Commission Recommendation on the principles applicable to the bodies responsible
for out-of-court settlement of consumer disputes
(98/257/CE)
THE COMMISSION OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Community and in particular
Article 155 thereof,
Whereas the Council, in its conclusions approved by the Consumer Affairs Council of
25 November 1996, emphasised the need to boost consumer confidence in the functioning
of the internal market and consumers’ scope for taking full advantage of the
possibilities offered by the internal market, including the possibility for consumers to
settle disputes in an efficient and appropriate manner through out-of-court or other
comparable procedures;
Whereas the European Parliament, in its Resolution of 14 November 1996 (European
Parliament Resolution on the Commission Communication “Action plan on consumer access
to justice and the settlement of consumer disputes in the internal market” of
14 November 1996, OJ No C 362, 2.12.1996, p. 275), stressed the need for such
procedures to meet minimum criteria guaranteeing the impartiality of the body, the
efficiency of the procedure and the publicising and transparency of proceedings and called
on the Commission to draft proposals on this matter;
Whereas most consumer disputes, by their nature, are characterised by a disproportion
between the economic value at stake and the cost of its judicial settlement; whereas the
difficulties that court procedures may involve may, notably in the case of cross-border
conflicts, discourage consumers from exercising their rights in practice;
Whereas the “Green Paper on the access of consumers to justice and the settlement
of consumer disputes in the single market” (COM(93) 576 final of 16.11.1993) was the
subject of wide-ranging consultations whose results have confirmed the urgent need for
Community action with a view to improving the current situation;
Whereas the experience gained by several Member States shows that alternative
mechanisms for the out-of-court settlement of consumer disputes – provided certain
essential principles are respected – have had good results, both for consumers and firms,
by reducing the cost of settling consumer disputes and the duration of the procedure;
Whereas the adoption of such principles at European level would facilitate the
implementation of out-of-court procedures for settling consumer disputes; whereas, in the
case of cross-border conflicts, this would enhance mutual confidence between existing
out-of-court bodies in the different Member States and strengthen consumer confidence in
the existing national procedures; whereas these criteria will make it easier for parties
providing out-of-court settlement services established in one Member State to offer their
services in other Member States;
Whereas one of the conclusions of the Green Paper concerned the adoption of a
Commission Recommendation with a view to improving the functioning of the ombudsman
systems responsible for handling consumer disputes;
Whereas the need for such a Recommendation was stressed during the consultations on the
Green Paper and was confirmed during the consultation on the “Action Plan”
Communication (Action Plan on consumer access to justice and the settlement of consumer
disputes in the internal market, COM(96) 13 final of 14.2.1996) by a very large majority
of the parties concerned;
Whereas this Recommendation must be limited to procedures which, no matter what they
are called, lead to the settling of a dispute through the active intervention of a third
party, who proposes or imposes a solution; whereas, therefore, it does not concern
procedures that merely involve an attempt to bring the parties together to convince them
to find a solution by common consent;
Whereas the decisions taken by out-of-court bodies may be binding on the parties, may
be mere recommendations or may constitute settlement proposals which have to be accepted
by the parties; whereas for the purposes of this Recommendation these various cases are
covered by the term “decision”;
Whereas the decision-making body’s impartiality and objectivity are essential for
safeguarding the protection of consumer rights and for strengthening consumer confidence
in alternative mechanisms for resolving consumer disputes;
Whereas a body can only be impartial if, in exercising its functions, it is not subject
to pressures that might sway its decision; whereas, therefore, its independence must be
guaranteed without this implying the need for guarantees that are as strict as those
designed to ensure the independence of judges in the judicial system;
Whereas, when the decision is taken by an individual, the decision-maker’s
impartiality can only be assured if he can demonstrate that he possesses the necessary
independence and qualifications and works in an environment which allows him to decide on
an autonomous basis; whereas this requires the person to be granted a mandate of
sufficient duration, in the course of which he cannot be relieved of his duties without
just cause;
Whereas, when the decision is taken by a group, equal participation of representatives
of consumers and professionals is an appropriate way of ensuring this independence;
Whereas, in order to ensure that the persons concerned receive the information they
need, the transparency of the procedure and of the activities of the bodies responsible
for resolving the disputes must be guaranteed; whereas the absence of transparency may
adversely affect the rights of the parties and cause misgivings as to out-of-court
procedures for resolving consumer disputes;
Whereas certain interests of the parties can only be safeguarded if the procedure
allows them to express their viewpoints before the competent body and to acquaint
themselves with the facts presented by the opposing party and, where applicable, the
experts’ statements; whereas this does not necessarily necessitate oral hearings of
the parties;
Whereas out-of-court procedures are designed to facilitate consumer access to justice;
whereas, therefore, if they are to be effective, they must remedy certain problems
associated with court procedures, such as high fees, long delays and cumbersome
procedures;
Whereas, in order to enhance the effectiveness and equity of the procedure, the
competent body must play an active role which allows it to take into consideration any
element useful in resolving the dispute; whereas this active role is all the more
important when, in the framework of out-of-court procedures, the parties in many cases do
not have the benefit of legal advice;
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;
Whereas the parties are entitled to be informed of the decisions handed down and of
grounds for these decisions; whereas the grounds for decisions are a prerequisite for
