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A new regulatory framework for extra-judicial consumer redress: where we are and how to move forward

  • Pablo Cortés (a1)

Abstract

This paper examines the new legal framework on consumer Alternative Dispute Resolution (ADR) in the EU. Its primary contribution lies in identifying that harmonising the complaint submission in a pan-European Online Dispute Resolution (ODR) platform, and directing parties to nationally approved ADR entities that comply with minimum standards, will not fulfil the potential of an extra-judicial consumer redress system. This paper proposes key functions that the ODR platform should incorporate if it is to provide effective redress. This paper also argues that a successful ODR platform should include built-in incentives that encourage parties to: (i) participate in approved ADR processes; (ii) settle complaints with little or no intervention from neutral third parties; and (iii) ensure voluntary compliance with final outcomes.

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Corresponding author

Pablo Cortés, Senior Lecturer, School of Law, University of Leicester, University Road, Leicester LE1 7RH, UK. Email: pablo.cortes@le.ac.uk

Footnotes

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I wish to acknowledge the support given by the University of Leicester in granting me a semester of study leave to conduct this research. I would also like to thank DG SANCO, Fernando Esteban de la Rosa, Julia Hörnle, Christopher Hodges, Colin Rule, Joseph Savirimuthu, Patricia Ypma and Hannah Bill for reading earlier drafts and discussing many of the ideas contained in this paper. Thanks are also due to the two anonymous reviewers for their informed and constructive comments. The usual disclaimers apply.

Footnotes

References

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1. European Commission Staff Working Paper Impact Assessment Accompanying the document of the Proposal for a Directive on Alternative Dispute Resolution for Consumer Disputes and the Proposal for a Regulation on Online Dispute Resolution for Consumer Disputes, SEC(2011) 1408 final, at 5.

2. Bordone, RElectronic online dispute resolution: a system approach – potential, problems, and a proposal’ (1998) 3 Harv Negot L Rev 175 ; Katsh, E and Rifkin, J Online Dispute Resolution: Resolving Conflicts in Cyberspace (San Francisco: Jossey-Bass, 2001 ); Rule, C Online Dispute Resolution for Businesses (San Francisco: Jossey-Bass, 2002 ); Kaufmann-Kohler, G and Schultz, T Online Dispute Resolution (Dordrecht: Kluwer Law International, 2004) p 7 ; Ponte, L and Cavenagh, T Cyberjustice, Online Dispute Resolution for E-Commerce (Upper Saddle River, NJ: Pearson Prentice Hall, 2005 ); Calliess, G-POnline dispute resolution: consumer redress in a global market place’ (2006) 7(8) German L J 647 ; Conley Tyler, M and Bornstein, JAccreditation of on-line dispute resolution practitioners’ (2006) 23(3) Conflict Resol Q 383 ; Rabinovich-Einy, OTechnology's impact: the quest for a new paradigm for accountability in mediation’ (2006) 11 Harv Negot L Rev 253 ; Larson, DTechnology Mediated Dispute Resolution (Tmdr): a new paradigm for Adr’ (2006) 21(3) Ohio St J on Disp Resol 629 ; Morek, RThe regulatory framework for online dispute resolution: a critical view’ (2006) 38 U Tol L Rev 163 ; Hörnle, J Cross-border Internet Dispute Resolution (Cambridge, UK: Cambridge University Press, 2009) p 75 ; Cortés, P Online Dispute Resolution for Consumers in the European Union (London: Routledge, 2010) pp 5254 ; Lodder, A and Zeleznikow, J Enhanced Dispute Resolution through the Use of Information Technology (Cambridge, UK: Cambridge University Press, 2010) pp 7585 ; Hodges, C, Benohr, I and Creutzfeldt-Banda, N Consumer ADR in Europe (Civil Justice Systems) (Oxford: Beck/Hart, 2012) pp 367453 ; Del Duca, L, Rule, C and Loebl, ZFacilitating expansion of cross-border e-commerce-developing a global online dispute resolution system’ (lessons derived from existing ODR systems – work of the United Nations Commission on International Trade Law) (2012) 1(1) Penn St J L & Int'l Aff 59 ; Wahab, M, Katsh, E and Rainey, D Online Dispute Resolution: Theory and Practice (The Hague: Eleven International Publishing, 2012 ); Vilalta Nicuesa, AE Mediación y Arbitraje Electrónicos (Thomson Reuters Aranzadi, 2013 ); Cortés, P and Esteban de la Rosa, FBuilding a global redress system for low-value cross-border disputes’ (2013) 62(2) Int'l & Comp L Q 407.

