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Out of court settlement moves online in India

‘A bad out of court settlement is much better than a good lawsuit!’

Let’s say you were to register a case today, in 2020. You ‘may’ expect a resolution not before 2037! Yes, you read it right – ‘17 years’. That is the average time that it takes to resolve a case in Indian courts. That too after innumerable hearings, adjournments, submissions, resubmissions, visits to lawyers’ offices, losing business as a result, and so on.

All of this translates to India losing Rs. 80,000 crores each year just due to court hearings. The green cost translates to an unbelievable 109 billion litres of water being consumed due to court hearings. Shockingly, all of this is just the tip of the iceberg.

Save yourself, and the judicial machinery, from this fate – welcome to out of court settlement! 

What is out of court settlement?

Out of court settlement means 2 parties mutually agreeing as to what will be the resolution of their dispute. This is without the involvement of a judge coming to a decision for them. Typically, it means that the parties privately decide as to how they want to proceed. Thereafter they withdraw their court case. This ends their dispute.

Such settlements have been around since time immemorial. In fact, they also appear in Ramayana (Angadha, the son of Vali approached Ravana and delivered the message of Lord Rama to opt the path of peaceful settlement). And also in Mahabharata (Lord Sri Krishna endeavoured to mediate between the Pandavas and Kauravas). Till date, across Indian villages, disputes among rural folks are resolved by prominent persons, popularly called the Panchayat. And it is becoming more and more evident that out of court settlements is the smarter way to end disputes.  

Out of court settlement is absolutely legal and in fact, codified in the law as well. This happens via ADR, or Alternative Dispute Resolution mechanisms.

There are the popular ADR mechanisms:

types of ADR mechanisms

Moving online: the 21st century way of out of court settlements

Today, a few legal tech startups are revolutionizing the legal ecosystem in dispute resolution in India. They are working towards making ODR, or Online Dispute Resolution, mainstream. For the uninitiated, ODR is the modern counterpart of ADR. It is the conduct of ADR mechanisms digitally. Consequently, these startups are making out of court settlement accessible on your fingertips. Yes, you read that right. Be it arbitrations, mediations or negotiations, the entire process can be conducted digitally. All you need is a smartphone and decent internet speed. You can raise the dispute online, submit claims and evidences, attend hearings online and even access settlement awards online (digitally signed).

These startups are marrying law to technology and revolutionizing the justice delivery system. Especially needed in India, which is, by the way, the world’s most litigious country. These ODR platforms not only provide a better solution to disputing parties, but also translate directly into reducing the burden on courts.

Legal standing

ODR, or online out of court settlement, finds legal validation in India primarily via these 4 Acts:

  • The Arbitration and Conciliation Act, 1996
  • The Information Technology Act, 2000
  • The Indian Evidence Act, 1872
  • The Indian Contract Act, 1872

These Acts give legal recognition to electronic records, electronic signatures, electronic service of notices, e-evidences, etc., thereby making ODR legally permissible. The Judiciary, Legislature and Executive have time and again stressed on the need and importance of ODR as an essential step for the true development of the country.

Furthermore, the Ministry of Law and Justice has also given recognition to a few ODR platforms. Additionally, they have also made recommendations to various government departments to adopt these mechanisms as the primary form of dispute resolution. Presolv360 is one such legal tech startup that has been given this recognition. It is a technology-enabled portal that uses state-of-the-art technology. Additionally, it uses artificial intelligence to allow disputing parties across the globe to resolve their conflicts without the involvement of courts.

Some of the other startups in the ODR space are Centre for Online Dispute Resolution, JustAct, SAMA and ADReS Now.

settling court cases

Technology lies at the helm of these legal tech startups.

A handful of them claim to have effectively tested the use of artificial intelligence and machine learning for automating dispute resolution. Especially in certain categories of formulae-based disputes. Certainly, it will be interesting to see a time where we can have disputes being effectively resolved in 1.7 minutes instead of 17 years as it stands today!

What are your thoughts on out of court settlement? Let us know in the comments section below. And, if you have any questions or would like to know more about out of court settlement online, write to us at [email protected]!

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About author

Namita Shah is the co-founder of Presolv360, a legal-tech company focused on out-of-court civil dispute resolution. She is a CA (gold medalist), CPA and LLB. She has also studied cyber-crime management from the 'Asian School of Cyber Laws'. Namita has been recognized among the Top 60 of the ‘Women Transforming India, 2018’ initiative by the Government of India. She recently graduated (top 5) from the ‘Women Entrepreneurship and Empowerment Foundation’, run in association with Niti Aayog and IIT.
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