ADR, Consumer ADR, ODR

Christopher Hodges

Head of the CMS/Swiss Re Research Programme on Civil Justice Systems, Centre for Socio-Legal Studies, University of OxfordLife member, Wolfson College, OxfordErasmus Professor of the Fundamentals of Private Law, Erasmus University, RotterdamSolicitor of the Superior Courts of England and Wales

Comprehensive EU coverage for Consumer ADR

Directive 2013/11 on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Directive on consumer ADR).

Regulation (EC) No 534/2013 on online dispute resolution for consumer disputes (Regulation on consumer ODR)

Classic ADR

The context is usually civil procedure

Typically mediationBefore the procedure, eg English pre-action protocolsDuring the procedure

Advantages: informal; parties own the process, the negotiation and the solution; confidential so can make admissions; flexible outcomes; can restore trust or relations

Disadvantages: transparent justice? Contribution to clarification of law? Independence of third party?C Menkel-Meadow, Dispute Resolution: Beyond the Adversarial Model (2005; 2nd ed. 2011); C Menkel-Meadow, Dispute Resolution in Cane & Kritzer, The Oxford Handbook of Empirical Legal Research (Oxford, 2010); and many others

ADR - EU MechanismsCouncil Resolution of 25 May 2000 on a Community-wide network of national bodies for the extra-judicial settlement of consumer disputes, [2000] O.J. C 155/1Commission Recommendation 98/257/EC on the Principles Applicable to the Bodies Responsible for Out-of-Court Settlement of Consumer Disputes, [1998] OJ L 155/31Commission Recommendation 2001/310/EC on the Principles for Out-of-Court Bodies involved in the Consensual Resolution of Consumer Disputes, [2001] OJ L 109, 56-61Financial Services Complaints Network, FIN-NET, 2001 European Code of Conduct for Mediators, 2004Commission Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters, [2008] O.J. L 136/3

Consultation paper on the use of Alternative Dispute Resolution as a means to resolve disputes related to commercial transactions and practices in the European Union (European Commission, January 2011)Directive of the European Parliament and of the Council on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Directive on consumer ADR), 2013/11/EURegulation 524/2013 of the European Parliament and of the Council on online dispute resolution for consumer disputes (Regulation on consumer ODR), 2013

Measures that encourage Member States to establish ADR schemes

Distance Marketing of Financial Services Directive 2002/65/EC

Timeshare Directive 2008/122/EC

E-commerce Directive (EC) 2000/31

Postal Services Directive EC) 2008/6 amending 97/67/EC

Insurance Mediation Directive 2002/92/EC

Markets in Financial Instruments Directive (MiFID) (EC) 2004/39 on markets in nancial instruments amending 85/611/EEC, 93/6/EEC and 2000/12/EC and repealing 93/22/EEC

Measures that require Member States to establish ADR schemes

Directive (EC) 2009/136 amending Directive 2002/22/EC on universal service and users rights relating to electronic communications networks and services

Directive (EC) 2009/72 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC, [2009] OJ L211/55; and Directive (EC) 2009/73 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC

Directive (EC) 2008/48 on credit agreements for consumers

Directive (EC) 2007/64 on payment services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC

Regulation (EU) No 181/2011 on bus and coach passenger rights [complaints function either in house or external; also complaints and enforcement authority]

The Vision for CDRImproving access to JusticeClaims values are lowConsumers attitudes to cost proportionalityCost to consumersDurationUser-friendliness and accessibility

Providing consumer advice, to underpin informed purchasing

Enabling the CDR system to deliver regulatory output and raise trading standards

Responding to consumer issues

France Telecoms: 3 Insurance: 3 - 6Banks: 6 GDF/SUEZ: 2Travel: 2 - 4 National Energy mediator: 6Germany Telecoms: 4Insurance:4.1 Banks: no dataTravel: 3 PolandTelecoms: no dataConsumer arbitration tribunals: 0.5 - 2Banking: 1.1Trade inspection consumer: no dataEnergy: no dataSpain Telecoms: no dataInsurance /pensions: 4Banking: 4-6Investment: no data Energy: 2UKTelecoms: 6 or lessPensions: 10.9Banks/Insurance: 2.2FLA: 2Energy: xxTravel: 2-2.5

