SPEECH/03/285 Date: 10/06/2003
European Commissioner for Health and Consumer Protection
The EEJ-Net: An important tool to help consumers resolving cross-border disputes with traders
European Extra-Judicial Network Conference
Brussels, 10 June 2003
Ladies and Gentlemen,
It is my great pleasure to welcome you all to this conference on the European Extra Judicial network. I am particularly pleased to see Akis Tsohatzopoulos and Diana Wallis here today. Their presence underlines the importance the Greek presidency and the European Parliament attach to the establishment of Alternative Dispute Resolution schemes (ADR) and to the development of the EEJ-Network.
This is the second conference on this subject. Many of you will recall the Lisbon event in May 2000 in partnership with the Portuguese Presidency, which marked the formal launch of the EEJ Network.
The increasing level of interest in ADRs and the EEJ-Net is most welcome. We need to continue our efforts towards delivering the full benefit of these initiatives to European citizens.
Before the intense work of the next two days begins, I would like to set out some of my own reflections on the main issues at stake. Much has been achieved since the launch of the pilot phase 18 months ago. This morning, I wish to take the opportunity to:
· Remind you of the fundamental aims of the Commission for the development of consumer policy;
· Give you an overview of what has been achieved since the pilot phase was launched;
· Identify the key issues for debate over the next two days; and
· Set out my intentions for the months ahead.
Aims of the Commission for the development of consumer policy
Over the last decade, the internal market has made significant progress but the consumer dimension has yet to reach its full potential.
Our goal is simple to complete the internal market in this area. In a nutshell we want consumers to be as confident when shopping across borders as they are at home.
As foreign travel and the accessibility of the Internet continue to grow, so do the opportunities for the single market to flourish.
The transparency of the Euro makes it easier for consumers to compare prices.
E-commerce has gradually begun to dismantle the main geographical and logistical barriers that prevent businesses and consumers based in different countries from coming together.
However as the number of consumers who buy abroad increases, inevitably the number of cross-border disputes will rise.
Confidence in cross-border shopping
To be confident when shopping outside their own country, consumers need reassurance that if things go wrong, they can seek effective redress. Obviously, if consumers think they have no means of redress this can act as a major disincentive to cross-border shopping.
Consumers also need to be reassured that they will not be prevented from enforcing their rights. If consumer rights are to have any practical value, mechanisms must exist to ensure that these rights can be exercised effectively.
Alternatives to court system
In the field of consumer protection, resorting to traditional litigation is not always practical or cost effective. There is, therefore, a growing demand for alternatives to the court system.
These alternatives should provide access to simple, low cost and effective means of resolving cross-border disputes for both consumers and businesses, especially SMEs, without having to resort to formal court action.
Developing efficient mechanisms for Alternative Dispute Resolution (ADR) has therefore become a priority for both national and EU policy-makers.
This priority was clearly stated in the presidency conclusions of the European Council held in Tampere in October 1999 and was supported by Diana Wallis's report.
To encourage the use of ADR in cross-border disputes, the Commission adopted two Recommendations:
· Recommendation 1998/257 promotes consistent and reliable standards so that users can have confidence in ADRs that provide recommended solutions or decisions, such as arbitration schemes.
· Recommendation 2001/31 sets similar principles for ADRs using less formal consensual methods such as mediation.
Both Recommendations set out a certain number of minimum quality guarantees in areas such as independence and transparency that ADR bodies should offer to their users.
What has been achieved so far?
Whilst experience at national level has demonstrated the effectiveness of ADRs, many practical obstacles still confront consumers who want to use an ADR in a country other than their own.
Lack of information about foreign ADRs as well as linguistic and geographical barriers make it difficult for consumers to make a complaint in the first instance.
To respond to these concerns, the EEJ-Net was launched as a pilot project in October 2001 by the Belgian Presidency and myself.
The objective of the network is clear: to help consumers resolve a cross-border dispute with a trader through an appropriate out-of court ADR body.
The project started with 8 Member States as well as Norway and Iceland. The remaining 7 Member States joined during the course of 2002. The start-up costs were financed with a combination of Commission and Member States' funding. The practical co-operation conforms to principles set out in a Memorandum of Understanding.
In agreement with the members of the network, the pilot phase has been extended in order to consolidate its initial successes. The Commission has provided further co-funding in order to achieve this consolidation.
By the end of March of this year, there were 17 Clearing Houses covering every Member State, as well as Norway and Iceland. Clearing Houses assist consumers in resolving disputes with traders through an ADR.
Assistance to consumers
This assistance includes the provision of translation facilities, where needed, and tracking the progress of the resolution of the complaint. There appears to be an excellent spirit of co-operation within the network. This is undoubtedly an important factor contributing to its success.
The database set up by the Commission now contains over 400 schemes. ADR procedures may vary from country to country. However, they all assure the impartiality of the decision maker, and they all operate at low cost.
The Commission has also been working with the Clearing Houses to set up technical support and Internet tools to improve performance and enable smoother co-operation within the network.
May I take this opportunity to thank colleagues from the Joint Research Centre for their participation in this Conference and for the work they have undertaken in this respect. They will present during this Conference the EEJ-net website and new complaint handling system.
Consumers can already submit a complaint to the Clearing Houses in their own language. This is an important requirement. As Diana Wallis sets out in her report, it would be inequitable to expect consumers to use a language other than their own.
Under the new Complaint handling system, this facility will become available to them on-line, as will the tracking of the progress of their complaint. The information gathered will also be a useful tool for the preparation of statistics.
