By Nilava Bandyopadhyay and Moonmoon Nanda
Traditional litigation processes can be slow, expensive, and ill-suited for handling disputes arising from rapidly evolving digital technologies and global connections. Arbitration, a method of alternative dispute resolution (ADR), being more flexible and efficient alternative, offers several advantages in this evolving environment for resolving such disputes.
Extent of Digitalization Pre-Covid
There have always been debates on the future of dispute resolution and Alternate Dispute Resolution (“ADR”) during pre-COVID period. In the Indian Judiciary, effort for computerization of some of its processes has been going on since 1990. There was an overwhelming realization in the judicial sector in favour of devising a National Policy and Action Plan with appropriate spread and phasing to implement ICT in courts across the country and their web-based interlinking. The Chief Justice of India (CJI) made a proposal to the Central Government under the letter dated 05.07.2004 addressed to the Minister of Law and Justice for constitution of an E-Committee to assist him in formulating a National Policy on computerization of Indian Judiciary and advise technological, communication and management related changes. Appreciating the desirability of constitution of such a Committee, the Union Cabinet approved the proposal. Consequently, office order dated 28.12.2004 was issued by the Ministry of Law and Justice (Department of Justice) constituting the E-Committee under the Chairmanship of Dr. Justice G.C. Bharuka, a retired Judge of the High Court of Karnataka, with three other specialist members. The E-Committee was inter alia required to formulate a National Policy on computerization of justice delivery system and to draw up an action plan with appropriate phasing for time bound implementation.
As part of National e-Governance Plan, e-Courts Project Phase I began in 2007 based on National Policy and Action Plan for Implementation of ICT in Indian Judiciary. A total of 14,249 District and Subordinate Courts were computerized. LAN connectivity was provided in 13,686 courts and laptops were provided to 14309 Judicial officers. A centralised case information software was installed in 13672 courts. Video Conferencing facility was also installed between 347 Jails and 493 Courts. E-Courts Portal was made operational. A total of 7.2 Crore cases were entered on the Case Information Software 1.0 and case status of pending/decided cases were made available. During Phase-I of the e-Courts Project, Computer Server Rooms and Judicial Service Centres had been readied in a very large number of Court Complexes. The e-Courts National portal (ecourts.gov.in) was launched by Hon’ble the Chief Justice of India on 07.08.2013, which provided cause-list, case status information in respect of more than 2.5 crore cases (pending and decided) and sometimes reached daily ‘hits’ in excess of 7 lakhs, further growing exponentially every week.
Phase II thereafter shifted to focusing on the needs of the litigant. And this was achieved by the creation of ‘monolithic systems’: the development of an end-to end digitisation system (such as CIS), portals that enable citizens to access information (NJDG) or systems for delivery of services (e-filing, e-payments etc).
Even in Arbitration, many arbitral institutions and arbitrators had been directing parties to file pleadings and documents through E-Mail prior to the pandemic of COVID-19. In arbitration, procedural flexibility and party autonomy being the key factors, the communication channel in several International Commercial Arbitration between the counsel and the parties have been on virtual mode. Institutional arbitrations are better known for the well set of procedural rules that ensure the uniformity and a definite structure for conducting the arbitration. These rules even prior to the pandemic, contemplated hearings, e-service and video conferencing. The transition was therefore smoother to shift from in-person hearings and physical service/filing of documents to virtual hearings and e-service/e-filings.
Digitalization of Dispute Resolution – Post COVID Scenario
While dispute resolution and ADR was already on the verge of transitioning to a more digital set up, the process was accelerated by the pandemic of COVID-19 and the consequent movement restrictions. On account of the pandemic COVID-19, in April 2020, the Hon’ble Supreme Court was able to list 357 matters for hearing, which amounted to only 2.48 per cent of the number of cases listed before the Supreme Court in April 2019 (14381 cases). The Hon’ble Supreme Court took suo-moto notice during the pandemic of COVID-19 and directed that all necessary steps be taken to safeguard the judicial system and to continue proceedings through video conferencing.
