The new legislation on ADR and ODR

More recently, at the EU policy level, several actions were taken to strengthen consumer ADR.[1] The European Commission published a consultation paper in 2010 on how to improve ADR,[2] highlighting the inconvenience of existing consumer ADR procedures and a lack of collective proceedings. In particular, a 2009 ADR study revealed that only 62 per cent of ADR schemes were able to deal with cross-border claims from consumers living in another Member State, so that overseas consumers were faced with additional bur- dens.[3] While the ECC-Net managed to resolve approximately half of cross-border consumer complaints on an amicable basis, for a large number of cases ADR schemes did not exist or were inapplicable.[4] Furthermore, cross-border cases were often linked to e-commerce transactions, which lacked a common legal framework on online redress mechanisms.[5]

As a result of the aforementioned consultation, the European Commission published two legislative proposals in November 2011: a draft directive on consumer ADR[6] and a draft regulation on consumer ODR.[7] Both proposals were based on Article 114 TFEU and intended to overcome three key shortcomings in consumer ADR: gaps in coverage of out-of-court schemes, insufficient awareness about these tools, and variation in quality.[8] In particular, the proposed draft directive on consumer ADR aimed at ensuring the quality and availability of ADR schemes for contractual disputes.[9]

In December 2012 a political agreement was reached on the two legislative proposals and on 12 March 2013 the European Parliament voted to support these proposals. Eventually, in spring 2013 the Council of the European Union adopted the final revised version of the proposed legislation on ADR and ODR.[10] As a result, Member States will now have to implement the new EU rules on consumer ADR and ODR by July 2015. Furthermore, an ODR platform will be established in January 2016.[11]

The new directive will provide for full ADR coverage, so that Member States will have to ensure that such ADR procedures exist for all consumer contractual disputes.[12] According to Article 2(1) this directive applies: ‘to procedures for the out-of-court resolution of domestic and cross-border disputes concerning contractual obligations stemming from sales contracts or service contracts between a trader established in the Union and a consumer resident in the Union’. Furthermore, all ADR schemes will now have to comply with key quality standards which ensure that they work in a competent, independent, effective, fair, and transparent way.[13] The directive also requires companies to inform consumers about available ADR schemes which will raise the general awareness of these schemes. In addition, the ODR Regulation requires that an EU dispute resolution platform (‘ODR platform’) is established, which will help consumers and companies to submit disputes arising from online purchases.[14] This platform, which will link all the national ADR entities, consists of an interactive website available in EU official languages, offering a single, free of charge, entry point for complaints.[14]

The new ADR and ODR rules are ambitious and are welcome initiatives to strengthen consumer ADR in the European Union. The mixture of ODR Regulation and ADR Framework Directive is a promising move towards a comprehensive solution for consumers to access out-of-court schemes. At the same time, these measures build on existing ADR schemes, leaving Member States free to decide how to transpose them into national legislation.

These new rules on consumer ADR can be seen as an important step to facilitate access to justice for consumers. In particular, they will be essential to increase availability of affordable dispute resolution mechanisms for consumers and to guarantee their quality standards, enhancing consumer confidence in these schemes.

Meanwhile, binding court procedures and collective redress mechanisms remain important both as an incentive for businesses to use ADR, and for those cases where no amicable settlement is found. While ADR mechanisms offer a simple and inexpensive way to improve consumer dispute resolution, they do not eliminate the need for collective redress procedures. ADR schemes are often most effective if combined with judicial collective redress mechanisms which encourage the use of out-of-court schemes and act as a deterrent against non-compliance. However, such court procedures would require adequate funding models, ensuring that consumers can resort to them if the ADR option remains unsuccessful.

  • [1] See Benohr, ‘Consumer Dispute Resolution after the Lisbon Treaty’ (n 1), 87-110; for moreinformation on consumer ADR, see also Benohr, ‘Alternative Dispute Resolution for Consumersin the EU’ (n 103), pp. 1-24.
  • [2] See the 2010 consultation paper by the European Commission, ‘On the use of AlternativeDispute Resolution as a means to resolve disputes related to commercial transactions and practicesin the European Union’.
  • [3] E.g., unfamiliar ADR systems and hearings are inconvenient in cross-border cases; ADRStudy (n 109), p. 339.
  • [4] ECC-Net Publication, Cross-border Dispute Resolution Mechanisms in Europe—PracticalReflections on the Need and Availability, 2009, pp. 10-11 and 57-8.
  • [5] P. Cortes, ‘A European Legal Perspective on Consumer Online Dispute Resolution’, (2009)15(4) Computer and Telecommunications L. Rev., pp. 90-100.
  • [6] European Commission, Proposal for a Directive on alternative dispute resolution forconsumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC(Directive on consumer ADR), COM(2011) 793/2, final, 29.11.2011.
  • [7] European Commission, Proposal for a Regulation on online dispute resolution for consumerdisputes (Regulation on consumer ODR), COM(2011) 794/2, final, 29.11.2011.
  • [8] European Commission, Communication by the European Commission on AlternativeDispute Resolution for consumer disputes in the Single Market, COM(2011) 791, final, 29.11.2011,p. 2. See Study on the Use of Alternative Dispute Resolution in the European Union of 16 October2009, , pp. 56-63; 112-15; 120-1.
  • [9] See Benohr (n 103).
  • [10] On 8 June 2013 both legislative acts were published in the Official Journal of the EU. See OJL 165 Volume 56, 18 June 2013: Regulation (EU) No 524/2013 of 21 May 2013 on online disputeresolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive2009/22/EC (Regulation on consumer ODR), Directive 2013/11/EU of 21 May 2013 on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 andDirective 2009/22/EC (Directive on consumer ADR).
  • [11] See the Commission’s website at: .
  • [12] However, some exceptions apply, mentioned in Art. 2(2) of the directive.
  • [13] See the explanation of the directive on the Commision’s website and in a press release(MEMO/13/193): .
  • [14] See n 139.
  • [15] See n 139.
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