At some point, all of us have complaints against merchants and businesses, but are the courts the best place to resolve those disagreements? Although they have not yet been fully implemented throughout the European Union and country-specific and sector-specific regulations will affect them in some cases, new EU rules on consumer redress have the potential to offer dissatisfied customers routes to resolution that are quicker, easier, and less expensive than going to court. In the process, the rules also should help people throughout the European Union gain a clearer understanding of what alternative dispute resolution is and what it can accomplish.
The new rules, in the form of a Directive on Alternative Dispute Resolution for Consumer Disputes and a Regulation on Online Dispute Resolution for Consumer Disputes, which took effect in July 2015 and January 2016 respectively, require all EU member states to ensure that consumer complaints can be resolved online by nationally certified alternative dispute resolution entities. Together, these two legislative instruments set up a ground-breaking framework for consumer ADR to tackle both national and cross-border disputes within the European Union and create a network of accredited ADR providers, all with the aim of stimulating trade, especially in the online arena. These ADR providers, which may be public or private bodies, can offer a variety of ADR techniques, including mediation, arbitration, and ombuds services.
Not Compulsory – but Available
The ADR Directive does not make participation in ADR compulsory, but it requires all EU national governments to ensure the availability of certified ADR providers (called ADR entities) that meet the procedural standards set in the directive. Among these requirements: certified ADR entities must be able to process complaints online; be free or low-cost for the consumer; and comply with the principles of independence (for instance, ADR entities cannot be employed or remunerated by an individual trader unless the national law allows for this option and ensures additional safeguards), effectiveness (resolving disputes online within 90 days, for example), transparency (such as publishing annual activity reports), fairness (such as giving consumers a cooling-off period before they agree to settle a claim), legality (ensuring that mandatory consumer law is respected, for instance) and liberty (such as guaranteeing that consumers agree to arbitration after the dispute arises). In addition, all merchants established in member states are obligated to inform a consumer resident in the European Union about the availability of these ADR entities every time the merchants have an unresolved dispute with that consumer or the consumer is not satisfied with the remedy offered by the merchants.
The ODR Regulation complements the directive by requiring the European Commission to run an ODR platform, which is in essence a web site that acts as a hub to channel all consumer complaints arising from e-commerce to these certified ADR entities. The platform, which started operating in February 15 2016, allows consumers (and merchants, when the national law permits) to submit complaints related to online contracts in all the EU languages. All merchants operating online and online market places established within the European Union (such as Amazon) have the obligation to provide an easily accessible link to the ODR platform.
At the same time, because the focus of the EU platform will inevitably be on cross-border issues, a number of EU countries, including Belgium, have already built or are building national ODR platforms to complement the EU platform.
The Role of Online Courts – Changes in England and Wales
Perhaps one answer lies in technology. EU member states could do more to promote traders’ adherence to ADR by offering these consumers (who cannot use ADR because traders refuse to participate in the ADR process) with an effective dispute resolution forum with residual jurisdiction. National governments could consider at least the following three options: they could sponsor a statutory ADR/ODR entity, following the parameters of those already operating on a sectorial basis; they could develop an online consumer tribunal along the lines of the Civil Resolution Tribunal that is being launched in British Columbia; and they could develop a much improved and user-friendly online small claims court, such as the one that is now being considered in the United Kingdom. Indeed, tribunals and courts can also incorporate triage and ADR in their small claims procedures, offering a multi-door process that accommodates the forum to the fuss, without the need for legal representation.
The UK experience kicked off with the efforts of the Civil Justice Council, an independent body advising the Ministry of Justice on civil procedure, which produced a report back in February 2015 asking the UK government to equip the civil courts with technology and a tiered procedure that enables self-represented litigants to settle and resolve low-value claims online. Soon thereafter JUSTICE, a nonprofit human rights organization, also recommended a similar overhaul in the civil courts. Key to these proposals are the roles of facilitators who would help litigants without legal representation settle their claims expeditiously through ADR/ODR, or in some cases, help them prepare for trial. These proposals have recently received the endorsement of the judiciary of England and Wales in a landmark report drafted by Lord Justice Briggs, a Court of Appeal judge, that reviews the structure of the civil courts. The report proposes measures to address the reality that English courts are now beyond the reach of most citizens for low- and medium-value disputes.
Lord Justice Briggs’s main proposal is the creation of an online court for claims under £25,000 (approximately $35,800 in US dollars). The proposal for the online court is expected to be implemented in 2017 on a pilot basis, given that the UK government has already committed £700 million (more than $1 billion US) to fully digitalize the court system and create a more modern operation. Part of this money is expected to be allocated for the creation of the online court, which would have its own procedure designed for self-represented litigants. In a way, the proposed court would depart from the traditional adversarial process, operating instead an online tiered procedure with three main stages. The first stage would be a fully automated triage process in which parties would be required to fill in an online claim form and offered simple commoditized online advice. In the second stage, the case would be passed to a case officer, who would offer a mix of mediation services and case management, both online and via the telephone – and ideally, settle the majority of cases. In the third stage, unresolved disputes would be sent to a judge for final determination on the documents (and occasionally, when necessary, via telephone, video, or face-to-face hearings). A final fourth stage may be incorporated to streamline the enforcement of judgments through an online process.
The proposals have encountered criticism from some members of the legal profession, who may see their business threatened (though low-value disputes are far from their bread and butter), and it was received with skepticism by those who question the success of government-sponsored IT projects. Yet most observers agree that English courts are in great need of modernization, especially now that secure online communications are possible.
The Institutionalization of ADR and ODR
The European legal framework for consumer ADR/ODR incorporates recognized best practices, and in doing so, those who created the EU Directive and Resolution have started a process of professionalizing a traditionally unregulated sector. The rationale behind this regulatory effort is the promotion of ADR/ODR as the primary form of dispute resolution for consumer disputes. This institutionalization process is moving ADR from the unregulated models of redress to an increasingly important part of the civil justice system in the United Kingdom and the rest of Europe.
From a European Union view point, consumer ADR is more than a mere tool of dispute resolution; it is an essential mechanism to ensure better compliance with consumer protections laws. Accordingly, a key element of a successful consumer redress system should be effective pathways from ADR processes to courts, regulators, and public enforcement bodies, as these public bodies play an important role in ensuring regulatory compliance and clarifying the interpretation of the law. This interconnection would ensure that merchants tackle the causes and consequences of their disputes with consumers, and in doing so, they would improve industry standards benefiting the society at large. The EU and national governments have yet to figure out how these ADR/ODR entities will complement (or even compete) with modern judicial processes, especially deciding how and when cases should proceed to court. In such discussions, policy makers would do well to focus on the needs of citizens, not those of lawyers, who will always have important roles to play in providing legal advice and legal representation, especially for cases involving more than small claims.
The new EU rules have been designed to ensure the availably of quality ADR services and it is set to accomplish the much-needed feat of raising awareness and understanding of ADR and ODR. Its success however will depend on whether merchants see their participation in ADR beneficial for their business model and whether a residual jurisdiction (such as an accessible online court) will incentivize ADR options.
Pablo Cortes is a Professor of Civil Justice at Leicester Law School, University of Leicester in England. He can be reached at firstname.lastname@example.org.