Last November, the European Union issued a proposal for a directive on alternative dispute resolution (ADR) for consumer disputes, the purpose of which is to provide an alternative forum to the ordinary courts where consumer versus trader disputes can be resolved at no or minimum cost and in an relatively short time.

The EU considers the implementation of its ADR proposal as an important means of enhancing consumer confidence in the internal market. In the explanatory memorandum to its proposal, the EU noted that the losses incurred by European consumers because of problems with purchased goods or services are estimated at 0.4 per cent of the European GDP. Important elements in the EU proposal include expertise and impartiality, transparency, effectiveness and fairness. In addition, the proposal requires that ADR entities have a website whereby parties can submit a complaint online and where both domestic and trans-border complaints can be submitted. The eventual implementation of these measures is a tall order. Going back to basics, what is in practice being proposed is an informal out-of-court process whereby two persons – a consumer and a trader – can submit their dispute at minimal cost, which dispute can then be settled within a short period. Is such a proposal far-fetched and can it be implemented in a local context? I believe the foundations for the introduction of such a consumer ADR process already exists in the form of the Consumer Claims Tribunal (CCT). I would venture to suggest that a review of the present CCT process in the light of the EU’s ADR proposal can serve to have in place an effective and wide-ranging means of out-of-court dispute resolution to the ultimate benefit of consumers and traders alike.

The CCT process in Malta came into being in 1996. It has been a mild success as an out-of-court process with the added bonus that a final CCT decision is enforceable as a court decision. It is inexpensive to use and the procedure is relatively informal with the presiding arbiter having the faculty of regulating proceedings as he thinks best suited to the ends of justice. Significantly the arbiter can at any stage intervene to mediate between the parties.

One problem that has somewhat undermined the process in recent years is the length of the process. Interestingly, the EU’s ADR proposal provides that a dispute must be “resolved” within 90 days though in the case of “complex disputes” the period may be extended. The EU proposal fails, however, to elaborate on what happens if the 90 days lapse and no decision is given or what constitutes a “complex” dispute.

The issue of how to ensure that a dispute is resolved in short order is a long-standing problem and has no simple solution. It is easy to write in the law a requirement that a dispute must be settled within a determined time frame. But what happens if it is not? One measure which may serve to assist in speedier resolutions is requiring that a periodical update on the progress of each dispute is made to an independent supervisory entity with the clear understanding that this entity will have no remit to intervene as to how a dispute is settled but can request explanations regarding the length of the proceedings.

One must of course act with caution, fully conscious of the importance of keeping a balance between ensuring a speedy resolution of the dispute and the independence of the arbiter.

At this juncture, one looks forward towards the finalisation of the EU’s ADR proposal and the impact this may have on the existing ADR processes in place in Malta.