THE NEW SERBIAN LAW ON CONSUMER PROTECTION AND

Transcription

1 Robert Schuman Centre for Advanced Studies The 13th Mediterranean Research Meeting Workshop 11: Political Governance and Regulatory Enforcement Activity in Competition and Consumer Protection Regulation: Comparing Experiences THE NEW SERBIAN LAW ON CONSUMER PROTECTION AND THE POSITION OF THE SERBIAN CONSUMER Authors: Mateja Djurovic Nebojsa Lazarevic 1 Montecatini Terme, Pistoia March 2012

2 CONTENTS I. Introduction... 3 II. The SAA Article 78 legal regime... 4 III. Development of Consumer Protection in the Serbian Legal System... 6 IV. Analysis of the CPL from the Aspect of Article 78 of the SAA IV.1 Policy of Active Consumer Protection IV.2 Harmonisation of Legislation on Consumer Protection IV.3 Effective Legal Protection for Consumers IV.4 Monitoring of Rules and Access to Justice IV.5 Exchange of Information V. Conclusion

3 I. INTRODUCTION In October 2010, the Parliament of the Republic of Serbia adopted new Consumer Protection Law ( the CPL ). 1 Its application commenced as of 1 January As one of the principal strategic goals of Serbia is to become a member state of the European Union, the adoption of this law has its place in the harmonisation process of the Serbian legislation with the EU law. The CPL transposes a large portion of the consumer acquis into the Serbian legal system. Serbia is currently a (potential) candidate for EU membership, which has a signed Stabilisation and Association Agreement, which regulates its relations with the European Union until the entry into force of a future Accession Treaty. Although the Serbian SAA has not yet been ratified by all EU member states, an Interim Agreement entered into force in February 2010, regulating mainly economic relations between the parties, as well as the issues of harmonisation of Serbian legal system with the EU one. This obligation by the associated country is contained in the Articles 72 and 78 of the SAA, which require Serbia to align its rules of consumer protection with those of the EU, but also contain additional obligations for Serbia. 2 The overall deadline for approximating Serbian legislation in all elements of the Community acquis referred to in [the] Agreement is six years from the entry into force of the Interim Agreement. 3 The main thesis of this paper is that the Serbian government has not adequately satisfied the requirements contained in these two Articles, resulting in a position of consumers in the Serbian market which is not satisfactory when observed from the aspect of the requirements under the SAA regime. The analysis of the currently existing system in Serbia is presented according to the key elements of the Article 78 of the SAA, which sets out in detail the requirements in the field of consumer protection. 1 Official Gazette RS No 73/ Article 78 of the SAA with Serbia, available at 3 Article 72 of the SAA, Article 8 of the SAA. 3

4 II. THE SAA ARTICLE 78 LEGAL REGIME The obligation of legal harmonisation is contained in the Article 72 of the Serbian SAA. This Article contains the general harmonisation regime, which is further elaborated for the different policy areas in the following seven articles of the Agreement. At the same time, the Article 72 not only specifies a general obligation of legal harmonisation with the acquis communautaire, but also specifies a number of priority areas, on which harmonisation should focus at an early stage. 4 Harmonisation of legislation with the EU acquis in the consumer policy area falls among these priority areas identified in the Article 72. Although consumer protection is not explicitly mentioned as such in this paragraph, it does refer to fundamental elements of the Internal Market acquis, to which consumer acquis indisputably belongs. 5 The importance of consumer protection to the internal market is confirmed by dedicating a separate Article 78 to this field. Prior to elaborating on the elements of the Article 78, which constitute the basis for the analysis in this Paper, it should also be emphasised that Article 72 already states an additional requirement for Serbia to that of simply approximating its legislation with the EU law. The Article explicitly requires proper implementation and enforcement of the adopted harmonised legislation, which is further elaborated and broken down into several elements of implementation and enforcement in the Article 78. The starting point of the Article 78 is that of obliging the parties to cooperate in order to align the standards of consumer protection in Serbia to those of the Community. This introductory, general obligation is supporting by reiterating the significance of consumer protection for the Internal Market of the EU: Effective consumer protection is necessary in order to ensure the proper functioning of the market economy, and this protection will depend on 4 Article 72(3) of the SAA. 5 Article 72(3) of the SAA. 4

