# EUR-Lex - 52011PC0793 - EN

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# 52011PC0793

**Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Directive on consumer ADR) /* COM/2011/0793 final - 2011/0373 (COD) */**

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EXPLANATORY MEMORANDUM

1.
Context of the Proposal

This present
proposal, together with the proposal for a Regulation on Online Dispute
Resolution for consumer disputes (Regulation on consumer ODR), has to be seen
in the context of efforts to improve the functioning of the retail internal
market and more particularly to enhance redress for consumers.

A substantial
proportion of European consumers encounter problems when buying goods
and services in the internal market. In 2010, this was the case for approximately
20% of European consumers[1].
Despite a generally high level of consumer protection guaranteed by
legislation, problems encountered by consumers are often left unresolved. The
losses incurred by European consumers because of problems with purchased goods
or services are estimated at 0.4% of the EU GDP.

In addition to
having recourse to traditional judicial means of redress[2], consumers and businesses in
some Member States have the option to refer their complaints to alternative
dispute resolution entities ("ADR entities"). These entities aim at
resolving, out-of-court, disputes arising between parties, through the
intervention of an entity (e.g. arbitrator, conciliator, mediator, ombudsman,
complaints board).

The Commission has adopted two
Recommendations on consumer ADR[3]
and established two networks dealing with ADR (ECC-NET[4] and FIN-NET[5]). A number of EU
sector-specific legislation contains a clause on ADR[6] and the Mediation Directive[7] promotes the amicable
settlement of disputes, including consumer disputes. However, the analysis of
the current situation identified the following main shortcomings which hinder
the effectiveness of ADR: gaps in the coverage, the lack of consumer and
business awareness as well as the uneven quality of ADR procedures[8].

The lack of effective ADR poses particular
challenges in the context of cross-border transactions (e.g. language barriers,
potentially higher costs, differences in legislation between Member States).

In view of the
problems identified, the Commission undertook to propose measures on ADR that
ensure that all consumer complaints can be submitted to an ADR entity and that
disputes arising from cross-border transactions could be more easily resolved[9].

2.
Results of Consultations with the interested
Parties and Impact Assessment
2.1.
Collection of expertise and consultation of interested
parties

The Commission conducted several studies on
ADR. These include the 2009 “Study on the use of Alternative Dispute
Resolution in the European Union”[10]
carrying out an in-depth analysis of existing ADR entities and their
functioning in all Member States, the study on "Consumer redress in the
EU: consumers' experiences, perceptions and opinions"[11], the "Assessment of
the compliance costs including administrative costs/burdens on businesses
linked to the use of Alternative Dispute Resolution (ADR)" (2011) and
the study on "Cross-border ADR in the European Union" (2011)[12].

A public consultation on the use of ADR was
launched in January 2011[13].
There appeared to be a high degree of consensus as to the subject of ADR: all
respondents agreed on the need to further develop ADR in order to improve the
functioning of the internal market. The vast majority of respondents also
supported action at EU level and stressed the need for quality ADR procedures
which should be available particularly for disputes arising from cross-border
transactions and in the digital environment. In their
view, effective ADR procedures should be guided by a number of common
principles, such as impartiality, transparency, effectiveness and fairness. Many respondents
supported the improvement of ODR procedures, in particular for e-commerce
transactions, where there are an increasing number of complaints especially for
low-value cases.

In March 2011, the Commission services together with the European Parliament organised a summit on "Alternative
Dispute Resolution for internal market and consumers", which brought
together some 200 interested parties. The debate showed general support for the
development of ADR, including ODR, for consumers and highlighted the need for
EU action. In April 2011, a workshop on "ADR: how
to make it work better?" was organised within the European Consumer Summit[14] with 60 stakeholders
participating.

Complementary input was provided, in particular, through a business consultation conducted by the
Commission services between December 2010 and January 2011 through the European
Business Test Panel[15]
and a business consultation conducted between March and May 2011 via the SME
survey platform[16].

The European Data Protection Supervisor
(EDPS) was also consulted.

2.2.
Impact assessment

The Commission has carried out a detailed
impact assessment (IA), analysing a range of policy options for both "ADR
coverage, information and quality" and "ODR for cross-border e-commerce transactions". The IA concluded that only a
combination of two instruments on ADR and ODR can ensure access to impartial,
transparent, effective and fair means to resolve domestic and cross-border
consumer disputes out-of-court. In particular, a Framework Directive is the
most appropriate way to ensure full ADR coverage in all Member States, to
inform consumers about ADR and to ensure that ADR entities respect specific
quality principles. Full ADR coverage will create the required framework on the
basis of which an EU-wide ODR system can effectively deal with disputes
relating to cross-border e-commerce transactions.

3.
Legal Elements of the Proposal
3.1.
Main elements of the proposal
3.1.1.
Ensuring that ADR procedures exist for all
consumer disputes

Under the present proposal, Member States
shall ensure that all disputes between a consumer and a trader arising from the
sale of goods or the provision of services can be submitted to an ADR entity,
including through online means. In order to fulfil their obligation, Member
States may use existing ADR entities and adjust their scope of application, if
needed; or they may create new ADR entities or a residual cross-sectoral entity.

The present proposal covers disputes
between consumers and traders arising from the sale of goods or the provision
of services. This includes complaints filed by consumers against traders but
also complaints filed by traders against consumers. The present proposal
applies to ADR entities that seek to resolve disputes between consumers and
traders out-of-court through the intervention of a dispute resolution entity.
It covers in particular mediation procedures but also non-judicial procedures
of an adjudicatory nature, such as procedures before consumer complaint boards,
arbitration and conciliation procedures. The present proposal does not apply to
consumer complaint handling systems operated by the trader nor to dispute
resolution entities where the natural persons in charge of dispute resolution are
employed exclusively by the trader. It also excludes direct negotiations
between the parties.

