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Robert Schuman Centre for Advanced StudiesThe 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

Montecatini Terme, Pistoia21 - 24 March 2012

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CONTENTSI. Introduction .............................................................................................................................. 3II. The SAA – Article 78 legal regime..................................................................................... 4III. Development of Consumer Protection in the Serbian Legal System .............. 6IV. Analysis of the CPL from the Aspect of Article 78 of the SAA......................... 10IV.1 Policy of Active Consumer Protection..................................................................... 10IV.2 Harmonisation of Legislation on Consumer Protection................................... 16IV.3 Effective Legal Protection for Consumers ............................................................. 18IV.4 Monitoring of Rules and Access to Justice............................................................. 20IV.5 Exchange of Information.............................................................................................. 22V. Conclusion............................................................................................................................... 23

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I. INTRODUCTION

In October 2010, the Parliament of the Republic of Serbia adopted newConsumer Protection Law (“the CPL”).1 Its application commenced as of 1January 2011. As one of the principal strategic goals of Serbia is to become amember state of the European Union, the adoption of this law has its place in theharmonisation process of the Serbian legislation with the EU law. The CPLtransposes a large portion of the consumer acquis into the Serbian legal system.Serbia is currently a (potential) candidate for EU membership, which has asigned Stabilisation and Association Agreement, which regulates its relationswith 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, anInterim Agreement entered into force in February 2010, regulating mainlyeconomic relations between the parties, as well as the issues of harmonisation ofSerbian legal system with the EU one. This obligation by the associated countryis contained in the Articles 72 and 78 of the SAA, which require Serbia to align itsrules of consumer protection with those of the EU, but also contain additionalobligations for Serbia.2 The overall “deadline” for approximating Serbianlegislation “in all elements of the Community acquis referred to in [the]Agreement” is six years from the entry into force of the Interim Agreement.3The main thesis of this paper is that the Serbian government has not adequatelysatisfied the requirements contained in these two Articles, resulting in a positionof consumers in the Serbian market which is not satisfactory when observedfrom the aspect of the requirements under the SAA regime. The analysis of thecurrently existing system in Serbia is presented according to the key elements ofthe Article 78 of the SAA, which sets out in detail the requirements in the field ofconsumer protection.1 Official Gazette RS No 73/20102 Article 78 of the SAA with Serbia, available athttp://ec.europa.eu/enlargement/pdf/serbia/key_document/saa_en.pdf3 Article 72 of the SAA, Article 8 of the SAA.

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II. THE SAA – ARTICLE 78 LEGAL REGIME

The obligation of legal harmonisation is contained in the Article 72 of the SerbianSAA. This Article contains the “general” harmonisation regime, which is furtherelaborated for the different policy areas in the following seven articles of theAgreement. At the same time, the Article 72 not only specifies a generalobligation of legal harmonisation with the acquis communautaire, but alsospecifies a number of priority areas, on which harmonisation should focus “at anearly stage”.4 Harmonisation of legislation with the EU acquis in the consumerpolicy area falls among these priority areas identified in the Article 72. Althoughconsumer protection is not explicitly mentioned as such in this paragraph, itdoes refer to “fundamental elements of the Internal Market acquis”, to whichconsumer acquis indisputably belongs.5 The importance of consumer protectionto the internal market is confirmed by dedicating a separate Article 78 to thisfield. Prior to elaborating on the elements of the Article 78, which constitute thebasis for the analysis in this Paper, it should also be emphasised that Article 72already states an additional requirement for Serbia to that of simplyapproximating its legislation with the EU law. The Article explicitly requiresproper implementation and enforcement of the adopted harmonised legislation,which is further elaborated and broken down into several elements ofimplementation and enforcement in the Article 78.The starting point of the Article 78 is that of obliging the parties to cooperate inorder to align the standards of consumer protection in Serbia to those of theCommunity. This introductory, general obligation is supporting by reiteratingthe significance of consumer protection for the Internal Market of the EU:Effective consumer protection is necessary in order to ensure the properfunctioning of the market economy, and this protection will depend on

4 Article 72(3) of the SAA.5 Article 72(3) of the SAA.

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the development of an administrative infrastructure in order to ensuremarket surveillance and law enforcement in this field.6The main elements of this more general requirement are spelled out inparagraph 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 independentorganisations;b) the harmonisation of legislation of consumer protection in Serbia on thatin force in the Community;c) effective legal protection for consumers in order to improve the quality ofconsumer goods and maintain appropriate safety standards;d) monitoring of rules by competent authorities and providing access tojustice in case of disputes;e) exchange information on dangerous products.It can be summarised that while point b) focuses on the legal harmonisationaspect, the remaining points specifically address various aspects ofimplementation 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 inparticular).

