JURIST Guest Columnist Anastasia Konina, an LL.M student at the University of Pittsburgh School of Law, discusses how due process rights should be applied in the case of consumer online dispute resolution…Recent years have witnessed the increasing privatization of enforcement institutions in several areas of European law, including consumer law. With the changes to the EU consumer protection law brought by the Regulation on Consumer Online Dispute Resolution (ODR Regulation) and the Directive on Consumer Alternative Dispute Resolution (ADR Directive), both adopted in 2013, the EU will be the first one to create an out-of-court dispute resolution system that can be used in buyer-to-consumer transactions. The ADR Directive will allow consumers to refer to private dispute resolution entities in the case of disputes involving different kinds of goods and services purchased online and offline. Disputes arising from online transactions will be referred to a Union-wide ODR platform, which will then transfer the case to an appropriate ADR entity. It is anticipated that the ODR platform will be launched in January 2016.

The supporters of using ODR have pointed out the following advantages of the new system: time and cost savings, greater control of the parties over the proceedings and convenience of the procedure. At the same time, the proposed system of consumer rights enforcement has been heavily criticized for a number of reasons, such as “putting efficiency above judicial scrutiny,” loss of public access, pressure due to general confidentiality of ADR and ODR proceedings and banning access to courts. While national judicial enforcement systems are increasingly losing their importance, the opponents of changes raise a general question concerning the legitimacy of the new “private” system of consumer rights enforcement and a more specific issue which relates to compliance of new mechanisms with the due process requirements. As was once noted by Dr. Jürgen Bast, “certain requirements of procedural due process are recognized in EU law as fundamental rights.” Therefore, Dr. Bast concludes that “recognition of fundamental rights as an integral part of the union legal order implies that the member states have to respect these rights when they act within the scope of EU law.” So when the member states are implementing the provisions of the ODR Regulation and the ADR Directive, they cannot derogate from certain due process requirements.

The primary sources of fundamental rights in the EU are the European Convention of Human Rights [PDF] and the EU Charter of Fundamental Rights. Article 6(1) of the Convention contains the following due process requirements that need to be followed in the determination of civil rights: independent and impartial tribunal, trial within a reasonable time, access to court, right to a public hearing and right to a fair hearing. Article 47 of the EU Charter of Fundamental Rights establishes a broader list of due process rights: right to a fair hearing, right to a public hearing, hearing within a reasonable time, independent and impartial tribunal, access to counsel and the right to defense and representation. As was pointed out by Jonathan Cooper of Doughty Street Chambers, “Article 47 draws no distinction between civil and criminal matters. All that is required to engage the Article is the violation of the rights and freedoms guaranteed by EU law.”

At the same time, the privatization and fragmentation of consumer rights enforcement is not merely a European, but an international trend. Several years before entry into force of the ADR Directive and the ODR Regulation, Professor Fabrizio Cafaggi noted that “[EU and US] are reshaping their global policies, redefining the balance between private and public enforcement.” The most representative of such “redefinitions” is UNCITRAL Working Group III sessions on the Draft Procedural Rules for Online Dispute Resolution for Cross-border Electronic Commerce Transactions. These draft rules are a collective attempt to create a comprehensive online dispute resolution mechanism for B2B (buyer to buyer) and B2C (buyer to consumer) disputes arising out of cross-border, low-value transactions conducted by means of electronic communication. The proceedings of the Working Group III show the differences that exist between various legal systems in their approaches to foundations, purposes and characteristics of the due process. These differences have fundamental roots because, as was noted by Samuel Issacharoff and Geoffrey Miller, “for countries steeped in the civil law tradition [most EU member states], the move away from centralized public enforcement is a sea change in legal structures.” So, what can be viewed from the European perspective as achieving a proper balance in due process standards is at the same time considered by the US lawyers an unfriendly intrusion of consumer legislation into freedom of contract. The resulting disagreement makes the creation of the comprehensive global dispute resolution system less feasible.

One of the main impediments to the creation of the uniform ODR procedural rules is the obligations under the European Convention on Human Rights that prevent the parties to the convention, including the EU, from making ODR binding for the consumers before the dispute has arisen. Binding ODR will violate the right to court access contained in Article 6(1) of the Convention. However, there seems to be no disagreement between all of the involved stakeholders that a global ODR system should be developed based on general due process principles, such as fairness, transparency, effectiveness and independence of the decision making body. Those principles can be adapted to local needs, and the differences in their interpretation are inevitable, for as was asserted by the Supreme Court in Mathews v. Eldridge, “‘due process,’ unlike some legal rules, is not a technical conception with a fixed content unrelated to time, place and circumstances.”

The creation of a “one size fits all” model for online resolution of disputes arising out of B2C transactions has proven to be a very challenging task on the level of EU, not to mention on the global scale. The analysis shows that even within the EU member states, there are different approaches towards a number of issues, such as the use of in-house arbitration procedures for ODR purposes, binding nature of the ODR entity’s decision and procedural rules which member states can choose to permit certified ODR providers to apply. The ODR Regulation states that “ADR entities to which a complaint has been transmitted through the ODR platform should…apply their own procedural rules.” At the same time, as was noted above, the EU is the pioneer in the field of creating a comprehensive ODR system for cross-border consumer transactions. Therefore, it is very likely that once the EU ODR system is fully implemented, a number of due process acquis communautaire will be imported by UNCITRAL into its draft rules.

Anastasia Konina plans to complete her LL.M in International and Comparative Law at the University of Pittsburgh School of Law in May 2015. She received a Bachelor of European and International Law in 2009 and her Master of European and International Law in 2011 from the Moscow State University of International Relations.

Suggested Citation: Anastasia Konina, Application of Due Process to Consumer Online Dispute Resolution, JURIST – Student Commentary, Feb. 12, 2015, http://jurist.org/student/2015/02/anastasia-konina-due-process-dispute-resolution.php.