Opinion of the Committee of the Regions on the "Communication from the Commission on the out-of-court settlement of consumer disputes and the Commission recommendation on the principles applicable to the bodies responsible for out-of-court settlement of consumer disputes"

(1999/C 198/11)

THE COMMITTEE OF THE REGIONS,

having regard to the Communication from the Commission on the out-of-court settlement of consumer disputes and the Commission recommendation on the principles applicable to the bodies responsible for out-of-court settlement of consumer disputes COM(1998) 198 final of 30 March 1998;

having regard to the decision of its Bureau of 15 July 1998, in accordance with the fourth paragraph of Article 198c of the EC Treaty, to draw up an opinion on the subject and to instruct Commission 5 for Social Policy, Public Health, Consumer Protection, Research, Tourism to carry out the preparatory work;

having regard to the opinion (CdR 441/98 rev. 1) (rapporteur: Mr von Plottnitz) adopted by Commission 5 on 26 January 1999,

at its 28th plenary session on 10 and 11 March 1999 (meeting of 10 March) adopted the following opinion.

1. Introduction

On the basis of the consultations on the Green Paper on Consumer access to justice and the settlement of consumer disputes in the single market(1) and the action plan which followed(2) it, the Commission has now issued a Communication on the out-of-court settlement of consumer disputes and a Recommendation on the principles applicable to the bodies responsible for out-of-court settlement of consumer disputes.

1.1. The Commission notes that the body of Community consumer law has increased substantially with the adoption of corresponding legal measures. Moreover, the Member States have also adopted a broad range of laws - in both harmonized and not yet approximated areas - granting consumers specific rights.

1.2. However, it also notes shortcomings throughout the Community with regard to the effective exercise of legal rights. A consumer seeking justice in the courts faces the following obstacles:

- the cost of legal consultation and representation, court fees and the cost of expert opinions,

- the duration of the legal proceedings,

- psychological barriers arising from the complexity and formalism associated with court procedures and unfamiliarity with legal language.

1.3. The Committee also points out that, if things are complex enough in national disputes, they are even more complicated when more than one country is involved. In general the proceedings are too long drawn-out and their cost excessive when compared with the limited value of the dispute. The consequence is that many consumers do not try to assert their rights.

2. Possible solutions

Three complementary approaches to a solution are proposed:

- the simplification and improvement of court procedures

- the improvement of communication between consumers and professionals

- the creation of out-of-court procedures for the settlement of consumer disputes.

2.1. Having established that the simplified court procedures for minor disputes introduced in most Member States differ greatly, the Commission turns in its proposal to the out-of-court settlement of consumer disputes. This is to be welcomed, as improved access for consumers to the law and improved communication between professionals and consumers is discussed, without however interfering with existing national court procedures.

2.2. With a view to the possibility of the introduction of out-of-court procedures, the Commission notes that there exist at present in Europe a variety of out-of-court mechanisms specifically intended for the settlement of consumer disputes. In some cases these procedures are complementary or preliminary to court procedures, such as mediation. In some cases other, alternative arrangements exist, e.g. arbitration.

2.2.1. The Commission also points out that out-of-court procedures also need to offer certain minimum guarantees of "good justice" and to reinforce consumers' confidence in these systems.

2.3. In its Communication the Commission therefore proposes two initiatives aimed at improving existing consumer access to the law, which is at present unclear to citizens.

2.3.1. First, a European claim form for consumers is presented, aimed at improving communication between consumers and professionals with a view to settling disputes swiftly and amicably.

If the problem cannot be solved in this way, the possibility is considered of establishing a procedure whereby out-of-court proceedings could be initiated by simple lodgement of the form. The form, which has been drawn up following prior consultations with the Member States, is intended to guide and orientate consumers in formulating their claims. It will initially be a two-year pilot project.

2.3.2. Secondly, the principles for the operation of out-of-court bodies dealing with the settlement of consumer disputes, put forward in the Commission recommendation, are to be established.

The recommendation is concerned exclusively with procedures which, no matter what they are called, lead to the settling of a dispute through the active intervention of a third party, who proposes or imposes a solution.

