Online mediation offers a wide range of implementation methods, confirmed by its fastest-growing branches: consumer and family law.
There could be no Online Dispute Resolution (ODR) without the internet. A short description of the history of the internet shows the speed of development of the network, which has transformed from an academic project to the most powerful medium of the 21st century.
The following article is extracted from “Online Dispute Resolution: The Future of Justice by Karolina Mania“
Internet History
The internet began as a U.S. military prototype network called ARPNET. In 1968, the Defense Department established the federal Advanced Research Projects Agency (ARPA), which worked toward the development of military technology in the fields of defense and security in cooperation with the academic world.
In 1980, the military, until that operated under the name ARPNET was disconnected from the academic unit that was named INTERNET.
In 1990, the Defense Advanced Research Projects Agency (DARPA) (transformed in 1972 from ARPA) formally completed its work on developing a civilian network. The internet was managed at the time by U.S. federal institutions and acquired the status of a public good in 1991.
The number of internet users has never ceased to grow. The International Telecommunication Union (ITU), an international organization that manages the telecommunications market, monitors the development of the internet.
According to statistical data and a report published on 23 December 2014, under the title “World Telecommunication/ICT Indicators Database 2014 (18th Edition),” the number of users of the network exceeded 3 billion, compared with under 14 million in 1993.
The internet is a 21st-century medium that has revolutionized many areas of life. It fulfils many functions, and, as a common source of information, communications tool, and global trading platform, it has become the engine for introducing modern technological solutions within existing fields of activity. The internet has had an impact on many areas of public life, including law.
Its fast expansion has caused many positive phenomena, such as the computerization of certain areas of law. However, it has also highlighted the non-compliance of the legal framework with new realities, such as in the scope of intellectual property rights.
The global character of the internet has changed how we access information, which impacts copyright and press law. The absence of borders online has highlighted that many provisions concerning private international law are out of date.
The development of electronic national and international commerce has made it necessary to introduce new regulations.
Despite these problems, new methods of communication have improved many areas of law, including modernizing processes for the out-of-court settlement of disputes, such as online dispute resolution.
Online Dispute Resolution: Preliminary Issues
There have been four phases in the development of online dispute resolution (ODR). The first, which ran from 1990 to 1996, was an amateur stage, where electronic solutions were tested. From 1997 to 1998, ODR developed dynamically, and the first commercial web portals offering services in this area were established.
The next phase (business) ran from 1999 to 2000. Given the favorable period of economic development, especially in IT services, many companies initiated projects based on electronic dispute resolution, but a large number no longer operate on the market.
The year 2001 marked the beginning of an institutional phase during which ODR techniques were introduced into the courts and administrative authorities.
One of the first cases of ODR took place in the U.S. The opposing sides decided to seek a new method to settle their dispute. The case was pending before the Online Ombuds Office at the Center for Information Technology and Dispute Resolution at the University of Massachusetts.
Ethan Katsh and Janet Rifkin, who founded the entity and are considered leading promoters of the ODR issue, started mediation procedures via e-mail. This eventually resulted in a settlement being signed.
Among others, the Online Ombuds Office offered mediation services for auction portal eBay. In 1999, this collaboration transformed into the SquareTrade portal, one of the first commercial ODR providers in the area of consumer disputes in the U.S. market. Among its most prominent services was online mediation, which was initiated by filling in a complaint form that indicated the methods for dispute resolution.
After voluntary acceptance of the electronic method for resolution, the other party would respond by choosing the relevant option. If a settlement could not be reached, the parties would go to the negotiation phase. This was supported by the mediator, who communicated with them using e-mail.
Another example of an early portal that offered automated online mediation is CyberSettle. It was established in the U.S. in 1998. Its main advantage was the functionality of creating a network of specialized internet applications that enabled various forms of communication.
The system enabled negotiations to be conducted online. These start with logging in and providing basic information such as first name, surname, e-mail address, date of the event, and type of case.
The party would then issue an invitation to participate in a so-called out-of-court blind-bidding process by specifying the maximum amount it would claim in the event of signing a settlement.
Once accepted by the other party, offers were collected by the interested parties. The number of proposals would not exceed three, but until the other party proposed an equal or lower amount, they were not disclosed to the other party.
The adopted solution allowed the settlement of disputes regarding specific values of claims, excluding consideration of the issue of legal liability.
