Unrevised transcript of evidence taken before. The Select Committee on European Union Sub-Committee E. Justice, Institutions and Consumer Protection

Transcription

1 Unrevised transcript of evidence taken before The Select Committee on European Union Sub-Committee E Justice, Institutions and Consumer Protection Inquiry on ALTERNATIVE DISPUTE RESOLUTION Evidence Session No. 1 Heard in Public Questions 1-19 WEDNESDAY 24 OCTOBER pm Witnesses: Jo Swinson MP, Graham Branton, Heidi Munn USE OF THE TRANSCRIPT 1. This is an uncorrected transcript of evidence taken in public and webcast on 2. Any public use of, or reference to, the contents should make clear that neither Members nor witnesses have had the opportunity to correct the record. If in doubt as to the propriety of using the transcript, please contact the Clerk of the Committee. 3. Members and witnesses are asked to send corrections to the Clerk of the Committee within 7 days of receipt.

2 1 Members present Lord Bowness (Chairman) Lord Anderson of Swansea Baroness Corston Lord Dykes Viscount Eccles Lord Elystan-Morgan Baroness O Loan The Earl of Sandwich Lord Stoneham of Droxford Lord Temple-Morris Examination of Witnesses Jo Swinson MP, Minister of State for Employment Relations and Consumer Affairs, Department for Business, Innovation and Skills; Graham Branton, Deputy Director of the Consumer and Competition Policy Directorate of the Department for Business, Innovation and Skills; and Heidi Munn, team leader in the Department for Business, Innovation and Skills for EU negotiations on the ADR and ODR regulation. The Chairman: Good afternoon, Minister. Thank you very much for coming to meet the sub-committee on the alternative dispute resolution proposal for the directive and, indeed, for the regulation for dealing with online dispute resolution. For the record, I should say that Members interests are recorded in the Register of Lords Interests. Members of the Committee with relevant interests will declare these as they go along. Insofar as it may be relevant, I declare mine as the holder of a solicitor s practising certificate. The session is on the record; it is being webcast and will be accessible via the parliamentary website. You will receive a transcript of this session to check and correct, but it goes on to the website immediately following the hearing. Again for the record, perhaps I could ask you to begin by introducing yourself and stating your office, although of course we know who you are. Would you please also introduce your officials and their positions?

3 2 Jo Swinson MP: I am Jo Swinson, Member of Parliament and, as of last month, Minister for Employment Relations and Consumer Affairs. I must apologise because I am suffering from a cold and a bad throat so I am slightly croaky today, but I hope to get through the questions. I shall ask my officials to introduce themselves. Graham Branton: I am Graham Branton, the deputy director of the Consumer and Competition Policy Directorate of the Department for Business, Innovation and Skills. Heidi Munn: I am Heidi Munn, team leader in the department for the EU negotiations on the ADR and ODR regulation. The Chairman: Thank you very much. Minister, if you do not want to finish this session with no voice at all, we will understand entirely if you would like your officials to make an opening statement. Also, I should say that we recognise that some of our concerns about the override, which perhaps caused us in the first instance to want to pursue this in more detail, were taken before you assumed this office. We understand that, although I am sure that you have made yourself aware of the circumstances of the override and that you will be able to answer the questions. Jo Swinson MP: Certainly. I will make a brief opening statement only to say that it is unfortunate and I am sorry that we are in the position of having to have this discussion. Clearly the use of a scrutiny override is not desirable. We take very seriously the importance of scrutiny and therefore we apply the scrutiny override in only a small number of cases. BIS applied it only five times on the dozens of various documents and proposals that came forward during the first six months of this year. However, I accept absolutely that it is not an ideal situation for the Committee. The situation was unavoidable and I am sure that there will be questions about it, but as I say, it is not something that we do lightly because proper scrutiny in both Houses of Parliament is a really important part of the whole process of looking at proposals that come from the European Union.