6 Article 78(1) of the SAA.

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III.DEVELOPMENT OF CONSUMER PROTECTION IN THE SERBIAN LEGAL SYSTEM

The idea of the existence of a separated legal regime for consumers, as particularsubjects in private law, represents a relatively innovative concept in the Serbianlaw. The most important source of private law, the Serbian Law on Obligations of1978 (“the SLO”),7 as the principal source of the law on obligations and generalrules of private law, contains no particular regulation applicable for the relationsbetween the consumer, on one side, and trader, on the other side.8It was only in 2002, with the onset of the economic transition and first activitiesaimed at the country’s EU integration, that Serbia passed its first Law onConsumer Protection.9 This first CPL provided a very basic and fragmentedprotection for consumers and was not harmonised with the EU law. In practice, itproduced hardly any results. There is no case law of the courts on the basis ofthis law. The inspectorates of the responsible ministries, as administrativeauthorities in charge of enforcement, based their actions almost exclusively onthe general laws regulating trade rather than the Law on Consumer Protection of2002.The 2002 CPL was repealed in 2005 by the second Serbian Law of ConsumerProtection.10 In comparison to its predecessor, this second piece of legislationrepresented a step forward for consumers in Serbia. The level of harmonisationwith the EU law was higher, as the Law incorporated, partially or fully, theprovisions of some of the EU consumer protection directives such as Directive93/13/EEC on unfair contract terms or Directive 94/47/EC on timesharing.11This improvement of legal protection was noticeable in practice, too. For the firsttime, Serbian consumers started profiting from their rights as defined by the law7 Official Gazette of the SFRY No 29/78, 39/85, 57/89 and Official Gazette of FRY No 31/938 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 20119 Official Gazette of FRY No 37/0210 Official Gazette of RS No 79/200511 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 ofConsumer Law, Ashgate, 2007, 465; M. Karanikic Miric, Serbia – legislative techiques, in: CivilLaw Forum for South East Europe, Cavtat 2010, Volume III, pp 436 -440

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which aimed at protecting them. The enforcement mechanism primarily reliedon the market inspectors of the Serbian Ministry of Trade which had theprevailing competence in the area of consumer protection.However, again as in the case of the previous Law of 2002, there was no case lawbefore general Serbian civil law courts based on this law.12 The only cases werethe ones brought before the misdemeanour courts. Moreover, with theexception of the area of consumer credit where the National Bank of Serbiaestablished a functional system of mediation,13 an alternative system for thesettlement of consumer disputes was not established.In spite of the fact that the Law of 2005 showed an increased level ofharmonisation with the EU law in comparison to the Law of 2002, the achievedlevel was still not satisfactory. Furthermore, since 2005, the EU consumer lawdeveloped immensely, especially with the adoption of Directive 2005/29/EC onunfair commercial practices and a new Timeshare Directive 2008/122/EC.Eventually, the Proposal for a new Directive on Consumer Rights was publishedin 2008 which was in a modified form adopted in October 2011 as Directive2011/83/EU. All of these factors led to the need for the adoption of a new CPL inSerbia, in order to fulfil the basic requirement of legal harmonisation set out inthe SAA.Consequently, under strong EU support, in 2008 Serbia initiated the work on anew CPL with the main objective of harmonisation with the consumer acquis.14After more than two years of work, the Parliament of the Republic of Serbiafinally passed the new Law on Consumer Protection on 12 October 2010. TheCPL represents for the most part a product of the work of a group of foreign anddomestic legal experts in the area of consumer protection and private law. Themain goal of the experts’ team was to draft a law which would be fully12 C. Jessel-Holst and G. Galev, Introduction, in: Civil Law Forum for South East Europe, Cavtat2010, Volume III, p 41213 http://www.nbs.rs/internet/cirilica/63/63_2/index.html14 The entire project was organised and run by a consortium ZAP – Serbia, see: www.zap-serbia.com