When the parties reached a consensus, the offer would be mutually presented. The confidentiality of the procedure provided significant value, particularly if there was a failure to reach an agreement, and it was referred to court. The portal also offered support from the mediator, who communicated with each party separately without disclosing the contents of their offers.
Many factors explain the decreasing number of ODR entities after 2000. Establishing electronic platforms enabling the transfer of dispute-resolution processes to the internet has many upfront costs, even when choosing licensed technological solutions of the SaaS variety.
To ensure the security of the system, it is necessary to introduce safeguards against loss of data and hacking, which significantly increases starting costs. Moreover, in most cases, ODR systems were created in the U.S. In the European Union, such services started to appear at the start of the 21st century, so their adoption was less dynamic.
It seems that the number of those providing ODR services will increase in the EU. Existing examples, such as the ombudsmen in Austria and Germany and online mediation systems in Italy and the UK, might in the future be replaced with new forms of ODR systems.
Trends can be seen for small claims procedures and legal advice systems in the Netherlands. And, with the implementation of EU regulation of the European Parliament and Council on 21 May 2013, and the launching of the platform for ODR services for consumer disputes in January 2016, it can be assumed they will be increasing in number, especially in Europe.
Looking at the history of ODR development, we see that the first web portals established at the end of the 1990s were replaced with new competitive platforms that used more modern technologies and constantly improved the services offered, replacing outdated solutions.
A current market leader in ODR is the portal Modria.com, established in 2011. It cooperates with eBay, among others, and offers a vast range of tools to customers. The platform allows mediation and arbitration and keeps all activities simple and intuitive.
The success of the Modria Resolution Center has been linked to its constant expansion in scope and services offered. One example is a project started in mid-2014 involving cooperation with the American Arbitration Association (AAA) and acting as a service platform for the insurance cases of “New York No-Fault Insurance (NYNF)” – estimated to number more than 100,000 per year.
The Definition of Online Dispute Resolution
ODR is a form of online settlement that uses alternative methods for dispute resolution (alternative dispute resolution). The term covers disputes that are partially or fully settled on the internet, having been initiated in cyberspace but originating offline.
The terms electronic ADR (eADR), online ADR (oADR), and internet dispute resolution (iDR) are treated as synonymous.
There is no system for reporting the number of entities that use ODR. Published research focuses mainly on showing the levels of alternative dispute resolution (ADR) use in specific countries.
However, there is no similar record on entities offering its online form—the number of ODR providers changes with the years. Conley Tyler found no less than 115 in 2004. By 2010 this number had decreased to 70% to less than 40 active ODR systems.
ODR and Technology
ODR uses existing forms of ADR, which makes it usable on the internet. The presence of a third party during the process of reaching an agreement remains unchanged. However, this is done differently with the use of modern forms of communication.
Now, there are indirect ways of submitting requests or evidence, as well as of carrying out a fully online process complete with the issuing a judgment at the end of the proceedings.
In the case of ODR, technology is crucial for the process to be effective. ODR systems may be divided according to the forms of communication used.
Entities may communicate with each other in real-time using Messenger or Skype. Or, if communication is not conducted at the same time, via e-mail, for example, it is less direct, such as with using the services of the National Arbitration Forum.
Research shows that the second form is the most frequently used (42%), but as many as 48% of ODR providers use the two forms jointly.
Low usage levels of online forms, such as chat (10%), suggest that ODR systems fail to fully exploit the IT possibilities of extensive programs.
Each form of ODR may use a different technological system. Online mediation can take different forms, from a fully automated internet platform using a portal based on electronic chat or videoconferencing (TheMediationRoom.com) to exclusive use of an asynchronous form of communication (i.e., through methods such as e-mail).
The first option involved video meetings or online conversations (chat), where the possibilities for dispute resolution are analyzed with the mediator – a more direct form of ODR.
The second option is used, for example, in mediation within the scope of monetary obligations. Using a system of submitted offers, the parties agree on an acceptable amount for all parties without the need to meet directly. Electronic arbitration, which refers to amicable proceedings conducted via the internet, may take either a synchronous (Smartsettle) or asynchronous form (Settle Today).
ODR techniques can be used in many ways, with different levels of integration into proceedings. Systems that have an intensive impact on proceedings may “support” parties by suggesting arguments or assessing their levels of satisfaction at each stage.
