On October 17, 2023, the European Commission adopted a proposal to review the Alternative Dispute Resolution (“ADR”) framework. The review consists of: (i) a proposal to amend the ADR Directive; (ii) a proposal to repeal the Online Dispute Resolution (“ODR”) Regulation; and (iii) a recommendation addressed to online marketplace and EU trade associations.
Amended ADR Directive
The proposed amendments to the ADR Directive aim to modernize and simplify the current ADR framework. The key proposals would:
- expand the material scope of the ADR Directive requiring Member States to facilitate access by consumers to ADR procedures where they think that a trader has breached its pre-contractual obligations (e.g., by showing misleading advertising or providing incomplete pre-contractual information) or other statutory rights of the consumers (e.g., the right not to be subjected to geo-blocking practices);
- expand the territorial scope of the ADR Directive to cover disputes between consumers and non-EU traders offering goods or services to consumers residing in the EU; and
- require traders against whom a consumer initiated ADR proceedings to inform the relevant ADR entity (within 20 days) whether or not they plan to participate in the ADR proceedings. However, just as under the current ADR Directive, traders’ participation in an ADR procedure remains voluntary, unless Member States’ laws implementing the Directive provide otherwise.
ODR Regulation repeal
The European Commission proposal aims to repeal the ODR Regulation, which created the European Online Dispute Resolution Platform on the basis that this platform was infrequently used. The ODR Platform will be replaced by digital interactive tools directing consumers to consumer redress solutions.
Recommendation on quality requirements
The European Commission recommends that ADR procedures offered by online marketplaces and EU trade associations, which fall outside the scope of the ADR Directive, adopt the quality criteria enshrined in the ADR Directive. Such quality criteria include the effectiveness and fairness of the ADR procedures, as well as the expertise, independence and impartiality of the persons in charge of running these procedures. The European Commission’s paper provides some specific recommendations on how online marketplaces can ensure that their ADR procedures meet these criteria.
The proposed legislation is at the start of the EU’s legislative process. The European Parliament and Council of the EU will each now develop their own positions on the proposed legislation, before engaging in negotiations across the three institutions to finalize the texts.
Although the Commission’s proposed changes to the ADR Framework so far have been relatively tame, we will make sure to keep a watchful eye on the negotiations going forward.
(This blog post was written with the contributions of Alberto Vogel.)