5 the development of an administrative infrastructure in order to ensure market surveillance and law enforcement in this field. 6 The main elements of this more general requirement are spelled out in paragraph 2, points a) to e) of this Article. Thus, Serbia needs to ensure: a) policy of active consumer protection, in accordance with Community law, including the increase of information and development of independent organisations; b) the harmonisation of legislation of consumer protection in Serbia on that in force in the Community; c) effective legal protection for consumers in order to improve the quality of consumer goods and maintain appropriate safety standards; d) monitoring of rules by competent authorities and providing access to justice in case of disputes; e) exchange information on dangerous products. It can be summarised that while point b) focuses on the legal harmonisation aspect, the remaining points specifically address various aspects of implementation of the harmonised legislation, including the institutional aspects (a, c, d and e) as well as the enforcement aspect (point c, as well as point d in particular). 6 Article 78(1) of the SAA. 5

6 III.DEVELOPMENT OF CONSUMER PROTECTION IN THE SERBIAN LEGAL SYSTEM The idea of the existence of a separated legal regime for consumers, as particular subjects in private law, represents a relatively innovative concept in the Serbian law. The most important source of private law, the Serbian Law on Obligations of 1978 ( the SLO ), 7 as the principal source of the law on obligations and general rules of private law, contains no particular regulation applicable for the relations between the consumer, on one side, and trader, on the other side. 8 It was only in 2002, with the onset of the economic transition and first activities aimed at the country s EU integration, that Serbia passed its first Law on Consumer Protection. 9 This first CPL provided a very basic and fragmented protection for consumers and was not harmonised with the EU law. In practice, it produced hardly any results. There is no case law of the courts on the basis of this law. The inspectorates of the responsible ministries, as administrative authorities in charge of enforcement, based their actions almost exclusively on the general laws regulating trade rather than the Law on Consumer Protection of The 2002 CPL was repealed in 2005 by the second Serbian Law of Consumer Protection. 10 In comparison to its predecessor, this second piece of legislation represented a step forward for consumers in Serbia. The level of harmonisation with the EU law was higher, as the Law incorporated, partially or fully, the provisions of some of the EU consumer protection directives such as Directive 93/13/EEC on unfair contract terms or Directive 94/47/EC on timesharing. 11 This improvement of legal protection was noticeable in practice, too. For the first time, Serbian consumers started profiting from their rights as defined by the law 7 Official Gazette of the SFRY No 29/78, 39/85, 57/89 and Official Gazette of FRY No 31/93 8 for a detailed examination of the develoment of Serbian contract and consumer law, see: M. Djurovic, Serbian contract law: its development and new Serbian Civil Code, ERCL Official Gazette of FRY No 37/02 10 Official Gazette of RS No 79/ for a more detailed overview of this Law, see: Consumer Protection Law and Policy in Serbia: The Current State and Projections for the Future, u: C. Twigg-Flesner et al.: The Yearbook of Consumer Law, Ashgate, 2007, 465; M. Karanikic Miric, Serbia legislative techiques, in: Civil Law Forum for South East Europe, Cavtat 2010, Volume III, pp

7 which aimed at protecting them. The enforcement mechanism primarily relied on the market inspectors of the Serbian Ministry of Trade which had the prevailing competence in the area of consumer protection. However, again as in the case of the previous Law of 2002, there was no case law before general Serbian civil law courts based on this law. 12 The only cases were the ones brought before the misdemeanour courts. Moreover, with the exception of the area of consumer credit where the National Bank of Serbia established a functional system of mediation, 13 an alternative system for the settlement of consumer disputes was not established. In spite of the fact that the Law of 2005 showed an increased level of harmonisation with the EU law in comparison to the Law of 2002, the achieved level was still not satisfactory. Furthermore, since 2005, the EU consumer law developed immensely, especially with the adoption of Directive 2005/29/EC on unfair commercial practices and a new Timeshare Directive 2008/122/EC. Eventually, the Proposal for a new Directive on Consumer Rights was published in 2008 which was in a modified form adopted in October 2011 as Directive 2011/83/EU. All of these factors led to the need for the adoption of a new CPL in Serbia, in order to fulfil the basic requirement of legal harmonisation set out in the SAA. Consequently, under strong EU support, in 2008 Serbia initiated the work on a new CPL with the main objective of harmonisation with the consumer acquis. 14 After more than two years of work, the Parliament of the Republic of Serbia finally passed the new Law on Consumer Protection on 12 October The CPL represents for the most part a product of the work of a group of foreign and domestic legal experts in the area of consumer protection and private law. The main goal of the experts team was to draft a law which would be fully 12 C. Jessel-Holst and G. Galev, Introduction, in: Civil Law Forum for South East Europe, Cavtat 2010, Volume III, p The entire project was organised and run by a consortium ZAP Serbia, see: 7

