On 15 February 2016, the new European Union Online Dispute Resolution platform (the 'ODR Platform') will be available for use by consumers and traders.

The ODR Platform has been open to Alternative Dispute Resolution entities since 9 January 2016 to allow them time to familiarise themselves with the Platform, hence the postponement of the Platform going live to consumers and traders until 15 February 2016.

The ODR Platform will allow consumers and traders to settle their online disputes both for domestic and cross border purchases of goods and services, without the need to go through lengthy and costly court proceedings.

How will it work?

The ODR Platform is an Alternative Dispute Resolution ('ADR') procedure conducted entirely online. ADR resolves a complaint without going to court. A neutral third party acts as a referee between the trader and the consumer who will then suggest or impose a solution or work to bring the parties together to find a solution to the dispute.

The European Commission has promised the ODR Platform to be user-friendly, multilingual and readily available to all with a resolution being reached in 4 steps:

  • The consumer completes an online complaint form;
  • The complaint is sent to the relevant trader, who proposes an ADR entity to the consumer;
  • Once the consumer and trader agree on an ADR entity to handle their dispute, the ODR Platform transfers the complaint to that ADR entity;
  • The ADR entity handles the case entirely online and reaches an outcome in 90 days.

The ODR platform refers disputes only to ADR entities who are included in the national lists of ADR entities that comply with the binding quality requirements established by the ADR Directive.

Benefits of the ODR Platform

The ODR Platform will provide confidence to both the online trader and consumer when trading across borders, knowing that any potential dispute can be settled in a prompt and low-cost way. Currently 60% of EU traders do not sell online to other countries because of the difficulties in resolving a problem if a dispute was to arise. The ODR Platform will encourage online traders such as these to broaden their trading relationships, and consumers to purchase from other member states.

Next steps for businesses trading online

From 15 February 2016, a business trading online will be required to supply certain information to consumers to ensure compliance with the ODR Platform. These requirements are also dependant on whether the online trader is a regulated business and therefore obliged to use an ADR entity.

Every online trader will be obliged under the new legislation to provide an electronic link to the ODR Platform on their websites regardless of whether the business currently markets its goods or services to consumers in other member states of the European Union.

In addition, those online traders who are committed to or obliged to use other ADR entities must also inform consumers through their website or by an email of the ODR platform as another platform to resolve their disputes. These regulated online traders must also include a link to the ODR platform in any offer made to consumers by email as well including the information in the general terms and conditions of online sales or services contracts.

Non-Compliance with the Regulation

Member States are to provide rules on penalties applicable to infringements of the European Regulation on Online Dispute Resolution ('ERODR') and shall take all measures necessary to ensure that they are implemented.

Currently, non-compliance with the ADR Regulation could result in being liable to Trading Standards' civil enforcement action which may result in a court order to comply with the Regulations. Any failure to comply with such a court order could result in an unlimited fine or up to two years in prison.

There is a chance that the same penalties could be imposed on a failure to adhere to the ERODR, but these are yet to be published.