Alternative dispute resolution for consumer disputes (Directive 2013/11/EU)

by Evripides Hadjinestoros


Directive 2013/11/EU of the European Parliament and of the Council of 21 May 2013 on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Directive on consumer ADR) («Directive») is the natural evolution of 98/257/EC Commission Recommendation of 30 March 1998 on the principles applicable to the bodies responsible for out-of-court settlement of consumer disputes (Text of EEA relevance) and 2001/310/EC Commission Recommendation of 4 April 2001 on the principles for out-of-court bodies for the consensual resolution of consumer disputes (Text with EEA relevance). It is the first legislation at European Union (“EU“) level to establish a common legal framework for the alternative resolution of consumer disputes.

The Directive aims to contribute to the achievement of a high level of consumer protection and the proper functioning of the internal market by ensuring that Consumers can voluntarily submit complaints against traders to ADR entities that provide independent, impartial, transparent, efficient, speedy, and fair alternative dispute resolution procedures. The concept of “voluntary” complaint was considered in the case Rampanelly by the Court of Justice of the European Union (“CJEU“). The “voluntary” nature of a dispute resolution system does not consist in the freedom of the parties to resort to the ADR process but in the fact that «the parties are in charge of the process and can organize it as they wish and complete it at any time». On this basis, it is permissible for a MS to create a system of mandatory submission of a complaint by a Consumer to an Alternative Dispute Resolution Entity (“ADR Entity“) as it does not prevent the parties from exercising their right to go to the Court.

However, it is noted that, although the MS have the freedom to do so, they are not obligated to force either Consumers or Traders to use ADR. The Directive however, obliges MSs to provide Consumers with the right to access ADR.

The importance and advantages of Alternative Dispute Resolution have been thoroughly discussed in the literature. In short, ADR offers speed, low cost, an opportunity for the parties to resolve their disputes away from outdated regulations and procedures, preserves the confidentiality of the information exchanged and does not torpedo the relationship between the parties to the extent that it would in a court procedure – which has been characterized by authors as primitive.

OPERATION OF ADR ENTITIES: The Directive’s scope is limited to some general rules for the operation of ADR Entities but it leaves the procedure used by them a matter for each ADR Entity.

There are four actors governing the operation of the Directive:

  • The Consumers
  • The Traders,
  • The ADR Entity,
  • The Competent Authority of the MS in which the ADR Entity is established. The competent authority assumes an assistive and regulatory

A complaint originates from a Consumer against a Trader. The Consumer first contacts the ADR Entity informing the ADR Entity that the complaint cannot be resolved with the Trader. The ADR Entity contacts the Trader asking them to attend (either online or in person) an Alternative Dispute Resolution process with the Consumer to resolve the dispute according to the method used by the ADR Entity in question. The ADR Entity may charge the Consumer for the management of the complaint and if the Trader agrees to approach the ADR Entity to resolve the dispute then a relevant charge is imposed on the Trader.

The process is voluntary for the Consumer in the sense explained above. If the dispute is resolved, then the parties may enter into a binding agreement. The role played by the ADR Entity depends on the process used. In general, the ADR Entity controls the process and that the person appointed to resolve the dispute proceeds independently, impartially, and expeditiously in resolving the dispute. These criteria are controlled by the fourth actor – the competent authority.

The European Union’s aim is to encourage Traders to use ADR – but not to force them to do so. This is left to the MS to decide.

LEVEL OF HARMONIZATION:  The above Directive is of minimal Harmonization since it does not affect the national legislation that makes it mandatory to participate in relevant alternative dispute resolution procedures.



2.1.             Where does the Directive apply?

In accordance with article 2, the Directive applies to procedures for the out-of-court resolution of domestic and cross-border disputes concerning contractual obligations stemming from sales contracts or service contracts between a trader established in the Union and a Consumer resident in the Union through the intervention of an ADR entity (“ADR Entity”) which proposes or imposes a solution or brings the parties together with the aim of facilitating an amicable solution. All disputes arising from any contracts are covered by the Directive with the exception of health services as well as secondary education services from public providers.

The Directive also sets requirements for someone to be recognized as an ADR Entity as well as requirements for recognition of ADR procedures, leaving however the MSs to establish rules that provide for a higher level of consumer protection.