Sweden TraderInformationDispute

Main economic sectors concerned by complaintsPercentageTransport, of which:Air transport (including problems with luggage)Car rental32.1%21.6%3.4%Timeshare related products and package holidays7.4%Recreational, sporting and cultural services7.0%Furnishing, household equipment and routine household maintenance6.8%Audio-visual, photographic and information processing equipment5.6%Health5.1%Communication4.7%Clothing and footwear4.5%Hotels and restaurants4.5%Personal care goods and services3.0%Financial services and insurance2.5%

200720082009201020112012Contacts50.93062.56960.75571.29270.20772.067Complaints24.81026.67427.60128.92726.90932.197Information requests22.28429.24325.87527.06028.10826.399

The added value of CDRMore attractive and cheaper for users than courts

Regulation of market behaviour:capture of complaint data aggregationidentification of issues and trendspublicationenable regulatory action

Collective redress by CDRs + RegulatorsSwifter identification of a systemic issueApplication of a generic solution

Three Pillar Model of Enforcement

Proposition

The central pathways for C2B dispute resolution in Europe will be new CADR/CDR/ODR

Regulatory oversight of compensation as part of enforcement of compliance

Courts (and lawyers) will have a residual and more restricted role

Commission CDR 2013 Legislation1. Gaps in coverageSectorsMember StatesFill gaps by mandatory horizontal coverLessons from Netherlands/Nordic unified modelODR platform

2. Lack of awareness How increase usage? visibility and adherence: National, EU and global umbrellas

3. Variation in qualityQuality principles (the 2 recommendations) and regulatory scheme with national competent authorities

4. ODR Platform

How to achieve the objectives?

The primary principle: Consumer ADR (CDR) must be effective (art 8).

Quality principles must be respected. CDR entities must be expert, independent and impartial (art 6.1). CDR entities that do not meet the standards must be improved or closed (arts 18-20). National competent authorities (NCAs) overseeing CDR entities must be effective. Data on the operation of CDR entities should be published (art 7).There should be agreement and clarity on which rules are being applied (art 7.1.1), i.e. law, fairness, equity, terms and conditions, etc.

Anticipating criticism

Unconstitutional

Blocks access to courts

Private justice bodies

Inconsistent decisions

Expense of regulating private bodies

Some business sectors dont need CDR

Criteria for democratic acceptance of Dispute Resolution Procedures

The right to access to justice and to a fair trial: Art 6 ECHR

The right to an eective remedy and to a fair trial: Art 47 EUCFR

Commission Recommendation (EC) 98/257/EC on the principles applicable to the bodies responsible for the out-of-court settlement of consumer disputes, [1998] OJ L 115

Commission Recommendation (EC) 2001/310 on the principles for out-of-court bodies involved in the consensual resolution of consumer ADR, OJ L 109 56

Modes: Historical Evolution of ModelsCourts: Procedural Justice

Arbitration: panels of 3Spain Nordic Consumer Complaint BoardsNetherlands GeschillencommissieUK Self-regulatory systems (Codes) and hybrids

Mediation: French mdiateurs: in ministries/regulators and companies

Public Ombudsmen (privatised, regulated industry sectors) and/or private sector Ombudsmen: single case handlers and ombudsmen

Techniques: an escalating pyramid

Netherlands Model

Three Tiers

Traders: encouraged to respond to customer feedback

CDR: a seamless service to users:Residual CDR functionSectoral specialist CDRs funded by business

Enforcers: linked in, with behavioural and redress powers

Conclusion

CDR is good for consumers, traders, markets, and economic prosperity

We need to make it work

Governments and ombudsmen and enforcers need to make the right design choices now

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