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harmonised with the EU law, but which would also fit best in the particularitiesof the Serbian legal system.It is noticeable that in terms of the form of regulating of consumer law, Serbiahas always opted for the ‘dualistic approach’ whereby consumer law is regulatedseparately from general private law. Opposite to the examples of Germany or theNetherlands whose Civil Codes incorporate consumer law, Serbia followed theFrench and Italian model by not incorporating consumer law provisions into thegeneral private law codification, i.e. the Law on Obligations of 1978. The othercountries of the Balkan region have followed the same approach.Parallel to the process of the drafting of the CPL, a separate commission of theSerbian Government was working on the draft of a new Serbian Civil Code. Therewas no communication between the Civil Code commission and the workinggroup that was drafting the CPL. Furthermore, the published materials of theCommission show that the alternative of including the rules of consumer lawinto the future Serbian Civil Code was not even considered.15The CPL provides a legal basis for the entire system of consumer protection inSerbia. Besides the rules of the substantive character, it provides rules regardingestablishment and activities of consumer associations, relevant sanctions forbreach of the law, including fines, defines the alternative systems of resolution ofconsumer disputes and awards necessary competence to diverse bodies incharge of the application and enforcement of the CPL.Whereas a very comprehensive approach was taken when drafting the CPL, thustransposing a huge part of the EU consumer acquis into the Serbian legal systemby means of this law, its final draft did not include provisions on consumer creditand distance marketing of financial services. A detailed account of the extent towhich the task of harmonising the Serbian consumer legislation with the EUrules was accomplished with the new CPL is given in the next chapter, dedicatedto the analysis of the CPL from the perspective of the requirements under Article78 of the SAA.15 http://www.mpravde.gov.rs/images/obrazlozenje(1).pdf

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

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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. Thepurpose thereby is to examine to which extent the “standards of consumerprotection” are aligned to those of the EU and how far the consumers in Serbiaare from the level of protection existing in the EU member states. Therefore, thefollowing sections are structured so as to follow points a) to e) of Article 78 andthe requirements thereof.IV.1 Policy of Active Consumer ProtectionPoint a) requires from Serbia to pursue a policy of active consumer protection, inaccordance with Community law, including the increase of information anddevelopment of independent organisations. Whereas the aspect of “accordancewith the Community law” in terms of legislative provisions is treated in the nextsection, this section focuses on the issues of how “active” the consumer policy isin Serbia, how the information of consumers is done, as well as how independentorganisations are supported.The Policy Institutions for Consumer ProtectionThere seems to be insufficient support for pursuing the consumer policy asproclaimed by the new CPL. The interest of the responsible Ministry in thesubject matter of consumer protection seems to be considerably lower than itused to be in the years preceding 2011. There used to be a large number ofactivities in the area of consumer protection until 2011, while in 2011 very littlehas been done. This problem is, inter alia, a result of the merger of the Ministryof Trade and Services with the much larger Ministry of Agriculture, Forestry andWater Management, which caused a shift of attention by the policy makers to theagriculture part of the ministry’s portfolio. The Commission also stated that the

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capacity of the Consumer Protection Department in the Ministry remains weak,despite the fact that additional staff has been employed there.16Furthermore, the National Council for Consumer Protection has not beenconstituted yet. The Council is to be comprised of the representatives of lineministries and other public authorities, associations and unions for consumerprotection, business and professional chambers and other actors on the market,as well as independent experts in the consumer protection field.17 This Council issupposed to adopt the future Strategy for consumer protection in Serbia.Currently, it is still the old Strategy of consumer protection that applies, whichwas adopted on the basis of previous CPL of 2005.Hence, the capacity for policy making and implementation in the area ofconsumer protection is currently rather weak and the relevant institutionalframework unfinished.The lack of education of consumers in Serbia about their rightsThe right to information and education represents one of the fundamental rightsof consumers.18 Consumers need to be educated about their rights, how tobehave in their best interest while interacting with the traders on the marketand how to exercise their rights when they are breached. It is primarily theresponsibility of the state and relevant state bodies to secure a functional systemof consumer education.In Serbia, the right to education of a consumer is recognised by article 2(7) of theCPL as one of the consumer’s basic rights. However, lack of adequate consumereducation seems to represent one of the biggest obstacles for the effectiveapplication of the CPL. The same was the case with the two previous Serbianlaws of consumer protection. Besides the fact that they did not provide a perfect16 Commission Opinion on Serbia’’s application for membership of the European Union –Analitical Report, p. 121.17 Article 126 of the CPL.18 The Preliminary Programme of the European Community for consumer protection andinformation policy, OJ C 92, 25.4.1975, p. 2-16; art 169 TFEU; United Nations Guidelines forConsumer Protection (as expanded in 1999), the Decision of UN General Assembly 54/449.

