Developing online dispute resolution for consumers in the EU: A proposal for the regulation of accredited providers

International Journal of Law and Information Technology

Volumn 19, Issue 1, 2011, Pages 1-28

  Cortés, Pablo ^a  

^a UNIVERSITY OF LEICESTER   (United Kingdom)

Author keywords

Access to justice; Alternative dispute resolution; Consumer disputes; Consumer protection; Due process; EU; Online dispute resolution (ODR)

Indexed keywords

EID: 79958070426     PISSN: 09670769     EISSN: 14643693     Source Type: Journal    
DOI: 10.1093/ijlit/eaq011     Document Type: Article

References (114)

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2. In the European Union (EU) more than half of the people use Internet regularly, 80 percent of which have access to broadband connections. See Commission Staff Working Document, 'Preparing Europe's Digital Future i2010 Mid-Term Review', 14 April 2008, COM(2008) 199 final. Commission Staff Working Document, 'Report on Cross-Border e-Commerce in the EU', 5 March 2009, SEC(2009) 283 final.
3. M. Kuneva, Commissioner for Consumer Protection, 'Consumer Strategy 2007-2013', Brussels, Press Conference, 13 March 2007.
4. European Commission Press Release, 'SME Retailers Take to E-commerce but It is Strictly National' 8 February 2007 (Hereinafter, last accessed 1 August 2009).
5. According to Flash Eurobarameter (EB), when EU consumers were asked about the hurdles they might face when shopping cross-border, they have rated highest the difficulties of resolving disputes (33 percent). See EB survey on Consumer Protection in the Internal Market, September 2008.
6. See Organization for Economic Co-operation and Development (Hereinafter OECD) Report on 'Consumer Dispute Resolution and Redress in the Global Marketplace' 11 April 2006. .
7. Communication from the Commission to the Council, European Parliament, the European Economic and Social Committee and the Committee of the Regions, i2010 - A European Information Society for growth and employment COM(2005) 229 final p.4. See also Department of Commerce, Federal Trade Commission, Public Workshop: Alternative Dispute Resolution for Consumer Transactions in the Borderless Online Marketplace (2000).
8. V. C. Crawford, 'A Proposal to Use Alternative Dispute Resolution as a Foundation to Build an Independent Global Cyberlaw Jurisdiction Using Business to Consumer Transaction as a Model' (2001) 25 Hastings International and Comparative Law Review 389.
9. Cf. L. M. Ponte 'Throwing Bad Money After Bad: Can Online Dispute Resolution (ODR) Really Deliver the Goods for the Unhappy Internet Shopper?' (2001) 3 Tulane Journal of Technology and Intellectual Property 55.
10. A. Zuckerman, Justice in Crisis: Comparative Dimensions, in Civil Justice in Crisis -Comparative Perspectives of Civil Procedure, (Great Britain, Oxford University Press, 2001) 12.
11. E. Katsh and J. Rifkin, Online Dispute Resolution: Resolving Conflicts in Cyberspace (San Francisco, Jossey-Bass, 2001) 93.
12. G. Kaufmann-Kohler and T. Schultz, Online Dispute Resolution: Challenges for Contemporary Justice (The Hague, Kluwer Law International, 2004) 132.
13. See Recommendation 98/257/CE 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; 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); Proposal for a Directive on Consumer Rights, COM(2008) 614 final. 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).
14. See .
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16. Directive 1998/27/EC of 19 May on Injunctions for the Protection of Consumers' Interests. 1998 O.J. (L. 166); Regulation (EC) No 2006/2004 of the European Parliament and of the Council of 27 October 2004 on Cooperation between National Authorities Responsible for the Enforcement of Consumer Protection Laws 2004 O.J. (L. 364).
