A European framework for ADR expected

Alternative Dispute Resolution (ADR) schemes, also known as ‘out-of-court mechanisms’, have been developed across Europe to help citizens engaged in a consumer dispute who have been unable to reach an agreement directly with the trader. ADR schemes usually use a third party such as an arbitrator, mediator or an ombudsman to help the consumer and the trader to reach a solution. The European Union is preparing a new Directive on Mediation in civil and commercial matters....

This issue is important for property professionals because ADR could prove useful in the residential property sector and indeed a number of CEPI’s member associations are already actively involved in such schemes in their own countries. Therefore we will follow developments with interest and look forward to contributing to the debate.

The advantage of ADR is that it offers more flexibility than going to court and can better meet the needs of both consumers and professionals. Compared to going to court these schemes are cheaper, quicker and more informal.
However, these out-of-court mechanisms have been developed differently across the European Union. Some are the fruit of public initiatives both at central level (such as the consumer complaints boards in the Scandinavian countries) and at local level (such as the arbitration courts in Spain), or they may spring from private initiatives (such as the mediators/ombudsmen of the banks or insurance companies). Precisely because of this diversity, the status of the decisions adopted by these bodies differs greatly. Some are merely recommendations (such as in the case of the Scandinavian consumer complaints boards and most of the private ombudsmen), others are only binding for the professional (as in the case of most of the bank ombudsmen); and others are binding for both parties (arbitration).

The Commission has been active in promoting the development of Alternative Dispute Resolution. Two Recommendations adopted by the European Commission have established quality criteria that each ADR scheme should offer to its users. In addition, the European Consumer Centres Network (ECC-Net) provides consumers with information and assistance in accessing an appropriate ADR scheme in another Member State. 

The European Union is preparing a new Directive on Mediation in civil and commercial matters. The proposal for a Directive seeks to further the use of Mediation by making certain legal rules available within the legal systems of the Member States. These rules cover the areas of confidentiality of the mediation process and of mediators as witnesses, enforcement of agreements for settling disputes as a result of mediation, the suspension of the running of periods of prescription and limitation of actions while mediation is in progress thus removing one potential disincentive to the use of mediation. As these rules do not attempt to regulate or harmonise the laws of the Member States they encourage the training of mediators and the adoption of norms of conduct to secure the quality of mediation on a consistent basis throughout the Union.

The European Commission, DG SANCO and the IMCO Committee of the European Parliament recently organised a summit on alternative dispute resolution. The public consultation on this topic has now closed and a proposal for legislation is expected later this year.

Support was expressed for the development of ADR, but a warning was given of the dangers of developing too many different schemes. It was also noted that there is a general lack of awareness of existing schemes. There are already around 700 ADR schemes in the EU but they are not seen as having reached their full potential. The recent public consultation identified three main shortcomings:
• Important gaps in most Member States (both sector specific and geographical). Only 62% of consumer ADR schemes deal with claims from consumers residing in another Member State.
• There is little awareness on the part of citizens and access to ADR is not always easy for consumers because there are many different schemes.
• Traders are reluctant to sign up for ADR. At present 64% of ADR schemes are voluntary and only 6% of European traders are members of such a scheme.

The conclusion on behalf of IMCO was that the EU should work on the existing expertise available and that any EU initiative should not interfere with what is already working. The EU should also concentrate on cross-border controversies and offer accessible information. Businesses should be encouraged to participate in good ADR practices. Confidentiality should be kept, but the outcome of the cases should be transparent and later used for feedback and improvement of goods and services.

Read more on the new Directive.