EU Commission Considers ODR For Cross Border Consumer Disputes

European Union (EU) has been on the forefront of using Alternative Dispute Resolution (ADR) and Online Dispute Resolution (ODR) as an effective alternative for court litigations. It has been launching various projects and schemes from time to time in this regard.

Recently EU Commission launched public consultation on the use of ADR as a means to resolve disputes related to commercial transactions and practices in the EU on 18 January 2011 and it officially ended on 15 March 2011. It aimed at gathering information on the use of ADR as a means to resolve disputes with traders, at seeking Member States and stakeholders’ views on the difficulties identified and at looking into possible ways in which the use of ADR within the EU could be improved. The Commission received a total of 220 responses at end of March 2011.

Respondents from all categories showed a strong support for ADR schemes as an efficient alternative to in-court proceedings for consumer disputes. They underlined the importance of developing consumer ADR schemes to benefit both consumers and businesses and, overall, to improve the well-functioning of the internal market. Many respondents supported the improvement of ODR schemes for ecommerce transactions. Most Member States and stakeholders welcomed EU level action to enhance the functioning of consumer ADR schemes. A future EU action should take account of existing national schemes. It should strengthen coordination throughout Europe.

It was generally stressed that flexibility is an essential element of ADR schemes. All respondents agreed that efficiency, speed and low costs of ADR schemes are the main incentives for consumers and businesses to use ADR and to comply with its outcomes.

It was also conveyed that the voluntary nature of ADR for business and consumers should be preserved according to many Member States and business representatives. Respondents from consumers expressed a more favourable opinion for mandatory ADR, but only for traders and especially in highly regulated sectors.

Concerning the nature of ADR outcomes many respondents, including some Member States and ADR schemes, recalled that it may depend on the conditions of a specific market (e.g. highly regulated sectors). For several consumer representatives ADR outcomes should be binding for the trader. Most business respondents stressed that the parties should agree in advance whether or not ADR outcomes should be binding.

It was also felt that a fundamental condition to improve the use of consumer ADR schemes is to raise awareness of consumers and business. All involved parties should play their role, in particular public authorities and sector regulators. Existing EU networks (ECC-NET and FIN-NET) should continue to facilitate consumers’ access to ADR and provide guidance on the use of ADR schemes, in particular for cross-border disputes.

Most respondents underlined that performing ADR schemes should be guided by a number of common principles, such as independence, impartiality, transparency and effectiveness. For consumer associations the principles of consumer ADR should be included in a binding instrument. Most replies indicated the importance of monitoring the functioning of ADR schemes in order to enhance their effectiveness and the use.

Most Member States and stakeholders focused mainly on ADR to resolve individual consumer complaints. A majority of businesses are not in favour of ADR dealing simultaneously with both consumer and SME complaints. They stressed that disputes of SMEs require a different treatment, which justifies excluding them from consumer ADR schemes. Some Member States seem also to favour a separate approach for consumer and SMEs complaints.

Respondents generally emphasised the importance of different sources to fund ADR schemes. All agreed that ADR should be low cost or free of charge for the consumer.

Some business and lawyers expressed concerns about over-simplifying a system for complex industries where disputes may arise, and said that a central legal framework would have to be established for it to work, while consumer groups warned against the language difficulties that could arise in a pan-EU system.

A majority of respondents believed that a single entry point or umbrella organisations could be very useful to provide consumers with information on and guidance to the appropriate ADR scheme at both EU and national level.

According to a large majority of respondents, imposing ADR as mandatory step before court may impinge on individual consumer’s right to go to court. A few respondents considered that parties in judicial proceedings could be encouraged to use ADR for specific cases, notably for low-value complaints.

Most respondents suggested that ADR schemes can improve their reputation by providing clear, transparent information on how they operate; by highlighting cost-effectiveness; by publishing outcomes, and by providing a central hub for information to redirect people to other dispute resolution options.

While European countries and developed countries are adopting ADR and ODR to a great extent, ODR in Asian countries has not been successful. In the Indian context we have no ODR Policy in India. Even we do not have a Technology Dispute Resolution Policy of India. Now we at Perry4Law and Perry4Law Techno Legal Base (PTLB) have provided ODR Policy of India and Technology Dispute Resolution Policy of India. We hope this would be helpful for all concerned.