17. European Consumer Centre Ireland Report 'The Development of Alternative Dispute Resolution (ADR) in Ireland, An Analysis of Complaints, Best Practices and Future Recommendations' (May 2008). European Consumer Centres' Network 'The European Online Marketplace, Consumer Complaints 2007' (May 2008).
18. Green Paper of the Commission of 27 November 2008 on Consumer Collective Redress, COM(2008) 794 Final
19. Regulation 861/2007/EC of 11 July 2007 establishing a European Small Claims Procedure OJ L199/1
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21. Regulation 593/2008/EC of 17 June 2008 on the Law Applicable to Contractual Obligations (Rome I) OJ L177/6 of 4 July 2008; Regulation 44/2001/EC of 22 December on Jurisdiction and the Recognition and Enforcement of Judgements in Civil and Commercial Matters, OJ L12
22. 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, 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 anti-trust 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.).
23. See Brussels Regulation article 15.1(c); Rome Convention article 5 and Rome I Regulation article 6.
24. J. Hörnle, Cross-Border Internet Dispute Resolution, (Cambridge, Cambridge University Press, 2009) p. 180-182.
25. See .
26. See UK branch at .
27. See for example Howard, the ECC-Net's online shopping assistant. Available at . EC Communication COM(2007) 99 Final. p.5.
28. M. Donnelly and F. White 'The Effect of Information Based Consumer Protection: Lessons from a study of the Irish online market' in ed Twigg Flesner et al Yearbook of Consumer Law 2008 (Ashgate, 2007) pp. 271- 296.
29. Author's phone interview with Colin Rule, ODR Director of eBay and PayPal, 23 July 2008
30. See .
31. Consumers International 'Disputes in Cyberspace 2001: Update of Online Dispute Resolution for Consumers in Cross-Border Disputes' (2001) .
32. M. Conley Tyler and Di Bretherton, 'Seventy-six and Counting: An Analysis of ODR Sites' (2003) Report of Research Conducted for the Department of Justice, Victoria, Australia.
33. C. Rule, Online Dispute Resolution for Businesses. B2B, E-Commerce, Consumer, Employment, Insurance, and Other Commercial Conflicts (San Francisco, Jossey Bass, 2002).58.
34. .
35. United Nations Conference on Trade and Development, 'Online Dispute Resolution: E-Commerce and Beyond' in E-Commerce and Development Report (2003) p. 190.
36. See article 4 of Ley 44/2006 of 29 December of Consumer Protection; Ley 7/1998 of 13 April of General Conditions and Clauses for Consumer Contracts, Ley 60/2003 of 23 December of Arbitration, Real Decreto (Royal Decree, RD) 636/1993 of 3 May 1993 of the Consumer Arbitration System, RD 231/2008 of 15 February of the Consumer Arbitration System
37. Regarding the importance of perception in the resolution of a dispute see R. Fisher, W. Ury, and B. Patton Getting to YES: Negotiating Agreement Without Giving In. (2nd ed) (London, Random House Business Books, 1999) 22-30.
38. VI principle of liberty. See also Annex [q] Directive 1993/13/EC.
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40. See also E. Katsh, 'Online Dispute Resolution: Designing New Legal Processes for Cyberspace' Proceedings of the WebSci'09: Society On-Line, 18-20 March 2009, Athens, Greece. p. 3.
41. J. Nadler, 'Electronic Mediated Dispute Resolution and E-Commerce' (2001) 17 Negotiation Journal 333.
42. This was used by SquareTrade and ECODIR. Currently is used by Paypal.
43. See .
44. See R. Jackson, LJ. Review of Civil Litigation Costs 8 May 2009, p. 42.
45. Summary of responses to the Green Paper on Alternative Dispute Resolution in Civil and Commercial Law, 31 January 2003
46. Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 on Certain Aspects of Mediation in Civil and Commercial Matters 2008 O.J. (L. 136) 3. Article 12.
