Automated Dispute Resolution

The Need

The pendency in Indian courts is a real problem, the popular William Gladstone saying
“Justice delayed is justice denied” will always remain true, the Hon’ble ex-CJI NV Ramana
has admitted this in public forum multiple times.1 There are multiple reasons to this, the
prominent ones being lacking judicial infrastructure, delay in adopting technology driven
justice, vacancies in the posts of judges, etc.

Automated dispute resolution is the evolution of online dispute resolution, which is a subset
of the alternate dispute resolution mechanism. This is the quintessential need of the industry
right now, the reason for this being the exponential boom in the tech driven consumer
services in India. The increase in E-commerce services will naturally drive up the disputes in
that industry and resolving these disputes using customer care executives who can only
resolve one dispute at a time is becoming an expensive proposition for the businesses in
India.

The reasons behind this being the value of disputes, sometimes the value of an item sold on
an ecommerce marketplace is so cheap that hiring a customer executive to resolve the dispute
would be more expensive than the price of product, let alone hiring a mediator/arbitrator, in
cases like these it makes more sense for the companies to refund the amount and consider it
to be the cost of doing business, this phenomenon is becoming more prevalent in the Indian
start up landscape.

We have with us an actual problem plaguing the entire business landscape in India, the
solution to these small value disputes lies in the process of automated dispute resolution. We
will further discuss the mechanism a to be adopted for resolving the dispute, its structure, and
underlying technologies.

1
https://www.thehindu.com/news/national/pendency-of-court-cases-huge-challenge-chief-justice-n-v-
ramana/article65813803.ece
The Mechanism

The first step in conducting the automated dispute resolution starts not after the dispute
arises, but prior to it in the contract drafting stage itself. In the dispute resolution clause of the
contract, the process of automated dispute resolution shall be communicated to the
contracting party. The model clause given below can be adopted:

“Any dispute arising under, out of or relating to this contract and any subsequent
amendments of this contract, including, without limitation, its formation, validity, binding
effect, interpretation, performance, breach or termination, as well as non-contractual claims,
shall be resolved in the first instances by the Automated Dispute Resolution
{software_name/application_name}, the rules followed are specified in the {clause_number}”

Model Clause in the Consent to participate in Initiating the dispute

contract the ADR resolution by App/Web

Exchange of
Outcome
Information/Negotiation

When the dispute arises and the consent is taken from the consumer to proceed with
Automated Dispute Resolution mechanism, The customers can either use a web-based or an
app-based platform to start the dispute resolution, after this they can proceed with the filings,
this will be done completely online, on the same platform. This procedure will be quite
different from a regular court proceeding, the evidence will be uploaded and stored on a
blockchain based platform.

Storing the court proceeding data on a blockchain based technology platform is extremely
beneficial, this way all data is safely stored, the proof of work concept used to build the
blockchain will make the evidence tamper free or immutable, the level of security warranted
by the courts will be fulfilled if not exceeded.

Now comes the most crucial step of all which is automated judgement process, this is where
the golden trilogy of tech (Bigdata, Machine Learning and AI) comes into picture, there are
many benefits of using these technologies over the regular ADR process, some of the most
important being cost efficient, accurate and speedy delivery. The downsides of this being the
heavy R&D investment to prepare the AI according to the needs of the ADR process, but
since this is only a one-time investment and eliminates a large amount of human capital, it
certainly makes the case for innovations in AI. The other important advantage of using these
technologies is the elimination of bias. Since AI is programmed there won’t be any bias
towards either of the parties, this solves the problem of judges being biased to either of the
parties.

The level of AI (hard or soft) depends on the need of the ADR process, the disputes include
largely repetitive and template-based ones, then soft AI will be sufficient, the use of soft AI
can be the perfect solution for consumer driven disputes. There are already platforms like
CyberSettle and SmartSettle which use a high-tech proprietary blind-bid settlement system to
help the insurance and finance companies in the USA to settle their matters quickly.2

In India there is an urgent need to clear the backlog of the consumer disputes as there is a
backlog of over 5 lakh consumer cases and the number is only going to increase based on the
trajectory and path of India’s development in customer services. These matters can be
instantly settled/resolved by using the AI tech. If the parties wish to settle the matter, then a
technology similar to cybersettle or smartsettle can be used which will have double blind
bidding mechanisms which will help in quicker resolution of disputes.

2
https://www.researchgate.net/publication/
228159662_Efficiency_of_Online_Dispute_Resolution_A_Case_Study
Another great use case of this AI driven dispute settlement mechanism is the aviation
industry, where the phenomenon of the airline company misplacing the luggage is quite
often, in this case as well the mild AI would be sufficient since these disputes are highly
repetitive in nature. The quality, packaging or delivery related issues in Ecommerce websites
can also implement this technology driven ADR for quicker and cost-effective resolution of
disputes. However, the AI must also be embedded with ML and OCR capability so that it can
effectively recognize the evidence uploaded and decide accordingly. This will help the AI
take informed decisions in cases where screenshots/photos are uploaded.

The decision-making process in the AI is dependent on the factors that were inculcated
during the process of development of AI, ideally during the initial phases of developing and
testing the AI, human intervention is necessary for overlooking the process, and approving
the same, thereby calibrating the AI to required levels. The logical flow chart of the AI
process would be like a typic If else statement, this will easily help the platform conclude and
frame the judgement.