A comparison of developments in dispute resolution in India

    By Ashwin Julka, Remfry & Sagar
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    Litigation remains the most popular mode of settling disputes in India. But it is time and cost-intensive and litigants are beginning to favour alternative modes of resolving conflicts. This article looks at the existing judicial framework and analyses how the covid-19 pandemic has disrupted the regular functioning of the court system. It also discusses whether the current crisis can lead to long term changes in the country’s litigation and dispute resolution scenario.

    Judicial framework

    Courts in India have accumulated large backlogs – 2020 statistics suggest nearly 38 million pending cases. These are daunting numbers but the pace of legal reform in recent years makes one hopeful of better days ahead for litigants.

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    Ashwin Julka
    Managing partner at Remfry & Sagar in New Delhi
    Tel: +91 124 280 6100; 465 6100
    Email: ashwin.julka@remfry.com

    For one, there has been a concerted focus on promoting modes of alternate dispute resolution (ADR) covering arbitration, negotiation, mediation, conciliation and lok adalats (people’s court). A 2002 amendment to the Indian Civil Procedure Code empowered courts to direct settlement of disputes by mediation and authorized them to frame suitable rules to govern the mediation process. A 2015 amendment to the Indian Arbitration and Conciliation Act, 1996, made ADR mechanisms more efficacious by awarding arbitral tribunals the power to grant interim measures. Also, arbitration proceedings were made timebound mandating an award to be passed within 12 months of commencement of proceedings.

    Effective from August 2019, India’s arbitration law was further amended to introduce the concept of an Arbitration Council of India charged with promoting and encouraging ADR mechanisms as well as framing policy and guidelines for uniform professional standards with respect to arbitration (including grading of arbitral institutions and arbitrators).

    The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (amended in 2018) was another significant development. It looked to improve the “ease of doing business in India” of which speedy enforcement of contracts, recovery of monetary claims and award of just compensation for damages suffered are critical aspects. Global practices such as case management hearings that entail a six-month window from the date of the first hearing to close of arguments and summary judgment, where the court (upon application by the parties) can arrive at a decision solely on the basis of written pleadings, have been introduced. Stringent timelines are set for filing of pleadings, disclosure, discovery, interrogatories and appeals.

    Legal costs too are covered quite elaborately including heavy penalties for those indulging in frivolous litigation. In fact, frivolous applications filed by litigants as dilatory tactics are one of the biggest contributors to the endemic delays that beset the Indian courts. Previously, courts would normally not impose costs that would act as a deterrent. The Commercial Courts Act has sought to correct this – an illustration in the statute states that even an unsuccessful party can be awarded costs if it comes to light that the successful party has made frivolous claims. Also, it specifically mentions that ‘legal fees’ and ‘fees and expenses of witnesses’ are to be considered while awarding costs to the successful party.

    Commercial courts and commercial appellate divisions hear commercial disputes that have a pecuniary value starting at ₹300,000 (US$4,000) at the district court and ₹20 million at the high courts. The 2018 amendment has also provided an impetus to mediation through a provision entailing that where a suit does not contemplate urgent interim relief, parties must exhaust the remedy of pre-institution mediation.

    The Commercial Courts (Pre-Institution Mediation and Settlement) Rules, 2018, were framed consequently to regulate such mediation proceedings, which are strongly encouraged by the courts. Many high courts have set up mediation centres and a large number of lawyers have been trained as mediators.

    Also notable is the Consumer Protection Act, 2019 (notified in August 2019), which amended the Consumer Protection Act, 1986, to protect consumers from vulnerabilities arising out of misleading advertisements, telemarketing, e-commerce, etc. Interestingly, it debuts an ADR mechanism – mediation – as a solution to consumer disputes. This provides for the establishment of mediation cells at the district, state and national levels.