4 3 Q1 The Chairman: I am sure that the Committee understands that from time to time, even if we hope that it is not necessary, overrides do occur. What we have found quite difficult to understand is why an override was necessary in this particular instance. What caused the haste? What was it that weighed so heavily with the Minister that he found it necessary to do this in circumstances in which we had not even had a proper text, and in circumstances where the text we did have was marked limité, but which turned out not to be limité anyway. We were then told that it was not the Government s mistake but the Council s mistake. Presumably the Government know when something should be limité or not. Jo Swinson MP: There was a range of different factors in this circumstance, and issues around recess dates and timetables also conspired against us in this instance. Obviously we had launched a call for evidence, and at the end of 2011 and the beginning of 2012, we took views on the Commission s proposal. In the run-up to the meeting at which this was to be discussed, my predecessor wrote on 25 April to the Committee to set out the situation and to give a degree of warning. That was because we anticipated that this unfortunate circumstance could potentially arise. The meeting was to take place on the 30 May, so by around 10 May we had prepared a submission, ideally to be sent out from the Minister. However, around that time we recognised from discussions with colleagues in Europe that significant changes might be made to the text at the meeting on 16 May, and therefore a decision was taken to wait for a few days rather than send information on to the Committee which, while that would have allowed a few extra days, could actually have ended up being very misleading because we were anticipating that at the meeting on the 16 May significant amendments would suddenly be proposed. As soon as that meeting was done and there was some clarity over the text that would be put forward on 30 May, my predecessor signed the letter in the evening of 16 May, although you will appreciate that it will not actually have

5 4 made its way to the Committee until the following day. That meant that the time for scrutiny by this committee was more limited than would have been ideal, and that is how we got to this situation. We felt that it was very important, despite not having had the waiver granted, none the less to vote and take part for three key reasons, which were the considerations taken on board by my predecessor. The first of those was a request from the higher and further education sector in the UK that we should negotiate an exemption for that sector from this directive. The sector was very concerned about the impact it could have and how complicated it would be if it were to go through. Therefore, in order to have any chance of securing that exemption, it was clear that we needed to be in a position where we were able to engage in negotiations and in a position actually to vote. Secondly, if we had not voted we would have lost all the leverage we would have had in subsequent discussions. Obviously the discussions and negotiations have continued since that meeting, and it was felt that it was important for the UK to have a strong voice in them. The other reason was a more general one regarding reputational damage to the UK and our relationships with our fellow EU member states in terms of being able to engage in those discussions. There would have been a problem for our reputation if we suddenly did not vote despite wanting to engage and making sure that we got the best deal for our higher and further education sector. For those reasons, we felt that the option of not voting would have been damaging and not in the UK s interests. Q2 Lord Dykes: Was there some feeling that both the UK Government and other member state Governments in the ministerial Council were a bit too obsessed with meeting the deadline of the anniversary of the single market? Was that a strong factor?

6 5 Jo Swinson MP: I have to confess that I was not part of the negotiations at the time, so I do not know if that was a factor. Perhaps I should ask my officials if they were aware of a particular impetus. Graham Branton: I was not aware of that being a major factor pushing the timing. It was driven by the Danish presidency rather than by the UK authorities. We were following the timing set by the Danes, and I cannot really comment on what was motivating them. Lord Dykes: It was unusually rapid, was it not, when measured against other negotiations like this? It was quite fast. Graham Branton: Yes. Q3 Lord Anderson of Swansea: It was unusually rapid, but presumably there should have been warning signals and bells should have rung beacuse things were moving rather more quickly than had been anticipated. Was there any fault on our part in not being aware of the speed of negotiation? Jo Swinson MP: I think we had some awareness, which was partly what prompted the letter sent on 25 April. Now obviously at that stage, we did not have the final text and as soon as we did we sent the follow-up letter signed on 16 May and forwarded it to the Committee the following day on 17 May. Certainly, about five weeks before, we had some awareness that it was moving more rapidly. That is why we tried at all stages to make sure that this Committee was kept as informed as possible, albeit in the context of what we were aware of in terms of the final text, which we did not have on 25 April. Graham Branton: If I may just add to that, we were aware from a fairly early stage that the Danish presidency would push this dossier quite hard and fast. What we were not aware of in April was the large number of amendments that other member states were going to lay in May, because they had had opportunities before. We had been pushing the things that we wanted to have changed for some months at that stage. But I think some other member

