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Consumer-to-business dispute resolution: the power of CADR

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Abstract

This paper summarises the findings of a study of CADR bodies in ten European Member States (Hodges C, Benöhr I, Creutzfeldt-Banda N in Consumer ADR in Europe. Hart Publishing, Oxford, 2012). It first notes the distinct nature of CADR bodies that have emerged, explains the architecture of national CADR systems, notes various empirical findings about how they operate, and then critically examines a series of important issues that arise over their modes of operation. It ends by considering the potential of CADR to deliver collective redress and to deliver behaviour control of traders, thereby acting as part of the regulatory system.

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Notes

  1. Commission (EC) ‘Proposal for a Directive on alternative dispute resolution for consumer disputes, COM (2011) 793/2, final, 29 November 2011 and Commission (EC) ‘Proposal for a Regulation on online dispute resolution for consumer disputes ’, COM (2011) 794/2, final, 29 November 2011.

  2. Roberts/Palmer [12].

  3. Lord Woolf ‘Access to Justice: Interim Report to the Lord Chancellor on the Civil Justice System in England and Wales, Final Report’, (HMSO, 1996).

  4. Dwyer [3].

  5. Directive 2008/52/EC of 21 May 2008 on certain aspects of mediation in civil and commercial matters.

  6. Regulation (EC) 861/2007 establishing a European small claims procedure.

  7. Directive 2009/52/EC on certain aspects of mediation in civil and commercial matters.

  8. See Hodges/Vogenauer/Tulibacka [9].

  9. See European Convention on Human Rights, art 6; and Case C-168/05 Mostazo Claro [2006] ECR I-10421 and Case C-40/08 Asturcom Telecomunicaciones SL v Cristina Rodríguez Nogueira [2009] ECR I-9579.

  10. Commission Recommendation 2001/310/EC on the Principles for Out-of-Court Bodies involved in the Consensual Resolution of Consumer Disputes.

  11. Recommendation 98/257/EC on the Principles Applicable to the Bodies Responsible for Out-of-Court Settlement of Consumer Disputes.

  12. European Code of Conduct for Mediators, at http://europa.eu.int/comm.justice_home/ejn/adr_ec_code_conduct_en.pdf.

  13. http://www.eejnet.org/filing_complaint.

  14. Council Resolution of 25 May 2000 on a Community-wide network of national bodies for the extra-judicial settlement of consumer disputes, OJ C 155/1, 6.6.2000.

  15. http://europa.eu/legislation_summaries/other/l32043_en.htm.

  16. See http://ec.europa.eu/consumers/ecc/key_facts_figues_en.htm.

  17. See http://ec.europa.eu/internal_market/finservices-retail/finnet/index_en.htm (accessed July 2008).

  18. See http://www.energyombudsmen.com.

  19. Directive 2000/31/EC of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market.

  20. Directive No 2008/6/EC.

  21. Directive No 2004/39/EC.

  22. Directive 2006/123/EC, art 27.

  23. Proposal for a Regulation of the European Parliament and of the Council on a Common European Sales Law, COM (2011) 635, 11.10.2011, AnnexI, art 13.1(g).

  24. Directives No 2009/136/EC and No 2009/140/EC; OJ L337, 18.12.2009 p.11 & 37.

  25. Directives No 2009/72/EC and No 2009/73/EC; OJ L 211, 14.8.2009 p. 55 & 94.

  26. Directive No 2008/48/EC.

  27. Directive No 2007/64 /EC.

  28. Stuyck [15].

  29. Civic Consulting, Study on the use of Alternative Dispute Resolution in the European Union, 16 October 2009 http://ec.europa.eu/consumers/redress_cons/adr_study.pdf. 2 December 2009.

  30. Consultation paper on the use of Alternative Dispute Resolution as a means to resolve disputes related to commercial transactions and practices in the European Union (European Commission, January 2011), available at http://ec.europa.eu/dgs/health_consumer/dgs_consultations/ca/docs/adr_consultation_paper_18012011_en.pdf.

