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EU consumer ODR platform launches - is your business ready?
The official Online Dispute Resolution website (the ODR Platform) of the European Commission (EC) went live on 15 February 2016 at http://ec.europa.eu/consumers/odr. The ODR Platform is intended to provide EU consumers and traders with a “simple, efficient, fast and low-cost” platform for settling disputes without going to court, according to the establishing EU 2013 Regulation on online dispute resolution for consumer disputes (the ODR Regulation). The ODR Platform does not itself resolve disputes, but it provides an online platform to link consumers and traders with competent Alternative Dispute Resolution (ADR) providers in the relevant sector. The EC hopes that this will increase the confidence of both consumers and traders to participate in online cross‑border sales of goods and services within the European Union.
The ODR Platform is relevant to all traders based in an EU Member State who provide online goods or services to consumers also based in an EU Member State. There does not need to be a cross‑border element. Online marketplaces are also affected.
If your business is within the ODR Platform’s scope, you will need to comply with new information requirements and be prepared to deal with consumers who want to use the ODR Platform to resolve any disputes they have with you. Non-compliance following 15 February 2016 could lead to enforcement action.
The ODR Regulation was passed along with the EU Directive on consumer ADR (the ADR Directive). The ADR Directive, implemented into UK law by three statutory instruments, requires each EU Member State to appoint a competent authority for each market sector (such as financial services, telecoms, gambling or energy) to regulate and ensure the quality of the ADR providers in its sector. In addition, the ADR Directive provides that each EU Member State shall facilitate the establishment of ADR providers in each market sector and maintain a list of those providers.
According to the ODR Regulation, the time for compliance by both Member States and affected online traders was 9 January 2016. Nevertheless, the EC delayed the launch of the ODR Platform until 15 February 2016, to give certain Member States additional time to comply. The UK’s Department for Business, Innovation & Skills (BIS) has confirmed, however, that no enforcement action against traders will take place for non-compliance before the ODR Platform went live.
New website and email information requirements
As a result of the ADR Regulation, traders within the scope of the ODR Platform must include on their websites:
- an easily accessible hyperlink to the ODR Platform; and
- an email address to act as a first point of contact for resolving disputes.
BIS suggests that “a logical place” for the link and email address “would be alongside existing complaints procedure information on a trader’s website”.
Traders who are required to use an approved ADR provider by legislation, a trade membership or contract, have additional information requirements. These traders must, in addition to the above information requirements, also:
- inform consumers of the existence of the ODR Platform and the possibility of using it alongside any existing information about ADR providers;
- include a link to the ODR Platform in any email offering goods or services; and
- also include the above information in their general terms and conditions.
Examples of traders to whom the additional information requirements apply would include gambling operators or telco companies under licensing requirements from the Gambling Commission or Ofcom respectively.
The ODR Regulation will be enforced in the UK by the Trading Standards Institute, using court orders. The maximum penalty for non-compliance with such a court order is an unlimited fine or two years’ imprisonment or both. In practice, BIS has said that the Trading Standards Institute would seek to work with the trader, in the first instance, to ensure it understands the ODR Platform’s requirements.
How the ODR Platform works
As mentioned above, the ODR Platform is a website run by the EC that links EU consumers and traders with an appropriate ADR provider to settle disputes. The EC and the ODR Platform do not themselves adjudicate individual complaints from consumers against traders.
The process for a consumer to bring an ADR complaint against an online trader through the ODR Platform is as follows:
- Submit a complaint. The consumer first fills in an online complaint form on the ODR Platform. Compared with a traditional claim form for court proceedings, the ODR Platform’s form is straightforward with questions and drop-down boxes. The platform then sends the complaint form to the trader. The ODR Platform only permits a nominal charge to the consumer, but the trader may have to pay a more substantial fee to the ADR provider if the trader wants to engage in the process.
- Choose an ADR provider. Once the trader has received the complaint, the consumer and trader have 30 days to agree on an ADR provider to resolve the complaint. The rules and procedure, and even whether the decision is binding, will depend on the ADR provider chosen. The ODR Platform will provide the consumer and trader with a list of ADR providers relevant to the market sector and Member States concerned. If agreement on an ADR provider cannot be reached within 30 days, the ODR Platform process fails and the consumer must consider a different dispute resolution option.
