Community law (including the Brussels and Rome Conventions as described above) sets certain minimum standards for consumer dispute resolution procedures, which are described as follows in the Commission's "Recommendation for out-of-court settlement of consumer disputes":
Whereas the out-of-court bodies may decide not only on the basis of legal rules but also in equity and on the basis of codes of conduct; whereas, however, this flexibility as regards the grounds for their decisions should not lead to a reduction in the level of consumer protection by comparison with the protection consumers would enjoy, under Community law, through the application of the law by the courts...
This suggests that certain basic procedural safeguards that apply in the court system (such as independence of the decision-maker, transparency of the process, etc.) must also be respected in ADR procedures. Furthermore, the Recommendation strongly suggests that there are legal limits on the ability of any ADR system to foreclose access to the court system by consumers.5
The "Council Directive 93/13/EEC of 5 April 1993 on Unfair Terms in Consumer Contracts" also contains important restrictions on the use of ADR with consumers. In particular, under Art. 3 of the Directive, Member States may provide that contract clauses are presumptively unfair which exclude or hinder "the consumer's right to take legal action or exercise any other legal remedy, particularly by requiring the consumer to take disputes exclusively to arbitration not covered by legal provisions, unduly restricting the evidence available to him or imposing on him a burden of proof which, according to the applicable law, should lie with another party to the contract." It is unclear what is meant by "arbitration not covered by legal provisions", but presumably this means that any ADR system which forecloses a consumer's ability to go to court must provide legal safeguards similar to those applicable in the court system. The "Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997" (the "Distance Selling Directive") also grants the consumer certain non-derogable rights which could limit the use of standard contracts containing ADR clauses in electronic commerce, such as the right to withdraw from distance contracts within seven working days of their conclusion.6
Of fundamental importance for the legal status of ADR in Europe will be the "Directive of the European Parliament and of the Council on certain legal aspects of Information Society services, in particular electronic commerce, in the Internal Market" (the "E-Commerce Directive"), the "Common Position" of which was published on February 28, 2000. Article 17 of the E-Commerce Directive (entitled "Out-of-court dispute settlement") contains the following provisions:
- Member States shall ensure that, in the event of disagreement between an Information Society service provider and the recipient of the service, their legislation does not hamper the use of out-of-court schemes, available under national law, for dispute settlement, including appropriate electronic means.
- Member States shall encourage bodies responsible for the out-of-court settlement of, in particular, consumer disputes to operate in a way which provides adequate procedural guarantees for the parties concerned.
- Member States shall encourage bodies responsible for out-of-court dispute settlement to inform the Commission of the significant decisions they take regarding Information Society services and to transmit any other information on the practices, usages or customs relating to electronic commerce.
As it is still subject to final approval and implementation into national law, it is unclear if the E-Commerce Directive will significantly improve the legal status of ADR mechanisms for electronic commerce in Europe.