EU framework on alternative dispute resolution for consumers

Summary:

Directive (2013/11/EU) on alternative dispute resolution for consumer disputes (the 'ADR Directive') provides an out-of-court solution for consumers to resolve disputes on goods and services purchased from traders established in the single market. Together with Regulation (EU) No 524/2013 on online dispute resolution for consumer disputes (the 'ODR Regulation'), the ADR Directive forms a horizontal EU-level framework for alternative dispute resolution. The significant increase of online sales, in particular during the COVID-19 pandemic, as well as contractual challenges exposed by the energy crisis, have highlighted the continued importance of an effective, low-cost and fair way to resolve disputes between consumers and traders. Typically, these disputes concern return of money, reparation of faulty products, or termination of a contract based on unfair terms. Although the ADR mechanisms are deemed a clear improvement for consumers, the digitalisation of the consumer market, the complexity of the procedures and lack of awareness challenge the existing ADR architecture adopted in 2013. Despite successive updates, the ODR platform has reportedly not achieved its objectives. On 17 October 2023, the European Commission therefore proposed to introduce targeted amendments to the ADR Directive and to repeal the ODR Regulation. It also put forward a new recommendation setting quality requirements for online marketplaces and EU trade associations providing dispute resolution systems. In addition to aiming for a modernised ADR framework, these proposals for revision contribute to the Better Regulation simplification and burden reduction targets. During the ninth legislature, the European Parliament has addressed ADR in the context of policies having consumer protection – including access to redress – at their core. These include, among other policies, automated decision-making. In addition, Parliament has dealt with several petitions from citizens relating to the implementation and application of the ADR mechanisms in practice. Preliminary rulings of the Court of Justice of the European Union (CJEU) have clarified the interpretation of certain provisions of the ADR Directive and thus facilitated legal certainty.