ONLINE DISPUTE RESOLUTION UNDER

CONSUMER PROTECTION ACT

Introduction

The Internet is a 21st-century medium that has revolutionised

many areas of life, including law. Its fast expansion has caused
many positive phenomena, such as the computerisation of
certain areas of law (for example, its administration).

The global character of the Internet has had its impact on

copyright and press law with regard to access to information.
The absence of territorial limitations is one of the main reasons
for its dynamic growth.

The internet has created a need to look at statutory frameworks

for defining and dealing with law. New methods of
communication have improved many areas of law. Modernising
the process for out-of-court settlement of disputes, such as
Online Dispute Resolution (ODR) is one among them.

The Arbitration and Conciliation (Amendment) Act, 2019, aims

to set up an Arbitration Council of India to encourage
arbitration, mediation and other alternative dispute resolution
mechanisms.

ADR Mechanism
Online Dispute Resolution (ODR) is basically an online
extension of Alternative Dispute Resolution (ADR)
mechanism. ADR refers to any means of resolving disputes
without litigation. It plays an important role in Indian judiciary
to deal with the situation of pendency of cases.
ADR provides various methods of settlement including
arbitration, mediation, negotiation, conciliation and lok adalat.
It resolves all types of matters including civil, criminal,
industrial, family etc.

The ADR mechanism provides certain developed techniques to

settle disputes amicably outside the courtroom. The final
settlement agreement is legally binding on the parties to the
dispute.

Generally, a neutral third party facilitates the parties in dispute

to communicate their grievances and discuss their difference of
opinions. This results in resolving the dispute amicably and
restoring friendly relationship between the parties.

However, a public court may be asked to review the validity of

ADR methods. But, they will rarely overturn such ADR
decisions and awards because the disputing parties have formed
a valid contract to abide by them.

Online Dispute Resolution (ODR)

Online dispute resolution (ODR) is a form of online settlement

that uses alternative methods for dispute resolution (alternative
dispute resolution). The term covers disputes that are partially
or fully settled over the Internet.

In an online dispute resolution process, the presence of a

neutral third party in reaching the settlement remains
unchanged. But there are certain distinct methods adopted for
carrying out a full online process together with issuing a judgement
at the end of proceedings etc.
Various technological aspects are crucial for the proper
effectiveness of ODR process. According to the forms of
communications used, the ODR system may be divided into
two categories; synchronous and asynchronous communication.
1. Synchronous communication – The parties
communicate with each other in real time using
messenger or skype. This is more direct form of
communication.
2. Asynchronous communication – The parties
communicate with each other via e-mail, etc. which is
less direct and not in real time.

ODR techniques can be used in many ways, with different levels

of integration into proceedings. Using this system, the parties agree
on an amount that is acceptable for all parties without the need to
meet directly.

Global Perspective of ODR

UNCITRAL1 defines online dispute resolution as a mechanism

to assist parties to resolve disputes without any requirement of
physical presence of the parties through various alternative
dispute resolution methods.

________________________________
1. The United Nations Commission on International Trade Law
(UNCITRAL) is a subsidiary body of the U.N. General Assembly
responsible for helping to facilitate international trade and investment.
https://uncitral.un.org/
This mechanism does not involve exhaustive list of forms and
approaches. Thus, we can say that ODR is an extended form of
ADR mechanism which takes place on a digital platform.

We don’t have many models in the world to see how the

effectively a system like Online Dispute Resolution is working.
There are very few countries which are having such a system
like European Union, US, China, and Brazil etc.

It should be noted that ODR doesn’t act as a substitution of

existing legal framework or any other dispute resolution
mechanism. It only complements the existing system to work
efficiently. It provides new and better ways to resolve the
disputes with network use.

National Perspective of ODR

In India, many companies have started using ODR mechanism.

It is a good sign to introduce this system in a nationwide aspect.
But an effective Indian model of ODR should comprise the
following procedures:-

 To manage ODR system in India, a principal body

named Central Consumer Protection Authority must be
established.
 This authority shall be the Central Administrator and it
shall govern and supervise the proper functioning of
ODR mechanism.
 A common ODR platform must be created and rules
shall be made in order to bring uniformity in the dispute
resolution system.
 It should be made mandatory that all e-commerce
websites shall be registered on this common platform
and shall be duly certified.
  These e-commerce websites shall provide the links to
the common platform in order to create awareness
among the consumers.
 In all standard form contracts, the dispute resolution
clause must be in accordance with the guidelines of
Central Consumer Protection Authority.
 When there is any violation to the above rules, heavy
penalty shall be imposed for the protection of
consumers against unfair terms made by the companies.
 The dispute resolution process should be multitier
system. It shall start with negotiation, then mediation
and finally the authority can decide whether to send it
for arbitration or not.