- Follow the process with the ADR provider. The ODR Platform will automatically send the complaint to the chosen ADR entity, which must decide within three weeks whether it is competent to decide the complaint. Once the ADR provider has agreed to hear the dispute, the procedure will then depend on the ADR entity and the form of ADR chosen (such as online mediation or arbitration). The process must be conducted entirely online through the ODR Platform or through the ADR provider’s own process, unless both parties agree to an offline process. The ODR Platform also includes an online translation tool for all EU languages to assist in resolving cross-border disputes.
- Outcome of the ADR process. The ADR provider has 90 days to reach a decision on the complaint, unless the case is “highly complex”. This timeframe compares favourably with traditional offline litigation, even in the small claims court. Regardless of whether the ADR process is conducted through the ODR Platform, offline or through the ADR provider’s online system, the decision will still be communicated to the consumer and the trader through the ODR Platform.
Neither the consumer nor the trader can be forced to use the ODR Platform or engage in the ADR process, although the information requirements about ODR Platform set out above are mandatory for traders. The ADR Directive confirms that an agreement between a consumer and a trader to submit complaints to an ADR entity is not binding on a consumer, if the agreement is concluded before the dispute arose. This would include, for example, an agreement to use ADR in standard terms and conditions of sale. Once a consumer and a trader agree to use an ADR process (following a dispute arising), the parties will be subject to the rules of the relevant ADR provider which may include that any decision will be binding and final.
Usefully, both the ODR Platform and BIS provide a lot of information for traders for responding to ODR Platform complaints, including FAQs and guidance on the websites for the ODR Platform. Each Member State is also required by the ODR Regulation to establish a National Contact Point to assist both consumers and traders with using the website or handling a dispute.
At this very early stage the ODR Platform looks promising. Only time will tell whether the ODR Platform achieves its stated goals of facilitating simple, efficient, fast and low-cost dispute resolution across EU borders, but it will require buy-in from both consumers and traders - as well as Member States. Despite the impending possibility of a ‘Brexit’, we note that the UK implemented the ODR Platform in a timely fashion; however, France and Germany have not yet created a National Contact Point while Spain and Italy do not yet have any ADR providers on their registers.
As neither consumer nor trader can be forced to use the ODR Platform or engage in ADR, it will be necessary to convince potential users that online dispute resolution can bring about justice between the parties. There is clearly support for an online dispute resolution process in the UK—see, for example, the Chancellor’s 2015 Autumn Statement which pledged £700m of investment in a new HM Online Court (HMOC) following the recommendations of the Civil Justice Council in February 2015. Access to justice for litigants in person has been a common theme of both the UK government and the EU over the past few years.
But online-only dispute resolution is a new and relatively untested concept (other than more informal processes, such as found on eBay) and it is not without its potential issues. In the Internet age, it would make huge cost savings to carry out mediations or court hearings online using video call or submit to an online document‑only arbitration without any form of hearing or oral submissions. Yet online justice in such forms is likely to be a lot more rough-and-ready without the benefit of the time, legal advice, documentary evidence, oral cross-examination of witnesses, and other features of what we expect from our dispute resolution processes.
Nevertheless, as consumers are generally not being required to pay more than a nominal sum to use the ODR Platform, it could result in many claims being pursued that would otherwise not have been and increased consumer confidence to buy goods and services from other EU Member States. Traders may also be more inclined to sell to consumers in another EU Member State with the option of online ADR if something goes wrong, rather than risking being sued in another Member State with unfamiliar court processes.
As a business based in the EU you already need to be compliant with the information requirements set out above, and you should carry out a review of your website, your complaints handling process, your emails sent to consumers and your terms and conditions, if you have not already done so. Remember that you may bind yourself to engage in ADR with your terms and conditions, but you may not bind a consumer.
You also need to be ready to start dealing with any ODR complaints that may be filed against you. While you are not obliged to engage in ADR or use the ODR Platform, you should include it as part of your consumer complaints handling strategy. It would also be advisable to set up a process for reviewing individual ODR complaints to determine whether engaging in the ODR Platform will be advantageous or whether more traditional complaints handling and dispute resolution methods will be more suitable.