10 January 2012 #Dispute Resolution
The European Commission (“EC”) has recently adopted two new proposals designed to promote the use of alternative dispute resolution (“ADR”) in resolving consumer disputes. The EC has a long history of legislating to protect consumers and providing them with greater access to justice. These proposals can be seen as further efforts by the EC to assist consumers in obtaining justice.
Alternative dispute resolution
ADR is an umbrella term for a number of procedures that seek to resolve disputes other than through the Court process. Of these procedures, by far the most common is mediation. Mediation involves the parties attending a meeting to discuss their differences on a confidential basis and to try to reach an agreement to settle their differences. The settlement discussions are facilitated by an independent third party called a mediator. Settling a dispute through mediation rather than through the Courts is usually in all parties’ interests since, if successful, the dispute can be resolved far more quickly and cheaply.
In 1998, the English Court system underwent a fundamental change designed to improve speed, cost efficiency and flexibility. The new system, governed by the Civil Procedure Rules (CPR), sought to tackle these problems by actively encouraging the parties to use ADR wherever possible. The use of ADR methods, particularly mediation, has increased considerably as a result and have been very effective in reducing the number of cases that end with a Court hearing.
European Commission proposals
1. Creation of National ADR Bodies for Consumer Disputes
The EC has proposed that all EU member states will be required to create a national out-of-Court body to deal with contractual disputes between consumers and businesses. This should not be confused with consumer complaints handling systems operated by the businesses. These proposed bodies will provide procedures for consumers to resolve disputes with businesses through various ADR methods as an alternative to Court proceedings. Businesses will be incentivised to use the scheme to encourage the use of ADR when a dispute arises with a consumer.
2. Creation of an EU wide Online Dispute Resolution System
The EC has also proposed that a single EU wide online dispute resolution system be created to enable the easier resolution of disputes for online shoppers who have bought a product from another EU country online. The new online platform will be linked to the ADR bodies mentioned above to afford greater protection for consumers who buy goods online from other EU countries. It is envisaged that the EC will assist in creating an interactive user friendly website available in all EU languages with its own set of common rules to facilitate the resolution of online disputes between consumers and companies anywhere in the EU.
With the growth of online shopping, it is perhaps understandable that the EU would wish to create a system for protecting consumers. The success of the proposal, if adopted, will depend largely on whether consumers take up the offer of mediation. If they do, this could prove to be a cost-effective way of businesses settling their differences with their consumer customer.