Consumer arbitration is gaining popularity globally as a practical and efficient method for resolving disputes between businesses and consumers. It allows both parties to submit conflicts to an impartial third party, typically an arbitral institution, without going through lengthy court proceedings.
However, consumer arbitration legislation differs significantly between the European Union and Georgia.
Consumer Arbitration in the European Union
In the EU, consumer arbitration is primarily governed by:
- Directive 2013/11/EU on Alternative Dispute Resolution (ADR) for Consumer Disputes
- Regulation (EU) No. 524/2013 on Online Dispute Resolution (ODR)
These frameworks aim to provide consumers with easier, faster, and less expensive options for resolving disputes with businesses.
The European ODR Platform
The European ODR Platform is an official tool that enables consumers to file complaints online. After a consumer submits a claim, the platform encourages both parties to reach an amicable agreement within 90 days. If no settlement is reached, the parties must select an ADR body within 30 days.
An example of such a body is the European Consumer Centre Network, which assists in cross-border consumer disputes and operates across the EU, Iceland, and Norway under the oversight of the European Commission.
Key Features of the EU Directive on Consumer ADR
- Applicability: The directive applies only to consumer complaints against businesses, not the other way around.
- Voluntary participation: In most EU member states, participation in ADR is voluntary for businesses.
- Pre-dispute agreements: Any pre-dispute arbitration agreement that prevents a consumer from going to court is not binding on the consumer.
- Expedited resolution: Disputes are typically resolved within 90 days, with extensions allowed based on case complexity.
This legal framework is designed to strike a balance between efficiency and consumer protection, thereby promoting quicker access to justice.
Consumer Arbitration in Georgia
In contrast, Georgia lacks dedicated legislation for consumer arbitration. Instead, consumer disputes fall under the general scope of the Law of Georgia on Arbitration, which governs all types of commercial arbitration.
Lack of Specific Consumer Arbitration Provisions
Unlike the EU’s detailed regulations, Georgian legislation lacks consumer-specific arbitration rules. Local arbitration institutions generally handle business-to-consumer disputes, and parties do not have to attempt amicable settlement before starting arbitration.
This is especially relevant for sectors like online gambling, where consumer complaints may arise frequently. For example, Georgia recently introduced favorable tax treatment for online gambling operators targeting foreign players, which may lead to increased market activity and potential disputes requiring clear arbitration mechanisms.
Key Requirements in Georgia
Despite the absence of specific rules, several safeguards exist:
- According to the Law of Georgia on the Protection of Consumer Rights, an arbitration clause requiring consumers to only use arbitration (if it’s not regulated under Georgian law) is considered unfair and void.
- The arbitration agreement must be in writing and signed by both parties if one of them is a consumer (natural person). This ensures that consumers are fully informed and prevents hidden or unfair arbitration clauses.
Pre-and Post-Dispute Agreements
Unlike the EU, Georgian law permits parties to enter into an arbitration agreement before or after a dispute arises. Once a party initiates arbitration, both businesses and consumers must fully participate.
Prospects of Consumer Arbitration in Georgia
Given the well-structured EU framework, Georgia has the opportunity to modernize and strengthen its consumer arbitration system. Implementing dedicated legislation could:
- Raise awareness of arbitration options among consumers and businesses
- Introduce mandatory pre-arbitration negotiation duties
- Improve efficiency in resolving disputes, easing the burden on Georgian courts
- Ensure that the system better protects consumer rights and makes arbitration processes fair and transparent.
Developing a comprehensive consumer arbitration framework in Georgia could, therefore, offer a cost-effective and time-saving alternative to court proceedings. This is particularly important in a legal system currently struggling with a judicial backlog.
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