Alternative dispute resolution

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Key facts

  • If you are unable to resolve a dispute with a customer, you must provide the customer with the name and web address of a certified ADR provider and whether you are willing to use this ADR provider to settle the dispute.
  • All businesses must provide an email address for customers on their website.

Note: now the UK has left the EU, businesses are unable to use the EU’s Online Dispute Resolution (ODR) Platform and you should remove links any references to the ODR platform from your website.

Alternative dispute resolution

The traditional means of adjudicating on a dispute between a business and a customer where they have been unable to reach an agreement has been via the court system (usually the Small Claims Court). However, this route can be both expensive and time-consuming.

The Alternative Dispute Resolution (ADR) Regulations 2015 therefore establish a new low-cost means to resolve these disputes by establishing independent alternative dispute resolution providers that businesses can use to provide adjudication. Although there is no requirement in the regulations that ADR providers need to be certified, it is recommended that you use a certified ADR provider to help ensure the quality of the service.

ADR providers are organisations or individuals who will act as an independent adjudicator and make a decision on the dispute. Normally, before using an ADR provider, you will agree with the customer as to whether the decision will be legally binding. If you sign an agreement that the ADR provider’s decision is legally binding, then the decision can be enforced in the same way as adjudicated/arbitrated decisions.

If either you or the customer do not agree to the decision being legally binding, then either side is still able to go to a court or tribunal to seek redress.

While it is not compulsory for businesses to use an ADR provider, all businesses that undertake the sale of goods and services to customers (the regulations do not cover business-to-business transactions) are required to provide customers with information on the ADR.

The dispute resolution process

If you enter into a dispute with a customer, the first course of action is to try to negotiate a resolution that is acceptable to both yourself and the customer. The ADR Regulations only come into effect if your negotiations with the customer have reached an impasse.

At this point, the ADR Regulations require you to inform the customer via a 'durable medium' such as a letter or email (i.e. not verbally) of:

  • the name and web address of a certified provider and
  • whether you are willing to use this ADR provider to settle the dispute.

Note: if you are a member of a trade association or another organisation that requires members to use an ADR scheme, you must consent to using the ADR provider whose details you provide.

Once you have sent the customer this information, and providing that you have stated that you are willing to use this ADR provider, both sides have 12 months in which to send evidence to the ADR provider.

Within three weeks of receiving the evidence from both sides, the ADR provider will inform both parties as to whether they will adjudicate over the dispute and, if so, will then provide a decision within 90 days.

If you trade online

Up until 1 January 2021, if you traded online, then you were also required to provide a link on your website to the European Commission’s Online Dispute Resolution (ODR) platform. With the UK now having left the EU, UK businesses no longer have access to the ODR platform and must use a UK based ADR provider instead.

Providing an email address

A final requirement of the ADR Regulations 2015 is for all businesses to provide a contact email address on their website. This means that it's now insufficient to just have an online contact form on your website that does not show the email address.