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legal framework of consumer protection, in any case they granted consumers acertain level of consumer protection. Nevertheless, one of the main reasons whyconsumers did not sufficiently profit from these laws lied in the fact that, inmany cases, the consumers were simply not familiar with the existence of a lawand the rights granted by it.In the last couple of years, the situation has been somewhat improved. First, theentire process of the drafting and adoption of the CPL was characterised by asignificant 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 thedrafting 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 informationand education of the consumer. The goal of these brochures is to educate Serbianconsumers about some of the most common problems faced by the consumers,such as hidden costs,19 or aggressive selling methods.20 These leaflets weredistributed in all municipalities in Serbia through the daily newspapers.Additional education activities were performed specifically targeting the youthin 497 high schools around Serbia.21 Furthermore, the newspaper “Politika” – theoldest daily newspaper in Serbia as well as one of the most popular and readones – has been publishing for the last two years a weekly free extra exclusivelydealing with consumer rights, under the name “Potrosac” (Consumer).22 TheMinistry of Trade also prepared and distributed several brochures and leaflets:“Consumer Protection and the SAA”, “Product Safety and the SAA”, “InternetPurchase Guide”, “Unfair Commercial Practice”, “Guarantees”, etc.The EU is also helping with the development of the education of the consumersin Serbia. Consequently, all high-school students in Serbia have been receiving19 http://www.mpt.gov.rs/postavljen/163/skriveni_troskovi.pdf20 http://www.mpt.gov.rs/postavljen/163/iznudjena_kupovina.pdf21 Responses to the Questionnaire of the European Commission, Chapter 28,, available at:<www.seio.gov.rs> (10 February 2012)22 http://www.politika.rs/rubrike/potrosac/index.1.sr.html

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already for the third time a copy of Europa Diary,23 which extensively deals withconsumer protection.Nevertheless, despite these numerous but fragmented activities in the area ofconsumer education, what is still missing is collective action primarily organisedby relevant state authorities aimed at ensuring a long term strategy of consumereducation and information. Particular attention should be paid to the mostvulnerable consumers, such as the elderly. Such an approach seems still to bemissing.The other type of education that is also necessary is the education of relevantprofessional subjects such as judges of the court and practicing lawyers, so as tomake them fully aware of what is understood under the concept of consumerprotection that has been transposed from the EU law into Serbian law.Consumer organisations in SerbiaIn the EU, consumer organisations represent one of the principal pillars ofconsumer protection. The consumer organisations are the necessary linkbetween consumers, on the one side, and the competent authorities forenforcement on the other side. Collective actions which are taken primarilythrough consumer organisations represent one of the most efficient means forsanctioning of the behaviour of traders who breach the rules of consumerprotection.The situation with the consumer organisations in Serbia is very complex. Prior tothe adoption of the CPL, more than sixty consumer organisations existed inSerbia, most of which had only a couple of members and lacked logistic andinstitutional capacities. This was a consequence of the inadequate regulatoryframework on consumer organisations as provided by the Law on ConsumerProtection of 2005. The procedure for establishing a consumer organisation wasquite simple, as no necessary conditions were provided, other than the generalprovisions on the establishing of non-governmental organisations (associations).23 http://ec.europa.eu/consumers/europadiary/uk/index_en.htm