CONDITIONS OF APPLICATION: In case C-75/16 it was stated that in order for the Directive to be implemented the following conditions must be met cumulatively:

«… firstly the procedure must have been initiated by a consumer against a trader concerning contractual obligations arising from sales or service contracts, secondly the procedure must comply with the requirements laid down in that directive and, in particular, in that respect, be independent, impartial, transparent, effective, fast and fair, thirdly that procedure must be entrusted to an ADR entity, that is to say, in accordance with Article 4(1)(h) of that directive, an entity, however named or referred to, which is established on a durable basis and offers the resolution of a dispute through an ADR procedure and which is entered on the list drawn up in accordance with Article 20(2) of Directive 2013/11, a list which is notified to the European Commission

CONSUMER AND TRADER: According to the Directive, the “Consumer” is any natural person who acts for purposes that do not fall within his commercial, business, craft or professional activity and the “Trader” is any natural or legal person, private or public, who acts , possibly through another person acting in his name or on his behalf, for purposes falling within the scope of his commerce, business, craft, or professional activity.

DOMESTIC AND CROSS-BORDER DISPUTES: The Directive covers domestic as well as cross-border disputes. “Domestic” are contractual disputes resulting from a sale or service contract if, at the time the goods or services are ordered by the Consumer, the Consumer resides in the Member State of establishment of the Trader.

The Directive applies only where the dispute arises from a contract between a Consumer and a Trader. With this in mind, the Member State or the Governmental Agencies or semi-Governmental Organisations can be considered Traders. This is also clarified by article 4(1)(b) of the Directive which states that “the Trader is any natural person, or any legal person irrespective of whether it is privately or publicly owned…».

Where there is no contract, there can be no resolution of the dispute on the basis of the provisions of the Directive – i.e. the dispute can be resolved by an ADR Entity which is not licensed under the provisions of the Member State implementing the Directive. For example, a civil dispute based on an accident does not fall within the provisions of the Directive. As a general rule, where the provision of services is “non-financial”, there is no financial consideration (i.e. it is provided without remuneration) with the result that as a rule no contract is implied and therefore, such arrangements are also not covered by the Directive.

A dispute arising from a contract can also be an attempt to renegotiate an existing contract, such as an attempt to restructure a credit facility. Whenever there is a dispute or impossibility of fulfilling a contractual obligation, it must be considered that it falls within the scope of the Directive – thus, an attempt to renegotiate the contract due to a failure to perform contractual obligations, arises from a contract.

WHERE THE TRADER IS ESTABLISHED: The Trader is established in the place of carrying out its business activity if it is a natural person or, in case it is a legal person, in the place of its registered office, its central administration or where it exercises its business activity as well as branches, agencies or other establishments.

WHERE IS THE ADR ENTITY ESTABLISHED: The ADR Entity is established if it is managed by a natural person, in the place where that person carries out its ADR activities. If the ADR Entity is a legal person or association of natural or legal persons, at the place where said legal person or association of natural or legal persons carries out their ADR activities or at the place of their registered office. If it is managed by an authority or other public entity, at the place of the registered office of that authority.

IMPORTANCE OF PLACE OF ESTABLISHMENT: The importance of the place of establishment of the Trader and the ADR Entity is that the procedure for resolution of the dispute initiated by the Consumer must begin (1) in the place where the Trader is established and (2) before an ADR Entity which is established in the place where the Trader is established.

That is, the place of establishment of the ADR Entity should be identical to the place of establishment of the Trader. Therefore, in contrast to Regulation 1215/2012 where the Consumer can file a lawsuit at the place where the Consumer is located, in relation to out-of-court dispute resolution cases, the Consumer can appeal to the ADR Entity where the Trader is established.

RELATION TO OTHER DIRECTIVES: Based on article 3, where there is a conflict, the Directive prevails over the provisions of other Directives which concern out-of-court resolution procedures initiated by a Consumer against a Trader.  However, for there to be a conflict, the provision of the directive being compared should provide less protection to the Consumer than that provided for by Directive 2013/11/EU. Where the directive being compared provides greater protection to the Consumer, it is not considered to be in conflict and the directive being compared prevails. The reason is that Directive 2013/11/EU is of minimum harmonisation, with the result that it is possible for a MS to provide more protection (even if this protection is derived from another EU Directive) rather than less.

