Resolving Mass Disputes

Resolving Mass Disputes

ADR and Settlement of Mass Claims

Edited by Christopher Hodges and Astrid Stadler

The landscape of mass litigation in Europe has changed impressively in recent years, and collective redress litigation has proved a popular topic. Although much of the literature focuses on the political context, contentious litigation, or how to handle cross-border multi-party cases, this book has a different focus and a fresh approach.

Chapter 2: CADR and settlement of claims – a few economic observations

Michael Faure

Subjects: economics and finance, law and economics, law - academic, arbitration and dispute resolution, comparative law, consumer law, law and economics, law and society


Enforcement of consumer law is a topic that has received a fair amount of attention in law and economics scholarship. However, it is probably fair to state that generally the topic of consumer alternative dispute resolution in consumer cases (abbreviated as CADR) and mass settlement of claims are not topics that have been studied in a great deal of detail in law and economics scholarship. For the purposes of this chapter I will attempt to apply general notions following from the law and economics methodology to some of the issues that are central to this volume. The goal of my contribution is certainly not to describe or criticize legal rules, since other contributors will undoubtedly do so and, moreover, to an important extent I will in that respect build upon earlier scholarship such as the studies by Van Boom and Loos on collective enforcement of consumer law and by Steele and Van Boom on mass disputes and the recent interesting comparative study by Hodges and Benöhr and Creutzfeldt-Banda on CADR. When thinking about potential problems of consumer ADR and settlement of claims from an economic perspective one tends to think of situations where a consumer would suffer a loss but would, for a variety of reasons, not be able to seek a remedy via the traditional civil justice system. The reasons for particular failures in the private litigation system in case of consumer losses have certainly been identified in law and economics literature.

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