  31. Hodges/Benöhr/Creutzfeldt-Banda [8]

  32. See Communication by the European Commission on “Alternative Dispute Resolution for consumer disputes in the Single Market”, COM (2011) 791/2.

  33. Proposal for a Directive of the European Parliament and of the Council on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Directive on consumer ADR), COM (2011) 793/2.

  34. Proposal for a Regulation of the European Parliament and of the Council on online dispute resolution for consumer disputes (Regulation on consumer ODR), COM (2011) 793/3.

  35. Models in ten Member States have been examined in Hodges/Benöhr/Creutzfeldt-Banda [8].

  36. One large UK retailers sold approximately 50 million products in 2011, with average price per item of £35, and received approximately 40,000 customer queries and 50 court claims; another had 130 million transactions with 280,000 consumers, average price per item of £15, and received 40 country court cases, of which 27 were admitted or settled straight away: see G Wynn, European Commission proposal for a Directive on ADR and a Regulation on ODR, January 2012, BRC Position (British Retail Consortium, 2012).

  37. But if the Ombudsman himself transfers the case to the Geschillencommissie the consumer pays no fee. If the Ombudsman declares the claim clearly inadmissible the fee is €100.

  38. Another is the Pensions Ombudsman, who is fully funded by the government, receiving £2,810,000 in 2010/11, and who accepted 950 complaints for investigation. The subject-matter is often complex, and average duration of investigations is 10.9 months. The recent statutory Legal Ombudsman had a budget of £9.9 million in 2011, obtained from a levy on all regulated firms and from a case fee of £400, which was not payable for the first two potentially chargeable complaints in a year. He received 38,155 contacts and accepted 3,768 cases for investigation.

  39. http://www.financial-ombudsman.org.uk.

  40. Such as OFCOM’s Approved Code of Practice for Complaints Handling in relation to complaints made by residential and small business customers, 2011, made under the Communications Act 2003, s 52.

  41. see Consumer Codes Approval Scheme: Core Criteria and Guidance 2008 (Office of Fair Trading, 2008), available at: http://www.oft.gov.uk/shared_oft/Approvedcodesofpractice/oft390.pdf.

  42. The Lending Code of the Finance and Leasing Association, at http://www.fla.org.uk/consumer.

  43. Motor Industry Code of Practice New Cars 2008, the Motor Industry Code of Practice: Service and Repair, 2008, and Motor Industry Code of Practice: Vehicle Warranty Products, 2009, at http://www.motorcodes.co.uk/about-motor-codes/icap.html.

  44. Code of Practice of the British Association of Removers at http://www.bar.co.uk/Default.aspx.

  45. Code of Practice of the Debt Managers Standards Association, at http://www.demsa.co.uk.

  46. The Code of practice of the Institute of Professional Willwriters, at http://www.ipw.org.uk.

  47. Review of the impact of business of the Consumer Codes Approval Scheme (Office of Fair Trading, 2006).

  48. See Stadler and Hau [14]; Hess and Hübner [7].

  49. See http://www.amf-france.org/affiche_page.asp?urldoc=mediateur.htm. The dispute resolution function is mandated under Article L. 621-19 of the French Monetary and Financial Code.

  50. Hodges/Benöhr/Creutzfeldt-Banda [8].

  51. Review of Alternative Dispute Resolution and Complaints Handling Procedures, (OFCOM, 2008). The original 12 weeks timeframe (now reduced to 8 weeks) came from the companies’ quarterly billing cycle. The energy regulator made this change before the telecoms regulator.

  52. Stuyck [15].

  53. Hodges/Vogenauer/Tulibacka [9].

  54. It pays for residual expenses not covered by social security arising out of personal injury, and receives 12,000 claims a year of which about half receive compensation.

  55. Hodges/Vogenauer/Tulibacka [9].

  56. These two terms are sometimes differentiated, but they are treated as the same for present purposes, involving an independent third party facilitating communication between the two primary parties and seeking to facilitate an agreement between them.

