What’s the issue?

The European Commission felt that one of the major barriers to the growth of cross-border sales was the difficulty in resolving cross-border disputes. As a result, it introduced two sets of legislation in 2013, the Directive on alternative dispute resolution for consumer disputes (ADR Directive) and the Regulation on online dispute resolution for consumer disputes (ODRRegulation). The ADR Directive deals mainly with the setting up and regulation of ADR entities and the ODR Regulation provides for the setting up of a free, cross-border online dispute resolution platform whose main purpose is to facilitate the selection of a suitable ADR entity to resolve disputes between consumers and traders.

What’s the development?

The Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015 (ADR Regs) which implement the ADR Directive came into force on 9 July 2015. In June 2015, the ADR Regs were amended by the Alternative Dispute Resolution for Consumer Disputes (Amendment) Regulations 2015 (The ADR Amendment Regs) which come into force partly on 9 January 2016 and partly on 9 July 2015. The ADRAmendment Regs pushed back the coming into force of parts 4 and 5 of the ADR Regs to 1 October 2015. They also include the trader to consumer information requirements from theODR Regulation.

What does this mean for you?

If you are a trader dealing with consumers in the EU, there are new sets of information requirements coming in on 1 October 2015 and, potentially, 9 January 2016, for online traders and marketplaces (although that presumably depends on the ODR platform being up and running by that time).

Information requirements on traders dealing with EU consumers from 1 October 2015

Under s19 of the ADR Regs as amended by the ADR Amendment Regs:

  • where a trader is obliged to use ADR services provided by an ADR entity or EU listed body by an enactment, the rules of a trade association to which it belongs, or a term of a contract, the trader must provide the name and website address of the ADR entity or EU listed body on its website (if it has one) and in its general terms and conditions of sales or services contracts between the trader and a consumer (where they exist);
  • where a trader has exhausted its internal complaint handling procedure, when considering a complaint from a consumer relating to a sales or service contract, the trader must inform the consumer on a durable medium:
    • that the trader cannot settle the complaint with the consumer;
    • the name and website address of an ADR entity or EU listed body which would be competent to deal with the complaint should the consumer wish to use ADR; and
    • whether the trader is obliged or prepared to submit to an ADR procedure operated by that ADR entity or EU listed body.

This is in addition to any other information requirements on out of court procedures which might apply under other legislation.

Information requirements on online traders and online marketplaces dealing with EU consumers regarding the ODR platform from 9 January 2016

The ADR Amendment Regs introduce the information requirements from the ODR Regulation in addition to those under the ADR Directive, both of which are in addition to those under any other relevant enactment.

Where under an enactment, trade association rules or a term of a contract, a trader is obliged to use an ADR procedure provided by an ADR entity or EU listed body, the trader must:

  • provide a link to the ODR platform in any offer made to a consumer by email; and
  • inform consumers of:
    • the existence of the ODR platform; and
    • the possibility of using the ODR platform for resolving disputes.
  • This information must also be provided in general online terms and conditions for sales or services contracts where they exist.

An online trader must provide a link to the ODR platform on its website and state the online trader’s email address.

An online marketplace must provide a link to the ODR platform on its website.

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Other relevant provisions under the ADR Regs introduced by the ADR Amendment Regs (from 9 July 2015)

  • An agreement between a consumer and a trader to submit a cross-border or domestic dispute to an ADR entity is not binding on the consumer to the extent that the agreement was concluded before the dispute arose; and where it has the effect of depriving the consumer of the right to bring judicial proceedings in relation to the dispute.
  • An ADR solution will not be binding on a party to the dispute unless the ADR entity notifies the party that the outcome will be binding and the party specifically accepts this before the ADR entity notifies the party of the outcome of the ADR procedure. This will not apply where an enactment or the trader’s trade association rules or the term of a contract provide that the solution will be binding.

Relevant definitions

  • “online marketplace” means a service provider as defined in point (b) of Article 2 of Directive 2000/31/EC (e-commerce Directive) which allows consumers and traders to conclude online sales and service contracts on the online marketplace’s website.
  • “online sales contract” means a sales contract where the trader or the trader’s intermediary has offered goods on a website or by other electronic means and the consumer has ordered such goods on the website or by other electronic means.
  • “online service contract” means a service contract where the trader or the trader’s intermediary has offered services on a website or by other electronic means and the consumer has ordered such services on the website or other electronic means.