2009 International Workshop on ADR/ODRs
Building Legal Standards in the EU for ODR Servicesi
Pablo Cortés
INTRODUCTION
The resolution of disputes is enhanced when assisted by information and communications
technology (ICT), because when distance communications are utilised there is no need to travel,
which in turn reduces costs and increases access to justice. Online Dispute Resolution (ODR)
mainly involves Alternative Dispute Resolution (ADR) processes, largely assisted by the speed
and convenience of technology, which is eminently suited to the needs of e-commerce. ODR
enhances the resolution of disputes through the use of the transformative power of the
technology, which, as pointed out by Katsh & Rifkin, can be seen as an additional party in the
classic model of dispute resolution, the so-called “fourth party”.ii
However, according to most experts the development of ODR is well behind its expectations.
One of the challenges of ODR is the lack of awareness about the existence of ODR service
providers. Consumers need to identify effective ODR services and providers need to attract
disputants. This cannot be left to self-regulation since there is often an imbalance of power
between the parties. This paper will start by discussing the which ODR method is the most
suitable for the resolution of business to consumers (B2C) e-commerce disputes and it will
suggest how the co-ordination of ODR providers that comply with quality standards may ensure
adequate measures counterpoising the power imbalance between disputants.iii This paper
focuses on a proposal for drafting a European Regulation in the field of ODR that would set
legal standards for mandatory ODR.iv The blueprint of the new Regulation will be the
procedural provisions set in the existing EC Recommendations, Directives and industry best
practices couple with additional suggestions.v The Regulation would create a pan European
i
Recommended citation: CORTÉS, Pablo (2009), « Building Legal Standards in the EU for ODR Services», 2009
Internacional Workshop on ADR/ODRs. Building bridges: legal framework and principles. Universitat Oberta de
Catalunya (UOC), Internet Interdisciplinary Institute (IN3), September 15, 2009. http://www.uoc.edu/symposia/adr/
[online academic paper].
 Dr Pablo Cortés (Licenciado, LLM, PhD, Abogado) is a lecturer in law at University of Leicester.
ii E. Katsh and J. Rifkin, Online Dispute Resolution: Resolving Conflicts in Cyberspace (San Francisco, Jossey-Bass,
2001) 93.
iii J. Hörnle, Cross-Border Internet Dispute Resolution, (Cambridge, Cambridge University Press, 2009) p. 7.
iv The author has suggested previously that a Directive in the field of ODR would be a suitable legislative instrument.
Cf. ‘A European Perspective on Consumer Online Dispute Resolution’ (2009) 15(1) Computer and
Telecommunications Law Review 90-100; ‘Accredited Online Dispute Resolution Services: Creating European Legal
Standards for Ensuring Fair and Effective Processes’ (2008) 17(3) Information and Communications Technology Law
221-237. Conversely, this paper argues that a Regulation may be more appropriate than a Directive.
v See Recommendation 98/257/EC of the Commission on the Principles Applicable to the Bodies Responsible for
Out-of-Court Settlement of Consumer Disputes 1998 O.J. (L. 115), Recommendation 2001/310/EC of 4 April 2001
on Principles of for Out-of-Court Bodies Involved in Consensual Resolution of Consumer Disputes 2001 O. J. (L.
109) 56; Directive 2000/31/EC of 8 June 2000 on Certain Legal Aspects of Information Society Services, in
Particular Electronic Commerce, in the Internal Market 2000 O. J. (L. 178) 1, in particular articles 5 (regarding
information that the service provider must render), article 17 and recital 51 (regarding the use of ODR), Directive
1997/7/EC of the Parliament and the Council of 20 May 1997 on the Protection of Consumers in Respect of Distance
Contracts O.J. 1997 (L. 144), in particular article 4 (regarding the information required to allow consumers making an
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trustmark that would be granted to those ODR service providers that comply with its legal
provisions. Compliance would be monitored by the co-operation between national and regional
authorities through the European Consumer Centres (ECC).vi
I. SUITABLE ODR METHODS
There is not a single ODR method that could be suitable for all consumer disputes. It is possible
to extract certain parameters from successful ODR providers that would assist in informing how
ODR methods need to be tailored to the disputes at hand in order to be effective. By way of
illustration, automated negotiation, e.g. CyberSettle,vii can be very useful in settling economic
disputes. Assisted negotiation and online mediation, e.g. SquareTrade, eBay and PayPal, have
been successful targeting large numbers of similar disputes with highly automated ODR models
that recognise patterns from comparable disputes matching them with proposed resolutions. viii It
appears that the limit of the latter platforms is that it deals only with repetitive and simple
disputes. The success of automated processes depends on the nature of the dispute, the accuracy
of the information provided, and the capability of the software or the fourth party in assessing
the dispute. It must be noted that these processes have great advantages because they are fast
and involve relatively little cost.
