The concept of Ethical Business Practice & Regulation (EBP&R) is a new paradigm drawing on findings from behavioural science, responsive regulation, safety in business and integrity management, to create a practical and holistic approach.
Alternative Dispute Resolution (ADR) is an umbrella term for a wide variety of out-of-court mechanisms, for resolving disputes and providing redress. ADR is growing in popularity, as a valuable and cost-effective alternative to court proceedings. It is also a very important element of EU Consumer Policy. ADR generally involves one of the following three mechanisms:
ADR via independent Ombudsman Entities (or similar publicly validated intermediaries like “mediateurs”) covers a wide variety of resolution techniques developed to deal with consumer claims, typically involving complaints about a product or service in a particular market sector. This type of ADR has the advantage over the first type of ADR of being multi-functional: it can be used for resolving unitary or mass claims, which may be contractual or non-contractual, and which may deal with private or public law disputes, but its real added value lies in combining these complaint handling powers with market surveillance and claims management functions.
These include accumulated market knowledge and intelligence, early detection, monitoring, feedback loops to business, advice to business and consumers, regular market and claims management reviews and reports. This ADR mechanism is frequently deployed through on-line platforms providing improved impact and efficiency and often an excellent consumer interface.
Generally, the Consumer Ombudsman model exists with a wide range of roles within different civil justice systems of Member States. It can be found in regulated sectors, working closely with sectoral regulators, such as a Financial Ombudsman, Energy Ombudsman, Communications Ombudsman etc.
ADR via Regulatory Redress is a mechanism whereby a public enforcement body (typically the regulator of a market sector) has power to encourage or stimulate voluntary settlement of a mass claim as an alternative to imposing a fine, or other penalty, and/or in lieu of pursuing a court order for injunction or damages. It covers a wide range of consumer, public law and competition law issuesThe most advanced regulatory authorities now approach enforcement by identifying the root cause of the problem and agreeing actions to reduce the risk of reoccurrence of the problem. This mechanism seeks to ensure that such actions are implemented by the infringer and others and that redress/rectification is made by imposing a proportionate supervisory sanction.
Today, digitalisation allows the use of big data and machine learning, developing modern techniques which offer further improvements on satisfactory and speedy outcomes for consumers and traders.
ADR, has proved to be the most effective and efficient pathway to deliver redress for unitary and mass claims. It is usually much cheaper, simpler and more efficient than court process, whilst providing more predictable remedial results. Empirical research on an extensive database of case studies in European Member States has clearly demonstrated the superiority in delivering collective redress via ‘Regulatory Redress’ and Consumer ombudsmen, which far surpass any court-based mechanisms.
The table below provides a comparative overview of the different mechanisms against various criteria:
At EU level, various legislations have framed the application of those mechanisms:
The ADR Directive (2013/11/EU) on consumer disputes came into force on 21st of May 2013. Member States had to implement this directive into national law by 9th July 2015. The Directive provides alternative ways of resolving unitary contractual disputes between consumers and businesses across the EU. The directive also aims to simplify and standardise the current process of dispute resolution for consumers.
The Directive increases the quality and professionalism of ADR entities by requiring them to maintain up-to-date websites, which provide consumers with easy access to information on their procedures and enable them to submit complaints online.
The ADR Directive had been taken in conjunction with the complementary European Online Dispute Resolution (ODR) Regulation (524/2013), implemented by member states since January 2016. The ODR platform offers consumers and traders a single point of entry for the out-of-court resolution of online disputes. The ODR platform only uses dispute resolution bodies approved by their national governments meeting quality standards relating to fairness, transparency, effectiveness and accessibility.
The ODR platform is easy to use and takes users through the dispute resolution process in a step-by-step fashion. It provides translations in all EU languages and has inbuilt time limits for resolving complaints.
In terms of the use of public bodies, it is relevant to mention the consumer protection cooperation Regulation (EC No 2006/2004 or CPC regulation) which lays down a cooperation framework to allow national authorities from all countries in the European Economic Area to jointly address breaches of consumer rules when the trader and the consumer are established in different countries.
Collectively, the national authorities form a European enforcement network, the "CPC Network". The European Commission coordinates the cooperation between these authorities to ensure that consumer rights legislation is applied and enforced in a consistent manner across the Single Market.
Where do we stand
The European Commission concluded in its 2019 EU Justice Scoreboard that more Member States are promoting the voluntary use of alternative dispute resolution methods for private disputes continues compared to previous years.
The graph below illustrates this trend and Member States’ efforts in promoting the use of ADR through incentives, which may vary depending on the area of law 
Promotion of and incentives for using ADR methods
In its 2017 report evaluating the functioning of the European Online Dispute Resolution platform, the European Commission concludes that its first year of operation is very positive, with an impressive reach among consumers. The graph below shows the trend of complaints submitted from the launch of the ODR platform.
Complaints submitted per month
Lastly, the ongoing institutional discussions around the Representative Actions proposal represents an opportunity to introduce modern redress techniques. EJF welcomes the European Parliament’s position adopted in plenary on 26 March 2019 and which includes a provision stressing the possibility to establish national registries of collective redress actions which should be linked to the European Commission’s database for all communications between the CPC authorities.