Parliament agrees rules to settle consumer disputes out-of-court

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The European Parliament has approved out-of-court systems for dealing with consumer complaints, in a drive to save some €22.5 billion by reducing the number of lengthy court actions.

Under the rules, EU countries will have to assemble dispute resolution bodies to deal with contractual disputes between consumers and traders, such as the sale of faulty products. The entities will have 90 days to settle disputes.

Many EU countries already have Alternative Dispute Resolution schemes, but a lack of common standards, patchy coverage and overloading make it hard for shoppers to use them. The new directive requires EU member states to ensure that ADR bodies exist for all business sectors and includes provisions to ensure that mediators are impartial.

The agreement also covers disputes for products bought online and the creation of an information platform in all EU languages.

MEPs also ensured that arbitration should be either free of charge for the shopper or cost only a "nominal fee". In general, any dispute should be resolved within 90 days, the rules add.

Tonio Borg, the EU’s health and consumer policy commissioner, said the move was “win-win for consumers, who will be able to resolve their disputes out-of-court in a simple, fast and low-cost manner, and also for traders who will be able to keep good relations with customers and avoid litigation costs.”

EU lawmakers approved the rules, proposed by the European Commission in 2011, in a vote on Tuesday (12 March).

The out-of-court system applies to any purchase made domestically or across EU borders. It will also require traders to provide consumers with adequate information on the possibility of recourse to out-of-court dispute resolution.

Ró?a Thun, a Polish MEP and rapporteur for e-commerce dispute resolution, said the rules would help shore up consumer and trader confidence when carrying out cross-border transactions online.

"These new instruments will give them confidence in buying and selling throughout the EU and allow them to fully benefit from all the opportunities that the Single Market offers", she said.

The two new rules will enter into force in April and the EU executive will give governments two years to apply the directive in national legislation.

In 2010, one in five consumers in the EU encountered problems when buying goods or services, leading to financial losses estimated at 0.4% of the EU's GDP, the Commission says.

Robert Rochefort, a French liberal MEP said: “It was urgent to solve the lack of ADR coverage in Europe; although there are currently more than 700 ADR systems in Europe, there is a great disparity in terms of coverage and the type of body covered… all European consumers will now be able to turn to a competent ADR body, regardless of the type of litigation faced, and whatever his Member State of origin and place of conflict.

“However, we must remain vigilant in the application of these provisions. Consumers as well as professionals, in particular SMEs, should be informed of these newly obtained rights. It is also necessary that the Internet platform to be set up to perform these mediations directly online is really accessible. This will be a very important responsibility which rests on the Commission.”

“Today’s adoption of the Alternative Dispute Resolution package represents an important step to strengthen business and consumer confidence in the internal market. Out-of-court redress is a win-win solution for businesses and consumers, representing simple, fast and affordable ways to solve disputes both in online and offline transactions”, said Markus Beyrer, director general of BusinessEurope.

Ashley Fox, a British Conservative MEP, said: “Procedural rules have been made flexible to respect existing systems and member states have more discretion on implementation. 

“ADR offers a low-cost alternative to formal legal action for both traders and consumers alike. It is an efficient way of resolving disputes and I hope coverage across the EU will increase rapidly.’

The European Commission uses the term ADR (Alternative Dispute Resolution) refer to schemes available to help consumers resolve disputes with traders when they have a problem with goods or services.

ADR is non-judicial and requires the appointment of a neutral third party to help settle disputes. It is mainly used for individual cases, but can also deal with several individual cases when they are similar, according to the Commission.

ADR does not cover businesses' customer complaint handling systems, amicable settlements directly between a consumer and a trader, or mediation processes within the judicial system. 

  • By 2015: Dispute mechanisms fully transposed into national legislation

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