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SEBI streamlines the existing dispute resolution to bring in Online Dispute Resolution Mechanism

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SEBI has recently issued a circular on July 31, 2023 on Online Dispute Resolution (“ODR”) to streamline the existing dispute resolution mechanism, offering online conciliation and arbitration after extensive public consultations, pursuant to the SEBI (Alternative Dispute Resolution Mechanism) (Amendment) Regulations, 2023.

This circular provides a detailed framework for escalation of cases to ODR, the manner of selection of ODR institutions, the conduct of various ODR process, the timelines for each process and the cost of each process to operationalize the whole mechanism in consultation with Market Infrastructure Institutions (“MII”). The SEBI ODR Circular enables dispute resolution arising out of securities market transactions by ODR institutions capable of undertaking time-bound online conciliation and / or arbitration in accordance with the Arbitration and Conciliation Act, 1996. The circular brings within its spectrum all listed companies / specified intermediaries / regulated entities (“Market Participants”) and directs them to enroll for the ODR Portal as per the prescribed timelines.

The circular enumerates a tiered grievance redressal mechanism wherein at the first stage the investor shall lodge its complaint with the concerned Market Participant. Upon non-satisfactory redressal by the Market Participant, the investor may escalate the matter with the SEBI SCORES Portal. Once both these options are exhausted, they may resort to initiating resolution through the ODR Portal. Alternatively, the investor can skip the second stage and directly initiate grievance on the ODR Portal. On the other hand, the Market Participant may also resort to redressing the investor grievance through ODR Portal after having given due notice of 15 days to the investor.

Once the grievance is registered on the ODR Portal, a conciliator shall be appointed who shall consensually resolve the matter within 21 days with a maximum of 10 days extension. If the process is resolved successfully a settlement agreement shall be executed. In case of an unsuccessful conciliation process, both parties shall be at liberty to initiate online arbitration proceedings.

However, all matters that are appealable before the Securities Appellate Tribunal shall be outside the purview of the ODR Portal.

A copy of the said SEBI Circular is enclosed below.

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