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Marianne STEGNER

Online dispute resolution: The future of

consumer dispute resolution?

Table of contents
I Introduction .......................................... 348
II Consumer online dispute resolution (ODR) & the European Union.........349
A The EU on its way to ODR ....................... ........ 349
B The directive on consumer ADR and the regulation on consumer
ODR ............................................... 352
C Critical evaluation ............................
.......... .......... 356
Ill Consumer ODR & UNCITRAL......................................358
A UNCITRAL on its way to ODR.................. ..... ...... 358
B ODR for cross-border electronic commerce transactions: Draft
outcome document reflecting elements and principles of an ODR
process.............................................358
C Critical evaluation ............................
.......... .......... 360
IV Outlook - Is consumer ODR the future? ............ .............. 360

Abstract
Over recent years there have been efforts on a European as well as a global
level to improve extrajudicial settlement, in particular online dispute resolution in
consumer disputes. Online dispute resolution shows great potential to resolve
low-value electronic commerce transactions including consumers. This article
gives an overview of the development of online dispute resolution in the Euro-
pean Union by summarizing and evaluating the European directive on consumer
alternative dispute resolution and the regulation on consumer online dispute
resolution. Also, the work of UNCITRAL in this area is surveyed and presented in
short.

Keywords
Digital single market, online dispute resolution, ODR, consumer ODR, consumer
dispute resolution, CDR, alternative dispute resolution, ADR, European directive
on consumer ADR, European regulation on consumer ODR, principles ODR
process

347
Marianne STEGNER

I Introduction
The use of the internet has increased ever since the internet was made accessible
to everyone in the 1990s.1 Besides online communication and information web-
sites also electronic trade became interesting for more and more internet users.
Even though buying and selling products or services online is now the most
popular way for distance sales - leaving behind telephone, post or fax - con-
sumers and traders are still hesitant to buy or sell online cross-borders. Even in
the European Union (EU), with a well functioning single market, the digital single
market is only growing slowly. European studies show that domestic online sales
have increased from 28% in 2008 to 44% in 2014, whereas cross-border online
sales within the digital single market have only increased from 6% in 2008 to
15% in 2014. Further, only 8% of the European consumers were buying online
2
from traders outside the EU. This divergence demonstrates that consumers, as
well as traders, are willing to use the internet as commercial platform, however
they hesitate to sell and shop cross-borders. Now the question arises: What are the
reasons for the reluctant growth of cross-border sales inside and outside the EU?
The uneven availability of simple, effective, fast but low-cost means of resolv-
ing disputes can be identified as a barrier for the growth of online trade. Disputes
between traders and consumers in the online environment are primarily concern-
ing small claims. Contracts of sale or service concluded by a consumer online
are worth on average E 100. 3 Hence, one is confronted with a huge number of
conflicts dealing with very small amounts of money. This special circumstance
needs equivalent means of dispute resolution. The fact that such means of dis-
pute resolution are missing, was both acknowledged by the EU as well as the
United Nations Commission on International Trade Law (UNCITRAL).

1 See e.g. Barry M. Leiner/et al., Brief history of the internet, internetsociety.
org/internet/internet-51/history-internet/brief-history-internet (28 June 2016).
2 European Commission, Consumer Conditions Scoreboard, 7th edition (May 2012) p. 14
figure 7; European Commission, Consumers Conditions Scoreboard, 9th edition (Ju-
ly 2013), p. 22 figure 11, available at ec.europa.eu/consumers/consumerresearch/
editions/docs/9theditionscoreboard de.pdf (28 June 2016); European Commis-
sion, Consumer Conditions Scoreboard, 2015 edition, p. 56 figure 46, available at
http://ec.europa.eu/consumers/consumer-evidence/consumer-scoreboards/11edition/
docs/ccs2015scoreboarden.pdf (28 June 2016).
3 See European Commission, Flash Eurobarometer 299 (2011) p. 21; Commission
Staff Working Paper, Impact Assessment, Accompanying the document Proposal for
a Directive of the European Parliament and of the Council on Alternative Dispute
Resolution for consumer disputes (Directive on consumer ADR) and Proposal for a
Regulation of the European Parliament and of the Council on Online Dispute Resolu-
tion for consumer disputes (Regulation on consumer ODR) (Brussels, 29 November
2011), p. 62.
348
 Online dispute resolution: The future of consumer dispute resolution?