Using advanced technologies allows the creation of computer algorithms that analyze all data entered into the system.
Online Mediation and Electronic Arbitration
The number of electronic forms of alternative methods for dispute resolution changes over time, but mediation (74% of ODR providers) and arbitration (40% of ODR providers) are the most frequently used. Just behind these is negotiation. Modern hybrid forms of ADR differ from classic models by being based on chosen elements of mediation and arbitration that constitute innovative and alternative joint methods.
The leading examples are Med-Arb and a mini-trial. At a European level, modern solutions have not been adopted to the same extent, giving way to classic models.
To analyze the legal grounds for using online mediation, it is necessary to refer to regulations regarding alternative methods of dispute resolution. The EU’s move to create freedom, security, and justice correlates with the promotion of ADR, with special reference to mediation.
The main normative act on mediation (excluding arbitration) consists of a document published on 19 April 2002 by the Commission of the European Communities titled “Green Paper on alternative dispute resolution in civil and commercial law.”
The main objective of this was to “initiate a broad-based consultation of those involved in a certain number of legal issues which have been raised as regards alternative dispute resolution in civil and commercial law.”
Positive reception to the “Green Paper” accelerated the work of the European Commission in regard to new regulations in the area of ADR, among which the most important is Directive 2008/52/EC of the European Parliament and Council of 21 May 2008.
It involved certain aspects of mediation in civil and commercial matters. This legal act does not refer to electronic solutions, so the legal grounds for their application are a result of an interpretation of the regulations in force.
There are two meanings of the term “online mediation.” The first relates to the place in which the legal relation for the dispute was created, and the second has to do with the online tools used to resolve the dispute, regardless of the place of its creation.
A typical model for the process of online mediation starts when an email is sent to the parties that contains basic information on the proceedings.
Virtual meetings are conducted in so-called “chat rooms,” virtual versions of meeting rooms. These can be carried out separately with each party or simultaneously with all parties. The electronic tools used for communication improve on the classic form of ADR and enable increased flexibility because virtual mediation sometimes becomes electronic negotiation and vice versa.
Online mediation is usually conducted through text-based communication, and meetings in real-time, such as teleconferences, happen more rarely.
Mediation executes one of the main functions of law – the resolution of disputes – while remaining consensual and non-binding. The electronic form enables new possibilities, such as the simultaneous presence of many parties without the hindrance of needing personal attendance at a specific place and time.
In accordance with quoted research, asynchronous online mediation is the most popular form, allowing greater flexibility because of 24-hour access to the platform.
Cost-savings from not needing the presence of a professional proxy or the delivery of documents are also important. Moreover, online mediation conducted via an electronic platform allows the whole process to be recorded and replayed.
Online mediation is not appropriate for all types of disputes. Use the internet changes the rules of communication, taking away face-to-face interaction. In extreme cases, the mediating person may be replaced with an electronic tool, distorting the nature of mediation to a significant extent.
Most concerns of the parties involved in in-person mediation are the same as those involved in the online version – the lack of impact on the course of proceedings, excessive costs, or the protractedness of the process.
The main feature that distinguishes classic ADR from the online type is the location of mediation proceedings. Classic meeting rooms are replaced with a virtual space.
The mediating person, with whom relations are built in a classic way, is transformed into an electronic, intangible form, which can be concerning among the participants. A lack of direct contact results in reduced personal dynamics in the overall process, which leads to problems with creating mental connections of the participants.
This could result in a lack of wanting to settle it amicably. In virtual reality, it is important to build a high level of trust in mediators as well as the IT tools used.
Electronic Arbitration
Regulation on the written form of agreement on arbitration in international trade was introduced in article II, clause 1 of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
The regulation was eased through the introduction of clause 2 that extended the definition of the term “written form” with “exchange of letters or telegrams.” This introduced possibly concluding an agreement on arbitration with other ways of sending statements of will while preserving their contents, including e-mail.
The interpretation of Article II clause 2 of the convention, which indicates minimum requirements that allow more liberal provisions in given countries, has been increasingly highlighted in the doctrine.
Electronic arbitration is less popular than online mediation, even though it is allowed on the basis of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards and directive on electronic commerce.