8 harmonised with the EU law, but which would also fit best in the particularities of the Serbian legal system. It is noticeable that in terms of the form of regulating of consumer law, Serbia has always opted for the dualistic approach whereby consumer law is regulated separately from general private law. Opposite to the examples of Germany or the Netherlands whose Civil Codes incorporate consumer law, Serbia followed the French and Italian model by not incorporating consumer law provisions into the general private law codification, i.e. the Law on Obligations of The other countries of the Balkan region have followed the same approach. Parallel to the process of the drafting of the CPL, a separate commission of the Serbian Government was working on the draft of a new Serbian Civil Code. There was no communication between the Civil Code commission and the working group that was drafting the CPL. Furthermore, the published materials of the Commission show that the alternative of including the rules of consumer law into the future Serbian Civil Code was not even considered. 15 The CPL provides a legal basis for the entire system of consumer protection in Serbia. Besides the rules of the substantive character, it provides rules regarding establishment and activities of consumer associations, relevant sanctions for breach of the law, including fines, defines the alternative systems of resolution of consumer disputes and awards necessary competence to diverse bodies in charge of the application and enforcement of the CPL. Whereas a very comprehensive approach was taken when drafting the CPL, thus transposing a huge part of the EU consumer acquis into the Serbian legal system by means of this law, its final draft did not include provisions on consumer credit and distance marketing of financial services. A detailed account of the extent to which the task of harmonising the Serbian consumer legislation with the EU rules was accomplished with the new CPL is given in the next chapter, dedicated to the analysis of the CPL from the perspective of the requirements under Article 78 of the SAA

9 At this point it should also be noted that the CPL protects consumers in the case of services of general economic interest which include supply of electricity, water, telecommunication sector and other types of services that consumers in the 21 st century necessarily need. In that aspect, particular protection is given to vulnerable consumers which include primarily consumers who are facing material financial difficulties. However, the National programme for the protection of vulnerable consumers, whose legal basis is defined by the CPL and whose purpose is to develop further these rules, has not been yet adopted. 9

10 IV. ANALYSIS OF THE CPL FROM THE ASPECT OF ARTICLE 78 OF THE SAA This chapter of the paper examines the consumer policy in Serbia in its totality both the legislative framework and the state of implementation and enforcement from the aspect of the requirements set out in Article 78 of the SAA. The purpose thereby is to examine to which extent the standards of consumer protection are aligned to those of the EU and how far the consumers in Serbia are from the level of protection existing in the EU member states. Therefore, the following sections are structured so as to follow points a) to e) of Article 78 and the requirements thereof. IV.1 Policy of Active Consumer Protection Point a) requires from Serbia to pursue a policy of active consumer protection, in accordance with Community law, including the increase of information and development of independent organisations. Whereas the aspect of accordance with the Community law in terms of legislative provisions is treated in the next section, this section focuses on the issues of how active the consumer policy is in Serbia, how the information of consumers is done, as well as how independent organisations are supported. The Policy Institutions for Consumer Protection There seems to be insufficient support for pursuing the consumer policy as proclaimed by the new CPL. The interest of the responsible Ministry in the subject matter of consumer protection seems to be considerably lower than it used to be in the years preceding There used to be a large number of activities in the area of consumer protection until 2011, while in 2011 very little has been done. This problem is, inter alia, a result of the merger of the Ministry of Trade and Services with the much larger Ministry of Agriculture, Forestry and Water Management, which caused a shift of attention by the policy makers to the agriculture part of the ministry s portfolio. The Commission also stated that the 10

11 capacity of the Consumer Protection Department in the Ministry remains weak, despite the fact that additional staff has been employed there. 16 Furthermore, the National Council for Consumer Protection has not been constituted yet. The Council is to be comprised of the representatives of line ministries and other public authorities, associations and unions for consumer protection, business and professional chambers and other actors on the market, as well as independent experts in the consumer protection field. 17 This Council is supposed to adopt the future Strategy for consumer protection in Serbia. Currently, it is still the old Strategy of consumer protection that applies, which was adopted on the basis of previous CPL of Hence, the capacity for policy making and implementation in the area of consumer protection is currently rather weak and the relevant institutional framework unfinished. The lack of education of consumers in Serbia about their rights The right to information and education represents one of the fundamental rights of consumers. 18 Consumers need to be educated about their rights, how to behave in their best interest while interacting with the traders on the market and how to exercise their rights when they are breached. It is primarily the responsibility of the state and relevant state bodies to secure a functional system of consumer education. In Serbia, the right to education of a consumer is recognised by article 2(7) of the CPL as one of the consumer s basic rights. However, lack of adequate consumer education seems to represent one of the biggest obstacles for the effective application of the CPL. The same was the case with the two previous Serbian laws of consumer protection. Besides the fact that they did not provide a perfect 16 Commission Opinion on Serbia s application for membership of the European Union Analitical Report, p Article 126 of the CPL. 18 The Preliminary Programme of the European Community for consumer protection and information policy, OJ C 92, , p. 2-16; art 169 TFEU; United Nations Guidelines for Consumer Protection (as expanded in 1999), the Decision of UN General Assembly 54/