7 6 states had been a bit slower than us in coming forward with the changes that they wanted, so a lot of amendments and discussions were laid at the last minute. The Danes tried to hold to their original scheduling, which meant that April and May were particularly frantic. I do not think that it was a fault on our part. It would have been hard to predict what the other member states were going to do when they were not indicating earlier that they were going to do it. It was just a combination of circumstances, I think. The Chairman: There is no great urgency about this matter, is there? Jo Swinson MP: The decisions were being made on 30 May, so if we had not participated in that, we would not have had a UK voice in those decisions. You could have had a situation where they moved forward but without, for example, the exemption for the higher education sector in the UK, which is important and in the interests of our country. The Chairman: I do not want to pre-empt a later question, but I do not quite understand why you say that if we had not gone along with the general approach in May we would have been outside. At that stage, there was no question of an opt-in or opt-out situation, was there? I know that this is now arising and we will come to that later on, but at that stage this was a single market measure. Heidi Munn: You are quite right: there would be no formal exclusion of the UK from negotiations, but this would be a reputational problem. Having pushed for the concessions that we did so strongly during the negotiations in April and May, to have then abstained from the final general approach would have reduced our negotiating capital to argue and to maintain those important changes in the text. That is what our partners in Brussels tell us would have happened. The Chairman: I suppose we do not want to dwell on the history for too long. Q4 Baroness Corston: Minister, what evidence is there that the lack of alternative dispute provisions is a hindrance to the single market?

8 7 Jo Swinson MP: A range of different studies show that there is a problem. In 2008, the OFT undertook a study that said that 48% of consumer problems are completely resolved. I do not think that that is high enough at all. There is also evidence that shows that when consumers are asked, 57% of them actually say that they are not interested in making crossborder purchases because they are worried about the difficulties if they then later need to resolve problems for example, returning faulty goods. It stands to reason that if any of us are engaging in cross-border purchases, we may have less confidence. That is not a helpful situation, so there is a problem. The alternative dispute resolution mechanisms vary greatly between the different member states. In some countries, such as the UK, we have welldeveloped ADR mechanisms. In some other countries in the EU, according to the Commission s analysis, there is no provision, very little or patchy provision. There is a gap there. Therefore, this is something that is helpful to consumers. Equally, I do not think that we should pretend that it is some kind of panacea: it is part of a range of measures helping consumers. It is certainly helping to close one of the gaps that exists. Q5 Lord Stoneham of Droxford: How do you think the consumer protection schemes introduced by these proposals will work in practice? Jo Swinson MP: I would like to caveat my remarks on this by saying that this is still subject to the negotiations that are ongoing at the European level. Exactly how it works in practice will necessarily depend on the final details of the EU legislation that is adopted. For examples of the types of things that can happen, we have in the UK we have a range of ADR providers, many of whom say that they already meet the types of criteria that are being discussed in terms of the quality mechanisms. Equally, it may be that some of them would want to assess whether or not they meet all those criteria so it could end up leading them to improve their procedures and the speed of the procedures in terms of how quickly they resolve complaints. It would also mean that companies and traders in the UK would most

