ADR in the Nordic and Baltic Countries
Alternative Dispute Resolution schemes in the Nordic and Baltic countries have a lot in common and build on the same principles and ideas. However, it is also clear there are differences in procedures and working methods. This comparative study aims to gain insight in the similarities and differences between ADR landscapes in Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden.
Introduction
The Nordic and Baltic countries have a lot in common in alternative dispute resolution (ADR). Not only does the same EU regulation, the ADR directive, apply to all countries' ADR schemes but the countries also build on the same ideas and thinking on how to organize and deliver out-of-court dispute resolution.
However, looking closer it is clear that there are also differences when comparing ADR in the Nordic and Baltic countries. The number of notified ADRs differs and there are different procedures and working methods. Furthermore, all countries have their own different limitations preventing them from offering consumers a full ADR coverage in reality.
We have done this comparative study of ADR in the Nordic and Baltic countries to gain more insight into the similarities and the differences in the ADR landscapes in our countries. The reasoning behind doing this comparative study is three folded:
- We want to provide our Network, the ECC-Net, with better understanding on how ADR works in the Nordic and Baltic countries, thereby qualifying the work we do in the Network with assisting consumers in cross-border disputes.
- The study is also done to provide information to the European Commission, Nordic and Baltic ministries and other stakeholders. Information that can be used as insight and inspiration during the expected revision of the European ADR and ODR legislation.
- Finally, it is also the aim of the study to provide national ADR competent authorities and others with knowledge and data about the ADR schemes in this region. This way we would like to help create a better basis for each of our countries evaluation of national ADR schemes – “Learn from your neighbours” is often the best and easiest way to find inspiration for improvements.
Observations
It is not as such the scope of this study to deliver recommendations, but the discussions between our centers during an ADR workshop hosted by ECC Latvia in December 2022 with the purpose of getting in depth understanding of each countries ADR schemes nevertheless revealed a few important observations.
In general, trader engagement in ADR and trader compliance with decisions are very strong in the Nordic and Baltic region. There are several reasons for this:
Some countries specifically mention that ADR bodies are well-reputed by traders and therefore even the non-binding decisions from an ADR are often accepted. Other ADR entities ensure trader engagement and compliance due to their binding decisions or the also well-used type of decision where the trader is bound by the decision if no reaction from the trader. Such decisions ensure that traders that are not actively disputing a decision are bound by such decision. As such, this type of decision does not prevent the traders from taking a dispute to court, but at the same time it safeguards the value of an ADR decisions from the consumers perspective in the situations where a trader simply ignores the ADR procedure.
Very often consumers from other countries have difficulties using the national ADR entities. This is the situation in all countries. Language barriers, difficulties in understanding procedures and ADRs' non-acceptance of cases where applicable law are not national law is some of the most often mentioned reasons why consumers from other EU countries have difficulties taking advantages of the ADR schemes.
The ECC's in all Nordic and Baltic countries work in different ways to support the national ADR schemes. From supporting ADRs via active participation in decision-making and interpretation of EU law and practice to concrete assistance to consumers from other EU countries in order for them to navigate through the complaint procedure at the different ADRs. The services provided by ECCs varies from country to country and it seems relevant to consider if such services towards ADRs and consumers can be aligned and better supported to strengthen ADR in cross-border disputes.
ECC Denmark, ECC Estonia, ECC Finland, ECC Iceland, ECC Latvia, ECC Lithuania, ECC Norway, ECC Sweden
Survey
The comparative study is based on data gathered by our centers in October and November 2022. The data was further qualified in discussions that were carried out at the joint workshop in Riga.
With this report, we provide a unique and easily accessible comparative study of ADR schemes in the Nordic and Baltic region. The data is not meant to be an exhaustive presentation of countries included in this study; neither does it resemble the official ADR reports produced by the national competent authorities.
Instead, this study is looking into some of the most important characteristics of the ADR schemes from the practitioners’ perspective, for example the different limitations that can hinder consumers from turning to the ADRs. The focus in this study is also on ADR complaint handling barriers linked to cross-border disputes, as the ECC-Net's main task is to assist consumers that are involved in a cross-border dispute with a trader.
Each dataset is accompanied by a few comments and, where relevant, we have also provided some insights that cover in-depth information on some of the interesting findings, and/or some good examples identified in one of the participating countries.
ADR accessibility
English is the most broadly accepted foreign language and can be used in many ADR entities in the Nordic and Baltic countries. But in all countries there are ADR entities that require complaints to be filed only in official national language(s).
