Consumer protection: Council approves updated Alternative Dispute Resolution directive

The Council gave its final approval to a directive updating, simplifying and improving the existing framework for alternative dispute resolution. Alternative dispute resolution refers to out-of-court methods of resolving disputes between consumers and traders, usually with the help of impartial third parties.

The legal text adopted today aims to make alternative dispute resolution a more accessible and attractive option for resolving disputes arising from contractual agreements, including issues related to pre-contractual obligations. It will adapt the ADR framework to digital markets, strengthen the use of ADR in cross-border disputes and simplify ADR procedures for the benefit of all actors. In addition, the proposal will streamline reporting obligations and reduce the administrative burden.

ADR will now, under certain conditions, be an option for resolving disputes between consumers established in the EU and traders from third countries. In addition, traders will be obliged to respond within 20 days of being contacted by an ADR entity, and failure to respond will be considered as a refusal to participate in the process. The new Directive requires Member States to promote the participation of traders and consumers in ADR procedures and to place particular emphasis on sectors with a low rate of participation in ADR procedures or with a high volume of consumer complaints.

The Commission will develop and maintain a multilingual and user-friendly IT tool to facilitate the use of ADR in cross-border consumer disputes.

Next steps

The adoption of the first reading position is the last step in the Council’s adoption process. The text still has to be approved by the plenary of the European Parliament. Once adopted, the Directive will take effect 20 days after its publication in the Official Journal. Member states will then have 26 months to transpose the new rules into national law, and the rules will start to apply 32 months after publication of the directive in the Official Journal.

Context

In any commercial relationship, traders and consumers may have to resolve disputes (e.g. if a product or service is not delivered on time or in good condition, or if the consumer does not pay the full purchase price). With the development of online shopping, the number of disputes has increased considerably. The judicial resolution of disputes can take a long time, and also involves lawyers and substantial litigation costs. However, there are alternative ways of resolving these problems without going to court.

According to the Consumer Conditions Scoreboard 2023, 25% of consumers experience problems that they could complain about, but one third of them do not do so. As a result, only 300,000 admissible disputes are resolved through Alternative Dispute Resolution (ADR) each year in the EU.

The most recent EU legislation to regulate out-of-court redress for consumers was adopted in 2013 and has remained unchanged since then. On 17 October 2023, the Commission proposed a new package of measures to modernise and simplify ADR rules. The package included a Directive amending the Alternative Dispute Resolution Directive and a Regulation to close the online dispute resolution platform, which has seen less use than expected. The Regulation on the ODR platform was formally adopted on 19 November 2024.

Further information: European Council