court of the place where
the award was rendered? Or where the ODR institution is physically established? Or where the
parties are established? The answer lies in the Arbitration Act itself. Section 36 states that the
award will be enforced under the Code of Civil Procedure, 1908 as if it were a decree of the
court. As per section 2(e) of the Act, 'Court' means the principal Civil Court of original
jurisdiction in a district, and includes the High Court in exercise of its ordinary civil jurisdiction,
having jurisdiction to decide the questions forming the subject-matter of the arbitration if the
same had been the subject-matter of a suit. Therefore, the court in which the award will be
enforced is dependent on the subject matter of the arbitration and not on the place where the

17
Where any law provides that information or any other matter shall be in writing or in the typewritten or printed
form, then, notwithstanding anything contained in such law, such requirement shall be deemed to have been satisfied
if such information or matter is (a) rendered or made available in an electronic form; and (b) accessible so as to be
usable for a subsequent reference.
18
Devashsish Bharuka Chapter 11, Online Dispute Resolution.
19
Where any law provides that information or any other matter shall be authenticated by affixing the signature or
any document shall be signed or bear the signature of any person then, notwithstanding anything contained in such
law, such requirement shall be deemed to have been satisfied, if such information or matter is authenticated by
means of digital signature affixed in such manner as may be prescribed by the Central Government. Explanation.-
For the purposes of this section, "signed", with its grammatical variations and cognate expressions, shall, with
reference to a person, mean affixing of his hand written signature or any mark on any document and the expression
"signature" shall be construed accordingly.

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arbitrator sits or renders the award or where the parties are established. Legal questions can be
sorted out. A conjoint reading of the Arbitration Act and the IT Act gives us the answers for the
legal sanctity of ODR.20

TRUST IN ONLINE DISPUTE RESOLUTION

Apart from the legal base, the other key issues involved in ODR are trust, privacy, shadow of law
and compliance. Trust is a key issue since it is important for the consumer filing a case in ODR
system to have the idea of how the system works. It is essential that the system is reliable and is
part of a service of a renowned and/or certified organisation.

According to the OECD Recommendations on Consumer Protection in E-commerce21, online


dispute resolution should be designed to provide dispute resolution on an objective, impartial,
and consistent basis, with individual outcomes independent of influence by those providing
financial or other support.

ODR providers should be accredited by third-party accreditation associations or national


consumer agencies applying a universal set of criteria. ODR providers should provide sellers and
buyers with sufficient information to allow an informed choice about participating in ODR,
including the methods of dispute resolution used, the scope of the provider’s authority, any fees
the parties will have to pay, available remedies, the criteria against which the dispute will be
evaluated (e.g., codes of conduct, legal principles, equity), significant differences from court
procedures, a statement of the precise dispute or type(s) of dispute to which the consent to
participate applies, how to access the process and how to obtain a copy of the applicable dispute
resolution procedures, expected time frames for the completion of each different method and

20
Where any law provides that information or any other matter shall be in writing or in the typewritten or printed
form, then, notwithstanding anything contained in such law, such requirement shall be deemed to have been satisfied
if such information or matter is (a) rendered or made available in an electronic form; and (b) accessible so as to be
usable for a subsequent reference.
21
Consumer Protection in E-commerce: OECD Recommendation, OECD Publishing, Paris, Available at:
http://dx.doi.org/10.1787/9789264255258-en. (Accessed on: 23-03-17).

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whether the complainant will be giving up the right to go to court if not satisfied with the
resolution.22

To generate e-confidence, it is necessary that transparent and adequate means of providing


information and minimum basic disclosures should be made. This should include terms and
conditions, disclaimers, jurisdictional limitations, explanation of services/ADR processes, costs
involved and the portion of the cost each party has to bear, steps required to ensure quick and
complete enforcement of the awards rendered etc.23

Preserving confidentiality and privacy of negotiations is one of the paramount concerns of


parties. Internet is still viewed as insecure media as cyber criminals may employ techniques to
intercept data and communications between parties. Sophisticated techniques for enhancing
internet security such as use of digital signatures, electronic signatures are being used to conduct
ODR process. Use of cookies often breaches the privacy of individuals and raise security
concerns. The electronic court house uses multiple security layers including sophisticated server,
complex pass word and software which backs up complete data of its servers and stores
information submitted by the parties in a protected environment. Many paralegal rights such as
money back guarantees and buyer protection clauses and authentication seals are becoming
popular on most e-commerce websites. This is only to generate more trust and bring consumer
confidence in ODR practice.24

One of the first cases of online dispute resolution involved a procedure started in the United
States of America in which the opposing sides decided to seek a new method to settle their
disputes25. The case was pending before the Online Ombuds Office at the Center for Information
Technology and Dispute Resolution at the University of Massachusetts. Ethan Katsh and Janet
Rifkin, who founded the entity and are considered leading promoters of the ODR issue, started
mediation procedures via only e-mail communications and this eventually resulted in a

