SEBI/HO/OIAE/OIAE_IAD-3/P/CIR/2023/195 | July 31, 2023 (Updated as on December 28, 2023)
Subject: Master Circular for Online Resolution of Disputes in the Indian Securities Market.
Pursuant to the SEBI (Alternative Dispute Resolution Mechanism) (Amendment) Regulations, 2023, the dispute resolution mechanism in the Indian securities market has been streamlined under the aegis of Stock Exchanges and Depositories (collectively, Market Infrastructure Institutions or "MIIs"), through a common Online Dispute Resolution Portal ("ODR Portal") that harnesses online conciliation and online arbitration for resolution of disputes arising in the Indian Securities Market.
Disputes between Investors/Clients and listed companies (including their registrar and share transfer agents) or any specified intermediaries / regulated entities in the securities market arising out of the latter's activities in the securities market are resolved in accordance with this circular, by harnessing online conciliation and/or online arbitration. Disputes between institutional or corporate clients and specified intermediaries/regulated entities may, at the option of the institutional or corporate client, be resolved either through this ODR mechanism or through an independent institutional mediation, conciliation and/or arbitration institution in India.
The MIIs, in consultation with their empaneled ODR Institutions, establish and operate a common ODR Portal (URL: https://smartodr.in/login). Each MII identifies and empanels one or more independent ODR Institutions capable of undertaking time-bound online conciliation and/or online arbitration (in accordance with the Arbitration and Conciliation Act, 1996) with duly qualified conciliators and arbitrators. All listed companies / specified intermediaries / regulated entities in the securities market ("Market Participants") are required to enroll on the ODR Portal, and all market participants and MIIs are advised to display a link to the ODR Portal on the home page of their websites and mobile apps.
An investor/client shall first take up the grievance with the Market Participant directly. If not redressed satisfactorily, the investor/client may escalate the same through the SEBI SCORES Portal. After exhausting these options, if still not satisfied, the investor/client can initiate dispute resolution through the ODR Portal.
The Market Participant may also initiate dispute resolution through the ODR Portal after giving at least 15 calendar days' notice to the investor/client.
Dispute resolution through the ODR Portal cannot be initiated if the matter is already under consideration under SCORES, pending before any arbitral process, court, tribunal or consumer forum, or is non-arbitrable in terms of Indian law, or is against the Government of India / a State Government.
Dispute resolution through the ODR Portal must be initiated within the applicable law of limitation, reckoned from the date the issue arose or the date of the disputed/last transaction, whichever is later.
A complaint/dispute initiated through the ODR Portal is referred to an ODR Institution empaneled by a MII. For an initial period specified by the Board, complaints/disputes arising with a specific trading member or listed company are referred to the ODR Institution(s) empaneled by the relevant Stock Exchange, and disputes with a specific depository participant are referred to the ODR Institution(s) empaneled by the relevant Depository. References to ODR Institutions are made after a review by the relevant MII, aimed at amicable resolution, to be concluded within 21 calendar days.
The ODR Institution appoints a sole independent and neutral conciliator from its panel within 5 days of receiving the reference.
The conciliator conducts meetings to reach an amicable, consensual resolution within 21 calendar days (extendable by up to 10 calendar days by consent of the parties).
If successful, the conciliation concludes with a duly executed settlement agreement, executed and stamped online, and the MII monitors due payment/compliance.
If unresolved within the conciliation period, the conciliator ascertains an admissible claim value (used only to determine the applicable arbitration fee slab), and either party may pursue online arbitration.
Where the Market Participant is the party against whom arbitration is initiated, it must deposit 100% of the admissible claim value with the relevant MII within 10 days, along with the applicable arbitration fees. Non-adherence may result in action against the Market Participant by the MII and/or SEBI, and On application, the MII may release up to Rs. 5,00,000 of the deposit to the investor/client pending the arbitral outcome, subject to an undertaking to return the amount if the award goes against them.
A sole independent and neutral arbitrator is appointed within 5 calendar days of reference and receipt of fees. Where the aggregate claim and/or counter-claim exceeds Rs. 30,00,000, the matter is referred to an Arbitral Tribunal of three Arbitrators.
The arbitral award is passed within 30 calendar days of appointment (extendable by a further 30 days for detailed consideration). Claims of Rs. 1,00,000 or below are handled through a document-only arbitration process.
Where the award requires payment by the Market Participant, payment must be made within 15 calendar days of the award (unless the award requires payment sooner). The MII monitors compliance and reports persistent non-compliance to SEBI.
A party wishing to challenge an award under Section 34 of the Arbitration and Conciliation Act, 1996 must submit its intention to do so within 7 calendar days on the ODR Portal. If the Market Participant wishes to challenge the award, it must first deposit 100% of the amount payable under the award with the relevant MII.