3.1.2.
Information on ADR and cooperation

When disputes arise, consumers must be able
to quickly identify which ADR entities are competent to deal with their
dispute. To this end, this proposal ensures that consumers will be able to find
information on the competent ADR entity in the main commercial documents
provided by the trader and, where a trader has a website, on that website. In
addition, traders will have to inform consumers on whether or not they commit
to use ADR in relation to complaints lodged against them by a consumer. This
obligation will act as an incentive for traders to use ADR more frequently.

Under the present proposal, Member States
shall ensure that consumers can obtain assistance when they are involved in a
cross-border dispute. Member States may delegate responsibility for this task
to their centres of the European Consumer Centre Network (ECC-net) which
currently performs the function of guiding consumers to the ADR entities
competent to deal with their cross-border disputes.

Under the proposal, ADR entities will be
encouraged to become members of networks of ADR entities in sector-specific
areas when they deal with disputes in that area. In addition, the present
proposal encourages cooperation between ADR entities and national authorities
entrusted with the enforcement of consumer protection legislation.

The present proposal contains provisions
ensuring the respect of strict guarantees of confidentiality and data
protection, in compliance with the relevant Union legislation.

3.1.3.
Quality of ADR entities

The present proposal aims at ensuring that
ADR entities respect the quality principles of impartiality, transparency,
effectiveness and fairness. Such principles have been laid down in two
Commission Recommendations. By giving a binding effect to these principles, the
present proposal will create a level playing field for ADR and strengthen the
confidence of both consumers and traders in ADR procedures.

Transparency of ADR entities should
guarantee that the parties receive all the information they need to take an
informed decision before engaging in an ADR procedure. ADR procedures should be
effective and address certain shortcomings associated with court procedures,
such as costs, length and complexity. Based on the results of existing studies,
the present proposal requires that disputes should be resolved within 90 days.
In order to ensure that ADR procedures remain accessible to all consumers, the
present proposal provides that they should be free of charge or of moderate
costs for consumers.

3.1.4.
Monitoring

In order to ensure that ADR entities
function properly and provide quality services for consumers and traders, they
should be closely monitored. In each Member State, a competent authority will
be in charge of monitoring the functioning of ADR entities established on its
territory. The competent authorities will inter alia assess, on the
basis of information notified to them by ADR entities, whether a given ADR entity
respects the quality requirements laid down by the present proposal. In
addition, the competent autorities will publish regular reports on the
development and functioning of ADR entities. Every three years, the Commission
will report to the European Parliament and the Council on the application of
the Directive.

3.2.
Subsidiarity principle

The proposal is based on Article 114 of the
Treaty on the Functioning of the European Union.

The development of a well-functioning ADR
system within the Union, built on existing ADR entities in the Member States
and respecting their legal traditions, will strengthen consumer confidence in
the retail internal market, including in the area of e-commerce. It will also
open up new opportunities for businesses. Action by Member States alone is
likely to result in further fragmentation of ADR, which in turn would
contribute to unequal treatment for consumers and traders in the internal
market and create diverging levels of consumer redress in the Union. Action at
Union level, such as proposed, should provide European consumers with the same
level of protection and promote competitive practices amongst businesses, thus
increasing the exchange of products or services across borders.

Defining at Union level common principles
and rules for ADR entities and ADR procedures in all Member States will have
the clear advantage of ensuring an effective and adequate treatment of consumer
disputes arising from domestic or cross-border transactions. It will also
ensure that quality levels of ADR procedures are more homogenous in the Union.

The divergence in national policies on ADR procedures
(or the lack thereof) shows that unilateral action by Member States does not
lead to a satisfactory solution for consumers and businesses. Efficient and
effective ADR for cross-border disputes requires a well-functioning system of
domestic ADR entities on which the EU-wide ODR platform will be anchored.

3.3.
Proportionality

The proposal complies with the
proportionality principle for the following reasons:

The proposal does not go beyond what is
strictly necessary to achieve its objectives. It does not regulate all aspects
of ADR but focuses on some key aspects of out-of-court dispute resolution. The
framework Directive will build on ADR entities that already exist and will
leave the choice of form and methods to achieve the results expected to Member
States.

The objectives of this proposal will be
achieved at the lowest costs to businesses and Member States, while avoiding
duplication of expenses and unnecessary administrative burdens.

4.         Budgetary Implication

This proposal does not have an impact on the EU budget. Therefore no
financial statement is attached to the proposal.

2011/0373 (COD)

Proposal for a

DIRECTIVE OF THE EUROPEAN PARLIAMENT
AND OF THE COUNCIL

on alternative dispute resolution for consumer
disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC
(Directive on consumer ADR)

THE EUROPEAN PARLIAMENT AND THE
COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the
Functioning of the European Union, and in particular Article 114 thereof,

Having regard to the proposal from the
European Commission[17],

After transmission of the draft legislative
act to the national Parliaments,

Having regard to the opinion of the
European Economic and Social Committee[18],

After consulting the European Data
Protection Supervisor,

Acting in accordance with the ordinary
legislative procedure,

Whereas:

(1)
Article 169(1) and Article 169(2)(a) of the
Treaty on the Functioning of the European Union (TFEU) provide that the Union
is to contribute to the attainment of a high level of consumer protection
through the measures adopted pursuant to Article 114 thereof. Article 38
of the Charter of Fundamental Rights of the European Union provides that Union
policies shall ensure a high level of consumer protection.