    Impact of covid-19

    To counter the spread of covid-19, the Indian government announced a strict nationwide lockdown beginning 25 March 2020. In response, the courts initially restricted their functioning to matters of extreme urgency and measures to reduce the physical presence of lawyers, litigants and court staff at court premises were put in place.

    Emphasizing the need to preserve access to/delivery of justice despite unprecedented challenges, the Supreme Court issued the Guidelines for Court Functioning Through Videoconferencing in a suo moto case on 6 April 2020. Measures were outlined to ensure robust functioning through videoconferencing (VC) technologies by the adoption of suitable modalities, including making VC facilities available for litigants with no personal access to such facilities.

    The detailed guidelines covered various aspects, for example, specifying that the mutual consent of both parties would be needed to record evidence via VC. To ensure seamless ”virtual courts”, every court was also asked to maintain a helpline for grievances regarding video feed and line during and immediately after a hearing. Subsequently, detailed standard operating procedures for mentioning and e-filing suits and conducting hearings via video conferencing have been issued by the Supreme Court, the latest one was issued on 4 July 2020.

    In the immediate aftermath, the institution of new cases slowed to a trickle and the disposal rate was also severely affected. In April 2020, 82,725 cases were filed in India, while 35,169 cases were disposed of. Compare this to 2019, when the average number of cases filed per month was around 1.4 million and those disposed of per month was 1.3 million. Data from the Delhi High Court indicate that remote hearings meant that only 10% of the usual caseload was being tackled.

    The lockdowns are easing now, and physical filings are resuming, however, certain courts, including the Supreme Court and the Delhi High Court, continue to hear matters in online mode only. The need for social distancing will likely continue into the third quarter of 2020. This will inhibit the resurrection of a packed courtroom – so parties must prepare for ways to resolve their disputes other than in person.

    Justice in a digital world

    There has been a steady adoption of electronic infrastructure by courts across the country since the Indian government established the e-committee of the judiciary in December 2004. This is the reason why various courts could migrate so quickly to online functioning in response to the covid-19 situation. A bigger hurdle to the increased use of digital tools in adjudicating suits has come from traditionalists in the judiciary and bar.

    However, the present crisis should be viewed as an opportunity to make online litigation processes more the norm rather than the exception, where written submissions would necessarily have to be concise and timely, where parties would have fixed time slots for presenting virtual arguments and where adjournments on account of inability to enter physical appearance (a common culprit of delays) would be ruled out. Online proceedings are already more commonplace when it comes to arbitration and mediation processes. And while virtual courts are unlikely to fully replace open-court hearings, it would be a shame not to capitalize on the momentum already in play for online procedures for the elimination of litigation backlogs in the longer term.

    On 6 June 2020, NITI Aayog, a government thinktank, organized the first-ever key stakeholder meeting to advance Online Dispute Resolution (ODR), often referred to as a form of ADR that takes advantage of the speed and convenience of the internet. E-commerce is a natural field for its application, particularly for settling cross-border complaints that are of low value and high volume. For instance, online traders in the EU must provide a link to the EU’s ODR platform.

    The Uniform Dispute Resolution Policy (UDRP), developed by ICANN, which allows trademark owners to fight cybersquatting is another example. Keeping in mind a likely spurt in disputes, most notably in lending, credit, property, commerce and retail, in the post covidian world, members of the Indian judiciary, government and legal profession discussed how ODR mechanisms could be utilized to resolve small and medium-value disputes expeditiously, even before they entered the formal court process in India. This is an encouraging initiative, but will need a strong policy and regulation-driven approach for implementation, particularly as ODR providers can be private, for-profit entities.

    So, will the current crisis precipitate a shift towards alternate as well as online adjudication? The author certainly hopes so, as there is much to gain from it.

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    REMFRY & SAGAR
    Remfry House at the Millennium Plaza
    Sector 27, Gurugram – 122 009
    National Capital Region, India
    Tel: 91-124-280-6100, 91-124-465-6100
    Email: remfry-sagar@remfry.com
    www.remfry.com

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