9 8 likely have to provide information to consumers about what ADR mechanisms are in place that they can have recourse to if necessary. In relation to the regulation about online dispute resolution for businesses that are trading online, they would have to give information about the platform that would be created to help with dispute resolution online. Those are just a few examples of the types of things in terms of how it would work in practice, but there is the caveat that the final details of the legislation will dictate exactly how it works in practice. Lord Stoneham of Droxford: Do you think therefore that we have some competitive advantage that we can use in this? Jo Swinson MP: I think it is certainly the case that we have strong ADR procedures here in the UK. That is good for UK business anyway because I hope that we accept around the Room confident, empowered consumers make for better businesses which are then competitive and have an advantage over businesses in other countries where there is perhaps not the same regime. It may also be the case that when this directive goes through, the expertise that we have in the UK can be shared with other countries. Some of that may be through consultancy or some the other providers that exist. Lord Stoneham of Droxford: I have a later question on that. Jo Swinson MP: I will stop there. Q6 Baroness Corston: Who do you consider would be appropriate to run these ADR schemes? I know that in some European countries they are run by business. Is that the kind of model that the Government are looking at? Jo Swinson MP: There is already a wide range of ADR providers in this country. We have various ombudsmen such as the Financial Ombudsman Service, the Office of the Independent Adjudicator for Higher Education and the Centre for Effective Dispute Resolution and there are some trade associations that run ADR schemes. Perhaps one of the most well known would be ABTA, for example. There are different models out there.

10 9 There is no reason why it should be one-size-fits-all, where you have an effective process working in a specific market place. There is individual expertise about that marketplace that might be helpful within the ADR provider. That said, obviously there are some that are not business-run as well. There can be a range of providers. Q7 Baroness Corston: You are probably aware that Which? is very opposed to industryrun schemes and thinks that they should be independent, like the Financial Services Ombudsman. Have you had discussions with Which? about this? Jo Swinson MP: I have not personally had discussions with Which? about this. I am due to meet Which? I think it is next week but my memory of my diary is not perfect. I am certainly due to meet Which? In the very near future, though, and we will be discussing a whole range of issues. Baroness Corston: And you will be discussing this? Jo Swinson MP: I am certainly happy to discuss this with them. Heidi Munn: I have had many conversations with officials at Which? about the legislation quite regularly as the negotiations have gone. I am aware of some of the concerns that they have, and one of the contentious issues with the negotiations at the moment is what the criteria should be around independence. That is an interesting area that we are going to have to keep an eye on, going forward. Q8 Lord Temple-Morris: If I could bring it down to ground level, as it were, as to what we are really aiming at here and what we are trying to do, where are the main advantages for consumers? This is the purpose of the question, really. ADR in the country is diverse, as you well know, it has grown up privately. There are law firms that specialise in it and the parties that indulge in it are quite capable of looking after themselves and making their own arrangements, as indeed they have for generations over arbitration and so on. Therefore you get to a situation where it will be resolved into each country. According to the directive, an

11 10 ADR entity shall be established a terrifying prospect, it seems to me to provide dispute resolution outside the court system. Red lights flash all the way here over public expenditure, bearing in mind that most of the big boys will look after themselves. You will then have almost a European or at least one that was established nationally small claims court type of thing. That will need public expenditure to come in. What are we really after here? Where is the gain? Jo Swinson MP: We in the UK are in a situation where there are well developed ADR mechanisms, but when you have a customer in the UK who is buying something from another EU member state, they do not necessarily have access to that same range of ADR providers; as I have said, in some countries in the EU it is non-existent or patchy and limited. So that will be of benefit to UK consumers, who will have more protection when buying in other countries, particularly if you take the online dispute resolution where one of the practical applications attached to it will be a translation service. By necessity, one of the challenges that can arise when you are dealing with 27 different member states with different languages is simply having proper communication when something goes wrong. Those are the benefits. If consumers are more empowered and have more information, there is a wider benefit of that to business as well; it means that you can have more cross-border trade, which is good for British business. That deepens and improves the market that exists. There will be benefits to consumers from this. As I say, I do not think that this on its own is a panacea, and there are other things that we need to do. Q9 Lord Temple-Morris: Okay, benefits to consumers, yes, but we are dealing here with different levels. You have gone into the consumer level, quite rightly, but who pays? Say that a mail order company orders something from Latvia or that sort of area an individual purchase of a fairly humble nature from what you have already said this means that apparently they will be reminded that they have alternative dispute procedures. It will be

