A ‘common’ Law of Consumer Contracts for Online Dispute Resolution?

The European Union has been thinking about the disharmony of its consumer laws and the disincentive that this can pose to cross-border commerce, particularly e-commerce. This disincentive may be greater because the Rome Treaty requires that consumer disputes be resolved in the courts of the consumer’s residence according to the law of that place. B2C e-commerce among EU countries is not expanding along with domestic B2C e-commerce.

The EU has come up with a proposal to have a ‘28th law’ (in addition to the law of the 27 member states), being a common consumer law that could be opted into by parties to a transaction. There’s a a description on OutLaw.com.

This is consistent with some discussion at the UNCITRAL Working Group on Online Dispute Resolution (ODR) in December, which focused on resolving disputes over high-volume, low-value transactions. It was thought that having a common, simply stated and short set of rules might cover and help resolve a big majority of B2C disputes. A large number of B2C disputes involve only a small number of scenarios: goods not delivered, goods not paid for, goods broken or otherwise unsuitable … points on which most legal systems will produce very similar results.

The report of the UNCITRAL December meeting is here (and if that doesn’t work, go through here). Future work (para 115) includes “describing substantive legal principles, including equitable principles, for deciding cases and making awards”.

A German panellist at the UNCITRAL colloquium on ODR last March described the common standard as a ‘blue button’ approach, meaning that a merchant’s web site could have an icon or button in EU-blue, clicking on which would amount to a choice of this common set of legal rules rather than the national law of either party. (That might require law reform to permit a consumer to make such a choice effectively.) A report of the colloquium is here (or via the 2010 Commission documents, Doc A/CN.9/706). The description is at para 16.

The UK government has now come out against any such common standard, finding it confusing and not helpful. (The UK did not have a delegate at the ODR Working Group meeting, as I recall.) See OutLaw.com for the story and for the official response. (The British call the proposal one for the “29th law”, since with Scottish civil law and English and Welsh common law, they have two of their own.)

What do you think? Is it reasonable to expect people to be able to come up with a simple, fair, consumer-accessible statement of law that might apply to all online contracts, or at least consumer contracts – worldwide?

Would it be good enough if that ‘law’ could resolve 75% or 80% of disputes, leaving the rest either unresolved or to a heavier procedural process (which probably amounts to leaving them unresolved, given the low value of most such transactions)?

And for advanced students (and ultimately for delegates to the Working Group): should consumers be able effectively to opt out of legal rules in their home jurisdictions (such as Quebec) that currently invalidate any provision that would prevent a consumer from having resource to his/her local courts? Or would it be acceptable to merchants to have an ODR system based on the ‘common’ legal rules that nonetheless allowed the consumer who did not like the resolution through that process to then go to his/her local courts? Maybe having a system that would get compliance most of the time would be enough of an incentive for international B2C e-commerce that having the occasional case slip out to the courts would not matter.

Is this the way forward for international ODR, or a dead end?

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