Consensual processes, such as online mediation and online negotiation, avoid conflicts of laws,
where parties can focus on their respective interests, rather than what rights they have under the
law. The main constraint of these consensual processes is that requires all parties to be
motivated in resolving their disputes. This begs the question of which situations are the most
appropriate for parties to seek compromise? It is expected that consensual processes would be
the most desirable method to resolve disputes in high context cultures, where people have close
connections over a long period of time, e.g. family disputes. Conversely, online mediation may
also be suitable in low context cultures, such as in e-commerce, if parties are motivated to
resolve the dispute and when the imbalance of power between the parties is not too great, i.e.
when consumers are dealing with small and medium enterprises (SMEs). When the power
imbalance is significant adjudicative processes may be more adequate for correcting possible
abuses of power. Notwithstanding, this is not just a question of power imbalance, but it is also a
question of the nature of the rights. Accordingly, in some disputes parties may find a solution
without compromising their interests, while in other cases a settlement would only be possible if
both parties compromise. Therefore, it would be necessary to indentify under which
circumstances one party may renounce a right for the sake of compromise. In the consumer
context, it would be necessary to distinguish between the rights that should not be waived by the
parties (e.g. human rights, the right to a fair trial) while other rights could be considered
informed decision) and article 6 (regarding the legal right to withdrawal within 7 days after the conclusion of the
contract with an ODR provider); American Bar Association Task Force on E-Commerce and ADR, Recommended
Best Practices for Online Dispute Resolution Service Providers (2002), CEN [Draft] Workshop Agreement on
Standardisation of Online Dispute Resolution Tools, prCWA XXX-3, (16 February 2009). See also Hörnle (2009) op.
cit. 95.
vi The European Consumer Centres Network (ECC-Net) is an EU-wide network designed to promote consumer
confidence by advising citizens on their rights as consumers and providing easy access to redress, particularly in
cases where the consumer has made a cross-border purchase. Their responsibilities include giving advice to
consumers and providing assistance with complaints and the resolution of disputes with traders. See
<http://ec.europa.eu/consumers/redress_cons/>.
vii See < http://www.cybersettle.com/pub/> (Hereinafter, last accessed 6 January 2010).
viii
See
<http://pages.ebay.com/services/buyandsell/disputeres.html>
and
<http://www.paypal.com/cgibin/webscr?cmd=xpt/cps/general/PPDisputeResolution-outside>.
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supplementary or dispositive rights (e.g. right to return the goods).ix In order to uphold these
rights it is necessary not only to use adjudicative processes but also to provide with a public
appeal system, which ensures the application of public mandatory laws, including consumer
protection laws.x However appeals increase costs and time in the resolution of disputes, thus, it
should be limited to the most deserving cases.xi
Adjudicative procedures may also be useful methods for resolving online consumer disputes.
Online arbitration has major advantages: it is custom-tailored to the dispute at hand, it is
conclusive and it can replace the jurisdiction of the courts. Online arbitration may also be non
binding or appealable. A clear example is the success of the UDRP providers that derives from
three aspects: (i) it deals only with blatant disputes, which are abusive registrations of domain
names made in bad faith in order to take advantage of the reputation of existing trademarks; (ii)
its referral is included through a mandatory contractual clause; (iii) it has incorporated a selfenforcement mechanism, even though its decisions are non binding if the dispute is brought to
court.
Similarly, chargebacks and refunds by payment service providers offer a valuable remedy for
consumers when using credit cards. Chargebacks reverse all transactions when a fraudulent use
has occurred or when there is a violation of the contractual terms. According to the OECD, the
most common form of paying by consumers in e-commerce transactions is credit cards.xii In the
UK consumers have the right to claim damages from the credit card issuer when the purchase
value is within the range of £100-£30,000.xiii This would also apply when an UK consumer
deals with a foreign business, eliminating the need for the consumer to initiate a legal action in a
foreign jurisdiction.xiv Although, in these cases the joint liability of credit card issuer and
merchant reduces the need for ODR; yet there are remaining cases where parties still need to
litigate. For these disputes an online judicial process or online arbitration may be faster and
more efficient than the methods currently available.xv Chargeback remedies are not always
available; only consumers may avail when the payment is done with a credit card and the
remedy is limited to refunding or not the buyer.
Online judicial processes are particularly appropriate for dealing with disputes where parties
cannot reach consensus through any other ODR method, when a large disparity of power exists
between the parties and when it is necessary to review decisions.
Online B2C disputes tend increasingly to be resolved through a tiered process: the first step is a
company’s internal customer service; the second step, consensual ODR (i.e. assisted
negotiation, automated negotiation and online mediation); the third step, online arbitration; and
the final step, an online judicial process.xvi The third and the final steps might exclude each
other if appeals from the arbitration process are restricted. Multi-step dispute resolution
processes are considered as a matter of public policy within the approach of proper access to
ix
In the EU the right to a fair trial is contained in article 6 of the European Convention of Human Rights, and the
cooling off period allowing consumers to return goods bought by methods of distance selling, including e-commerce,
is contained in article 6 of the Distance Selling Directive 97/7.
x Hörnle (2009) op. cit. p. 161.
xi Ibid.
xii Organization for Economic Co-operation and Development “Best Practices for Consumer Policy: Report on the
Effectiveness
of
Enforcement
Regimes”
(20
December
2006)
Available
at
<http://www.oecd.org/dataoecd/26/61/36456184.pdf>.
xiii Section 75(3)(b) of the Consumer Credit Act 1974.
xiv Section 75(1) of the Consumer Credit Act 1974 and Office of Fair Trading v Lloyds TSB [2007] QB 1 (CA), 29.
