The European Regulation on Consumer Online Dispute Resolution – Where Are We Now?

As mentioned in a previous post, the Cyberjustice Laboratory was proud to host the 2013 ODR Forum, which took place on June 17^th and 18^th in Montreal, Quebec. Among the issues addressed by our panelists and esteemed guests during those two days was that of the European Regulation on consumer ODR, a document that is seen as both a step in the right direction and a source of great confusion. If most in the ODR community welcome the document, general consensus also seems to be that important details remain to be incorporated for it to be implementable since it is still unclear as to how the system will actually work.

That being said, and as stated above, the intent behind the Regulation on consumer ODR is to be commended. The digital dimension of the European internal market is growing at a rapid pace: consumers increasingly make purchases on the web, and more and more traders are selling online. Confidence therefore is of paramount importance when it comes to encouraging these online transactions. The availability of reliable and efficient alternative dispute resolution (ADR) mechanisms could greatly help strengthen this confidence. However, current disparities in ADR coverage and quality in the European Union seem to hinder growth of the internal market.

This is the context that led to the European Commission putting forward the aforementioned Regulation on consumer ODR, of which the objective is twofold: 1) to contribute to the proper functioning of the internal market, and in particular to its digital dimension, and 2) to ensure a high level of protection for consumers. To achieve this goal, the Regulation puts in place a European ODR platform (the ‘ODR platform’), which both consumers and traders will be able to use. This platform will consist of an interactive website that will be user-friendly and freely accessible in all of the EU’s official languages. It will serve as a single point of entry for consumers and traders seeking out-of-court resolution of their disputes relating to online transactions. A consumer will be able to submit a complaint to the platform, which will, in turn, transmit it to the competent alternative dispute resolution entity (‘ADR entity’). This diagram gives an overview of the major steps of the process as we understand them:

On March 12^th, 2013, the European Parliament adopted the aforementioned Regulation, while making numerous amendments to the original text submitted by the Commission. To get a sense of this new version, we refer the reader to the Cyberjustice Laboratory’s working paper entitled « FAQ : Règlement relatif au RLLC » (in French only). Here are the key amendments to the Commission’s proposal:

• The Regulation on consumer ODR now applies to cross-border as well as domestic online transactions. Section 2(1) states that the Regulation “shall apply to the out-of-court resolution of disputes concerning contractual obligations stemming from online sales or service contracts between a consumer resident in the Union and a trader established in the Union (…).”
• If the legislation of the Member State where the consumer resides allows it, a trader can submit a complaint against a consumer (section 2(2)). However, Member States do not have an obligation to ensure that ADR entities offer procedures for the out-of-court resolution of these disputes (section 2(4)).
• While seeing to the development, operation and maintenance of the ODR platform, the Commission has to ensure that the privacy of its users is respected (section 5(1)).
• Among its functions, the ODR platform makes publicly available: 1) information on ADR entities; 2) an online guide about how to submit complaints; and 3) statistical data on the outcome of the disputes which it transmitted to ADR entities (section 5(4)(h)).
• To make sure that the Regulation will prove effective, the Commissionwill test the technical functionality and user-friendliness of the ODR platform and of the complaint form (section 6(1)).
• Two scenarios can lead the discontinuance of the procedure: 1) the parties fail to agree on an ADR entity within 30 calendar days after submission of the complaint form and 2) the ADR entity refuses to deal with the dispute (section 9(8)).
• An ADR entity which has agreed to deal with a dispute is not required to conduct the procedure through the platform. In other words, dispute resolution entities or mechanisms can handle disputes that have been submitted directly to them on their own. The idea is that the Regulation should not prevent the functioning of existing ADR entities operating within the EU (section 10(d)).
• In orderto ensure broad consumer awareness of the platform’s existence,traders that engage in online sales or service contracts as well as online marketplaces established within the EU will have to provide an electronic link to the platformon their websites (section 14)
• The Commission will report to the European Parliament and to the Council on a regular basis (section 21).

In conclusion, we should mention that the ODR platform is expected to become operational six months after the Member States transpose the Directive on consumer ADRinto their national legislation (a transposition which should occur by mid-2015). However, between now and then, we predict that many further discussions will be necessary to work out some of the remaining kinks in the proposed system . . .

[Antoine Guilmain and Cléa Iavarone-Turcotte assisted in the preparation of this column.]