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Consumers did not know where to address their complaints, while thecompetition among the numerous consumer organisations was intense andrather negative.One of the main goals of the CPL was to resolve the mentioned problemspertaining to consumer organisations, which is why it provided a detailed set ofrules on consumer organisations in its Chapter XI. The competences of theorganisations are defined, so that the consumer organisations are authorised to:1) inform, educate and help consumers with solving diverse consumer relatedproblems;2) conduct surveys and comparative analyses of the goods and servicesoffered 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 consumerorganisation has to gather at least 50 members (as opposed to only 3, which isthe general rule for “ordinary” NGOs) and that it needs to possess the necessaryhuman resources with the adequate professional knowledge and skills in thearea of consumer protection. This means that at least one lawyer, who haspreviously passed the bar exam, has to be permanently employed by theorganisation, as well as one other employee with the experience in the area ofconsumer protection.Only an organisation which possesses these capacities can be registered in thepublic register of consumer organisations kept by the Ministry which is in chargeof consumer protection. The registration is important primarily for financialreasons since only those organisations which are duly registered can be financedby the competent state, regional and local authorities.These rules were further developed by the Rulebook adopted by the Minister incharge of consumer protection in 2011. In accordance with that, the alreadyexisting consumer organisations had to re-register and prove that they fulfil therequired conditions. The Register is public and available on the official site of the

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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 ofconsumer organisations, especially regarding financing. It has not been madeclear how the organisation are financed and what is the criteria on the basis ofwhich they should receive financial aid from the state. Consequently, in 2011,only some of the organisations were awarded certain sums of money withoutany clear explanations.25The European Commission emphasises that the organisations lack adequateresources and that they are still weak, which continues to hamper theireffectiveness.26 The financial resources indeed are insufficient, as the annuallyallocated amounts by the Government have ranged from €35,000 to 75,000.As it has been pointed out, the rules on consumer organisations provide someconditions for members of the consumer organisation, but this still does notsufficiently clarify what is required for an organisation in order for it to becomerepresentative. Furthermore, since the CPL has not envisaged the establishmentof local and regional counselling services for consumers, the Ministry in chargeof consumer protection transferred this duty of consumer counselling serviceson some of the consumer organisations and provided financial assistance forthat. Additional research is needed to assess the effectiveness of the work of theorganisations which have been entrusted with this role.One of the important roles of consumer organisations according to the CPL is tobring collective actions on behalf of consumers to the courts (although this roleis not granted exclusively to them). Nevertheless, so far there have been nocollective actions brought by a consumer organisation, which is also illustrative24 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. 122.

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of their capacities to contribute to a policy of active consumer protection, asrequired by the Article 78 of the SAA.IV.2 Harmonisation of Legislation on Consumer ProtectionAs already mentioned, one of the main reasons for drafting a new Law onConsumer Protection was the need to transpose the EU consumer acquis into theSerbian legal system. The CPL shows a high level of harmonisation with the EUlaw. In its 135 articles, the CPL has duly incorporated fifteen European directivesin the area of consumer protection. Besides these directives, some of theprovisions of the Proposal of the Directive on Consumer Rights of 8 October2008 were used as models for some of the provisions of the CPL, for instance therules dealing with the information requirements as defined by articles 16 and 28of the CPL. This Proposal of the Directive was subsequently (in October 2011),following some modifications, adopted as the new Directive 2011/83/EU onconsumer rights. From that aspect, it can even be said that the CPL is one of thefirst laws in Europe to be, at least partially, in accordance with the Directive2011/83/EU.The following EU directives are transposed into Serbian law through theprovisions of the CPL:1) Directive 93/13/EEC on unfair contract terms2) Directive 99/44/EC on consumer sales and guarantees3) Directive 85/577/EEC on off-premises contracts4) Directive 97/7/EC on distance contracts5) Directive 2005/29/EC on unfair commercial practices6) Directive 98/6/EC on price indication7) Directive 2009/136/EC, Directive 2009/72/EC and Directive 2009/73/EC onservices of general economic interest8) Directive 2008/122/EC on timeshare9) Directive 90/314/EC on package travel10) Directive 2009/22/EC on injunctions11) Directive 2000/31/EC on e-commerce12) Directive 85/374/EEC on product liabilityThe final version of the proposal of the CPL included also the rules on consumercredit as provided by Directive 2008/48/EC on consumer credit and Directive on