II Consumer online dispute resolution (ODR) & the

European Union

A The EU on its way to ODR

The development of alternative dispute resolution means, as well as the devel-
opment of online dispute resolution means, occurred almost parallel to the in-
creasing use of the internet. However, online trade developed far more quickly
than equivalent online dispute resolution means.
In 1993, the green paper consumer access to justice was published. Therein
the European Commission suggested to "develop all the out-of-court procedures,
thereby lessening the imbalance between the cost of the cross-border legal pro-
cedure and the value of the dispute."4
In 1996, the European Commission reiterated in the action plan on consumer
access to justice and the settlement of consumer disputes in the internal market
that fast out-of-court dispute resolution means are necessary to resolve disputes
at reasonable costs and with due guarantees.s
In 1998, the importance of alternative dispute resolution in consumer disputes
was taken up again by the European Commission in its communication on the
out-of-court settlement of consumer disputes.6 In the same year the Commission
Recommendation of 30 March 1998 on the principles applicable to the bodies
responsible for out-of-court settlement of consumer disputes was published.
Therein the idea of a European consumer complaint form for consumer disputes
(CCform) was born.8 Further, did this recommendation contain the following
seven principles:
* principle of independence
* principle of transparency
* adversarial principle
* principle of effectiveness
* principle of legality
* principle of liberty
* principle of representation.

4 Consumer access to justice (Green Paper), available at http://eur-lex.europa.eu/

legal-content/EN/TXT/HTML/?uri=URISERV:132023&from=DE (28 June 2016).
5 Resolution on the Commission communication 'Action plan on consumer access to
justice and the settlement of consumer disputes in the internal market'
(COM(96)0013 - C4-0195/96), available at http://eur-lex.europa.eu/legal-content/EN/
TXT/HTML/?uri=CELEX:519961PO355&from=DE (28 June 2016) lit. F.
6 Communication from the Commission of 30 March 1998 on the out-of-court settle-
ment of consumer disputes [COM(1 998) 198 final - not published in the Official Jour-
nal], available at http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=
URISERV:132031&from=DE (28 June 2016).
7 Commission Recommendation of 30 March 1998 on the principles applicable to the
bodies responsible for out-of-court settlement of consumer disputes, Official Journal
L 115 , 17/04/1998 P. 0031 - 0034, 98/257/EC.
8 See e.g. Pablot Cortes, Online dispute resolution for consumers in the European
Union, Routledge, Abingdon, Oxon, New York 2011, 72, 73; Marta Poblet/Graham
Ross, ODR, in: Mohamed S. Abdel Wahab/Ethan Katsh/Daniel Rainey (eds.), Online
Dispute Resolution: Theory and Practice, The Hague 2012, 460.
349
Marianne STEGNER

The recommendation of 30 March 1998 was limited to procedures with the

active intervention of a third party, who proposes or imposes a solution.
In addition to the recommendation of 30 March 1998, the Commission Re-
commendation of 4 April 2001 on the principles for out-of-court bodies involved
in the consensual resolution of consumer disputes was issued in 2001. This
recommendation was limited to consumer dispute resolution procedures which
bring the parties together in an attempt to convince them to reach a solution by
common consent and contains the following four principles:
* impartiality
* transparency
* effectiveness
* fairness. 9
Equally, in 2001, the European Extra-Judicial Network for resolving consumer
disputes (EEJ-Net) was created in order to boost consumer confidence in the
single market. Already back then the use of online means to resolve disputes
was emphasized by the Council of the EU. The pilot project of the EEJ-Net was
stopped in 2013. The aim of the EEJ-Net was to connect national institutions
dealing with alternative dispute resolution with each other to promote out-of-court
ways of dispute resolution for cross-border conflicts between traders and con-
sumers. 10 Even though the pilot project was not continued, this idea was adopted
by the European directive on consumer alternative dispute resolution (ADR) and
the regulation on consumer online dispute resolution (ODR).
Further, in 2001 the Financial Dispute Resolution Network (FIN-Net) was
launched by the European Commission. The FIN-Net puts consumers in touch
with the relevant alternative dispute resolution complaint scheme in order to
solve disputes between a consumer and a financial services provider."
In 2002, the Green Paper on alternative dispute resolution in civil and com-
mercial law was published and, once again, the EU stressed the importance of
alternative and online dispute resolution means for consumer dispute resolution.1 2
In 2003, the pilot project Electronic Consumer Dispute Resolution (ECODIR)
was completed. Within this project, ODR between consumers and traders was
tested. ECODIR imagined an ODR process containing three steps: negotiation,
mediation, and recommendation. Therefore, the ECODIR Resolution Rules were
drafted to govern the ODR process. However, due to a lack of awareness in the
society and a lack of willingness of concerned traders to participate in this out-of-
court process, as well as a lack of financial resources, the project was terminated.