(2)
In accordance with Article 26(2) TFEU, the
internal market is to comprise an area without internal frontiers in which the
free movement of goods and services is ensured. In order for consumers to have
confidence in and benefit from the internal market, it is necessary that they
have access to simple and low-cost ways of resolving disputes which arise from
the sale of goods or the provision of services. This applies to offline as well
as to online transactions, and is particularly important when consumers shop
across borders.

(3)
Alternative dispute resolution offers a simple,
fast and low-cost out-of-court solution to disputes between consumers and
traders. However, alternative dispute resolution is not yet sufficiently
developed across the European Union. In order for consumers to fully exploit
its potential, it is necessary that alternative dispute resolution is available
for all types of consumer disputes, quality levels of ADR procedures are even
and consumers and traders are aware of such procedures. It is also necessary
that ADR entities handle cross-border disputes effectively.

(4)
In its Single Market Act[19], the Commission has identified
legislation on alternative dispute resolution which includes an electronic
commerce dimension as one of the twelve levers to boost growth and strengthen
confidence in the Single Market.

(5)
The European Council has invited the Parliament
and the Council to adopt, by the end of 2012, a first set of priority measures
to bring a new impetus to the Single Market.[20]

(6)
The development within the European Union of
well-functioning alternative dispute resolution is necessary to strengthen
consumers' confidence in the internal market, including in the area of
e-commerce. Such development should build on existing ADR procedures in the
Member States and respect their legal traditions.

(7)
This Directive should apply to contractual
disputes between consumers and traders that are arising from the sale of goods
or provision of services in all economic sectors. This should include
complaints submitted by consumers against traders but also complaints submitted
by traders against consumers. This Directive should not apply to disputes
between traders; however, it should not prevent Member States from adopting or
maintaining in force provisions on procedures for the out-of-court resolution
of such disputes.

(8)
The definition of “consumer” should cover
natural persons who are acting outside their trade, business, craft or
profession. However, if the contract is concluded for purposes partly within
and partly outside the person’s trade (dual purpose contracts) and the trade
purpose is so limited as not to be predominant in the overall context of the
supply, that person should also be considered as a consumer.

(9)
This Directive should be without prejudice to
Directive 2008/52/EC of the European Parliament and of the Council of 21 May
2008 on certain aspects of mediation in civil and commercial matters[21], Regulation (EC) No 44/2001 of
the Council of 22 December 2000 on jurisdiction and the recognition and enforcement
of judgments in civil and commercial matters[22],
Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11
July 2007 on the law applicable to non-contractual obligations (“Rome II”)[23] and Regulation (EC) No
593/2008 of the European Parliament and of the Council of 17 June 2008 on the
law applicable to contractual obligations (“Rome I”)[24].

(10)
This Directive should prevail over Union
legislation which contains provisions aimed at encouraging the setting up of ADR
entities in a specific sector. Where sector-specific legislation mandates the
setting up of such entities, this Directive should prevail only to the extent
that such legislation does not ensure at least an equivalent degree of consumer
protection.

(11)
ADR entities are highly diverse across the Union
but also within the Member States. This Directive should cover any entity that
is established on a durable basis and offers the resolution of a dispute
through an ADR procedure. An arbitration procedure which is created outside the
framework of an ADR entity on an ad hoc basis for a single dispute between a
consumer and a trader should not be considered as an ADR procedure.

(12)
This Directive should not apply to procedures
before dispute resolution entities where the natural persons in charge of
dispute resolution are employed exclusively by the trader nor to procedures
before consumer compliant handling systems operated by the trader. It should
not apply to direct negotiations between the parties. Furthermore, it should
not apply to attempts made by a judge to settle a dispute in the course of a
judicial proceeding concerning that dispute.

(13)
Member States should ensure that disputes covered
by this Directive can be submitted to an ADR entity fulfilling the requirements
set out in this Directive. Member States should have
the possibility to fulfil this obligation by relying on existing ADR entities
and adjusting their scope of application, if needed, or by providing for the
creation of new ADR entities. This Directive should not oblige Member States to
create a specific ADR entity in each retail sector. Member States should have
the possibility to provide for the creation of a residual ADR entity that deals
with disputes for the resolution of which no specific entity is competent.

(14)
This Directive should be without prejudice to
traders established in a Member State being covered by an ADR entity which is
located in another Member State. Member States should encourage
the development of such entities.

(15)
This Directive should be without prejudice to Member
States maintaining or introducing ADR procedures dealing jointly with identical
or similar disputes between a trader and several consumers. Such procedures can
be seen as a preliminary step to further developing collective ADR procedures
within the Union.

(16)
The processing of information relating to
disputes covered by this Directive should comply with the rules on the
protection of personal data laid down in the laws, regulations and
administrative provisions of the Member States adopted pursuant to Directive
95/46/EC of the European Parliament and of the Council of 24 October 1995 on
the protection of individuals with regard to the processing of personal data
and on the free movement of such data.

(17)
The natural persons in charge of alternative
dispute resolution should only be considered impartial if they cannot be
subject to pressure that potentially influences their
attitude towards the dispute. There is a particular need to ensure the absence
of such pressure where ADR entities are financed by one of the parties to the
dispute or an organisation of which one of the parties is a member.

(18)
In order to ensure the transparency of ADR entities
and of ADR procedures it is necessary that the parties receive all the
information they need to take an informed decision before engaging in an ADR
procedure.