3. See OECD Conference on Empowering E-consumers Strengthening Consumer Protection in the Internet Economy, Background Report DSTI/CP(2009)20/FINAL, Washington DC (8–10 December 2009) at 29. European Commission, EU Consumer Policy Strategy 2007–2013, COM(2007) 99 final, at 11.

4. See Impact Statement, above n 2, at 5.

5. Directive 2013/11/EU of the European Parliament and of the Council of 21 May 2013 on alternative dispute resolution for consumer disputes and amending Regulation (EC) 2006/2004 and Directive 2009/22/EC, [2013] OJ L165/63 and Regulation (EU) 524/2013 of the European Parliament and of the Council of 21 May 2013 on online dispute resolution for consumer disputes and amending Regulation (EC) 2006/2004 and Directive 2009/22/EC, [2013] OJ L165/1.

6. Communication on Alternative Dispute Resolution for Consumer Disputes in the Single Market COM(2011) 791; Civic Consulting, European Parliament Study Cross-border Alternative Dispute Resolution in the EU (2011) at 9, 31, 49; ECC-Net Cross-border Dispute Resolution Mechanisms in Europe-Practical Reflections on the Need and Availability (2009) at 57.

7. This situation has been criticised extensively, noting that soft laws, such as the EU Recommendations on ADR, were insufficient to ensure minimum quality standards for ADR entities. See Commission Recommendation 98/257/EC of 30 March 1998 on the Principles Applicable to the Bodies Responsible for Out-of-Court Settlement of Consumer Disputes (OJ 1998, L 115); Commission Recommendation 2001/310/EC of 4 April 2001 on the Principles for the Out-of-Court Bodies Involved in the Consensual Resolution of Consumer Disputes (OJ 2001, L109/56). See Impact Assessment, above n 2.

8. ADR national schemes are more widely set up to resolve disputes in the fields of financial services, package travel and telecommunications. Identified gaps, where ADR is particularly inaccessible, include games of chance, food products, non-food consumer goods, construction and transport. See Civic Consulting Study for DG SANCO Study on the Use of Alternative Dispute Resolution in the Eu (2009) Figure 14, at 59.

9. UNCITRAL Working Group III (Online Dispute Resolution). See http://www.uncitral.org/uncitral/commission/working_groups/3Online_Dispute_Resolution.html (accessed 1 March 2014). Cortés and Esteban de la Rosa, above n 3.

10. Article 2 of the ADR Directive. It must be noted that initially Germany considered the inclusion of domestic disputes as a breach of the principle of subsidiarity. See Bundesrat's Chamber of European Affairs, Decision 772/11 adopting an opinion pursuant to Art 12 (b) TEU (24 January 2012) paras 3 and 4. Cf H Micklitz and G Sartor ‘Assessing the scope of the online dispute resolution platform’ and H Jacquemin ‘Optimal integration of the European dispute resolution platform’ (13 April 2012), available at http://www.europarl.europa.eu/committees/en/imco/publications.html?id=IMCO00001 (accessed 1 March 2014). Although there are some existing ADR entities that already have this wide scope (eg the Spanish consumer arbitration system), the majority of the existing entities are sector specific (eg the Financial Ombudsman Service or the Legal Ombudsman in the UK).

11. Article 2(2)(e) of the ADR Directive.

12. European Parliament, Committee on the Internal Market and Consumer Protection, Draft Report of 18 April 2012, 2011/0373(COD) Rapporteur L Grech, at 65.

13. Article 2(2).

14. Article 2(2) (f) and (g).

15. Article 5(4).

16. Article 18.

17. See Department for Business and Innovation Skills (BIS) Government Response to the Call for Evidence, Eu Proposals on Alternative Dispute Resolution (May 2012) at 17.

