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Online traders will be able to resolve contractual disputes with consumers based in other EU countries through a new online dispute resolution (ODR) framework after MEPs voted to back the new regime earlier this week.

The European Parliament approved a new ODR Regulation and a new Alternative Dispute Resolution (ADR) Directive on Tuesday. The European Commission has said the new regime will allow disputes over online transactions to be settled faster and at less cost than through the courts. The Commission initially proposed the new ODR and ADR rules in late 2011. The UK Government has previously expressed scepticism about the claimed benefits of the new system.

The new ODR Regulation will enable the European Commission to establish a new 'online platform' through which consumers could submit complaints about contracts with businesses. The platform is to be linked to national ADR schemes which would ultimately seek to resolve disputes.

"Consumers who encounter a problem with an online purchase will be able to submit a complaint online through the ODR platform, in the language of their choice," the Commission said in a statement. "The ODR platform will notify the trader that a complaint is lodged against him. The consumer and the trader will then agree on which ADR entity to use to solve their dispute. When they agree, the chosen ADR entity will receive the details of the dispute via the ODR platform."

"The ODR platform will be connected to the national ADR entities set up and notified to the Commission, in line with the new rules of the ADR Directive. The platform will help speed up the resolution of the dispute by allowing ADR entities to conduct the proceedings online and through electronic means," it said.

"A set of common rules will govern the functioning of the ODR platform. These will include the role of national contact points acting as ODR advisors in their respective countries. Their task will be to provide general information on consumer rights and redress in relation to online purchases, assist with the submission of complaints and facilitate communication between the parties and the competent ADR entity through the ODR platform. For this purpose, ODR advisors will also be linked electronically to the platform," the Commission added.

All consumer contract disputes, excluding those in the health and education sectors, will be able to be resolved through the new framework.

The EU's Commissioner for Health and Consumer Policy, Tonio Borg, said: "ADR and ODR are a win-win for consumers, who will be able to resolve their disputes out-of-court in a simple, fast and low-cost manner, and also for traders who will be able to keep good relations with customers and avoid litigation costs."

The European Parliament's rapporteur on the ODR rules, MEP Róża Thun, said that the new system would improve the confidence of businesses and consumers to "buy and sell throughout the EU".

The new ODR and ADR rules will take effect 20 days after they are published in the Official Journal of the EU. Member states would then have two years to apply the new ADR rules after which the new online platform is expected to be introduced.

Last May the UK Government said that the European Commission had exaggerated the benefits of ADR. It said the Commission had "distorted" the cost businesses face in dealing with consumer complaints on the basis of "a small number of high value claims" and had therefore calculated potential benefits of ADR incorrectly. The Government said that it would be "unlikely" that the Commission's plans would "deliver the benefits" the Commission suggested would be derived.

Copyright © 2013, Out-Law.com

Out-Law.com is part of international law firm Pinsent Masons.

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