As of February 1 2017 companies and entrepreneurs, including air carriers, must comply with new information duties about consumers with regard to alternative dispute resolution (ADR).
With the Consumer ADR Act, Germany transposed the EU Alternative Dispute Resolution Directive (2013/11/EU) into national law. Although the act had already been enacted on April 1 2016, some provisions pertaining to information duties came into force on February 1 2017.
The act's aim is to create a comprehensive out-of-court dispute settlement system between consumers and entrepreneurs. The act complements the EU Online Dispute Resolution (ODR) Regulation (524/2013), according to which all traders established within the European Union engaging in online sales or service contracts must provide an electronic link to the ODR platform on their websites.
Generally, the ADR participation is voluntary. However, a peculiarity applies for air carriers. According to Section 57a of the Air Traffic Act, airlines are obliged to participate in ADR. The ADR system for air transport consists of two major conciliation bodies:
- a private conciliation body; and
- a government conciliation body, which is part of the Federal Office of Justice.
If an air carrier does not voluntarily join the private conciliation body, it must participate in the government ADR process.
The Consumer ADR Act contains:
- general information duties; and
- information duties after a dispute with a consumer has arisen.
General information duties
An entrepreneur that maintains a website or general terms and conditions must, in an easily accessible, clear and comprehensible manner:
- notify the consumer if it is willing or obliged to participate in ADR before a conciliation body; and
- inform the consumer of the competent conciliation body, including address and website.
This information will appear on the entrepreneur's website and must be given together with its general terms and conditions.
Information duties after dispute with consumer has arisen
An entrepreneur must inform the consumer in writing about the competent conciliation body, including address and website, if a claim cannot be fully settled. At the same time, the entrepreneur will indicate whether it is willing or obliged to participate in dispute resolution procedures.
The risks of non-compliance can be cost-intensive, for example:
- cease and desist letters;
- court proceedings initiated by consumer associations; and
- claims for damages by consumers for a breach of contractual or pre-contractual duties.
In order to avoid such measures, entrepreneurs (including air carriers) should indicate in their terms and conditions and on their websites whether they are obliged to participate in ADR procedures. They should name the competent conciliation body, including its website and address. Further, the German national enforcement body recommends including this information along with passenger rights information that is handed out according to Article 14 of EU Regulation 261/2004.
For passengers, the ADR procedure is free of charge, as the conciliation bodies charge only the air carrier for the dispute resolution with a significant fee per case. It is likely that the information duties will lead to an increased number of complaints filed with the conciliation bodies and therefore higher costs for airlines.
For further information on this topic please contact Katja Helen Brecke at Arnecke Sibeth Rechtsanwaelte by telephone (+49 69 97 98 85 0) or email ([email protected]). The ArneckeSibeth website can be accessed at www.arneckesibeth.com.