(19)
ADR procedures should be effective. They should
provide for a simple and fast procedure whose duration generally does not
exceed 90 days. The ADR entity should be able to extend this time period when
the complexity of the dispute in question so demands.

(20)
ADR procedures should be free of charge or of
moderate costs for consumers so that it remains economically reasonable for
consumers to use such procedures.

(21)
ADR procedures should be fair so that the
parties to a dispute are fully informed about their rights and the consequences
of the choices they make in the context of an ADR procedure.

(22)
When a dispute arises it is necessary that
consumers are able to identify quickly which ADR entities are competent to deal
with their complaint and to know whether or not the trader concerned will
participate in proceedings submitted to an ADR entity. Traders should therefore
provide such information on their main commercial documents and, where they
have a website, on their websites. This obligation should be without prejudice
to Articles 6(1)(t), 7(1) and 8 of Directive 2011/83/EU of the European
Parliament and of the Council of 25 October 2011 on consumer rights[25]. Article 6(1)(t) of Directive
2011/83/EU stipulates for consumer contracts concluded at a distance or off
premises that the trader has to inform the consumer about the possibility of
having recourse to an out-of-court complaint and redress mechanism to which the
trader is subject, and the methods for having access to it, before the consumer
is bound by the contract. Article 7(1) of Directive 2011/83/EU provides that,
in the case of off-premises contracts, this information must be provided on
paper or, if the consumer agrees, on another durable medium.

(23)
This Directive does not prescribe that
participation of traders in ADR procedures be mandatory or that the outcome of
such procedures be binding on traders, when a consumer has lodged a complaint
against them. However, this Directive is without prejudice to any national
rules making the participation of traders in such procedures mandatory or their
outcome binding on traders, provided that such legislation does not prevent the
parties from exercising their right of access to the judicial system as
guaranteed in Article 47 of the Charter of Fundamental Rights of the European
Union.

(24)
Member States should ensure that ADR entities
cooperate on the resolution of cross-border disputes.

(25)
Networks of ADR entities which facilitate the
resolution of cross-border disputes, such as FIN-NET in the area of financial
services, should be strengthened within the Union. Member States should
encourage ADR entities to become part of such networks.

(26)
Close cooperation between ADR entities and
national authorities entrusted with the enforcement of Union legislation on
consumer protection should strengthen the effective application of such Union
legislation.

(27)
In order to ensure that ADR entities function
properly and effectively, they should be closely monitored. The Commission and
competent authorities under this Directive should publish and update a list of ADR
entities that comply with this Directive. Other bodies, such as ADR entities,
consumer associations, business associations and the European Consumer Centre
Network, should also publish this list. In addition, competent authorities
should publish regular reports on the development and functioning of ADR entities.
ADR entities should notify to competent authorities specific information on
which those reports should be based. Member States should encourage ADR entities
to provide such information using Commission Recommendation 2010/304/EU on the
use of a harmonised methodology for classifying and reporting consumer
complaints and enquiries[26].

(28)
It is necessary that Member States lay down
penalties for infringements of the provisions of this Directive relating to
consumer information by traders and information to be notified to competent
authorities by ADR entities and ensure that they are enforced. The penalties
should be effective, proportionate and dissuasive.

(29)
Regulation (EC) No 2006/2004 of the European
Parliament and of the Council of 27 October 2004 on cooperation between
national authorities responsible for the enforcement of consumer protection
laws (the Regulation on consumer protection cooperation)[27] should be amended to include a reference to this
Directive in its Annex so as to reinforce cross-border cooperation on enforcement of this Directive.

(30)
Directive 2009/22 of the European Parliament and
of the Council of 23 April 2009 on injunctions for the protection of consumers'
interests (Injunctions Directive)[28]
should be amended to include a reference to this Directive in its Annex so as
to ensure that the consumers' collective interests laid down in this Directive
are protected.

(31)
Since the objective of this Directive, namely to contribute to the proper functioning of the internal market by
ensuring a high level of consumer protection, cannot be
sufficiently achieved by the Member States and can therefore be better achieved
at Union level, the Union may adopt measures, in accordance with the principle
of subsidiarity as set out in Article 5 of the Treaty on European Union. In
accordance with the principle of proportionality, as set out in that Article,
this Directive does not go beyond what is necessary in order to achieve that
objective.

(32)
This Directive respects fundamental rights and
observes the principles recognised in particular by the Charter of Fundamental
Rights of the European Union and specifically Articles 7, 8, 38 and 47 thereof,

HAVE ADOPTED THIS DIRECTIVE:

CHAPTER I
GENERAL PROVISIONS

Article 1
Subject matter

This Directive is to contribute to the
functioning of the internal market and to the achievement of a high level of
consumer protection by ensuring that disputes between consumers and traders can
be submitted to entities offering impartial, transparent, effective and fair
alternative dispute resolution procedures.

Article 2
Scope

1.
This Directive shall apply to procedures for the
out-of-court resolution of contractual disputes arising from the sale of goods
or provision of services by a trader established in the Union to a consumer
resident in the Union through the intervention of a dispute resolution entity
which proposes or imposes a solution or brings the parties together with the
aim of facilitating an amicable solution, hereinafter ‘ADR procedures’.

2.
This Directive shall not apply to:

(a)
procedures before dispute resolution entities
where the natural persons in charge of dispute resolution are employed exclusively
by the trader;

(b)
procedures before consumer complaint handling
systems operated by the trader;

(c)
direct negotiation between the consumer and the
trader, whether represented or not;

(d)
attempts made by a judge to settle a dispute in
the course of a judicial proceeding concerning that dispute.

