by Miriam Driessen-Reilly FCIArb
This week (15 February 2016), the provisions of the EU’s Online Dispute Resolution Regulation become operational. This means that consumers that run into problems with an online purchase will have access to an online platform run by the European Commission to submit a complaint against the trader. The idea is that the ODR platform will then notify the trader that a complaint has been lodged against him and the two parties will then agree on a specific ADR provider to resolve the dispute. This provider may then conduct the relevant proceedings online in a kind of expedited procedure. Curiously, the possibility to bring a complaint is also extended to traders who wish to complain against a customer.
The idea of online dispute resolution (ODR) is relatively recent, but gaining ground in various jurisdictions across the world. The EU’s Regulation on ODR, (Regulation (EU) No 524/2013) dating from May 2013, goes hand in hand with the EU Directive on Alternative Dispute Resolution (Directive 2014/11/EU).
The Directive acknowledges that ADR procedures are diverse across the Union and does not proscribe what procedures should be available from one country to another. It covers all kinds of consumer trader disputes initiated by the consumer, other than those in health care or third level education. ADR in all its forms already exists across the EU. However, particularly as regards consumers, there was a distinct lack of access to ADR on a cross-border level. It was this gap, combined with a lack of trust in the provision of online services that led to the legislative package. The ADR Directive therefore seeks to promote the use of ADR for both domestic and cross-border contractual disputes between EU based traders and consumers, the idea being that ADR can operate as an effective, more efficient and lower cost alternative to litigation. The Directive applies across the EU, and aims to facilitate access to ADR procedures for consumers in all Member States, even where ADR has not yet to date been widely made available.
The most basic provision is found in Article 5 – so that each Member State is obliged to facilitate access by consumers to ADR procedures where there is a dispute with a trader based in their jurisdiction. Such procedures can be provided by an ADR provider established either within that country or elsewhere in the EU. These can be domestic in nature or “regional, transnational or pan-European dispute resolution entities”.
Whilst standards of professional behaviour are self regulated by various ADR bodies, minimum standards are established by the Directive in relation to the standards of expertise, independence and impartiality expected of persons charged with dealing with these procedures. In particular, they are required to:
a)Have the necessary knowledge and skills in the field of alternative or judicial resolution of consumer disputes, as well as a general understanding of law.
b)Appointed for a term of office sufficient to ensure their independence and not liable to be relieved of their duties without just cause (minimum three years).
c)Independent of both parties.
d)Remunerated in a way that is not linked to the outcome of the procedure.
e)Subject to a continuous duty of disclosure where their independence or impartiality may be compromised or seen to be compromised.Special rules are in place to ensure that persons charged with resolving disputes will commit not to work for any trader or professional or business association of which such trader is a member for a period of three years following resolution of the dispute.
It seems therefore that the neutrals engaged in providing these procedures must be engaged by the ADR provider under a contract of at least three years. Under this system, which admittedly focuses on consumer/trader relations as opposed to commercial disputes, the neutrals may be employees.
The Directive provides for effectiveness and fairness within the ADR procedures, including the right to be heard and to have access to all evidence, statements and documents provided by the other party, the rights to be assisted or represented by a third party and the right to have a reasoned decision at the end of the procedure. The time framework for the whole procedure is set at ninety days, which may be extended by a further ninety days at the discretion of the ADR provider in very complex cases.
Member States are tasked with deciding which ADR entities qualify to be listed under the Directive and to designate a competent authority to be a central point of contact for the European Commission. A list of approved providers are already available on the Commission’s ODR platform website.
Traders within the EU are obliged to inform consumers about the existence of the ADR entities under which a potential dispute are covered and this should appear on their website and in the general terms and conditions of their sales and service contracts.
Notably, the Directive states that ADR procedures “should preferably be free of charge for the consumer” and that where a fee is applied, the procedure should be “accessible, attractive and inexpensive for consumers”. In that respect, “costs should not exceed a nominal fee”. In practical terms, Article 8 of the Directive provides that in order to ensure effectiveness, the Member States shall ensure, inter alia, that “the ADR procedure is free of charge or available at a nominal fee for consumers”. It appears therefore, that the cost of the procedure will largely be charged to the traders involved, although many of the listed ADR providers are sectoral level Ombudsman services, some of which may be state financed. [1]
© Miriam Driessen-Reilly February 2016
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