Directive 2013/11/EU, however, does not prevail over Directive 2008/52/EC of the European Parliament and of the Council, of May 21, 2008, on certain matters of mediation in civil and commercial matters. The relationship between the two Directives was examined in the case Rampanelly. In this case, the CJEU decided that Directive 2008/52/EC prevails over Directive 2013/11/EU to the extent that the conflict between the two concerns cross-border issues. The reason is that Directive 2008/52/EC is limited to them – regardless of whether it enables MS to apply the Directive to internal mediation systems.


2.2.             Where does the Directive not apply?

The Directive does not apply to the following cases listed in article 2(2) of the Directive. These are the following:

  • procedures before dispute resolution entities where the natural persons in charge of dispute resolution are employed or remunerated exclusively by the individual trader, unless Member States decide to allow such procedures as ADR procedures under this Directive and the requirements set out in Chapter II, including the specific requirements of independence and transparency set out in Article 6(3), are met.
  • procedures before consumer complaint-handling systems operated by the trader.
  • non-economic services of general interest.
  • disputes between traders.
  • direct negotiation between the consumer and the trader.
  • attempts made by a judge to settle a dispute in the course of a judicial proceeding concerning that dispute.
  • procedures initiated by a trader against a consumer.
  • health services provided by health professionals to patients to assess, maintain or restore their state of health, including the prescription, dispensation and provision of medicinal products and medical devices.
  • public providers of further or higher education.

Regarding the above exceptions, it is important to note the following:

Firstly, the provisions of the Directive concern the obligations of traders vis-à-vis consumers and therefore, do not apply to proceedings initiated by traders against traders, traders against consumers or by consumers against consumers. The Directive, of course, does not prevent MSs from creating Bodies which deal with complaints from traders against consumers.

Secondly, a key pillar of the Directive is the independence of the Alternative Dispute Resolution Entities as well as the requirement of a lack of any form of conflict of interest of the persons responsible for resolving disputes. For this reason, procedures where the Consumer tries to resolve his dispute directly with the Trader, or complaint systems operated by the Trader, are excluded from the scope of the Directive, but also in cases where the persons responsible for resolving disputes are paid by the Trader. In relation to the latter case, MSs may permit such a procedure to fall within the scope of the Directive, given that the following cumulative requirements are met:

(a), the natural persons in charge of dispute resolution are nominated by, or form part of, a collegial body composed of an equal number of representatives of consumer organisations and of representatives of the trader and are appointed as result of a transparent procedure;

(b), the natural persons in charge of dispute resolution are granted a period of office of a minimum of three years to ensure the independence of their actions;

(c), the natural persons in charge of dispute resolution commit not to work for the trader or a professional organisation or business association of which the trader is a member for a period of three years after their position in the dispute resolution entity has ended;

(d), the dispute resolution entity does not have any hierarchical or functional link with the trader and is clearly separated from the trader’s operational entities and has a sufficient budget at its disposal, which is separate from the trader’s general budget, to fulfil its tasks.


When natural persons are paid exclusively by a professional organization or business association of which the Trader is a member, the MSs must ensure that a special budget is allocated which sufficient for the fulfillment of their duties – but this does not apply where there is an equal representation of representatives of the interests of the collegial body consumers and traders. In addition, where an ADR Entity consists of natural persons who participate in a collegial body, MS should ensure that the specific body (not the ADR Entity), perhaps includes a number of representatives of consumer and trader interests.

Thirdly, the Directive explicitly sets the role of the Court as separate from Alternative Dispute Resolution procedures. Therefore, the procedure before a Court cannot under any circumstances be considered as a procedure that falls within the scope of the Directive  – regardless of whether, for example, the judge tries to help the parties resolve their dispute by agreement.







ADR Entities must meet specific qualitative criteria provided for in the Directive and the Competent Authorities must ensure that these rules are met.

The Directive, although it states that it applies to institutional procedures – not ad-hoc, it does not mention the consequences where a Consumer and a business resolve disputes through an institution offering ADR services when that Center does not meet the requirements of the Directive.

