The European Union is continuing its efforts to create a high level of consumer protection. The ADR Directive (2013/11/EU) and Regulation No. 524/2013 require member states to establish an out-of-court dispute resolution system for online commerce.
The German government has met this requirement by enacting the Consumer Dispute Resolution Act [Verbraucherstreitbeilegungsgesetz], which regulates the licensing and operation of conciliation boards, as well as companies’ duties.
Since 2016, the European Union has operated an online dispute resolution platform in which consumers can lodge complaints in connection with online transactions. As of April 2016, business owners who conclude online agreements with consumers have been required to make disclosures using this platform by providing their e-mail address as well as a link from the platform to an easily accessible page of their website.
All companies which have yet to comply with this requirement are urgently advised to do so as soon as possible. We would be glad to provide the relevant link as well as further information. To expedite the process, the Ministry of Justice provides web banners for this purpose at the following link: www.bmjv.de/odr-banner.
These disclosure requirements will be extended as of 1 February 2017:
Each business which operates a website or uses general terms and conditions of business will be required to disclose whether it takes part in out-of-court dispute resolution procedures. If available, this information to be placed on the website and in the GTCs.
While the participation in such procedures is voluntary (with exceptions for energy companies and airlines), the company is required to disclose whether or not it is prepared to take part in them. Only companies with ten or fewer employees and those which do not use a website or GTCs are exempt from the disclosure requirement.
The Consumer Dispute Resolution Act defines the requirements for conciliation boards and their operation.
Conciliation boards can be established by public authorities as well as by private associations. They are required to adopt binding rules of procedure and to maintain their independence as well as an earmarked and adequate budget which is separate from that of its sponsoring association. In some cases, they must be comprised of an equal number of members from each side in order to maintain neutrality.
The conciliator himself must be qualified to exercise the office of judge or be a certified mediator. The law provides that the conciliation board is to decide within three weeks of receiving the complaint whether or not to take the complaint. If it does so, both parties are to be granted a hearing and a conciliation proposal is to be made no later than 90 days after receipt of the complete record. The participation of legal counsel is permitted but not required.
Both parties may terminate the conciliation at any time. Conciliation proposals are not binding. In-court litigation may be initiated at any time.
The procedure causes costs to accrue which are generally to be paid by the business, ranging from EUR 75.00 to EUR 380.00 depending on the value and course of the procedure. In the few exceptional cases in which costs are to be borne by the consumer, those costs are capped at EUR 30.00.
– Businesses need to consider the subject and decide whether they plan to participate in conciliation procedures or not. They may decide to participate in the procedure only for certain conflicts, e.g. for conflicts up a certain value.
– The declaration that a business is willing to take part in conciliation procedures is binding and establishes an obligation to specify the precise address and website of the competent consumer conciliation board (§ 36(1) No. 2 of the Consumer Dispute Resolution Act).
There is a general conciliation board in Kehl. It can be reached via the following link: https://www.verbraucher-schlichter.de/herzlich-willkommen-be0-der-allgemeinen-verbraucherschlichtungsstelle-%e2%80%93-ihrer-schlichtungsstelle-fuer-verbraucherstreitigkeiten.
A list of industry-specific conciliation boards which have been submitted so far can be found at the following link: https://www.bundesjustizamt-de/DE/SharedDocs/Publikationen/Verbraucherschutz/Liste_Verbraucherschlichtungsstellen.pdf%3F_blob%3DpublicationFile%26y%3D24.
– Regardless of how the business positions itself, its website and GTCs will have to be adapted.
– If small businesses with fewer than ten employees hire additional employees so that the threshold of ten employees is exceeded, they must ensure compliance with the disclosure requirement in the following year. The decisive figure in each case is the number of employees on the final day of the last year.
– In the event of a compliant, the business is also required to notify the affected consumer about its willingness to take part in the procedure. If it is willing to do so, the customer is to be notified of the competent conciliation board; otherwise, the customer is to be notified that the business will not be taking part so as to save the customer the cost and effort of requesting conciliation.
– If these requirements are not met, the business may face cease and desist letters from competitors, as well as from competition or consumer associations.
Companies can establish an industry-specific conciliation board or participate in an existing one. Clearly, industry-specific conciliation boards will have the professional expertise necessary to resolve conflicts in a particularly expedient manner, and the quality of these decisions may exceed that of the judgments rendered by the civil courts.
In this way, economic operators will be able to help shape the development of the law by creating sensible rules and conciliation proposals.
The question as to whether it makes sense for a company to take part in an out-of-court dispute resolution procedure is a controversial one.
The Federal Ministry of Justice stresses that such procedures are quick, cost-efficient and involve few expenses, and points out that companies have an opportunity to improve their image by announcing their willingness to take part in these procedures.
It is true that conciliation proposals create legal certainty quickly and at low cost.
Critics point out that the business will have to bear the costs of the procedure regardless of its outcome. They also fear that the “conciliators” will ask the business to give in even in cases where it is clearly in the right.
The option of establishing industry-specific conciliation board comprised of industry members is often viewed as an opportunity to implement practical solutions.
The new consumer protection rules impose stricter formal requirements with regard to companies’ public image. They result in higher expenses as well as the risk of litigation.
Certainly, there is no particular need for the creation of such bodies in Germany in view of the presence of easily accessible, relatively low-cost and qualified civil courts, as well as the ability to obtain help with legal expenses. The situation may be different in other member states. Nevertheless, Germany is required to subject itself to these initiatives as well in the interest of the harmonization of the European single market.
We will gladly advise you as to whether or not it would be sensible for your business to take part in such arbitration procedures, how to create an arbitration board yourself if you wish and how to adapt the public presentation of your business to the new requirements.