Almost all ADR entities only accept cases where the applicable law is the national law. In all countries it will often not be possible to file a complaint at an ADR entity if the trader is not established in the same country as the ADR.
Trader engagement is mainly voluntarily but most ADRs in the Nordic and Baltic countries can make decisions regardless of whether the trader participates or not. This way the procedural rules give traders a strong incitement to participate in ADR.
Although all sectors seem to be covered in most countries there are in reality some circumstances that limit the coverage in reality: Full ADR coverage in reality is reduced by monetary thresholds in most countries, as well as due to cases being rejected if the trader is not established in the country of the ADR, or because the applicable law is not the national law.
ADR schemes and procedures
The Nordic and Baltic ADR schemes cover a wide range of different ADR models: Complaint Boards, Mediation, Conciliation, Commission, Decisions by public authorities, arbitration and Ombudsman.
The average case handling time varies not only from country to country but also from one ADR entity to another. From 58 days as the shortest average case-handling time and 16 months as the highest.
All countries have ADR entities that use expert opinions as part of the decision making.
Country-specific information on ADR schemes and procedures
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Fees for consumers and costs for traders vary considerably from country to country as well as between national entities. In two countries, Finland and Lithuania, the ADR schemes are completely free of costs and fees for the consumers and traders.
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Insights
In Denmark an often used cost model differentiate the costs a trader has to pay to the ADR. The trader pays a reduced cost if the case is settled during the process at the ADR entity (sometimes depending on which phase the case has reached) and full cost if the decision is made in favor of the consumer. Usually, the trader pays no cost if the case is won. This way there is a build-in incitement for traders to avoid complaints to the ADR entity or to consider an early settlement of the case if the outcome is uncertain.
In Iceland consumer fees are kept as low as possible to ensure that access to ADR is not made difficult due to financial threshold. If the consumer wins a case (partially or in full) he or she generally gets the fee refunded. Usually, the trader pays no cost if the case is won.
In Estonia the draft law on amending the Consumer Protection Act is being reviewed. The main goal of the planned changes is to ensure simple, quick, cheap, impartial and fair resolution between traders and consumers. Among other planned amendments, changes in the cost model has been under discussion, but the process is still in its early stages.
In Norway the public residual ADR is financed by the government. Neither consumers nor traders have to pay a fee. In some other ADR entities the trader has to pay a small or bigger amount, sometimes depending on the outcome of the case.
In Lithuania, most ADR procedures are free of charge for consumers and traders. However, in cases where the main ADR body undertakes the inspection of a particular good or service, the costs for this inspection are covered by the trader if the consumer's request is satisfied
#fees-and-costs
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All countries have ADR entities that operate with non-binding decisions and all countries except Finland have ADR entities issuing binding decisions.
ADR entities in three countries – Denmark, Iceland and Lithuania – issue decisions that become binding if the traders do not challenge the decisions.
With a few excemptions, the compliance rates are very high in the Baltic and Nordic countries – between 70 to 100 %.
ADR decisions compliance rates
- Denmark: 84-100%
- Estonia: 64-100%
- Finland: 70-100%
- Iceland: 83-100%
- Latvia: 40-71%
- Lithuania: 33-100%
- Norway: Not available
- Sweden: 78%
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What is a binding decision in cases where the trader does not react?
If the trader does not react, the decision becomes automatically enforceable upon the expiry of the deadline. Denmark, Iceland and Lithuania make use of this type of decisions.
This means that consumers get enforceable ADR decisions in the cases where the trader does not participate in the ADR procedure or ignore a decision.
In Denmark and Iceland, a trader that wants to avoid being bound by an ADR decision has to notify the ADR within 30 days after receipt of the decision that the decision will not be honored. In Lithuania, a trader that wants to avoid being bound by an ADR decision has to turn to court within 30 days after the adaption of the decision.
These types of decisions put pressure on the trader to react to an ADR decision in favor of the consumer and it strengthens the validity of the ADR entities. At the same time these types of decisions do not prevent the traders from going to court in a situation where the trader find it reasonable to challenge the ADR decision.
High compliance rate with non-binding decisions in Finland
The Finnish ADR scheme has a long tradition helping consumers – the ADR entities (or their predecessors) were established decades ago. Transparent decision-making practices, strong expertise and the trust built over the years may explain why the majority of traders are willing to comply with non-binding ADR decisions.
Secondly, publicity matters. Traders that do not comply with ADR decisions are usually named. The Finnish media is usually interested in publishing articles about well-known traders that refuse to act according to the decision. This may have a deterrent effect.
#decisions
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