The EU Council has agreed amendments to the European Commission’s November 2011 proposals for a draft Directive on alternative dispute resolution (ADR) for consumer disputes and a draft Regulation on online ADR for resolving consumer disputes regarding online purchases made in another EU country (ODR).  The ADR-ODR legislative package is a priority initiative of the European Single Market Act and of the Digital Agenda, and the European Parliament has indicated that it intends to adopt the package by the end of 2012. After adoption, member states will have 18 months in which to implement the ADR Directive. The Regulation will be binding automatically.

The purpose of the Directive is to provide for simple, fast and affordable out-of-court settlement procedures designed to resolve disputes between consumers and traders arising from the sales of goods and services. In its current draft version, the Directive would apply to disputes submitted by consumers against traders in almost all areas of commercial activity across the EU. The Council’s amendments give member states the power to set monetary, procedural and time thresholds outside of which the Directive would not apply. The Directive will also not apply to complaints submitted by traders against consumers or disputes between traders.

The Directive will be supplemented by a European on-line dispute resolution platform (ODR Regulation). This will be an interactive website accessible electronically and free of charge in all languages of the Union. Consequential amendments to reflect changes to the ADR Directive were made by the Council to the ODR Regulation. In addition, the ODR Regulation will now offer enhanced services including: informing the trader about the complaint submitted against him, providing the parties with information about the competent ADR entity to deal with their dispute, and offering a free electronic case management tool to enable the parties and the ADR entity to conduct the ADR procedure online via the ODR platform.

The EU’s promotion of ADR through the above proposals should be applauded. However, incentives must be developed for participation, as well as a high functioning platform devised. Particular care will need to be taken at the monitoring level, to ensure that ADR providers perform their roles adequately to protect consumer rights.