12 11 utterly beyond them to decipher it unless it is all explained for them, and to my mind it will become a matter of public service a small claims court or whatever. I cannot quite see this happening without a considerable amount of expenditure. Jo Swinson MP: As I say, there is a cost to alternative dispute resolution. That cost is generally lower than the cost of things going through the courts, so it is a helpful thing to encourage businesses and consumers to engage in. There are different models regarding who pays. In the UK, with regard to additional costs, when we did the call for evidence on the original European Commission proposals, the majority of the UK ADR providers came back and said that they felt that either they already met the criteria that had been proposed or they would be able to do so pretty easily. That therefore suggests that there will not be a significant cost there. If you were talking about a country where there was not currently good ADR provision then it is a question about how that gets set up, and there is a discussion to be had about the balance of that cost between the consumer and the business. There are arguments about that and there is a delicate balance. Some of the providers that exist in the UK put all of the cost on the business, which is fine if they are happy to do so, but equally, if you require that to be the case although this is a voluntary initiative, that might not encourage many businesses to sign up to it, and obviously we want them to sign up so that we can try to settle disputes outside courts if possible. Equally, you do not want all the costs falling on the consumer. There is also an argument to say that if you have zero cost for the consumer, that can encourage frivolous vexatious complaints, so at least some sort of nominal fee has a certain sense to it. Getting the balance right of how those costs are split is important. I am sure that it will be different in the way in which different provision gets set up; as I say, in the UK we already have a mix. Q10 Lord Elystan-Morgan: On the question of costs, Minister, the directive on ADR says that costs will be limited to such as would be moderate in the circumstances. I

13 12 appreciate that there may be very many factors that determine what is moderate in a particular case. You will no doubt recollect that some 12 years ago there was a comprehensive review of civil procedures by Lord Woolf. One of the problems that they faced, possibly the greatest problem, was the question of costs. There was a determination then that, whatever happened, costs in a civil action should never be other than proportionate to the value of the claim that was in dispute. Would you agree that that should be some sort of background principle in this matter? Jo Swinson MP: It certainly has great logic to it. We do not want to place disproportionate costs on business. The way in which this will proceed is that, once the directive is agreed, we will need to consider and consult again on the specific detail of how we comply with the directive, and that of course would include what the definition of moderate would be seen to be. We think that that is appropriate language. Some people are pushing for it to be lower or nominal and I can understand that view was well but, for the reasons that I outlined in my previous answer, there is a balance, particularly in a voluntary scheme, in trying to ensure that business feels that it is in its interests to engage with this and that the scheme is therefore not unwieldy. We want this to be a success and to avoid the courts where possible. Lord Elystan-Morgan: I am not saying that it should be the only criterion there will be many others but it should always be a massive background to the consideration of cost. Q11 Lord Anderson of Swansea: The quality of ADR entities will vary from country to country. For example, if I were to have a consumer dispute with a Latvian supplier, there may be considerable problems of language and many technical schedules that would have to be interpreted if the ADR entity were fully to understand the nature of my complaint. Who picks up the bill for translation?