9 Commission Recommendation of 4 April 2001 on the principles for out-of-court

bodies involved in the consensual resolution of consumer disputes (notified under
document number C(2001) 1016).
10 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, paras. 8-11.
11 FIN-Net, available at http://ec.europa.eu/finance/fin-net/indexen.htm (10 July 2016).
12 Green Paper on alternative dispute resolution in civil and commercial law [COM(2002)
196 final - Not published in the Official Journal], available at http://eur-lex.europa.eu/
legal-content/EN/TXT/HTML/?uri=URISERV:133189&from=DE (28 June 2016).
13 See Philippe Mireze, Where is everyone going with online dispute resolution (ODR),
available at ombuds.org/cyberweek2002/library/ODRMirezePhillipe.doc (10 July
2016) 25; Gralf-Peter Callies, Online Dispute Resolution: Consumer Redress in a
Global Market Place, German Law Journal, 7 (2006) 8, 325; Karim Benyekhlef/
350
 Online dispute resolution: The future of consumer dispute resolution?

In 2005, the European Consumer Centres Network (ECC-Net) was estab-

14
lished, being a merger of the EEJ-Net and the Network of Euroguichets. The
ECC-Net is no dispute resolution institution, rather it offers information about
consumer rights within the EU and assists consumers having complaints against
an entrepreneur domiciled in another European member state.
In 2010, the Commission published the communication Europe 2020: A strat-
15
egy for smart, sustainable and inclusive growth. The strategy implied seven
flagship initiatives; one was the Digital Agenda for Europe, which identified dif-
ferent barriers:
"Europe is still a patchwork of national online markets, and Europeans are
prevented by solvable problems from enjoying the benefits of a digital sin-
gle market. Commercial and cultural content and services need to flow
across borders; this should be achieved by eliminating regulatory barriers
and facilitating electronic payments and invoicing, dispute resolution and
customer trust."16
In 2011, the communication entitled Single Market Act - twelve levers to boost
growth and strengthen confidence: "working together to create new growth" put
emphasize on the need of legislation on ADR, especially in the area of online
17
disputes. The EU was convinced that adequate alternative and online dispute
resolution means would boost the confidence of consumers in the internal market.
These steps clearly demonstrate that the EU tried to achieve simple, effective
and easily accessible solutions for cross-border conflicts between consumers
and service providers or traders within the EU ever since the digital single market
started growing.
Finally, in 2013, the directive 2013/1 1/EU on alternative dispute resolution for
consumer disputes (directive on consumer ADR) and the regulation (EU) No.
524/2013 on consumer online dispute resolution (regulation on consumer ODR)
were published.

Fabien Gelinas, Online Dispute Resolution, available at lex-electronica.org/docs/

articles_87.pdf (10 July 2016) 100 et seq.
14 The Euroguichets were created in the early 1990s at the Commission's initiative in
order to inform consumers about the possibilities of the internal market and consum-
ers' rights.
15 Communication from the Commission of 3 March 2010 - Europe 2020: A strategy for
smart, sustainable and inclusive growth [COM(2010) 2020 final - Not published in
the Official Journal], available at http://eur-lex.europa.eu/legal-content/EN/TXT/
HTML/?uri=URISERV:em0028&from=DE (28 June 2016).
16 Digital Agenda for Europe KOM(2010) 310, available at http://eur-lex.europa.eu/
legal-contentlen/TXT/PDF/?uri=CELEX: 52010DC0245&from=en (28 June 2016) 6.
17 Communication from the commission to the European Parliament, the Council, the
Economic and Social Committee and the Committee of the Regions, Single Market
Act Twelve levers to boost growth and strengthen confidence: "Working together to
create new growth" COM/2011/0206 final.
351
Marianne STEGNER

