Policymakers from across Europe last week expressed broad support for the introduction of an EU-wide alternative dispute resolution system to prevent consumers from having to go to court to settle disputes with companies.
"Every day, consumer purchase goods and services, but many give up when experiencing problems with traders," said EU Consumer Affairs Commissioner John Dalli ahead of a public hearing on alternative dispute resolution (ADR) hosted in Brussels by MEPs on the European Parliament’s internal market and consumer protection (IMCO) committee (16 March).
Last week’s hearing marked the closure by the European Commission of a three-month public consultation on setting up an ADR system in Europe, potentially providing consumers and traders with a cheap, straightforward and quick means of resolving disputes.
"ADR gives consumers a simple chance to get their problems resolved. It may sound try but it’s really important for consumers – maybe we need to find a sexier title!" said IMCO committee chair Malcolm Harbour MEP (Conservatives; UK) upon entering the chamber.
The results of the consultation, due out later this spring, will feed into upcoming legislative proposals on establishing an EU-wide ADR scheme, which are due for publication by the Commission before the end of the year.
Over 750 schemes currently in place
Over 750 alternative dispute resolution schemes are currently in place across Europe. But the current ADR landscape is best by major shortcomings, including gaps between existing schemes, low awareness of their existence among businesses and consumers alike and systemic weaknesses related to cross-border trading.
As a result, "most consumers don’t take action" when faced with problems related to their purchases, said Commissioner Dalli. "We need to make sure that any consumer in a dispute can refer to an ADR scheme," he added.
Not all EU countries have ADR schemes in place, nor are they accessible for all sectors of the economy.
40% of retailers in the EU do not know about alternative dispute resolution and in 2009 just 3% of consumers and 9% of retailers used ADR schemes, according to the Commission. 64% of ADR schemes currently in place are voluntary.
ADR is only available in six regions in Portugal, for example, while in the Netherlands, ADR for air travel is only applicable to national carrier KLM Royal Dutch.
"We want to make sure that consumers can resolve problems cheaply out of court. Alternative dispute resolution boosts markets by encouraging consumers to buy and businesses to sell across borders. Given the right framework, consumers can be a key engine of growth," said Commissioner Dalli.
"ADR should be one of the first legislative proposals voted on in 2012," Dalli added.
Regulating ADR ‘not EU’s job’
Opinions among EU policymakers about the best way to proceed on ADR vary widely.
Hungary, which currently holds the EU’s rotating presidency, is wary of regulating to force through the introduction of a common EU-wide scheme. "It’s not our duty to regulate ADR, but to support it," said Hungarian Minister for Strategic Affairs Zoltán Cséfalvay, underlining the need to give ADR "total autonomy" to allow it to flourish "on its own terms".
"ADR is not for every case and it is certainly not our intention to make it so. It can best be established by trade associations and national consumer groups, rather than by being imposed centrally. But it is the best resolution system in some areas, especially cross-border e-commerce," Cséfalvay said.
"We need to create favourable framework conditions to facilitate the wider use of ADR in Europe. We also need to ensure that ADR is high quality, especially given that there are so many varieties. ADR costs money and there’s a role for the EU here," he added.
"It’s right to concentrate on the consumer, but good ADR will have to be mutually beneficial" if it is to work, Cséfalvay said.
The minister said the Presidency would work hard to raise awareness of ADR among European businesses and consumers, and push for the creation of a European code of best practice. But "our role is to create opportunities, not regulate," he repeated.
However, others fear that adopting such an approach would create a system in which standards vary from one country or sector to another.
"There is too wide a spectrum of ADR systems in Europe," said European Parliament Vice-President Diana Wallis (Liberal Democrats; UK), insisting that "the EU should be able to offer signposting or a roadmap to make sure that people get to the right place"
Maltese MEP Louis Grech (Socialists & Democrats) went further, claiming that "an EU-wide ADR system would give a greater sense of security".
He said clarification was needed as to whether the Commission’s legislative proposal would cover only business-to-consumer contracts or business-to-business relations too, for example between large companies and SMEs.
"We cannot afford any more years of reports, discussions and hearings. It’s time for the Commission to act now," Grech added.
Consumer groups want binding ADR schemes
Participants struggled to agree on whether participation in a future EU-wide ADR scheme should be mandatory or voluntary.
"ADR schemes should be binding," said Monique Goyens, director-general of European consumer organisation BEUC.
She was supported by Peter Fogh Knudsen from Denmark’s Consumer Advice Centre, who said "to me voluntary ADR means no ADR". "I’ve never met a voluntary trader," he added.
"Public authorities must provide information on ADR and traders must use it more often if consumers are going to become more aware of it. Traders don’t use it because they have no incentive to – they already know that the consumer doesn’t want to go to court," said BEUC’s Goyens.
"If it was binding and there was a genuine threat of court action afterwards, then ADR would be a genuine stick," she added.
Attempting to sum up the debate, IMCO committee chair Malcolm Harbour said any EU initiative on ADR would need "to add value to what people are doing already" and set out "ways in which we can share experiences [to] enhance quality [and] develop best practices.
Details of the public consultation’s findings will be made available to policymakers this spring ahead of the planned publication by the European Commission of legislative proposals on ADR by the end of the year.