Covid-19 and the rise of online dispute resolution

The Supreme Court has sought to ensure access to justice during the ongoing pandemic. Since March 2020, the Supreme Court has issued orders stating that it would hear urgent matters via video conferencing and prescribed standard operating procedures, including for advocates and parties for mentioning cases, e-filing and hearings. Several High Courts and District Courts have also initiated online hearings. On June 2, the Supreme Court notified that physical appearance in court may be permissible if parties consent and subject to availability of the bench and social distancing norms.

The silver lining to the ongoing pandemic is the acceleration of digitisation of disputes. Covid-19 has created an unprecedented need for courts, arbitral institutions and organisations to adapt at short notice to new and different ways of working and offer solutions to parties and practitioners that will enable dispute resolution in a time of quarantine and enforced social distancing.

Given the existing backlogs and uptick in Covid-related disputes, arbitration may be the preferred forum as opposed to judicial proceedings. The arbitration community has steadily adopted new technologies over time to assist in resolution of disputes. For instance, it has become fairly common practice for case management conferences to be conducted via video-conferencing and where circumstances justify it, cross-examination of some witnesses and experts may take place remotely. Electronic document storage and trial presentation are a practical option for international arbitrations and will now be the new normal for domestic arbitrations in India. Parties in India may accordingly resolve their disputes online via arbitration and approach courts only for reliefs and/or enforcement of the arbitral award.

Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. In choosing arbitration, parties opt for privatisation of justice instead of going to court. Depending on the nature of the dispute, the potential advantages of arbitration include:

Time – The Indian court system is infamous for its overburdened courts, shortage of judges and protracted court proceedings. Cases have been pending for over 10 years before High Courts and subordinate courts. Comparatively, arbitration is less time-consuming, Section 29A of the Arbitration and Conciliation Act, 1996 (“the Act”), requires that the arbitral award in a domestic arbitration be rendered within 12 months from the date of completion of the proceedings. The parties may, by consent, extend this 12-month period by six months. However, parties may experience delays in scenarios where the opposing party may contest arbitration, choice of arbitrators or appeal against the arbitral award.

Flexibility – Court litigation is controlled by statutory and procedural rules. In contrast, parties opting for arbitration may mutually agree upon the rules and the manner in which the arbitration proceedings may be conducted.

Cost – Due to the difference in timeline, arbitration is less expensive than court litigation. However, costs may vary depending on counsel and arbitrators’ fees. As per Section 11 of the Act, in cases of domestic arbitration, where the court refers parties to arbitration, the court may fix the arbitrator’s fee as per rates stipulated in the Fourth Schedule to the Act. For instance, the maximum fees payable to an arbitrator under the Schedule is Rs 30 lakh.

Expertise – Arbitrators are often appointed from a pool of professionals typically experienced in the subject matter of the dispute and may provide a greater level of expertise than a judge.

The government, on its part, has undertaken several initiatives to monitor caseloads and promote alternative dispute resolution (ADR). Online dispute resolution (ODR) has also been touted as a mode for speedy dispute resolution. For instance, the Vice President of India, while speaking at a conference in 2018, remarked that ODR was the need of the hour and would help attract foreign investment by projecting India as an investor-friendly country.

While it is hugely beneficial to have online hearings, such hearings may only be effective if they are well-run. Tribunals, counsel and parties must cooperate to ensure a smooth process. Given the sensitivity of the arbitrations, cybersecurity of the proceedings and personal data should be maintained throughout. Arbitral tribunals may issue cyber-protocols and procedural orders to deal with the logistics of holding such hearings.

Arbitration remains a preferred dispute resolution mechanism in the business world, as Pricewaterhouse Coopers validated in its 2013 survey on ‘Corporate attitudes and practices towards Arbitration in India’. It suggests that 91% of the companies that responded include arbitration (not litigation) for resolution of disputes. The corporate participants in the survey, when asked to identify the top three factors which make arbitration the preferred dispute resolution mechanism, listed speed, flexibility and confidentiality.

Over the years, Prime Minister Narendra Modi has emphasised on the ease of doing business. At a conference in New Delhi in 2016, Modi declared the creation of a “vibrant ecosystem for institutional arbitration” one of the “foremost priorities” of his government. Promoting ADR in India, including arbitration, mediation and conciliation would provide “comfort to investors and businesses” and “ease the caseload of Indian courts”. Modi rightly noted that the availability of quality arbitration mechanisms is an “integral component of ease of doing business, to which our government is committed”, whilst observing that regions like Singapore and Hong Kong have developed as business and arbitration hubs in tandem.

The Department of Justice (DoJ), in 2018, urged government entities to explore alternative methods for settlement of disputes such as mediation, arbitration, conciliation, online or otherwise. The DoJ noted that there were more than three crore cases pending in various courts and 46% of these involved government entities. The increasing support for arbitration by private parties, government and judiciary could ensure ease of doing business and make India a preferred destination for foreign direct investment.

(The writer is an International Disputes Lawyer, Incoming Associate with DLA Piper Australia at Sydney)