B The directive on consumer ADR and the regulation on

consumer ODR
The directive on consumer ADR applies to all types of ADR procedures, be it the
consensual resolution of a dispute, the proposal of a solution, or an imposed
solution. Besides, it applies to all disputes between consumers and traders con-
cerning sales or service contracts, be it online or offline transactions, both do-
mestic and cross-borders. Sales contracts do also include the sale or provision
of digital contents. Service contracts mean all types of service contracts with
the exception of services provided free of charge and employment issues.19 The
directive does not apply to the situation where either the consumer or the trader
is domiciled in a state that is not a member state to the EU.
Exempted economic sectors are non-economic services of general interest,
health care services, and public providers of further or higher education. Further,
procedures before consumer complaint-handling systems operated by a trader,
disputes between traders, direct negotiation between the consumer and the
trader, and attempts by a judge to settle a dispute in the course of a judicial pro-
ceeding, are excluded from the scope of application of the directive.20
Whether procedures before dispute resolution entities, which are totally fi-
nanced by an individual trader, are covered by the directive is left upon the deci-
sion of each member state. Additionally, member states may decide whether
also complaints from a trader against a consumer can be dealt with by the do-
mestic dispute resolution entities.21
This broad scope of application, both in its geographical as well as material
dimension, should enable consumers all over Europe to submit complaints
against traders, independent of the member state the trader is domiciled and
independent of the economic sector. Therefore, it guarantees consumers a pos-
sibility to resolve disputes in an easy, efficient procedure, free of cost, but on a
high quality level. This shall strengthen the consumer confidence in the Europe-
an single market and the digital single market. By concluding a sales or service
contract, a consumer is now assured that there are adequate dispute resolution
procedures besides the judicial system available.
The quality of the ADR procedure is also guaranteed by the registration of na-
tional ADR entities in a European list. Whereas the legal form of the entity is not
defined by the directive and entities can be established in various ways, e.g. ex
lege, by official institutions, chambers or associations, they all have in common
that the principles established by the directive are applied. An ADR entity is set
up on a permanent basis, hence, ad hoc proceedings do not fall under the di-
rective on consumer ADR. 22

18 Directive 2013/11/EU of the European Parliament and of the Council of 21 May 2013
on alternative dispute resolution for consumer disputes and amending Regulation
(EC) No. 2006/2004 and Directive 2009/22/EC (Directive on consumer ADR), recital 16.
19 See Jochen Hayungs, ADR-Richtlinie und ODR-Verordnung, ZKM, 16 (2013) 3, 86;
Tamara Gabriel/Kirstin Grablinger, Einfach, effizient, kostengonstig: Alternative
Streitbeilegung - zwei neue Rechtsakte der EU, in: Beate Reiffenstein/Maria
Blaschek (eds.), Konsumentenpolitisches Jahrbuch 2011-2012, Vienna 2014, 5.
20 Art. 2 Directive 2013/1 1/EU.
21 Ibid.
22 Directive 2013/11/EU, recital 20.
352
 Online dispute resolution: The future of consumer dispute resolution?

The deadline for the implementation of the directive on consumer ADR was
9 July 2015. Hence, by now all member states had to implement the provisions
of the directive into national law, e.g. in Austria the Alternative-Streitbeilegung-
Gesetz (law on alternative dispute resolution) came into force.
By implementing the directive, member states have to make sure that there
are ADR entities available that a consumer can address if the consumer has a
dispute with a trader domiciled in the member state. Further, the member state
has to ensure that the entity providing dispute resolution procedures, maintains
an up-to-date website with necessary information about the ADR procedure,
enables the consumer to submit a complaint (both online and offline), enables
the exchange of information between the parties and accepts domestic and
cross-border disputes.2 3
The different ADR entities are free to introduce procedural rules. These pro-
cedural rules may, at the discretion of each member state permit the refusal of
24
complaints filed at an ADR entity, due to the following reasons:
* the consumer did not try to resolve the dispute directly with the trader as a
first step,
* the dispute is frivolous or vexatious,
* the dispute has already been considered by a court or another ADR entity,
* the value of the complaint falls below or above a pre-specified monetary
threshold,
* the dispute started at least more than a year ago,
* the dealing with such dispute would seriously impair the effective operation of
the ADR entity.
These grounds ensure the effective work of the entities.
ADR procedures as well as ADR entities are highly diverse in the EU. The di-
rective did not aim at creating one way of ADR procedure and one type of entity.
Rather the different traditions on ADR in the member states are respected by the
directive. However, the directive establishes the following harmonized principles
and quality requirements:
* expertise, independence and impartiality,
* transparency,
* effectiveness,
* fairness,
* liberty,
* legality.
Expertise shall be guaranteed by ensuring that the natural person in charge of
the ADR process has the necessary knowledge and skills in the field of alterna-
tive or judicial resolution of consumer disputes. While a general understanding of
law is necessary, it is not mandatory to be a jurist.
Independence is guaranteed by freedom of instructions as well as a remuner-
ation that has no connection to the outcome of the procedures administered.
Impartiality, as an important procedural principle, can be achieved by the ob-
ligation to disclose any circumstances that rise doubts as to the impartiality of the

