Dear entrepreneurs, disputes with consumers do not have to end up in court

More than two weeks ago, the law on extra-judicial consumer dispute resolution came into force, designed to introduce a quick and inexpensive way of solving disputes, uniform throughout the EU – and will also be important for e-commerce. Over time we’ll see whether and how the new system will work.

The act on extra-judicial resolution of consumer disputes, which puts in order the system for the settlement of disputes arising from contracts concluded between consumers and businesses, has been in force for over two weeks. The new regulations also apply to e-commerce.

The act of September 23rd, 2016, on extra-judicial resolution of consumer disputes (the “Act”), in the scope of the regulation implements the Directive of the European Parliament and of the Council 2013/11/EU of May 21st, 2013, on alternative dispute resolution for consumer disputes and amending Regulation (EC) No. 2006/2004 and the 2009/22/EC Directive (the so-called Directive on ADR in consumer disputes). The aim of the Directive was to create a uniform system of extra-judicial consumer dispute resolution in the European Union. Poland was significantly late with the implementation of the Directive on ADR, the provisions of which should have been implemented by July 9th, 2015.

The main objectives of the reform

The Act applies to disputes between consumers residing in Poland or another EU Member State, and businesses established only in the territory of Poland. The provisions of the Act do not apply in particular to complaint proceedings, consumer complaints settled by a business, as well as disputes arising from contracts for the provision of health services or education.

The premise of the Act is the settlement of consumer disputes by allowing reconciliation of the positions of the parties to resolve a dispute, present the parties with proposals to solve a dispute and through the resolution of a dispute and imposing a settlement upon the parties. Imposing the settlement will be possible only if the parties were informed of the binding nature of the settlement, which is the result of the procedure and the consequences of failure to comply with such resolution and if agreed to be bound by such a settlement.

Non-judicial resolution of disputes is, as a rule, voluntary. Both the consumer and the business decide on the method of solving their dispute and may refuse to use this form of conflict settlement. The exception here is the procedure before the Financial Ombudsman, in which the business is required to participate.

Who will conduct the proceedings?

The proceedings will be conducted by special entities that fulfil the requirements of the Act and will be entered in the register kept by the President of the OCCP (“authorized entities”). The authorized entities will be created by business organizations in a particular industry or, e.g. by consumer organizations. The Chamber of E-Commerce in Poland is supposed to be granted the status of the authorized entity.

For selected sectors, the Act directly indicates the entities authorized to resolve disputes, which will operate at or within the structure of selected public bodies (e.g. The President of Office of Electronic Communications).

Time for disputes settled online

Initiation of proceedings will take place at the request of the consumer, and in certain situations also at the request of the entrepreneur. What is important, the application can be submitted over the Internet, and the proceedings can be carried out online. The authorized entity specifies in the regulations the deadline for submission of the application. It can not be longer than one year from the date on which the applicant has attempted to contact the other party to resolve the dispute.

The procedure, as a rule, will be free to consumers, and the “outcome of proceedings” in the case should be presented to the parties within 90 days from the date of receipt of the application. What is important, the initiation of proceedings interrupts the limitation period of the claim subject to the dispute. The period of limitation of legal proceedings does not run again until the investigation is completed.

Business’ obligations

The act imposes a number of obligations on business. First of all businesses who expressed their willingness to use the extra-judicial dispute resolution system in consumer cases and those who are required to do so by the law, are obliged to inform consumers about their competent authorized entity (including the address of the website of the authorized entity).

The Act provides that if the business fails to resolve the dispute with the consumer in the way the complaint is required to provide to the consumer on paper or on another permanent medium (!) the information about the competent authorized entity and whether it intends to take part in the extra-judicial settlement of consumer disputes, or if the entrepreneur refuses to participate in it. If the entrepreneur does not submit any statement, this is considered as  consent.

In addition, the legislature imposed an obligation on businesses to respond to consumer complaints within 30 days of its receipt (unless separate provisions provide otherwise).  Otherwise, it is deemed that the business  has agreed to the complaint.

Changes important for e-commerce

Businesses dealing with online sales have the same responsibilities as businesses  operating stationary locations.  In addition, they also have an obligation to put on their website a link to the platform for online dispute resolution (the ODR platform – Online Dispute Resolution). This is necessary even if the business does not agree to participate in the proceedings on the extra-judicial settlement of consumer disputes.

Why all this?

The new system is intended to provide consumers with a quick and inexpensive way of solving disputes by the parties with the appropriate level of knowledge and experience in this field. According to the EU legislator, uniform and well-functioning EU-wide ADR system is necessary to strengthen the consumer confidence in the internal market, including – in the area of e-commerce.

No obligation to create authorized entities by the employers’ organizations and consumer organizations may make the solutions introduced by the Act as “defunct”. The law has been in force for more than two weeks, yet the register of authorized entities kept by the President of the OCCP is empty. In this respect, at least in the initial period of the Act, a lot will depend on the initiative of trade organizations, which should promote alternative dispute resolution. The coming months should show how the new model is working.