It appears that such procedures do not lead to invalidity, but rather such Centers will not have a competitive advantage over others which are approved. For example, businesses will be referred by competent authorities to approved Centers (rather than non-approved) and will not be included in the EU Online ADR platform. Also, since they will not meet the quality requirements, this will act as a disincentive for a business and also for a Consumer to use the services of an ADR Entity especially if one takes into account that a procedure initiated through a licensed ADR Entity affects the statute of limitations.


3.1.              Basic Quality Requirements to be Fulfilled by an ADR Entity

Article 5 refers to the obligation of MSs to facilitate access by consumers to ADR procedures and that they should ensure that disputes covered by this Directive and which involve a trader established on their respective territories can be submitted to an ADR entity which complies with the requirements set out in this Directive. Member States shall ensure that ADR entities:

(a), maintain an up-to-date website which provides the parties with easy access to information concerning the ADR procedure, and which enables consumers to submit a complaint and the requisite supporting documents online;

(b), provide the parties, at their request, with the information referred to in point (a) on a durable medium;

(c), where applicable, enable the consumer to submit a complaint offline;

(d), enable the exchange of information between the parties via electronic means or, if applicable, by post;

(e), accept both domestic and cross-border disputes, including disputes covered by Regulation (EU) No 524/2013; and

(f), 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 in the Member State in which the ADR entity is established.


The above information is an important tool in the hands of the Consumer to be able to make a decision – e.g. to which ADR Entity to resolve its dispute or which Traders accept alternative dispute resolution. It is also important to mention the fact that the above information may be used as an advertisement for the Trader – e.g. to advertise that it deals with its customer complaints or that there are no complaints against it or, for example, that it resolves a high percentage of complaints.

MSs have the right to create additional ADR Entities that cover specific disputes for which there is no competent ADR Entity. An example of such Entities Financial ADR Entities that exist in each MS.

Also, MSs may allow ADR Entities to maintain or establish procedural rules which enable them to refuse to accept a particular dispute on specific grounds. These are the following:

(a), the consumer did not attempt to contact the trader concerned in order to discuss his complaint and seek, as a first step, to resolve the matter directly with the trader;

(b), the dispute is frivolous or vexatious;

(c), the dispute is being or has previously been considered by another ADR entity or by a court;

(d), the value of the claim falls below or above a pre-specified monetary threshold;

(e), the consumer has not submitted the complaint to the ADR entity within a pre-specified time limit, which shall not be set at less than one year from the date upon which the consumer submitted the complaint to the trader;

(f), dealing with such a type of dispute would otherwise seriously impair the effective operation of the ADR entity.


Where an ADR Entity is unable to accept a dispute, it shall notify both parties of the reasons for its decision not to accept it within three weeks of receipt of the complaint file.


3.2.              Natural Persons Responsible for the Resolution of Disputes

Based on Article 6, the MS must ensure the expertise, independence and impartiality of the natural persons responsible for ADR. They also ensure that ADR Entities have procedures in place that ensure that, in the event that there are circumstances which may affect the independence and impartiality of natural persons, then the said natural person is replaced by another, or the said natural person is removed from of the ADR process or the circumstances are disclosed to the parties and that natural person is permitted to continue the ADR process only if the parties have not objected, after being informed of the situation and of their right to object.

It is noted that where an ADR Entity is staffed by government employees, it is generally considered to be independent and impartial since as a general rule, government employees are considered independent since they are «representatives of both consumers’ and traders’ interests .

TRAINING OF NATURAL PERSONS: According to article 6(6) of the Directive, the ADR Entities must provide training to the natural persons who are responsible for ADR. The MSs, which designate the competent authorities, follow the training programs established by the ADR Entities. The above article is inextricably linked to article 6(1)(a) which provides that persons resolving disputes possess the necessary knowledge and skills in the field of ADR or judicial resolution of consumer disputes as well as basic knowledge of the law. It is important to note that natural persons do not need to be legal professionals – however, it is important that they have acquired knowledge in at least some areas of consumer law as well as ADR.