The arbitration institutions also quickly moved into online hearings to minimize the disruption caused by the pandemic. Arbitration has procedural flexibility, which had an important role in dealing with the fallout from the COVID-19. It is witnessed that under the pandemic, commercial dispute resolution faced two challenges: the increase of caseloads and the increase in complexity. The statistics indicating the case filing and percentage increase in the Arbitration Institutions are as under:
| Arbitration Institution | Case Filing | Percentage Increase |
| Singapore International Arbitration Centre (SIAC) | 1080 | 125% |
| Hong Kong International Arbitration Centre (HKIAC) | 318 | 3.2% |
| International Chamber of Commerce (ICC) | 946 | 8.86% |
| China International Economic and Trade Arbitration Commission (CIETAC) | 3615 | 8.5% |
There are several advantages of arbitration in the present globalized and technological landscape, some of which are listed as under:
- Speed and Efficiency: In the digital age, parties expect faster resolutions. Party Autonomy being the corner stone of the arbitration proceedings, the arbitration procedures can be tailored to the parties’ needs, allowing for quicker outcomes compared to traditional court litigation. Parties can agree on the timeline and procedures, allowing for quicker resolution of disputes, which is essential in the fast-paced digital age. The two key expense categories being travel and document handling can be substantially cut down. The digital age has introduced various tools that enhance arbitration proceedings. Technological tools such as video conferencing and electronic document submission have facilitated streamlined proceedings, thereby reducing the time and cost associated with travels and physical paperwork. Further, digital platforms allow for efficient data storage, retrieval, and analysis, making it easier to manage large volumes of evidence and documentation. Furthermore, virtual hearings, electronic evidence submission, and secure online case management systems have enabled parties and arbitrators to engage remotely, overcoming geographical barriers.
- Cross-Border Accessibility: Globalization has led to disputes often involving parties from different jurisdictions. In such context, Arbitration transcends national borders and provides a neutral platform for parties to resolve disputes without being subject to the complexities of multiple legal systems. International arbitration institutions, such as the ICC, SIAC, London Court of International Arbitration (“LCIA”), offer established frameworks for cross-border dispute resolution. Parties can participate in arbitration proceedings from anywhere in the world through video conferencing and other online communication tools. This expands access to arbitration for international disputes.
- Expertise and Specialization: The cross-border accessibility has made it possible for appointment of arbitrators and legal & financial experts of other nationalities based on the expertise, as may be requisite and relevant for the kind of complex technological and commercial disputes at hand. This ensures that the decision-makers understand the intricacies of the dispute and resultantly enhances the quality of the outcome.
- Confidentiality: Confidentiality being paramount in several commercial disputes for maintaining business relationships and protecting proprietary information, arbitration proceedings can be kept private, protecting sensitive business information from becoming public. It is in fact particularly important in the digital age, where data breaches and other digital-related issues could harm a company’s reputation, that advanced encryption and cybersecurity measures are implemented to ensure the confidentiality and integrity of arbitration proceedings.
- Enforceability: The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards facilitates the enforcement of arbitral awards across many jurisdictions in more than 160 countries. This is particularly advantageous in the digital age, where parties might be located in different countries with varying legal systems.
Online Dispute Resolution (ODR):
The digital age has also given rise to Online Dispute Resolution (“ODR”) platforms, which can be particularly useful for low-value, high-volume disputes such as e-commerce, online service disagreements etc., using digital technology and techniques of ADR, such as arbitration, conciliation and mediation. ODR utilizes digital technology to facilitate the resolution of conflicts, often without the need for physical presence. ODR platforms provide an efficient way to resolve such disputes entirely online.
NITI Aayog on 29.11.2021 released a report on ‘Designing the Future of Dispute Resolution: The ODR Policy Plan for India’, to scale dispute avoidance, containment and resolution online.
