A Guide to French consumers ADR reform – compulsory as of 1 January 2016

Beyond the principle, what steps should be taken to achieve compliance?

Which professionals are concerned?

This new obligation applies to any professional established in France and/or EU, dealing directly with French consumers and acting in a commercial, industrial, trade or liberal professional business capacity. It concerns all sectors, apart from non-economic services of general interest, higher education and health services.

The scope is therefore extremely wide and henceforth means that any professional entering directly in contract with a consumer, whether in the context of physical shop premises or online, is required to systematically offer a ADR process for settling disputes with consumers.

Which disputes are covered?

French Consumer Code excludes from the scope: "claims raised directly by the consumer with the professional’s client service" and "direct negotiations between the consumer and the professional ".

The consumer must indeed have initially attempted to resolve the dispute directly with the professional in writing. ADR is thus only possible after failure of an attempt to settle the matter amicably. From a practical point of view, it may however be complicated for a consumer to determine from which point the negotiation have been broken off.

It will therefore be in the best interest of professionals to clearly inform their clients when a claim has been taken into account by the customer service, and the expected timescale expected to respond to this claim.

Which entity should be appointed?

Three options are available to professionals:

Option 1: Appoint an approved external ADR entity

Insofar as ADR must always be without charge for the consumer, it is the responsibility of the professional to remunerate the external body, and said remuneration shall not be fixed in consideration of the resolution. A new French Commission for evaluation and control of mediation (CECM) should publish a list of approved bodies by the end of January.

French existing bodies already offer their services to professionals. The Paris Chamber of Commerce and Industry Centre for Mediation and Arbitration (CMAP) has been offering assistance in consumer disputes and has already dealt with over one hundred such cases.

The reform has also brought new bodies into existence, such as MEDICYS, an online ADR process established by the French National Chamber of Judicial Officers, which offers assistance in consumer disputes starting at a cost of 60 € excluding tax per case, to be paid by the professional involved in the dispute. MEDICYS has already announced partnerships with several French professionals federations.

The French Franchise Federation (FFF) has also set up a Mediation Commission (MFC) with the mission of assisting in resolving disputes between consumers and franchisors/franchisees. Finally, other federations already having ADR, like for example the FEVAD (the federation of e-commerce players), provides their members with free access to their ADR entity.

Professionals are therefore advised to contact their professional federation for information on the steps taken with regard to ADR.

Option 2: Through a business sector ADR entity

This is certainly the simplest option for professions which already benefit from a public ombudsman, such as banking or insurance sectors.

The professionals who already benefit from a sector-based ADR are however free to appoint a new consumer ADR entity that will work in cooperation and by agreement with the sector-based entity.

Option 3: An in-house ADR entity

Finally, the Consumer Code enables professionals to make in-house arrangements within the company to appoint persons responsible for ADR with consumers, subject to fulfillment of the terms set down in law:

• The person must be appointed by a collegiate body established by the company, and composed of at least two representatives of approved consumers’ associations and at least two representatives of the professional.
• The person is prohibited, from the end of their period of office, from working for the same professional, or for the federation with which the professional is affiliated, for at least three years.
• There may not be a hierarchical or functional relationship between the professional and this person.

Other legal obligations to achieve compliance

Professionals are obliged, subject to an administrative fine of 15,000 €, to communicate the contact details of their relevant ADR entity. Access to ADR is also required to be "easily accessible by electronic means or by regular post” for consumers.

Insofar as the sanction for failure to inform consumers of the ADR process is currently the only one applicable, companies are advised to update their terms and conditions accordingly, and appointing an external ADR body, even though they may need to amend these conditions later if an in-house ADR is finally put into place.

English translation of article published in les Echos de la Franchise.