SEBI proposes direct arbitration for high-value and repetitive complaints

This change is part of SEBI's broader plan to improve the Online Dispute Resolution (ODR) system in the Indian securities market and make it more efficient.

According to SEBI's consultation paper, complaints involving financial claims of Rs 10 crore or more, and those that are chronic or repetitive in nature, should go straight to arbitration.

This will help in resolving long-pending and complex disputes faster. SEBI has invited public comments on these proposals until May 12.

Other cases that may be directly referred for arbitration include those filed by specific institutions, recovery claims made by trading members, cases where both parties agree to arbitration, and legal or time-barred issues identified early in the process.

However, if a party chooses not to go for arbitration, the case will be closed in the ODR portal. The party can still pursue it through other legal channels outside the ODR system.

The capital markets regulator also suggested that settlements reached through conciliation should be accepted electronically and be legally binding.

In addition, it has proposed that ODR institutions must maintain separate panels for conciliators and arbitrators, ensuring that one person does not serve in both roles.

These professionals would be evaluated annually to maintain the quality of dispute resolution.

As part of streamlining the process, SEBI has also proposed that all market infrastructure institutions (MIIs) and ODR institutions should jointly prepare a Standard Operating Procedure (SOP) for the ODR system.

This SOP would provide step-by-step guidance on lodging complaints, the required documents, handling repetitive or invalid complaints, and the responsibilities of each party during different stages like pre-conciliation, conciliation, and arbitration.

The SOP will also include rules for recording proceedings, payment of fees, enforcement of arbitration awards, and the actions to be taken against participants who break the rules.

"This document will be made available online and reviewed every year to keep it updated," the market regulator said.