15.04.2011

ITALY: COMPULSORY MEDIATION FOR COMMERCIAL DISPUTES.

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The European Mediation Directive (2008/52/EC) forms part of a European-wide initiative to promote and regulate the development of mediation throughout the EU. Italy implemented new legislation which came into effect on 21 March 2011, whereby new rules were introduced to make it compulsory for any party to a potential civil or commercial dispute to attempt to resolve their differences through mediation before a claim may be heard before a civil court.

The underlying benefits for the litigants are that compulsory mediation should reduce the volume and the length of civil proceedings in Court, which are a well known trait of Italy's overburdened judicial system and it aims to provide a commercially viable alternative to the traditional approach of litigating disputes in Italy through the Courts, with significant cost savings.

At this point, the rules relating to the introduction of compulsory mediation include disputes relating to insurance contracts, banking and financial contracts as well as other matters such as real estate and property rights, division of assets, inheritance disputes, leases of going concern, compensation for damages due to car accidents, medical liability or defamation/libel

Several reasons exist for choosing mediation over other channels of dispute resolution:
Parties to a dispute may choose mediation as (often) a less expensive route to follow for dispute resolution.
While court hearings of cases happen in public, mediation offers a confidential process. Mediation is confidential and professionals involved with the proceedings are not permitted to disclose any information gleaned during the process. Unless given permission, mediators cannot disclose to either party any information disclosed in separate sessions and any information disclosed during the mediation cannot be used as evidence as the mediator cannot be called as a witness before any judicial authority.

Mediation offers multiple and flexible possibilities for resolving a dispute and for the control the parties have over the resolution. In a case filed in court, the parties will obtain a resolution, but a resolution thrust upon the parties by the judge. In mediation, on the other hand, the parties have control over the resolution, and the resolution can be unique to the dispute. Often, solutions developed by the parties are ones that a judge could not provide. Thus, mediation is more likely to produce a result that is mutually agreeable, or win/win, for the parties.


The mediated agreement is fully enforceable in a court of law.
The new provisions oblige all lawyers to inform their clients about the mediation process, which is is limited to four months and carried out by a private professional body, set up and registered with the Italian Ministry of Justice or another public entity such as the Chamber of Commerce or local centres of the Italian Law Society.

Further endorsement of the use of ADR in Italy was given by the European Court of Justice in a preliminary ruling issued on 18 March 2010 (in joined cases C-317/08, C-318/08, C-319/08, and C-320/08). The ECJ held that EU Directives and general principles do not prevent national law from providing for mandatory mediation procedures.

"Mediation provisions leave it to the parties to agree the mediation venue or which mediation body should be used." – Valentina Giarrusso, Head of the ADR department at Giambrone Law, says – "In the situation where international companies are now forced to mediate, there is a possibility that the mediation venue chosen by the opponent could be very distant from where they are based in Italy, thus counteracting the purported financial benefits of the new legislation."

It is therefore advisable to include a specific mediation clause in all commercial contracts. This should state the city where mediation should take place and the mediation body which will deal with any potential proceedings.

Compulsory mediation will also apply to contracts executed before March 2011: all pre-existing commercial agreements with Italian counter-parts should be revisited to include a similar mediation clause.