18. Article 21.

19. BIS Response, above n 18, at 18.

20. The blueprints of these standards were contained in the Recommendations 98/257/EC and 2001/310/EC.

21. Article 6.

22. Article 7.

23. Article 8.

24. Article 9.

25. Grech, above n 13; see similar provisions in the Mediation Directive 2008/52/EC, Art 8(1).

26. Article 10.

27. Article 11. In this way, the Directive is in line with previous legislation and developments by the Court of Justice of the European Union (CJEU) that restricted the validity of pre-dispute arbitration clauses. See Asturcom Telecomunicaciones (C-40/08) and Mostaza Claro (C-168/05). Cf Micklitz and Sartor, above n 11, at 16. See generally Collins, DCompulsory arbitration agreements in domestic and international consumer contracts’ (2008) 19(2) King's L J 335356 ; Piers, MConsumer arbitration in the Eu: a forced marriage with incompatible expectations’ (2011) 2(1) J Int'l Dispute Settlement 209 at 219–228.

28. In cross-border disputes, in accordance with the Rome I Regulation, the applicable law will often be the law of the consumers' habitual residence, particularly where the trader has actively targeted the consumer's jurisdiction by, for instance, offering goods in the language and currency of the consumer. See Art 6(2) of the Rome I Regulation (OJ 2008, L 177/6) and Peter Pammer (C-585/08). However, if the proposal for a Common European Sales Law Regulation is approved, then parties in cross-border contracts (for the sale of goods, digital content and related services) would be able to choose this common law instead of the consumer national laws. Editorial Comments (2012) 49 Common Market L Rev 12671278 at 1278; Whittaker, SThe proposed “Common European Sales Law”: legal framework and the agreement of the parties’ (2012) 75(4) Mod L Rev 578605 ; Esteban de la Rosa, F and Olariu, OLa protección del consumidor en la propuesta de Normativa Común de Compraventa Europea: ¿realidad o quimera?’ (2012) 13(1) Indret 132.

29. Katsh and Rifkin, above n 3, p 93.

30. Article 1 of the ODR Regulation.

31. Article 5(3). See link at http://europa.eu/youreurope/citizens/index_en.htm (accessed 1 March 2014).

32. Article 2(2).

33. To that figure we must add the annual running costs (€300,000) plus upgrading the ECC-Net (€500,000). See Impact Statement, above n 2, at 58.

34. Article 10(d).

35. Article 14.

36. There are three ways in which parties can agree to participate in an ADR process through the ODR platform. First, the consumer will be invited to participate in the ADR process when the trader contractually agrees, or has previously agreed, to an ADR process. Secondly, there are ADR entities (mainly ombudsmen schemes) that receive consumer complaints without the traders' agreement to participate. This is, for example, the case of the Legal Ombudsman in the UK, which receives complaints about lawyers, or the Financial Ombudsman Services, which settle complaints related to financial services in the UK. Germany and the Netherlands also have other mandatory schemes. See Hodges et al, above n 3, pp 73–116, 129–166. Lastly, there are sector-specific laws in the EU that require the participation of traders in an ADR scheme. For examples of directives requiring that ADR schemes are put in place, see the telecom and energy sectors (Directives 2009/136/EC and 2009/72/EC) as well as the consumer credit Directive 2008/48/EC and the payment services Directive 2007/60/EC. There are also legal provisions that require various sectors to provide internal complaint mechanisms. Examples are Directive 2002/65/EC on distance marketing of financial services: Recital 28, Arts 3(4)(a) and 14; Directive 2008/122/EC on the protection of consumers in respect of certain aspects of timeshare, long-term holiday product, resale and exchange contracts: Recital 21 and Art 14; Directive 2000/31/EC on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (Directive on electronic commerce): Recitals 51 and 52, and Arts 1(2) and 17.

