Alternative Dispute Resolution

It is the European Commission’s intention to increase consumer confidence in the Single Market by ensuring easier, faster and cheaper out-of-court dispute resolution of disputes between consumers and traders. The promotion of alternative dispute resolution schemes is a priority objective driving the revision and updating of the EU’s consumer aquis.

Alternative Dispute Resolution refers to non-judicial schemes available to help consumers resolve disputes with traders whenever they have demonstrable issues with goods or services obtained via a commercial transaction. Such schemes offer a cost-effective alternative to judicial redress.

The European Commission has launched a public consultation on ADR schemes for consumers, aiming to identify difficulties related to ADR and ways to improve the use of ADR in the EU. The Commission has also produced reports on country-specific situations with regard to existing ADR courts, noting in the case of Malta specific gaps in the transport, tourism and energy sectors.

In Malta, the resort to ADR-based solutions remains rather limited, despite the fact that there are several public ADR schemes operating locally. These include the Malta Arbitration Centre and the Malta Mediation Centre besides some authorities such as the MFSA and the MCA disposing of ADR mechanisms.

From a Maltese business perspective, ADR-modeled solutions for cross-border consumer disputes are clearly much more attractive propositions than the ongoing discussions at EU-level to unveil mandatory legislation on compensatory collective redress possibly mirroring the US class action system.

Nevertheless, Maltese business is concerned about the rapid pace of development of the discussions on the separate but related EU legislative proposals concerning the Consumer Rights Directive and the optional European Contract Law. It is the opinion of Maltese business that reinforcing ADR systems through greater awareness and the proactive engagement of traders would deliver better results for consumers and traders alike rather than resorting to complex and administratively-burdensome legislation.

Less money and less flexibility for the EU’s cohesion policy?

A Commission Communication drawing conclusions on a detailed report on the state of cohesion policy contains a number of interesting considerations for Maltese business and how local firms can expect to benefit from a restructured cohesion policy. For Maltese business, it is a most welcome note that the Commission is planning a future cohesion policy where investments are closely aligned to the competitiveness objectives of the EU2020 strategy.

The Commission paper goes beyond the debate on the principle that cohesion policy should remain a territorial-based policy that takes into account the specific and different needs of EU member-states and their constitutive regions. It delves into the pertinence or otherwise of channelling greater investments into larger projects thereby concentrating financial resources to build up critical mass and contribute to high-impact projects.

This kind of approach is needed with regard to specific types of projects like, for instance, R&D schemes for enterprise. Nonetheless, from a macroeconomic perspective, it is also important that the future cohesion policy will allow the necessary flexibility to direct funding for the more conventional large-scale environmental and transportation projects that are still much-needed for maintaining the modernisation momentum of Malta’s infrastructure.

The Commission’s report also calls for careful reflection, particularly on the issue of co-financing, whereby the Commission is calling for its level to be reviewed and possibly differentiated to better reflect the level of development, EU-added value, categories of projects being supported and the final beneficiaries of the funding.

It is advisable to retain the highest possible levels of co-financing rates in order to facilitate the take-up of EU-funded grant schemes for business operators, especially SMEs.

Maltese business calls on EU policy-makers to exercise caution when discussing the merits of a shift towards a mix of loans and grants-based system rather than the current grants-only practice, guiding cohesion-funded support schemes for economic operators whether these pertain to ERDF, ESF or even Interreg cross-border cooperation funding streams.

For more information on EU affairs related to business, contact the Malta Business Bureau on 2125 1719, or e-mail info@mbb.org.mt or visit www.mbb.org.mt