On 17 October 2023, the European Commission presented a set of proposals and recommendations to revise the legal framework for the consumer alternative dispute resolution (CADR), which includes the following main documents:
– Proposal for a Regulation of the European Parliament and of the Council repealing Regulation (EU) No 524/2013 and amending Regulations (EU) 2017/2394 and (EU) 2018/1724 with regards to the discontinuation of the European ODR Platform;
– Proposal for a Directive of the European Parliament and of the Council amending Directive 2013/11/EU on alternative dispute resolution for consumer disputes, as well as Directives (EU) 2015/2302, (EU) 2019/2161 and (EU) 2020/1828;
The Report from the Commission to the European Parliament, the Council and the European Economic and Social Committee on the application of Directive 2013/11/EU of the European Parliament and of the Council on alternative dispute resolution for consumer disputes and Regulation (EU) No 524/2013 of the European Parliament and of the Council on online dispute resolution for consumer disputes has also been made public as a supporting document.
Overall, although several provisions may represent a step forward in the field of CADR, the European Union plans to take a significant step backwards in this area, at least in comparison with the 2013 legislative package.
So far, it was possible to identify three different phases in the evolution of the EU policy on ADR:
– First phase – Identification of the problem and adoption of non-binding instruments;
– Second phase – Adoption of binding instruments with a sectoral impact, applicable to all means of ADR or to means of CADR on specific issues;
– Third phase – Adoption of binding CADR instruments.
We are probably now heading towards a fourth phase of slowdown and disinvestment in this field.
Obviously, the European Commission does not present the legislative package adopted for discussion in this light. One can, however, easily see a clear trend in this direction.
Given the substantial differences between the Member States in terms of models and commitment to CADR, the solution is justified. Although I believe that alternative dispute resolution is the right way forward in this and other areas, I admit that the role of the European Union could be reduced by helping the Member States to implement the mechanisms they deem appropriate and, if possible, by financially supporting the organisations that resolve disputes.
The following is an analysis of the eight main aspects in which this legislative package, in particular the Proposal for a Directive, is innovative.
- Discontinuation of the European ODR Platform
In an article published in 2016, Joana Campos Carvalho and I had already predicted that the sad end of the platform would be in sight if significant changes were not made to the system provided for in Regulation (EU) No 524/2013 and some of its provisions. The number of cases was already low then and, over the years, it certainly has not increased.
Three main problems were identified.
Firstly, the lack of information about the existence of the platform. Although it was rightly required that the trader informed the consumer about the platform, nothing was done to ensure that this information was actually provided in a way that was easily accessible to the consumer. We therefore proposed the creation of a EU logo, which would have to be displayed on the homepage of the trader. Without information, both consumers and professionals are unlikely to take part in the project.
Secondly, the platform had very little flexibility and was not in line with some of the most successful national CADR systems. In fact, in cases where CADR is imposed on traders by national legislation, the platform had no mechanism to allow the process to move forward without the cooperation of the trader. If the CADR is imposed on them, the platform could never allow the trader to block the continuation of the process.
Thirdly, the Regulation was distrustful of CADR entities, not allowing them to contact the trader directly to convince them of the advantages of CADR before deciding whether or not to accept the procedure.
In practical terms, the shutdown of the platform will have very little impact on CADR, since it has always had very little use over the last ten years.
However, from a symbolic point of view, it is a landmark step in the EU’s policy and the main reason for the conclusion that the European institutions have clearly disinvested in this area. Nevertheless, the courage to back down from a solution that has not worked is to be commended.
- Duties to inform and respond
The Proposal for a Directive removes the duty of the trader to inform the consumer about the CADR if they are not bound to take part in a CADR procedure.
Whilst it is true that traders have an excessive number of information duties resulting from EU legislation (in many cases, on top of those resulting from purely national rules), it is nonetheless symbolic that the aim of reducing bureaucracy and the associated costs comes at the cost of a rule in such a relevant area.
This information had one objective: to make the CADR known to consumers. If the information is no longer provided, the likelihood of consumers knowing about the system and realising whether the trader is bound by it decreases dramatically.