37. Article 6.

38. Article 5(1). See also Report of the Committee on the Internal Market and Consumer Protection of the European Parliament on a ‘Strategy for strengthening the rights of vulnerable consumers’ (2011/2272(INI)) Rapporteur: I Pérez, para 33. Cf Esteban de la Rosa, FPrincipios de protección del consumidor para una iniciativa Europea en el ámbito de la Resolución Electrónica de Diferencias (Odr) de consumo transfronterizas’ (2011) 25 Rev Gen Derecho Eur 16. Arguably, parties without ICT skills may face barriers in accessing technology. The CJEU held this view in Alassini, arguing that if online redress processes were imposed inappropriately on consumers, it would impede their right of access to justice. See Rosalba Alassini and Others v Telecom Italia C-317/08–C-320/08 (18 March 2010) The CJEU in Rosalba Alassini allowed for the use of mandatory mediation provided that it does not deny the parties access to the court after unsuccessful mediation and when ‘the electronic means is not the only means by which the settlement procedure may be accessed’. See para 67. Cf Davies, J and Szyszczak, EAdr: effective protection of consumer rights?’ (2010) 35(5) Eur L Rev 695. Nevertheless, access to technology and skills in its use are rapidly changing, particularly amongst younger generations and e-commerce participants. See Larson, DTechnology Mediated Dispute Resolution (Tmdr): a new paradigm for Adr’ (2006) 21 Ohio St J on Disp Resol 668670.

39. Articles 5 and 6.

40. Flash Eurobarometer Report Cross-Border and Consumer Protection (March 2011).

41. The lingua franca is normally English for the ECC. The ECC Protocol on Case Handling IT Tool states that the problem description should be written in English by the Consumer ECC unless another language is agreed between the ECCs sharing the claim. See Art 7.

42. See above n 10.

43. Cortés and Esteban de la Rosa, above n 3.

44. Official Records of the General Assembly, Sixty-Fifth Session (New York, 21 June – 9 July 2010), Supplement No. 17 (A/65/17), para 257.

45. UNCITRAL Report of Working Group III (Online Dispute Resolution) on the Work of its Twenty-Fifth Session (New York, 21–25 May 2012) A/CN.9/774 (7 June 2012) para 16.

46. Rule, C and Del Duca, LFrom lex mercatoria to online dispute resolution: lessons from history in building cross-border redress systems’ (2011) 43(3) UCC L J 115 at 13. See also A/CN9/WG III/WP112 UNCITRAL Working Group III (Online Dispute Resolution) Note by the Secretariat, 28 February 2012.

47. See, for instance, the Directive on Consumer Rights 2011/83/EU and the proposal for a Regulation on a Common European Sales Law SEC(2011) 1165 final. See a critical analysis on the limitations of the consumer acquis at Micklitz, HW and Reich, NCrónica de una muerte anunciada: the Commission proposal for a “Directive on Consumer Rights”’ (2009) 46(2) Common Market L Rev 471 ; Eidenmuller, H et al ‘Towards a revision of the consumer acquis’ (2011) 48 Common Market L Rev 10771123 ; Weatherill, SRThe Consumer Rights Directive: how and why a quest for “coherence” has (largely) failed’ (2012) 49 Common Market L Rev 12791318.

48. I would like to thank the reviewers for raising this point.

49. See, for instance, the UK, which while implementing the Consumer Rights Directive 2011/83/EU is going through a process of harmonising and clarifying UK national consumer law. See the Department for Business and Innovation Skills (BIS) Report on ‘Consolidation and simplification of UK consumer law’ (November 2010) and the Consumer Rights Bill 2013.

50. Naturally, this expression has been borrowed from Mnookin, R and Korn Hauser, LBargaining in the shadow of the law: the case of divorce’ (1979) 88 Yale L J 950.

51. A/CN.9/716, 17 January 2011.

52. Article 2 of the ADR Directive.

53. The European Small Claims Procedure threshold of €2,000 was discussed as a possible benchmark. See Regulation (EC) 861/2007 of the European Parliament and of the Council of 11 July 2007, establishing a European Small Claims Procedure, OJ 2007 L 1999/1.

54. See the eBay Resolution Centre at http://resolutioncenter.ebay.com/ (accessed 1 March 2014) and MasterCard, Chargeback Guide (29 June 2012), http://www.mastercard.com/us/merchant/pdf/TB_CB_Manual.pdf (accessed 1 March 2014).

55. See Draft Preamble of the Twenty-Fifth Session (New York, 21–25 May 2012) A/CN.9/WG.III/WP.112 – Online dispute resolution for cross-border electronic commerce transactions: draft procedural rules.

