Brussels, 26 June 2025 22:00
The EU Council and the European Parliament have reached a provisional agreement to update, simplify and facilitate the existing alternative dispute resolution (ADR) framework, with the aim of making these procedures more accessible, appealing and better suited to the digital age. ADR refers to out-of-court procedures that help resolve disputes between consumers and traders, typically with the help of a neutral third party.
The agreement introduces deadlines for companies to respond to ADR bodies regarding specific cases and promotes stronger cooperation between ADR entities and consumer protection authorities. It clarifies how automated systems – such as artificial intelligence, machine translation and other IT solutions – should be used to make ADR procedures more efficient, especially in cross-border cases.
Efficient and accessible methods for resolving disputes outside the courtroom have already shown their potential in simplifying and speeding up the process for both consumers and businesses. To keep pace with the digital transformation, these solutions must evolve, offering more widespread access and tackling a broader spectrum of conflicts. This will not only strengthen consumer trust in digital platforms but also reduce burdens on companies and ease the pressure on our judicial systems.
Krzysztof Paszyk, Polish Minister for Development and Technology
Scope of the directive
Inside the EU (including cross-border) the agreement keeps the scope of the ADR directive to disputes stemming from a contract, including precontractual obligations (e.g. advertising, information provision). The agreement extends the scope to disputes between a consumer resident in a member state and a trader in a third country that direct their activities to that member state, if both agree to use to the ADR procedure.
Duty to reply
When a trader is contacted by an ADR entity about a commercial dispute, it will have 20 days to reply (or 30 in exceptional or very complex circumstances). If there is no reply after this period, the ADR entity may presume that the trader has refused to participate, close the case and inform the consumer accordingly.
Incentives
Member states will be required to adopt measures to promote the use of ADR. These incentives may be:
- financial, such as reduced fees for compliant traders, free participation for businesses, reimbursement of costs for a set number of cases, training schemes for staff or co-financing the creation of sector-specific ADR bodies
- non-financial, such as public awareness campaigns or certification for participating businesses
Sectors of special attention
When establishing measures to promote participation in ADR among both companies and consumers, member states are encouraged to pay particular attention to specific business sectors with low participation in ADR procedures or with a high number of consumer complaints (e.g. air transport or tourism).
EU-wide IT tool
The Commission will create a user-friendly and free-of-charge digital tool that provides general information on consumer redress. This new tool will include practical guidance on using ADR in a cross-border context, as well as links to ADR entities and information on consumer rights. To facilitate ADR in cross-border consumer disputes, the tool will also include a machine translation tool, which will also be available to the ADR entities and national ADR contact points.
Automated systems
While acknowledging the benefits and risks of automated systems (i.e. AI or bots) in ADR, the agreement requires that consumers be informed in advance if such means are used in handling their disputes. Furthermore, consumers will have the right to request a human review of the outcome.
Next steps
This agreement is provisional and subject to final adoption by both institutions.
Background
In any commercial relationship, traders and consumers may have disputes to resolve (for instance, if a product or service is not delivered on time or in good condition, or if the consumer has not paid the full purchase price). With the development of online shopping, the number of disputes has increased substantially. Solving a dispute in court could be lengthy and entails the involvement of lawyers and considerable procedural costs. However, there are alternative ways to solve problems without going to court.
According to the 2023 Consumer Conditions Scoreboard, 25% of consumers experience a problem worthy of complaint, but one third of them do not act. As a result, there are only 300 000 eligible disputes solved via ADR annually in the EU.
The most recent European legislation to regulate out-of-court consumer redress was adopted in 2013 and has not been amended since. On 17 October 2023, the Commission proposed a new package of measures to modernise and simplify ADR rules. The package included a directive amending the ADR directive and a regulation to discontinue the Online Dispute Resolution platform, which was used less than expected. This ODR regulation was formally adopted on 19 November 2024.
Source – EU Council
EU Parliament on the deal on out-of-court dispute resolution rules
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Alternative dispute resolution allows consumers and traders to resolve disputes quickly and inexpensively without going to court
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New measures to improve traders’ participation and raise consumer awareness
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Allowing participation of third-country traders
Thursday’s agreement between Parliament and Council aims to increase consumer awareness and encourage greater business participation in out-of-court dispute solutions.
Alternative dispute resolution (ADR) involves impartial, out-of-court bodies, such as conciliators, mediators, arbitrators, the ombudsmen and complaints boards, helping consumers and companies resolve issues amicably, in a fair and low-cost manner.
