Alternative dispute resolution

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The traditional means of adjudicating on a dispute between a business and a customer who 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 established a new low-cost means to resolve these disputes, by detailing independent alternative dispute resolution providers that businesses can use to provide adjudication. Although there is no requirement in the regulations for ADR providers 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 can 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.

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 (that is, 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.

Up until 1 January 2021, if you traded online, 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.

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 is now insufficient to just have an online contact form on your website which does not show the email address.