What is consumer ADR?
Amicable resolution of consumer disputes ADR (Alternative Dispute Resolution) are out-of-court proceedings conducted to resolve disputes between consumers and traders by an independent third party (an expert). ADR is an alternative to long-lasting and costly lawsuits. Participation in the ADR proceedings in most of the EU countries is voluntary (eg. in Poland), this means that both the consumer and the trader must agree to take part in it.
Type of ADR systems in the EU
Mediation and conciliation
By means of mediation or conciliation the parties try to reach an amicable agreement with the participation of third party.
The mediator’s task is to make easier for the parties to find a solution satisfactory for them. The mediator himself doesn’t impose any solution but takes care that the parties reach compromise independently. In conciliation system the third party, after listening to the arguments of both parties, tries to propose the best solution for them. This proposal doesn’t need to bind the parties. In mediation and conciliation the parties are not limited by the provisions of substantive law and rules of procedure. The dispute settlement, therefore, doesn’t have to be based on a specific legal norm, but may refer to the rules of honesty, legitimacy, loyalty or good morals. Most often the amicable agreement concluded in such a proceeding additionally requires granting an enforcement clause by court.
Arbitration is a method of out-of-court disputes settlement most similar to court procedures. The most important legal instrument regulating arbitration is Convention of the United Nations on Identification and Acceptance of Foreign Arbitration Decisions as of June 10th, 1958.
Arbitration is a type of procedure according to which the parties select one or more neutral individuals to whom they present the case in order to obtain a final legally binding settlement. It may be of single or institutionalised nature. In temporary arbitration each party of dispute selects its own arbitrator (or arbitrators) and then these appoint a super arbitrator. Selected in such a way composition settles a dispute on the basis of previously agreed rules. Institutional arbitration most often functions on the basis of professional organisation dealing with arbitration. In some models of arbitration there may be formed a necessity of conducting additional enforcement proceeding before a civil court.
Consumer organisations, associations of entrepreneurs or commercial institutions may jointly or independently organise complaint commissions basing on provisions of common law or solutions based on soft-law. Complaint commissions are of collective nature with equal representation of consumers and entrepreneurs community.
The commission’s settlements mostly do not bind parties. Some complaint commissions may conduct consumer cases even without the entrepreneur’s consent. Such a decision, although not binding, is significant for its reputation.
ADR standards in the EU:
According to the Directive on alternative dispute resolution for consumer disputes (2013/11/EU), Member States shall ensure that ADR entities meet certain requirements:
1) Knowledge and impartiality
- possess the necessary knowledge and skills in the field of alternative or judicial resolution of consumer disputes, as well as a general understanding of law
- are appointed for a term of office of sufficient duration to ensure the independence of their actions, and are not liable to be relieved from their duties without just cause
- are not subject to any instructions from either party or their representatives
- are remunerated in a way that is not linked to the outcome of the procedure
- without undue delay disclose to the ADR entity any circumstances that may, or may be seen to, affect their independence and impartiality or give rise to a conflict of interest with either party to the dispute they are asked to resolve. The obligation to disclose such circumstances shall be a continuing obligation throughout the ADR procedure. It shall not apply where the ADR entity comprises only one natural person.
ADR entities should make publicly available on their premises and websites information on their activities. Institutions solving disputes should ensure the following data as part of the procedure:
- the natural persons in charge of ADR, the method of their appointment and the length of their mandate;
- their membership in networks of ADR entities facilitating cross-border dispute resolution, if applicable;
- the types of rules the ADR entity may use as a basis for the dispute resolution
- the languages in which complaints can be submitted and in which procedure is conducted;
- the types of disputes they are competent to deal with
- preliminary requirements the parties may have to meet before an ADR procedure can be instituted
- the costs of the procedure
- the average length of the procedure
- the legal effect of the outcome of the procedure
- the legal effect of the outcome of the procedure, including the penalties for non-compliance in the case of a decision having binding effect on the parties
Moreover, ADR entities should make publicly available the annual activity reports, include among others the following information:
- the number of conducted disputes
- the types that most often go to it
- any systematic problems that occur frequently
- the average time taken to resolve dispute;
In order for the proceedings conducted by ADR entities be effective, they should ensure:
- that the procedure be easily accessible to both parties, irrespective of where they are
- that the parties have access to the procedure without being obliged to retain a lawyer
- that the parties have the opportunity to be represented and to use the assistance of a third party at any stage of the procedure
- that the procedure is free of charge or available for a small fee
- that the dispute be resolved within a period of 90 calendar days from the date on which the ADR entity has received the complaint (in the case of complex disputes, the ADR entity may extend the ‘90 calendar days’ time period).
ADR entities should meet certain requirements to ensure a fairness, to meet this:
- the parties have the possibility of expressing their point of view, the arguments, as well as getting to know the evidence, documents and facts put forward by the other party and by the experts participating in the procedure
- the parties are notified of the outcome of the ADR procedure in writing or on a durable medium and are given a statement of the grounds on which the outcome is based.
A consumer who wants his dispute to be resolved by ADR should be effectively informed that:
- the parties have the choice as to whether or not to agree to or follow the proposed solution;
- the proposed solution may be less favorable than a judgment issued in a court
- before accepting or rejecting the proposed solution, the parties have the right to receive independent legal advice
The parties before agreeing to a proposed solution are informed of the legal effect of agreeing to a proposed solution and that before expressing their consent to a proposed solution, they are a reasonable period of time to reflect.
- Directive 2013/11/EU of the European Parliament and of the Council of 21 May 2013 on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Directive on consumer ADR)
- Act of 23 September 2016 on out-of-court dispute resolution
What is ODR PLATFORM?
ODR Platform (ang. Online Dispute Resolution) is an online platform managed by the European Commission.
It is one common access point for consumers and traders used for online dispute resolution in the field of online purchases. The dispute is resolved through the ADR entity selected by the parties (only entities notified by the European Commission are on the platform). Participation in the procedure in most of EU countries is voluntary (eg. In Poland), it means that both the consumer and the trader must agree to take part in it.
More information: link to the platform
- Regulation (EU) No 524/2013 of the European Parliament and of the Council of 21 May 2013 on online dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Regulation on consumer ODR)
The European Small Claims Procedure
More information: link