Amended regulations of the United Nations Commission on International Trade Law (UNCITRAL) began on 15 August 2010. The provisions take into consideration the impact of the internet on the reality of conducting arbitration proceedings in international trade – for example, regulation on deliveries using electronic communication – so international tendencies should be reflected in national legislation.
The most common use of online arbitration is in disputes over internet domains. On 24 October 1999, the Internet Corporation for Assigned Names and Numbers (ICANN), the institution responsible for granting the names of internet domains, adopted the Uniform Domain Name Dispute Resolution Policy (UDRP).
This was set out in two documents: the Uniform Domain Name Dispute Resolution Policy, which consisted of a collection of substantive rules for resolving domain-name disputes; and the Rules for Uniform Domain Name Dispute Resolution Policy, which constituted the rules of procedure before arbitration courts.
The rules related to specific domain addresses, such as .com, .org, and .net, being applicable in relation to entities that had unlawfully registered an internet domain that endangered or infringed the rights to protection of trademarks of third parties.
The UDRP sets the rules for concluding agreements on registration and administration of domains, including regulations that oblige disputes to be settled amicably to avoid problems involving the jurisdiction of courts.
Disputes over domains are settled by accredited entities. The most important one in Europe is the World Intellectual Property Organization Arbitration and Mediation Center, established in 1994. It has conducted electronic arbitration proceedings since 2010.
The asynchronous process begins after a complaint is submitted via electronic means, which is confirmed by feedback sent by WIPO. A formal examination of the complaint is then carried out for up to three days, including the paying of the fee, the number of domain names involved in the complaint, and the type of panelist (a complaint compliance review).
If there are any deficiencies, the complainant can remove them within five days. After confirmation of the correctness of a complaint, the administrative proceedings begin. The other party is informed via electronic communication. The other party can submit a response within 20 days.
If this is not submitted, the panel deciding on the dispute will make a decision based on the evidence provided by the complainant.
After a 20 day response period, the Center will appoint an administrative panel consisting of one or three people. Upon the consent of both parties, a single-member panel can be appointed. If one of the parties raises an objection, the complainant and the other party are entitled to choose three people from the list of panelists.
The Center will try to appoint one panelist from the list of candidates provided by each party, with a third panelist appointed individually.
The panel will send its decision on the complaint within 14 days to the Center, which then delivers the decision to the parties, the registrar, and ICANN. Within ten days of receipt of the decision, the registrar is obligated to transfer the domain name, in accordance with article 4(k) of UDRP.
A positive example of ICANN introducing new out-of-court methods for resolving trademark disputes is the procedure for a uniform rapid suspension (URS) system.
Applied for the first time in February 2013, by the National Arbitration Forum (FORUM), its main purpose is to create a fast and inexpensive way of resolving online disputes of intellectual property rights. URS makes it impossible for third parties to run websites that breach those rights.
The system for instant suspension of the domain name begins with the submission of a complaint by the holder of rights to protection of the trademark to an entity accredited by ICANN, and that offers URS services. Formal requirements with regard to the complaint are equivalent to those specified in the UDRP and are examined within two days of the complaint’s submission.
If the outcome is positive, the entity responsible for registering the agreement’s conclusion with the Registry is notified the following day, and the contents of the disputed domain address are then blocked.
The party in breach is notified and has a period of about 14 days to submit a response. A negative outcome (such as a lack of response) results in automatic suspension of the domain name. The system does not, however, allow the transfer of domain rights to the holder of rights to the trademark until the end of the period of unlawful registration, when the domain is blocked, despite the fact that the registered entity remains unchanged.
The main difference between URS and the UDRP is that the new system has a narrower personal scope, and under this system, it is not possible to execute the transfer of the domain name. In the case of URS, there are no appeal proceedings.
The costs in the case of URS are lower, leading to shorter proceedings, a narrowing of proceedings to simple (uncontested) cases, and a very limited number of means for carrying out procedures over the electronic system.
As a result, the cost of proceedings varies from $300 to $500. The cost for UDRP proceedings is $7000. This means there is growing interest in URS procedures.
All the elements of URS mentioned accelerate overall proceedings, but the limited personal and material scope of such proceedings and a lack of the possibility to enforce the domain’s transfer discourage potential users.
The settlement of domain name disputes in an environment identical to the initial environment of the domain is an excellent example of the implementation of ODR techniques.