12 legal framework of consumer protection, in any case they granted consumers a certain level of consumer protection. Nevertheless, one of the main reasons why consumers did not sufficiently profit from these laws lied in the fact that, in many cases, the consumers were simply not familiar with the existence of a law and the rights granted by it. In the last couple of years, the situation has been somewhat improved. First, the entire process of the drafting and adoption of the CPL was characterised by a significant level of transparency, so that consumers could read or hear that a law, which would provide them with a new system of protection, would be adopted. Most of major Serbian daily newspapers, as well as TV channels followed the drafting process and examined the novelties that new Law was going to bring. In 2010, the Ministry of Trade published a set of seven leaflets on information and education of the consumer. The goal of these brochures is to educate Serbian consumers about some of the most common problems faced by the consumers, such as hidden costs, 19 or aggressive selling methods. 20 These leaflets were distributed in all municipalities in Serbia through the daily newspapers. Additional education activities were performed specifically targeting the youth in 497 high schools around Serbia. 21 Furthermore, the newspaper Politika the oldest daily newspaper in Serbia as well as one of the most popular and read ones has been publishing for the last two years a weekly free extra exclusively dealing with consumer rights, under the name Potrosac (Consumer). 22 The Ministry of Trade also prepared and distributed several brochures and leaflets: Consumer Protection and the SAA, Product Safety and the SAA, Internet Purchase Guide, Unfair Commercial Practice, Guarantees, etc. The EU is also helping with the development of the education of the consumers in Serbia. Consequently, all high-school students in Serbia have been receiving Responses to the Questionnaire of the European Commission, Chapter 28,, available at: < (10 February 2012)

13 already for the third time a copy of Europa Diary, 23 which extensively deals with consumer protection. Nevertheless, despite these numerous but fragmented activities in the area of consumer education, what is still missing is collective action primarily organised by relevant state authorities aimed at ensuring a long term strategy of consumer education and information. Particular attention should be paid to the most vulnerable consumers, such as the elderly. Such an approach seems still to be missing. The other type of education that is also necessary is the education of relevant professional subjects such as judges of the court and practicing lawyers, so as to make them fully aware of what is understood under the concept of consumer protection that has been transposed from the EU law into Serbian law. Consumer organisations in Serbia In the EU, consumer organisations represent one of the principal pillars of consumer protection. The consumer organisations are the necessary link between consumers, on the one side, and the competent authorities for enforcement on the other side. Collective actions which are taken primarily through consumer organisations represent one of the most efficient means for sanctioning of the behaviour of traders who breach the rules of consumer protection. The situation with the consumer organisations in Serbia is very complex. Prior to the adoption of the CPL, more than sixty consumer organisations existed in Serbia, most of which had only a couple of members and lacked logistic and institutional capacities. This was a consequence of the inadequate regulatory framework on consumer organisations as provided by the Law on Consumer Protection of The procedure for establishing a consumer organisation was quite simple, as no necessary conditions were provided, other than the general provisions on the establishing of non-governmental organisations (associations)

14 Consumers did not know where to address their complaints, while the competition among the numerous consumer organisations was intense and rather negative. One of the main goals of the CPL was to resolve the mentioned problems pertaining to consumer organisations, which is why it provided a detailed set of rules on consumer organisations in its Chapter XI. The competences of the organisations are defined, so that the consumer organisations are authorised to: 1) inform, educate and help consumers with solving diverse consumer related problems; 2) conduct surveys and comparative analyses of the goods and services offered to consumers; 3) cooperate with relevant authorities in Serbia and abroad. The CPL now sets up the criteria for establishment of consumer organisations. These conditions include, inter alia, the requirement that a consumer organisation has to gather at least 50 members (as opposed to only 3, which is the general rule for ordinary NGOs) and that it needs to possess the necessary human resources with the adequate professional knowledge and skills in the area of consumer protection. This means that at least one lawyer, who has previously passed the bar exam, has to be permanently employed by the organisation, as well as one other employee with the experience in the area of consumer protection. Only an organisation which possesses these capacities can be registered in the public register of consumer organisations kept by the Ministry which is in charge of consumer protection. The registration is important primarily for financial reasons since only those organisations which are duly registered can be financed by the competent state, regional and local authorities. These rules were further developed by the Rulebook adopted by the Minister in charge of consumer protection in In accordance with that, the already existing consumer organisations had to re-register and prove that they fulfil the required conditions. The Register is public and available on the official site of the 14