3.3.              Transparency

Each ADR Entity must publish on its websites upon request, on a fixed medium and by any other appropriate means, clear and easily understandable information on the following:

(a), their contact details, including postal address and e-mail address;

(b), the fact that ADR entities are listed in accordance with Article 20(2);

(c), the natural persons in charge of ADR, the method of their appointment and the length of their mandate;

(d), the expertise, impartiality and independence of the natural persons in charge of ADR, if they are employed or remunerated exclusively by the trader;

(e), their membership in networks of ADR entities facilitating cross-border dispute resolution, if applicable;

(f), the types of disputes they are competent to deal with, including any threshold if applicable;

(g), the procedural rules governing the resolution of a dispute and the grounds on which the ADR entity may refuse to deal with a given dispute in accordance with Article 5(4);

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

(i), the types of rules the ADR entity may use as a basis for the dispute resolution (for example legal provisions, considerations of equity, codes of conduct);

(j), any preliminary requirements the parties may have to meet before an ADR procedure can be instituted, including the requirement that an attempt be made by the consumer to resolve the matter directly with the trader;

(k), whether or not the parties can withdraw from the procedure;

(l), the costs, if any, to be borne by the parties, including any rules on awarding costs at the end of the procedure;

(m), the average length of the ADR procedure;

(n), the legal effect of the outcome of the ADR procedure, including the penalties for non-compliance in the case of a decision having binding effect on the parties, if applicable;

(o), the enforceability of the ADR decision, if relevant.


MSs have the obligation to ensure that the ADR Entities publish on their websites (or upon request, on a fixed medium or in any other way they deem appropriate) enough of the above information for the purpose of informing the public.

PROBLEM OF OVERLAPING OF DIFFERENT ADR ENTITIES COVERING WITH THE SAME SECTORS OF THE ECONOMY: One of the main problems created by the enactment of the Directive is the fact that there are several ADR Entities that cover the same sectors of the economy. To illustrate this point, it is important to consider the meaning of the acronym “ADR”. ADR means, “Alternative Dispute Resolution”, or otherwise “Adequate Dispute Resolution”. The word “adequate” is used to indicate the ability of the parties to make a sufficiently informed decision about the process to use so that the solution they find is mutually acceptable and beneficial. Although the Directive tries to set common rules for the operation of the ADR systems in the MSs, it does not try to reduce the confusion that may exist in the resolution of disputes where different Entities may be competent to deal with the same complaint. The result is an information overload and ultimately confusion for the Consumer as to which ADR Entity to use. Therefore, the dissemination of the above information, and in particular the relevant information regarding the types of disputes that ADR Entities are competent to consider, is important to avoid confusion to Consumers as to disputes being resolved by an ADR Entity and not by another.


3.4.              Efficiency and Fair Treatment

Article 8 of the Directive refers to the effectiveness of ADR Entities. According to this article, ADR Entities must meet the following requirements:

(a), the ADR procedure is available and easily accessible online and offline to both parties irrespective of where they are;

(b), the parties have access to the procedure without being obliged to retain a lawyer or a legal advisor, but the procedure shall not deprive the parties of their right to independent advice or to be represented or assisted by a third party at any stage of the procedure;

(c), the ADR procedure is free of charge or available at a nominal fee for consumers;

(d), the ADR entity which has received a complaint notifies the parties to the dispute as soon as it has received all the documents containing the relevant information relating to the complaint;

(e), the outcome of the ADR procedure is made available within a period of 90 calendar days from the date on which the ADR entity has received the complete complaint file. In the case of highly complex disputes, the ADR entity in charge may, at its own discretion, extend the 90 calendar days’ time period. The parties shall be informed of any extension of that period and of the expected length of time that will be needed for the conclusion of the dispute.


USE OF A LAWYER: Article 9 refers to the obligation of MSs to ensure that in ADR procedures there is fair treatment of the parties to the procedure. That is, that the parties have the possibility to express their views, that it is not necessary to use a lawyer or a legal advisor. The parties may also be represented by a third party at each stage of the proceedings or receive advice from an independent person – without the latter being a lawyer. In fact, it has been decided by the Court of Justice of the European Union that national rules cannot stipulate that the Consumer must be represented by a lawyer in an ADR procedure.

COMPLETION OF THE PROCEDURE: At the end of the procedure, the ADR Entity must notify the parties, in writing or on a fixed medium, of the outcome of the ADR procedure as well as its reasoning. The process is completed within 90 days. Whilst the 90 days, seem like a generous timeframe in sales of goods cases – especially in low-cost disputes, is likely to be considered short when compared to service contracts.