22
“Possible future work on online dispute resolution in cross-border electronic commerce transactions”, United
Nations Commission on International Trade Law, Forty-third session, New York, 21 June-9 July 2010, A/CN.9/706.
23
S. K. Verma, Raman Mitta, at 318-320.
24
Karnika Seth, Cyber law Expert & Managing Partner, Seth Associates, “Online Dispute Resolution”, Accessed At:
http://www.karnikaseth.com/wp-content/uploads/ODR-CIAC%20conference%20paper.pdf.
25
F. Wang, “Online dispute resolution: technology, management and legal practice from an international
perspective”, Chandos Publishing , Oxford (2008), p. 2008.

13
settlement being signed26. Among others, the Online Ombuds Office offered mediation services
for auction portal eBay. In 1999, this collaboration had transformed into the Square Trade portal,

ONLINE DISPUTE RESOLUTION IN VARIOUS JURISDICTIONS

Though the process of ODR is in nascent stage in most of the jurisdictions, there are some
countries who have taken steps to introduce schemes which allow consumers to resolve their
disputes online. The European Commission launched a new platform to help consumers and
traders solve online disputes over a purchase made online on February 15th, 2016. The Online
Dispute Resolution (ODR) platform offers a single point of entry that allows EU consumers and
traders to settle their disputes for both domestic and cross-border online purchases.27

Article 5 of the ADR Directive28 states that Member States shall facilitate access by consumers
to ADR procedures and shall ensure that disputes covered by this Directive and which involve a
trader established on their respective territories can be submitted to an ADR entity29 which
complies with the requirements set out in this Directive.

The person(s) in charge of ADR should possess the necessary expertise and should be
independent and impartial. The ADR entities have to be transparent and have to make publicly
available on their websites, clear and easily understandable information on their contact details,
the person in charge of ADR, etc. It is further required that the ADR procedures should be
effective and fair.30 Further, the Commission Implementing Regulation on consumer ODR lays
down the modalities for the electronic complaint form, the exercise of the functions of the ODR
platform and the cooperation between the ODR contact points.31

26
E. Katsh and Rifkin, 2001, “Online disputes resolution: Resolution conflicts in cyberspace”, Wiley, Hoboken
(2001).
27
European Commission - Press release, “Solving disputes online: New platform for consumers and traders”,
Accessed At: http://europa.eu/rapid/press-release_IP-16-297_en.htm..
28
Directive 2013/11/EU of the European Parliament and of the Council of 21 May 2013 on alternative dispute
resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC
(Directive on consumer ADR).
29
‘ADR entity’ has been defined as any entity, however named or referred to, which is established on a durable
basis and offers the resolution of a dispute through an ADR procedure and that is listed with the competent
authority.
30
Article 6, 7, 8 and 9 of the Directive on Consumer ADR.
31
Commission Implementing Regulation (EU) 2015/1051 of 1 July 2015.

14
The regulations under the Directive on Consumer ADR are implemented in UK as well. Apart
from that, the UK Financial Ombudsman Service was established under Financial Services and
Markets Act, 2000 as the ADR body in the financial services sector. Part XVI of the Act states
that the function of the scheme is to resolve disputes between consumers and UK-based financial
businesses quickly and with minimum formality by an independent person. However, this is only
limited to financial services and not other types of disputes.

In Canada, the Civil Resolution Tribunal (CRT) is the first online tribunal for resolving strata
and small claims disputes that started functioning as of July 13, 2016. It is a public scheme,
regulated under the Civil Resolution Tribunal Act 2012.32 The CRT offers new ways to resolve
disputes and legal issues in a timely and cost-effective manner. The CRT is available 24 hours a
day, seven days a week, from a computer or mobile device that has an internet connection.
Interaction with the other participant(s) and/or the CRT can be done when it is convenient.33

In Australia, family disputes are required to undergo a mandatory mediation. In the United
States, Federal Mediation and Conciliation Service is using ODR to settle labour disputes. Under
the principles of e-governance, various governmental departments are using ODR to settle
consumer grievances.34 It can, therefore, be seen that there exist a background for the
implementation of ODR mechanisms in most of the jurisdictions.

ONLINE DISPUTE RESOLUTION IN INDIA

In India, use of ADR techniques is explicitly encouraged through Nyaya Panchayat System, Lok
Adalat, Arbitration and Conciliation Act, 1996 based on UNCITRAL Model law of arbitration,
provision of statutory arbitration amongst other initiatives. The Indian legal framework supports
ODR including Section 89 of Code of Civil Procedure, 1908 that promotes use of alternative

32
Civil Justice Council, Online Dispute Resolution For Low Value Civil Claims, Online Dispute Resolution
Advisory Group, February 2015, www.judiciary.gov.uk/reviews/online-dispute-resolution.
33
Accessed At: http://www2.gov.bc.ca/gov/content/housing-tenancy/strata-housing/resolving-disputes/the-civil-
resolution-tribunal, last accessed on 21-03-18.
34
Md Nayem Alimul Hyder, “Online Dispute Resolution: Scope and challenges”, The Financial Express, 26 Feb
2017, Available at: http://www.thefinancialexpress-bd.com/2017/02/26/62812/Online-Dispute-Resolution:-Scope-
and-challenges/print, last accessed on 28-03-18.