It can be said that this is a cost rationalisation measure for businesses, which may well be justified, but it cannot be said that it will encourage greater participation in the CADR.
On the other hand, it is now compulsory for the trader to reply to the CADR entity within a maximum of 20 days. The response can be to participate or not participate in the procedure, in cases where it is not binding under national law, but the trader cannot fail to respond.
The effectiveness of this measure will essentially depend on the consequences envisaged internally in the event of a lack of response.
In terms of information duties, the simplification of procedures for CADR entities should be emphasised. This measure is positive, as some of these entities are more like centres of bureaucracy than of dispute resolution. It is strange, however, that there is no longer a requirement to report on the training of the individuals who manage the CADR procedures. This training is very important for the quality of the system, and it is anticipated that removing this duty to report could have the effect of reducing training time and, consequently, reducing the quality of the procedures.
- Extended scope of application
The scope of application of the Directive is extended to include non-contractual consumer relationships, particularly as regards the pre-contractual phase, and legal obligations.
This is a step in the right direction, although I think it would be preferable to extend the scope of application to all consumer disputes, possibly excluding only those that it would not be appropriate to resolve through ADR. I find it difficult to specify which disputes would be excluded from the scope of the Directive if the path I suggest were to be followed, which demonstrates the advantages of the extension.
- Bundling similar cases
In order to make the system more flexible and procedures more efficient, it is now possible to bundle similar cases involving the same trader.
I think we could go a little further and allow, in some situations, with the authorisation of the parties involved, the bundling of similar cases even if two or more different traders are involved.
- Prior contact with the CADR entity
The CADR bodies will still be able to refuse to deal with a dispute on the grounds that the consumer did not first try to contact the trader to resolve the dispute.
However, if the amendment is approved, the Directive will provide that CADR bodies may not impose disproportionate conditions in this regard. Recital (12) gives two examples: (i) “the obligation to use the company escalation system after a first negative contact with the complaints handling service” and “the obligation to prove that a specific part of a company’s after sales service was contacted”.
- Disputes with traders established outside the European Union
The Proposal for a Directive clarifies that the ADR entities must handle disputes in cases where the consumer is a resident of the Member State in question and the trader is based in a country outside the European Union.
This is a good solution, although attention is drawn to the difficulty, in many of these cases, of contacting the trader and, if necessary, managing the procedure, including for linguistic reasons.
Article 5-2 of the Proposal for a Directive expressly provides that (i) consumers may submit the complaint and access the paper file at their request, (ii) that tools relating to digital procedures are “easily accessible and inclusive” and that, (iii) in the event that the procedure is automated, the parties are granted a right to a review of the decision by a natural person.
The rationale for providing for these rights is understandable, although it should be emphasised that these are burdens that can be significant in practice for CADR entities.
- CADR contact point
One of the main innovations introduced by the Directive is the creation of a CADR contact point, which must be designated in each Member State, to assist consumers and traders.
Member States will have to make a first decision in this regard: will the CADR contact point be competent only for cross-border disputes or also for domestic disputes?
This question may be relevant to answering the second one: who should be the CADR contact point in each Member State?
The rule points to a preference for the contact point to operate in the European Consumer Centre, but this will probably only make sense in two cases: (i) the contact point is only intended to assist in cross-border disputes; (ii) the European Consumer Centre of the Member State concerned has powers extended to domestic disputes.
In any case, the success of this measure will essentially depend on its practical application. A contact point that effectively provides assistance to consumers and traders can add value to the system, helping to fulfil the objective of increasing access to the ADR network.
 Issues related to online marketplaces are not analysed: (i) on the one hand, the relationship between this regime and Art. 21 of the Digital Services Act; (ii) on the other hand, Recommendation (EU) 2023/2211, indicated in the second paragraph of the text.
 “Online Dispute Resolution Platform – Making European Contract Law More Effective”, in Alberto De Franceschi (ed.), European Contract Law and the Digital Single Market, Intersentia, Cambridge, 2016, pp. 245-266.