Overview of the statistics
The statistics on the activity of the Clearing Houses so far are encouraging. The total number of complaints received by all the Clearing Houses between October 2001 and October 2002 was 1100. By March 2003 it had increased to 2182.
This represents a doubling during the last six months alone. It is clear that the network is gathering pace and fulfilling its objectives by delivering real benefits to many consumers involved in cross-border disputes.
I would like to highlight briefly some interesting trends. A large number of complaints handled by the Clearing Houses have been settled, either through an ADR or an amicable settlement (51%).
This emphasises the value of the EEJ-Net and ADRs disputing parties often become more amenable to finding a solution when the consumer has gone this far with his or her complaint.
There is also a sharp increase in the number of cases settled through ADR in the past 6 months. In October 2002, 4% of complaints were settled through ADR. This figure had risen to 7% in March 2003.
However 38% of complaints remain unresolved. This is mainly due to the lack of ADRs in certain countries and certain sectors.
It is interesting to note that 50% of complaints arise from transactions undertaken during trips abroad. This reflects the relatively low use by consumers at present of distance selling methods for cross-border transactions.
Also, 49% of complaints relate to high value goods or services (those in excess of 500 euros). This would seem to indicate that consumers are reluctant to make a complaint where the amount at stake is low and that even more informal ADRs may therefore need to be developed.
Complaints divide equally between goods and services, except for timeshare which on its own represents close to a third of the complaints.
Clearly, we have come a long way since the launch of the EEJ-Net in October 2001. This is most encouraging. However, more work needs to be done.
Working procedures between the Clearing Houses need to be better defined. The formal principles for co-operation, which should be adopted in the near future, will further clarify procedures within the network. Technical support also needs to be completed.
This Conference is an opportunity to fully review and evaluate the needs of the network, taking into consideration the views of all stakeholders. It will also help us to elaborate the future strategy to further consolidate and develop the network.
Contents of the conference
Allow me now to set out the main issues to be discussed over the next two days.
The first workshop is devoted to the extension of the network.
In 2004, 10 new Member States will fully join the European Union. We must help them establish the necessary framework to protect consumers. I welcome those representatives from acceding countries participating in this conference.
I am delighted that certain acceding countries have already expressed their intention to set up a Clearing House or European Consumer Centre.
A Technical Assistance Information Exchange Office conference will be held on Friday to introduce them to the network. Existing Clearing Houses have already offered their assistance in helping future members of the network to set up their own Clearing House.
The network must also look at creating links with third countries in order for European consumers to benefit from ADR mechanisms existing outside Europe. The United States, for example, has many ADR bodies.
During the pilot phase, it has become evident that a major obstacle to the resolution of cross-border consumer complaints is the lack of ADR bodies in certain sectors of activity. This issue will be dealt with in workshop 2.
A number of disputes could not be resolved due to this. The second workshop will focus on this issue. The discussions at this conference will, I hope, help us find solutions to promote the creation of more ADR bodies, the development of which is crucial for the protection of consumers and the consolidation of the network.
Furthermore, it is essential that consumers have confidence in new and existing ADR bodies in order for them to feel comfortable in approaching them with their dispute.
My colleague Antonio Vitorino has prepared a Green Paper which looks at the quality of ADR bodies and invites further reflection on the subject. The discussions at this conference will contribute to this exercise.
The third workshop is partly dedicated to examining the relationship between the network and ADR bodies. We are particularly interested in hearing views on how to develop further co-operation between the network and its ADR bodies.
For those ADR bodies that are not part of the network, it is important to establish why this is the case and to find ways to develop links with these bodies.
This workshop will also look at the co-ordination of Clearing Houses with other Community networks. The EEJ-Net could benefit from the experience of other consumer protection networks that operate in different fields.
Diana Wallis's report highlights the importance for consumers to be aware of each network's field of responsibility so that they always know who to turn to should they require assistance.
For example, the synergies between European Consumer Centres and the Clearing Houses are numerous. The European Consumer Centres provide consumers with information on their rights and assist them in getting professional help in the event of cross-border disputes. Clearing Houses are the contact point to help consumers to access an appropriate ADR.
From the outset, 9 of the 17 existing Clearing Houses have in fact been attached to a European Consumer Centre. The role of the European Consumer Centre complements the role of the Clearing House and this is undoubtedly the reason why a number of countries have decided to house both bodies under the same roof.
The combination of the roles of the European Consumer Centre and the Clearing House ensures that consumers receive assistance at every stage of a problem relating to a cross-border transaction, by providing a complete "Consumer Help Centre".
I am sure these three workshops will provide fruitful input on these important issues.
Finally, I would like to set out the prospects for the coming months.
After the conference, the Commission intends to produce a report which will provide a full evaluation of the network and set out the perspectives for the future.
The findings will be based on the outcome of the pilot phase so far and the discussions at this conference. This report will be presented to the Council and Parliament by the end of the year.
The Commission has adopted its proposal for a Council and European Parliament Decision on the general framework for funding EU consumer activities for 2004-2007. It contains provisions concerning the joint financing of Clearing Houses.
The Commission views the EEJ-Net initiative as a priority. It is an essential component of a number of initiatives aimed at bolstering the confidence of consumers to actively take part and benefit from the Internal market.
It is also important for businesses, as it will facilitate the increase of cross-border trade in particular for SMEs.
It puts the framework in place to allow the potential of ADR for resolving cross-border disputes to be fully exploited.
I am confident that given our unity of purpose, together we will continue towards ensuring that the EEJ-Net reaches its full potential.
Thank you all for being here today. I wish you a stimulating and thought-provoking Conference.