14 13 Jo Swinson MP: In the online dispute resolution, that will be part of the portal that is being created, although it does not mean translation of the whole thing. Clearly there will be a split of costs between business and the consumer, and that is part of the discussion about moderate costs. The details of this are still being discussed at the European level, and in implementing any directive we will be consulting on exactly how to do that, as would other countries in the EU. Lord Anderson of Swansea: Where do we think the costs should lie? Jo Swinson MP: Well, there is that balance between the consumer and business. We want a situation where it is possible for people to bring complaints and disputes and not find that there is a huge barrier of, for example, a massive translation bill before they start. Indeed, if you are a business operating on a cross-border basis, presumably you often communicate with your consumers, and that may already be in a range of different languages. It is one of the challenges of operating across the EU in different countries that businesses already have to deal with, and it may be that they already have some mechanisms in place for that kind of translation and communication for the consumers. It is important to remember that the dispute is with someone who is their customer and has bought something from them already, so there is a significant interest for the business in facilitating that, particularly if it also means that they can avoid a much more costly court case. The translation costs in alternative dispute resolution are low compared with legal fees. Q12 Lord Anderson of Swansea: Presumably our concern is not with the businesses, which can look after themselves, but with the individual who may buy a Latvian washing machine. Jo Swinson MP: Indeed. That is why I just said that we do not want there to be a barrier, so that people feel that they cannot actually engage in a dispute if they have had poor quality service. The translation service that exists for the online dispute resolution website through

15 14 the regulation is a useful step. That is why we are talking about moderate costs, and the exact definition of that. Q13 Baroness O'Loan: I think you have wandered into this territory about which I wish to speak. The directive requires that all consumer disputes are available for resolution through an ADR entity. Have you been able to indentify the gaps in our ADR market, and to what extent do you think that the Government will have to fill those gaps to satisfy its obligations? Will there be costs to the UK taxpayer where there are such gaps? Jo Swinson MP: Clearly, we would need to do a further assessment of ADR provision in the UK in light of passing the legislation. It makes sense to do that once the detail is clear to avoid duplication. It is also worth noting that when we had the call for evidence in the UK, there was actually one provider, the Centre for Effective Dispute Resolution, which claimed to offer ADR for all consumer-to-business disputes. A second one said that they did so for all online sales. That suggests that there certainly are some ADR providers in the UK who feel that they do already cover the full gamut of disputes. Obviously, we would be doing a further assessment in light of the directive. We also recognise that many ADR providers felt that they already met the standards that were being set out in the initial proposals. We are not anticipating a large cost, but obviously we would have to make the specific assessment once the detail was known. Baroness O'Loan: Do you think that there are any specific areas in which there is a marked dearth of ADR and consumer resolution process? Jo Swinson MP: There are no specific areas that we have a huge concern about at the moment. As I say, there are providers who say that they offer that service. The increased awareness to consumers will be very welcome. In more general terms, the Government have been doing a variety of things to address the consumer protection landscape and want to really make sure that we can create confident consumers who are empowered, feel that

16 15 they know their rights and have confidence in using them. We recognise that that has an overall benefit for the economy. While there is pretty good provision of ADR, it is important also that consumers know about it. We will be looking, obviously, at ways to improve that. Q14 Lord Stoneham of Droxford: Minister, you indicated that there was an opportunity for UK quality ADR to take advantage of the single market in your earlier answer. I wondered whether the Government have any figures available as to the value in the European market for quality ADR. Jo Swinson MP: The first thing to say is that, in talking about it as a market, there are clearly opportunities there, but it is not the kind of market you would necessarily want to see hugely growing. You might want to see it grow compared to court cases but, in an ideal world, we would want to get to a situation where consumers had a good service from all of the providers that they bought goods and services from. If there was any dispute that they had, then that was resolved amicably with the company involved without even the need for ADR, let alone taking things to court. In an ideal world there would be no market in consumer-to-business dispute resolution. Obviously, the business-to-business market is separate. There is a big market there, but that is not within the scope of the particular directive regulation that is being considered here. I do not think that I can give you a figure for the value of that market. A large market is not necessarily a desirable thing to have; it is a sign that there are unresolved disputes. There definitely is the opportunity for some sharing of best practice. Individuals who are experts in this area may well find that they get contracts to act as consultants and go to other EU member states where there is a less developed ADR landscape and provide best-practice expertise and advice. It may well be that existing providers in the UK were able to extend their scope because the most cost-effective way of another country or a particular sector in another country complying with the directive

