EU considering out-of-court consumer dispute scheme

European policymakers have expressed broad support for the introduction of an EU-wide out-of-court settlement scheme to resolve consumer disputes, although opinion is currently divided on whether it should be voluntary or mandatory.

A hearing in Brussels last week marked the end of a three-month public consultation on whether to set up an Alternative Dispute Resolution system in order to provide consumer and traders with a cost-effective and straightforward means of resolving disputes.

EU Consumer Affairs Commissioner John Dalli said: "We want to make sure that consumers can resolve problems cheaply out of court. ADR boosts markets by encouraging consumers to buy and businesses to sell across borders. Given the right framework, consumers can be a key engine of growth."

The problem at the moment is that, although there may be more than 750 ADR schemes currently in place across Europe, not all countries operate one. Moreover, those initiatives that are available are variable in quality, do not cover all industry sectors, are subject to low levels of consumer and business awareness and do not generally apply to cross-border trading. As a result, only 3% of consumers and 9% of retailers turned to an ADR scheme in 2009.

The consultation’s findings are due to be published later this spring and will feed into forthcoming legislative proposals, which will be published by the European Commission by the end of the year.

But opinion was split on whether an EU-wide ADR scheme should be voluntary or mandatory. Hungary, which currently holds the EU’s rotating presidency, was wary of making it compulsory, for example. Hungarian Minister for Strategic Affairs Zoltan Csefalvay said: "It’s not our duty to regulate ADR, but to support it", adding that it should be given "total autonomy" in order to flourish "on its own terms".

"ADR is not for every case and it is certainly not our intention to make it so. It can best be established by trade associations and national consumer groups rather than by being imposed centrally. But it is the best resolution system in some areas, especially cross-border ecommerce," Csefalvay said.

But other representatives feared that a voluntary approach would create a system that was too variable in quality from one country to another. European Parliament Vice President Diana Wallis said that at the very least the EU “should be able to offer signposting or a roadmap to make sure that people get to the right place”.

Maltese MEP Louis Grech went further, claiming that "an EU-wide ADR system would give a greater sense of security", but warned that clarification was required as to whether the EC’s proposals would cover only business-to-consumer activities or business-to-business ones too.

"We cannot afford any more years of reports, discussions and hearings. It’s time for the Commission to act now," he added.

Under EC terminology, an ADR scheme is non-judicial and requires the appointment of a neutral third party to help settle disputes between individual consumers and traders if there are problems with goods or services. It does not cover businesses’ customer complaint handling systems, direct amicable settlements between consumers and traders or mediation processes within the judicial systems.