As the Department for Business Innovation & Skills succinctly puts it:
Alternative dispute resolution (ADR) refers to ways of resolving disputes between consumers and traders that don’t involve going to court. The government wants to encourage the development of ADR. Better ADR and easier access to it should also be good for all businesses committed to giving their customers the best possible service…
The regulations do not make participation in ADR schemes mandatory for traders. The regulations do require almost all businesses which sell directly to consumers to point the consumer to a certified ADR scheme – where they cannot resolve a dispute in-house – and declare whether or not they intend to use that scheme.
The ADR Regs
The Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015 (as amended) (ADR Regs) came into force in England and Wales on 1 October 2015 (ADR) and 9 January 2016 (ODR).
Regulation 19 of the ADR Regs imposes requirements on traders to provide information to consumers about dispute resolution. These requirements are in addition to the duties imposed in respect of court proceedings in England and Wales, where the court may impose sanctions if the parties fail (without good reason) to consider alternative dispute resolution or unreasonably refuse to participate, before (as well as after) the commencement of proceedings.
The ADR Regs apply to cross-border disputes and domestic disputes, i.e. disputes concerning contractual obligations arising from a sales contract or a service contract where, at the time the consumer orders the goods or services, the consumer is resident and the trader is established in the United Kingdom or the consumer is resident in another member State.
A trader is established in the UK: (a) if the trader is an individual, where the trader has his or her place of business in the UK; or (b) if the trader is a company or other legal person or an association of persons, where it has its statutory seat, central administration or place of business, including a branch, agency or any other establishment in the UK.
Information requirements for ADR are two-fold: the first applies to all traders established in the UK and the second applies only where such a trader is already subject to a legal requirement to use ADR (see below):
1. Where a trader is considering a complaint from a consumer relating to a sales contract or a service contract and has exhausted its internal complaint handling procedure, the trader must inform the consumer, on a durable medium (paper, email or other prescribed medium):
(a) that the trader cannot settle the complaint with the consumer;
(b) of the name and website address of an ADR entity or EU listed body that would be competent to deal with the complaint; and
(c) whether the trader is obliged, or prepared, to submit to an alternative dispute resolution procedure operated by an ADR entity or EU listed body.
2. Where, under an enactment, rules of a trade association, or term of a contract, a trader is obliged to use an alternative dispute resolution procedure provided by an ADR entity or EU listed body the trader must provide the name and website address of the ADR entity or EU listed body—
(a) on the trader’s website, if the trader has a website; and
(b) in the general terms and conditions of sales contracts or service contracts of the trader, where such general terms and conditions exist.Click here for a detailed list of approved ADR providers in the EU (including the UK).
1. An online trader must on its website—
(a) provide a link to the ODR platform; and
(b) state the online trader’s email address.
2. Where under an enactment, rules of a trade association, or term of a contract, an online trader is obliged to use an alternative dispute resolution procedure provided by an ADR entity or EU listed body, the trader must—
(a) provide a link to the ODR platform in any offer made to a consumer by email; and
(b) inform consumers of—
(i) the existence of the ODR platform; and
(ii) the possibility of using the ODR platform for resolving disputes.
The information in (b) must also be included in the general terms and conditions of online sales contracts and online service contracts of the trader, where such general terms and conditions exist.
Online marketplaces (i.e. online platforms which allow traders to make their products and services available to consumers), which bring together or facilitate online transactions between consumers and traders, must provide a link to the ODR platform on its website.
If a trader fails to comply with these information requirements, trading standards services can apply for a court order requiring the trader to comply. If a court order is obtained and not complied with, the maximum penalty is an unlimited fine and 2 years imprisonment.
How we can help
We can undertake a compliance check to see if you have complied with the Regulations and advise you on the changes required.
Sign up for our newsletter and get the latest to your inbox.