European Commission Proposes Expansion of Alternative Dispute Resolution Directive

In 2013, as part of an ongoing effort to promote the availability of “high quality alternative dispute resolution” in Europe, the European Parliament and Council adopted the Alternative Dispute Resolution Directive (“the Directive”). The Directive contained minimum standards for ADR but left specific implementation questions to Member States. ADR would remain voluntary unless otherwise required by other legislation. The scope of the Directive was limited to contract disputes involving EU consumers and EU sellers.

Studies of the implementation of the Directive in 2019 and 2023 suggested that although the Member States had all implemented ADR procedures, a significant number of consumers who had encountered difficulties with their transactions were not taking further action for a number of reasons. The European Commission also commented that the growth of online purchases from non-EU sellers had led to increased complexity of transactions and consumer protection issues.

In response to the findings of these studies, on October 17, 2023, the Commission proposed a series of changes relating to ADR. First, the Commission proposed that the coverage of the Directive be expanded beyond contractual disputes to advertising issues and other statutory rights of consumers, encompassing “all aspects of EU consumer law.” Second, the revised Directive would apply to transactions between consumers and non-EU sellers offering goods or services to consumers residing in the EU. Third, although ADR participation would generally remain voluntary, sellers would be required to respond to a consumer seeking ADR within 20 business days, informing the consumer whether or not the seller would participate in ADR. The proposal also suggests a number of other steps to improve assistance to consumers and ease some regulatory burdens associated with ADR. The Commission expects these steps would significantly increase the number of disputes submitted to and resolved through ADR.

Separately the Commission issued a Recommendation that online marketplaces and trade associations, which are not currently covered by the Directive, adopt the relevant quality criteria for ADR provided in the Directive. These criteria include standards for the expertise, independence and impartiality of mediators, and specific provisions intended to assure the effectiveness and fairness of the process.

Finally, the Commission proposes to eliminate the Online Dispute Resolution Platform, also adopted in 2013, on the ground that it has been rarely used. The Commission anticipates that other tools and consumer services will be available to assist consumers in finding and using ADR resources.

The proposals will now be the subject of negotiations between the Commission, the European Parliament and the EU Council.