In November 2011 two main proposals were put forward by the European Commission to encourage viable alternatives to court proceedings in consumer cases. These were:-

  • a new ADR directive to ensure that quality ADR schemes exist to deal with disputes between EU consumers and traders who are established in the EU.
  • a new regulation on Online Dispute Resolution (ODR) to provide consumers and traders with   access to an online platform which will help to resolve contractual disputes arising from cross-   border online transactions.

The Commission argues that all EU consumers should be able to solve their problems without going to court, regardless of the kind of product or service that the contractual dispute is about and regardless of where they bought it in the European Single Market.

Requirements for AD schemes

The draft directive states that every ADR scheme that wishes to be considered as such under the directive would need to demonstrate it has complied with various requirements. These include, amongst others, the following:-

  • making publicly available information about its governance, funding and the practical aspects of its procedures;
  • making publicly available annual reports on the number of disputes received, number of disputes resolved, the average time taken and the rate of compliance;
  • ensuring the procedures are free of charge or at moderate costs for consumers; and
  • ensuring disputes can be resolved within 90 days.

Requirements for traders

Traders will be obliged, under the draft directive, to inform consumers about an ADR scheme that meets the standards of the directive and which is competent to deal with potential contractual disputes between themselves and consumers. Businesses would also have to specify whether or not they commit to use the scheme should a dispute arise. Businesses would have to do this on their website (if they have one), in their general Terms and Conditions and in relevant invoices and receipts.

UK 'call for evidence'

In December 2011 the Department for Business Innovation & Skills (BIS) sought views from UK stakeholders on the Commission's proposals. The response, received by 31 January 2012, included feedback from the Office of Fair Trading (OFT) and the Citizens Advice Bureau (CAB). The main criticism raised by both the OFT and CAB was the fact that the directive, as currently drafted, does not make the provision of ADR a mandatory requirement. Instead it merely provides for 'access' to ADR of a certain quality. Accordingly, such access would not go far enough to secure any real advantage to a consumer when often a trader's best defence to a disputed claim is simply not to respond.

Looking ahead

Whilst the use of ADR procedures under the draft directive is not required, the Commission is clearly encouraging member states to move in this directidn as governments are expressly permitted to include their own obligatory rules. This is unlikely to be a popular approach in the UK as it would mean an onerous overhaul of many businesses' consumer complaints procedures. BIS have indicated that they will be consulting on how the UK will implement these proposals in due course