Regional Online Dispute Resolution Mechanism: the EU Perspective

With the growth of e-commerce around the world, it is likely to generate difficulties for dispute resolutions, particularly the disputes arisen from cross-order electronic transactions and those related to consumer rights and consumer protection.

An example can be seen in the European Union which revealed by the DSM (Digital Single Market) consumer survey that against most problems related to online purchases were not taken any action whatsoever to remedy the situation, and even those issues which met with an intent to solve the situation did not end up with a satisfactory result. In order to protect consumers and further facilitate e-commerce, it is thus necessary for policymakers and businesses to provide an appropriate dispute resolution mechanism for resolving disputes which arise from e-commerce transactions. And online dispute resolution (“ODR”) is likely one of the most appropriate mechanism, which can help the parties to resolve the dispute in a simple, secure manner, fast and flexible, without the need for physical presence at a meeting or hearing.

One of the top ten political priorities of the European Commission is to facilitate cross border e-commerce, particularly for small and medium enterprises (SMEs), and strengthening consumers’ trust when shopping online. The EU recognizes cross-border e-commerce and consumers’ trust in online transactions as an important part of the Commission’s Digital Single Market strategy. The ODR platform can facilitate consumers for solving disputes with traders that arise from online transactions in a simple, fast and inexpensive way, while traders avoid costly litigation procedures and maintain good customer relations. Therefore, the EU considers promoting access to efficient and effective redress mechanisms through alternative dispute resolution procedures including online dispute resolution as an important part for achieving its Digital Single Market strategy.

Policy Background

In May 2010, the European Union (the EU) announced a strategy to improve the ADR/ODR system of the EU under its flagship initiative “Digital Agenda for Europe” that launched an EU-wide strategy to improve ADR systems and propose an EU-wide online redress tool for e-commerce and improve the access to justice online. In March 2011, the Parliament and the Council were invited to adopt the first set of priority measures to bring a new impetus to the Single Market, which was later adopted by the European Commission as the Single Market Act on Twelve Levers to Boost Growth and Strengthen Confidence, in which it identified an initiative on ADR/ODR scheme of the European Union with the purpose to establish simple, fast and affordable out-of-court settlement procedures for consumers and protect relations between businesses and their customers including the e-commerce dimension.

ADR/ODR Legal Framework

In 2013, the EU adopted a comprehensive legal framework at EU level – a Directive 2013/11/EU of the European Parliament and of the Council on Alternative Dispute Resolution for Consumers (ADR Directive) and a Regulation (EU) No 524/2013 of the European Parliament and of the Council on Online Dispute Resolution for Consumers (ODR Regulation), and they have been in place since 2016, with an endeavour to strengthen ADR/ODR scheme in the EU and to enable accessible and efficient out-of-court redress for consumer disputes, including in disputes arising from cross-border online transactions. Both the ADR Directive and ODR Regulation are interlinked and complementary. The ODR Regulation builds on the ADR Directive and thus both legislative instruments establish the legal framework for the operation of the platform. The ADR Directive builds trust to EU consumers that they can go to certified ADR bodies with simple, efficient, fast and low-cost ways for resolving any disputes arising from their shopping made online or offline in both domestically and across borders. And to assure this, the ODR Regulation provides that ODR contact points should be designated by the Member States to provide one-to-one support to users of the ODR platform, in which to date all Member States have their ODR contact point. Most of ODR contact points of Member States are hosted by their national European Consumer Centre, while Hungary hosts its ODR contact point by the Arbitration Board of Budapest, and the UK hosts its ODR contact point by the Chartered Trading Standards Institute. The legal framework applies to disputes between consumers and traders over the purchase of goods or service made online or offline in virtually all retail sectors both domestically and across borders in the EU and in EEA countries. However, the ODR scheme under the legal framework does not address disputes arising from e-commerce in consumer-to-consumer (C2C) or in business-to-business (B2B), it only proceeds disputes stemming from online sales or online service contracts between consumers and traders (B2C). Also, the platform does not address disputes concerning health care services or public providers of further or higher education, nor does it provide a framework for direct negotiation between the parties, and settlement attempts made by a judge in the course of judicial proceedings.

EU ODR Platform

To promote e-commerce development and build trust for consumers online within the EU, in January 2016, the EU launched the ODR platform and it was later opened to the public on 15 February 2016, aiming to facilitate the online resolution of disputes between consumers and traders over the purchase of goods or services made online or offline domestically and across borders. The ODR platform of the EU offers a single point of entry to consumers and traders seeking for redress scheme to resolve disputes arising from online transactions through an interactive web-interface without going to court. The ODR platform has been established with functions based on paragraph 4 of Article 5 of the ODR Regulation, in which (1) the parties can conduct the dispute resolution procedure online through electronic case management; (2) consumers can submit a complaint electronically to a trader; (3) the trader has right to identify the competent ADR entity, and in case the parties mutually agree on the ADR body, the parties transmit the complaint to that body. The platform also provides the free translation of information necessary for the resolution of the dispute. To this end, the key characteristics of the ODR platform of the EU can
be summarized as followings:

• Consumers and traders can choose any of the EU official languages for their
  interaction with the platform such as submitting their complaints, receiving notifications
  and so on.
• The ODR platforms are competent to handle the case and to refer the dispute to
  the ADR body on which the parties agree.
• ADR/ODR bodies can use the platform's case management system to conduct the
  ADR procedure entirely online.
• The parties can request that the outcome of the ADR procedure should be
  translated by a professional translator.
• Clear deadlines are built into the platform to ensure a fast process.
  According to the EU ADR/ODR legal framework, the ODR process takes part when the unhappy consumer submits a fully completed complaint to the ODR platform and the trader response and agree to go to the ADR Body for resolving the dispute. Each dispute  resolution body under the EU ADR/ODR framework has its own rules and procedures, but it is possible to conclude that there are four main steps under the EU ODR platform in general as followings:

1. submitting a complaint;
2. agreeing on a dispute resolution body,
3. handling of the complaint by the dispute resolution body, and
4. outcome and closure of the complaint.

Conclusion

Overall, the EU ODR platform has functioned structurally and worked properly, and has
impressed consumers in the EU, and the response of a survey conducted in 2017 proved that 71% of the ODR platform visitors were satisfied and found it useful. With the ADR Directive and ODR Regulation, the EU legal framework for consumer ADR/ODR is now in place. And except Spain, all Member States have communicated to the Commission that they have fully implemented the ADR Directive.

However, not all ADR bodies from all Member States are connected to the Online Dispute
Resolution platform and it remains low participation of traders in the platform. As of September 2019, in about 80% of disputes submitted to the ODR platform was closed automatically because the trader had not responded the notification of the dispute and the invitation to propose an ADR entity to the consumer. Only in about 2% of cases, the platform was able to transmit the dispute to an ADR entity the parties agree. To conclude, this remains a key challenge for the EU ODR platform.

Phet Sengpunya
Faculty of Law, University of Pecs | Hungary

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