Italy is promoting Alternative Dispute Resolution (ADR) procedures, such as Mediation, in order to reduce the number of disputes that go to Italian courts. Although parties remain always free to start an ADR procedure to resolve a dispute, there are subject-matter where mediation is compulsory. This means that you can not go directly before an Italian judge to solve a civil and commercial dispute in certain specific matters. This is indeed the case when the claim is based on an insurance, banking or financial contract.
During compulsory mediation procedure in Italy parties are assisted by their lawyers. In order to maximise the success of the procedure, it is important that the lawyer has established a good communication with its own client and possesses good negotiation skills. In this article we will cover compulsory mediation in Italy and its implications.
What is Compulsory Mediation?
Mediation: the definition
Legislative Decree n. 28/2010, amended in 2022, introduced in Italy a mediation model based on a facilitative approach. Mediation is defined as the activity of an impartial third party, called Mediator. The mediator is not a judge and has no power to decide: he/she helps two or more parties in finding an amicable settlement to a dispute. In some cases and if the parties agree, the mediator may submit a confidential settlement proposal to them.
Compulsory mediation
The law identifies several types of civil and commercial matters subject to compulsory mediation in Italy, such as:
- Condominium disputes
- Rights in rem
- Division of assets
- Trust and real estate
- Disputes on family covenants
- Landlord and tenant disputes
- Leases of business
- Motor vehicle and maritime accidents
- Medical malpractice
- Libel and defamation through other media
- Insurance contracts
- Banking and financial contracts
- Franchising agreements
- Joint ventures
- Professional service agreements
- Consortium agreements
- Sub-supply agreements
- Disputes among members of a partnership
- Supply agreements falling in the definition of art. 1559 of the Italian civil code
If the dispute refers to a subject-matter that is among those identified by the law, the claimant is required to initiate mediation before bringing the matter to court. Failing to do so, the judge will fix a time-limit to start mediation and if mediation is not started by the obliged party, the judicial proceeding is terminated.
The failure to participate in the mediation procedure without justification is negatively evaluated by the judge and may lead to the application of a fine.
Compulsory mediation does not apply to urgent and interim proceedings or to the proceeding to obtain an order for payment against an Italian debtor.
Advantages and Disadvantages to Compulsory Mediation in Italy
Advantages
- It is rather fast: the entire procedure shall have a maximum duration of 3 months, not subject to the summer recess period. It is possible to end the procedure just after the first meeting and, subsequently, the claimant may submit immediately the case to the Italian court.
- Parties keeps their rights. Actually, the limitation period is interrupted by the mediation request (Article 5(6), L.D. 28/2010).
- It is confidential: all parties and the mediator are bound to confidentiality and must sign a confidentiality agreement (Article 9, L.D. 28/2010). A statement made in mediation can only be disclosed in court proceedings if the party who made the statement consents to the disclosure.
- It can be conducted online, so that the physical presence of the party is not necessary.
- The settlement agreement signed by the parties, their lawyers and the mediator is immediately enforceable, having the same effect as a court judgement (Article 12 L.D. 28/2010).
Disadvantages
- Compulsory mediation must be initiated even if it is already clear that the parties will not settle the dispute. So this may lead to an extra cost which should be claimed before the Italian judge, together with all other costs (damages, legal fees).
- The amendment in 2022 extended compulsory mediation to some subject matters, in an unclear way. As an example, it is not easy to assess if disputes between parties of an IT service contract or a joint venture agreement are subject to compulsory mediation in Italy.
Lawyer for Compulsory Mediation in Italy
When mediation is a precondition for litigation, the parties must be assisted by their lawyers (Article 8, L.D. 28/2010). The party must be present in person or in videoconference, and his/her role in the proceeding must not be delegated to the lawyer. Especially when the party is not familiar with Italian language, it is important to appoint a lawyer who can facilitate the communication of that party during the mediation proceeding, with the aim to reach the best possible outcome.
Moreover, an expert Commercial Lawyer in Italy can assess if international contracts such as franchising and joint venture agreements should be subject to compulsory mediation, in case of a dispute in Italy.