The Commission lays down the following principles:

2.3.2.1. Principle of independence of the mediating body (to be guaranteed, inter alia, by qualifications, a mandate of sufficient duration and lack of any personal connection with the parties).

2.3.2.2. Principle of transparency of the procedure (to be guaranteed, inter alia, by information requirements with regard to the remit and territorial jurisdiction of the out-of-court disputes settlement body, the procedural rules to be observed, costs, the legal status of the decision, and by the publication of periodic reports on decisions).

2.3.2.3. Adversarial principle.

2.3.2.4. Principle of effectiveness (to be guaranteed, inter alia, through the right but not the obligation to use a legal representative, a free or low-cost procedure, rapidity, and an active role for the mediating body in guiding the procedure).

2.3.2.5. Principle of legality (to be guaranteed, inter alia, by compliance with the mandatory provisions of the law of the state in which the body is established and the requirement to give reasons for the decision).

The COR considers it necessary to specify that the decisions of the out-of-court disputes settlement body are not only fully in accordance with the law, but also with equity, insofar as this is desired by the parties involved.

2.3.2.6. Principle of liberty (to be guaranteed, inter alia, by ensuring that the consumer is not deprived of his/her right to take legal action notwithstanding any commitment entered into prior to the materialization of the dispute).

2.3.2.7. Principle of representation - the right to be represented by a third party at all stages of the procedure.

3. General comments

3.1. The importance of consumer protection for citizens in the internal market

3.1.1. In its Opinion of 17 May 1994 on the Green Paper on access of consumers to justice and the settlement of consumer disputes in the Single Market(3) the COR, agreeing with the Commission's assertion that the credibility of European construction is at stake in the question of consumer protection, stated that the internal market would function properly only if European citizens had sufficient confidence in it, knowing that any disputes could be resolved swiftly and effectively.

The Committee also expressed the view that in the internal market consumer protection had taken on a new "Community" dimension. Against this background and in the light of uncertainty as to the effectiveness of the protection of consumer rights, the Committee of the Regions called on the Commission to treat consumer redress and consumer disputes settlement as a matter of priority, and in so doing to make full use of the opportunities created by Article 129a of the EC Treaty.

3.1.2. In this context it should be pointed out that the Maastricht Treaty and the Amsterdam Treaty (via the new Article 153) have progressively strengthened consumer protection and brought progress towards the achievement of a high level of protection.

3.1.3. The internal market has brought advantages for consumers, but particularly also for business people, and this is to be welcomed. The Committee of the Regions believes that, within the European internal market, consumers need to be able to rely upon an essentially uniform out-of-court settlement procedure. Consumers and the associations and organizations representing them also need to be more familiar with the options available for both litigation and out-of-court settlements. It would also be useful for businesses to endorse out-of-court settlement arrangements as an indication of the quality of their services.

3.2. Examination in the light of the second and third paragraphs of Article 3b of the EC Treaty

With a view to preserving the powers of the regional and local authorities, both the European consumer claim form and the principles governing the out-of-court dispute settlement bodies should be examined in the light of the second and third paragraphs of Article 3b of the EC Treaty (subsidiarity and proportionality principles).

3.2.1. The Committee approves the Commission's approach of making the proposed measures voluntary, and in particular that of establishing a two-year pilot project.

3.2.2. The Committee feels that, despite the efforts made at Community level over the last few years - examples being the Directive of 19 May 1998 on Injunctions for the protection of consumers' interests or the Proposal for a Directive on the sale of consumer goods and associated guarantees(4) - the body of Community law is not yet sufficiently developed to make it possible to speak of an equal level of protection for consumers in the Member States. On the other hand, the Committee reiterates the view it expressed in relation to the green paper that disparities in national consumer protection legislation are an expression of the rich cultural diversity of Europe's national and regional traditions, which should in principle be respected.