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2002/65/EC on distance marketing of financial services. The purpose of such anapproach was to have a unified piece of legislation that will encompass all of therules relevant for consumer protection and thus to include also rules on financialservices. However, due to a disagreement between the line ministry and theCentral Bank regarding the constitutional competence over this area, in the lastmoment these provisions were taken out of the draft law in spite of the strongopposition by some of the stakeholders. As a consequence, the CPL does notcontain the rules on consumer credit, which was instead subsequently regulatedby a separate Law on protection of users of financial services.27 This Law wasadopted in May 2011 and its application started in December 2011. However, theanalysis of its text shows that the drafters of this law did not follow the modelprovided by the erased chapter on consumer credit from the final draft of theCPL. As a consequence, it can be noticed that the provisions of this law are notaligned with Directive 2008/48/EC on consumer credit, which is confirmed bythe European Commission, too.28Some of the provisions of the CPL show that Serbia profited from the minimumharmonisation clauses in order to protect consumers in situations which are notcovered by the consumer acquis. Some of the examples include the chapter onprice indication that transposed the rules of minimum harmonisation Directive98/6/EC where separate articles of the CPL provide the particular rules for priceindication in the case of petrol stations, restaurants and different types ofaccommodations as provided by articles 11 and 12 of the CPL. Nevertheless,Serbia has not used the possibility stemming from Article 5(1) of the Directive98/6/EC which allows for a “negative list” of products for which a member statecan waive the obligation to indicate the unit price of products. Similarly, thepossibility from the Article 5(2) regarding a “positive list” of non-food productswhere the unit price must be indicated has not been used.It is important to notice that the CPL has introduced some legal concepts into theSerbian law for the first time. That is particularly the case with the Chapter III27 Official Gazette of RS No 36/201128 Commission Opinion on Serbia’’s application for membership of the European Union –Analitical Report, p. 122.

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which regulates unfair commercial practices, thus transposing the Directive2005/29/EC on unfair commercial practices. This Directive has provided ageneral legal framework for fair trade and fair behaviour of the traders towardsconsumers in the EU and has now been incorporated into Serbian legal system.The CPL provides a comprehensive and effective system of sanctions in case ofunfair 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 misdemeanourcourts, the rules on guarantees do not, thus causing a number of implementationproblems, 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 whichit has transposed, certain areas where approximation is not fully accomplisheddo exist. Examples of such areas are neither numerous nor serious, but futureamendments to the CPL should attempt to address them. Some of them aresimply a consequence of inadequate translation. Such is the case of the definitionof the consumer itself (e.g. translation of a product as a good, translation of theterm “buys” as “acquires”, etc.). Similarly, the term “seller” in the Directive1999/44/EC has been translated as “trader”, which cannot be considered as anegligible error.29 Other omissions in the transposition of the EU consumeracquis have to do with the fact that the ECJ case law has not been taken intoaccount when drafting the new CPL. A good example for this type of an omissionis the failure to give the definition of an average consumer which the ECJintroduced in its judgments in the cases C-315/92, C-210/96 and C-220/98.30IV.3 Effective Legal Protection for ConsumersPoint c) of Article 78 refers to the effective legal protection for consumers inorder to improve the quality of consumer goods and maintain appropriate safety29 Articles 51-58 of the CPL.30 The ECJ thereby defined an average consumer as “the one who is reasonably well informed andreasonably observant and circumspect” [...] “taking into account social, cultural and linguisticfactors.”

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standards. This point makes an explicit reference to the safety aspects of theconsumer policy, which are regulated by a separate law in the Serbian legalsystem – 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 isconfirmed by inclusion of the safety issues in the Consumer and HealthProtection chapter for negotiations on EU membership) will necessitate a furtherunderstanding of the role that safety issues play in an effective consumer policy.Until the passing of the Law on General Product Safety, important requirementspertaining to the safety of products in Serbia were defined exclusively bysectoral technical and other regulations, which means that safety requirementsexisted only for certain groups of products. Ergo, there was no legal frameworkin place for guaranteeing general safety of all products, including those which arenot subjects of technical and other regulations. Furthermore, until the passing ofthe Law on General Product Safety there were no legal acts which explicitly andprecisely defined the duties of producers and distributors to place only safeproducts on the market, from the aspect of all known risks that a product couldpose in the sense of the accomplished level of scientific, technological andtechnical knowledge.The Law on General Product Safety transposed a number of EU directives intothe Serbian legal system. However, in its Avis, published in October 2011, theEuropean Commission encouraged Serbia to take additional steps to ensure fullalignment with the EU acquis in this area.32 Nevertheless, despite certain obviousshortcomings in terms of full approximation with the EU law, this law hassubstantially improved the legal framework and practice regarding safety ofproducts 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. 41/2009.32 Commission Opinion on Serbia’’s application for membership of the European Union –Analitical Report, p. 122.