Hörnle (2009) op. cit. p. 38-42.
xv Ibid p. 42.
xvi Cf. Hörnle (2009) op. cit. p. 261.
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justice. This view emphasises the parties’ prerequisite to use consensual processes during the
initial stage of their dispute in order to promote less formal, less costly and more efficient
dispute resolution methods.xvii However, such approach should consider ODR, as well as ADR,
neither just as a first step before litigation or other adjudicative methods, nor as an alternative
and invaluable tool for the resolution of disputes, but as a system which should be offered in
conjunction to the adjudicative methods.xviii
II. PROPOSAL
It is submitted that a legal initiative within the European Union (EU) is required for exploiting
ODR services that are necessary for resolving niche disputes arising out of e-commerce.
Currently, the existing regulations and initiatives in the EU for the development of ODR
processes are scarce and many designed for offline methods of dispute resolution.xix A European
Regulation could guarantee the interoperability between the courts and ODR services; since
issues such as the enforceability of ODR clauses and decisions can only be dealt with
legislation. In order to achieve this, it is required to establish clear legal standards in the ODR
field. A Regulation is necessary to ensure that domestic laws grant electronic access to existing
ADR and judicial processes.xx
The inherent ubiquitousness of e-commerce appears to be a suitable area for the use of private
methods of dispute resolution. This is particularly clear in those countries, such as the US,
where pre-dispute mandatory arbitration is allowed under the national law for the resolution of
consumer disputes.xxi Nevertheless, policy makers in the EU are not persuaded in allowing
private dispute resolution systems to decrease the level of consumer protection within the EU.xxii
Yet, the EU approach could change with a co-ordinated legal initiative if this ensures that
private ODR services meet sufficient legal standards. It is submitted that a European Regulation
in the field of consumer ODR would contribute towards developing the ODR market within the
EU, and it would also stop inconsistent standards and regulations within the EU facilitating the
expansion of the internal market. Such Regulation could create a pan-European trustmark that
would accredit those ODR providers and online businesses that comply with the consumer
protection lawxxiii and meet the detailed procedural rules (as opposed to the existing general
principles contained in the EC Recommendations) set out in the proposed Regulation.xxiv This
T. Stipanowich, “The Arbitration Penumbra: Arbitration Law and the Rapidly Changing Landscape of Dispute
Resolution” (2007) 8 Nevada Law Journal 427.
xviii Hörnle (2009) op. cit. p.58.
xix The main policy instruments were the Mediation Directive and the two Recommendations. The European
Commission has also brought forward a number of initiatives with very limited market use, i.e. the Consumer
Complaint Form; the ECC-Net; ECODIR; Webtrader. According to Hill, the EU efforts were insufficient and
ineffective. See J. Hill, Cross-Border Consumer Contracts (Oxford, Oxford University Press, 2008) p. 379.
xx
See for instance article 17 of the E-Commerce Directive 2000/31.
xxi Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991). In this leading case the US Supreme Court upheld that a
forum selection clause in a consumer contract was reasonable because it was, firstly, freely bargained for; secondly, it
was entered into in exchange for reduced fares; and thirdly, it did not unduly burden the plaintiffs. On this line of
argument, the US Supreme Court cases have rejected challenges to pre-dispute arbitration clauses in consumer
contracts, e.g. Buckeye Check Cashing, Inc. v. Cardegna 546 US 440 (2006). Pre-dispute arbitration has nonetheless
certain restrictions. In a recent decision the Second Circuit Court held that the credit card industry had breached antitrust laws by conspiring to limit consumers’ dispute resolution choices through pre-dispute mandatory arbitration
clauses. See Ross v. Bank of America F.3d. 2008 WL 1836640 (Cir.2d. N.Y.).
xxii Hörnle (2009) op. cit. pp. 174-9.
xxiii Green Paper of the Commission of 8 February 2007 on the Review of the Consumer Acquis COM (2006) 744
Final.
xxiv According to Hill: “A widely known trustmark scheme operating throughout of the European Union and a ‘fall
back’ ADR system would have a more positive impact on both consumer confidence (particularly in the context of
cross-border Internet shopping) and the satisfactory resolution of consumer disputes than any amount of tinkering
xvii
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would facilitate the establishment of fair and cost-efficient ODR services that would comply
with quality standards within the EU. Accredited ODR providers may be included in electronic
contracts by online businesses as an initial mandatory dispute resolution stage. The ODR
process would be characterised by having two online stages: a consensual process, and
escalating if necessary to an adjudicative process which would be a mixture between an
adversarial and inquisitorial process. Decisions and settlements reached through the accredited
programs would be directly enforceable by public courts through an online process.
