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Cross-border shopping wars: EC proposes free online arbitration

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The European Commission has proposed a free online dispute resolution platform through which traders and consumers could resolve disputes over online purchases.

The Commission has published a draft regulation on online dispute resolution and said that a new platform would save time in ending consumer disputes and "ease communication" between parties based in different countries.

Under the proposal, consumers and traders would be able to submit complaints to registered alternative dispute resolution (ADR) "schemes" via a dedicated website. Complaints would be directed towards the "competent" ADR scheme for dealing with it and that scheme would then determine the outcome of the dispute within 30 days. ADR schemes may take longer to deal with complex disputes in some circumstances.

"The present proposal aims at establishing a European online dispute resolution platform (ODR platform)," the Commission's proposals (40-page/254KB PDF) said.

"This ODR platform takes the form of an interactive website which offers a single point of entry to consumers and traders who seek to resolve out-of-court a dispute which has arisen from a cross-border e-commerce transaction. The platform can be accessed in all official languages of the EU and its use is free of charge. ADR schemes established in the Member States which have been notified to the Commission ... will be registered electronically with the ODR platform," it said.

The Commission said that a lack of effective redress currently available for cross-border online purchases hinders trade.

"Consumers lose out by not being able to shop online across borders; they thus miss the opportunity of comparing the costs of products in the wider EU market and of buying them where they are less expensive. Businesses, in particular small and medium-sized enterprises, are deterred from acquiring the administrative capacity needed to deal with disputes with consumers residing in another Member State. This hinders the development of the digital Internal Market," the Commission's proposals said.

"Consumers and traders will be able to submit their complaints through an electronic complaint form which will be available on the platform’s website in all official languages of the EU," it said. "The platform will check if a complaint can be processed and seek the agreement of the parties to transmit it to the ADR scheme which is competent to deal with the dispute. The competent ADR scheme will seek the resolution of the dispute in accordance with its own rules of procedure within 30 days from the date of receipt of the complaint."

"The ADR scheme will have to notify to the platform some data in relation to the development of the dispute (date when the complaint was notified to the parties; date when the dispute was resolved; outcome of the dispute)," it said. "Under the proposal, a network of online dispute resolution facilitators (ODR facilitators' network) will be established which will consist of one contact point for online dispute resolution in each Member State. The ODR facilitators' network will provide support to the resolution of disputes submitted via the ODR platform."

When a complaint is submitted, the ODR platform facilitators would enable disputing consumers and traders to choose between ADR schemes, if more than one body is able to deal with the dispute. Traders and consumers do not have to specify a choice but must both agree to the appointment of an ADR scheme before a complaint can be resolved. Details of whether fees would apply for the use of an ADR scheme would have to be sent out to consumers and traders by the facilitators and whether the ADR scheme could require disputing parties to be physically present to resolve issues.

The Commission announced the ODR platform proposals alongside wider plans to change the laws in relation to ADR. It wants ADR to be available as a mechanism for settling any contractual dispute between consumers and business and announced the proposal in a new draft Directive (24-page/87KB PDF).

Under the Commission's plans, all ADR bodies in the EU would have to be impartial experts that offer transparent information about their services, hear and determine the outcomes of complaints fairly and generally determine those outcomes within 90 days of receiving a complaint.

ADR mechanisms should be free or low cost for consumers to use and member states should be able to draw up national rules that force disputing parties to enter into ADR and make any decisions made binding upon them, the Commission said.

Copyright © 2011, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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