56. See the Twenty-Sixth Session (5–9 November 2012) and the Twenty-Seventh Session (20–24 May 2013) of UNCITRAL Working Group III.

57. In these jurisdictions, an arbitral award against a consumer who participated via a pre-dispute arbitration clause would not be binding on the consumer. See Proposal by the European Union Observer Delegation of the Twenty-Seventh Session of UNCITRAL Working Group III (New York, May 2013), Online Dispute Resolution for Cross-Border Electronic Commerce Transactions: Draft Procedural Rules. A/CN.9/WG.III/WP.121.

58. C-40/08 Asturcom Telecomunicaciones and C-168/05 Mostaza Claro. Although a number of EU Member States presently allow for pre-dispute consumer arbitration under very limited circumstances; other countries, chiefly the USA, have largely upheld the validity of pre-dispute arbitration agreements unless they are ‘unconscionable’ for the consumer. The US Supreme Court has given a very restrictive interpretation to these exceptions and has also restricted the use of state law in limiting the application of the Federal Arbitration Act (FAA). See Carnival Cruise Lines, Inc. v Shute, 499 S.Ct. 585 (1991) and AT&T Mobility v Concepcion 131 S.Ct. 1740 (2011), giving force to the Federal Arbitration Act. US courts are, however, more likely to strike down mandatory arbitration clauses in online contracts when the consumer could not have found an alternative supplier. See Bragg v Linden Research, Inc., 487 F. Supp. 2d 593 (E. D. Penn. 2007). It must be also noted that the CJEU has distinguished pre-dispute mediation clauses from arbitration clauses. The former are valid provided that they meet the conditions set out by the Court. See C-317/08 Rosalba Alassini at 67.

59. See European Parliament Resolution of 25 October 2011 on Alternative Dispute Resolution in Civil, Commercial and Family Matters (2011/2117(INI)). The e-Justice portal is presently preparing an online filing system for the European Small Claims Procedure, which is expected to start running in 2013. See https://e-justice.europa.eu/home.do?plang=en&action=home (accessed 1 March 2014). Cf P Cortés ‘Does the proposed European procedure enhance the resolution of small claims?’ (2008) 27(1) Civ Just Q 83–97. See Recital 53 of the E-Commerce Directive 2000/31/EC encouraging access to justice by employing appropriate electronic means in the judicial process.

60. Research in the EU has suggested that parties would not consider to go to court for less than €500. See J Stuyck et al ‘Study on alternative means of consumer redress other than redress through ordinary judicial proceedings’ (Catholic University of Leuven, 17 January 2007). The economic threshold is even higher (€786) for cross-border claims. See Special Eurobarometer (2013) at 8.

61. See eg Rome I Regulation (OJ 2008, L 177/6); Brussels I Regulation (OJ 2001, L 012); and the Mediation Directive (OJ 2008, L 136/3).

62. See generally Smith, S and Martinez, JAn analytical framework for dispute system design’ (2009) 14(4) Harv Negot L Rev 14011446 . Hodges et al, above n 3, p 1.. Susskind, R The End of Lawyers? Rethinking the Nature of Legal Services (Oxford: Oxford University Press, 2008) p 224.

63. Hodges et al, above n 3, pp 199, 200, 220.

64. Ibid.

65. It is likely that the ODR platform will receive many complaints that are simple requests for information. According to the ECC-Net, in 2011, 40% of the contacts were consumer requests for information that arose from cases where traders had not attended to the requests. European Consumer Centres ‘Network, Annual Report 2011: getting help and advice on your purchases abroad’ (2012), available at http://ec.europa.eu/consumers/ecc/ecc_annual_reports_en.htm (accessed 1 March 2014).

66. This important role was first envisioned by Ury, W, Brett, J and Goldberg, S in Getting Disputes Resolved: Designing Systems to Cut the Costs of Conflicts (San Francisco: Jossey-Bass, 1988 ).

67. Rule, CMaking peace on eBayAcresolution (autumn 2008 ). Rabinovich-Einy, O and Katsh, ELessons from online dispute resolution for dispute system design’ in Wahab et al, above n 3, p 42 .