There is a need to clarify the legal status of ODR decisions and contractual clauses. Thus far
ODR has relied on self-regulation leaving many legal questions unanswered, i.e. enforceability
of decisions and clauses referring parties to an ODR process. Enforceability is one of the key
issues for successful ODR providers, such as the UDRP. How many domain name disputants
would voluntarily agree to use the UDRP if they were not compelled to do so? How many
disputants would voluntarily comply with a decision from an adversarial ODR process? Even
consensual ODR providers, such as SquareTrade, relied on the provision of strong incentives for
parties to use ODR: the buyer wanted to obtain economic compensation and the seller wanted to
receive positive feedback from the buyer. Furthermore, the SquareTrade process was the only
method whereby sellers could get their feedback reviewed.xxv It must be noted that the two most
successful ODR processes to date (UDRP providers and SquareTrade) appeared in a market
where disputes were referred to them, and where the market administrator (ICANN and eBay)
wanted to avoid being sued by disputants. Furthermore, in most of these cases parties could not
access an offline dispute resolution mechanism for a reasonable cost. Also CyberSettle has
targeted specific markets, such as insurance companies, and it has collaborated with dispute
suppliers, such as the city of New York and the American Arbitration Association.xxvi
If ODR is to expand, legislation should provide teeth to efficient and fair ODR schemes that do
not have self-enforcement mechanisms. A way of strengthen these schemes would be by a
regulatory recognition of contractual riders referring to accredited ODR and by enforcing their
decisions in the courts. This, arguably, could only be achieved by devising a legal framework
that would encourage disputants to use accredited ODR services. The adherence to a pan
European trustmark will deliver prominence to accredited ODR services.
Decisions from accredited ODR bodies will be considered as those provided by institutionalised
arbitration, which decisions will not have res judicata effect; in other words decisions would be
appealable in a court of law on procedural and substantive grounds. It is Online appeals would
ensure greater uniformity, but in order to avoid unnecessary appeals, which would increase the
cost and consequently the accessibility of such online process, it is suggested a limited use of
costs penalties.xxvii It is proposed that only consumers, as one shot players, using accredited
ODR providers may opt for appealing a decision through an online judicial process. xxviii If
however the consumer does not obtain a judgment that is better than the one given through an
with private international law rules or small claims procedures. The efforts which have been directed at legislative
developments (such as the European Small Claims Procedure Regulation) might have been much more profitable
directed at promoting and establishing a fully effective ADR framework for consumer disputes (in particular, those
arising out of e-commerce).” See J. Hill (2008) op. cit. 318-319.
xxv O. Rabinovich-Einy “Technology’s Impact: The Quest for a New Paradigm for Accountability in Mediation”
(2006) 11 Harvard Negotiation Law Review 253.
xxvi See <http://www.cybersettle.com/pub/home/about/partners/aaa.aspx>.
xxvii In England and Wales Courts have discretion to take into account the parties’ efforts to settle their disputes when
making awards and costs offers. See Part 36 and rule 44 of the Civil Procedure Rules (England and Wales) 1999. See
also Halsey v Milton Keynes NHS [2004] 1 WLR 3002; Carver v BAA Plc [2008] EWCA Civ 412, para. 31. In
Ireland appeals from institutionalised ADR bodies may carry costs penalties if the judicial award does not improve
the recommendation awarded by the ADR body. See s. 51A(3) Personal Injuries Assessment Board Act
(Amendment) 2007 No 35 of 2007.
xxviii S. 51A of PIAB (Amendment 2007) Act 2003.
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accredited ODR, then the consumer will not be entitled to recover costs and exceptionally the
court may exercise its discretion to award costs against the claimant, unless the court considers
this to be unfair.
It must be accepted the concession that in order to develop a greater access to justice through
ODR, it may be necessary to reduce some degree of procedural formality in exchange for faster,
less expensive and more effective (accessible and counterpoised)xxix ODR processes. This is
particularly relevant in the e-commerce context, where it would even be justified to sacrifice
some levels of due process in favour of obtaining greater access to required redress mechanisms
for low value disputes. This trade off must be balanced by considerations of proportionality,
taking into account on one hand the value of the disputes and on the other hand the most
suitable ODR process. In addition, a review system through an online judicial process could
ensure that unfair decisions will be corrected. In this regard, fairness is not just assured through
minimum due process requirements for accredited ODR providers, but also in establishing
online judicial reviews.
III. THE ODR OF THE FUTURE
To predict how ODR might develop in the EU over the next few years may be speculative and
risky since a forecast on anything involving technology may soon be proven wrong. Despite
that, it appears likely that there will be an increase of institutionalised ODR processes, such as
the Spanish online arbitration systems and simplified court processes, such as the online money
claims and small claim procedures.xxx The European Small Claims Procedure (ESCP) could
become the first judicial procedure incorporating ODR technology to deal with cross-border
claims within the EU.xxxi The ESCP however may not be the best scheme to deal with low value
claims, since legal costs may become disproportionate, particularly when the costs rule exposes
the consumer to reimburse the defendant’s legal costs (including legal representation). xxxii In
addition, consumers may find difficulties in filing claims appropriately and bringing sufficient
evidence forward. This is broadly a challenge that judges and arbitrators will face, which could
result in suspending legal proceedings for lack of evidence or other procedural limitations. The
resolution of disputes will be first attempted by consensual processes. The ESCP should
incorporate in court online mediators with the role of filtering those disputes that may be ripe
for compromise.