15 Ministry which is in charge of consumer protection. 24 According to the register, ten consumer associations have been registered so far [February 2012]. However, the situation with the consumer organisation remains unsatisfactory. What seems to be particularly missing is the transparency of the work of consumer organisations, especially regarding financing. It has not been made clear how the organisation are financed and what is the criteria on the basis of which they should receive financial aid from the state. Consequently, in 2011, only some of the organisations were awarded certain sums of money without any clear explanations. 25 The European Commission emphasises that the organisations lack adequate resources and that they are still weak, which continues to hamper their effectiveness. 26 The financial resources indeed are insufficient, as the annually allocated amounts by the Government have ranged from 35,000 to 75,000. As it has been pointed out, the rules on consumer organisations provide some conditions for members of the consumer organisation, but this still does not sufficiently clarify what is required for an organisation in order for it to become representative. Furthermore, since the CPL has not envisaged the establishment of local and regional counselling services for consumers, the Ministry in charge of consumer protection transferred this duty of consumer counselling services on some of the consumer organisations and provided financial assistance for that. Additional research is needed to assess the effectiveness of the work of the organisations which have been entrusted with this role. One of the important roles of consumer organisations according to the CPL is to bring collective actions on behalf of consumers to the courts (although this role is not granted exclusively to them). Nevertheless, so far there have been no collective actions brought by a consumer organisation, which is also illustrative 24 Currently the Ministry of Agriculture, Trade, Forestry and Water Management. 25 Based on the interviews with the representatives of several consumer organizations. 26 Commission Opinion on Serbia s application for membership of the European Union Analitical Report, p

16 of their capacities to contribute to a policy of active consumer protection, as required by the Article 78 of the SAA. IV.2 Harmonisation of Legislation on Consumer Protection As already mentioned, one of the main reasons for drafting a new Law on Consumer Protection was the need to transpose the EU consumer acquis into the Serbian legal system. The CPL shows a high level of harmonisation with the EU law. In its 135 articles, the CPL has duly incorporated fifteen European directives in the area of consumer protection. Besides these directives, some of the provisions of the Proposal of the Directive on Consumer Rights of 8 October 2008 were used as models for some of the provisions of the CPL, for instance the rules dealing with the information requirements as defined by articles 16 and 28 of the CPL. This Proposal of the Directive was subsequently (in October 2011), following some modifications, adopted as the new Directive 2011/83/EU on consumer rights. From that aspect, it can even be said that the CPL is one of the first laws in Europe to be, at least partially, in accordance with the Directive 2011/83/EU. The following EU directives are transposed into Serbian law through the provisions of the CPL: 1) Directive 93/13/EEC on unfair contract terms 2) Directive 99/44/EC on consumer sales and guarantees 3) Directive 85/577/EEC on off-premises contracts 4) Directive 97/7/EC on distance contracts 5) Directive 2005/29/EC on unfair commercial practices 6) Directive 98/6/EC on price indication 7) Directive 2009/136/EC, Directive 2009/72/EC and Directive 2009/73/EC on services of general economic interest 8) Directive 2008/122/EC on timeshare 9) Directive 90/314/EC on package travel 10) Directive 2009/22/EC on injunctions 11) Directive 2000/31/EC on e-commerce 12) Directive 85/374/EEC on product liability The final version of the proposal of the CPL included also the rules on consumer credit as provided by Directive 2008/48/EC on consumer credit and Directive on 16

