IP, Technology & Data

The European Parliament recently confirmed its adoption of the European Commission’s Alternative Dispute Resolution (ADR) and Online Dispute Resolution (ODR).

The ODR is intended to establish an EU-wide online platform to quickly and efficiently handle consumer disputes arising from online transactions, avoiding the need to go to court.

Tonio Borg, Commissioner for Health and Consumer Policy explained that

ADR and ODR are a win-win for consumers, who will be able to resolve their disputes out-of-court in a simple, fast and low-cost manner, and also for traders who will be able to keep good relations with customers and avoid litigation costs.

Astoundingly, the Commission claims that the a well-functioning and transparent ADR could save consumers €22.5bn a year.

Online Dispute Resolution – the basics
ADR aims provide an alternate route to resolving disputes by using non judicial entities – for example, a conciliator, mediator, arbitrator, or ombudsman.

The ADR entity proposes a solution or brings the parties together to find a solution. Entities operating fully online are called online dispute resolution entities and will be utilised in the new ODR platform.

With more online and cross border European trade the ODR platform will allow the resolution of disputes when traders and consumers are in geographically different locations. The nature of the platform will (hopefully) speed up procedure to the benefit of both consumers and traders.

It is intended that the new procedure will be available to resolve all consumer contract disputes other than contracts for health and education, regardless of what they purchased, and whether the purchased it domestically or across borders. The ADR process will apply to contracts purchased both online and offline.

When will the regulations come into force?
Member States will have 24 months, after the entry into force of the Directive, to transpose the regulations into national legislation i.e. midway through 2015. The ODR platform will become operational six months after the end of the transposition period.

What should traders do now?
A trader who commits or is obliged to using ADR will need to inform consumers about ADR on their website and in their general terms and conditions. Although the changes are not intended to come into force for some time, traders should start to think about their process changes now.

Traders will be obliged to inform consumers about ADR when a dispute cannot be settled between the trader and consumer. Traders should also provide a link to the ODR platform on their websites.

How will it work in practice?
The platform will link all national alternative dispute resolution entities. A set of common rules will be published detailing the functions of the ODR platform, including the role of national ODR advisors.

Consumers will be able to submit a complaint online using the ODR platform. The platform will notify the trader a complaint has been made. The consumer and trader will then agree upon the appropriate ADR entity to determine the dispute. The new rules provide that ADR entities should settle disputes within 90 days.

We will post more information on the new procedures when they become available.

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