3.2.3. Against this background, the Commission's basic intention in submitting the Communication, to stress and promote the opportunities for out-of-court settlement of disputes, is unreservedly welcomed. All the more so as, in the COR's view, the costs incurred and court time spent on a significant proportion of national and above all cross-border legal disputes are now out of proportion to the value of the dispute. Moreover, out-of-court disputes settlement mechanisms tend to be better able to adapt flexibly to individual cases and thus to boost the confidence of those involved, as has been impressively demonstrated by the success of the international trade arbitration court. Moreover, specific regional and local conditions can also be taken into account, such as the structure of supply and demand for goods and services of various kinds.

3.2.4. The strengthening of out-of-court disputes settlement proposed by the Commission is in line with procedures being discussed, or actually implemented, in the Member States.

Thus in Denmark, Sweden and Finland most consumer disputes are dealt with by consumer complaints committees with official status; decisions are taken in accordance with a written procedures the details of which are laid down by law.

Belgium and the Netherlands have disputes commissions, which also mainly operate a written procedure, and the decisions of which are binding on parties which have submitted to the procedure.

In the United Kingdom and Ireland, on the other hand, there are private ombudsmen, working in the banking and insurance sectors for example as mediators and subject to certain minimum requirements.

In Spain a special arbitration procedure ("sistema arbitral del consumo") has existed for consumer matters since 1993; arbitration centres are chaired by an official and represent both parties to the dispute; the centres' rulings are binding.

In France there is a simplified complaints procedure via the "tribunal d'instance" for disputes valued at up to FF 13000, using a standardized form.

In Germany commercial mediation and arbitration bodies have been set up on the initiative of the corresponding economic associations, in some cases in cooperation with consumer association bodies. Bodies of various kinds exist, such as those with a legal mandate to mediate (e.g. craft chambers), guild-based bodies operating within a given sector (e.g. motor vehicle trade arbitration bodies), consumer bodies offering mediation and advice (e.g. consumer counselling on faulty goods), and partnership-based bodies involving associations from both sides (e.g. rent mediation bodies).

4. Specific comments

4.1. The European consumer complaint form

4.1.1. Given that the single form proposed by the Commission is intended to enable the consumer to formulate his/her complaint more precisely and thus, via constructive dialogue, to contribute to an amicable settlement of the dispute, it is therefore, the COR feels, a welcome development that the Commission, in contrast to the intention expressed in its action plan, is no longer proposing the use of a standardized form for the initiation of necessary legal proceedings in the absence of any response from the other party to the dispute. The approach of restricting use of the form to the initiation of out-of-court proceedings and leaving it to the parties concerned to decide whether the form can be used to settle the dispute is to be welcomed.

4.1.2. It should however be borne in mind that consumer disputes are a complex field, and that in individual cases the value of a standardized, schematic presentation of the circumstances or of the consumer's claim may be doubtful.

Closer examination of the form reveals that the consumer is required to tick a number of boxes, e.g. boxes 5, 6, 7, 26 and 27 in part I (problems encountered) relating to proper performance of the contract and boxes 36, 39 and 45 in part III (request by the consumer) relating to redress, which might be a source of uncertainty to the claimant, particularly if he/she is not well versed in economic or legal matters. This is all the more true, when one considers that attention is drawn in the instructions for completing the form to the time limit for the submission of claims. This is a necessary warning and is to be welcomed, but it might mean - particularly in view of the need to determine the system of national law applicable to a cross-border dispute - the claimant needing competent legal advice even at this stage. Advice might be needed on meeting the time limit for the claim, which for example in Germany is six months from the date of delivery of the goods in accordance with paragraph 477 of the civil legal code (BGB), or on the appropriateness of any solution or compromise proposed by the other side, in the light of the law. The aim should be for national or regional consumer bodies which supply the claim forms also to provide the legal advice required to complete these.

4.1.3. Against this background, the COR strongly supports the proposed two-year trial period, to provide an opportunity to assess the operation and effectiveness of the form on the basis of the experience gained. Account will also need to be taken of progress towards approximation of the law, as referred to in the Directive on the sale of consumer goods and associated guarantees mentioned above. However, these arrangements do not permit the consumer to propose, to the professional, an out-of-court solution to the conflict, separately from an amicable settlement.

