Regular readers of this blog will be aware of the Court’s approach towards Alternative Dispute Resolution (ADR): parties should always seek to resolve their disputes wherever possible without recourse to Court action and a party may be penalised in terms of costs by unreasonably refusing to engage in ADR.
There are clear benefits to resolving disputes at an early stage: it can save time, costs and commercial relationships. It is the aim of the EU’s ADR Directive (the Directive) to encourage consumers and businesses to resolve their disputes in this way.
The Directive must be transferred into national law by 9 July 2015. This will be achieved by bringing the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015 (the Regulations) into force.
That’s the background but more importantly, here’s what you need to know.
- The scope of the Directive covers any dispute concerning contractual obligations (the sale of goods or the provision of services) between a consumer and a business (i.e. business to business disputes and disputes initiated by a business against a consumer are not covered).
- Under the Directive, there must be a certified ADR body in place for claims falling within the above scope (and to ensure that ADR entities are in place by the above deadline, procedures to approve applicants will come into force on 7 April 2015).
- What you need to know is that from July, businesses must provide information about whether they use the ADR scheme and details of ADR providers in their contracts, on their websites and in any “final position” correspondence relating to a dispute.
- Whilst ADR must be available if both parties want to use it, the ADR scheme will not be made compulsory for either party…
- …however this does not affect sectors (such as the financial services sector) where ADR already is (or can be made) compulsory.
What impact the above will have on disputes between a consumer and a business will remain to be seen, the fact that the ADR scheme is not compulsory may be a limiting factor.
However, what is clear is that it is not just the Courts that recognise the value of ADR.
For more information, email firstname.lastname@example.org.