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Earlier this year the European Parliament adopted two key legislative measures regarding the resolution of consumer disputes in Europe. The new regulation mandates that all businesses selling goods or services to consumers online in any European Union member state, excluding those in the health and education sectors, make available a link to a EU-wide online platform that will be set up to handle consumer disputes.
The directive requires all EU member states to implement the Online Dispute Resolution initiative within 2 years of the regulation’s entry into force. The directive applies to any purchase made domestically or across EU borders.
The official press release can be seen below.
Brussels, 12 March 2013
A step forward for EU consumers: Commissioner Tonio Borg welcomes adoption of Out-of-court Dispute Resolution
Commissioner for Health and Consumer Policy, Tonio Borg, welcomed the vote of the European Parliament on Alternative Dispute Resolution and Online Dispute Resolution (ADR-ODR) today. This vote confirms the agreement on the two proposals put forward by the European Commission in 2011.
Tonio Borg said: “Today, the European Parliament confirmed its agreement on two key proposals for boosting growth in the Single Market and strengthening the Digital economy. ADR and ODR are a win-win for consumers, who will be able to resolve their disputes out-of-court in a simple, fast and low-cost manner, and also for traders who will be able to keep good relations with customers and avoid litigation costs. It must be stressed that the EU institutions achieved a fast agreement which will significantly improve everyday life for consumers across Europe”.
He also added: “I want to take this opportunity to thank the rapporteurs of the two proposals at the European Parliament, Louis Grech and Róża Thun, for their commitment to reach an agreement. I am also grateful to the Member States and the Presidencies of the Council for their intensive work on these files. This is a truly inter-institutional achievement to boost consumers’ and traders’ confidence in the internal market and its digital dimension.”
The rules on ADR will ensure that consumers can turn to quality alternative dispute resolution entities for all kinds of contractual disputes that they have with traders; no matter what they purchased1 and whether they purchased it online or offline, domestically or across borders.
According to the ODR Regulation, an EU-wide online platform will be set up for handling consumer disputes that arise from online transactions. The platform will link all the national alternative dispute resolution entities and operate in all official EU languages.
Raising consumers’ awareness is another pillar of this legislation, as traders will need to provide consumers with adequate information on ADR and ODR.
Member States will have two years to implement the ADR/ODR rules. The ODR platform will be operational at the end of 2015.
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Although there are many other compelling reasons to use online dispute resolution rather than small claims court, one of the most significant is the cost savings. Even when attorneys are not used, there are simply more costs associated with trying to resolve your dispute in small claims court. It should be noted, however, that it is extremely difficult to provide an accurate cost of going to court since many costs depend on the actions and decisions of the other party and the judge. It also depends on how “cost” is defined. It should be noted that rules and procedures vary by State and specific jurisdiction where your case is heard.
To file a suit in small claims court, you will need to pay a filing fee. The amount varies from about $15 to $200 depending on the State as well as the amount being claimed.
Some States do not allow attorneys in small claims court. However, since there are some complicated procedures and technical rules that could cause problems for your case if not followed correctly, to give yourself the best chance of winning, you might want to consult with an attorney. For a decent attorney you can expect to pay at least $250 per hour and often much more. Assuming a 2 hour consult, that is at least $500.
As the saying goes: time is money. Filling out all the forms correctly, reading, and understanding and following the rules and procedures, often takes longer than one would expect. One example is the requirement in most jurisdictions that your signature be notarized – typically by a lawyer, a court clerk, or a licensed Notary. Assuming you value your time at an average of $40 per hour, the following is how much your time alone will cost, disregarding all other hard costs:
(travel to court to file suit and for trial, waiting in line, filling out forms, signing forms in front of a notary)
|Supporting Your Case
(collecting evidence, finding witnesses, serving defendant)
|Reviewing claim closer to trial
(since the trial will be months after the incident and months after you filed the claim you won’t remember the details)
(You’re not given a specific time – you’re given a window of time where you must be in court waiting for your case to be heard)
These costs above do not include the extra time you will have to spend if the defendant does not show up in court and later asks for the case to be re-opened and heard, or does show up and asks for an adjournment to a later date. In some jurisdictions there also is a mandatory pre-trial hearing where you have to meet with a representative of the court to discuss your case and see if there is a way to settle it before trial.
Time Off Work
In most cases you will have to attend court during the work week, both to file the initial paperwork, and to attend trial, and possibly a pre-trial hearing. So you will need to take some time off work on two or three days. This could be anywhere from 5 to 10 hours. Assuming an average hourly wage of $40, that is between $200 and $400 of lost wages.
When you file suit, the defendant must be given formal notice in writing that you are suing them. In most States, you will have to bear this cost which could be upwards of $30 to $100 for a courier or licensed process server.
Total Cost of Small Claims Court
Based on the above assumptions and depending on your circumstances and how you value your time, taking your case to small claims court could cost anywhere from $100 to $2,000 if you represent yourself in court. If you want to be represented by an attorney you can add on at least another $2,000 since it is unlikely an attorney will take on a case for less given the responsibilities and liabilities.
Other Possible Costs and Points of Note
There are other possible costs – they are not standard, but circumstances may require them. For instance, since written witness statements are typically not allowed in small claims court, if you need the testimony of a witness you will have to convince the witness to attend the trial and pay them a small fee for doing so. In some jurisdictions there is also the slight possibility that if the defendant loses, the judge may grant an appeal to the defendant which means another attendance in court for you. The other party may also bring a motion for one reason or another that may require you to attend court again at a later date.
Most people expect that if they go to court their case will be heard in front of a judge, but that is not often the case for small claims court. Often small claims cases are heard and decided by Magistrates who are lawyers appointed by the Court, or possibly by a clerk who are not required to have a law degree. It should also be noted that small claims judgments are public information and could appear on your credit report, affecting your credit rating.
