In a recently issued judgment, the EU Court of Justice (“EUCJ”) has confirmed the obligation imposed on traders selling goods or services online to consumers under the ADR Directive (2013/11/EU) (the “ADR Directive”) that requires sellers (which can include Communications Providers) to set out in their website terms and conditions, details of the approved Alternative Dispute Resolution (ADR) body that will deal with the consumer’s complaints.
Scope of current regulations
The main purpose of the ADR Directive is to make sure consumers can easily find which approved ADR bodies are qualified to deal with their complaint and be informed as to whether or not the trader will participate in the ADR process. Furthermore, the ADR Directive states that if a trader operates a website, it is required to provide in the relevant terms and conditions the name and website of an approved ADR body in their business sector and advise consumers if they will engage in the ADR process.
The EU’s Online Dispute Resolution (ODR) system Regulation No. 524/20131 also makes it mandatory for online traders to include an easily accessible link to the EU’s ODR system on their websites. Should a dispute be submitted through this system, the ODR platform will then, among other things, provide a list of recommended ADR bodies, which the parties can actually disregard altogether. While online traders are legally compelled to connect to the ODR system from their website, they are not obliged to collaborate with a consumer who initiates a complaint through the ODR platform, calling into question the very effectiveness of the system which relies on the mutual consent of the parties.
Presently, in the UK’s telecoms sector, customers whose complaints have not been resolved within eight weeks must likewise be sent written notification about their right to go to ADR and must be proactively informed about the process and timeframe for dealing with the complaint. This includes complaints about customer service. If a sector specific online trader is required to use a particular ADR body (e.g. owing to a regulatory requirement) it should clearly inform this to the consumer as well.
Furthermore, Communication Providers offering services to individuals and small businesses (up to 10 employees) must also be members of an ADR scheme and must deploy effective signposting of access to ADR when complaints become deadlocked.
Relevance of the EUCJ ruling
The case Bundesverband der Verbraucherzentralen v Deutsche Apotheker-und Ärtzebank eG (Case C-380-19) EU:C:2020:498 (25 June 2020), brought before the EUCJ by a German court, analysed whether or not it was enough for a trader, whose contracts are not entered into via its website, to include the details of the approved ADR body in other documents made available on its website, rather than in the website terms and conditions themselves, or in a standalone document provided to the consumer at the time of signing the contract.
The language of Article 13 was deemed by the EUCJ to be clear-cut since it unequivocally specifies that the information about the ADR entity must be provided in the general terms and conditions, where they are published on the trader’s website, and not in other documents available on or from the website.
The fact that the trader in question included the details of the approved ADR body up until the conclusion of a contract was also found by the EUCJ to be in contravention of Article 6(1) of the Consumer Rights Directive (2011/83/EU). Such article clearly states that traders must inform consumers of their possible recourse to an out-of-court complaint and redress mechanism before being bound by a contract (save for on-premises sales).
Dispute resolution mechanisms for online traders during the UK-EU transition period and beyond
During the transition period, it will still be compulsory for any UK enterprise selling goods or services online to EU counterparts and vice versa, to duly inform consumers of the ODR platform, and where applicable, the sector specific ADR body.
If at the end of the transition period no deal is struck between the UK and the EU, online traders will no longer be required to connect nor have access to the EU’s ODR system. However, the requirements examined in this case will still apply, as the bulk of rights and obligations will remain regulated by domestic legislation (i.e. the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015, which implemented the requirements of the ADR Directive into UK law), meaning a continuing requirement to appoint a UK ADR body.
Key points online traders should consider on their digital sales platforms
In light of the above, businesses need to:
- Check if they are bound to provide an ADR option to their consumer customers;
- If so, make sure adequate ADR information is included in their website Ts&Cs; and
- Ensure that the ADR is available to its customers. This may require formally onboarding with an approved ADR provider depending on the sector.
The material contained in this article is only a general review of the topics covered and does not constitute any legal advice. No legal or business decision should be based on its content.