23 Art. 5 Directive 2013/1 1/EU.

24 Art. 5 para. 4 Directive 2013/1 1/EU.
353
Marianne STEGNER

natural person in charge of the ADR procedure. Similar to provisions in arbitra-

tion rules, the directive contains a detailed process on the replacement of a par-
tial natural third person in the ADR process.
Transparency, on the one hand, concerns the transparency of the ADR enti-
ties, on the other hand, of the procedure itself. The ADR entity has to publish on
its website information such as contact details, the fact that they are listed in
accordance with the directive, the types of disputes they are competent to deal
with, or the costs of the procedure. Further, the entities have to publish the num-
ber of disputes received and the types of complaints to which they related, the
number of disputes refused, as well as the percentage of solutions (amicably
agreed, proposed or imposed) and the average time to resolve a dispute
The procedure is transparent, because the entity has to make publicly availa-
ble, e.g. information on the procedural rules, the natural persons in charge of the
ADR process, whether the parties can withdraw from the procedure, the length of
the procedure, or the legal effect of the outcome of the procedure.
By easy accessible procedures, free of charge without being obliged to retain
a lawyer and a fast process of a maximum of 90 calendar days, the directive
ensures the effectiveness of consumer ADR.
Fairness is guaranteed by the fact that each party has the possibility to ex-
press its point of view. Further the parties are informed that they may seek for
legal advice and are notified by the outcome of the procedure as well as the
grounds on which the outcome is based. Additionally, the directive contains spe-
cial provisions for procedures where a solution is proposed. Before agreeing to a
proposed solution, the parties have to be informed that they are not obliged to
agree on the proposed solution, that they still have the right to start court pro-
ceedings, and finally, that the proposed solution might vary from the outcome of
a court applying legal rules.
The provision dealing with the principle of liberty states that proceedings that
impose a solution upon the parties may only be binding if the parties were in-
formed about the binding nature in advance and accepted it. Further, an agree-
ment between a trader and a consumer to submit complaints to ADR entities is
only binding upon the consumer, if the agreement was concluded after the dis-
pute has materialized and it does not deprive the consumer of its rights to judicial
redress.
If the ADR procedure imposes a solution on the parties, the principle of legali-
ty assures that this solution does "not result in the consumer being deprived of
the protection afforded to him by the provisions that cannot be derogated from by
agreement by virtue of the law of the Member State where the consumer and the
25
trader are habitually resident."
The idea of a consumers' complaint form (see above p. 349) was re-launched
by the regulation on consumer ODR. The regulation on consumer ODR estab-
lishes a web-based platform as single point of entry for consumers to resolve
disputes with traders.
The platform describes itself as follows:
"If you have a problem with something you've bought online, you can use
this site to try to reach an out-of-court settlement. You can only use it if
you live in the EU and the trader is based in the EU. In some countries you

25 Art. 11 Directive 2013/11/EU.

354
 Online dispute resolution: The future of consumer dispute resolution?

can also use this site if you are a trader and you want to complain about a
consumer over a good or service you sold online."2 6
In order to create a level playing field, the ODR platform applies to cross-
27
border as well as domestic online transactions. However, it does not apply to
disputes between consumers and traders resulting of an offline concluded sales
or service contract.
The ODR platform also provides general information. The participation in an
alternative dispute resolution happens on a voluntary basis. Accordingly, the
consumer has also the right of access to the judicial system. In fact, the ODR
platform does not only inform about ODR but also about other forms of redress,
like the small claims procedure, court procedures, and the European payment
order.
The ODR platform is available in 23 languages of the EU. Its main objective is
to transmit complaints to an ADR entity, namely the registered and listed ADR
entities according to the directive on consumer ADR. Hence, consumers can be
sure that the ADR entities on the ODR platform were checked and fulfil all the
requirements set by the directive. Consequently, they can be sure that their dis-
pute is resolved by a legitimate institution and that the procedural principles are
respected.
The ODR platform supports consumers by supplying an electronic complaint
form that can easily be filled in. In addition, relevant documents can be attached
to the submitted complaint (e.g. photographs or bills). Further, it offers an elec-
tronic case management tool, which can be used by the ADR entities on a volun-
tary basis. The case management tool enables the entity to conduct the whole
dispute resolution procedure via the platform. Of course, the platform guarantees
the secure interchange of data.
In short, the procedure can be explained as follows: The consumer fills in the
complaint form and submits it to the platform. The ODR platform contacts the
trader and informs about the complaint. Then the consumer and the trader have
to agree which ADR entity should resolve their dispute. The chosen ADR entity
receives all documents already uploaded to the ODR platform and may use the
case management tool to resolve the dispute. The dispute resolution procedure
should not take longer than 90 calendar days.
In case the parties cannot agree upon one ADR entity, the parties should con-
tact their national contact point for support. The member states are obliged to
establish a national contact point, hosting at least two ODR advisors, to provide
assistance to users of the ODR platform. These national contact points are listed
on the ODR platform. Many member states conferred this responsibility on their
consumer centres being part of the ECC-Net.
Since 15 February 2016, the platform is available to the public. Availability
and a high level of awareness are essential for the platform to achieve its goal to
make "consumers and traders [...] feel confident in carrying out transactions