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establishment of “a relatively comprehensive system of active coordination ofmarket surveillance across different ministries.”33IV.4 Monitoring of Rules and Access to JusticePoint d) of the Article 78 refers to the monitoring of rules by competentauthorities and providing access to justice in case of disputes. The greatestproblems in the Serbian consumer protection system currently are indeedrelated to the enforcement mechanisms and access to justice.The new enforcement mechanismThe CPL provides a new mechanism of enforcement, different than the one thatpreviously existed on the basis of the Law of Consumer Protection of 2005. Oneof the most innovative concepts is the establishment of the out-of court mannerof 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 regulatesmediation in Serbia. The second one is through arbitration in accordance withthe law that regulates arbitration. In accordance with that, the CPL provides adetailed mechanism for this means of settlement of consumer disputes.However, all this has remained just black letter law. No case law of this kindexists for more than a year of the application of the CPL. In a specific area ofconsumer law, the consumer credit, the alternative system of settlement existedeven before the adoption of the CPL. That was the system established by theNational Bank of Serbia and represents a successful example. It has existed formore than five years now and the regularly published statistics shows theconstant increase of successfully resolved disputes through this instrument.Relevant authorities can profit from this example and develop a similar systemfor other areas of consumer law.33 Commission Opinion on Serbia’’s application for membership of the European Union –Analitical Report, p. 122.

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The new Serbian Law on Civil Procedure of 2011 introduces particular rules forconsumer dispute. However, there have been no cases so far nor has anyinformation regarding the case law been published by the Ministry, which isrequired by the Article 141 of the CPL.Problems regarding the application of the new enforcement mechanismThe main problem regarding the new enforcement mechanism lies in the gapbetween the proclaimed policy, which includes a stronger role for consumerorganisations, arbitration, mediation and other mechanisms for out of courtdispute settlement, coupled with a diminishing role of a repressive systemmirrored in inspection and misdemeanour proceedings, and the realperformance of the government in the last couple of years. The latter has beencharacterised by a chaotic reform of the judiciary, weak (to inexistent) progresspertaining to out of court settlement, inexistence of small claims court or similarmechanisms, weak support to the NGOs, etc.The only mechanism which has worked to a certain extent in the past has hastilybeen proclaimed as obsolete and is being phased out. The inspection system is, infact, 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 possibilityof other sanctions. Faced with this procedure, both parties have an interest insettling the dispute without the inspection, often through mediation and adviceof a consumer organisation.Further analysis of the successfulness of the policy as announced and proclaimedis certainly needed. However, based on the conducted interviews it can beconcluded that all parties involved find the simple and fast procedure from theprevious CPL as more suitable, especially in cases of complaints by consumersrelated to guarantees. When observing the statistics over the two yearspreceding the entry into force of the new CPL (2009-2010), these complaintsconstituted between 50 and 65% of all the cases by the market inspectorate. It

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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 publicadministration in Serbia in the crisis stricken 2010. The envisaged 10%reduction of the staffing levels per ministry was in most ministries conducted byreducing the number of inspectors by 15 and more percent, while the number ofcivil 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 from571 to 485 (i.e. by 15%) in 2010.34IV.5 Exchange of InformationThe system of rapid exchange of information is established on the basis of theLaw on General Product Safety.35 This system serves for rapid information andalerting between the responsible and other institutions and organisations inSerbia regarding the measures and activities undertaken regarding the risks thatdangerous products represent for the health and safety of consumers and otherusers. This system (called NEPRO) will in fact represent the internal RAPEX ofSerbia, which will at a later stage of Serbia’s EU integration (possibly beforeaccession) be integrated into the EU RAPEX system.36 The EuropeanCommission has positively evaluated the introduction of the informationexchange system in Serbia (NEPRO) in its Avis of October 2011.37This system is still in an early stage of development and, whereas it can generallybe 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 thereal impact of this system.34 Responses to the Questionnaire of the European Commission, Chapter 28, p.4, available at:<www.seio.gov.rs> (10 February 2012)35 Article 14, paragraph 2 of the Law on General Product Safety36 Article 15 of the Law on General Product Safety37 Commission Opinion on Serbia’’s application for membership of the European Union –Analitical Report, p.122.

