As of 21 March 2011, new legislation in Italy requires parties in civil and commercial disputes to attempt to resolve their differences through mediation. Once the mediation process is completed, the matter can then be heard before a judge in the civil court.
The new mandatory mediation particularly includes disputes relating to:
- insurance contracts;
- banking and financial contracts; and
- medical negligence and libel by the press or advertising media.
The introduction of compulsory mediation should provide a commercially realistic alternative to the traditional approach of litigating disputes in Italy, with significant cost savings. It should also reduce the volume of lengthy and protracted proceedings which are a common feature of Italy’s overburdened judicial system.
The new provisions state that lawyers must inform their clients about the mediation process. The mediation process is limited to four months and carried out by a private professional body, which is set up and registered with the Italian Ministry of Justice, or public entities, such as the Chambers of Commerce or Professional Councils. Currently 170 bodies have registered.
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. If the mediation fails, all information received during the process will be deemed without prejudice and cannot be used in subsequent contentious proceedings. Furthermore, information disclosed during the mediation cannot be used as evidence and the mediator cannot be called as a witness before any judicial authority.
If the mediation is successful, either the parties can draft a settlement agreement themselves, or if an agreement cannot be reached, the mediator will draft one for them. The parties will have seven days to consider and accept the proposed settlement agreement. The agreement must comply with Italian law in order to be enforceable. A lack of agreement between the parties will result in the commencement of proceedings.
However, there are still some concerns regarding the future success of compulsory mediation. For instance, mediation is only effective if both parties are willing to reach an agreement and not just because they have been told to mediate by a judge. Concerns have been raised about the training and quality of mediators available.
The mediation provisions also lack guidance for a choice of mediation venue or which mediation body should be used. This could be a potential risk for insurers, as the mediation venue selected could be a significant distance from where they are based and the mediating body chosen may not have the expertise required. Therefore it is advisable to have a specific mediation clause in contracts or policies stating the choice of venue and mediation body which will oversee the proceedings. Furthermore, compulsory mediation also applies to contracts agreed (but not proceedings entered into) before 21 March 2011. Therefore it is advisable to also amend pre-existing agreements to include a specific mediation clause.
Currently the Italian Legal Unitary Organisation has launched a legal challenge to mandatory mediation on the basis that the current format represents an obstacle to justice and will exacerbate costs for claimants. A decision on this from the Administrative Court in Rome will be handed down shortly.