Article 3
Relationship with other Union legislation

1.           This Directive is without
prejudice to Directive 2008/52/EC, Regulation (EC) No 44/2001, Regulation (EC)
No 864/2007 and Regulation (EC) No 593/2008.

2.           Article 5(1) of this Directive
shall prevail over the provisions referred to in the Annex.

3.           This Directive shall prevail over
mandatory provisions contained in sector-specific Union legislation which
relate to alternative dispute resolution only to the extent that such
provisions do not ensure at least an equivalent degree of consumer protection.

Article 4
Definitions

For the purposes of this Directive:

(a)
"consumer" means any natural person
who is acting for purposes which are outside his trade, business, craft or
profession;

(b)
"trader" means any natural persons or
any legal person, irrespective of whether privatly or publicly owned, who is
acting, including through any person acting in his name or on his behalf, for
purposes relating to his trade, business, craft or profession;

(c)
a trader is established:

–
if the trader is a natural person, where he has
his place of business;

–
if the trader is a company or other legal person
or association of natural or legal persons, where it has its statutory seat,
central administration or place of business, including a branch, agency or any
other establishment;

(d)
"cross-border dispute" means a
contractual dispute arising from the sale of goods or provision of services
where, at the time the consumer orders the goods or services, the consumer is
resident in a Member State other than the Member State in which the trader is
established;

(e)
"ADR entity" means any entity, however
named or referred to, which is established on a durable basis and offers the
resolution of a dispute through an ADR procedure;

(f)
an ADR entity is established:

–
if the entity is operated by a natural person,
at the place where it carries out alternative dispute resolution activities;

–
if the entity is operated by a legal person or
association of natural or legal persons, at the place where that legal person or
association of natural or legal persons carries out alternative dispute
resolution activities or has its statutory seat;

–
if the entity is operated by an authority or
other public body, where that authority or other public body has its seat.

CHAPTER II
ACCESS AND PRINCIPLES APPLICABLE TO ALTERNATIVE DISPUTE RESOLUTION

Article 5
Access to alternative dispute resolution

1.
Member States shall ensure that disputes covered
by this Directive can be submitted to an ADR entity which complies with the
requirements set out in this Directive.

2.
Member States shall ensure that ADR entities:

(a)
have a website enabling the parties to submit a
complaint online;

(b)
enable the parties to exchange information with
them via electronic means;

(c)
accept both, domestic and cross-border disputes,
including disputes covered by Regulation (EU) No [Office of Publications
insert reference number] of the European Parliament and of the Council of [Office
of Publications insert date of adoption] on online dispute resolution for
consumer disputes (Regulation on consumer ODR)[29];
and

(d)
when dealing with disputes covered by this
Directive take the necessary measures to ensure that the processing of personal
data complies with the rules on the protection of personal data laid down in
the national legislation implementing Directive 95/46/EC.

3.
Member States may fulfil their obligation under
paragraph 1 by ensuring the exsistence of a residual ADR entity which is
competent to deal with disputes as referred to in paragraph 1 for the
resolution of which no existing ADR entity is competent.

Article 6
Expertise and impartiality

1.
Member States shall ensure that the natural
persons in charge of alternative dispute resolution possess the necessary
expertise and are impartial. This shall be guaranteed by ensuring that they:

(a)
possess the necessary knowledge, skills and
experience in the field of alternative dispute resolution;

(b)
are not liable to be relieved from their duties
without just cause;

(c)
have no conflict of interest with either party
to the dispute.

2.
Member States shall ensure that ADR entities where
the natural persons in charge of dispute resolution form part of a collegial
body provide for an equal number of representatives of consumers' interests and
of representatives of traders' interests in that body.

Article 7
Transparency

1.
Member States shall ensure that ADR entities
make publicly available on their websites and in printed form at their premises
information on:

(a)
the natural persons in charge of alternative
dispute resolution, the method of their appointment and the length of their
mandate;

(b)
the source of financing, including percentage
share of public and of private financing;

(c)
where appropriate, their membership in networks
of ADR entities facilitating cross-border dispute resolution;

(d)
the types of disputes they are competent to deal
with;

(e)
the rules of procedure governing the resolution
of a dispute;

(f)
the languages in which complaints can be
submitted to the ADR entity and in which the ADR procedure is conducted;

(g)
the types of rules the ADR entity may use as a basis
for the dispute resolution (e.g. rules of law, considerations of equity, codes
of conduct);

(h)
any preliminary requirements the parties may
have to meet before an ADR procedure can be instituted;

(i)
the costs, if any, to be borne by the parties;

(j)
the approximate length of the ADR procedure;

(k)
the legal effect of the outcome of the ADR
procedure.

2.
Member States shall ensure that ADR entities
make publicly available on their websites and in printed form at their premises
annual activity reports. These reports shall include the following information
relating to both domestic and cross-border disputes:

(a)
the number of disputes received and the types of
complaints to which they related;

(b)
any recurrent problems leading to disputes
between consumers and traders;

(c)
the rate of dispute resolution procedures which
were discontinued before an outcome was reached;

(d)
the average time taken to resolve disputes;

(e)
the rate of compliance, if known, with the
outcomes of the ADR procedures;

(f)
where appropriate, their cooperation within networks
of ADR entities facilitating the resolution of cross-border disputes.