The system of creating advanced networks for arbitration courts that use the internet more frequently not only to communicate but also to settle disputes is a positive example of specialized legal methods based on modern internet tools.
In disputes on internet domains, the use of online arbitration is effective and, thanks to a constant broadening of the range of services within the scope of ADR by ICANN and WIPO, it looks likely that the number of cases resolved in an amicable manner will increase in the coming years.
The crucial issue is whether each type of dispute that might be resolved using alternative methods will be subjected to proceedings conducted online.
Does virtual reality have a nature that does not affect the result of proceedings? Would the process of dispute resolution and – most importantly – its outcome be the same in the case of traditional ADR and modern ODR? The addition of an electronic tool changes the traditional ADR model and might have a decisive impact on the shape of the process.
Automatic data blocking, user verification, the management of meetings, and the hearings schedule might simplify the process for issuing decisions and have an impact on significantly decreasing the complementary role of a third party.
The use of ODR techniques should take place only in areas in which parties are not deprived of rights, and such rights are not limited. Such implementations are effective for people who want to save time and money if the size of the claim does not correspond with the possible costs of proceedings.
Barriers that slow down the common implementation of the ODR techniques are not based only on technological aspects. The attitudes of the conflicting parties play a key part in alternative methods for dispute resolution, including their electronic forms.
The voluntary nature of such processes must have a basis in a high level of trust towards the supporting person (mediator) or the person who decides on the issues disputed (arbiter).
It should never be limited, as indicated by the practice of implementing UDRP principles throughout the world. Computer programs might improve communication, which is crucial for entities separated by a significant distance.
However, they might also constitute a barrier that cannot be accepted – particularly within the scope of cases that have emotional involvement, such as family matters.
The public perception of ODR should encourage the use of modern forms, and formal legal obstacles should be reduced offering the opportunity to those who are not afraid to settle disputes by using them.
ODR in Consumer Disputes
The protection of consumers depends on the EU and member states. This obligation is all the more important because of the existence of the European internal market, which should ensure unified protection of consumer rights. A guarantee of this is provided by ADR and ODR systems, which allow quicker and less expensive settlement of disputes (in comparison with common courts).
Each member state implements competition and consumer-protection policies individually, resulting in differing levels of access to ADR services.
The European Commission’s recommendation no. 98/257/EC of 30 March 1998, on the principles, applied to those responsible for out-of-court settlement of consumer disputes, is an important piece of regulation in the area of consumer disputes.
The Commission’s recommendation no. 2001/ 310/EC published in 2001, which amended previous conclusions within the scope of activity of the aforementioned bodies and promoted ADR is another important document in this area.
The resolution of consumer disputes that arise out of commercial transactions by means of electronic communication is an example of the effective implementation of ODR techniques.
The creation of a system that enables the conclusion of disputes between a consumer and trader using the same medium over which the purchase or sales transaction was made – that is, the internet – is a logical extension of introducing e-commerce.
Characteristics of ODR in the Case of Consumer Disputes
A report by the European Commission, which monitor’s the community’s consumer market, titled “Consumer Markets Scoreboard 10th edition – June 2014,” showed that the level of protection in the consumer market differs among member states.
As a result, internet shoppers have limited trust in traders from other EU countries. At the same time, many consumers have no knowledge of legal systems for dispute resolution in the event of nonconformity of goods with a contract.
Despite concerns, the proportion of consumers who participated in cross-border e-commerce increased from 20% in 2004 to 45% in 2012, with the effect of increasing the number of complaints in this area. As indicated in the report from 2013, “As many as 45% of European consumers have made at least one online purchase in the past year. This represents an increase of 2 percentage points since 2011 and a 5-point increase since 2010.
With this growth rate, the proportion of internet shoppers will have met or exceeded 50% by 2015, in line with the target set out in the Digital Agenda for Europe.”
E-commerce disputes are non-personal, so ODR techniques free from direct interactions are tools that allow effective dispute resolution. As a result, consumer disputes constituted the main focus of services provided by portals such as SquareTrade and CyberSettle. Their customers included popular auction portals.
This trend continues to date, with some disputes coming from transactions made using the eBay portal still settled by external entities that offer ODR services, such as Modria.com. At the same time, autonomous systems have been created (for example, eBay’s Resolution Centre).
