Guidelines for leveraging FTA

How can HCX ecosystem leverage Fast Track Arbitration (FTA) for better ecosystem experience

This section presents key aspects of simplifying the resolution process and leveraging Fast track arbritation as enablers of faster dispute resolution and better ecosystem experience in the HCX network enabled ecosystem.

Formation of Dispute Resolution Facilitation Council (DRFC) at HCX

This will be a group of eminent people appointed by the HCX governing council. This group will facilitate settlements by non-binding mediation between any two parties who may have a dispute. The scope of disputes can be between an HCX operator and its participants, or between the participants on an HCX.

This Council will function on similar lines as the MSME (Micro, Small and Medium Enterprises) Facilitation Council. The only difference being, currently it does not have statutory blessing and none of its suggestions would be binding.

Parties may send their dispute to the council which may call for documents or call the parties for a hearing. The council or its appointed mediator member will attempt to facilitate an amicable settlement between the parties. In case the facilitation fails, the parties may file a case with the IRDAI Ombudsman, or go to arbitration, or file a case in court as per the clauses in their agreement.

This DRFC may choose to extend its function to be a full fledged mediation and adjudication body later. This should be done in a manner that ensures no conflict or perceived conflict with the IRDAI Ombudsman.

To enable this step, the template contracts recommended by HCX can include a clause which says that the parties will try to amicably settle the dispute via mediation and agree to approach the DRFC for the same (this can not be binding for any case where the IRDAI Ombudsman has jurisdiction; and can not be binding for any case where a dispute resolution method or jurisdiction is specified by the law governing the insurance sector)

IRDAI Ombudsman

The IRDAI ombudsman may be approached by any of the parties to the dispute, for a contract where the IRDAI ombudsman has jurisdiction. If any of the parties to the dispute chooses to go to the IRDAI Ombudsman, none of the clauses in the agreement which specify any alternative adjudication method, will apply. The adjudication must then happen through the IRDAI Ombudsman.

However, the parties can choose to not go to the IRDAI Ombudsman and instead choose to file for arbitration or in civil court. Also, if the contract specifies arbitration, the parties can not file in civil court.

To enable this step, the template contracts recommended by HCX must contain arbitration clauses and must be fast track arbitration friendly. The following section details how HCX can use these template contracts to facilitate rapid and inexpensive dispute resolution for all parties. However, the arbitration clauses can not be binding for any case where a dispute resolution method or jurisdiction is specified by the law governing the insurance sector.

Leveraging FTA will involve:

HCX Operator facilitation of dispute resolution- Types of Contracts and facilitation

There are two types of contracts and the HCX specifications can include a mechanism for HCX to aid/facilitate dispute resolution in both cases.

  1. Contracts between an HCX Operator and its participants

  2. Contracts between participants

In both these cases, the HCX Operator’s “facilitation” role is limited to supplying data or requesting the supply of data relevant to the dispute. Typically, the request will come from any of the parties or the adjudicator appointed by them or a court of law.

  1. Supplying data - The HCX operator can only access the time stamps (delivery time and date) and the “Names” of the documents/packets exchanged. Therefore it can supply this data on the request of any of the parties or the adjudicator appointed by them or a court of law

  2. Requesting the supply of data - The HCX Operator can request the parties to supply specific documents as per the request of the adjudicator appointed by them or a court of law

The Contract between HCX Operator and Participants must explicitly grant permission to HCX to do the above. The only case where HCX is not required to take permission from anyone is in the case of a court order to HCX demanding the data.

HCX Operator and Rapid Dispute Resolution (via Fast Track Arbitration)

People are often under the wrong impression that Arbitration Awards are not enforceable in the same manner and to the same degree as a court order. This is not true and, thanks to a judgement by Justice Gautam Patel of Bombay High Court, the reverse is true. Not only are arbitration awards just as enforceable as any decree of a civil court, but also they are now very difficult and expensive to successfully appeal. Unlike a lower court order, appealing an arbitration award at a district/high court will usually involve heavy deposits (as much as the entire awarded amount) with the court before the matter is heard on merit. Even then, the grounds on which an arbitration award can be overturned are far more limited than those on which a decree of a civil court can be overturned.

Fast Track Arbitration is a type of arbitration wherein no oral hearings are conducted unless the Arbitrator requires any clarifications. It is a “documents only” process. The Arbitration Act requires the Arbitrator to conclude the arbitration within 6 months, but it can be even shorter

For Contracts between an HCX Operator and its participants

The “Terms and Conditions” of listing and participation on the HCX exchange constitute the contract between the HCX Operator and the Participant. This contract must be made Fast Track Arbitration friendly. To do so:

  1. The contract must anticipate the kinds of disputes, specify the evidence to be provided for each and must specify a formula to calculate damages

  2. The contract must enforce Fast Track Arbitration, include an automatic arbitrator appointment process, and specify an arbitration institution

Current specifications have tried to facilitate this process for all by creating reference template contract here. The fact that an HCX operator has adopted an FTA template, greatly increases its credibility and trust for all participants and will create a strong incentive for HCX operators to ensure SLAs and good governance.

In addition, HCX operator may facilitate this further by specifying a panel of three to ten Arbitration Institutions/Dispute Resolution Platforms for any party to choose from.

For contracts between two participants

HCX can play an important role to play in facilitating Rapid Dispute Resolution amongst any two participants. As HCX itself is an initiative to enhance the operations of the health insurance sector, creating specifications that help to improve the messy, expensive and fairly dysfunctional dispute resolution system is an important goal.

In this regard, policy guidelines working group has worked on “model addendums” for the different types of contracts between the participants. At this time there are reference model addendums are provided for two key relationships:

The HCX specifications encourages the HCX netwrok participants to adopt these model contract addendums. The promise of rapid dispute resolution is a fundamentally important service standard and will aid the competitive in service provisioning standards.

In addition, HCX operators may also offer its empanelled Arbitration Institutions/Dispute Resolution Platforms for any party to choose from.

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