Executives from several online dispute resolution (ODR) platforms are writing to the Securities and Exchange Board of India (Sebi) to urge the regulator to refine the existing dispute framework rather than dismantle independent platform roles. The pushback follows a proposed overhaul by the market regulator that could eliminate independent ODR entities, stranding multi-year investments in technology, compliance, and specialized teams, according to industry executives and experts.
In a consultation paper released on 23 July, Sebi proposed transferring the complete administration of conciliation and arbitration from empanelled private ODR institutions to market infrastructure institutions (MIIs)—such as stock exchanges, depositories, and clearing corporations. Public comments on these proposals are open until 13 August.
Under the proposed framework, responsibilities currently handled by private ODR entities—including appointing conciliators and arbitrators, coordinating hearings, maintaining records, and managing technology platforms—would move entirely to MIIs.
Industry executives noted that Sebi had not discussed with them about the proposed changes. Typically, the market regulator engages in formal or informal discussions with affected entities before issuing public proposals.
“We are planning to make a representation to Sebi to upgrade the existing ODR system but in consultation with ODR platforms. Ideas should be shared with us and moved forward,” said Deepika Kinhal, chief executive officer at the Centre for Online Dispute Resolution (CORD).
Currently, investor complaints pass through Sebi's SCORES platform before escalation to seven empanelled ODR platforms: CORD, Centre for Alternate Dispute Resolution Excellence (CADRE), Webnyay, Presolv360, Sama, Just Act, and Jupitice.
For investors and market intermediaries, Sebi argues the shift will streamline the dispute resolution mechanism. The regulator noted feedback highlighting chronic issues under the existing setup, including delays in appointing arbitrators, slow fee disbursements, weak enforcement of awards, and procedural bottlenecks.
Because most intermediaries and listed companies already operate under the direct regulatory ambit of MIIs, Sebi believes MIIs are better equipped to supervise proceedings, enforce compliance, and reduce turnaround times for aggrieved investors.
Queries emailed to Sebi did not elicit a response.
‘Systemic issues’
Pushing back against Sebi’s rationale, ODR platforms argued that many of these issues are systemic rather than caused by the platforms themselves. CORD's Kinhal noted that platforms have repeatedly warned Sebi about an unviable fee structure: while handling a conciliation costs an ODR platform around ₹2,500, it receives just ₹600 from the total fee ( ₹3,240 for an unsuccessful conciliation and ₹4,800 for a successful one), with the remainder going to the conciliator.
To make matters worse, market participants fail to pay the conciliation fee in nearly 30% of cases, forcing ODR platforms to pay conciliators out of pocket while waiting for reimbursement, she said. "This problem will not be solved even if MIIs take charge, as MIIs could have anyway come in to penalize the market participants for non-payment of fees, but that did not happen," Kinhal added.
Legal experts also argue that Sebi's plan to empower MIIs does little to solve the bottlenecks in the ODR framework. For instance, Sebi has proposed restoring investor participation in the appointment of arbitrators by allowing both parties to indicate their preferred names from an approved panel. The concerned MII will appoint a common choice where possible, and if there is no overlap, the arbitrator will be selected through a centralized allocation process that excludes the names shortlisted by both parties.
Sidharth Kumar, senior associate at law firm BTG Advaya said, “They are going to choose from the same set of arbitrators that have been resolving matters up until now. People and entities should be given the choice to choose an arbitrator outside the MII’s panel of arbitrators. This would work better for the investor as it would ensure the arbitrator is not biased towards the MII or intermediaries. To make arbitrators subject matter experts, specific training programmes can be launched by NISM (National Institute of Securities Markets)."
Adding to these operational hurdles is the risk to past investments. Bhaven Shah, co-founder of Presolv360, said, “There has been significant investment by ODR institutions over the past few years in building the platform for investor disputes, strengthening compliance frameworks, and developing specialised teams to support the dispute resolution ecosystem. The proposed changes, which shift the administration of disputes to the MIIs, represent a fundamental change to that framework and naturally raise concerns for institutions that have contributed to building this ecosystem.”
Structural conflicts
Beyond fee structures and lack of prior consultation, legal and market experts point out that shifting administration to MIIs introduces new structural conflicts while doing little to resolve underlying enforcement delays.
For one, transferring administration to MIIs has sparked conflict-of-interest concerns. “Some MIIs function as front-line regulators to market participants while also doing business with them. Shifting the complete administration of dispute resolution and the empanelment of neutrals to the MIIs will undermine the perception of independent arbitration,” said Vishwam Jindal, co-founder of Webnyay.
Beyond conflicts of interest, experts point out that moving administration to MIIs would do little to accelerate the final enforcement of arbitral awards for investors, which remains bound by statutory court procedures. Under India's Arbitration and Conciliation Act, an arbitral award is legally binding on the parties, but it is not automatically enforced. If the losing party complies voluntarily, the matter ends there. If it does not, the winning party must approach a court to enforce the award, which is treated like a court decree.
According to both the existing and proposed ODR frameworks, if a regulated entity challenges an arbitral award in court, it must deposit 100% of the award amount with the concerned MII. The MII holds this interest-free deposit and can now release up to 50% of the award amount, or ₹5 lakh, whichever is lower, to the investor as interim relief if the conditions laid down in the framework are met.
"Enforcement of awards will not change if MIIs operate the ODR framework without private institutions," Jindal said. “Currently, either the losing party can pay the arbitral award by themselves or the winning entity can take them to court for it. Whether ODR institutions are part of the system or not does not slow down this process.”