The Mediation Directive allows the courts to refer disputes that they consider suitable for
mediation. It seems that mediation is becoming part of the litigation system. Courts, arbitral
xxix
Cf. Hörnle (2009) op. cit. p. 218.
See articles 51-55 and fourth final disposition RD 231/2008. Cf. M. J. Marín López, “La Nueva Regulación del
Arbitraje de Consumo: el Real Decreto 231/2008, de 15 de Febrero” Diario La Ley, 17 March 2008. See
<https://smallclaims.courts.ie/esmallclaims/claim/Main?page=home&Language=English>. The first year of
operation of the Online Small Claims 41.5 per cent of all cases were received through the online system. See Court
Service Annual Report (2007) at p. 25. Available at <http://www.courts.ie>.
xxx See <https://www.moneyclaim.gov.uk/csmco2/index.jsp>.
xxxi Regulation 861/2007/EC of the European Parliament and of the Council of 11 July 2007 establishing a European
Small Claims Procedure O. J. (L. 199) 1. The ESCP is predominantly a written judicial procedure based on standard
forms available in all EU official languages. It deals with low value claims arising in cross-border disputes within the
EU and provides for the direct enforcement of contested decisions in any of the Member States. The ESCP covers
civil and commercial matters, but it excludes a number of claims such as those related to revenue, customs,
administrative matters, legal capacity, wills, etc. Under the current Regulation claims cannot exceed €2,000 in value,
excluding interests and legal costs. Naturally, this procedure will need to rely on ICT and standard forms in order to
avoid disproportionate costs. Hence, the ESCP is not an ODR process per se, but in the near future it may become the
first cross-border online judicial procedure.
xxxii Article 16 ESCP. See also recital 29 requiring proportionality.
xxx
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tribunals,xxxiii consumers and business associations, lawyers and law students will recommend
the most appropriate means of resolving a dispute. This will be achieved by educating lawyers
and judges on the appropriateness of each dispute resolution method.xxxiv
Both, the improvement of technology and the future of ODR are undeniable. According to
Katsh, ODR might not have taken over the world the first time around, but technology has
gotten to the point where it just does not make sense to not use the Internet to handle
disputes.xxxv There is a constant increase in the use of ADR, transnational e-commerce, and
online social networking which are coupled with the advance in technology tools, such as video
and call conferencing. ODR is not an alternative to anything, but the only feasible way of
resolving most Internet disputes; these are niche disputes, which could not be resolved by
traditional off line dispute resolution methods.
Furthermore, younger generations are computer literates and have an innate aptitude with
technology. Evans et. al. observe that,
“The principle users of these futuristic ODR systems will likely be new generations of
computer-literate youths. Operating beyond the constraints of either territorial or technical
limits, these advanced ODR users could cross territorial, language, and cultural barriers.”xxxvi
ODR might not always provide a perfect solution to resolve all B2C disputes, but it could
certainly deliver a satisfactory resolution for many disputes, including those that arise out of the
B2C sphere, as well as small and medium size B2B disputes, or even outside the commercial
and online realm, such as citizen to government (C2G) disputes.xxxvii Disputes will be resolved
online when parties encounter certain circumstances; such as limited economic resources, where
there is vast geographic distance between the parties or where there is urgency in the resolution
of disputes. ODR is also an ideal process for isolated B2C transactions where parties prefer less
formal procedure and are content to avoid face to face interactions.
It appears that the time is right to expand and regulate those ODR providers which are ready to
provide fair and effective services. The ODR of the future will cater for specific disputes, will
mainly be publicly operated or monitored, it will be compulsory, completely or partly
automated and in some instances it will be able to provide all of the functions of a human third
party. Such a system would have to be supported by artificial intelligence. To date, a high level
of automation has only been achieved to deal with low comprehension systems (e.g. PayPal
assisted negotiation) or to manage disputes with one single issue (e.g. CyberSettle blind
bidding). Although ODR systems with a higher content of artificial intelligence already exist
(e.g. SmartSettle) they have been proven not to be consumer friendly as of yet. Clearly, with the
appropriate regulation it is merely a question of time before ODR services are improved,
becoming the mainstream method for resolving online B2C disputes.
See CEDR Commission on Settlement in International Arbitration – Consultation 2009.