68. The external ADR method previously used by Telecom Italia is ‘paritetical negotiation’, whereby a representative of the consumer met with a representative of the trader in order to settle a complaint.

69. Smith and Martinez, above n 63, at 1434.

70. Thompson, DOnline dispute resolution expansion in the Eu’ (2012) 22(6) Computers & Law 31, 32; Cortés, PImproving the Eu's proposals for extra-judicial consumer redress’ (2012) 23(2) Computers & Law 2728.

71. United Nations Commission on International Trade Law (UNCITRAL) Working Group III (Online Dispute Resolution) Twenty-Fifth Session, ‘Online dispute resolution for cross-border electronic commerce transactions: draft procedural rules’ (New York, 21–25 May 2012) Draft Art. 5.

72. To put this figure into context, courts in England and Wales issue around one million civil (non-family) claims. See Judicial Court Statistics (annual) 2011 and Court Statistics (Quarterly) January–March 2013.

73. Schultz, TThe roles of dispute settlement and ODR’ in Ingen-Housz, A ADR in Business: Practice and Issues across Countries and Cultures (Dordrecht: Kluwer, 2011) p 135.

74. Rabinovich-Einy, OTechnology's impact: the quest for a new paradigm for accountability in mediation’ (2006) 11 Harv Negot L Rev 253. Cf Katsh and Rifkin, above n 3, p 36..

75. Lodder and Zeleznikow, above n 3, pp 75–85.

76. Rogers, N et al Designing Systems and Processes for Managing Disputes (Dordrecht: Kluwer, 2013) pp 2425, 250.

77. See eg SmartSettle.com.

78. See Cortés, PA European legal perspective on consumer Odr’ (2009) 15(4) Computer & Telecomm L Rev 92. See also Gabuthy, YOnline dispute resolution and bargaining’ (2004) 17(3) Eur J L & Econ 353371.

79. By way of examples on average costs, the Consumer Arbitration Scheme in Spain spends over €400 in resolving each case, while the Financial Ombudsmen Services in the UK spends £555 per case. See Hodges, C, Benohr, I and Creutzfeldt-Banda, NConsumer-to-business dispute resolution: the power of Cadr’ (2012) 13 ERA Forum 199, 206, 216. See also The Financial Ombudsman Service ‘Annual Review 2010/11’, available at http://www.financial-ombudsman.org.uk/publications/ar11/foreword.html (accessed 1 March 2014).

80. Most disputes relating to the sale of goods usually concern the non-arrival or untimely delivery of the goods in question, or their non-correspondence with the description provided at the time of the transaction; while disputes about services will often relate to the quality of those provided, or whether they were provided at all; for example, in cases of flight cancellations. See Katsh, E, Rifkin, J and Gaitenby, AE-commerce, e-disputes, and e-dispute resolution: in the shadow of “eBay law” ’ (2000) 15(3) Ohio St J on Disp Resol 705, 709, and Hodges et al, above n 3, p 453..

81. According to the European Consumer Centres' Network, the ECCs could only find an amicable solution in settlement with the trader in 41.6% of all cases and 56.2% of disputes arose from e-commerce transactions. In 75% of cases where no solution was found, this was due to lack of agreement with the trader. ECC Network Annual Report 2010, at 1; Henry, KMed-Arb: an alternative to interest arbitration in the resolution of contract negotiation disputes’ (1988) 3(2) Ohio St J on Disp Resol 385.

82. Article 5(3) of the ODR Regulation.

83. Article 5(2)(c) of the ADR Directive.

84. J Hörnle ‘Encouraging online dispute resolution in the Eu and beyond – keeping costs low or standards high?’ Queen Mary School of Law Legal Studies Research Paper No. 122/2012, s 4b.

85. Rule and Del Duca, above n 47.

86. Katsh and Rifkin, above n 3, p 93; Hörnle, above n 3, p 261..

87. Cortés, above n 71, at 28–29.

88. Article 19(3) of the Directive on Consumer ADR.

89. Articles 16 and 17 of the Directive on Consumer ADR. See also Opinion of the European Data Protection Supervisor on the Legislative Proposals on Alternative and Online Dispute Resolution for Consumer Disputes 2012/C 136/01.