26 ODR Platform, available at https://webgate.ec.europa.eu/odr/main/index.cfm?event=

main.home.show&lng=EN (28 June 2016).
27 Regulation (EU) No. 524/2013 of the European Parliament and of the Council of
21 May 2013 on online dispute resolution for consumer disputes and amending
Regulation (EC) No. 2006/2004 and Directive 2009/22/EC (Regulation on consumer
ODR), recital 11.
355
Marianne STEGNER

online. ,28 Accordingly, the regulation contains various provisions in this regard,
e.g. it indicates that the link to the ODR platform is accessible through the Your
Europe portal on a prominent position.29 Further, traders established within the
EU as well as online-marketplaces should provide a link to the ODR platform on
their website.ao
The operation, in particular translation functions and technical facilities,
maintenance, fundin and data security of the ODR platform is the responsibility
of the Commission.

C Critical evaluation
The directive on consumer ADR and the regulation on consumer ODR are the
reaction to the awareness that ADR - despite all the steps that have already
been taken by the EU - is still not satisfactorily used in the EU. Firstly, this is due
to the fact that ADR is inconsistently developed within the EU. Secondly, avail-
able procedures are on a different quality level depending on the member state
they are applied. Thirdly, neither the consumers nor the traders are aware of the
potential of ADR to resolve disputes and its many advantages.32
The first two issues are addressed by the directive on ADR which establishes
quality requirements fulfilled by all listed ADR entities. The directive on consumer
ADR follows a minimum harmonization approach. This is in line with the ap-
proach of other directives on consumer protection and respects the different
legal traditions on ADR in the member states. However, a result of the minimum
harmonization approach is that ADR is still inconsistently developed: The di-
rective provides a great scope for the implementation in national law. In particu-
lar the fact that it is left to the individual entities to establish procedural rules
remains the highly fragmented structure of ADR entities within the EU. "Europe-
an procedural rules for consumer dispute resolution" would have been a bigger
step into the direction of ADR and ODR as most popular ways for consumers to
resolve disputes with traders.3 3 Too many questions are left open by the direc-
tion, e.g. how to deal with confidential issues in a judicial procedure following the
ODR process, or confidentiality in connection with the cooperation and exchange
of experience between the ADR entities according to Art. 16 of the directive.
The directive and the regulation are two interlinked legislative instruments,
since the successful implementation of the directive is a precondition for the
effectiveness of the regulation.
Despite the directive and regulation being interlinked, the directive is only ap-
plicable to complaints submitted by a consumer against a trader and not vice
versa. It is up to the member states to allow entities to admit procedures where a
trader submits a complaint against a consumer. However, this is contrary to the
basic idea to increase consumer protection by providing the weaker party of a

28 Regulation (EU) No. 524/2013, recital 6.

29 Regulation (EU) No. 524/2013, recital 21.
30 Regulation (EU) No. 524/2013, recital 30, Art. 14.
31 Regulation (EU) No. 524/2013, recital 19; Art. 5.
32 See Directive 2013/11/EU, recital 5.
33 See also Gerhard Wagner, Die Richtlinie Ober Alternative Streitbeilegung - Law
Enforcement statt mediative Konfliktlisung, ZKM, 16 (2013) 4, 104; Jochen
Hayungs, ADR-Richtlinie und ODR-Verordnung, ZKM, 16 (2013) 3, 86.
356
 Online dispute resolution: The future of consumer dispute resolution?

