Enter to open, tab to navigate, enter to select
New EU online dispute resolution platform: obligations for businesses
Practical Law UK Articles 9-623-5187 (Approx. 5 pages)
New EU online dispute resolution platform: obligations for businesses
by Jocelyn Paulley, Gowling WLG
| Published on 25 Feb 2016 • European Union, United Kingdom |
Consumers and traders can now use the European Commission’s new online dispute resolution platform to refer contractual disputes that arise from buying goods or services online to an agreed alternative dispute resolution entity. From 15 February 2016, online retailers and online marketplace providers must include a link to the platform on their websites and in their terms and conditions.
The European Commission's (the Commission) new online dispute resolution (ODR) platform is now operational. Consumers and traders can use the ODR platform to refer contractual disputes that arise from buying goods or services online to an agreed alternative dispute resolution (ADR) entity.
The ODR platform was established under the Online Dispute Resolution Regulation (524/2013/EU) (the Regulation) and, from 15 February 2016, online retailers and online marketplace providers must comply with the Regulation by including a link to the ODR platform on their websites and in their terms and conditions. The link should be easily accessible and traders are also encouraged to provide, where possible, the required information on the ODR platform together with any other information regarding consumer out-of-court redress procedures contained in other EU legislation.
Aims of the ODR platform
The Regulation is a baby-step towards tackling the practical issues that must be addressed to enable cross-border trade to flourish (see box EU consumer law and e-commerce). It aims to help ease one of the legal difficulties that concern consumers; that is, what can be done when goods are damaged or services do not conform to their description?
The EU digital single market aims to encourage trust and confidence among consumers when buying from sellers in other EU member states (see News brief "A digital single market: the European Commission unveils its strategy"). The Commission hopes that the launch of the ODR platform will provide a practical tool for consumers who have bought online to resolve issues with sellers without the need for court proceedings, while also removing language and location barriers.
The intention is that the ODR platform will allow consumers to enforce their rights in low-value claims. Avoiding the courts is also a more attractive option for traders that have reputational considerations and want to maintain good customer relations. The accessibility and the removal of language concerns should encourage consumers to buy from abroad, safe in the knowledge that any issues can be resolved relatively easily.
ODR platform process
The ODR platform will follow a simple process:
- The complainant party (consumer or trader) completes an electronic complaint form.
- The ODR platform transmits the complaint to the respondent party and invites that party to propose an ADR entity.
- Once the ADR entity is agreed on by both parties, the ODR platform will automatically transmit the complaint to that entity.
- The ADR entity that has agreed to deal with the dispute will handle the case entirely online and will reach an outcome in 90 days.
There is also a free case management tool that the parties can use if they choose. The ADR procedure may be conducted in any of the 23 official languages of the EU, using an ADR body that complies with the necessary quality requirements set out at Chapter II of the Alternative Dispute Resolution Directive (2013/11/EU) (the Directive).
A clear obstacle to the successful resolution of disputes is the need to agree on an ADR entity. If the parties fail to agree, or the ADR entity refuses to deal with the dispute, the complaint will not be processed further.
Broad scope
The Regulation applies to traders that are "established" within the EU and that are engaging in "online sales or service contracts". The Regulation defines both of these concepts broadly.
"Established" within the EU is defined in accordance with Article 4(2) of the Directive. The definition includes traders that have their statutory seat, central administration or place of business, including branch, agency or any other establishment, within the EU. This broad definition, with the catch-all "or any other establishment" will mean that US companies that have any kind of physical presence in the EU are caught by the Regulation.
The Regulation defines "online sales or service contracts" as any sales or service contracts for goods or services that are offered by a trader (including online marketplaces where purchases can be completed) or the trader's intermediary through a website or by other electronic means (including telephone sales or contracts concluded by email) where the goods or services have been ordered by the consumer on that website or by other electronic means.
Obligations for online traders
Online traders must:
- Provide an electronic link on their websites to the ODR platform.
- State their email address on their website.
- Include a link to the ODR platform in their general terms and conditions.
However, traders do not have to use the ODR platform and can refuse to enter into ADR by not agreeing on the ADR entity to hear the dispute.
The majority of the Directive is implemented in the UK by the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015 (SI 2015/42) (2015 Regulations) (www.practicallaw.com/8-617-4938). The use of ADR under the 2015 Regulations, like the ODR, is not compulsory unless the trader is part of a trade association where its rules, or other laws, require the trader to use ADR services. These traders must provide the name and website address of the relevant ADR entity in their terms and conditions and on their websites.
Traders that are already obliged to use ADR entities to resolve disputes with consumers under the 2015 Regulations must still inform consumers of the ODR platform and provide an electronic link to the ODR platform on their websites, in any email offers and in general terms and conditions.
The ODR platform does not replace complaints procedures and the Commission still encourages traders and consumers to try to resolve disputes amicably. It also does not replace a consumer's right to go to court, although it is likely that only a small number of consumers would consider issuing court proceedings against a trader in another jurisdiction in any event.
Jocelyn Paulley is a Director at Gowling WLG.
EU consumer law and e-commerce
EU consumer law strives to achieve a high level of consumer protection while removing barriers for market integration across the EU in order to stimulate e-commerce. The European Commission's (the Commission) first attempt to create a harmonised approach was its October 2011 proposal for a Common European Sales Law (CESL); an optional legal system for online traders operating across EU member state borders (see News brief "The Common European Sales Law: a new choice for EU businesses"). However, the very fact that it was not mandatory meant that it was rejected as being fundamentally flawed, as illustrated by the House of Commons' challenge to it in December 2011 (www.practicallaw.com/9-517-3213).
Meanwhile, the Consumer Rights Act 2015 consolidated existing consumer law in England and Wales and also introduced some changes to domestic laws, including rights relating to digital content, ahead of EU developments (see feature article "Consumer Rights Act 2015: a step in the right direction").
Following its abandonment of CESL, in December 2015 the Commission proposed two draft directives that are maximum harmonisation measures, addressing the key criticism of CESL (www.practicallaw.com/5-622-1210). These directives also focus on consumer remedies, which was one of the areas highlighted by the consultation on barriers to online trade that followed the demise of CESL (www.practicallaw.com/4-617-4940). The directives, if adopted, will harmonise areas such as the hierarchy of remedies available to consumers and the minimum period for the reversal of the burden of proof of a defect on delivery.
However, legal change and a focus on harmonising national laws alone is not the panacea for online sales, although further harmonisation and simplification would be welcome. The practicalities of making websites available in several languages, the tax issues of cross-border VAT and sales tax, and the cultural differences and cost of delivery are all as important as legal remedies in stimulating e-commerce across the EU, and these remain outstanding challenges.