90. Hörnle, above n 85, at s 6.

91. Hodges et al, above n 80, p 220..

92. Communication on Alternative Dispute Resolution for Consumer Disputes in the Single Market COM(2011) 791.

93. Article 14(1) of the ODR Regulation.

94. Article 13(1) of the ADR Directive. In an effort to assist traders in reducing the legal costs in complying with the information requirements, the UK government is considering providing a template or a standard wording that traders could use. BIS Response, above n 18, at 21.

95. See eg Directive 2000/31/EC on Electronic Commerce OJ 2000, L 178/1, and Directive 2011/83/EU on Consumer Rights OJ 2011 L304/64. In the event that a trader adhered to an ADR scheme continuously refuses to participate, it could be considered to be an unfair commercial practice (Directive 2005/29/EC OJ 2005, L 149/22).

96. In the UK, the Enterprise Act 2002 confers enforcement powers to the Office of Fair Trading, the Local Authority Trading Standards Services and other enforcement bodies that have powers to consider complaints and seek court orders for compliance when there is a blatant breach of these information obligations.

97. For instance, under the Spanish Arbitration System, in the cases where there exists a public offer of arbitration, the arbitral agreement will be valid once the consumer files the complaint and this is covered in the scope of application of the public offer. See Art 24.2 Spanish Royal Decree 231/2008. Cf E Vilalta ‘ODR and e-commerce’ in Wahab et al, above n 3, p 42..

98. Article 5(1) of the Mediation Directive empowers national courts to recommend the use of mediation (but not other ADR processes) when they consider appropriate to do so. Under English law, this is possible according to Cable and Wireless [2002] 2 All ER (Comm) 1041. See generally Hopt, K and Steffek, F Mediation: Principles and Regulation in Comparative Perspective (Oxford: Oxford University Press, 2012 ).

99. Hörnle, above n 85, at s 7.

100. Rogers et al, above n 77, pp 24–25.

101. C Rule, Ceo at Modria (and former Odr Director for eBay and PayPal), Presentation on eBay ODR Experience at the 10th International ODR Forum, Chennai, India, 9 February 2011.

102. Sorkin, DEPayment methods for consumer-to-consumer online transactions’ (2001) 35(1) Akron L Rev 910.

103. This incentive would go hand in hand with Art 5.1 of the Mediation Directive, which allows national courts to recommend the use of mediation. Established case-law in the UK states that cost penalties for unreasonably refusing to participate in ADR comply with Art 6 ECHR and Art 47 of the CFREU. See Halsey v Milton EWCA Civ 576 (2005) and Pt 36 of the Civil Procedure Rules 1998 (England and Wales).

104. See European Parliament Resolution of 2 February 2012, ‘Towards a coherent European approach to collective redress’ (2011/2089(INI)).

105. A trustmark is an electronic label displayed on the traders' website, signifying that they pledge to comply with a code of conduct, the relevant law, and that disputes will be addressed by an independent neutral third party. Cf Balboni, P Trustmarks in e-commerce (Cambridge, UK: Cambridge University Press, 2009) pp 3537.

106. EESC, Alternative Dispute Resolution for Consumer Disputes, Rapporteur: J Pegado Liz (CESE 803/2012 – INT/609) para 3.3. Grech, above n 13, at 65. The reason for deciding its exclusion is unclear to this author, but a plausible motivation might be the interest of the Commission in making a general consumer trustmark.

107. Hörnle, above n 85, at s 6. See also Cortés, PDeveloping online dispute resolution for consumers in the Eu: a proposal for the regulation of accredited providers’ (2011) 19(1) Int'l J L & Info Tech 128 .

108. Cortés, above n 3, pp 62–64.

109. For example, the Spanish government has created a trustmark (Confianza en Linea) that is controlled by the national consumer association and that provides assurance that its traders will participate in the institutional consumer arbitration scheme. See Real Decreto (Regulation) 292/2004 20 February 2004, which establishes a public trustmark for the services of the information society and the electronic commerce. See also Hörnle, above n 3, pp 262–263.

110. Hodges, above n 3, pp 90–94, 121, 289–290, 358.

111. Ibid; Roberts, S and Palmer, M Dispute Processes: ADR and the Primary Forms of Decision Making (Cambridge, UK: Cambridge University Press, 2nd edn, 2005) pp 346357.