3.5.              Freedom to Commit to a Decision

SUGGESTED SOLUTION: Under the Directive, where a solution to the process is proposed (such as in a conciliation process) some peculiar rules apply. These are the following:

Firstly, the parties may withdraw from the procedure at any stage if they are not satisfied with the whole conduct of the procedure; they are informed of their right to withdraw before the procedure begins. In order to understand the above rule (which only applies if the procedure does not result in binding decisions), it is important to distinguish two cases:

The first is the case of starting a process and the second is the case of continuing it. It is permissible for a Consumer to initiate an ADR procedure when this is provided for by law. In fact, the MSs can impose sanctions (either directly or indirectly) on the Consumer in the event that he refuses to initiate such a procedure given that the following conditions are met: The process (1) is not binding on the parties, (2) does not materially delay the exercise of a remedy, (3) suspends the limitation period (4) causes no or minimal cost to interested parties (5) is not provided only electronically (6) provisional measures may be taken in exceptional cases where the urgency of the situation so requires (7) any sanctions provided for if the procedure is not used should not be excessive and burdensome.

Things differ where, in the event that the Consumer, while starting the process, wishes not to continue it. The second case is an inalienable right of the Consumer and he is not allowed to be adversely affected in case he makes such a decision. Case C-75/16 is illustrative of this. In that case the national legislation allowed the withdrawal from mediation only if the Consumer demonstrated reasonable grounds for his decision. It was ruled by the CJEU that the legislation was not compatible with the Directive.


As mentioned above, if national legislation required the Consumer to participate in mediation but gave him the right to terminate the process after the first meeting with the mediator, this would be permissible given that the aforementioned conditions are met.

Secondly, and related to the above, before the parties agree to a proposed solution, they are informed that:

(i), they have the choice as to whether or not to agree to or follow the proposed solution;

(ii), participation in the procedure does not preclude the possibility of seeking redress through court proceedings;

(iii), the proposed solution may be different from an outcome determined by a court applying legal rules.


Thirdly, the parties, before agreeing to or following a proposed solution, are informed of the legal effect of agreeing to or following such a proposed solution.

Fourthly, the parties, before expressing their consent to a proposed solution or amicable agreement, are allowed a reasonable period of time to reflect.

The above should be read with the caveat that it is permissible for a MS to decide that a Trader is required to take part in an ADR process and that a Trader is bound by the proposed solution. The same cannot apply to the Consumer.

BINDING DECISION: Based on Article 10, the MSs ensure that the agreement of a Consumer and a Trader to submit a complaint to an ADR Entity is not binding on the Consumer if it was concluded before the dispute arose and if it entails a deprivation of the Consumer’s right to appeal to the competent courts for the settlement of the dispute. Such is the case of a clause which refers to institutional arbitration (ie an ADR Entity). Where such a clause exists, the Consumer is not bound unless it agrees to arbitration after the dispute has arisen. Where an arbitration clause refers to ad hoc arbitration, it is subject to an unfairness review under the provisions of Council Directive 93/13/EEC of 5 April 1993 on unfair clauses in contracts concluded with Consumers.

As far as the Trader is concerned, if the national law provides that the solutions are binding on him, no specific acceptance is required – i.e. the only one who has the right to choose whether to take part in the process in which the solution is binding is the Consumer. It is noted that this does not negate the non-mandatory nature of the ADR.

Based on article 11, the MSs ensure that in ADR procedures where the solution is imposed on the Consumer, then the imposition of a solution is allowed only where the following conditions are met:

(a), in a situation where there is no conflict of laws, the solution imposed shall not result in the consumer being deprived of the protection afforded to him by the provisions that cannot be derogated from by agreement by virtue of the law of the Member State where the consumer and the trader are habitually resident;

(b), in a situation involving a conflict of laws, where the law applicable to the sales or service contract is determined in accordance with Article 6(1) and (2) of Regulation (EC) No 593/2008, the solution imposed by the ADR entity shall not result in the consumer being deprived of the protection afforded to him by the provisions that cannot be derogated from by agreement by virtue of the law of the Member State in which he is habitually resident;

(c), in a situation involving a conflict of laws, where the law applicable to the sales or service contract is determined in accordance with Article 5(1) to (3) of the Rome Convention of 19 June 1980 on the law applicable to contractual obligations, the solution imposed by the ADR entity shall not result in the consumer being deprived of the protection afforded to him by the mandatory rules of the law of the Member State in which he is habitually resident.