17 16 would be to use an existing set-up and pay in order to do so. There are some opportunities, but I would not overstate it. Lord Stoneham of Droxford: I just wondered whether, when you did your consultation, you picked up any examples of organisations that thought that they might take advantage of it. Jo Swinson MP: I am not aware of any specific examples. Heidi Munn: We had some responses where people thought that there would be opportunities. Others raised the problems of language differences that could be a potential barrier to those opportunities. Two or three current UK ADR providers say that they already provide a service in other EU member states, so there has clearly already been some movement in that direction. Q15 Lord Temple-Morris: Here we go again, on the relationship between the ODR this great net above us all and alternative dispute resolution, with a background of who pays for what which seems to be, at the moment, a consumer lobby-driven exercise which has actually got itself very well established. The draft regulation introduces everyone to ODR and, via ODR, all sorts of consumers who would not be making contractual provisions for their own welfare. It turns my cheek a little bit, but not much. They would not be making much provision for themselves. They would see this wonderful halcyon service, and they would therefore go to ODR and would then be drafted down from there, via the resolution, to a national ADR entity. This wonderful national ADR entity, we do not know quite what it is but there are a number of possibilities. Each member state would then be invited to designate an ODR contact point staffed by at least two individuals. My suggestion to you, Minister, is that it will take a darn sight more than two individuals to deal with the onslaught that this will probably attract; at least two individuals to support and facilitate the resolution of disputes submitted via the ODR platform. You are really coming into a major

18 17 area of public provision not private, where it largely is now. Have you thought this through at all? Jo Swinson MP: First, to consider the regulation, this applies to online sales. There is a logic that if you are buying a product or service online, the initial contact point for resolving that dispute is also online. There is a benefit to that, as with the translation service. That will act as a signposting mechanism to the relevant and particularly good quality, in terms of meeting the criteria ADR provider. It does not mean that it will always be the same ADR provider in each member state. It does not mean that a minimum of two is a maximum of two members of staff. It may well be that in a particular state there is a range of different ADR providers, so that it is not one two-person entity dealing with all the disputes that come through this. Heidi Munn: The text of the legislative proposals is quite complicated to understand. It is something that has been a difficulty for the member states as we have been going through the negotiations; indeed, now the Parliament is looking at it as well. One of the first things is that there is no intention that each member state has to have a single ADR entity. The directive states that member states have to ensure that there is quality ADR provision for all disputes. That can be done through existing ADR providers. If a gap needs to be filled, it could be done by creating a residual ADR entity, or through extending the scope of the existing bodies. The likelihood is that each member state will have more than one. There are a few member states that already have a publicly funded ADR system, and they would retain it. In many other states, including the UK, we would have more than one. The ODR facilitators and their role have been the matter of some debate in negotiations. It has been narrowed to helping consumers to access the ODR platform. It is very much now being focused on filling out the initial complaint form and using the online system, so they

19 18 would not actually be resolving the dispute themselves. Their role is being redefined as negotiations go on, and we will have to see where those discussions end up. Q16 Lord Temple-Morris: But there is huge potential for a bureaucratic muddle in terms of who has responsibility. If, for example, Latvia were to get into trouble Lord Anderson has chosen to use it as an example it will come through on to what is basically a contact point, a facilitator. It will then have to find some dispute resolution people to take it on. Many of them will say, We don t want this. You are going to find that you need quite a big bureaucracy in order to put it around. Heidi Munn: The Commission is confident that it can create an automatic signposting service through this ODR platform. What would happen is that the consumer would fill in a complaint form setting out the nature of the complaint, with whom and a number of other details again, subject to negotiation. The ODR platform will have links to all the registered ADR entities in Europe and will present the parties with viable options. The idea is that most of this will be done automatically and that it will be the responsibility of the European Commission. Q17 Lord Elystan-Morgan: It is a long time since I retired from the law, but I suspect that England and Wales already have in place a fairly sophisticated machinery and a fairly sophisticated attitude towards ADR. If I remember rightly, the civil court rules, which of course were the product of the Woolf reforms, make specific provision for directing parties towards ADR and giving them the opportunity to consider it, and where the court thinks they need time to do so, it can unilaterally adjourn a case. Is that not the case? Jo Swinson MP: I am not a legal expert, but I am happy to believe that that is the case. Lord Elystan-Morgan: If that is so, it may be that we are more sophisticated and mature than almost any other of the other 26 countries of the European Union.

