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EU Online Dispute Resolution Rules Move A Step Closer

by Ulrika Lomas,, Brussels

20 December 2012

The European Commissioner for Health and Consumer Policy, Tonio Borg, has welcomed the positive vote on Alternative Dispute Resolution (ADR) and Online Dispute Resolution (ODR) in the Internal Market and Consumers Committee of the European Parliament (EP).

The vote confirms an agreement reached between the EP and the European Council on the two proposals put forward by the European Commission (EC) in 2011. Member states will start implementing the ADR/ODR rules in the second quarter of 2013, after their final adoption by the EP. The package would also complete one of the components of the Digital Agenda for Europe.

Member states will have 24 months after the entry into force of the ADR Directive to transpose it into their national legislation – up to mid-2015. The ODR platform will become operational six months after the end of the transposition period.

The rules on ADR will ensure that contractual disputes between consumers and traders are settled out of court through alternative dispute resolution entities. These will operate in all member states and in all sectors, with the exception of health and higher education.

The ODR Regulation will set up a European Union (EU)-wide online platform for handling disputes between consumers and traders, arising from online transactions. The platform will link all the national ADR entities and will operate in all official EU languages. Traders will be required to provide consumers with adequate information on ADR and ODR.

Borg concluded that the legislation "is a victory for consumers and a milestone in the functioning of the Single Market. It will boost consumers' and traders' confidence by enabling them to solve their disputes easily and at little expense, no matter whether they purchased locally or cross-border, online or offline."

It was said that, in 2010, one in five European consumers encountered problems when buying goods and services in the single market, but that, unfortunately, until now, out-of-court dispute resolution in the EU remains possible only for some business sectors or in some areas.

It was pointed out that there are, currently, over 750 alternative dispute resolution (ADR) entities in the EU. They work differently and have different names, for example, arbitration, mediation, ombudsmen and complaints boards. In some countries, they only cover specific consumer disputes, for example, for financial services, energy supply and transport. In a few countries, ADR covers all consumer disputes, and some others offer the entire process online.

It has been estimated that universal access to quality ADR across the EU would save consumers around EUR22.5bn (USD29.9bn) annually. The cost of unresolved consumer disputes is estimated at 0.4% of the EU's gross domestic product. This includes the money lost by European consumers due to problems when shopping from other EU countries, which is estimated at between EUR500m and EUR1bn.

The EC therefore wants the new package of laws to help increase consumers’ confidence in the EU-wide single market, thus contributing to the growth of EU economy. A new proposed directive should ensure that all EU consumers will be able to resolve their disputes, regardless of the kind of product or service that the contractual dispute is about and regardless of where they bought it in the EU Single Market.

On the other hand, the ODR regulation will create a EU-wide online platform, providing consumers and businesses with a single point of entry for resolving on-line the disputes concerning purchases made on-line in another EU-country. This single European point of entry will automatically send the consumer’s complaint to the competent national ADR entity, and facilitate the resolution of the dispute within 30 days.

Within the new laws, consumers will therefore have access to an effective and inexpensive way of solving their disputes with traders, regardless of the goods or services that they buy, however they buy (online or offline), and wherever they buy in the EU (in their country or abroad), and consumers buying on-line from other EU countries will be able to solve their contractual disputes with EU traders entirely online.

TAGS: business | European Commission | commerce | law | internet | e-commerce | legislation | regulation | European Union (EU) | services | Europe

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