The first initiatives on ODR projects were launched in 1996 in the University of Massachusetts and the University of Maryland. In the late 1990s, with the expansion of the internet and the evolution of e-commerce, a robust system was required to address the disputes originating from commercial activities over the internet. ODR offered a solution to this problem. Around the same time, ODR was pioneered in a few early e-commerce entities. In 1999, eBay started a pilot project to provide online mediation facilities for disputes arising between buyers and sellers on its platform. The pilot project handled almost two hundred disputes in a two-week period, by far the largest number of disputes ever handled online. It prompted eBay to include dispute resolution as an option for buyers and sellers in the event a transaction was unsuccessful. The number of disputes handled by eBay grew steadily over the next decade and by 2010 eBay was handling over 60 million disputes per year through its ODR Platform.
The success of a few of these private ODR Platforms drew the interest of governments towards this emerging addition to the dispute resolution ecosystem. One of the first steps towards this adoption was taken in 2004 when the City of New York adopted an ODR system developed by Cybersettle to clear their backlog and expedite the settlement of personal injury claims. This resulted in reduction of settlement time by 85 per cent and an impressive 66 per cent settlement rate within 30 days of submission of the dispute. Subsequently, governments across several jurisdictions have adopted ODR programs for efficient dispute redressal.
In the context of India, while multiple attempts have been made over the last two decades, it is only now that the potential of ODR has come to be recognised and is undisputed. In the recent past, Ministries and Departments within the Government have acknowledged the potential of ODR and launched programmes that help resolve disputes in the sectors regulated by them.
While there does exist a governance framework to regulate ODR in the country and there are a range of support legislations, which address both the technology and ADR aspects of the ODR, the said legislations primarily identify the strides that the Government has taken in terms of ADR. The other aspect of ODR i.e. technology has been seen in only some legislations including (i) Indian Evidence Act, 1872, where Section 65-A and 65-B recognises electronic evidence and provides conditions for its admissibility – such provisions can provide guidance to regulate sharing of virtual documents and conducting virtual hearings; (ii) Information Technology Act, 2000, where Section 4 and 5 provides recognition to electronic records and electronic signatures – such legal recognition can be crucial to enable end-to-end digitisation of justice delivery processes.
Even though these legislations provide a framework that ODR can be introduced within, India can still take further advances in terms of legislative preparedness for ODR. At a preliminary level, amendments can be introduced within these legislations to explicitly recognise ODR to increase its legitimacy and acceptability in the long run. Further, as identified by the Hon’ble Supreme Court in M.R. Krishna Murthi v. The New India Assurance Co. Ltd., there is a pressing need for a mediation legislation for India. To this end, in January 2020, the Supreme Court formed the Mediation and Conciliation Planning Committee (MCPC) to draft a law that gave legal sanctity to disputes settled through mediation. This draft legislation prepared by the MPCP (bill passed in Lok Sabha in August 2023) was submitted to this Committee. Some of the key features suggested in this draft legislation included: (i) Recognition of ODR, (ii) Mechanism for recognition and enforcement of settlement agreements, (iii) Establishment of a central regulating body for mediation, mediation institutes and mediators, (iv) Incorporation of pre-litigation mediation, and (v) Provision for enforcement of international mediation settlements.
Recognition of Online Arbitration
The Hon’ble Supreme Court, in Shakti Bhog v Kola Shipping, and in Trimex International v Vedanta Aluminium Ltd., recognised the validity of use of technology in the arbitration process. The court also upheld that the validity of online arbitration agreements through emails, telegram or other means of telecommunication which provide the record of agreement.
Further, the Hon’ble Supreme Court in Grid Corporation of Orissa Ltd. v AES Corporation allowed consultation amongst people through electronic media and remote conferencing for the purpose of appointing an arbitrator. In the case of State of Maharashtra v Praful Desai the court extended this recognition for modern modes of communication and upheld video-conferencing as a valid mode for recording evidence and testimony of witnesses. Further, in Balram Prasad v Kunal Saha and Ors., the Hon’ble Supreme Court upheld the use video conferencing as a means to obtain the expert opinion of a foreign doctor.