CEN [Draft] Workshop (2009) op. cit. p. 68 at 9.4.
xxxv E. Katsh and L. Wing, “Ten Years of Online Dispute Resolution (ODR): Looking at the Past and Constructing
the Future” (2006) 38 University of Toledo Law Review 26.
xxxvi F. Evans, B. Wettman, L. Shadoff, R. Birdwell, “Proceeding: Enhancing Worldwide Understanding Through
ODR: Designing Effective Protocols for Online Communications” (2006) 38 University of Toledo Law Review 427.
xxxvii E. Katsh “The ODR experience in the USA and the (Potential) Lesson of Electronic Medical Records” paper
presented at the ODR Workshop, Brussels, 31 March 2009. Available at <ftp://cenftp1.cenorm.be/PUBLIC/StandODR/ODR%20Katsh%20March09.pdf>
xxxiii
xxxiv
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CONCLUSION
This paper has considered, from an EU perspective, the need to regulate ODR. The paper has
noted that the success of ODR will depend on establishing clear procedural rules that would
ensure the enforceability of ODR clauses and decisions. To that end, this paper proposes the
design of a European Regulation, preceded by a consultation paper, establishing detailed
procedural rules. A pan European trustmark will accredit those ODR providers that voluntarily
adhere to the Regulation. The trustmark will reassure consumers that they will not be dragged to
more expensive or inefficient dispute resolution methods than the competent court. The pan
European trustmark will enhance trust amongst SMEs and consumers when they participate in
e-commerce. Yet, in order to be effective, an EU institution, such as the ECC, needs to be
commended with the monitoring of accredited ODR providers and trustmark holders
supervising their compliance with the regulatory provisions set by the Regulation. In addition,
the ECC would act as a clearing house advising consumers, whenever necessary, which specific
ODR method they should use. Accredited ODR processes could be included in pre-dispute B2C
contractual clauses and their decisions or settlements will be enforced directly in court.
Mediated agreements will be enforced under the Mediation Directive and ‘arbitral’ decisions
will be treated as judicial decisions taken in first instance. These decisions could be reviewed
through an online appeal system, such as the ESCP using some of the procedural features of the
UDRP, such as online submissions, written process, standardised process, publicity of
decisions, etc. Online judicial appeals will only be allowed at the consumers’ instance; but
limited cost penalties may be imposed when the consumer had failed in obtaining a judgment
that is more favourable than the decision made by the accredited ODR provider.
Judicial review of ODR decisions will legitimate ODR services and will contribute towards the
establishment of uniform procedural and substantive legal standardsxxxviii in the field of B2C
ODR. In other words, both, ODR providers and the public courts will carry out the
interpretation of the procedural and substantive provisions established in the European
Regulation. Therefore, this proposal suggests a two-step process for accredited ODR providers,
beginning with mandatory ODR where most disputes are expected to be resolved, preferably by
using consensual processes, and escalating, if necessary, to a judicial online process.
Given the cross-border nature of e-commerce, in order to develop an efficient ODR legal
framework, it must be agreed at an international level with the collaboration of all the ecommerce stakeholders (governments, industry and general public). It is just a matter of time
before courts and legislatures will develop international rules. A European Regulation on
minimum standards in the field of ODR will facilitate the EU to speak with one voice in the
international debate on how to incorporate ODR into international law, where it has its greatest
potential.
xxxviii
Proposal for a Directive on Consumer Rights (COM(2008) 614 final) of 8 October 2008. This directive repeals
four existing directives, namely, the Doorstep Selling Directive 85/577/EEC; Distance Selling Directive 97/7/EC;
Unfair Terms in Consumer Contracts Directive 93/13/EEC; and Consumer Remedies and Consumer Guarantees
Directive 99/44/EC. Importantly, the proposed directive sets maximum harmonisation whereby Member States
cannot introduce more stringent laws.
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APPENDIX.
PROPOSAL FOR AN EC REGULATION ESTABLISHING AN ACCREDITATION SCHEME FOR
ONLINE DISPUTE RESOLUTION SERVICES
The following text is a blueprint that encapsulates some of the best practices while taking an EU
perspective for the regulation and accreditation of online dispute resolution (ODR) service
providers.
Article 1. Objective. The purpose of the Regulation is to accredit fair and efficient ODR service
providers in order to promote the use of ODR for the resolution of all types of disputes, but in
particular for the resolution of cross-border business to consumer (B2C) disputes arising out of
e-commerce in the internal market. The accreditation of ODR service providers shall require
that service providers comply and promote the application of the relevant consumer laws.
Article 2. Definitions
a) ODR service providers for the purpose of this Regulation shall be those which processes take
place mainly online with the use of ad hoc information and communication technology (ICT)
tools.
b) Accredited ODR service providers shall be those ODR service providers that comply with
this Regulation and that have been accredited by the EC Commission and the European
Consumer Centre Network (ECC-Net). These providers shall display, if they decide to do so, a
pan-European logo named EU-Confidence.
c) For an accredited ODR process shall be considered the entire course of the ODR proceeding,
which shall be from the start to the end an online process. This is without prejudice of using offline communications exceptionally whenever this is deemed necessary by the ODR service
provider or the third neutral party.
d) For an ODR platform shall be considered the website interface hosting the process of an
accredited ODR service provider.
Article 3. Attentiveness. Disputes shall be dealt within a reasonable time period reflecting the
needs of e-commerce. Hereby, disputes shall be resolved as expeditious as possible, and in any
event disputes shall be resolved within two months after the commencement of the ODR
process, unless all parties and the ODR service provider agree to an extension, which shall not
be longer than an additional two months.