4.2. The principles governing bodies responsible for the out-of-court settlement of consumer disputes

4.2.1. Given that an out-of-court disputes settlement system operating throughout the internal market must at least have the beginnings of a homogeneous structure, if it is to perform its function, the COR wholeheartedly supports the Commission's proposal to simplify and approximate out-of-court procedures by drawing up certain minimum criteria at European level. The application of common principles to out-of-court disputes settlement and to the bodies operating these procedures is in principle to be welcomed as a useful contribution to the creation of an environment conducive to the settlement of intra-Community consumer disputes, all the more so as these options will neither bar the consumer's way to the courts nor make access more difficult.

4.2.2. The COR agrees that it is essential that out-of-court disputes settlement bodies be independent. From this point of view, these should be assessed in line with the principle of participation, and "sectoral" mediation bodies which fail to comply with this principle should be rejected. The COR considers it essential, not least in order to ensure that decisions are accepted, that the membership of mediation and arbitration bodies include representatives of the three main players on the market: consumer associations, associations representing business, and the government; furthermore the bodies should be chaired by an independent and legally qualified person. Moreover, to ensure that the principle of liberty is adequately guaranteed, particularly for the consumer, it should be ensured in implementing the recommendations that sufficient time is allowed for study of the result of mediation.

4.2.3. The COR considers that the objective should on no account be to remove the dispute settlement mechanisms already in place in the Member States and to replace them with new, standardized institutions. Rather, the recommended minimum standards should be used to improve where necessary the quality of the out-of-court dispute settlement bodies existing in the regions and local areas in line with the Commission's proposals. The Committee feels that this is the best way to ensure that local and regional conditions continue to be appropriately taken into account in future and that existing resources are used as efficiently as possible in the interests of consumers.

In particular, existing, successfully operating national or local legal advice bodies, like the "Öffentliche Rechtsauskunfts- und Vergleichsstelle" in Hamburg and Bremen, should not be affected.

4.2.4. The Commission's efforts to establish a central database in the interests of greater transparency and of the widest possible dissemination of out-of-court dispute settlement mechanisms are to be welcomed.

In line with one of the measures for implementing the principle of transparency established by the Commission, and in order to standardize these procedures within the EU, they (the data banks) must permit the dissemination of and provision of information about the procedural rules governing bodies responsible for out-of-court settlements of disputes, and about the decisions taken by such bodies, by making such information available to the Member States with financial support from the Community; the privacy of the parties involved must be preserved.

4.2.5. Moreover, the Committee recommends that in future, consumer associations at all levels, dedicated to defend collective interests, under procedures for out-of-court settlements, should be involved; this covers not only those who represent the consumer, but also those who defend the individual interests of the vast number of consumers affected by identical consumer relations within the European internal market.

5. Conclusions

5.1. The COR welcomes the Commission proposal but stresses that this initiative should initially - as proposed by the Commission - be implemented as a two-year pilot project.

5.2. The creation of an out-of-court consumer dispute settlement procedure in the internal market will increase the transparency of the citizens' rights arising from the internal market and help boost public support for European integration.

5.3. The COR also considers that the objective of further measures to promote consumer access to justice should not be to replace the dispute settlement mechanisms already in place in the Member States with new European bodies. Rather, the aim should be to bring existing bodies into line with the European minimum standards already drawn up or to be drawn up.

5.4. Finally, the COR considers that the proposals for the out-of-court settlement of disputes contained in the Commission communication should receive suitable support, including financial support. To this extent, the COR is glad that the Proposal for a European Parliament and Council Decision establishing a general framework for Community activities in favour of consumers, which, inter alia, provides financial support for the consumer policies of the Member States was adopted in December 1998. It would be a good thing if the corresponding consumer policies were to be rapidly implemented.

Brussels, 10 March 1999.

The President

of the Committee of the Regions

Manfred DAMMEYER

(1) COM(93/576 final of 16 November 1993.

(2) COM(96) 13 final of 14 February 1996.

(3) Cdr 47/94 - OJ C 217, 6.8.1994, p. 29.

(4) COM(95) 520 final.