Even dispute resolution centres which have traditionally been providing ADR services, have expanded their modes to include ODR processes. The Indian Institute for Arbitration and Mediation has developed an ODR Platform called Peacegate, which hopes to integrate all facets of ADR ranging from filing to back-office support. The Bangalore International Mediation, Arbitration and Conciliation Centre offers online arbitration, conciliation, mediation services since 2013. Further, the Mumbai Centre for International Arbitration offers video conferencing facility to enable online arbitration proceedings. In 2020, the Delhi Dispute Resolution Society also introduced an initiative called SEHMATI, which is dedicated solely to ODR.
Challenges in Arbitration in the digital landscape
While arbitration offers numerous benefits, challenges can arise in the digital age as well. Issues related to jurisdiction, choice of law, and the technical complexity of disputes may require careful consideration. Ensuring cybersecurity during virtual hearings, addressing issues related to the admissibility of electronic evidence, and maintaining procedural fairness in online proceedings are some of the challenges that need to be navigated. Some of the challenges
- Technical Challenges: The reliance on technology can lead to technical glitches, such as poor internet connectivity or software malfunctions, can disrupt online arbitration proceedings and delay resolutions. Besides the connectivity issues, concerns about data security and privacy during virtual proceedings also need vital consideration as data breaches can have severe consequences.
- Digital Divide: It is also important to note that all parties may not have equal access to technology, thereby potentially disadvantaging some participants in arbitration proceedings.
- Standardization: The rapid evolution of technology requires ongoing efforts to establish standardized procedures for technology-enabled arbitration to ensure fairness and consistency. Organizations like the United Nations Commission on International Trade Law (UNCITRAL) are working on harmonizing international standards for online arbitration to ensure consistency and enforceability.
- Enforcement of Awards: Despite the convenience of online arbitration, enforcing arbitral awards in multiple jurisdictions can still be a relatively complex process.
Key Trends and Developments:
Besides specialized ODR, there are certain other recent trends and developments in this area, some of which have been attempted to be listed down as under:
- Blockchain and Smart Contracts: Blockchain technology is being explored for arbitration, especially in cases involving smart contracts. The immutability and transparency of blockchain can provide a reliable record of contractual obligations. Technologies like blockchain and smart contracts can be integrated into arbitration processes to streamline and automate certain aspects of dispute resolution. These technologies can help ensure transparency and accuracy in the enforcement of agreements.
- AI and Data Analytics: AI-powered tools are being used to streamline the analysis of large volumes of data and evidence, aiding arbitrators in making informed decisions.
- Virtual Reality (VR) and Augmented Reality (AR): VR and AR technologies are relatively new to the market and are yet to make significant inroads into international arbitration. This is also being explored to recreate physical hearing environments virtually, enhancing the online arbitration experience.
Role of Arbitrators in online hearing
With the emerging trends in ADR and more specifically in arbitration proceedings, it becomes paramount to consider the aspect of preservation of the due process. As opposed to physical hearings where participants can visually acknowledge due process being followed, in the virtual set up, the same may be a slightly difficult.
Therefore, arbitrators must safeguard that due process is followed by ensuring that the parties get equal opportunity in terms of making oral as well as written submissions. The arbitrators have to take appropriate measures to ensure fair recording of oral evidence of the witnesses. Further, in virtual hearings, the arbitrators, all the more, have to ensure and maintain the confidentiality of the information shared by the parties in terms of Section 42A of Arbitration and Conciliation Act, 1996.
Conclusion
In conclusion, arbitration in the digital age offers a promising way to resolve disputes arising from the globalized and technological landscape. Its flexibility, efficiency, and adaptability make it well-suited for addressing the challenges posed by cross-border transactions, technical complexities, and the need for speedy resolution in today’s interconnected world. However, the ongoing efforts are necessary to ensure that arbitration processes keep up with the rapid pace of technological advancements and adapt further to meet the demands and challenges of this dynamic environment and at the same time provide a fair and effective means of resolving disputes.
The authors are senior partner and Sr. principal associate,S&A Law Offices, respectively
