A faster and cheaper resolution of consumer disputes for EU consumers through Alternative and Online Dispute Resolution

A substantial proportion of European consumers encounter problems when buying goods and services in the internal market. In 2010, this was the case for approximately one in five European consumers. It is therefore crucial to ensure that all EU consumers can solve their problems without going to court, regardless of the kind of product or service that the contractual dispute is about and regardless of where they bought it (that is, at home or in another EU Member State). This is what the European Parliament intends to achieve by adopting two new regulations, proposed by the European Commission, on Alternative Dispute Resolution (ADR) and Online Dispute Resolution (ODR) on 12 March.

Well-functioning ADR and ODR across the EU will boost consumer confidence in seizing the opportunities that the Single Market offers them in terms of choice and better prices. More cross-border commerce in the EU will also open up new opportunities for businesses and help drive economic growth. Unlike court proceedings, which are time-consuming (court proceedings in the EU last on average 500 days), expensive and burdensome, ADR and ODR offers cheap and speedier solutions that will help consumers to seek compensation and take full advantage of the Single Market. This will prevent the loss of money by European consumers due to problems when buying from other EU countries, which is estimated to amount to between €500 million and €1 billion.

Both the EPP Group Rapporteur on Online Dispute Resolution, Róża Thun MEP, and EPP Group Spokesman on Alternative Dispute Resolution, Hans-Peter Mayer MEP, welcome the proposals, underlining that adpoption of the new regulations will enable consumers to be more active in searching for good offers and best prices across the EU Single Market, thus driving competition and economic growth.

What is Alternative Dispute Resolution (ADR) for consumers?

In addition to traditional dispute resolution through judicial means, consumers and businesses can refer their claims to the so-called Alternative Dispute Resolution (ADR) schemes. Alternative Dispute Resolution (ADR) is an out-of court resolution that helps consumers to resolve disputes with traders when they have a problem with a product or service they have bought. The term covers non-judicial procedures, such as conciliation, mediation, arbitration, and complaints boards. It is faster, cheaper and easier than court proceedings. ADR mainly concerns individual cases, but can also handle several individual cases together when they are similar.

Disputes arising from shopping in another EU country or online can be settled through Alternative Dispute Resolution, however not all EU countries have ADR entities to cover all kinds of consumer disputes with traders, and some existing ADR entities do not meet minimum quality standards.

What's new in ADR?

The proposed Directive on Alternative Dispute Resolution for consumers will ensure:

• full ADR coverage - by making it possible to submit any contractual dispute involving an EU consumer and an EU-based trader to an Alternative Dispute Resolution entity. Member States can ensure this either by creating new ones, possibly business organisations, or by broadening the competence of existing entities;
• the quality of ADR entities – impartial, fair, transparent end effective; procedures should not exceed 90 days;
• cheaper resolving of conflicts – the vast majority of ADR procedures will be free of charge for consumers or inexpensive to use.

What is Online Dispute Resolution (ODR)?

ADR schemes aimed at resolving disputes between consumers and traders via an online procedure are called Online Dispute Resolution schemes (ODR). Through an interactive website, which will be set up and maintained by the European Commission, consumers and traders will have a chance to solve disputes over online purchases, where the consumer and the trader are often located far from each other. The platform will be accessible via the 'Your Europe' portal and will be free of charge and available in all official languages of the EU. To save time, all steps of the complaint can be handled online. ODR regulation will apply to all disputes concerning online sales, irrespective of where the seller is located.

How will ODR work?

• Consumers and traders will be able to submit their complaints through an electronic complaint form which will be available on the platform’s website in all official languages of the EU
• The platform will check if a complaint can be processed and seek the agreement of the parties within 30 days from the day of the submission of the complaint, to transmit it to the ADR scheme competent for dealing with the dispute
• The competent ADR scheme will seek the resolution of the dispute in accordance with its rules of procedure within 90 days from the date of receipt of the complaint
• The ADR scheme will have to notify to the ODR platform some data in relation to the development of the dispute (date when the complaint was notified to the parties; date when the dispute was resolved; outcome of the dispute)
• ODR will enable both the consumers and traders concerned to monitor the dispute resolution process online
• If assistance or information is needed the ODR advisor in the Member States will be available upon request.

Next steps

The European Parliament is due to vote on the proposals at its plenary session on 12 March.

The Alternative Dispute Resolution Directive and the Online Dispute Resolution Regulation will enter into force 20 days after their publication in the EU Official Journal. The ADR Directive should apply in all EU Member States within 24 months of its entry into force. The ODR platform will start working shortly after that date. However, before that, the European Commission will test the platform together with consumer and trader organisations and present the results to the European Parliament.