17 2002/65/EC on distance marketing of financial services. The purpose of such an approach was to have a unified piece of legislation that will encompass all of the rules relevant for consumer protection and thus to include also rules on financial services. However, due to a disagreement between the line ministry and the Central Bank regarding the constitutional competence over this area, in the last moment these provisions were taken out of the draft law in spite of the strong opposition by some of the stakeholders. As a consequence, the CPL does not contain the rules on consumer credit, which was instead subsequently regulated by a separate Law on protection of users of financial services. 27 This Law was adopted in May 2011 and its application started in December However, the analysis of its text shows that the drafters of this law did not follow the model provided by the erased chapter on consumer credit from the final draft of the CPL. As a consequence, it can be noticed that the provisions of this law are not aligned with Directive 2008/48/EC on consumer credit, which is confirmed by the European Commission, too. 28 Some of the provisions of the CPL show that Serbia profited from the minimum harmonisation clauses in order to protect consumers in situations which are not covered by the consumer acquis. Some of the examples include the chapter on price indication that transposed the rules of minimum harmonisation Directive 98/6/EC where separate articles of the CPL provide the particular rules for price indication in the case of petrol stations, restaurants and different types of accommodations as provided by articles 11 and 12 of the CPL. Nevertheless, Serbia has not used the possibility stemming from Article 5(1) of the Directive 98/6/EC which allows for a negative list of products for which a member state can waive the obligation to indicate the unit price of products. Similarly, the possibility from the Article 5(2) regarding a positive list of non-food products where the unit price must be indicated has not been used. It is important to notice that the CPL has introduced some legal concepts into the Serbian law for the first time. That is particularly the case with the Chapter III 27 Official Gazette of RS No 36/ Commission Opinion on Serbia s application for membership of the European Union Analitical Report, p

18 which regulates unfair commercial practices, thus transposing the Directive 2005/29/EC on unfair commercial practices. This Directive has provided a general legal framework for fair trade and fair behaviour of the traders towards consumers in the EU and has now been incorporated into Serbian legal system. The CPL provides a comprehensive and effective system of sanctions in case of unfair commercial practice which includes injunctions and high pecuniary fines. Where this chapter of the CPL mainly retains the old enforcement mechanisms, which include a strong role of the market inspectorate and misdemeanour courts, the rules on guarantees do not, thus causing a number of implementation problems, which are discussed below (section IV.4). Although the CPL represents an example of successful transposition of the acquis communautaire, especially having in mind the sheer number of directives which it has transposed, certain areas where approximation is not fully accomplished do exist. Examples of such areas are neither numerous nor serious, but future amendments to the CPL should attempt to address them. Some of them are simply a consequence of inadequate translation. Such is the case of the definition of the consumer itself (e.g. translation of a product as a good, translation of the term buys as acquires, etc.). Similarly, the term seller in the Directive 1999/44/EC has been translated as trader, which cannot be considered as a negligible error. 29 Other omissions in the transposition of the EU consumer acquis have to do with the fact that the ECJ case law has not been taken into account when drafting the new CPL. A good example for this type of an omission is the failure to give the definition of an average consumer which the ECJ introduced in its judgments in the cases C-315/92, C-210/96 and C-220/ IV.3 Effective Legal Protection for Consumers Point c) of Article 78 refers to the effective legal protection for consumers in order to improve the quality of consumer goods and maintain appropriate safety 29 Articles of the CPL. 30 The ECJ thereby defined an average consumer as the one who is reasonably well informed and reasonably observant and circumspect [...] taking into account social, cultural and linguistic factors. 18

19 standards. This point makes an explicit reference to the safety aspects of the consumer policy, which are regulated by a separate law in the Serbian legal system Law on General Product Safety (2009). 31 In the Serbian legal system, product safety is not considered as part of the consumer legislation stricto sensu, but the fact that the EU links it tightly with the consumer acquis (which is confirmed by inclusion of the safety issues in the Consumer and Health Protection chapter for negotiations on EU membership) will necessitate a further understanding of the role that safety issues play in an effective consumer policy. Until the passing of the Law on General Product Safety, important requirements pertaining to the safety of products in Serbia were defined exclusively by sectoral technical and other regulations, which means that safety requirements existed only for certain groups of products. Ergo, there was no legal framework in place for guaranteeing general safety of all products, including those which are not subjects of technical and other regulations. Furthermore, until the passing of the Law on General Product Safety there were no legal acts which explicitly and precisely defined the duties of producers and distributors to place only safe products on the market, from the aspect of all known risks that a product could pose in the sense of the accomplished level of scientific, technological and technical knowledge. The Law on General Product Safety transposed a number of EU directives into the Serbian legal system. However, in its Avis, published in October 2011, the European Commission encouraged Serbia to take additional steps to ensure full alignment with the EU acquis in this area. 32 Nevertheless, despite certain obvious shortcomings in terms of full approximation with the EU law, this law has substantially improved the legal framework and practice regarding safety of products placed on the Serbian market. It also represented the legal basis for the 31 Zakon o opštoj bezbednosti proizvoda, Official Gazette of the RS No. 41/ Commission Opinion on Serbia s application for membership of the European Union Analitical Report, p

