Mediation: New Obligations for France-based Traders

by McDermott Will & Emery
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Since entry into force on 1 January 2016 of the French provisions transposing the 2013 EU directive regulating mediation of consumer disputes (Directive 2013/11/EU of 21 May 2013 on alternative dispute resolution for consumer disputes (“ADR”)), and the operability of the online platform provided by the 2013 EU regulation on online dispute resolution for consumer disputes, (“ODR”), France-based traders must comply with new rules regarding in-store and online sales. Essentially, France-based traders must inform consumers of the possibility to have recourse to mediation.

Generally speaking, ADR rules aim at ensuring that EU consumers have access to ADR entities when resolving their contractual disputes with EU-based traders in order to reduce the number of disputes brought before courts and, hence, favor a faster resolution of “simple” disputes. Access to ADR entities must be ensured no matter what product or service is purchased, whether the product or service was purchased online or offline, and whether the trader is established in the consumer’s EU Member State or in another EU Member State.

On 15 February 2016, the EU Commission published on the ODR platform a list of French ADR entities, so-called Médiateurs, that meet the standards of the ADR Directive and are registered with the French ad hoc authority (Commission d’évaluation et de contrôle de la médiation de la consommation).

The ODR platform allows consumers, and in some jurisdictions (Germany, Belgium, Luxembourg and Poland) traders too, to file a claim online. The ODR platform enables a connection between the trader and the consumer, who may then decide to submit the dispute to aMédiateur agreed upon with the trader.

Traders Duty to Inform Consumers

In accordance with the ADR Directive, any trader based in France must inform consumers in a “clear and accessible” way, of the Médiateur(s) by which they are covered, the possibility for them to file a claim with such Médiateur(s), and, accordingly, the Médiateur(s)’ contact details, including its(their) website address. This information shall be provided on the trader’s website, in the trader’s general terms and conditions of sales or service contracts, on the trader’s order form or on any appropriate support (Article 13 of the ADR Directive and Article R. 156-1 of the French consumer code).

In addition, traders established in France engaging in online sales and service contracts must provide on their websites an electronic link to and information about the ODR platform.

Should traders fail to do so, they face the risk of being fined up to EUR 15,000 (Article L. 156-3 of the French consumer code).

Extensive ADR Provisions Applied to French-based Traders

The French ADR provisions realize an extensive implementation of the EU Directive and include that the ADR process must be free for consumers, the appointed Médiateur may be external or in-house provided that it fulfills the standards detailed below, before resorting to a Médiateur, the consumer must have tried, in writing, to address the problem directly with the trader, and the consumer must seize the Médiateur within a maximum of one year after having sent a written complaint to the trader.

However, France-based traders cannot insert clauses in their general terms and conditions that impose ADR upon consumers before seizing local courts. In this regard, it is worth noting that until the parties’ acceptation of the Médiateur’s proposed solution, each party can freely leave the procedure and, as the case may be, decide to file a claim before the competent French court.

Given the absence of a minimum financial threshold for the consumer claim, French law provisions provide for safeguards in order to prevent any abusive consumer claim. Therefore, in addition to the above mentioned written complaint prerequisite and one year time-limit following this complaint, Médiateurs shall refuse to deal with manifestly unfounded or abusive claims, as well as claims that are being or have previously been considered by another Médiateur or by a court.

The Médiateur is obliged to issue its proposed solution within 90 days from the filing of the claim and the Médiateur must inform the parties that they are free to accept or refuse his proposed solution. The procedure is often contradictory and parties are entitled to be represented by a lawyer and due to this nature, the procedure before the Médiateur is confidential and the Médiateur must always try to reach a mutual agreement of the parties.

Different Kinds of Médiateurs but a Common Set of Standards

Beside the classic external (but not sectorial) Médiateur appointed by a trader, French ADR provisions have created the status of public Médiateur (appointed by a public authority), sectorial Médiateur and in-house Médiateur (employed or remunerated exclusively by the individual trader).

When a complaint relates to a field of activity covered by a sectorial Médiateur, French ADR provisions specifically provide that the consumer may in any case file his complaint with this sectorial Médiateur. In addition, as soon as a public Médiateur, to be appointed by a public authority, is competent for a claim, the consumer cannot file his claim with any other Médiateur.

Anyhow, those Médiateurs shall all comply with a detailed set of standards that is even more substantial for in-house Médiateurs.

In line with the ADR Directive, French ADR provisions require Médiateurs to be independent, impartial and have sound ADR and legal knowledge including consumer law. Médiateurs must have a website explaining how they operate and allow consumers to lodge their claim online. Furthermore, Mediateurs must be appointed by traders for a minimum of 3 years.

The abovementioned French ad hoc authority decides whether an applicant Médiateur fulfills these conditions and, as the case may be, gives its name to the EU Commission for registration on the ADR entities list published on the ODR platform. Accordingly, in theory, as long as a Médiateur is not approved by the French ad-hoc authority, its designation by a trader is not a valid appointment. Should the Médiateur fail to fulfill one of these conditions, the ad hoc French authority shall refuse his approbation or withdraw it and accordingly unregister said Médiateur from the EU Commission list.

Under French ADR provisions, traders may appoint an in-house Médiateur provided that it operates independently from them. In that case, in addition to the common set of standards applicable to all Médiateurs, in-house Médiateurs must be appointed pursuant to a transparent process involving, in any case, consumer associations’ representatives. Furthermore, the in-house Médiateur must be granted a distinct budget and shall not report to any operational division of the trader (which, in practical terms, implies to report to the managing director of the company only). Last but not least, the in-house Médiateur must commit not to work for the trader for a period of three years after his position has ended.

The choice of a Médiateur (i.e., in-house or external and, in the latter case, which kind of external Médiateur) requires an in depth analysis of several elements including which Médiateur would fit best with each trader’s corporate structure, culture and objectives, including the client service, and the desired budget allocated to mediation, since external ADR immediately appears as less extensive than in-house ADR.

Although ADR and ODR rules are very recent, a wide range of possibilities can already be considered for the appointment of an externalMédiateur, or the setting-up of an in-house Médiateur within a group with several independent subsidiaries or business units, including, for example, through an Economic Interest Grouping (Groupement d’Intérêt Economique) or a Shared Services Center (Centre de Services Partagés). As the case may be, the latter solutions require a careful drafting of the rules governing the structure that will host the Médiateur, including the allocation of necessary human, financial and technical resources for the latter.

What’s Next?

The French provisions, which have in extenso implemented the ADR Directive, thereby demonstrate a commitment to generalize and promote ADR for French consumers. However, the French government’s ambition may be unsatisfied or at least delayed by a certain lack of visibility that France-based traders currently suffer.

First, as of today, only seven French Médiateurs are registered on the EU Commission’s list and all of them are public or sectorialMédiateurs, except the MCCA (“Médiateur du Commerce Coopératif et Associé”), which has already been appointed by companies such as E. Leclerc and Intermarché.

Second, companies that would like to maintain or set-up an in-house Médiateur may be facing difficulties to comply with ADR and ODR provisions, at least in the short term. Such difficulties are mainly caused by the absence of transitional provisions for existing in-house Médiateurs. Indeed, the two month term, as from the publication of the French decree implementing the ADR Directive which occurred on 31 October 2016, given by French transposing provisions to existing in-house Médiateurs to comply with the new regulation is insufficient in taking into account the independence conditions that must be met by in-house Médiateurs, including regarding their appointment, operation and allocation of budget.

A substantial communication campaign on ADR/ODR from both public authorities (including the abovementioned French ad hoc authority) and traders appears as a necessary prerequisite to the actual development of these procedures.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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