sales or service transaction with easy accessible dispute resolution means.3 4

Additionally, a critical note may be that the scope of application of the regula-
tion is limited to online transactions. However, consumers would benefit most if
there would be a single point of entry to out-of-court dispute resolution for all kind
of sales or service contract.
Further, one may argue that the EU sets its focus on out-of-court dispute
resolution means for consumer disputes, although the access to the judicial
system is already available. The directive on consumer ADR and the regulation
on consumer ODR open up another way of dispute resolution, which can exist
parallel to judicial means. Which way is taken is up to the decision of the con-
sumer. Critics argue that this approach is too costly for the EU since judicial
means do already exist and should be promoted in a stronger way instead of
creating further alternative ways. However, consumer protection should be one
of the most important issues in the European internal market, hence, the im-
provement of consumer protection in various ways is welcome.
In my opinion, the ODR platform has two main advantages: firstly, the single
point of entry and secondly the listed ADR entities that are linked to the platform.
A single point of entry is necessary and useful in the digital single market, since
consumers otherwise would have to search for ADR entities on their own, which
can be very time-consuming and frustrating. A single point of entry through a
website operated by the European Commission is a comfortable way to submit
complaints. This leads to the second big advantage, since the complaints are
transmitted to registered ADR entities which fulfil all requirements of the ADR
directive and accordingly ensure that the disputes between consumers and trad-
ers are handled on an equal quality level independent of the member state the
consumer or the trader have their domicile.
From the point of view of a consumer, I am afraid that the ODR platform and
the great possibility of easy, effective and free of charge dispute resolution sys-
tems could and should have been communicated more strongly in the media.
One reason why projects like the EEJ-Net or ECODIR were not a success was
the lack of knowledge within the society. Accordingly, to make the directive on
consumer ADR and the regulation on consumer ODR a success, focus should
be given on its promotion overall Europe. Knowledge about the ODR platform is
essential for its usage!

34 See Report Louis Grech A7-0280/2012, Alternative dispute resolution for consumer
disputes, amendments 001-166 by the Committee on the Internal Market and Con-
sumer Protection, amendment 102, available at http://www.europarl.europa.eu/
sides/getDoc.do?pubRef=-//EP//NONSGML+AMD+A7-2012-0280+001-166+DOC+
PDF+VO//EN (28 June 2016); Opinion of the committee on legal affairs for the com-
mittee on the internal market an consumer protection on the 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), PE486.223v02-00, available at
http://www.europarl.europa.eu/meetdocs/2009_2014/documents/juri/ad/905/905641/
905641en.pdf (28 June 2016), amendments 4 and 36.
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Marianne STEGNER

III Consumer ODR & UNCITRAL

A UNCITRAL on its way to ODR

Already in the year 2000 UNCITRAL evaluated ODR as a potential future project
for one of its Working Groups. 3 5 In 2003, UNCITRAL considered it as being still
too early to deal with this topic in detail, rather it should be observed and further
information should be collected.
Upon a proposal by the American delegation to establish ODR procedural
rules, UNCITRAL organized a colloquium on the topic A fresh look at Online
Dispute Resolution an Global E-Commerce: Toward a Practical and Fair Redress
System of the 21st Century Trader (Consumer and Merchant) in 2010.37 Accord-
ing to this colloquium it became evident that ODR was necessary to improve
consumer confidence in electronic commerce. The participants agreed that tradi-
tional judicial means are not suitable for online consumer dispute resolution,
since fast, easy and low-cost procedures are necessary.
In 2010, the UNCITRAL Commission decided that Working Group Ill should
undertake work in the field of ODR relating to cross-border electronic commerce.39
The mandate of Working Group Ill related to low-value, high-volume cross-
border electronic transactions, including business-to-business (B2B) and busi-
ness-to-consumer (B2C) transactions. Further, the impact of ODR on consumer
protection and the question how to draft rules would respond to the needs of
developing countries and those facing post-conflict situations, in particular with
regard to the need for an arbitration phase to be part of the process should be
considered by the Working Group. 40
From 2010 to 2015 the Working Group Ill tried to establish procedural online
dispute resolution rules for cross-border electronic commerce transactions. Despite
all efforts, the Working Group could not agree on a set of rules. Accordingly, at its
forty-eighth session, the Commission instructed Working Group Ill to elaborate a non-
binding descriptive document reflecting elements and principles of an ODR process. 41

B ODR for cross-border electronic commerce transactions:

Draft outcome document reflecting elements and principles
of an ODR process
Starting at its forty-eighth session, the Working Group Ill had a time limit of one year
to end its considerations on ODR, independent of whether or not a result could be
achieved. Accordingly, its work had to end with this draft outcome document.