Article 8
Effectiveness

Member States shall ensure that ADR procedures
are effective and fulfil the following requirements:

(a)
the ADR procedure is easily accessible to both
parties irrespective of where the party is situated;

(b)
the parties have access to the procedure without
being obliged to use a legal representative; nonetheless parties may be
represented or assisted by a third party at any stage of the procedure;

(c)
the ADR procedure is free of charge or at
moderate costs for consumers;

(d)
the dispute is resolved within 90 days from the
date on which the ADR entity has received the complaint. In the case of complex
disputes, the ADR entity may extend this time period.

Article 9
Fairness

1.
Member States shall ensure that in ADR procedures:

(a)
the parties have the possibility to express
their point of view and hear the arguments and facts put forward by the other
party and any experts' statements;

(b)
the outcome of the ADR procedure is made
available to both parties in writing or on a durable medium, stating the
grounds on which the outcome is based.

2.
Member States shall ensure that in ADR
procedures which aim at resolving the dispute by suggesting a solution

(a)
the consumer, before agreeing to a suggested
solution, is informed that:

(i)      he has the choice as to whether or
not to agree to a suggested solution;

(ii)      the suggested solution may be less
favourable than an outcome determined by a court applying legal rules;

(iii)     before agreeing or rejecting the
suggested solution he has the right to seek independent advice;

(b)
the parties, before agreeing to a suggested
solution, are informed of the legal effect of such agreement;

(c)
the parties, before expressing their consent to
a suggested solution or amicable agreement, are allowed a reasonable period of
time to reflect.

CHAPTER III
INFORMATION AND COOPERATION

Article 10
Consumer information by traders

1.
Member States shall ensure that traders
established on their territories inform consumers about the ADR entities by
which they are covered and which are competent to deal with potential disputes
between themselves and consumers. Such information shall include the addresses
of the relevant ADR entities' websites and specify whether or not the trader
commits to use these entities to resolve disputes with consumers.

2.
The information referred to in paragraph 1 shall
be mentioned in an easily, directly, prominently and permanently accessible way
on the trader's website, where one exists, in the general terms and conditions of
contracts for the sale of goods or provision of services between the trader and
a consumer and in invoices and receipts relating to such contracts. It shall
specify how further information on the ADR entity concerned and on the
conditions for using it can be accessed.

3.
The provisions in this Article shall be without
prejudice to the provisions in Articles 6, 7 and 8 of Directive 2011/83/EU
concerning consumer information for distance and off-premises contracts.

Article 11
Assistance for consumers

1.
Member States shall ensure that consumers can
obtain assistance with regard to their disputes arising from cross-border sales
of goods or provision of services. Such assistance shall in particular aim at
helping consumers to access the ADR entity operating in another Member
State which is competent to deal with their cross-border dispute.

2.
Member States may confer responsibility for the
task referred to in paragraph 1 on their centres of the European Consumer
Centre Network, on consumer associations or on any other body.

Article 12
General information

Member States shall ensure that ADR entities,
consumer associations, business associations, the centres of the European
Consumer Centre Network and, where appropriate, the bodies designated in
accordance with Article 11(2) make publicly available at their premises and on
their websites the list of ADR entities referred to in Article 17(3).

Article 13
Cooperation between ADR entities on the resolution of cross-border disputes

1.
Member States shall ensure that ADR entities cooperate
on the resolution of cross-border disputes.

2.
Where a network of ADR entities facilitating the
resolution of cross-border disputes exists in a sector-specific area within the
Union, Member States shall encourage ADR entities that deal with disputes in
that area to become a member of that network.

3.
The Commission shall publish a list containing
the names and contact details of the networks referred to in paragraph 1. The
Commission shall, if necessary, update this list every two years.

Article 14
Cooperation between ADR entities and national authorities enforcing Union
legislation on consumer protection

1.
Member States shall ensure cooperation between ADR
entities and national authorities entrusted with the enforcement of Union
legislation on consumer protection.

2.
This cooperation shall include mutual exchange
of information on business practices by traders about which consumers have
lodged complaints. It shall also include the provision of technical assessment
and information by such national authorities to ADR entities where such
assessment or information is necessary for the handling of individual disputes.

3.
Member States shall ensure that cooperation and
mutual information exchanges referred to in paragraphs 1 and 2 comply with the
rules on the protection of personal data laid down in Directive 95/46/EC.

CHAPTER IV
MONITORING OF ADR ENTITIES

Article 15
Designation of competent authorities

1.
Each Member State shall designate a competent
authority in charge of monitoring the functioning and development of ADR entities
established on its territory. Each Member State shall communicate the authority
it has designated to the Commission.

2.
The Commission shall establish a list of the
competent authorities communicated to it in accordance with paragraph 1 and publish
that list in the Official Journal of the European Union.

Article 16
Information to be notified to competent authorities by ADR entities

1.
Member States shall ensure that ADR entities
established on their territories notify to the competent authority the
following:

(a)
their name, contact details and website address;

(b)
information on their structure and funding,
including information on the natural persons in charge of alternative dispute resolution,
their funding and by whom they are employed;

(c)
their rules of procedure;

(d)
their fees, if applicable;

(e)
the approximate length of the ADR procedures;

(f)
the language or languages in which complaints
can be submitted and the ADR procedure conducted;

(g)
a statement on the elements necessary to
establish their competence;

(h)
a reasoned statement, based on a self-assessment
by the ADR entity, on whether it qualifies as an ADR entity falling within the
scope of this Directive and complies with the requirements set out in chapter
II.

In the event of changes to the information
referred to in points (a) to (g), ADR entities shall immediately notify these
changes to the competent authority.