47. B. Mann, 'Smoothing Some Wrinkles in Online Dispute Resolution' (2009) 17(1) International Journal of Law and Information Technology 110.
48. See Annex [q] Directive 1993/13/EC of 5 April on the Protection of Unfair Terms in Consumer Contracts 1993 O.J. (L. 95); 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.
49. See their comments regarding Océano Grupo Editorial SA and Salvat Editores SA v. Rocio Murciano Quintero, 27 June 2000, Cases C-240/98 to C-244/98, reported in [2000] ECR I4941.
50. F. Sander, 'Varieties of Dispute Processing' The Pound Conference (1976) 70 Federal Rules Decisions 111-34.
51. In England the Court of Appeal stated that most civil disputes in their nature are suitable for being resolved through mediation. See Halsey v. Milton Keynes [2004] EWCA (Civ) 576.
52. J. Jolowicz, 'Civil Litigation: What's it for?' 67(3) (2008) Cambridge Law Journal 508.
53. Lord Phillips, former Lord Chief Justice, Review of the Administration of Justice in the Courts (London, Judiciary of England and Wales, 31 March 2008) 5.49 and 14.5.
54. See also Employment Act 2008 encouraging the use of mediation in employment tribunals
55. At the time of writing LJ Jackson is conducting a report for the Minister of Justice that it is expected to inform significant legislative changes to reduce costs in litigation.
56. See preliminary report at R. Jackson, LJ. Review of Civil Litigation Costs 8 May 2009.
57. Cable & Wireless [2002] EWHC (Comm Ct) 2059
58. Dunnett [2002] 2 ALL ER 850
59. Halsey v. Milton Keynes [2004] EWCA (Civ) 576.
60. G. Lightman, 'Braking Down the Barriers' Times Online, 31 July 2007 .
61. P. Cortés, 'Can I Afford Not to Mediate? Mandatory Online Mediation for European Consumers: Legal Constraints and Policy Issues' (2008) 35(1) Rutgers Computer & Technology Law Journal 1-41.
62. Recital 9 of the Preamble
63. See Royal Decree 231/2008 of 15 February 2008 of the Consumer Arbitration System
64. Ley de Enjuiciamiento Civil (Spanish Civil Procedural Rules) of 8 January 2000
65. Ley de Servicios de la Sociedad de la Información 34/2002, Article 32 and para. 2 of disp. adic. 3.
66. Cf. M. Malo De Molina, E. Derecho De Internet La Ley de Servicios de la Sociedad de la Información y de Comercio Electrónico. Ch. IX Comunicaciones comerciales por vía electrónica. Códigos de conducta. Resolución judicial y extrajudicial de conflictos (Aranzadi, Pamplona, 2003).
67. Ley 26/1988, of 5 December 1988, of Arbitration changed by the Ley 60/2003, of 23 December and its Royal Decree (RD) Law 636/1993 [RDAC], of 3 May
68. See articles 51-55 and fourth final disposition RD 231/2008. See also RD 863/2009.
69. 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.
70. Art. 51 RD 231/2008.
71. Currently the videoconference has been implemented in a number of places, including Madrid, Valencia and Murcia
72. Article 14.1 RDAC.
73. See Spanish Clearing House Instituto Nacional de Consumo Memoria del Sistema Arbitral de Consumo (8 April 2005) 109. Available at .
74. Art. 1 RD 231/2008.
75. Ley 7/1998, LGDCU disp. adic. 1.26.
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77. M. Gonzalo Quiroga La Protección Jurídica de los Consumidores, (Madrid: Dykinson S.L. 2003) 120.
78. Article 31.4 of Ley 44/2006 of 29 December 2006 on Consumer Protection.
79. Art. 38 RD 231/2008.
80. Art. 38 RD 231/2008.
81. A. Hernández Fernández, 'Una Experiencia Paradigmática: El Arbitraje de Consumo On Line en el Marco del Sistema Español de Protección de los Consumidores' Universidad de Valencia (2003) 2 Revista de Derecho 13.
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84. P. Cortés 'The UDRP Reviewed: The Need for a 'Uniform' Policy' (2008)14(6) Computer and Telecommunications Law Review 133-139.
85. S. Donahey, 'Divergence in the UDRP and the Need for Appellate Review' (2002) 5 Journal of Internet Law 1.
