Blockchain And Online Dispute Resolution: Reshaping Access To Justice

The emergence of Online Dispute Resolution ('ODR') has brought about a revolution in conflict resolution by utilising advanced digital platforms to enable negotiation, mediation, and arbitration. Unlike simple technological enhancement, ODR goes beyond traditional mechanisms by embracing video conferencing, electronic document exchange, and AI-enhanced dispute resolution to override the needs of physical adjudication.

This piece urges the institutionalisation of an Indian blockchain-based ODR framework on the back of blockchain architecture and self-enforcing smart contracts to secure transparency, security, and efficiency in conflict resolution. Blockchain technology, an open, distributed, and tamper-proof ledger system, guarantees secure and auditable transactional integrity, promoting a culture of trust and procedural stability. In the presence of autonomous smart contracts, blockchain-based ODR supports self-enforcing contracts, which can reduce human interference and pre-emptively avoid disputes.

Systematic inefficiencies define India's conventional conflict resolution system through judicial lethargy, verbose procedural formalism and an enormous backlog of cases. Bureaucratic inefficiencies and procedure obfuscation have assisted a complex legal procedure in eroding public confidence in institutionalised justice. By comparison, an ODR system supported by blockchain technology provides an efficient, cost-effective, and an incorruptible substitute, redefining the border of access to justice.

ODR has many advantages over legacy adjudicative models, thus is essential to identify a conceptual map for a smart contract-based blockchain mediation platform, and suggest end-to-end legal reforms to insert this paradigm into India's legislative and regulative framework. The aim is to envision an advanced, technology-friendly, jurisprudentially consistent, and accessible dispute resolution mechanism suitable for India's judicial modernisation and digital empowerment vision.

Emergence of ODR as a Mechanism For Access to Justice

ODR is a technological upgrade of Alternative Dispute Resolution ('ADR'), utilising digital means to enable negotiation, mediation, and arbitration. Not merely a dispute resolution tool, ODR is a system for enhancing access to justice that incorporates AI-based automation, script-based resolutions, and specialised platforms for different legal issues, such as e-commerce, domain name disputes, family law, and consumer protection.

The application of technology to justice systems must not be innovation-led but based on its capacity to complement and respect core legal principles. In the view of Professor Richard Susskind, ODR increases legal consciousness by making people aware of their rights and responsibilities and decreasing the occurrence of disputes through pattern identification and wise decision-making. By streamlining mediation and arbitration, ODR eliminates unnecessary litigation, becoming more efficient and accessible.

The major advantages of ODR are cost savings, reduced resolution time, and convenience. It saves legal expenses, travel expenditure, and procedural time, particularly in consumer disputes, small claims, and cheque-bounce matters. In contrast to conventional court procedures, ODR does away with scheduling conflicts and instead uses email, group deliberations, and online forums to enable parties to prepare, read, and execute contracts with ease. Apart from efficiency, computer-mediated communication allows for equal participation, reducing hierarchical barriers and prompting more people to participate in reconciliation. Along with blockchain-based smart contract mediation, ODR delivers a tamper-proof, transparent, and automated dispute resolution process, correcting the shortcomings of existing systems. As legal frameworks evolve, ODR, enabled by future technologies, is capable of revolutionising access to justice globally.

Blockchain and Smart Contracts

Integrating smart contracts in blockchain-based ODR holds potential for improving India's access to justice scenario. The anomalies in conventional dispute resolution originate from the need for more human intervention and the requirement of physical presence. Smart contracts can potentially reduce human intervention. As they are automated, and pre-defined events trigger the execution. A platform developed on smart contract blockchain technology for facilitating mediation can be game-changer for ODR.

The platform developed should be based on 'Participatory Design' with a focus on the end user's involvement. Involving end users in the platform will make it more inclusive and easier to use. The proposed model for the platform will have a justice-oriented framework gamified to make it more participatory. The parties in dispute first enter into a smart contract agreement that executes mediation when a dispute arises. The platform will offer a gamified interface explaining the workflow of dispute resolution to make it engaging. The platform rewards people with certain perks if they settle disputes amicably; the more amicable and faster the settlement, the better the perks; this form of gamified interface will encourage more people to opt for ODR but court settlement. When a dispute arises, the parties then instruct the platform on the genesis of the dispute and their demands. The AI algorithm in the platform then looks for amicable solutions between the parties and provides them with solutions, acting as a mediator in the conflict. The compromise will be based on past legal precedents and the demands of the parties; if the parties agree to the solution, then the resolution will be executed, but if there is a stalemate, then a human mediator will be appointed to break the deadlock.

Some dispute resolution platforms use smart contracts blockchain technology based on Ethereum, such as Kleros, OpenCourt and Aragon Network Jurisdiction; these platforms allow contracting parties to include a dispute resolution mechanism directly within their smart contract during creation. In the event of a dispute occurring once the contract has been signed, the pre-programmed mechanism automatically launches a decentralised arbitration process, ensuring that disputes are settled equitably without the need for conventional courts and intermediaries.

To make this technology in India a reality, considerable legal and technological reforms are needed to sustain and facilitate its implementation.