2.
Member States shall ensure that ADR entities communicate
to the competent authorities at least once a year the following information:

(a)
the number of disputes received and the types of
complaints to which they related;

(b)
the rate of ADR procedures which were
discontinued before an outcome was reached;

(c)
the average time taken to resolve the disputes
received;

(d)
the rate of compliance, if known, with the
outcomes of the ADR procedures;

(e)
relevant statistics demonstrating the way in
which traders use alternative dispute resolution for their disputes with
consumers;

(f)
any recurrent problems leading to disputes
between consumers and traders;

(g)
where applicable, an assessment of the
effectiveness of their cooperation within networks of ADR entities facilitating
the resolution of cross-border disputes;

(h)
a self-assessment of the effectiveness of the ADR
procedure offered by the entity and of possible ways of improving its performance.

Article 17
Role of the competent authorities and of the Commission

1.
Each competent authority shall assess, on the
basis of the information it has received in accordance with Article 16(1), whether
the ADR entities notified to it qualify as ADR entities falling within the
scope of this Directive and comply with the requirements set out in chapter II.

2.
Each competent authority shall, on the basis of
the assessment referred to in paragraph 1, establish a list of the ADR entities
that fulfil the conditions set out in paragraph 1.

The list shall include the following:

(a)
the name, the contact details and the website
addresses of these ADR entities;

(b)
their fees, if applicable;

(c)
the language or languages in which in which
complaints can be submitted and the ADR procedure conducted;

(d)
the elements necessary to establish their
competence;

(e)
the need for the physical presence of the
parties or of their representatives, if applicable; and

(f)
the binding or non-binding nature of the outcome
of the procedure.

Each competent authority shall notify the list
to the Commission. In the event that any changes are notified to the competent
authority in accordance with the second subparagraph of Article 16(1), the list
shall be updated immediately and the relevant information notified to the
Commission.

3.
The Commission shall establish a list of the ADR
entities communicated to it in accordance with paragraph 2 and update this list
whenever changes are notified to the Commission in accordance with the second
sentence of the third subparagraph of paragraph 2. The Commission shall publish
this list and its updates and transmit it to the competent authorities and the
Member States.

4.
Each competent authority shall publish the
consolidated list of ADR entities referred to in paragraph 3 on its website and
by any other means it considers appropriate.

5.
Every two years, each competent authority shall
publish a report on the development and functioning of ADR entities. The report
shall in particular:

(a)
identify areas, if any, where ADR procedures do
not yet deal with disputes covered by this Directive;

(b)
identify best practices of ADR entities;

(c)
point out the shortcomings, supported by
statistics, that hinder the functioning of ADR entities for both domestic and
cross-border disputes, where appropriate;

(d)
make recommendations on how to improve the
functioning of ADR entities, where appropriate.

CHAPTER V
FINAL PROVISIONS

Article 18
Penalties

Member States shall lay down the rules on
penalties applicable to infringements of the national provisions adopted pursuant
to Article 10 and Article 16(1) and (2) of this Directive and shall take all
measures necessary to ensure that they are implemented. The penalties provided
for must be effective, proportionate and dissuasive.

Article 19
Amendment to Regulation (EC) No 2006/2004

In the Annex to Regulation (EC) No
2006/2004 the following point is added:

"20.   Directive .... of the European
Parliament and of the Council of .... on alternative dispute resolution for
consumer disputes and amending Regulation (EC) No 2006/2004 and Directive
2009/22/EC (Directive on consumer ADR) (OJ L..., ...., p. ...): Article 10."

Article 20
Amendment to Directive 2009/22/EC

In the Annex to Directive 2009/22/EC the following point is added:

"14.   Directive .... of the European
Parliament and of the Council of .... on alternative dispute resolution for
consumer disputes and amending Regulation (EC) No 2006/2004 and Directive
2009/22/EC (Directive on consumer ADR) (OJ L..., ...., p. ...): Article 10."

Article 21
Communication

1.
By [Office of Publications insert same date as
in Article 22(1) = date of implementation of the Directive] at the latest
Member States shall communicate to the Commission

(a)
where appropriate, the names and contact details
of the bodies designated in accordance with Article 11(2); and

(b)
the competent authorities designated in
accordance with Article 15(1).

Member States shall inform the Commission of
any subsequent changes to this information.

2.
By [Office of Publications insert date: six
months after the implementation date as to be inserted in Article 22(1)] at
the latest, Member States shall communicate to the Commission the first list
referred to in Article 17(2).

3.
The Commission shall transmit to the Member
States the information referred to in paragraph 1(a).

Article 22
Transposition

1.
Member States shall bring into force the laws,
regulations and administrative provisions necessary to comply with this
Directive by [Office of Publications insert date: 18 months after entry into
force] at the latest. They shall forthwith communicate to the Commission
the text of those provisions and a correlation table between those provisions
and this Directive.

When Member States adopt those provisions, they
shall contain a reference to this Directive or be accompanied by such a
reference on the occasion of their official publication. Member States shall
determine how such reference is to be made.

2.
Member States shall communicate to the
Commission the text of the main provisions of national law which they adopt in
the field covered by this Directive.

Article 23
Report

No later than [Office of Publications
insert date: five years after the entry into force], and every three
years thereafter, the Commission shall submit to the European Parliament, the
Council and the European Economic and Social Committee a report on the
application of this Directive. The report shall consider the development and
the use of ADR entities and the impact of this Directive on consumers and
traders. The report shall be accompanied, where appropriate, by proposals for
amendment of this Directive.

Article 24
Entry into force

This Directive shall enter into force on
the twentieth day following that of its publication in the Official Journal
of the European Union.

Article 25
Addressees

This Directive is addressed to the
Member States.

