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DG SANCO policy on ADR and Redress

DG SANCO is pursuing a policy to improve ADR in Europe as the main basis for consumer redress.This is a dramatic change from the original policy of court based remedies and SANCO's current policy is close to EJF recommendations.

  1. Background
  2. Current developments

Background

DG SANCO began a project on consumer redress in 2007, led by the Commissioner for Consumer Affairs, Mrs Kuneva. SANCO's approach was originally based on collective litigation, but not least as a result of EJF's advocacy - SANCO moved to a policy based on ADR.

In May 2009, SANCO published a discussion paper prior to a public hearing later that month . The paper listed 5 options, only one of which involved court based mechanisms. In December 2009, SANCO published a study on ADR in Europe, the main conclusions of which were:

  • 750 ADR schemes relevant for business-to-consumer disputes were identified in Member States, of which only about 60% are notified to the European Commission.
  • The study confirmed the high diversity of ADR mechanisms, not only across the European Union, but also within Member States with varying public and private schemes.
  • ADR schemes are low-cost and quick alternative for consumers for settling of disputes with businesses.
  • ADR schemes have limited experience with collective alternative dispute resolution. Only a few schemes provide representative collective procedures.
  • The results of the study indicated the difficulty for ADR schemes and other stakeholders in understanding which of the two Commission Recommendations on ADR ( Recommendation 98/257/ED and Recommendation 2001/310 EC) applies to a specific scheme. Many ADR schemes that lead to an arbitration decision also have a mediation stage.
  • Many of the schemes investigated apply best procedural practices that could be shared with others and these could take the form of the EU-wide guidelines or more formal industry standards to be developed by an appropriate body and implemented into national guidelines or standards.

Please see link to this study.

In June 2011, a follow-up study was published on cross-boarder ADR (click here for link).

Under the new Barosso Presidency, which began in 2010, Mr John Dali became the Commissioner responsible for SANCO. In a meeting with Mr. Dali in March 2010, EJF was told that SANCO would be focusing on ADR is the basis of their policy.

At the end of 2010 SANCO launched a consultation on ADR to which EJF made a detailed submission in March 2011 (Click here to see EJF's response, the first few pages of which are a summary if EJF's position).  

Current Development

In April 2011, SANCO organised a Public Hearing on ADR in the European Parliament. Professor Hodges of Oxford University was one of the experts invited to address the Hearing.

In June 2011, SANCO published a feed back report on the ADR consultation showing that virtually all stakeholders agreed broadly on support of ADR.

SANCO has announced that it will prepare two new legislative proposals late in 2011. The first will be a framework Directive aimed at supporting the development and use of ADR in Europe. SANCO understands that there is no oversize-fits-all measure that can be imposed on Member States. Instead it intends to identify outcomes and principles that should be adopted by Member States.

The second proposal will be a Regulation on "online ADR": EJF will of course comment on these proposals when they are published. EJF has also commented on the draft Parliamentary own initiative reports on ADR (click here). The JURI Committee has the lead role for ADR. Their draft report was finalized on July 7 and will be presented to a plenary session of Parliament in September.

EJF's main concern is that which ADR is supported, Parliament and others empress the concern that without the "big stick" of collective litigation, ADR will not be used. EJF is arguing strongly against this view, which is not a reflection of responsible corporate governance.