86. See and .
87. O. Fiss, 'Against Settlement' (1984) 93 Yale Law Review 1073, 1087.
88. 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
89. Organization for Economic Co-operation and Development 'Best Practices for Consumer Policy: Report on the Effectiveness of Enforcement Regimes' (20 December 2006). Available at .
90. Section 75(3)(b) of the Consumer Credit Act 1974
91. Section 75(1) of the Consumer Credit Act 1974 and Office of Fair Trading v Lloyds TSB [2007] QB 1 (CA), 29
92. T. Stipanowich, 'The Arbitration Penumbra: Arbitration Law and the Rapidly Changing Landscape of Dispute Resolution' (2007) 8 Nevada Law Journal 427.
93. O. Rabinovich-Einy 'Technology's Impact: The Quest for a New Paradigm for Accountability in Mediation' (2006) 11 Harvard Negotiation Law Review 253.
94. J. Hill, Cross-Border Consumer Contracts (Oxford, Oxford University Press, 2008) p. 379.
95. S. Kierkegaard, "Online Alternative Dispute Resolution, Information Obligations in EC E-Commerce Law" in R. Nielsen, S. Sandfeld Jakobsen and J. Trzaskowski, eds., EU Electronic Commerce Law (Copenhagen: Djøf Publishing, 2004).
96. Morek, R., "The Regulatory Framework for Online Dispute Resolution: A Critical View" (2006) 38 University of Toledo Law Review 163.
97. T. Schultz, "Does Online Dispute Resolution Need Governmental Intervention? The Case for Architectures of Control and Trust" (2004) 6 North Carolina Journal of Law and Technology 71.
98. I would like thank the anonymous reviewer for raising this point
99. Treaty on the Functioning of the European Union as Amended by the Treaty of Lisbon [2008] OJ C115/13
100. 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.
101. It must be noted though that this is presently against the Annex q of the Unfair Terms Directive and it has been maintained in the Proposal Directive on Consumer Rights; hence the proposal calls for amendment on this provision
102. Act No. 151 of 2004. This statute has informed the proposal for a regulation contained at the end of this paper.
103. See Consumer Protection and Alternative Dispute Resolution in the Financial Sector, Foreign Non-Life Insurance Association of Japan, Inc., 18 June 2008. Available at .
104. The Japan Commercial Arbitration Association, News, ADR Law, JCAA Newsletter (Number 18, March 2007) p. 1.
105. For instance, in Japan, parties dealing with disputes through an accredited ADR body have the prescription periods interrupted during the ADR process (art. 25); parties may request jointly the suspension of a legal proceedings (art. 26); accredited ADR may be used instead of the court annexed mandatory conciliation for rent and divorce disputes (art. 27); accredited providers may receive remuneration for their services (art. 28).
106. See the European Trustmark Requirements as part of the E-Confidence Initiative agreed by BEUC and UNICE in 2001. Cf. European Parliament Working Document, Consumer Confidence in the Digital Environment (INI/2006/2048).
107. P. Balboni, Trustmarks in E-Commerce, The Value of Web Seals and the Liability of Their Providers (The Hague, Information Technology and Law Series, Cambridge University Press, 2009), p. 37.
108. European Parliament, Non Legislative Resolution, Zuzana Riothová (2007)
109. European Parliament, Consumer Confidence in the Digital Environment, Briefing Note, (IP/A/IMCO/NT/2006-21) p. 9.
110. European Commission, Commission Staff Working Document, Consumer Confidence in E-Commerce: Lessons Learned from the E-Confidence Initiative SEC(2004) 1390, p. 10.
111. See Part 36 and rule 44 of the Civil Procedure Rules (England and Wales) 1999
112. See Ireland s. 51A of PIAB (Amendment 2007) Act 2003.
113. R. Susskind, The End of Lawyers? (Oxford, OUP, 2008) p. 201-210.
114. 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.