  57. See ECC-Net Air Passenger Rights Report 2011 (The European Consumer Centres’ Network, 2011).

  58. Financial Services and Markets Act 2000, s 228(2).

  59. Directive 2005/29/EC.

  60. Directive 93/13/EC.

  61. Directive 2006/114/EC: article 1 refers to the aim of preventing the unfair consequences of misleading advertising.

  62. It needs to be borne in mind that levels of trust in judges in Central and Eastern European states is not always high, nor is it in junior professional judges in some states.

  63. Verkijk [17].

  64. Galanter [5].

  65. Roberts/Palmer [12].

  66. Yeazell [18].

  67. Menkel-Meadow [11].

  68. Van Rhee/Uzelac [16].

  69. Hodges/Vogenauer/Tulibacka [9].

  70. Sen [13].

  71. The UK FOS and OFCOM now publish data on the types of issues and the names of traders.

  72. Huls [10].

  73. See the discussion on the development of EU wide complaints reporting in Benöhr [1].

  74. Communication from the Commission ‘Europe 2020 - A strategy for smart, sustainable and inclusive growth’ COM (2010) 2020. See also Proposal for a Regulation of the European Parliament and of the Council establishing a Programme for the Competitiveness of Enterprises and small and medium-sized enterprises (2014–2020), COM (2011) 834 final, available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0834:FIN:EN:PDF.

  75. Report from the Commission to the Council and the European Parliament Minimizing regulatory burden for SMEs Adapting EU regulation to the needs of micro-enterprises, COM (2011) 803, 23.11.2011, http://ec.europa.eu/governance/better_regulation/documents/minimizing_burden_sme_EN.pdf.

  76. Delivering regulatory reform. Report by the Comptroller and Auditor General (National Audit Office, 2011), available at http://www.nao.org.uk/idoc.ashx?docId=89f6cf32-eeeb-4f0a-b862-d5a9feec4388&version=-1. See also Lightening the Load: The Regulatory Impact on UK’s Smallest Businesses (Department for Business Innovation and Skills, 2010).

  77. Consumer Law and Business Practice. Drivers of compliance and non-compliance (Office of Fair Trading, 2010), OFT1225, available at http://www.oft.gov.uk/shared_oft/reports/Evaluating-OFTs-work/OFT1225.pdf.

  78. The future of market surveillance in the area of non-food consumer product safety under the General Product Safety Directive, (BSI, 2011), http://ec.europa.eu/consumers/safety/projects/docs/final_report_the_future_of_market_surveillance.pdf.

  79. Case C-317/08, C-317/08, C-319/08 and C-320/08, Rosalba Alassini v Telecom Italia SpA, Filomena Californio v Wind SpA, Lucia Giorgia Iacono v Telecom Italia SpA and Multiservice Srl v Telecom Italia SpA, March 18, 2010.

  80. English Civil Procedure Rules, r 44.5(3).

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Authors and Affiliations

  1. CMS Research Programme on Civil Justice Systems, Centre for Socio-Legal Studies, University of Oxford, Manor Road, Oxford, OX1 3QU, UK

    Christopher Hodges, Iris Benöhr & Naomi Creutzfeldt-Banda

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  1. Christopher Hodges
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  2. Iris Benöhr
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  3. Naomi Creutzfeldt-Banda
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Correspondence to Christopher Hodges.

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All Authors are members of the CMS Research Programme on Civil Justice Systems, Centre for Socio-Legal Studies, University of Oxford; C. Hodges is also Erasmus Professor of the Fundamentals of Private Law, Erasmus University, Rotterdam. C. Hodges was speaker at the Annual Conference on European Consumer Law 2011, organised by ERA on 13 October 2011 in Trier.

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Hodges, C., Benöhr, I. & Creutzfeldt-Banda, N. Consumer-to-business dispute resolution: the power of CADR. ERA Forum 13, 199–225 (2012). https://doi.org/10.1007/s12027-012-0263-y

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