Sat, Jan. 28, 2017

New E.U. Vendor ADR Rule Now Binding in Germany

CK - Washington.   Starting February 1, 2017, vendors are required to incorporate in websites and sales terms a new statement expressing their intent to participate in, or reject, formal non-binding dispute resolution programs with consumers to settle consumer disputes. The German Statute for Alternative Dispute Resolution in Consumer Matters, known as VSBG, implements E.U. rules. A failure to provide the statement can cause costly litigation under competition law if a competitor would accuse a non-compliant vendor of unfair trade practices.

The statute explains the required ADR entities in detail but does not define the terms consumer and vendor. For the latter, it uses the term enterprise, and it exempts very small vendors from its reach. In addition to private dispute resolution bodies, vendors may refer to state-established Universal State Dispute Resolution Bodies under § 28 VSBG. These bodies may charge only vendors for their services; the fees are capped at €380. They may charge consumers for abusive complaints a fee of up to €30.

Vendors offering goods or services to German consumers should consider the reach of the statute. Court will likely consider it enforceable on vendor-consumer contracts even if a vendor is located outside of Germany. The requirements on vendors are not particularly burdensome but demand some attention because the vendor, under § 36 and § 37 VSBG, needs to:
1.   State whether it agrees to participate in mediation or not, or whether it is required to participate or not;
2.   If it agrees to participate, state the mediation body to which it will submit, and must then participate in the proceeding and bear its cost;
3.   If it uses a website, publish the statement on the site;
4.   If it uses form contracts or general terms and conditions of some other nature, include the statement therein;
5.   Once a dispute arises that it and the consumer cannot resolve, notify the consumer of the mediation body and whether or not it will participate in a mediation proceeding.
The proceeding targets a non-binding alternative resolution that will not bar litigation or arbitration. Submissions to the mediation body may be in digital form. Parties cannot be required to appear in person. The mediator may conduct telephone conferences. Mediation rules are to respect due process. The default language of the proceeding is German but the parties may agree on another language.

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