You shall use ADR

Court of Justice, Luxembourg

There has been some reporting in the UK of a recent decision of the Court of Justice in Luxembourg on the legality of mandatory out-of-court settlement procedures for electronic communications disputes in the Joined Cases C-317/08, C-319/08 and C-320/08 Rosalba Alassini & Others.  The Court was asked to decide if a mandatory system made under national legislation (in Italy) implementing Art.34 of the Universal Services Directive 2002/22/EC was not precluded by other EU law, including Art.6 of the European Convention on Human Rights (right to fair hearing).  The short answer is that mandatory out-of-court alternative dispute resolution (ADR) is lawful.

Whilst this might change how consumer disputes are handled in other member states, this will not change practice in the UK.  We already have a system of compulsory ADR, as communications providers are required by the terms of the general authorisation to which they are all subject and made by Ofcom under the Communications Act 2003 to put in place complaints handling and dispute resolution procedures.  These procedures also require communications providers to refer consumer complaints to approved ADR providers.  Since 1 September 2009, such disputes can be referred by consumers after only 8 weeks of making a complaint.  There are still only 2 approved providers: OTELO and CISAS.  Ofcom publish a table to show which scheme each operator in the UK uses.

So for the UK, the Rosalba Alassini judgement is a cases of “Move along. Nothing to see here.”

ADR Terms of Reference for Communications Providers

Article 20(1) of the Framework Directive 2002/21/EC requires national regulatory authorities (“NRAs”) of member states to issue binding decisions to resolve certain regulatory disputes between communications providers.  However, Article 20(2) permits member states to make provisions for NRAs to decline to make such decisions where the NRAs consider that another mechanism, including mediation, exists and “would better contribute to resolution of the dispute in a timely manner in accordance with the provisions of Article 8.”

Article 8 sets out the policy objectives and regulatory principles that must be followed by NRAs in carrying out their tasks under the Framework Directive and its associated directives.

In the UK, Art. 20(2) has been implemented by s.186 of the Communications Act 2003.  In particular, s.186(3) states that unless there are alternative means of dispute resolution that are consistent with the Article 8 policy objectives and regulatory principles (the Community requirements set out in section 4 of the Communications Act 2003) (the “Community Requirements”) and provide prompt and satisfactory resolution, any dispute must be resolved by Ofcom.

Standard ADR clauses in electronic communications agreements do not, in our experience, routinely include the Community Requirements in any terms of reference for mediators, arbitrators or other dispute resolution third parties (e.g. third party evaluators for early neutral evaluation procedures).  If communications providers wish to avoid the possibility of a dispute being subject to Ofcom’s jurisdiction by the effect of s.186(3), arguably they should ensure that their ADR clauses provide for the inclusion of the Community Requirements in any ADR terms of reference.