Done at Brussels,

For the European Parliament                       For
the Council

The President                                                 The
President

ANNEX

1.
Directive 2002/65/EC of the European Parliament
and of the Council of 23 September 2002 concerning the distance marketing
of consumer financial services and amending Council Directive 90/619/EEC and
Directives 97/7/EC and 98/27/EC (Article 14(1)), OJ L 271, 9.10.2002, p. 16.

2.
Directive 2008/122/EC of the European Parliament
and of the Council of 14 January 2009 on the protection of consumers in respect
of certain aspects of timeshare, long-term holiday product, resale and exchange
contracts (Article 14(2)), OJ L 33, 3.2.2009, p. 10.

3.
Directive 2004/39/EC of the European Parliament
and of the Council of 21 April 2004 on markets in financial instruments
amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of
the European Parliament and of the Council and repealing Council Directive
93/22/EEC (Article 53(1)), OJ L 145, 30.4.2004, p. 1.

4.
Directive 2002/92/EC of the European Parliament
and of the Council of 9 December 2002 on insurance mediation (Article 11(1)),
OJ L 9, 15.1.2003, p. 3.

5.
Directive 97/67/EC of the European Parliament
and of the Council of 15 December 1997 on common rules for the development of
the internal market of Community postal services (Article 19(1), third
subparagraph), OJ L 52, 27.2.2008, p. 3.

[1]               Eurobarometer 342, "Consumer Empowerment", p.
169.

[2]               For example, Regulation No 861/2007 establishing a
European Small Claims Procedure, OJ L 199, 31.7.2007, p. 1.

[3]               Commission Recommendation 98/257/EC on the principles
applicable to the bodies responsible for the out-of-court settlement of
consumer disputes, OJ L 115, 17.4.1998, p. 31 and Commission Recommendation
2001/310/EC on the principles for out-of-court bodies involved in the consensual
resolution of consumer ADR, OJ L 109, 19.4.2001, p. 56.

[4]               The European Consumer Centre network (ECC-Net) helps
consumers to access the appropriate ADR entity in another Member State in case
of cross-border disputes.

[5]               FIN-NET consists of ADR schemes that handle
cross-border disputes between consumers and financial services providers.

[6]               For example, Directive No
2009/72/EC of the European Parliament and of the
Council of 13 July 2009 concerning common rules for the Internal Market in
electricity and Directive No 2009/73/EC of the European
Parliament and of the Council of 13 July 2009 concerning common rules for the Internal
Market in natural gas (OJ L 211, 14.8.2009, pp. 55 and 94); Directive No
2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers (OJ
L 133, 22.5.2008, p. 66); Directive No 2000/31/EC of the European Parliament
and of the Council of 8 June 2000 on certain legal aspects of information
society services, in particular electronic commerce, in the Internal Market
('Directive on electronic commerce') (OJ L 178, 17.7.2000, p. 1).

[7]               OJ L 136, 24.5.2008, p. 3.

[8]               Cf. Study on the use of Alternative Dispute
Resolution in the European Union of 16 October 2009, http://ec.europa.eu/consumers/redress_cons/adr_study.pdf, pp. 56-63; 112-115; 120-121.

[9]               Europe 2020 flagship initiative: "A Digital
Agenda for Europe", COM (2010) 245, p. 13; Commission Communication
"Single Market Act", COM (2011) 206, p. 9.

[10]             Study on the use of Alternative
Dispute Resolution in the European Union, Civic Consulting of the Consumer Policy Evaluation Consortium
(CPEC), 2009, available at: http://www.cc.cec/home/dgserv/sg/evaluation/pages/eims_en.htm.

[11]             "Consumer redress in the European Union:
consumers' experiences, perceptions and opinions", 2009 http://ec.europa.eu/consumers/redress_cons/docs/cons_redress_EU_qual_study_report_en.pdf.

[12]             http://www.europarl.europa.eu/meetdocs/2009_2014/documents/imco/dv/adr_study_/adr_study_en.pdf.

[13]             Public consultation on the use of alternative dispute
resolution (ADR) as a means to resolve disputes related to commercial
transactions and practices in the EU: http://ec.europa.eu/consumers/redress_cons/Feedback_Statement_Final.pdf.

[14]             http://www.european-consumer-summit.eu/workshops3_en.asp.

[15]             335 companies from all EU Member States were consulted on
their experiences and views on ADR: http://ec.europa.eu/yourvoice/ebtp/consultations/2010/adr/index_en.htm.

[16]             During this consultation 927 small and medium size
enterprises responded to questions regarding ADR.

[17]             OJ C ..., ..., p... .

[18]             OJ C ..., ..., p... .

[19]             Communication from the Commission to the European
Parliament, the Council, the economic and social Committee and the Committee of
the Regions: Single Market Act – Twelve levers to boost growth and strengthen
confidence, "Working together to create new growth", COM (2011) 206
final, p. 9.

[20]             Conclusions of the European Council of 24-25 March
2011, EUCO 10/11, p. 4; see also Conclusions of the European Council of 23
October 2011, EUCO 52/11, pp. 1-2.

[21]             OJ L 136, 24.5.2008, p. 3.

[22]             OJ L 12, 16.1.2001, p. 32.

[23]             OJ L 199, 31.7.2007, p. 40.

[24]             OJ L 177, 4.7.2008, p. 6.

[25]             OJ L ..., ..., p. ....

[26]             OJ L 136, 2.6.2010, p.1.

[27]             OJ L 364, 9.12.2004, p. 1.

[28]             OJ L 110, 1.5.2009,
pp. 30–36.

[29]             OJ L ..., ...., p. ...