Cost of Online Arbitration
The cost of arbitration is generally broken down into three categories:
- The cost of the arbitral institution’s fees;
- The fees and expenses of the arbitrator; and
- The party’s direct costs. These include costs of legal representation, the costs of any experts, and the costs of any out of pocket expenses.
Costs vary widely for online arbitration depending on which arbitral institution is chosen to administer the arbitration, which arbitrator is chosen to decide the case and whether the party wants to be represented by an attorney. Arbitral institutions typically charge between $30 and several hundred dollars to file a small claims case. The parties also typically have to split the cost of the arbitrator’s time which can vary anywhere between $100 to $500 per hour depending on the complexity of the case and whom the parties choose.
eQuibbly is different. There is no charge to file a case, nor to use the platform. So if you have someone who is willing to arbitrate your case for free, such as a mutually acceptable neutral third-party, you can arbitrate your dispute completely free on eQuibbly. Of course, if you wish, you can also hire an independent arbitrator on eQuibbly – fees range from $50 per party per hour to $275 per party per hour, with some offering a flat fee of about $250 per party. These fees are paid directly to the arbitrator, not to eQuibbly.
You won’t have to spend time travelling back and forth to court multiple times, waiting for your turn to file documents with the clerk or waiting to be heard, or learning complicated rules and procedures. Nor will you risk time spent on an appeal. There’s also no need to pay attorney’s fees since decisions are based on what is fair given the facts, not on technical laws and procedures that are often difficult to learn.
So although it is very difficult to quantify costs, generally speaking, in most circumstances online dispute resolution will be a more cost-effective way to resolve disputes than going to small claims court. In any event, it is definitely a lot more convenient.
For most of our day-to-day communication, we rely on the written word to replace much of the in-person and telephone conversations we relied on in the past. There’s no doubt there are instances where the intended meaning of what we write is misinterpreted by the person on the receiving end, which could have been avoided in person. But in certain situations, such where there are disputing Parties, there are many benefits to using the written word online.
How many times have you been in an argument or dispute with someone where simply looking at the person makes your blood boil? How often does your blood boil over when that person opens their mouth to speak? Anthropologist Ray Birdwhistell found that over 65 percent of communication is nonverbal.
Each gesture or movement can convey meaning and trigger different emotions in others. This is useful in most circumstances, but given a dispute between Parties who are at odds with one another, it can be destructive. Facial expressions, the roll of the eyes, crossing of arms, shrugging of shoulders, or inflection in someone’s voice can set off negative emotions that distort the substance of the message – reason and logic are lost to emotion.
The following are some of the benefits that Online Dispute Resolution (ODR) has over traditional in-person dispute resolution:
- Online communication is often less emotional since negative verbal and visual communication is absent; it’s easier to focus on the facts and a reasoned resolution.
- People are less likely to be intimidated by the opposing Party when they’re not physically present due to the absence of visual and vocal tools of intimidation.
- It levels the playing field for those who are less skilled at expressing themselves verbally, suffer from stage fright, or who have speech impediments that cause them to be self-conscious. People also are less likely to be caught off guard or become flustered in the heat of the moment.
- It provides the Parties time to organize their thoughts and state their case in the clearest manner possible. There is time to consider what the other Party’s position is and to prepare a reasoned response.
- It eliminates the difficulties created by physical distance, other travel barriers, and scheduling conflicts.
- There’s a written record of what has been discussed making it difficult to deny what was said.
By Lance Soskin, Founder and President of eQuibbly.
eQuibbly is a web application created to help companies resolve their disputes quickly and fairly online. It’s known formally as Online Dispute Resolution (ODR). Disputes are resolved entirely online either via mediation or arbitration in a secure private virtual room. Parties can opt for the outcome to be legally-binding and enforceable in court in almost any country.
If you have already experienced the great pleasure of going to court, especially for a full-blown trial, there’s no reason to read any further as you’re already well-aware that almost any other method of resolving a dispute or conflict is better than the traditional justice system.
Once you hire an attorney, it’s extremely difficult to get away with paying anything less than a few thousand dollars for pre-trial procedures, even if it is for small claims court. And if your case goes to trial, you’re almost certainly going to be out-of-pocket at least $10,000 and often times tens of thousands of dollars. If that isn’t reason enough to convince you to try an alternate route, the time commitment and aggravation involved in pursing litigation surely are.
One alternate route that is growing in popularity is online dispute resolution using arbitration or mediation.
If you meet one or more of the criteria below, it may be time for you to take a closer look at whether online arbitration or mediation may be right for you:
- Negotiation has failed. You have tried to resolve your dispute or complaint on the phone, by email, or face-to-face and were unable to reach a satisfactory solution.
- Meeting in-person is inconvenient. You and the opposing Party live far enough away from one another that there is no convenient place to meet without wasting a lot of time traveling.
- Cost of litigation may exceed your claim. Unless you are independently wealthy, there is little point suing if the cost of litigating might be more than the amount you recover at the end of the ordeal. Many plaintiffs over-estimate their chances of winning and the amount they will recover if they do win. If you’re looking for some sense of moral victory regardless of the cost, keep in mind the old saying about ‘cutting off your nose to spite your face’; it will likely ring true a year later when you’re still trying to make your way through the justice system on your last dime.
- Confidentiality is important. You would like to keep your disputes and your confidential information private. The courts in the U.S. and Canada are open to the public and almost everything you file with the court is public record and subject to public disclosure (other than personal information that can lead to identity fraud).
- You have shopped or socialized online. The online world is part of your everyday life. If you’re comfortable shopping, socializing, and commenting on news articles online, you’re technologically savvy enough to make use of online dispute resolution.