transparency and the parties’ confidence in the operation of out-of-court procedures;
Whereas in accordance with Article 6 of the European Human Rights Convention, access to
the courts is a fundamental right that knows no exceptions; whereas since Community law
guarantees free movement of goods and services in the common market, it is a corollary of
those freedoms that operators, including consumers, must be able, in order to resolve any
disputes arising from their economic activities, to bring actions in the courts of a
Member State in the same way as nationals of that State; whereas out-of-court procedures
cannot be designed to replace court procedures; whereas, therefore, use of the
out-of-court alternative may not deprive consumers of their right to bring the matter
before the courts unless they expressly agree to do so, in full awareness of the facts and
only after the dispute has materialised;
Whereas in some cases, and independently of the subject and value of the dispute, the
parties and in particular the consumer, as the party who is regarded as economically
weaker and less experienced in legal matters than the other party to the contract, may
require the legal advice of a third party to defend and protect their rights more
effectively;
Whereas, in order to ensure a level of transparency and dissemination of information on
out-of-court procedures in line with the principles set out in the Recommendation and to
facilitate networking, the Commission intends to create a database of the out-of-court
bodies responsible for resolving consumer disputes that offer these safeguards; whereas
the database will contain particulars communicated to the Commission by the Member States
that wish to participate in this initiative; whereas, to ensure standardised information
and to simplify the transmission of these data, a standard information form will be
made available to the Member States;
Whereas, finally, the establishment of minimum principles governing the creation and
operation of out-of-court procedures for resolving consumer disputes seems, in these
circumstances, necessary at Community level to support and supplement, in an essential
area, the initiatives taken by the Member States in order to realise, in accordance with
Article 129a of the Treaty, a high level of consumer protection; whereas it does not go
beyond what is necessary to ensure the smooth operation of out-of-court procedures;
whereas it is therefore consistent with the principle of subsidiarity,
RECOMMENDS that all existing bodies and bodies to be
created with responsibility for the out-of-court settlement of consumer disputes
respect the following principles:
I. Principle of independence
The independence of the decision-making body is ensured in order to guarantee the
impartiality of its actions.
When the decision is taken by an individual, this independence is in particular
guaranteed by the following measures:
the field of law, required to carry out his function;
independence of his action and shall not liable to be relieved of his duties without just
cause;
enterprise, he must not, during the three years prior to assuming his present function,
have worked for this professional association or for one of its members or for the
enterprise concerned.
When the decision is taken by a collegiate body, the independence of the body
responsible for taking the decision must be ensured by giving equal representation to
consumers and professionals or by complying with the criteria set out above.
II. Principle of transparency
Appropriate measures are taken to ensure the transparency of the procedure. These
include:
1. Provision of the following information, in writing or any other suitable form, to
any persons requesting it:
concerned, as well as any existing restrictions in regard to territorial coverage and the
value of the dispute;
requirements that the consumer may have to meet, as well as other procedural rules,
notably those concerning the written or oral nature of the procedure, attendance in person
and the languages of the procedure;
costs at the end of the procedure;
considerations of equity, codes of conduct, etc.);
binding on the professional or on both parties. If the decision is binding, the penalties
to be imposed in the event of non-compliance shall be stated, as shall the means of
obtaining redress available to the losing party.
2. Publication by the competent body of an annual report setting out the decisions
taken, enabling the results obtained to be assessed and the nature of the disputes
referred to it to be identified.
III. Adversarial principle
The procedure to be followed allows all the parties concerned to present their
viewpoint before the competent body and to hear the arguments and facts put forward by the
other party, and any experts’ statements.
IV. Principle of effectiveness
The effectiveness of the procedure is ensured through measures guaranteeing:
representative;
consideration any factors conducive to a settlement of the dispute.
V. Principle of legality
The decision taken by the body may not result in the consumer being deprived of the
protection afforded by the mandatory provisions of the law of the State in whose territory
the body is established. In the case of cross-border disputes, the decision taken by the
body may not result in the consumer being deprived of the protection afforded by the
mandatory provisions applying under the law of the Member State in which he is normally
resident in the instances provided for under Article 5 of the Rome Convention of 19 June
1980 on the law applicable to contractual obligations.
All decisions are communicated to the parties concerned as soon as possible, in writing
or any other suitable form, stating the grounds on which they are based.
VI. Principle of liberty
The decision taken by the body concerned may be binding on the parties only if they
were informed of its binding nature in advance and specifically accepted this.
The consumer’s recourse to the out-of-court procedure may not be the result of a
commitment prior to the materialisation of the dispute, where such commitment has the
effect of depriving the consumer of his right to bring an action before the courts for the
settlement of the dispute.
VII. Principle of representation
The procedure does not deprive the parties of the right to be represented or assisted
by a third party at all stages of the procedure.
THIS RECOMMENDATION is addressed to the bodies responsible for the out-of-court
settlement of consumer disputes, to any natural or legal person responsible for the
creation or operation of such bodies, as well as to the Member States, to the extent that
they are involved.
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