15
dispute resolution between parties. Similarly, Order X Rule 1A confers powers on the court to
direct the parties to a suit to choose any ADR method to settle its disputes.35

Recently, in State of Maharashtra v. Dr. Praful B. Desai36, the Supreme Court of India
established that the video conferencing is an acceptable method of recording evidence for
witness testimony. In explaining the benefits of video-conferencing, the Court observed that:

“Virtual reality is a state where one is made to feel, hear or imagine what does not really exist.
Video-conferencing has nothing to do with virtual reality. Video-conferencing is an advancement
in science and technology which permits one to see, hear and talk with someone far away, with
the same facility and ease as if he is present before you i.e. in your presence. This is not virtual
reality, it is actual reality. In fact the accused may be able to see the witness better than he may
have been able to if he was sitting in the dock in a crowded Court room. In fact the facility to
play back would enable better observation of demeanour. They can hear and rehear the
deposition of the witness.”

The practice of ODR is not entirely unknown in India. ODR has been recognised in India under
the Banking Ombudsman Scheme, 2006 issued by the Reserve Bank of India wherein complaints
were allowed to be made online to the Banking Ombudsman.37 The provisions of the Information
Technology Act, 200038 must be used for establishing an Information and Communication
technology base that may be conducive for the development of ODR mechanism in India. The IT
Act grants legal recognition to use of electronic signatures and electronic records.

A legal mechanism for ODR can be created by reading Indian Arbitration Act, 1996 with
Information Technology Act, 2000. For example, section 7(3) of Arbitration Act provides that
the agreement should be in writing. However, if the agreement is made online and referred to
ODR, the same will be valid under Section 4 of the IT Act which states that where any law
provides that information or any other matter shall be in writing or in the typewritten or printed
form, then such requirement shall be deemed to have been satisfied if such information or matter
is rendered or made available in an electronic form and accessible so as to be usable for a

35
Supra note 24.
36
Maharashtra v Dr Praful B Desai (2003) 4SCC 601.
37
The Banking Ombudsman Scheme 2006, Ref.RPCD.BOS.No.441/13.01.01/2005-06.
38
Hereinafter referred to as the “IT Act”.

16
subsequent reference. Similarly, Section 31(1) of the Arbitration Act requires the arbitral award
to be in writing and signed by members of arbitral tribunal. Both these requirements can be
fulfilled under Section 4 and 5 of the IT Act which provide for legal recognition of electronic
records and electronic signature respectively.39 Both section 4 and 5 can help in building a legal
base for ODR in India.

Consumer Protection Bill, 2015 (Draft Bill) has been introduced in Lok Sabha. The Statement of
Objects and Reasons of the Bill states that the rapid development of e-commerce has provided
new options and opportunities for consumers. Equally, this has rendered the consumer vulnerable
to new forms of unfair trade and unethical business practices which require appropriate and swift
executive interventions to prevent consumer detriment.

The Consumer Protection Bill, 2015 provides for option of electronic filing of complaints.40 The
Bill also introduces mediation as an alternative dispute resolution mechanism. It provides for the
formation of Consumer Mediation Cells which will be established and attached to the redressal
commissions at the district, state and national levels. Once the complaint is admitted and if it
appears to the court that there exist an element of settlement, which may be acceptable to the
parties, the court shall direct the parties for mediation as provided under the Bill. Therefore, in
order to make ODR a success for dealing with online consumer grievances in India, necessary
amendments will have to be made in IT Act, 2000 and the Consumer Protection Act so that both
the acts read together can provide a conducive base for successful functioning of ODR
mechanisms.

JURISDICTION ISSUES RELATED TO AN E-COMMERCE ENTITY

Indian courts on various occasions have dealt with the issue of determination of jurisdiction in e-
commerce. However, these are limited to copyright and trademark infringement issues in
cyberspace and do not extend to consumer disputes. Recently, Delhi High Court has in the matter
of World Wrestling Entertainment, Inc. v. Reshma Collection41, clarified the law in relation to

39
S. K. Verma, Raman Mittal.
40
Section 21(1) of the Draft Bill.
41
World Wrestling Entertainment, Inc v Reshma Collection, FAO(OS) No. 506/2013.

