EU Online Dispute Resolution – All Bark and No Bite?

On 15 February 2016, the EU's Online Dispute Resolution platform ("ODR") came into force via EU Regulation No. 524/2013¹. The ODR makes it mandatory for online traders that offer goods/ services to consumers via a website or other electronic means to include an easily accessible electronic link to the EU's ODR website on their sales platform, as well as to provide consumers with a direct contact e-mail address. The aim is to provide an easy, low-cost process of settling   contractual disputes regarding goods or services supplied, without the parties having to resort to court². 

It has now been more than 18 months since the ODR platform became compulsory. In this article we look at the requirements imposed on online traders and whether, once an online trader has fulfilled these obligations, to what extent must it further engage with the ODR process?

Purpose of the ODR platform

The ODR platform arose out of an EU initiative to provide a simple and low-cost means of resolving disputes arising out of the sale of goods/ services, particularly in the context of cross-border sales. The ODR allows consumers to submit their contractual dispute to the platform and to start an Alternative Dispute Resolution ("ADR") procedure online. 

The platform works essentially as a referral system – it recommends an appropriate dispute resolution body to the parties, automatically submits a consumer's complaint to the chosen dispute resolution body and in some cases allows consumers/ traders to access communications from the dispute resolution body via the platform. However, substantive adjudication of the dispute is carried out by the dispute resolution body itself – the platform is simply a conduit. There are more than 260 dispute resolution bodies registered on the ODR, with over 40 for the UK alone. 

The procedure

Once a consumer submits a complaint through the ODR platform, the relevant online trader is automatically notified and has a period of 10 days within which to reply. Should the trader decline to take part in the ODR process, the complaint will be automatically closed within 30 calendar days, with no further action taken. The consumer may still have other routes of redress open to them outside of the ODR process.

Once the trader has replied, both parties have thirty calendar days from the submission of the complaint to agree on a dispute resolution body. The ODR platform will provide recommended dispute resolution bodies, however the parties may choose outside of this recommended list. If the online trader is required to use a particular dispute resolution body (for example due to a regulatory obligation) it should explain this to the consumer (there are further notification requirements that apply to the online trader under the Regulation if this is the case). If the parties cannot agree on a particular dispute resolution body, the complaint will be automatically closed within 30 calendar days with no further action taken.

Once the parties have agreed on a dispute resolution body, the ODR platform will provide the body with the consumer's complaint. The body then has three weeks to inform the parties of whether it accepts jurisdiction to handle the complaint.

Once the dispute resolution body has accepted jurisdiction, it will handle the complaint in line with its usual procedures, and must offer a suggested solution with 90 days, in accordance with its own procedures and practices. The final decision of the body will be available to access on the ODR platform. Whether or not the suggested solution is legally binding on the parties depends upon the rules of the particular dispute resolution body handling the complaint.

Benefits of the platform

If a trader is notified of a consumer complaint through the platform, the most advisable course of action is for the trader to contact the consumer directly to resolve the issue, particularly if the complaint is straightforward³.  

However, if the trader wishes to dispute the complaint (and the complaint has some legal merit), engaging with the ODR process is a low-cost (and potentially non-binding) option that allows the parties to attempt to resolve the issue outside of pursuing or defending legal proceedings. 

It should also be noted that in some EU Member States, traders can use the platform to submit complaints against consumers, where the chosen dispute resolution body has the jurisdiction to adjudicate on such a dispute.

All bark and no bite?

As with other forms of alternative dispute resolution, the platform operates on the basis of the consent of both parties to the use of the platform to facilitate the dispute resolution process. Therefore, although online traders are under a legal obligation to make a link to the ODR website accessible from their sales platform, they are under no legal obligation to co-operate with a consumer who submits a complaint through the ODR platform – or to even respond to the complaint. There is no body with enforcement powers that sits behind the platform and no way for consumers to seek legal redress through the platform itself.

Given the above, one may understandably wonder what the purpose of the platform is. The platform may simply provide direct means for an unhappy consumer to make initial contact with a trader and flag a complaint, particularly where the trader is based in a different EU Member State to the consumer. However, in an age where a trader can suffer immeasurable damage as a result of a complaint being aired on social media, the ODR could be meeting an important need for both parties. It enables the consumer to make a complaint, and also allows the trader to react to that complaint and possibly take measures once notified to prevent further bad publicity from being generated (i.e by changing terms and conditions, exchanging a faulty product or removing substandard merchandise from its online 'shelves').  

In a press release dated March 2017, the European Commission noted that 24,000 complaints were lodged via the platform in its first year of operation, a third of these concerning cross-border purchases⁴. Most complaints were about clothing and footwear, airline tickets and information and communication technology goods.

The European Commission will be issuing a detailed report towards the end of 2017 into the functioning of the platform and is planning to engage in more publicity to promote the platform to consumers. If the platform continues to allow disputes to be resolved in the best interests of the consumer and the trader then it will be judged a success especially if it avoids the spectre of high legal costs, the stresses of a day in court and the unwanted publicity which often accompanies legal proceedings. For most traders the ODR will continue to be welcomed.

Please contact us if you would like any further help with the requirements of the ODR.

To read more articles related to this topic or to view other know-how material relevant to dispute resolution please visit our dedicated know-how portal Disputes+. 

¹ To view a copy of the Online dispute resolution for consumer disputes Regulation click here and to read a copy of our previous briefing on the ODR from January 2016 click here
² To view the ODR platform click here
³ This is often what happens in practice – see the European's Commission's press release referred to below.
⁴ http://europa.eu/rapid/press-release_IP-17-727_en.htm