20 19 Jo Swinson MP: Indeed, and that is consistent with the general approach not just of this Government but of predecessor Governments. Where it is possible for there to be a dialogue, whether in consumer disputes or employment disputes, we should try to have good conciliation and arbitration alternatives. That is absolutely a better outcome for everyone involved. If you can create a system that, as far as possible, directs people at least to try and exhaust those opportunities before the last resort of justice through the courts, that is very helpful. Heidi Munn: I would add, Minister, that the aim of this legislation is to have ADR being used before cases are taken to court because that step in itself is often a step too far for a consumer to take. Although we have a lot of provision once cases go to court to get the parties to consider ADR, actually this is aimed at one step before that. Lord Elystan-Morgan: That is a fair point. Q18 The Chairman: Minister, in conclusion, I refer to your letter of 15 September to Lord Boswell in which you helpfully brought us up to date on the position. You talked about the amendments that are being put forward by the European Parliament and the fact that they may contain obligations in the field of justice and home affairs. I think that you are basing that on the fact that there are provisions which would require member states to amend limitation and prescription periods so that they do not expire during ADR. The Government are saying that if that kind of provision is included, then it is a JHA obligation that may trigger the opt-in or opt-out. The Government and this Committee have a history on this, as to whether or not opt-ins exist when the legal base is not actually a Title V provision. I think that the Government have taken the view that, from time to time, it is if they think it is. Your letter also goes on to suggest that we might be under some pressure, again because of the 20th anniversary, to come to conclusions about whether or not we should opt in or opt out. As things stand at the moment, this is a single market provision, so

21 20 the opt-in does not apply. If we are confronted with the question of whether we should opt in or opt out, and the provisions that will apply to those, I hope we do not find ourselves, as your letter suggests, having to do it at very short notice. Jo Swinson MP: I wrote the letter in order to be fully upfront with the Committee about the situation, which of course is still unclear. In terms of the timing, that has been set by the presidency rather than by any particular anniversary. The UK position on these amendments is to suggest that this particular piece of legislation in terms of the single market should not include any JHA obligations. We will continue to make that case. Indeed, for a variety of reasons a number of other member states are also opposing the proposal that these particular amendments should be included. We do not know where we will get to, but it is possible that, through the trilogue negotiations, the European Parliament could formally submit to the Council a version of the legislation that contains one or other of the amendments in question. It is the position of the UK s legal advice that we might then consider that the Title V opt-in protocol had been triggered. That would lead us into the situation where there could be only a few weeks before the legislation was put to the Council. As I say, we are taking steps and arguing in order to try not to be in that position, but if we were, we would obviously have to consider the situation. We think that in that scenario there could be real risks attached to not opting in, but obviously we would want to seek the views of colleagues both in this House and in the other House before taking any view. But we may be in a situation where the timetable is not what we would ideally wish for. That is why I thought it would be helpful at an early stage to make the possibility clear to the Committee in order to give it the maximum opportunity to discuss it. Q19 The Chairman: I am sure that we are grateful to you for the advance warning, and I am sure you will understand that if, when we have deliberated, we come to the conclusion

22 21 that we do not like making decisions until we have seen what we are deciding on, you will understand. Jo Swinson MP: Absolutely, and we will endeavour to be as timely as possible in our communications so as to make sure that you have sight of texts as soon as we do. The Chairman: Thank you very much. Minister, is there anything else you want to add? Jo Swinson MP: No, I think that a wide range of questions have been asked and I will save my voice, if that is okay. The Chairman: Indeed. Perhaps I may thank you and your colleagues very much for coming before the Committee.