Article 4. Language. The language of the procedure shall be the same language of the
transaction that originated the dispute. Parties may agree to a different language as long as this
is accepted by the third neutral party and the accredited ODR service provider. Accredited
service providers however may have a limited number of working languages. When their
services are thus offered to an online business that makes transactions in more languages than
those offered by the accredited ODR service provider, the trustmark logo must be accompanied
by the expression of “limited offer”.
Article 5. Submission to the Online Process. If a consumer informs a business adhered to an
accredited ODR provider that he or she rejects the remedy proposed by the company’s internal
customer services and wishes to submit the dispute to the accredited ODR service provider, the
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business must cooperate fully in the proceedings and comply with the result, even when the
decision may be appealable by the consumer. Accredited ODR service providers shall admit
collective claims.
Article 6. Claimants. Consumers and businesses shall be able to initiate claims in online
processes managed by accredited ODR service providers. But businesses shall not be able to
lodge claims against consumers, only against other businesses.
Article 7. Appeals. Parties shall be able to appeal a decision from the accredited ODR service
provider, except in B2C disputes where only consumer-claimants shall be permitted to appeal.
The appeal shall be made to the competent court according to the Brussels (I) Regulation and
the applicable law shall be that stated in accordance to the Rome (I) Regulation.xxxix When the
appeal is equal or below €5,000 and has cross-border elements, i.e. when one of the parties is
located in a different Member State, shall be processed according to the European Small Claims
Procedure (ESCP).xl
a) Herewith the ESCP is amended by firstly increasing the economic limit from €2,000 up to
€5,000, and secondly removing the right of the claimant to request the legal costs for engaging
in litigation when the award is not more favourable than the decision delivered by the accredited
ODR service provider.
b) The European Commission will develop a pan-European common website interface that will
be used by all the national courts when resolving online appeals. The new interface shall allow
litigants to participate in a fully online process obviating the need for travelling.
Article 8. Binding nature of the ODR process. Businesses shall not compel consumers to
agree the use of binding ODR processes prior to the materialization of a dispute, except when
the business had referred all unresolved complaints to an accredited ODR service provider. In
the latter event, pre-dispute agreements shall be upheld if they were clearly disclosed before the
transaction is completed. The final decision of the accredited ODR service provider shall be
binding for both parties, except when one party appeals the decision.
Article 9. Selection of third neutral parties and technology. Accredited ODR service
providers must be capable of selecting the appropriate third neutral party and adequate ICT tools
for the resolution of each individual dispute, taking into account the scope and knowledge of the
parties. The procedure of how third neutral parties are selected shall be transparent and
disclosed to the disputants.
Article 10. Costs. The costs of ODR services shall be kept as low as possible, particularly for
consumers who must be able to access to these services for free or at a low cost. In any event
the cost of acceding to an accredited ODR service provider should be proportionate to the
dispute and lower for both parties than an off-line process.
Accredited ODR service providers should be partly funded, whenever this is appropriate and
possible, by public entities with the aim of enhancing consumer trust.
Article 11. Third neutral parties. Dispute resolution professionals shall have sufficient skills
and training to fulfil their function, but they will not need to be licensed legal practitioners.
xxxix
Article 6 of the Regulation 593/2008 of the Parliament and the Council of 17 June 2008 on the Law Applicable
to Contractual Obligations (Rome I), O. J. (L. 177). Article 15 of the Regulation 44/2001 of 22 December on
Jurisdiction and the Recognition and Enforcement of Judgements in Civil and Commercial Matters, 2000 O.J. (L. 12).
xl Regulation (EC) 861/2007 of 11 July 2007establishing a European Small Claims Procedure OJ L199/1.
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However, accredited ODR service providers must take measures to ensure legal experts are
available for consultation when specialised knowledge on the interpretation and application of
laws and regulations is required in the process of providing ODR services.
a) Third neutral parties shall be independent, without any type of personal or professional
relationship with any of the parties. Accordingly, accredited ODR service providers shall
incorporate procedures for recusing providers and third neutral parties who are interested parties
to a dispute or have any other causes which may harm the fair use of accredited ODR.
b) The third neutral party, whenever this is feasible, shall not be linked to successful case
settlement or to a recommendation or decision in favour of any particular party. When dealing
with repeat players accredited ODR service providers shall provide with a mechanism to grant
grater level of transparency and impartiality, which may, for instance, allow an additional
opportunity to recuse a third neutral parties by non-repeat-players.
c) Information about the credentials and experience of third neutral parties shall be made
available for the parties. This information shall include the number of cases received and
resolved (with anonymous caseload history when appropriate).
Article 12. Consensual Processes and Representation. Accredited ODR bodies shall play an
active role in encouraging the use of consensual methods for resolving disputes, thus reducing
the need for legal representation. However, consensual processes should not be imposed against
the will of the parties. Parties shall always retain their right to be represented or assisted by a
third party at all stages of the procedure. Notwithstanding, whenever parties are legally
represented they shall be asked to disclose their representation.