Each auction platform uses its own ODR system or finished solutions in cooperation with other auction platforms. To tackle consumer problems regarding goods and services purchased on the EU’s internal market, the directive of the European Parliament and Council on alternative resolutions for consumer disputes and regulation on online resolutions for consumer disputes were produced.
New regulations apply to disputes between consumers and traders of contractual obligations from sales or service contracts in all economic sectors – with some exceptions –that are concluded via or outside the Internet.
Such solutions involve establishing a network of institutions that provide high-quality ADR services for consumers and a system that provides the general public with information on out-of-court methods.
On 18 June 2013, directive 2013/11/EU of the European Parliament and of the Council of 21 May 2013 on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/ 2004 and Directive 2009/22/EC (Directive on consumer ADR) and the Regulation (EU) No 524/2013 of the European Parliament and of the Council of 21 May 2013 on online dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Regulation on consumer ODR) were published. Member states were obligated to implement the legal acts until July 2015, with a date of January 2016 set for launching the ODR platform.
The ADR directive and ODR regulation for consumer disputes are aimed at improving the retail market by introducing a complex system of alternative options for resolution and internet solutions for out-of-court methods.
The legislative changes will enable stabilization of the EU’s internal market by providing consumers with an alternative to the common judiciary and traders with a tool to avoid multi-annual processes.
The ADR directive applies to procedures for the out-of-court resolution of domestic and cross-border disputes concerning contractual obligations from sales or service contracts between a trader established in the EU and a consumer resident in the region – setting the material scope for ODR regulation.
The directive does not introduce a definition of the forms of ADR in consumer disputes, but mediation is included in this term.
Article 2 determines a wide material scope for the directive, not excluding out-of-court proceedings. However, in clause 29 of the preamble, which refers to the principles of confidentiality and privacy, the wording of the provision suggests that arbitration proceedings should be treated as separate from ADR proceedings.
The advantage of the ADR system is the exclusion of the problematic aspect of the choice of law. In accordance with article 6 clause 2 of the regulation of the European Parliament and Council no. 593/2008 of 17 June 2008, parties can choose the law applicable to a contract which fulfils the requirements of paragraph 1, in accordance with article 3. Such a choice may not, however, deprive the consumer of the protection given him through provisions that cannot be deviated from under the law that, in the absence of choice, would have been applicable.
Pursuant to article 44 of the directive’s preamble, in a situation involving a conflict of laws and in which the law applicable to the sales or service contract is determined in accordance with articles 6(1) and (2) of the Rome I regulation, “the solution imposed by the ADR the entity should not result in the consumer being deprived of the protection afforded to him by the provisions that cannot be derogated from by agreement by virtue of the law of the Member State in which the consumer is habitually resident.
In a situation involving a conflict of laws, where the law applicable to the sales or service contract is determined in accordance with Article 5(1) to (3) of the Rome Convention of 19 June 1980, on the law applicable to contractual obligations, the solution imposed by the ADR entity should not result in the consumer being deprived of the protection afforded to the consumer by the mandatory rules of the law of the Member State in which the consumer is habitually resident.”
Exclusion of the application of article 6 clause 2 of the Rome 1 regulation should be based on specific rules that ensure the consumer’s protection at levels equivalent to statutory legislation.
The assumptions adopted in the directive allow the problem of clashes between the legislation of member states to be resolved, improving and speeding up the entire ADR process. In accordance with the directive, proceedings with regard to resolving out-of-court consumer disputes are based on the principles of transparency, voluntariness, and fairness of treatment.
Article 7 of the directive introduces the requirement of transparency for ADR entities, which are obligated to provide parties with clear and easily understandable information, such as contact data (for instance, postal and e-mail addresses) and information about whether or not the parties can withdraw from the procedure.
The voluntariness of proceedings is referred to in article 10 of the directive, emphasizing that a decision on the choice of the procedure remains solely with the parties and does not deprive them of the right to bring an action before the courts.
Fairness of treatment can be understood as a number of obligations imposed on ADR entities with regard to information (article 9 of the directive).
Furthermore, article 5 clause 2 determines a list of obligations that a member state should impose on an ADR entity, among which is an obligation to enable the exchange of information between the parties via electronic means or, if applicable, by post.
