Mediation or Alternative Dispute Resolution (ADR) has been around for a long time for business to business disputes. The Government is pushing greater use of ADR as a way of solving disputes between traders and consumers. New law has been introduced to promote ADR.
In simple terms mediation is a, usually, voluntary process where two parties to a dispute try to resolve their disputes between themselves or with the help of a trained mediator rather than having to litigate the case through the courts. Mediation can be much quicker and cheaper than traditional litigation through the courts which is why the Government is in favour of promoting mediation for smaller claims between traders and their consumers. The focus of mediation is not on reaching what may be the right solution so far as the law is concerned. The focus is very much on the parties agreeing a compromise of the dispute and for mediation to be successful it does require both parties to walk away from the dispute with not quite everything they would hope for. This is the trade-off to have the dispute settled quickly and usually cheaper than going through the courts which can be very expensive and the outcome can be uncertain.
The Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015 is now law and the aim of these regulations is to promote the use of Alternative Dispute Resolution (ADR) of which mediation is one form of ADR and the most frequently used. It only applies to your business if you sell to the public (consumers) and does not apply to business to business trading.
What might these regulations mean to you? The two main changes which the Regulations impose are as follows:
- If your company is a member of a Trade Association Body or there is a separate law which requires you, as a trader, to use ADR services you have to advise consumers of that ADR provider. For example, this information could be on your website and in your terms and conditions/contract that you enter into with consumers. You have to draw this option to your customers.
- Even if you are not a member of a Trade Association Body or there is a law requiring you to use ADR services, the new Regulations require you to consider whether you would voluntarily submit to ADR as a way of resolving a dispute with a consumer. You are now required to advise consumers whether you would be prepared to use ADR and if so, which body you have chosen to provide that service. You can decide not to use an ADR provider and if this is the case your terms and conditions must still tell the consumer who a suitable ADR provider would be before then going on to say whether or not you would agree to use ADR to resolve that dispute. This is a slightly odd approach to the issue and has probably been drafted in this way to make sure that all traders consider whether to use ADR to resolve a dispute with a consumer.
This is an important new Regulation and you should consider whether your business is already satisfying these requirements. If you do not know if that is the case you should undertake the following steps:
- Consider if your business is a member of a Trade Body or Association. If you are, get in touch with that Trade Body or Association to ask them whether the rules of your membership requires you to use an ADR service if you cannot resolve a dispute with a consumer and if that consumer wishes to use the ADR service to try and resolve the dispute. If the Trade Body or Association tells you that you are obliged to use their ADR service you should include this in the information you give to your consumers when you enter into your contract with them, for example, in the contract terms itself or any accompanying terms and conditions. You should also have a look at your complaints process to see if this information needs to be inserted into any written complaints process that you send to your consumers when you have a dispute with them.
- If you are not in a Trade Body or Association or if your membership with them does not require you to use their ADR service you should consider whether it is sensible to have that as an option. Generally speaking it is always preferable to try and resolve disputes without court proceedings and if you need any help deciding whether or not it is good for your business based on the types of disputes you generally have with your consumers whether to have the option of an ADR service to try and resolve that dispute, please do get in touch with us for advice.
- If you have decided that you are not legally required by a law or by your Trade Body or Association to use ADR services and if you have chosen not to voluntarily submit your company to an ADR service this needs to be stated in your contract documents that you have with your consumers.
For further information about the issues raised in this article please contact Susan Lewis for further information on 01924 387110.