20 establishment of a relatively comprehensive system of active coordination of market surveillance across different ministries. 33 IV.4 Monitoring of Rules and Access to Justice Point d) of the Article 78 refers to the monitoring of rules by competent authorities and providing access to justice in case of disputes. The greatest problems in the Serbian consumer protection system currently are indeed related to the enforcement mechanisms and access to justice. The new enforcement mechanism The CPL provides a new mechanism of enforcement, different than the one that previously existed on the basis of the Law of Consumer Protection of One of the most innovative concepts is the establishment of the out-of court manner of settlement of consumer disputes. The CPL provides two manners of out-court settlement of consumer disputes. The first one is through mediation, in accordance with the law that regulates mediation in Serbia. The second one is through arbitration in accordance with the law that regulates arbitration. In accordance with that, the CPL provides a detailed mechanism for this means of settlement of consumer disputes. However, all this has remained just black letter law. No case law of this kind exists for more than a year of the application of the CPL. In a specific area of consumer law, the consumer credit, the alternative system of settlement existed even before the adoption of the CPL. That was the system established by the National Bank of Serbia and represents a successful example. It has existed for more than five years now and the regularly published statistics shows the constant increase of successfully resolved disputes through this instrument. Relevant authorities can profit from this example and develop a similar system for other areas of consumer law. 33 Commission Opinion on Serbia s application for membership of the European Union Analitical Report, p

21 The new Serbian Law on Civil Procedure of 2011 introduces particular rules for consumer dispute. However, there have been no cases so far nor has any information regarding the case law been published by the Ministry, which is required by the Article 141 of the CPL. Problems regarding the application of the new enforcement mechanism The main problem regarding the new enforcement mechanism lies in the gap between the proclaimed policy, which includes a stronger role for consumer organisations, arbitration, mediation and other mechanisms for out of court dispute settlement, coupled with a diminishing role of a repressive system mirrored in inspection and misdemeanour proceedings, and the real performance of the government in the last couple of years. The latter has been characterised by a chaotic reform of the judiciary, weak (to inexistent) progress pertaining to out of court settlement, inexistence of small claims court or similar mechanisms, weak support to the NGOs, etc. The only mechanism which has worked to a certain extent in the past has hastily been proclaimed as obsolete and is being phased out. The inspection system is, in fact, frequently transformed into a kind of out-of-court settlement mechanism, due to the looming threat of a fast and efficient misdemeanour procedure, which is quickly followed by quite a high pecuniary fine, as well as the possibility of other sanctions. Faced with this procedure, both parties have an interest in settling the dispute without the inspection, often through mediation and advice of a consumer organisation. Further analysis of the successfulness of the policy as announced and proclaimed is certainly needed. However, based on the conducted interviews it can be concluded that all parties involved find the simple and fast procedure from the previous CPL as more suitable, especially in cases of complaints by consumers related to guarantees. When observing the statistics over the two years preceding the entry into force of the new CPL ( ), these complaints constituted between 50 and 65% of all the cases by the market inspectorate. It 21

22 could be imagined that the number of cases would have been immensely higher, had the threat of this procedure not existed. The market inspectorate was hit hard by the rationalisation of the public administration in Serbia in the crisis stricken The envisaged 10% reduction of the staffing levels per ministry was in most ministries conducted by reducing the number of inspectors by 15 and more percent, while the number of civil servants in the ministries proper would be decreased by only a few percent. In the case of the Ministry of Trade the number of inspectors was reduced from 571 to 485 (i.e. by 15%) in IV.5 Exchange of Information The system of rapid exchange of information is established on the basis of the Law on General Product Safety. 35 This system serves for rapid information and alerting between the responsible and other institutions and organisations in Serbia regarding the measures and activities undertaken regarding the risks that dangerous products represent for the health and safety of consumers and other users. This system (called NEPRO) will in fact represent the internal RAPEX of Serbia, which will at a later stage of Serbia s EU integration (possibly before accession) be integrated into the EU RAPEX system. 36 The European Commission has positively evaluated the introduction of the information exchange system in Serbia (NEPRO) in its Avis of October This system is still in an early stage of development and, whereas it can generally be observed that Serbia has made steps to fulfil its obligations under the point e) of the Article 78 of the SAA, additional research will be needed to evaluate the real impact of this system. 34 Responses to the Questionnaire of the European Commission, Chapter 28, p.4, available at: < (10 February 2012) 35 Article 14, paragraph 2 of the Law on General Product Safety 36 Article 15 of the Law on General Product Safety 37 Commission Opinion on Serbia s application for membership of the European Union Analitical Report, p