However, it shall not be made a compulsory first step because

of low awareness and low digital literacy among the general
public. Otherwise it will create more havoc than helping
people.

Types of ODR

Basically there are four types of online dispute resolution

methods:-

1. Online settlement, using an expert system to

automatically settle financial claims;

2. Online arbitration, using a website to resolve disputes

with the aid of qualified arbitrators;

3. Online resolution of consumer complaints, using e-

mail to handle certain types of consumer complaints;
 4. Online mediation, using a website to resolve disputes
with the aid of qualified mediators;

Not all of these types of ODR are fully developed yet. Online
settlement and online mediation are currently the most
advanced.

1. Online Settlement

Online settlement of financial claims is already very well

developed in the US even though it is not a form of ODR.

Clicknsettle2 is a popular website which offers parties with any

kind of monetary dispute the possibility of reaching a
settlement with the help of an expert system. The systems are
built in such a way that parties do not know the amount the
other party is asking for or offering.

Younger sites like Ussettle and Settlesmart are based on the

same idea and use the same mechanisms. These websites were
set up to shorten the duration of a negotiation or litigation
process and to reduce the cost of litigation as well.

_____________________________

2. www.clicknsettle.com

2. Online Arbitration
Online arbitration is commonly used by Canada based
eResolution, a virtual tribunal to settle domain name disputes. 3
These disputes are resolved in accordance with the ICANN
Uniform Domain-Name-Dispute-Resolution Policy.4

As we know every website has its own domain name. As the

number of domain names registered grows, so will the possible
number of domain name disputes. There will most likely be a
growing number of disputes that will be handled through online
arbitration.

A domain name complaint can be submitted online by means of

a secure web based complaints form or by e-mail. The
arbitrator will deal with the parties’ claims in conformity with
ICANN’s policy and rules.

When both parties have had the opportunity to make their case,
the arbitrator will issue a legally binding decision.

3. Online Resolution of Consumer Complaints

In US, Better Business Bureau (BBB) acts as an alternative

dispute resolution to solve consumer or business problems
online. With BBBOnLine, complaints can be submitted online,
but cases are not yet handled completely online.

____________________________

3. http://www.eresolution.ca.
4. http://www.icann.org/udrp/udrp-policy-24oct99.html
After receiving a consumer complaint, BBBOnLine will
initially try a form of simple conciliation, by approaching the
right person within a company. This often solves the problem
immediately.

If conciliation does not work, in many cases a simplified

mediation process is started, using e-mail correspondence and
telephone.

If these semi-online efforts do not lead to a solution, BBB

offers more formal options of offline dispute resolution, like
face-to-face mediation and several arbitration programs.

4. Online Mediation

There is an increasing interest in online possibilities of

mediation. Online mediation takes place in virtual reality,
where the parties to a dispute and the mediator do not meet
face-to-face.

This means that people in different parts of the world can use
online mediation to resolve a dispute, by using secure
encrypted e-mail or secure chatrooms or in some cases
videoconferencing.5

The online mediation process does not differ very much from
the offline process. The first step is the filing of a dispute on the
website of the online mediator or mediation organisation.

____________________________

5. http://www.consensus.uk.com/e-mediator.html
The next step is taken by the mediation organisation. They will
contact the other party to find out whether they are willing to
participate in an online mediation procedure.

If this is indeed the case, a mediator is either chosen by the

parties or in other cases assigned. Both parties need to be
informed of the rules of mediation. Usually this is achieved
through a link on the relevant website.

Then the mediator will introduce himself and will explain the
process of online mediation to the parties. In some cases a
mediation agreement will be signed, indicating that parties
intend to solve their problem through mediation.6

Major problems

1. Legitimacy of the Courts

Most people believe in-person court experiences to be fairer

and impartial compared to online court experiences. Court-
sponsored ODR has not yet had time to build trust and establish
legitimacy.

2. Unequal Access to Online Resources

Some participants may face a variety of barriers that make it

difficult for them to access or use ODR platforms, such as
limited access to the internet, low literacy, or other disabilities.

____________________________
6. www.e-mediation.nl

3. Limited English Proficiency

Traditional court interpretation services are not designed for

ODR platforms. Hence, it limits the ability of participants with
limited English proficiency to access ODR.

4. Readability

Some participants may struggle to understand complicated or

technical materials even though they can read English.

