SME friendly dispute resolution in standardisation at risk

At the last General Assembly of ETSI, the European Telecommunication Standards Institute, SMEs stood together against the proposal to delete an article of ETSI Rules of Procedure that concerns dispute resolution between its members.

Recognised by the EU as one of the three European Standards Organisation together with CEN and CENELEC, ETSI produces globally applicable standards for Information and Communications Technologies, such as GSM™, DECT™, Smart Cards and electronic signatures. ETSI’s membership comprises more than 800 organizations worldwide, including the global leading ICT companies. Approximately 25% of ETSI’s members are SMEs.

Ahead of the General Assembly meeting, a coalition of some multinational IT companies proposed to delete an article of ETSI’s Rules of Procedure dealing with dispute resolution between members of the institute. Article 18.1 requests ETSI members to revert to internal conciliation to solve disputes. Such rule also sets that French law should be followed in case of legal escalation.

Article 18.1 of ETSI’s Rules of Procedures is vital for all ETSI members, but especially for smaller companies. Internal dispute resolution is a faster means of solving disputes, as well as a less costly one. It puts all members on an equal footing and therefore protects smaller members from financially stronger ones. Furthermore, it is a safeguard principle against unnecessary or premature court cases.

Recently, TruePosition, an ETSI member claiming that its technical contributions for standards were not being treated fairly at ETSI, filed a complaint in a US court against the Institute and other companies involved in the standard setting. The resultant cost of approximately 4 million Euros was only for the “discovery” phase of the litigation lasting several years before the parties agreed to settle.

With that background, the possible deletion of article 18.1 would be a dangerous decision for all SMEs in ETSI. Larger and financially stronger companies could use the threat of an expensive litigation in the US to force any European SME to give up its legitimate rights, simply because the SME could not afford the costs.

Alerted by some small ETSI members, Small Business Standards (SBS), the European association for SMEs in standardisation, initiated a campaign to block the proposed deletion of article 18.1. Ahead of the General Assembly meeting, SBS called on the members of ETSI to oppose the deletion of the article. Following the initiative by SBS, the European Commission decided to issue a written position. According to the Commission, the EU Regulation on standardisation established a fiduciary duty by the European Standards Organisations (i.e. ETSI in this case) in favour of their SME members. Hence, the Commission pleaded in favour of retaining Article 18.1 in order to promote the participation of SMEs.

Thanks to the intervention of Small Business Standards and of the European Commission, a large number on national delegations decided to oppose the deletion of article 18.1. Thus, the ETSI General Assembly decided to maintain article 18.1 and requested a smaller group of members to prepare a proposal to better formulate the article.

“We are satisfied with the outcome and will participate in the working group to ensure a proposal which is acceptable to all, large and small companies” said Oliver Grün, president of DIGITAL SME, after the meeting.

The European Digital SME Alliance was a founding member of SBS in 2013. Since 2015 it has been in charge of the ICT sectoral operations of SBS. Thanks to its collaboration with SBS, the European Digital Alliance appointed its Secretary General Mr Sebastiano Toffaletti as ETSI Board member and Mr Peter Statev, chairman of ICT Cluster Bulgaria, as Vice Chairman of the ETSI GA.