Online and Alternative Dispute Resolution

As a member of the Federation of Small Businesses Philmus Consulting meet numerous online retailers. Much of the talk amongst these firms currently involves the General Data Protection Regulations. However EU directives relating to Online and Alternative Dispute Resolution are often ignored. It is anticipated that EU rules on ODR and ADR will continue in the UK if a Brexit transition agreement is initiated in 2019.

Many of the small businesses I meet operate solely on the internet. They have no retail premises and are often based in their proprietors home. Many of these businesses are unaware of their legal responsibilities in relation to dispute resolution.

In 2016, the EU created an Online Dispute Resolution portal. This links consumers with an appropriate dispute resolution provider. The portal operates across the EU and applies to both domestic and cross-border electronic contracts for the sale of goods and services. The EU has an ever-growing list of approved alternative dispute resolution providers.

The aim of online and alternative dispute resolution is to make it simpler and cheaper for consumers to achieve restorative justice without the need for costly civil court proceedings.

The EU ODR portal allows documentation and information to be shared electronically. Consumers and traders can agree on a suitable independent arbiter to resolve disputes.

In some industries, such as financial services, legislation prescribes an official arbiter. Membership of certain trade associations requires acceptance of their arbitration service. Consumers can choose to accept the arbitration role of the trade association or agree with the trader to use a separate independent arbiter. If a consumer and trader cannot agree on an independent arbiter within 30 days, the complaint cannot be proceeded with and more formal resolution processes, such as the small claims court must be used.

Depending on the industry, alternative dispute resolution can result in a range of judgements, from formal advice through to legally binding decisions. ADR providers have to be registered with an appropriate certification body such as the Financial conduct authority.

If you are an internet trader please ensure that your systems are ODR and ADR compliant and that your website contains the above, legally required links and information.

Failure to comply with ODR and ADR protocols is a criminal offence enforceable under the Enterprise Act 2003.

The following questions and answers will help you decide on what action you need to take in relation to ODR and ADR compliance:

•  Do you sell goods and services through a website?   If the answer is no, you do not need to put details of ODR on your website.  If you do, go to the next question.
• Are you operating in a sector where an approved ADR scheme is
  mandatory under legislation?   If the answer is yes, you need to:
• You need to inform consumers of the existence of the EU ODR platform and their opportunity to use it. You are required by law to provide:
  A link to the ODR platform on your website
  Emails to consumers must include a link to the ODR platform as first point of contact for dispute resolution
  Information on the ODR platform including terms and conditions relating to online contracts
  This information is in addition to giving details of your approved ADR provider.  If the answer is no, go to the next question.
• Are you required by your trade association to participate in an approved ADR scheme?  If your answer is no, you need to provide a link to the EU ODR platform on your website. You also need to provide an email address on your website so that customers have a first point of contact for dispute resolution.  If the answer is yes, you are required to:  Place a link to the ODR platform on your website;
  Emails to consumers must include a link to the ODR platform as first point of contact for dispute resolution; You must include information on the ODR platform including terms and conditions relating to online contracts.

Regulatory Divergence

In recent months there has been significant attention paid to regulatory change by marketing industry commentators.

Much of this has focused on GDPR (The General Data Protection Regulations). However the prospect of Brexit could mean regulatory change which makes the changes to consumer protection law look like the proverbial drop in the ocean.

UK firms currently benefit from our EU membership. They can sell goods and services across the block without tariff and non-tariff barriers such as regulatory divergence.
The UK government is proposing a new trade agreement with the EU but it is highly likely that Theresa may’s red lines, in particular her opposition to the European Court of Justice precedent applying in the UK may make such an agreement impossible.
Some hard-line Brexit supports are keen to see mass deregulation within the UK which will put us at odds with our biggest trading partner. All trustworthy forecasts show that the potential increase in trade from non-EU countries will not match the trade we will lose with the EU. Rather than having one set of regulations to follow, UK firms may have to apply multiple sets of divergent regulations to their production. This is potentially a lengthy, complicated and expensive process.

Most commentators agree that it is in the interest of British Industry to have as little regulatory framework divergence as possible. This is unlikely as EU agencies which coordinate regulatory enforcement and conformity will have to be replicated within the UK. There is real concern about a reduction in economies of scale which will make it harder for UK firms to compete.

If the UK regulatory framework does diverge from that of the EU, British businesses will find it harder to sell into the EU as existing standards require compliance throughout the supply chain. They may also find that they face double or treble the regulatory burden than at present. This could be incredibly costly and seriously harm the competitiveness of the UK.