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E-Commerce Alternative Dispute Resolution in the European Union

E-commerce is one of the fastest growing business sectors worldwide, but there still are obstacles to the efficiency of cross-border transactions. One of the biggest hurdles is the low-cost and efficient resolution of consumer disputes. In 2015, it has been estimated that one of every three consumers experienced problems in the course of online shopping, and a quarter of them did not submit any complaint on the incident. The main reasons behind this failure to pursue consumer rights was that they considered the process of dispute resolution to be too long, too expensive, or that they will not be provided with an effective resolution on the merits of their claim.  Coming to an online store near you, the European Commission is taking the lead in mandating the resolution of e-commerce consumer disputes.  

In January 2016 the European Commission launched its online dispute resolution platform known as the European Online Dispute Resolution Platform (the “ODR Platform”).  The ODR Platform aims to  make the process of resolving international Internet consumer disputes simpler, cheaper and much quicker.  Of course, wide-spread acceptance of the ODR Platform should facilitate confidence-building among the consuming and selling parties., which can cause the e-commerce growth pattern to spiral even higher.  The core theme of the ODR Platform is that anyone suffering damage or disadvantage during their online shopping will be allowed to complain in a simple way, and instead of slow and costly judicial proceedings, alternative methods will be established in each member state. For example, in Hungary there will be a standing conciliation panel for Hungarian claims – other member states have similar options at the disposal of the parties.

On February 15, 2016 the ODR Platform went operational.. To this effect, the EU now makes it compulsory for online stores (web-shops, online marketplaces) to indicate on their websites whether the ODR Platform  is an available dispute resolution option.   Traders concluding agreements online with their consumer customers are obliged to place an active link at an easily accessible part of their websites.. In addition, all participating traders must place a notice of the ODR Platform  in their general terms and conditions, and they shall also inform their customers on the ODR Platform and its function. 

Partaking in alternative dispute resolutions is obligatory for enterprises only if they commit themselves thereto, and besides the EU regulations, the provisions specified in the relevant national laws shall also apply. In Hungary for instance, in respect of resolving cross-border consumer disputes, Hungarian enterprises are obliged to cooperate with the Budapest Conciliation Panel which has exclusive jurisdiction in Hungary over such cases. Omitting the obligation may result in the consumer protection authority imposing a fine against the enterprise. In other cases, the enterprises operating web-shops, online stores and marketplaces have no such obligation, in lack of voluntary usage of any alternative dispute resolution fora, the regular judicial proceeding remains the available measure for both consumers and enterprises to resolve their disputes.

For businesses that are interested in using the new process, the ODR Platform requires prior registration in the system of the European Commission. Subsequently, following login, the consumer can submit his/her complaint via the website, if the dispute could not be resolved directly with the enterprise. Following its submission, the online dispute resolution platform immediately transmits the complaint to the counterparty. Subsequently, the parties concerned shall have to agree on an alternative dispute resolution forum, which will act in their case. The platform provides the parties with information on such fora, which are also listed on the website of the platform. Once the agreement on the alternative dispute resolution forum is reached, the platform will forward the complaint thereto. If an agreement cannot be reached by the parties within 30 days, or if based on the submitted data, the platform is unable to identify an alternative dispute resolution forum having jurisdiction over the dispute, the complaint will not be processed further.

A fundamental weakness of alternative dispute resolution, in any form, is getting voluntary acceptance and usage by all involved parties.   Usage of the ODR Platform may be in the interest of not only the consumers, but of the enterprises as well, since most online enterprises pursue their business activities in several EU countries and they may benefit from handling mult-jurisdictional complaints under the same (or very similar) uniform rules. 

The ODP Platform is a worthy effort that deserves your consideration as a business operator and your understanding as an online consumer.  If you have any questions about the ODR Platform and its use, whether in Hungary or elsewhere in the EU, do not hesitate to contact us.

Tamás Novák (novak.tamas@ban-karika.hu)

István Solt (solt.istvan@ban-karika.hu)

Ban & Karika

Aliz u. 1 

Office Garden B/3

1117

Budapest

Hungary

Tel: 0036 1 501 5360

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