Article 13. Accessibility. The technology used by accredited ODR shall strive to keep user
interfaces as simple and intuitive as possible. The European Commission and the ECC-Net shall
provide some guidelines and criteria for ensuring accessibility.
a) Parties shall be able to download and print all the information contained in the
ODR platform, including information related to their individual cases.
b) The ODR platform should be available to all parties in order to check their own
case information 24 hours a day, with the only exception of scheduled
downtime.
Article 14. Notifications. Accredited ODR service providers shall make available to the parties
an appropriate and secure method for giving notifications. Without prejudice of using other
techniques that ensure the authenticity of the communications and the identity of the parties, the
use of the electronic signature shall guarantee the communications and the identity of all parties.
a) Notifications shall be sent to the electronic destination chosen by the parties.
They shall be considered to have legal effect the day after the party had
accessed the notification. Nonetheless, if one party had not accessed the
notification ten days after the notification was sent, then the party shall be
considered notified.
b) Accredited ODR processes shall encourage respectful online communications.
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Article 15. Place of Resolution. The place where the ODR process occurs is where the physical
ODR platform [or secretariat] is located. Hence, accredited ODR service providers shall
disclose the physical location of its platform, including the postal address and contact
information, such as email addresses of the ODR service providers and telephone numbers.
Article 16. Privacy and confidentiality. All the information contained and distributed shall
observe all the data protection law and the confidentiality requirements established by European
law. The ODR platform shall maintain a high level of security, such as Secure Sockets Layer
and cryptographic protocols; hence providing with authentication procedures for access to cases
files and other data.
Article 17 . User information. The following information shall be clearly displayed by all
accredited ODR service providers:
a) The identities and affiliations of the ODR service providers, their managers and interveners.
b) A description of the type of dispute which may be referred to as well as any existing
restriction regarding territorial coverage and the effect of the decision.
c) Whether the process is meant to be exclusively online, or both offline and online, and what it
entails. Online processes shall disclose the system requirements (hardware and software) for
using the ODR platform.
d) Requirements that consumers must meet, such as the previous attempt to obtain redress
through the business internal complaint system.
e) An explanation about what is a neutral mediator, arbitrator, third neutral party and other
terms to which parties may be unfamiliar.
f) Information about the credentials and experience of third neutral parties.
g) Clear and unambiguous information about the processes involved and how users can best
manage their cases.
h) Information on time limitations and the suspension of prescription periods when applicable.
i) Indication of fees and costs to be borne by the parties.
j) Where mediation and arbitration are offered, simple and clear information for parties about
the differences between the services shall be available.
k) Rules that serve as the basis for the decision, including legal provisions, considerations of
equity and code of conduct.
l) The legal force of the decision taken, that is, whether and when an accredited ODR service
provider would issue binding or non-binding outcomes.
m) Whether the decisions are made publicly available.
n) When online arbitration is used, parties shall be informed how the arbitral award is delivered
and how parties can be enforced it.
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o) Parties are entitled to be informed of the decisions, its legal status, and the grounds of these
within, unless otherwise agreed, two months after initiating the process.
Article 18. Agreements and Decisions. Consumers shall be informed in clear and
understandable language, before agreeing to a suggested settlement that they have the choice to
agree or disagree with the suggested settlement. Any decision or agreed settlement should be
recorded on a durable medium.
Article 19. Suspension of Legal Proceedings. Where a lawsuit is pending between the parties
to a civil dispute which may be settled by an accredited ODR service provider, the court in
charge of the case, upon request of one of the parties, may make a decision that the legal
proceeding shall be suspended for a period of not more than four months.
Article 20. Submission of Business Reports. Accredited ODR service providers shall prepare
and submit to the ECC-Net a business report, inventory list, balance sheet, expenditure
statements for each business year within three months after the end of the business year. The
Business Report shall consist of information about the number and type of disputes being
handled by the accredited ODR service provider, including the type of claims, any systematic
problem arising from complaints, the number of disputes resulting in settlement or agreement,
and the average length of time for the resolution of disputes.
Article 21. Trustmark. The EU-Confidence logo shall be given to all ODR service providers
which are considered by the Commission and the ECC-Net to comply consistently with the
present Regulation. All online businesses that adhere to an accredited ODR body shall be
permitted to also display the same logo as long as these businesses provide an internal
complaint-handling system which is credible, works efficiently and is subject to independent
monitoring or auditing by the ECC-Net.
Article 22. Liability. Accredited ODR providers shall be liable for damages caused to any
person who relies on the trustmark as to the accuracy of the information therein represented;
unless the ECC-Net recognises that the accredited ODR provider had not acted negligently. The
European Commission and the ECC-Net shall issue guidelines regarding the limitation of
liability for accredited ODR providers.
Article 23. Feedback. Accredited ODR service providers shall have a feedback system where
users shall post their satisfaction levels. Even though accredited ODR providers may decide on
the publication of their feedback ratings, these shall form part of the annual report submitted to
the ECC-Net.
Article 24. Inspection. If the ECC-Net considers that there is an accredited ODR body that does
not comply with the Regulation, the ECC-Net shall remove the accreditation from the ODR
service provider
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