On 29 November 2011, the European Commission adopted a package
of proposals in order to encourage consumers to solve their
conflicts through out-of-court proceedings. To this end, the
European Commission is taking measures to promote the use of
alternative dispute resolution ("ADR"). ADR relates to
specific dispute resolution mechanisms that allow consumers to
solve their conflicts with businesses without going to court. Such
mechanisms are usually faster, cheaper and easier than regular
The European Commission adopted two proposals in its efforts to
improve the functioning of the internal retail market and more
particularly to enhance redress for consumers. The first aspect of
the package proposed by the European Commission concerns a proposal
for a Directive on alternative dispute resolution for consumer
disputes and amending Regulation (EC) No. 2006/2004 and Directive
2009/22/EC (the "Proposed Directive on consumer ADR").
The second proposal is for a Regulation on online dispute
resolution for consumer disputes (the "Proposed Regulation on
The goal of the Proposed Directive on consumer ADR is to
eliminate the gaps in coverage of ADR entities in the EU. Today,
there are more than 750 ADR entities in the EU, however, these are
only available in specific regions or particular sectors. European
consumers therefore do not enjoy the same access to ADR. The
Proposed Directive on consumer ADR seeks to ensure that there are
sufficient ADR entities in order to deal with any contractual
dispute between a consumer and a business. It will also oblige
Member States to make sure that all disputes between a consumer and
a business arising from the sale of goods or the provision of
services can be submitted to an ADR entity, including through
In addition, the Proposed Directive on consumer ADR provides for
mechanisms that should allow consumers to identify quickly which
ADR entities are competent to deal with their dispute. The Proposed
Directive also aims to boost consumer confidence in ADR by setting
up basic quality criteria that would need to be fulfilled by the
ADR entities (transparency, impartiality, fairness...). Similar
principles had been laid down already in two Commission
Recommendations, but these principles would now be given a binding
effect. Under the Proposed Directive on consumer ADR, disputes
would have to be resolved within 90 days and the ADR procedures
should be free of charge or at a moderate cost for consumers. The
Proposed Directive on consumer ADR further provides for mechanisms
to monitor the functioning of ADR entities.
With the second aspect of the package, the Proposed Regulation
on consumer ODR, the European Commission aims to establish a
European online dispute resolution platform that will facilitate
the resolution of disputes related to the cross-border online sale
of goods or provision of services between a business and a
consumer. This would allow parties that are located far from each
other to solve their contractual dispute entirely online. Under the
Proposed Regulation on consumer ODR, a dispute should be resolved
within 30 days from the date of receipt of the complaint.
The package now has to be adopted by the European Parliament and
the European Council. This adoption is envisaged by the end of
2012. Upon adoption, the EU Member States will then have an
18-month period to implement the Directive in their domestic laws.
Assuming this timing would be complied with, the ADR mechanisms
should be in place everywhere in the EU by the end of 2014. The
EU-wide platform for online dispute settlement should become
operational six months after the deadline for implementation of the
Directive, in early 2015.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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There has been much press comment recently about the nature of "offshore companies" and in particular those incorporated in the British Virgin Islands which has only limited requirements for provision of any company information.
In the Professional and Financial Disputes team at Clyde & Co, we sometimes see litigation funding from the opposite end of the telescope in circumstances where the prosecution of a case has gone awry.
Discussions will be protected by without prejudice privilege where it is obvious that their purpose is to resolve a dispute, even if this is not expressly agreed between the parties.
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