112. Hörnle, above n 85, at s 4a.

113. Hodges et al, above n 80, at 214.

114. Doktori, D, Karlik, E and Perkins, LStakeholder analysis and design recommendations for an Eu-wide online dispute resolution system’, Harvard Negotiation & Mediation Clinical Program (2 May 2012).

115. Rule, above n 102.

116. Hodges et al, above n 80, at 212.

117. Ibid.

118. Cortés, PA comparative review of offers to settle – would an emerging settlement culture pave the way for their adoption in continental Europe?’ (2013) 32(1) Civ Just Q 4267.

120. Fiss, OAgainst settlement’ (1984) 93 Yale L J 1073.

121. Eisenberg, MPrivate ordering through negotiation’ (1976) 89 Harv L Rev 637 ; Mnookin and Korn Hauser, above n 51, at 950.

122. Article 7(2).

123. Cf Menkel-Meadow, CDo the “haves” come out ahead in alternative judicial systems? Repeat players in Adr’ (1999) 15 Ohio St J on Disp Resol 1961.

124. Micklitz and Sartor, above n 11, at 12, arguing for the publication of decisions in binding and non-binding processes, but maintaining the anonymity of the parties when they so request.

125. See http://www.trustpilot.com/ and http://www.reviewcentre.com/ (both accessed 1 March 2014).

126. It should be noted that Art 14 of the E-Commerce Directive 2000/31/EC establishes a safe haven regime for hosting providers as long as they are not informed of its illegal character, and that they act promptly when informed of it. By contrast in the USA, s 230 of the Communications Decency Act 1996 provides greater protection for website publishers. See Zeran v AOL, 129 F.3d 327 (4th Cir. 1997).

127. See http://www.google.com/ads/shopping/ and http://www.google.com/wallet/ (both accessed 1 March 2014).

128. For example, Trusted Shops lists the websites that have had their accreditation withdrawn for non-compliance (http://isisaccreditation.imrg.org/User/Pages/WithdrawnWebsites.aspx?pageID=16&pageTemplate=1, accessed 1 March 2014); the Internet Ombudsman in Austria publishes a Watchlist of traders that have generated multiple consumer complaints (http://www.ombudsmann.at/schlichtung.php/cat/5/aid/17/title/Watchlist, accessed 1 March 2014); and the Swedish National Board for Consumer Disputes also makes available to the public its decisions for ‘naming and shaming’ traders for non-compliance. See European Parliament (DG for Internal Policies, Internal Market and Consumer Protection) ‘Cross-border alternative dispute resolution in the European Union’ (June 2011), available at http://www.europarl.europa.eu/meetdocs/2009_2014/documents/imco/dv/adr_study_/adr_study_en.pdf (accessed 1 March 2014).

129. See http://www.bbb.org/ (accessed 1 March 2014).

130. Webb, LInternational Bbb ratings à la eBay: a proposal for an improved online better business bureau to facilitate international business transactions’ (2004) 35 Cal W Int'l L J 127.

131. Hodges et al, above n 80, at 216.

132. See eg http://www.escrow.com (accessed 12 September 2013). The Payment Services Directive 2007/64/EC (OJ 2007, L 319) allowed the introduction of low-cost escrows in the EU that are properly licensed and regulated by the public authorities. Cf UNCITRAL Working Group III ‘Online dispute resolution for cross-border electronic commerce transactions: overview of private enforcement mechanisms’ (13 September 2013), available at http://www.uncitral.org/uncitral/commission/working_groups/3Online_Dispute_Resolution.html (accessed 1 March 2014).

* I wish to acknowledge the support given by the University of Leicester in granting me a semester of study leave to conduct this research. I would also like to thank DG SANCO, Fernando Esteban de la Rosa, Julia Hörnle, Christopher Hodges, Colin Rule, Joseph Savirimuthu, Patricia Ypma and Hannah Bill for reading earlier drafts and discussing many of the ideas contained in this paper. Thanks are also due to the two anonymous reviewers for their informed and constructive comments. The usual disclaimers apply.

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Legal Studies
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