The agreed rules aim to modernise the existing ADR rules for the digital economy, making it easier to resolve cross-border disputes and streamlining procedures for both consumers and businesses.
Scope and third-country traders
The agreed rules clarify the scope of the ADR framework to consumer rights disputes stemming from a contract, including issues that occur before the contract (e.g. advertising and information provision) and after it ends (e.g. use of digital content).
Considering that 2 out of 5 online transactions made by EU consumers are with traders established in third countries, the agreement allows for such traders to participate in ADR procedures as well.
Boosting participation and ensuring trader accountability
Unless specific EU law or national legislation imposes trader participation in out-of-court dispute resolution, businesses will continue to be free to decide whether to participate in alternative dispute resolution or not. To boost trader and consumer participation, member states should put in place measures encouraging out-of-court settlements, for example through information campaigns, certificates or financial incentives. In doing so, they should pay particular attention to sectors with a high number of consumer complaints, especially the transport and tourism sectors, including air passenger rights.
The agreed rules introduce a duty for traders to respond whether they intend to engage in the proposed procedure when a consumer requests ADR intervention. Negotiators agreed that this period should not exceed 20 working days (30 in complex cases). A lack of a response would be treated as a refusal, allowing cases to be closed.
Streamlining and user-friendly information
The agreed measures allow ADR entities to bundle similar cases against the same trader together (with consumer consent), leading to faster and more coherent procedures.
They must maintain websites where consumers can easily find information on such procedures, as well as submit and track their complaints online.
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Parliament’s rapporteur Laura Ballarín Cereza (S&D, ES) said: “The revision of the ADR directive represents a significant step forward for consumer rights. Under the new agreement, member states are expected to put in place incentive measures to encourage the participation of both consumers and traders in alternative dispute resolution procedures, especially in sectors that have been the subject of repeated consumer complaints —such as airline carriers. The revised directive also extends the scope to third-country traders, given the current importance of e-commerce.”
Background
If a consumer has a problem with a product or service that they bought, for example if a trader refuses to repair a product or issue a refund, they have the option to settle the dispute out of court using an alternative dispute resolution procedure, a low-cost and simple alternative to court procedures. Each year, approximately 300 000 eligible disputes between consumers and traders are handled by ADR entities, with resolution rates ranging from 17 % to 100 % across the EU. Despite this, ADR uptake remains low, due in part to low consumer awareness, low trader engagement, coverage gaps, high costs and complex procedures in some member states.
Next steps
Parliament and the Council have concluded an “early second reading agreement”. The Council is expected to adopt this agreement formally, after which Parliament will vote to endorse it in plenary, at second reading.
The directive will enter into force 20 days after its publication in the EU Official Journal. The provisions will start to apply after 32 months.
Further information
Source – EU Parliament
EU Commission welcomes agreement on simplified out-of-court dispute resolution for consumers
Brussels, 27 June 2025
The European Commission welcomes the political agreement reached by the European Parliament and the Council on the Commission proposal for a revised Alternative Dispute Resolution (ADR) Directive.
The new legislation simplifies and modernises the out-of-court resolution of disputes between businesses and consumers in the European Union, adapting them to digital markets and further reinforcing EU consumer protection. Previously, the Directive was limited to contractual disputes between EU consumers and EU traders. Now its scope is extended to cover disputes related to pre-contractual obligations, digital content and services, as well as non-monetary contracts. It now also encompasses non-EU traders willing to engage in ADR procedures. The new requirement for traders to reply to ADR inquiries within 20 days will incentivise businesses to engage with consumers in out-of-court resolution procedures. The new ADR contact points established across Member States will further assist consumers in the process of navigating cross-border dispute resolutions.
Henna Virkkunen, Executive Vice-President of the European Commission for Tech Sovereignty, Security, and Democracy, said: “The agreement reached yesterday will strengthen the rights of consumers for the digital era, while fostering market trust. Out-of-court dispute resolution is a powerful, cost-efficient tool that is now improved for the benefit of all.”
Michael McGrath, Commissioner for Democracy, Justice, the Rule of Law, and Consumer Protection, said: “Yesterday’s agreement is a positive step for consumers. Out-of-court dispute resolution empowers consumers with a fast, fair and affordable way to stand up for their rights without being discouraged by long and costly judicial procedures. The revised Directive brings the system in line with today’s digital economy – making justice more accessible for everyone.”
The next step is for the European Parliament and the Council to formally adopt the Directive. The directive will start to apply 32 months after its entry into force.
More information can be found here.
Source – EU Commission