Legal And Technological Reforms

The 'NITI Aayog Expert Committee on ODR' released a handbook on the 'ODR Policy Plan for India' which suggested that the Consumer Protection Act, 2020 and the Commercial Courts Act, 2015 also need amendments specifically to recognise ODR. The Commercial Courts Act 2015 should permit the voluntary adoption of ODR, and the smart contract-based blockchain mediation framework on a pilot project would streamline disputes effectively. Section 12A of the act needs to be modified to specifically legitimise ODR and smart contract-based blockchain mediation framework for pre-institution mediation and settlement, with compliance ensured through accredited online platforms. Moreover, Rule of the Commercial Court (Pre-Institution Mediation and Settlement) Rules, 2018, shall broaden the definition of “venue” to encompass electronic portals offered by accredited ODR service providers and the proposed automated dispute settlement to facilitate remote mediation. In addition, the Act shall add provisions for authorising, accrediting, and regulating ODR service providers to ensure compliance with confidentiality, equity, and judicial best practices. Such reforms would decrease judicial arrears, increase access, and support ease of business by institutionalising cost-saving, efficient, and technology-driven conflict resolution within India's commercial world.

Necessary amendments should also be brought up in the Consumer Protection Act, section 2(25) must be amended to broaden the definition of mediation to include e-mediation by express mention, and Section 79 must be amended to acknowledge mediation by electronic means. The Consumer Protection (Mediation) Rules, 2020, must also be amended to validate ODR service providers as mediators and accept electronically signed settlement agreements as legally enforceable. Furthermore, rule 11 needs to be extended to recognise electronic media as legitimate places for mediation, and rule 25 must include electronic signatures and Aadhaar-based authentication to facilitate the enforceability of digitally signed settlements.

In the same vein, amendments to the Companies Act 2013 can institutionalise blockchain-based ODR platforms by giving regulatory status to ODR and smart contract mediation service providers to carry out mediation and conciliation in commercial disputes. Such amendments would de-congest dispute resolution, improve transactional security, and strengthen legal certainty in India's commercial and consumer protection environment.

The ODR report also suggested three principled approaches, i.e., a group of the account aggregator ecosystem or a more organised model such as the National Payment Corporation of India ('NPCI'). The Mediation Act, 2023 mandates institutional and online mediation for resolving disputes, but the act is silent on mediation facilitated through pre-defined codes and AI mediators. The legislation's scope is limited to human mediators and fails to inculcate technology regarding mediators. The scope of the act should be amended to include provisions facilitating blockchain mediation and also establishing their enforceability.

There is a prominent cybersecurity threat when everything is happening digitally, underscoring the country's need for a robust cybersecurity regime. India is among the most targeted nations for cyber-attacks globally, with 11 cyber threats every second. Cybersecurity is a significant concern for India. The laws should be made more stringent, and data protection related to blockchain and digital platforms should also be mandated in the Mediation Act 2023.

The technology developed, further, should be user-centric so that it does not exclude the primary stakeholders. The technology should not create inequality. Thus, the mechanism should be inclusive, not exclusive, taking into consideration the underprivileged sections of the society. Many fault lines, such as the digital divide and language barriers in society, need to be addressed before realising the true aim of the technology. An active and efficient education policy in the area is required to enhance the population's computer and cyber literacy levels. Such programs should also be introduced in schools and law schools so as to provide a generation with the necessary knowledge and skill set.

The legal profession is just as dynamic as law; the ways and mediums to practice it are never constant. The advent of technology has revolutionised the profession, and so has dispute resolution. Many experts have asserted that technology will be a positive force in enhancing access to justice. Conventional mechanisms of resolving disputes require the physical presence of the parties, hence opening the door to numerous limitations that result from the requirement of physical presence. Courts are clogged with backlogs, and the entire process is characterised by irregularities that make access to justice difficult, particularly for ordinary people.

ODR is an emerging mechanism in the field of legal practice that makes use of online channels to advance justice and resolve disputes. ODR breaks the shackles of physical necessity as essential in the traditional system and provides a cheaper, more efficient and more accessible way to approach the legal institutions for justice. However, one should note that ODR is not perfect for every kind of dispute. Thus, it is essential for professionals in the field of dispute resolution to evaluate whether technology may be efficiently used or if conventional methods should be adopted. Smart contract blockchain-based dispute resolution offers potential to improve access to justice by removing human interference. This novel approach to dispute resolution offers increased transparency, security, and efficiency.

The integration will bear fruit only when laws and other factors are brought at par with them. India requires some essential legal and technological reforms. ODR Policy Plan for India lists wholesome changes in the Indian legal landscape so as to make full use of the emerging mode of legal practice. The technology should be inculcated in such a way it does not exacerbate the already existent inequalities in the country and for which necessary legal reforms and educational programs should be introduced so as to educate people and normalise the technology among the masses. The technology holds immense potential to make justice more accessible; thus, a concerted effort is needed from various stakeholders to walk the talk.

Author: Yash Agarwal, student at Dr. Ram Manohar Lohiya National Law University, Lucknow. Views are personal.