5. Accessing the Court Building

Due to inability to take time off work, lack of child care, lack
of transportation, limited physical mobility, etc. makes it
difficult to attend court, especially during the court’s limited
business hours. This may result in default judgments.

6. Top-Down System Design

ODR platforms are sometimes designed through processes that

involve limited feedback from end users.

7. Data Security

ODR platforms will contain sensitive participant information. If

such data are not properly secured, general public may not find
it trust-worthy.
Effective solutions

1. Legitimacy of the Courts

Consumers should be able to try ODR without penalty and be

allowed to easily transfer back to a traditional court at any time.
There should be no consequence if a consumer does not opt in
to ODR.

2. Access to Online Resources

Courts adopting ODR should offer options, like telephonic

participation, in addition to ODR without any additional
charges.

This might help users to participate remotely who face barriers

using an online platform. All online access should be easily
accessible through any type of mobile device.

3. English Language

ODR platforms should ask participants if they need translation

services to participate in ODR early in the process itself. The
assistance of an interpreter should be provided if they prefer to
participate telephonically or in person. This will be of great
help to the users with limited English proficiency.

4. Readability

ODR platforms should prioritize readability to maximize

consumer understanding. This can be achieved with access to
legal representation because it is crucial to understand complex
materials.

5. Accessing the Court Building

Court-sponsored ODR may make it easier for some participants

to access the courts by allowing them to participate remotely
and at times when the court is closed.

6. Top-Down System Design

Courts implementing ODR should work closely with

individuals who use the system, including advocates. This
would help to design and test ODR systems.

7. Data Security

Courts that adopt ODR will need to develop clear data security
protocols. It would prevent data breaches, data mining and
other cyber crimes when using ODR platforms.

This way private information exchanged during online

negotiations shall be made confidential.

Need for ODR

With the Consumer Protection Act, 2019 a consumer is given

an option to file a complaint where he resides or where the
business takes place of the service provider.
This increases the multiplicity of complaints against the trader
by a single cause of action, for example deficiency in services
by an airline company.

This ODR mechanism will be of great use where all the

complaints can be clubbed into a single one when the relief
claimed is common. It will reduce hardship on such a service
provider also.

Also during covid times, online shopping rose up as the most

viable and efficient option in the hands of consumers. The e-
commerce proves to be a boon for the society.

But the consumers are in middle of a life threatening pandemic

and non-sympathetic greedy traders. Consumers face regular e-
commerce challenges like frauds, bad quality, etc.

People could not file their complaint and hence remained

vulnerable to such challenges. This reflects the dire need for
establishing an Online Dispute Resolution mechanism for the
purpose of enforcement of consumers’ rights.

Conclusion

The world is witnessing the new age consumers who prefer to

stay at home and do all the shopping and demand services with
just a single tap. Thus consumer rights must be protected at any
cost.

Hence, Online Dispute Resolution (ODR) is a concept that

seeks to unclog the courts by offering online Alternative
Dispute Resolution (ADR) mechanisms, like arbitration,
negotiation and mediation. This policy is also a game changer
for online consumerism.
India requires such a system as soon as possible because the
numbers of cases pending to the numbers of judges is really
worrying state of affairs. Because we believe in the legal
maxim “Justice Delayed is Justice Denied”.

References

1. https://www.law.cornell.edu/wex/alternative_dispute_resolution
2. http://www.legalservicesindia.com/article/1674/Justice-Delayed-is-
Justice-Denied.html
3. http://www.legalserviceindia.com/legal/article-1678-alternative-
dispute-resolution-adr-.html
4. https://www.courts.ca.gov/3074.html
5. https://www.mondaq.com/advicecentre/content/4458/Alternative-
Dispute-Resolution-In-India-A-Brief-Overview
6. https://link.springer.com/chapter/10.1007/978-981-15-8948-
5_13#:~:text=Online%20Consumer%20Mediation%20Centre
%20(OCMC,their%20disputes%20out%20of%20court.
7. https://www.mondaq.com/india/dodd-frank-consumer-protection-
act/975302/mediation-a-resolution-to-complaints-under-the-
consumer-protection-act-2019
8. https://www.google.com/url?
sa=t&source=web&rct=j&url=https://www.nclc.org/images/pdf/
debt_collection/ib-odr-
july2019.pdf&ved=2ahUKEwjPrcS934rxAhUlwjgGHTLLCPYQF
jAVegQICRAC&usg=AOvVaw3x85MtcIBhZoIIfFRoKWEU&csh
id=1623248493771
9. https://www.google.com/amp/s/thedailyguardian.com/online-
dispute-resolution-policy-is-a-game-changer-for-online-
consumerism/amp/