KISS with ODR: keep it short and simple with Online Dispute Resolution
The number of disputes arising from doing business on the internet is on the increase. In order to unlock the e-commerce potential and to drive the Digital Single Market forward, European Commission has launched a new platform where EU citizens will be able to resolve online dis- pute without going through a court. This article aims to explain the idea that underlies the ODR, to explain how it works, and to summarise the steps which traders should take in order to be compliant with ODR legislation.
Why do we need ODR?
The online dispute resolution (ODR) is a new platform launched by the European Commission in order to help consumers and traders resolve online disputes both for domestic and cross border purchase of goods and services, without the need to go to court. The idea of settling disputes in an alternative way – instead of going to court – is not new. Arbitration and amicable settlement procedures are common. But they need adapting to the internet age. As internet usage continues to expand, it has become increasingly necessary to design efficient mechanisms for resolving Internet disputes because traditional mechanisms, such as litigation, can be time-consuming, expensive and raise jurisdictional problems28. Both consumers and traders ask a low cost, simple and fast procedure which can avoid to go through lengthy and costly court proceedings.
Arbitration bodies allow the settlement of disputes out of court. They are generally known as ADR or Alternative Dispute Settlement. They involve a neutral third party to act as an inter- mediary between consumers and traders. The ADR entity can suggest or impose a solution or simply bring the two to discuss how to find a solution. ODR is the evolution 2.0 of ADR: it is like an ADR procedure but conducted entirely online.
The legal framework
Pursuant to Article 169 TFEU the European Union is competent to legislate in the area of con- sumer policy even if it is a shared competence with the Member States.
The legal basis for the establishment of the ODR platform is the Regulation 524/2013 adopted by the European Parliament and the Council on 21 May 201329 which describes the main func- tions of the platform as well as the workflow for a dispute that is submitted through the plat- form. The Regulation builds upon the Directive 2013/11/EU30 – implemented into Italian law by Legislative Decree 6 August 2015 n.130 – which provides the legal basis for ADR as a whole.
According to an EU Factsheet from January – issued by the Directorate-General for Justice and Consumers – the Directive ensures that consumers have access to Alternative Dispute Resolution when seeking to resolve their contractual disputes in virtually all economic sectors no matter where (domestically or across borders) and how (online/offline) the purchase was made. The Directive has provided for full ADR coverage at EU level. In every Member State and for all contractual disputes in every market sector there will be an ADR procedure availa- ble. The Commission is working with the Member States in order to achieve a full coverage of all Member States and sectors as soon as possible. The complaints from a consumer living outside the EU and from a consumer complaining about a trader established outside the EU, or from a consumer complaining about goods or services bought offline (e.g. physically in a shop) are not covered by the Directive. The complainants about higher education or healthcare services are not accepted either.
How does the ODR platform work?
The ODR platform is developed and operated by the European Commission. It has been opened since 9 January 2016 and available for use since 15 February 2016. The platform offers users the possibility to conduct the entire resolution procedure online, it is user-friendly and multilingual. There are four steps:
- The consumer fills and submits an online compliant form;
- The compliant is sent to the relevant trader, who proposes an ADR entity to the consumer;
- Once the consumer and trader agree on an ADR entity to handle their dispute, the ODR platform transfers the complaint automatically to that entity. The ADR entities are bodies that comply with the binding quality requirements established by the ADR Directive and which are included in the National list of ADR bodies;
- The ADR entity handles the case entirely online and should reach a conclusion within 90 days.31
The ODR platform involves lots of practical benefits both for consumers and for traders. The first added value of settling a dispute on ODR platform is that users (read here European citizens, consumers or traders) will be more confident in trading online and across borders be- cause they know that any potential dispute can be solved in a quick and low cost way, and – the most important thing – not only out of court but even from their home.
The Commission estimates that 60% of EU traders do not sell online to other countries be- cause of the difficulties in resolving potential problems which could be arise from a dispute over the sale.
EU Justice Commissioner Vera Jourova said, “One in three consumers experienced a problem when buying online in the past year. But a quarter of these consumers did not complain mainly because they thought the procedure was too long or they were unlikely to get a solution. The new online platform will save time and money for consumers and traders.”
On the other hand, the ODR practice presents an intrinsic contradiction. Mediation is general- ly based on a face-to-face discussion of the issues between participants. The mediator typically plays the role of the helping party who listen and understands concerns and moreover, who helps parties to empathize with each other.
Online mediation loses the dynamics of traditional mediation because it takes place at a distance and in front of computer screens, rather than with face-to-face communication.(32) Someauthors have argued that the lack of personal presence in online mediation can make it more difficult for the mediator to maintain effective control over the negotiating parties.(33)
Every online trader will be required under the new legislation to comply with certain obliga- tions:
- Provide an electronic link to the ODR platform on their website;
- Moreover, in every commercial offer to consumers made by e-mail, similar information should be included in the e-mail;
- The information shall also be provided in the general terms and conditions applicable to online sales and service
Currently, non compliance with the ADR Regulation could result in Trading Standards civil enforcement which could escalate into a court order to comply with the Regulations. Member States will be responsible for elaborating rules on penalties applicable to infringements which cloud result in an unlimited fine or up to two years in prison.
28 See Lucille M. Ponte, Boosting Consumer Confidence in E-business: Recommendations for Establishing Fair and Effective Dispute Resolution Programs for B2C Online Transactions, 12 ALB. L.J. SCI. & TECH. 441, 442-44 (2002).
29Regulation (EU) No 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) No 2006/2004 and Directive 2009/22/EC (Regulation on consumer ODR) http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2013:165:0001:0012:EN:PDF .
30 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) No 2006/2004 and Directive 2009/22/EC (Directive on consumer ADR) http://eur- lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2013:165:0063:0079:EN:PDF.
31 These four steps are explained in the EC Factsheet of January in the Section Justice and Consumers.
32 Joel B. Eisen, Are We Ready for Mediation in Cyberspace? 1998 BYU L. Rev. 1305, 1308 (1998). http://scholarship.richmond.edu/cgi/viewcontent.cgi?article=1634&context=law-faculty-publications .
33 Ethan Katsh, Janet Rifkin and Alan Gaitenby, E-Commerce, E-Disputes, and E-Dispute Resolution: In the Shadow of “eBay Law,”15 OHIO ST. J. ON DISP. RESOL. 705, 714 (2000).