The material and personal scope of the ODR regulation in clause 9 of the preamble and in the article 2 clause 1 relate directly to the provisions of directive 2013/11/EU of 21 May 2013, on ADR, with the exception of disputes between consumers and traders that arise from sales or service contracts concluded offline and disputes between traders specified in clause 15 of the preamble.
Under the directive, the procedure for filing complaints should only take place on the internet via a dedicated electronic platform available in official EU languages.
After filling in the complaint form, the seller will be notified about its contents so that within ten calendar days they can choose an entity that provides ADR services – to which the consumer is entitled to grant consent within the next 10 days.
The ODR platform automatically delivers the complaint to the ADR entity or entities previously chosen by the parties. Such entities should immediately notify the parties about the receipt of the complaint or refusal to deal with a given dispute pursuant to article 5 clause 4 of the directive.
If the parties fail within 30 calendar days of submission of the complaint form to agree on an ADR entity, or the entity refuses to deal with the dispute, the complaint will not be processed further under this procedure.
The ADR entities will be assessed by the European Commission so they can be entered into the registry of entities competent to settle consumer disputes out of court.
This enables the creation of an ODR contact points network related to the existing European Consumer Centres Network by organizational (national) structure. The provisions of article 6 of the directive impose quality requirements, emphasizing that it is necessary that ADR entities “possess the necessary expertise and are independent and impartial.”
The assumptions cited suggest that in many member states, including Poland, it would be necessary to introduce a deep reform of the existing ADR system for consumer disputes to allow the unification of requirements applicable to natural persons conducting, for example, mediation proceedings.
The outcome of ADR proceedings has no binding force, and in accordance with article 9 clause 3 of the directive, different solutions might be adopted in national law.
The issue of binding force with regard to the outcome of proceedings for parties is determined in clause 43 of the preamble: “An agreement between a consumer and a trader to submit complaints to an ADR entity should not be binding on the consumer if it was concluded before the dispute has materialized and if it has the effect of depriving the consumer of his right to bring an action before the courts for the settlement of the dispute.
Furthermore, in ADR procedures that aim at resolving the dispute by imposing a solution, the solution imposed should be binding on the parties only if they were informed of its binding nature in advance and specifically accepted this. Specific acceptance by the trader should not be required if national rules provide that such solutions are binding on traders.”
In terms of guaranteeing the confidentiality and protection of personal data of the entities that constitute an ODR platform, the resolution refers to the provisions of the Directive of the European Parliament and of the Council of 24 October 1946, on the protection of individuals with regard to the processing of personal data and on the free movement of such data, and Regulation (EC) No 45/2001 of the European Parliament and of the Council of 18 December 2000, on the protection of individuals with regard to the processing of personal data by the Community institutions and bodies and on the free movement of such data.
The solutions that will be introduced under the new regulation should have a significant effect on consumers, who would be provided with fast and inexpensive ways of settling disputes with traders. Traders would incur additional costs at the start but would be forced to improve existing internal systems for deciding on complaints to ensure a high level of functionality and effectiveness.
New legal regulations will be connected with a number of changes in the scope of the law of member states at the level of statutory legislation. It will be necessary to introduce material provisions that regulate the area of out-of-court consumer disputes, procedural provisions that enable the amendment of existing acts to offer a different scope of competence for entities that provide out-of-court settlement systems for disputes, and institutional provisions.
Institutional provisions will be directly related to article 5 of the directive, which outlines member states’ obligation to ensure that consumers have access to alternative methods for the resolution of disputes that involve a trader established in the territory of a given member state.
The material and personal scope for using ODR methods is not unlimited. Online mediation offers a wide range of implementation methods, confirmed by its fastest-growing branches: consumer and family law. However, many legal issues, such as classifying violations or legal liability, cannot be resolved through electronic mediation. A lack of direct contact in the course of mediation does not favor the creation of trust, which is the basis for directing a claim to be settled by any out-of-court processes.
Electronic communication, despite its apparent accessibility, might also create a number of mental barriers that prevent effective mediation.
However, the provisions of the cited directive and regulation will provide an effective impulse to popularize alternative methods of dispute resolution, with unified quality requirements in each member state. A developed network of institutions that provide mediation services will help to relieve the justice system and comply with the principles of a fair process conducted in a reasonable amount of time. Furthermore, it will contribute to ensuring sectoral and geographic filling of the market of out-of-court methods for dispute resolution in the EU.