17
territorial jurisdiction by relying on the Dhodha House v. S.K. Maingi42 case. The Supreme Court
has observed that:

Because of the advancements in technology and the rapid growth of new models of conducting
business over the internet, it is possible for an entity to have a virtual presence in a place which is
located at a distance from the place where it has a physical presence. The availability of
transactions through the website at a particular place is virtually the same thing as a seller having
shops in that place in the physical world. When the shop in the physical sense is replaced by the
virtual shop because of the advancement of technology, it cannot be said that the appellant/
plaintiff would not carry on business in that place.

As per this case, the Plaintiff can institute the case where sales are made by it. Hence, the
plaintiff now has the choice of forum if it makes sales across India. The application of this case
is, however, limited to copyright and trademark infringement cases.

The Consumer Protection Act, 1986 provides that a complaint shall be instituted in a District
Forum within the local limits of whose jurisdiction, — (a) the opposite party or each of the
opposite parties, where there are more than one, at the time of the institution of the complaint,
actually and voluntarily resides or carries on business or has a branch office or personally works
for gain, or (b) the cause of action, wholly or in part, arises. An e-commerce website may have
only a virtual place of business or it may be conducting business in more than one place. The
Consumer Protection Bill, 2015 provides that a consumer can file a complaint in State
Commission within the local limits of whose jurisdiction he resides or personally works for
gain.43

It is a settled principle of law that in the event there are two or more courts, which will have
appropriate jurisdiction in a matter, the parties can oust the jurisdiction of others in favour of
one.44 Many e-commerce portals provide for a standard form jurisdiction clause expressly
providing the jurisdiction of a particular court under the agreement. This might create
inconvenience to a consumer who did not contemplate such a situation while placing his order

42
Dhodha House v SK Maingi, 2006 (9) SCC 41.
43
Section 40 of the Draft Bill.
44
Swastik Gases v. Indian Oil Corporation Limited, (2013) 9 SCC 32.

18
and has to bear the expenses of filing a suit in a place which the defendant has specified in the
contract.

There is a pressing need for specific provisions relating to jurisdiction in online transactions
where directly consumer is involved and which provides for filing of suit in the place where the
plaintiff resides. A consumer can bring proceedings either in his own jurisdiction or in the place
where the supplier is domiciled. This rule cannot be altered or waived by an agreement on
jurisdiction between the parties.45

OTHER CONCERNS

There are certain problems relating to ODR which are India-specific like digital divide, distrust
of people in technology, dependency on lawyers unaware of such mechanisms etc. This can be
avoided only by creating more digital awareness and making it technologically viable to opt for
such mechanisms. Projects like Gyanadoot at Dhar (MP), Wired Village at Warna (Maharastra),
Bhoomi in Karnataka, Information Village Research in Pondicherry, have proved how these
innovative projects can facilitate in bridging the digital divide.46

CONCLUSION

With the unprecedented growth of e-commerce and facilitated global consumer transactions over
the internet, a number of disputes occur which often involve parties from different jurisdictions.
To resolve such disputes innovative mechanisms such as ODR using techniques like arbitration,
mediation and the like methods can be extremely useful. Online dispute resolution in India is in
its infancy stage but it is gaining prominence day by day.

With the enactment of Information Technology Act, 2000 in India, e-commerce and e-
governance have been given a formal and legal recognition in India. Even the traditional

45
Article 15-17, Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and
enforcement of judgments in civil and commercial matters.
46
Prof. T.P. Rama Rao, E-Commerce and Digital Divide: Impact on Consumers, Presented at the Regional Meeting
for the Asia-Pacific: New Dimensions of Consumer Protection in the Era of Globalisation, Goa, India, 10-11
September 2001, Available at: https://web.iima.ac.in/egov/documents/ecommerce-and-digital-divide.pdf (last
accessed on 26-03-18).

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arbitration law of India has been reformulated and now India has Arbitration and Conciliation
Act, 1996 in place that is satisfying the harmonised standards of UNCITRAL Model. These laws
can further be amended to provide for a successful ODR system thereby encouraging e-
commerce and ensuring the timely resolution of disputes of an online consumer.

Since the entrance and participation of users is governed by contract, terms and conditions for
participation in dispute resolution could be included in the contract. Though the Consumer
Protection Bill, 2015 has included provisions for mediation, however, it will have to be seen that
proper and impartial procedures are followed for the same. For effective implementation of such
procedures, separate rules can be framed. This can be seen under the European Directive on
ADR for consumer disputes under which the principles and procedures to be applied for solving
consumer disputes through ADR are mentioned.

In the online environment, loss of time often causes loss of opportunities, and persons involved
in electronic commerce or any type of online relationship will wish to resolve problems in the
fastest possible way. It also ensures smoother functioning of the whole process. As a result,
online ADR, employing increasingly sophisticated tools provided by the network, can be
expected to be a resource of growing value and should be incentivised for its faster growth.

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