Róża Thun: ADR is cheaper and more convenient for businesses than the courts | In Principle

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Róża Thun: ADR is cheaper and more convenient for businesses than the courts

Róża ThunAn interview with Róża Thun, a member of the European Parliament and the Committee on the Internal Market and Consumer Protection, about the European Commission’s new initiative for resolving consumer disputes.

Litigation Portal: In every EU member state there is not only a judicial system, but also institutions providing arbitration and mediation services for various sectors. Any of these institutions could decide disputes involving consumers. How did the idea come about of unifying consumer ADR methods at the EU level?

Róża Thun: It is important to bear in mind that the systems for non-judicial resolution of consumer disputes vary widely across the EU member states. They employ mediation, arbitration, and other methods for bringing the parties to agreement. As a rule, however, in every member state they are incomplete, and do not cover all sectors. Thus it is difficult to compare them to the judicial system. Where they do operate, however, they are very effective. They offer consumers quick and cheap solutions to their problems. The idea to create a legal framework at the European level to cover existing national ADR systems and to create a European system for resolving consumer disputes in e-commerce arose several years ago. The Single Market Forum held in Kraków last year was decisive for realisation of this idea. In the Kraków Declaration, which was adopted at the end of the forum, the European Commission was called upon to present legislative proposals to achieve this.

How will the European platform for online resolution of consumer disputes function? Will claims be considered by a virtual arbitrator, with the ruling in the “clouds”? Will the decision immediately become enforceable, without the need for endorsement (e.g. with an enforcement clause) by the national legal system where it will be enforced?

The European platform is designed first and foremost to facilitate settlement of disputes. It would operate in all of the languages of the EU member states and would also handle translation of all relevant documents in a cross-border dispute. It will offer consumers a dispute resolution entity and also enable them to conduct the whole procedure online. Existing institutions would thus be supplemented within the next two years with new entities established by the member states, or by businesses or consumer organisations, in sectors where they were not present before. There would also be ODR facilitators working within the system to assist consumers, when needed, in filing an online application.

Will ADR entities undergo any form of European or national certification? Based on what criteria? How could an ADR entity build its image as a fair and reliable centre for resolution of consumer disputes?

As is already the case, such entities will be notified to the European Commission by the member states. In Poland, this is handled by the Office of Competition and Consumer Protection. So far, only four such entities have been notified, but in Europe as a whole there are over 500. We will debate the criteria as the Consumer ADR Directive works its way through the legislative process. But there are already principles governing such aspects as transparency and effectiveness, depending on the type of procedure involved.

Given the broad access planned for the platform and the low costs of proceedings in the ADR system, there is a risk that businesses will be flooded with consumer complaints. Would the platform stand up to such a caseload?

I would not be worried about that. Consumers today can file complaints with businesses. In the case of ADR entities, it should be borne in mind that they have their rules for accepting complaints. They do not have to accept all of them, but may, for example, establish a minimum amount in dispute. Moreover, the consent of the business is necessary in order to file a claim against it before an ADR entity. I believe that businesses will also want to use these methods, because it cheaper and more convenient for them than the courts. In addition, such procedures make it possible to maintain a business relationship after the dispute is over, while a judicial resolution typically leaves the two sides unsatisfied and the commercial relationship is broken off. For consumers, it is very important to have trust in the seller, so it is a classic win-win situation.

Do businesses have any means of defending themselves against entering into a dispute, if the consumer’s complaint is partially unfounded?

Of course they have. In this respect nothing will change.

It there any provision for excluding certain types of disputes from the consumer ADR system, such as disputes involving highly specialised services, medical services, financial services or the like?

There is a discussion underway about that. I think that the subject matter covered by ADR should be as broad as possible. Perhaps there are some issues that could be excluded, but it should be borne in mind that these ADR entities will be deciding only on contractual obligations, not claims for damages or the like. It should be considered, however, whether foreign ADR entities should be able to decide such disputes. In my view that would be a very good idea. Why should every country have to establish ADR entities to resolve disputes in the area of, say, financial services, when the UK for example already has such an institution, operating in 49 languages and deciding 1.5 million cases a year?

What is the timetable for introduction of a uniform ADR system, and when may we expect the ODR platform to be launched?

It will not be uniform ADR. We will only establish common criteria that the ADR entities must meet. We will still have available a highly diverse ADR structure across Europe. But we will be better able to monitor the quality of ADR entities, and we will create an opportunity to resolve disputes entirely online. I have already submitted a draft report on the online platform, which will be voted on in my committee, Internal Market and Consumer Protection, on 10 July. Then we will begin negotiations with the Council, and I believe a final compromise should be adopted by the European Parliament by October or November. In that case, these changes should go into force by the end of 2014.