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'
Date: 1999-03-10
Institutions: European Committee of the Regions
Subjects: consumer movement, consumer protection

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Official Journal of the European Communities

14.7.1999

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’

THE COMMITTEE OF THE REGIONS,

(1999/C 198/11)

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 Communi-
cation 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 un-
familiarity with legal language.

(1) COM(93/ 576 final of 16 November 1993.
(2) COM(96) 13 final of 14 February 1996.

The Committee also points out that,

1.3.
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.

Having established that the simplified court procedures
2.1.
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 dis-
cussed, without however interfering with existing national
court procedures.

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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 prelimi-
nary to court procedures, such as mediation. In some cases
other, alternative arrangements exist, e.g. arbitration.

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).

2.2.1.
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.

2.3.2.5.
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).

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

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.

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

Principle of liberty (to be guaranteed, inter alia, by
2.3.2.6.
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).

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:

Principle of independence of the mediating body
2.3.2.1.
(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).

2.3.2.7.
represented by a third party at all stages of the procedure.

Principle of representation — the right

to be

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 (1) the COR, agreeing
with the Commission’s assertion that the credibility of Euro-
pean 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 con-
sumer 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.

(1) Cdr 47/94 — OJ C 217, 6.8.1994, p. 29.

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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 protec-
tion and brought progress towards the achievement of a high
level of protection.

The internal market has brought advantages for
3.1.3.
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).

The Committee

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

approves

The Committee feels that, despite the efforts made at
3.2.2.
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 (1) — 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

(1) COM(95) 520 final.

dispute. Moreover, out-of-court disputes settlement mechan-
isms tend to be better able to adapt flexibly to individual cases
and thus to boost
those involved, as
the confidence of
has been impressively demonstrated by the success of the
international
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.

trade arbitration court. Moreover,

The strengthening of out-of-court disputes settle-
3.2.4.
ment 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 13 000,
using a standardized form.

In Germany commercial mediation and arbitration bodies have
been set up on the initiative of the corresponding economic
in some cases in cooperation with consumer
associations,
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).

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4. Specific comments

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.

4.1. The European consumer complaint form

Given that the single form proposed by the Com-
4.1.1.
mission 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 con-
cerned 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.

I

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
(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
the law, as
taken of progress towards approximation of

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 sys-
tem 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.

The COR agrees that it is essential that out-of-court
4.2.2.
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.

The COR considers that the objective should on no
4.2.3.
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 necess-
ary 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.

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In particular, existing, successfully operating national or local
legal advice bodies, like the ‘O¨ ffentliche 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.

the Committee recommends that

4.2.5. Moreover,
in
future, consumer associations at all levels, dedicated to defend
collective interests, under procedures for out-of-court settle-
ments, 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.

Brussels, 10 March 1999.

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.

The creation of an out-of-court consumer dispute
5.2.
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 inte-
gration.

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.

The President

of the Committee of the Regions

Manfred DAMMEYER