35 UNCITRAL, Report A/55/17, 33rd session (12 June - 7 July 2000) para. 385.
36 UNCITRAL, Brief von Jernej Sekolec, Secretary UNCITRAL (17.01.2003) an
CEFACT, LA/TL 131(6) RS/lb 6.
37 UNCITRAL, Possible Future work on online dipsute resolution in cross-border elec-
tronic commerce-transactions, Note by the Secretariat, A/CN.9/706, 43rd session
(23 April 2010) para. 6.
38 Ibid. para. 31, 50. See also UNCITRAL, Working Group Ill, Annotated provisional
agenda, 22nd session (13-17 December2010) para. 9.
39 UNCITRAL, Annotated provisional agenda, A/CN.9/WG.Ill/WP.139*, para. 8.
40 Ibid. para. 9 et seq.
41 See ibid. para. 13.
358
 Online dispute resolution: The future of consumer dispute resolution?

Since 2010, the Working Group Ill tried to create procedural rules that were
applicable both to B2B as well as B2C conflicts. After it became evident that it
was impossible to agree upon procedural ODR rules, the Working Group, upon
instruction of the Commission, summarized the elements, which had reached
consensus by then in a draft outcome document reflecting elements and princi-
ples of an ODR process. Hence, disputed questions, such as the nature of the
final stage of the ODR process, were not included therein.
In the draft outcome document it is stated that "ODR ought to be simple, fast
and efficient, in order to be able to be used in a real world setting', including that
it should not impose costs, delays and burdens that are disproportionate to the
economic value at stake."4 2
Any ODR process has to be based on fundamental principles, like fairness,
transparency, due process and accountability. As far as the principle of transpar-
ency is concerned, it is important that information that may raise any doubts as
to the impartiality and independence are disclosed. Further, ODR administrators
could publish anonymized decisions or statistical data. Of course, ODR adminis-
trators should design their website user friendly. 4 3
To ensure independence of the neutrals administering the conflict, the ODR
administrators should adopt a code of ethics, containing inter alia provisions how
to handle conflicts of interest.44 Additionally, ODR administrators should imple-
ment policies governing the selection and training of neutrals to guarantee exper-
tise within the ODR procedure.4 5
Further, the draft outcome document reflecting elements and principles of an
ODR process state that an online dispute resolution proceeding may consist of
stages including: negotiation; facilitated settlement; and a third (final) stage. 4 6
The term "negotiation" in the draft document means direct negotiation between
the claimant and the respondent through an ODR platform. Facilitated settlement
as second stage involves a neutral who is appointed by the ODR administrator
and tries to achieve an amicable settlement.4 7 The parties may object to the
appointment.
Moreover, the draft document contains a description of the process and rec-
ommends that the process should be administered via an ODR platform. The
process may start by transmitting the name and electronic address of the claim-
ant and of the respondent, the grounds on which the claim is made, any solu-
tions proposed to resolve the dispute, the preferred language of proceedings,
and the signature or other means of identification and authentication of the
claimant and/or the claimant's representative.4 8

42 Ibid. para. 9.
43 Ibid. paras. 10-12.
44 Ibid. paras. 13, 14.
45 Ibid. paras. 15-17.
46 Ibid. paras. 18 et seq.
47 Ibid. paras. 40-44.
48 Ibid. paras. 30-33.
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Marianne STEGNER

C Critical evaluation
Since the directive on consumer ADR and the regulation on consumer ODR in
the EU do not apply to the situation where either the consumer or the trader is
domiciled in a state that is not a member state to the EU, procedural rules and
international entities governing this situation would have been desirable.
However, several years of effort could not lead to a set of procedural rules on
online dispute resolution. Rather, UNCITRAL could only agree upon guidelines,
summarizing already well known principles.
These guidelines are non-binding and do not serve as rules. Neither are they
intended to be exhaustive or exclusive.49 Hence, in my opinion, the Working
Group Ill did not achieve a satisfactory result.

IV Outlook - Is consumer ODR the future?

A backlog of cases pending before courts in many member states demands new
and alternative forms to resolve consumer disputes.5 0 The directive and the regu-
lation lay down the tracks for a new system of judicial protection for consumer
disputes.5 Alternative and online dispute resolution mechanisms have the poten-
tial to become the most popular way of consumer dispute resolution.
Since the ODR platform has only been accessible a couple of months yet,
there are currently no statistical data available upon its usage. Hence, like so
often when breaking new grounds, only time will tell whether ADR and ODR will
be accepted by the consumers and boost their confidence in the online market.

49 UNCITRAL, Note by the Secretariat, Draft outcome document reflecting elements

and principles of an ODR process, A/CN.9/WG.Ill/WP.140*, para. 6.
50 See Directive 2013/11/EU, recital 15.
51 See GUnter Hirsch, Aullergerichtliche Beilegung von Verbraucherstreitigkeiten - ein
alternativer Zugang zum Recht entsteht, NJW, 66 (2013) 29, 2088, 2089.
360