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V. CONCLUSION

The purpose of this paper was to examine the Serbian system of consumerprotection set up under the 2010 Law on Consumer Protection from the aspectof the requirements set out in Articles 72 and 78 of the SAA. While Article 72contains a general requirement of approximation of the associated country’slegal system with the acquis and enumerates several priority areas whereapproximation is to start from the day of the signing of the SAA, including theconsumer policy there as one of the key elements of the Internal Market acquis,Article 78 creates a more specific consumer related regime. It necessitatesspecific actions/reforms by Serbia, whose realisation in practice has beenexamined in this paper.In terms of pursuing an active policy of consumer protection, Serbia has notachieved much progress over the last year. These problems are of animplementation nature, which tends to be an inherent problem in the Serbianadministrative system. Even when high quality laws are produced and adopted,follow-up activities frequently fall short of ensuring adequate implementationand enforcement of their provisions, thus failing to accomplish the effectsintended by such legislation. In the case of the CPL, the problems are related toinsufficient capacities and lack of focus by the responsible Ministry, failure toestablish one of the most important policy institutions – the National Council forConsumer Protection, as well as insufficient and unfocused support to consumerorganisations. The only area in which certain results were accomplished is theinformation and education of consumers, though these activities were mainlyimplemented in the period of the drafting and enactment of the CPL, while in theaftermath of its adoption they have faded considerably. Despite numerous,though fragmented, activities in the area of consumer education, what is stillmissing is collective action primarily organised by relevant state authoritiesaimed at ensuring a long-term strategy of consumer education and information.The new CPL has accomplished much in terms of harmonisation of the EUconsumer acquis into the Serbian legal system, which is the second requirement

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of the Article 78. A comprehensive set of EU directives has been transposed intothe CPL, though in the case of two directives various reasons interfered in thedrafting process, resulting in the exclusion of provisions ensuring theirtransposition into the CPL. Thus, the directives on consumer credit and distancemarketing of financial services were transposed into the Serbian legal systemthrough separate legislation. Additionally, from the legal approximation point ofview, several more or less significant omissions were made, mainly having to dowith inadequate translation of certain terms and definitions and lack of inclusionof the ECJ case law in the approximation process. These omissions do notsignificantly 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 withthe view to improve the quality of consumer goods and maintain appropriatesafety standards. This area was regulated by a separate Law on General ProductSafety, which has not ensured full harmonisation with the acquis, but hasnevertheless made significant progress in terms of general safety of productsplaced on the Serbian market.Monitoring of rules by competent authorities and providing access to justice incase of disputes is the fourth requirement under Article 78, which has beenanalysed in this paper. The CPL effectively comprises a dual system ofenforcement, 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 themarket inspectorate and the misdemeanour courts. Other provisions of the CPLsuch as those dealing with guarantees, on the other hand, are to be enforcedthrough a rather modern and innovative enforcement mechanism, albeit one forwhich Serbia seems to be unprepared. The new mechanisms of out-of-courtdispute settlement through mediation and arbitration are not yet functional andthe role of the consumer organisations in this enforcement mechanism has notbeen supported by the State.

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The final requirement of the Article 78 has to do with exchange of information ondangerous products, where a seemingly functional internal system has beenestablished (called the NEPRO), to simulate the EU RAPEX system and to beintegrated into it at a later stage. Whereas the European Commission seems to besatisfied with the results achieved so far, further research will be necessary toevaluate 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 relatedlegislation with the EU acquis, though several areas for improvement stillexist.2. Main problems have been encountered in the sphere of implementationand enforcement, due in part to the introduction of novel and advancedmechanisms but, above all, due to limited and unfocused support andcommitment by the government and the responsible ministry.3. Whereas the new CPL, as well as other legislation in the area of productsafety and consumer protection, largely creates the preconditions forbringing the standards of consumer protection in Serbia in line with thoseof the EU, consumers in Serbia do not yet enjoy the level of protectionexisting in the Union. To a certain extent, due to the serious problems in thesphere of implementation and enforcement, their level of protection isnowadays even lower than it used to be under the previous CPL, which wasnot harmonised with the EU acquis.4. Serious and focused action will be necessary in the future to make full useof the new and modern legislation through its proper enforcement, whichcan be considered the true spirit of the Article 78 of Serbia’s SAA with theEU.