23 V. CONCLUSION The purpose of this paper was to examine the Serbian system of consumer protection set up under the 2010 Law on Consumer Protection from the aspect of the requirements set out in Articles 72 and 78 of the SAA. While Article 72 contains a general requirement of approximation of the associated country s legal system with the acquis and enumerates several priority areas where approximation is to start from the day of the signing of the SAA, including the consumer policy there as one of the key elements of the Internal Market acquis, Article 78 creates a more specific consumer related regime. It necessitates specific actions/reforms by Serbia, whose realisation in practice has been examined in this paper. In terms of pursuing an active policy of consumer protection, Serbia has not achieved much progress over the last year. These problems are of an implementation nature, which tends to be an inherent problem in the Serbian administrative system. Even when high quality laws are produced and adopted, follow-up activities frequently fall short of ensuring adequate implementation and enforcement of their provisions, thus failing to accomplish the effects intended by such legislation. In the case of the CPL, the problems are related to insufficient capacities and lack of focus by the responsible Ministry, failure to establish one of the most important policy institutions the National Council for Consumer Protection, as well as insufficient and unfocused support to consumer organisations. The only area in which certain results were accomplished is the information and education of consumers, though these activities were mainly implemented in the period of the drafting and enactment of the CPL, while in the aftermath of its adoption they have faded considerably. Despite numerous, though fragmented, activities in the area of consumer education, what is still missing is collective action primarily organised by relevant state authorities aimed at ensuring a long-term strategy of consumer education and information. The new CPL has accomplished much in terms of harmonisation of the EU consumer acquis into the Serbian legal system, which is the second requirement 23

24 of the Article 78. A comprehensive set of EU directives has been transposed into the CPL, though in the case of two directives various reasons interfered in the drafting process, resulting in the exclusion of provisions ensuring their transposition into the CPL. Thus, the directives on consumer credit and distance marketing of financial services were transposed into the Serbian legal system through separate legislation. Additionally, from the legal approximation point of view, several more or less significant omissions were made, mainly having to do with inadequate translation of certain terms and definitions and lack of inclusion of the ECJ case law in the approximation process. These omissions do not significantly affect the level of alignment of the CPL with the EU consumer acquis, but should be addressed in future amendments of this Law. The third requirement of the Article 78 relates to effective legal protection with the view to improve the quality of consumer goods and maintain appropriate safety standards. This area was regulated by a separate Law on General Product Safety, which has not ensured full harmonisation with the acquis, but has nevertheless made significant progress in terms of general safety of products placed on the Serbian market. Monitoring of rules by competent authorities and providing access to justice in case of disputes is the fourth requirement under Article 78, which has been analysed in this paper. The CPL effectively comprises a dual system of enforcement, with different regimes applying to different issues regulated by it. Most of the provisions of the CPL have maintained the old enforcement system, which operated under the previous CPL as well, mainly relying on the role of the market inspectorate and the misdemeanour courts. Other provisions of the CPL such as those dealing with guarantees, on the other hand, are to be enforced through a rather modern and innovative enforcement mechanism, albeit one for which Serbia seems to be unprepared. The new mechanisms of out-of-court dispute settlement through mediation and arbitration are not yet functional and the role of the consumer organisations in this enforcement mechanism has not been supported by the State. 24

25 The final requirement of the Article 78 has to do with exchange of information on dangerous products, where a seemingly functional internal system has been established (called the NEPRO), to simulate the EU RAPEX system and to be integrated into it at a later stage. Whereas the European Commission seems to be satisfied with the results achieved so far, further research will be necessary to evaluate the real results of the NEPRO system in the long run. Following from all of the stated above, it is possible to conclude the following: 1. Serbia has largely ensured approximation of its consumer related legislation with the EU acquis, though several areas for improvement still exist. 2. Main problems have been encountered in the sphere of implementation and enforcement, due in part to the introduction of novel and advanced mechanisms but, above all, due to limited and unfocused support and commitment by the government and the responsible ministry. 3. Whereas the new CPL, as well as other legislation in the area of product safety and consumer protection, largely creates the preconditions for bringing the standards of consumer protection in Serbia in line with those of the EU, consumers in Serbia do not yet enjoy the level of protection existing in the Union. To a certain extent, due to the serious problems in the sphere of implementation and enforcement, their level of protection is nowadays even lower than it used to be under the previous CPL, which was not harmonised with the EU acquis. 4. Serious and focused action will be necessary in the future to make full use of the new and modern legislation through its proper enforcement, which can be considered the true spirit of the Article 78 of Serbia s SAA with the EU. 25