It is important to note that in relation to what is stated in article 11(1) is that reference is made to the laws of habitual residence of the Consumer and the Trader – to the extent that there are provisions that protect the Consumer. Based on the above provisions, the law of the MS which is applicable is that where the Consumer has his usual residence. As mentioned above, ADR procedures are filed in the MS where the Trader is located, in an ADR Entity in the Trader’s MS. The result is that, while ADR procedures aim to resolve a dispute between a Consumer and a Trader at a low cost, matters become more complex when provisions of the Consumer’s MS have to be applied. This is because the Consumer may have to present evidence from the MS in which he resides through an expert, etc.

PRESCRIPTION: According to article 12 of the Directive, MSs ensure that in proceedings the outcome of which is not binding, the limitation period is suspended. This means that at the time of commencement of the ADR procedure, the limitation period is suspended and continues to run at the end of the procedure. It is submitted that the time of commencement of ADR is a matter of the rules of procedure of the respective ADR Entity or based on the law of the MS concerning a particular procedure – for example mediation.

The Directive does not state what applies regarding the limitation period in cases where the outcome of the procedure is binding. In such a case, it seems that the matter rests with each MS. For example, where the procedure chosen is arbitration, one should refer to the Arbitration Laws or local Statutes of Limitation.



OBLIGATIONS OF TRADERS: Chapter III refers to the information and cooperation that the MSs must ensure between Traders and Consumers.

Specifically, Article 13(1) states that, MSs shall ensure that where Traders undertake or are required to use ADR Entities, they should inform Consumers of the ADR Entity or ADR Entities covered by those Traders.

This information includes the address of the website of the competent ADR Entity or ADR Entities and must be displayed in a clear, legible and easily accessible manner on the Trader’s website and, as referred to in Article 13(2), “if applicable“, in the general terms and conditions of the sales or service contracts between the Trader and the Consumer. It is important to say that this information cannot be given at the point of conclusion of the contract (e.g. with the general terms and conditions document). It is necessary to give them in advance.

MEANING OF “IF APPLICABLE“: What the Directive means by the words “if applicable” was examined in CJEU decision C-380/19 where a Trader who did not enter into contracts through its website nevertheless listed the general terms and conditions of a potential contract on its website. The question that arose was whether it had to include in these terms the details of the ADR Entity to which it belonged. The answer given by the CJEU was affirmative. That is, a Trader who is required to use ADR Entities, regardless if transacting through their website or not, if it decides to list its general terms and conditions on its website, then it must inform the Consumer about the ADR Entity to which it belongs through the general terms of the contract and not simply mention the details of the ADR Entity to which it belongs elsewhere of its website or in another document (e.g. an invoice). It is understood that this obligation also applies where the Trader enters into contracts through its website.

With reference to the above, the following conclusions can be drawn. First, a Trader who decides not to commit to using an ADR Entity does not have to inform Consumers about the ADR Entity that the Consumer must use. This may also act as a disincentive for a company to commit to the use of an ADR Entity, since additional obligations are born for the business, which should make sure that it informs the Consumers about the ADR Entity it is committed to using. The problem is magnified when one considers that a business may choose to work with an ADR Entity for some disputes but not for others – eg. which Consumers does it inform and which does it not? This also creates additional confusion for Consumers regarding the complaint process and how they will raise it. Finally, there is ambiguity as to exactly how the “commitment” for a Trader to use an ADR Entity is interpreted. Is an agreement between an ADR Entity and a Trader required, or is a declaration by a Trader that it will use an ADR Entity sufficient? Ultimately, all of these problems work against the ease of use that should characterize ADR.

Secondly, based on the above provision, regardless of whether the Trader decides to commit to using an ADR Entity or not, there are cases where either the use or the information requirements are mandatory (see for example Directive (EU) 2015/2302 article 7 (2)(g)71 and Regulation (EU) No. 524/2013, Article 14(1)). In such cases there is no choice for the Trader – it must inform the Consumer.