ODR Institutions conduct conciliation and arbitration entirely online, enabling online/audio-video participation by the investor/client, the Market Participant and the conciliator or arbitrator. Investors may also participate by using the facilities of Investor Service Centers (ISCs) operated by any of the MIIs. The venue and seat of proceedings is deemed to be the place where the investor resides permanently (or is registered/has its principal place of business, if not an individual), as provided in the relevant KYC documents.
There is no fee for registering a complaint/dispute on the ODR Portal. Fees for the conciliation process (irrespective of claim value) are as under:
| Component | Amount |
|---|---|
| Conciliator's fee - successful conciliation | ₹4,800/- |
| Conciliator's fee - unsuccessful conciliation | ₹3,240/- |
| ODR Institution's fee (in addition to conciliator's fee) | ₹600/- |
| Applicable GST, Stamp Duty, etc. | On actual outgoings |
These fees are borne by the MIIs and recovered from the concerned Market Participant against whom the complaint is raised; the Market Participant may not shift this cost to the investor/client. Initiating conciliation more than six months after the transaction/dispute arose attracts a late fee of Rs. 1,000/-, payable by the initiator.
Fees for the arbitration process (per claim/counter-claim slab):
| Claim / Counter-claim slab | Arbitrator's Fee | ODR Institution's Fee |
|---|---|---|
| Rs. 0 – 1 lakh | ₹4,800/- | ₹600/- |
| Above Rs. 1 lakh – 10 lakh | ₹8,000/- | ₹1,000/- |
| Above Rs. 10 lakh – 20 lakh | ₹12,000/- | ₹1,500/- |
| Above Rs. 20 lakh – 30 lakh | ₹16,000/- | ₹2,000/- |
| Above Rs. 30 lakh – 50 lakh | ₹60,000/-* | ₹7,500/- |
| Above Rs. 50 lakh – 1 crore | ₹1,20,000/-* | ₹15,000/- |
| Rs. 1 crore and above | 1% of claim value or ₹1,20,000/-, whichever is higher* | ₹35,000/- |
* For a panel of three arbitrators, the fee is split 40:30:30, with the higher share payable to the arbitrator writing the award. Applicable GST, Stamp Duty, etc. on actual outgoings apply in addition to the above. Such fees must be deposited within 7 days of choosing to initiate arbitration (or such period as specified). Arbitration initiated between one and six months after failure of conciliation attracts double the fee; after six months, an additional 50% fee per month of delay applies for Market Participants. The party successful in arbitration receives a refund of the amounts it deposited, subject to the terms of the award.
MIIs and their empaneled ODR Institutions ensure an adequate panel size, and that conciliators and arbitrators are trained/certified or sufficiently experienced in online dispute resolution, technology, finance and securities law (including programs by the National Institute of Securities Market, NISM), with such training taken at least annually. Panels are evaluated annually, and profiles, qualifications and experience of conciliators/arbitrators are published on each ODR Institution's website. Conciliators and arbitrators must be neutral and independent, with no connection to any disputing party.
Enter into agreements with ODR Institutions outlining roles/responsibilities and inter-se dispute handling, and with financial institutions/banks for receipt, payment and disbursal of amounts.
Ensure resolution of complaints/disputes within stipulated timelines, and maintain Management Information Systems (MIS) reports shared with the concerned Market Participant.
Maintain relevant records, including orders passed at pre-conciliation, conciliation and arbitration stages, for the period specified under law.
Undertake investor education and awareness programmes about the ODR Portal, and lay down a Code of Conduct for ODR Institutions, Market Participants, conciliators and arbitrators.
Publish periodic statistics on the ODR Portal, including aggregate references received, complaints resolved by conciliation and arbitration, and claim values decided in favour of investors/clients.
All agreements/contractual frameworks with investors/clients are deemed to incorporate provision for online conciliation and/or arbitration via the ODR Portal.
Market Participants must promptly attend to all complaints/disputes in accordance with applicable SEBI rules, regulations and circulars, and their communications must specify the availability of the SCORES Portal and ODR Portal.
Staff must be duly trained in attending to complaints/disputes and in handling references from SCORES or the ODR Portal, with due cooperation extended to MIIs and ODR Institutions.
SEBI may require Market Participants to maintain an interest-free deposit with the MIIs for honouring arbitral awards or amounts payable pending arbitration or challenge to an award.
This Circular supersedes prior SEBI circulars/directions dealing with mediation, conciliation and arbitration on this subject (listed in the Circular's Annexure I), while matters already under consideration of the IGRC or in arbitration continue to be disposed of as per the superseded circulars. Matters appealable before the Securities Appellate Tribunal (other than those escalated through SCORES) remain outside the purview of the ODR Portal. This Circular is issued under Section 11(1) of the SEBI Act, 1992, to protect the interests of investors and to promote the development and regulation of the securities market, and is available on the SEBI website (www.sebi.gov.in) under "Legal > Master Circulars".