Future of Online Dispute Resolution (ODR)

System for Digital Payments

"A scheme of retail payments in offline mode using cards and

mobile devices, and a system of on online dispute resolution
(ODR) mechanism for digital payments will also be
introduced," said RBI governor Shaktikanta Das

Introduction-

Richard Susskind propounds that “access to justice encompasses four layers –

legal health promotion, dispute avoidance, dispute containment and
authoritative dispute resolution”. He points out that the traditional court
system has been concerned with only the last two of these. This observation
holds true for India as well. The judiciary of the country has systematically
employed technology for resolving disputes and keeping the court system alive
virtually. However, the time has come for the focus to shift from dispute
resolution to dispute avoidance, containment and improving the overall legal
health.

Investing in ODR through adoption of more advanced second-generation

technology, can help India progress towards a futuristic justice system. The
COVID-19 pandemic has been extremely unfortunate, and has necessitated change.
An inevitable change that justice delivery systems all over the world have
embraced is integration of technology
The integration of technology in judicial delivery systems is an inevitable
change happening all over the world.
This integration of Information, Communication and Technology into the dispute
resolution process provides great potential to overcome challenges associated
with Courts.
Key benefits of Online Dispute Resolution (ODR) are-

• Cost Effective – ODR has the potential to reduce costs by way of reducing
time for legal proceedings and by doing away the need for legal advice
in certain cases.
• Convenient and Quick- ODR employs simpler procedures and a fixed
timeline for processes leading to effective dispute resolution. Not
requiring the physical presence of parties also saves time on travel.
• Encourages Dispute Resolution- ODR tools like online mediation are
premised at mutually arriving at a conclusion.
Important Considerations in ODR-
• Integrity- Ensuring accuracy and authenticity of data and documents is
essential to guarantee fair process and an enforceable outcome.
• Confidentiality- An ODR process is likely to involve confidential
commercial and private data and hence the system should ensure a well-
developed confidentiality framework.
• Actionability- a dynamic ODR platform which adapts to advancements in
technology and legal ecosystems requires the ability to explore,
analyse, predict and act upon the data available.
RBI Guidelines-

Reserve Bank of India (RBI) in its Statement on Developmental and Regulatory

Policies dated 6th August 2020, had announced introduction of Online Dispute
Resolution (ODR) system for resolving customer disputes and grievances
pertaining to digital payments.
RBI issued its statement setting out measures to deepen digital payments. The
Apex Bank has noticed the significant increase in the number of complaints
and grievances in the digital payment space.
The Bank has recognised the need for technology driven redressal mechanisms
to resolve such disputes effectively and expeditiously. Through the
notification given by NITI Ayog, they propose to mandate adoption of ODR
systems by the payment system operators (PSO) in a phased manner.
PSO are supposed to adopt ODR systems for disputes and grievances arising out
of failed payment transaction. RBI prescribed a framework for resolution of
failed transactions and due to any reason not attributable to the customer
such as non-availability of cash in an automated teller machine (ATM), time-
out of sessions while making online payments, etc. The RBI had also clarified
that failed transactions would include instances where payments cannot be
made to the beneficiary account due to lack of complete or accurate
information for processing the payment, and related delays in initiating a
reversal transaction. The RBI had also prescribed a compensation of INR 100
for each working day during which the reversal of payments is delayed.
This notification is applicable to both Bank and Non-Banking PSOs. The
deadline is January 01, 2021 within which the PSOs are required to implement
the ODR for failed transactions. PSOs have to make sure that each of their
PSPs are3 given access to the ODR system. Customers should be provided with
a facility to lodge their complaints on the ODR system. Such a system could
be offered through various ways such as web-based or paper-based forms, voice
assistance, etc.

The processes adopted in the ODR system to resolve disputes must be simple
and should require only minimum details for resolution. The customers raising
a dispute on the ODR system must be allotted a unique reference number and
facility for tracking the status of resolution of such disputes. If such
disputes are not resolved even after one month, the customers may approach
the banking ombudsmen to obtain relief.
The current process of ODR System is given as under-

1. Customers are provided with multiple channels to lodge their complaints.

2. In case of mobile based service providers, customers shall also be
provided facility to lodge complaint through same mobile app for making
payments, which shall then be integrated with the ODR System.
3. ODR system is capable to capture full details of customer using
information provided.
4. Data confidentiality shall be taken care of.
5. A Unique Reference Number is allotted by the system. Facility shall be
provided to the customer to track his complaint.

Recommendations by the NITI Aayog Expert Committee on ODR-

• Increase access to digital infrastructure

• Expand the scope of ODR Professionals through training
• Encourage development of different variants of ODR
• Collaborate with the private sector to resolve an upsurge of cases
arising during the COVID-19 related pandemic
• Build TRUST in ODR by adopting ODR for Government Litigation,
introducing an awareness campaign.
• Strengthen existing legislative framework.
These principles are designed to guide and regulate various aspects of ODR
processes – the technology platform used in ODR processes, the institutions
providing ODR services and the Neutrals that facilitate or adjudicate the
dispute resolution process.

Conclusion-

While a great number of challenges exist, the future of ODR in India is

bright.
It is true that India has the key elements for introducing a comprehensive
framework for technology in dispute resolution process, namely, expertise and
technology capacity.
Currently this system is applicable only for failed transactions lodged on
the ODR system. The future of ICT in this area will be extended by RBI to
other types of payment disputes.

Submitted by,
Louis Noronha.