DIRECT SUBMISSION OF A COMPLAINT: An important provision is Article 13(3) which states that:

«Member States shall ensure that, in cases where a dispute between a consumer and a trader established in their territory could not be settled further to a complaint submitted directly by the consumer to the trader, the trader provides the consumer with the information referred to in paragraph 1, specifying whether he will make use of the relevant ADR entities to settle the dispute. That information shall be provided on paper or on another durable medium. »

This means that, in accordance with article 13(3), where the Trader cannot resolve a Consumer complaint through the Trader’s internal complaints procedure, there is an obligation under article 13(3) to inform the Consumer of the ADR Entity or ADR Entities covered, their address as well as their website on in paper form or other durable medium. For this provision, it has been said that a Consumer will be more receptive to receiving this information than at the initial stage of the contract. This is because the information provided under article 13(3) follows the dispute with the Trader – resulting in the Consumer being focused on how to resolve their dispute – which is why this provision has attracted significant criticism from businesses.

With that said, our opinion is that this provision poses a particular difficulty in complying by Traders but also in a way is gift without effect to the Consumer. This is because the Trader should, in the event that he has not committed to an ADR Entity, seek to find all the Entities to which it belongs, to write down their details and inform the Consumer, in all probability telling the Consumer at the end that “I do not wish to use any ADR Entity”. If one considers the inconvenience that a Consumer will undergo before an investigation or complaint against the Trader for violation of this provision arises, it is not difficult to conclude that this provision is problematic. In particular, a Consumer will first refer to the Traders to resolve his dispute. If the Trader does not respond, then the Consumer should contact the Trader a second time asking him to inform him about the ADR Entites to which the Trader belongs. If the Trader does not respond, the Consumer should approach the competent authority in the country of residence of the Trader to report the Trader for failing to inform the Consumer in accordance with Article 13(3) – and this, without considering the Consumer’s original contractual dispute.

OBLIGATIONS OF MEMBER STATES: Article 14 refers to the obligation of MSs to ensure that in cross-border contracts Consumers can obtain assistance in accessing the ADR Entity operating in the other MSs. This responsibility is assigned to their centers included in the Network of European Consumer Centers, consumer organizations or any other ADR Entity.

Based on article 15, the MSs have various obligations regarding the publication of various general information (such as the names of the ADR Entities and their websites, etc.). They must also ensure appropriate dissemination of information on how Consumers can have recourse to ADR procedures and encourage consumer organizations and professional bodies, both at Union and national level, to promote ADR Entities and their procedures and promote the use of ADR by professionals and Consumers.

According to article 16, MSs ensure that ADR Entities cooperate in the resolution of cross-border disputes and that they carry out regular exchanges of good practices, regarding the resolution of both cross-border and domestic disputes.

Article 18 states that each MS designates a competent authority which does the following:

  • It undertakes to collect various data from the ADR Entities (such as their name, their procedural rules, the fees imposed, the average length of the dispute resolution procedures, etc.).
  • It undertakes to evaluate whether an Entity can be considered an ADR Entity that falls within the scope of the Directive and whether it meets the specific requirements of the Directive. Then, based on its assessment, it compiles a list of all ADR Entities which includes information such as (contact details, fees they charge, language, types of disputes, etc.). Each competent authority shall publish on its website the consolidated list of ADR Entities referred to in article 20(4) providing a link to the relevant website of the Commission.

SANCTIONS: Based on article 21 of the Directive, the Member States must establish rules regarding the sanctions applied to the violations of the national provisions. Special mention is made in relation to article 13 of the Directive, which includes the obligation of Traders to inform Consumers about the ADR Entity or Entities they are covered by. Sanctions should be effective, proportionate and dissuasive.

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Evripides Hadjinestoros Lawyer
Evripides is a partner at a law firm and the founder of the Cyprus Center for Alternative Dispute Resolution. After completing his law degree, LLB at the Queen Mary University of London in 2009, he completed his master's degree in LLM corporate law at University College London. He graduated with Distinction. In 2016, Evripides published the book "Sale of Goods and Consumer Protection in Cyprus". He has taught and teaches extensively on issues related to commercial and consumer law at the European University of Cyprus.