Consumer rights: Deal on out-of-court dispute resolution rules  

This article is brought to you in association with the European Parliament.

• Alternative dispute resolution allows consumers and traders to resolve disputes quickly and inexpensively without going to court 
• New measures to improve traders’ participation and raise consumer awareness 
• Allowing participation of third-country traders 

Thursday’s agreement between Parliament and Council aims to increase consumer awareness and encourage greater business participation in out-of-court dispute solutions.

Alternative dispute resolution (ADR) involves impartial, out-of-court bodies, such as conciliators, mediators, arbitrators, the ombudsmen and complaints boards, helping consumers and companies resolve issues amicably, in a fair and low-cost manner.

The agreed rules aim to modernise the existing ADR rules for the digital economy, making it easier to resolve cross-border disputes and streamlining procedures for both consumers and businesses.

Scope and third-country traders

The agreed rules clarify the scope of the ADR framework to consumer rights disputes stemming from a contract, including issues that occur before the contract (e.g. advertising and information provision) and after it ends (e.g. use of digital content).

Considering that 2 out of 5 online transactions made by EU consumers are with traders established in third countries, the agreement allows for such traders to participate in ADR procedures as well.

Boosting participation and ensuring trader accountability

Unless specific EU law or national legislation imposes trader participation in out-of-court dispute resolution, businesses will continue to be free to decide whether to participate in alternative dispute resolution or not. To boost trader and consumer participation, member states should put in place measures encouraging out-of-court settlements, for example through information campaigns, certificates or financial incentives. In doing so, they should pay particular attention to sectors with a high number of consumer complaints, especially the transport and tourism sectors, including air passenger rights.

The agreed rules introduce a duty for traders to respond whether they intend to engage in the proposed procedure when a consumer requests ADR intervention. Negotiators agreed that this period should not exceed 20 working days (30 in complex cases). A lack of a response would be treated as a refusal, allowing cases to be closed.

Streamlining and user-friendly information

The agreed measures allow ADR entities to bundle similar cases against the same trader together (with consumer consent), leading to faster and more coherent procedures.

They must maintain websites where consumers can easily find information on such procedures, as well as submit and track their complaints online.

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Parliament’s rapporteur Laura Ballarín Cereza (S&D, ES) said: “The revision of the ADR directive represents a significant step forward for consumer rights. Under the new agreement, member states are expected to put in place incentive measures to encourage the participation of both consumers and traders in alternative dispute resolution procedures, especially in sectors that have been the subject of repeated consumer complaints —such as airline carriers. The revised directive also extends the scope to third-country traders, given the current importance of e-commerce.”

Background

If a consumer has a problem with a product or service that they bought, for example if a trader refuses to repair a product or issue a refund, they have the option to settle the dispute out of court using an alternative dispute resolution procedure, a low-cost and simple alternative to court procedures. Each year, approximately 300 000 eligible disputes between consumers and traders are handled by ADR entities, with resolution rates ranging from 17 % to 100 % across the EU. Despite this, ADR uptake remains low, due in part to low consumer awareness, low trader engagement, coverage gaps, high costs and complex procedures in some member states.

Next steps

Parliament and the Council have concluded an “early second reading agreement”. The Council is expected to adopt this agreement formally, after which Parliament will vote to endorse it in plenary, at second reading.

The directive will enter into force 20 days after its publication in the EU Official Journal. The provisions will start to apply after 32 months.