Tech-Jus: Enhancing Access to Justice through Online Dispute Resolution
The Indian judicial system is currently grappling with an extensive backlog of cases, which hinders the right of access to justice and significantly impacts economic growth and the ease of conducting business. As per the data available on the National Judicial Data Grid as on 20th May 2025, more than one crore civil cases are pending across the country. The Government of India enacted a central legislation, namely the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, to catapult the holistic growth of micro, small, and medium units and provide them with a competitive advantage. The MSMED Act provided a special framework for the resolution of delayed payment disputes faced by micro and small enterprises (MSEs) through alternative dispute resolution, including mandatory conciliation and statutory arbitration. It is pertinent to state that the legislature envisioned the adoption of the alternative dispute resolution methods through mandatory pre-arb conciliation and statutory arbitration in 2006, when such methods were not widely common or adopted.
Alternative Dispute Resolution (ADR) methods offer several advantages over traditional dispute resolution, including cost-effectiveness, efficiency, flexibility, and greater control over outcomes. ADR methods are more efficient and less adversarial, allowing the parties involved to resolve disputes more expeditiously and privately, resulting in better preservation of business relationships.
The MSMED Act introduced special provisions to address the power asymmetry between small businesses and large corporations. The special provisions include safeguards such as mandatory pre-arb conciliation to contain and settle the dispute for the maintenance of business relations between parties, the statutory arbitration without the requirement of an arbitration agreement, a quasi-judicial forum with members having experience in trade, commerce, industry to provide insights regarding the business models of micro and small enterprises, award of statutory compound interest in case of delayed payments, mandatory timelines, seventy-five percent deposit of arbitral award amount at the time of filing of appeal, disclosures in books of accounts, etc.
The Ministry of MSME launched the MSME Samadhaan portal by deploying technological integration to facilitate the process of filing delayed payment references by micro and small enterprise sellers. The portal enables a limited e-filing process for MSEs and provides the facility of tracking cases. Subsequent to the initial filing process, all the other procedures and processes have largely remained physical. The learnings from the operationalisation of the MSMED Act and operational procedures have highlighted certain shortcomings, such as limited legal knowledge, a manual case management system, inadequate availability of physical, technical, and human infrastructure with the Facilitation Councils, lack of awareness regarding the special dispute resolution provisions of the MSMED Act amongst MSEs, lack of legal resources with the Facilitation Councils, additional administrative duties of the members of the Facilitation Councils, varied rules of procedures across states for the resolution of disputes, quality of arbitral awards, delays in the enforcement of arbitral awards, etc.
The U.K. Sinha Committee report points out that despite the existence of rigorous legislative provisions, micro and small enterprises face delayed payments due to their low bargaining power, which adversely affects their working capital cycle and operational efficiency. The data collected by the Committee on average debtor days from 1997-98 to 2017-18 indicates that the average debtor days for MSEs is quite large and has consistently been over ninety (90) days. Unlocking the full potential of India's MSMEs through prompt payments report published by Global Alliance for Mass Entreprenuership (GAME) and Dun & Bradstreet (D&B), 2022 reported the finding that an estimated 5.9% of the gross value added (GVA) in the Indian economy INR 10.7 lakh crores - is locked up in delayed payments from buyers to MSME suppliers.
The cost of litigation and delays in the disposal of delayed payment cases, coupled with systemic challenges associated with the dispute resolution framework, often act as an impediment to access to justice for micro and small enterprises. The bridging of these gaps requires new technological solutions through the integration of technology with the existing dispute resolution framework to effectively address the issue of delays and litigation costs.
To strengthen the existing dispute resolution mechanism under the MSMED Act, 2006, the Ministry of MSME has re-imagined the overhaul of the existing system with technology disruption. The integration of technology with the traditional dispute resolution system has given birth to the idea of online dispute resolution. Online Dispute Resolution, as a form of alternative dispute resolution, refers to the use of technology to resolve disputes through various methods such as negotiation, conciliation, mediation, arbitration, etc.
The intersection of law and technology under the guidance of the Supreme Court of India has resulted in the e-courts framework. The e-courts project has resulted in citizen-centric services, transparency in the justice delivery process, and an augmentation in judicial efficiency through automation and modernisation of court processes.
Building on the e-courts framework that exists in the Indian judicial space, MSME Online Dispute Resolution Portal brings the entire dispute resolution to the doorstep of the small-scale supplier. MSME ODR Portal will facilitate dispute avoidance, dispute containment, and dispute resolution. The Portal will enable the ease of access to justice in a timely and cost-efficient manner through digital access, inclusion, and empowerment of Micro and Small Enterprises.
MSME ODR Portal is conceived as a government-owned portal that would provide the facility of a digital guided pathway, negotiation, conciliation, and arbitration. While digital guided pathway and negotiation are voluntary processes, they would enable the parties to reach a speedier and cost-effective redressal of disputes before entering into the adjudication mechanism. The Portal provides the option of conducting settlement talks and exploring several options before the parties enter into the adjudication process under the MSMED Act, 2006. During these Digital Guided Pathway and Negotiation process, the parties can conduct negotiations digitally with a host of settlement options and ranges, thus allowing them to resolve their disputes quickly and in a cost-effective manner. The system also allows the parties to evaluate their cases before entering into the adjudication process to make an informed decision pertaining to the continuance of the adjudication process or the settlement of the matter.
In the context of conciliation/mediation, the mediation proceedings would be conducted online in a secure environment, settlement agreements would be drafted, and the agreed-upon agreements would be executed online, through the portal. During the arbitration proceedings, the parties would file the entire pleadings, present evidence and cross-examine, appear in hearings, conduct arguments, and the arbitrator would send notices, pass the legally binding awards online, through the ODR Portal.
The Online Dispute Resolution mechanism is not envisioned as just another portal, but would usher in an era of transformational reform that would make the ease of access to justice a reality for small businesses and bring in transparency, flexibility, efficiency, and convenience in the dispute resolution mechanism. Ultimately, it would provide a level playing field to the parties and enhance the trust and confidence of the parties in the legal system.