Alternative Dispute Resolution (ADR) mechanisms play an important role in Italy in reducing the number of disputes that go to court.
Although parties remain always free to start an ADR procedure to resolve a dispute, depending on the subject-matter ADRs might also be a prerequisite to initiate a judicial proceeding. This is indeed the case if a party is trying to recover a debt that is under € 50k or the claim is based on an insurance, banking or financial contract.
In this Quickguide we will cover two of the most common types of compulsory ADRs in Italy, i.e. mediation and assisted negotiation.
Compulsory Mediation in Italy
In 2010 the Italian lawmaker introduced the “mediation in civil and commercial disputes”.
Following the objective to reduce the number of disputes going to trial and increase the efficiency of the justice system, the law (Legislative Decree n. 28/2010) identifies 11 types of matters subject to compulsory mediation. These were identified among those that during the years had recorded higher litigation rates such as:
insurance, banking or financial contracts;
Because the mediation is a prerequisite to the judicial proceeding if the dispute refers to a subject-matter that is among those identified by the law, the claimant is required to initiate it before bringing the matter to court. Failure to do so will lead to the rejection of the claim. Also, failing to participate to the mediation initiated by the counterparty without a valid reason could be negatively evaluated by the judge and might lead to the application of a fine.
Place of the mediation
To initiate the mediation procedure a request is filed with the Mediation Body chosen by the claimant. This should be located in the same territory as the competent court that would have been able to decide the matter. If the claim regarding propriety rights or insurance contracts should be filed to a court located in Rome, the mediation body ought to be located in Rome as well.
The legislation provides that each party to the dispute shall be assisted by an Italian lawyer. This is a rather important provision not only with regard to the technical support a lawyer could provide on the legal aspects of the matter at dispute, but also ensuring that the parties’ rights are safeguarded throughout the procedure. Additionally, it is explicitly required that, at the time the power of attorney is signed, the lawyer shall inform its client in writing regarding the possibility to initiate a mediation procedure.
The first meeting is to be scheduled and a mediator assigned by the mediation body no later than 30 days after the request is filed, and the entire procedure shall have a duration of no more than 3 months. It is a rather agile process as the law does not require specific formalities. Additionally, the 3 months period is not subject to the summer recess period. If a party does not intend to proceed with the mediation, it is possible to end the procedure just after the first meeting. Following the unsuccessful outcome of the procedure, the claimant could immediately bring the matter to court.
Parties must be present at the meetings either personally or through a representative. It is important to outline that, even before the Covid restrictions, most mediation bodies had the possibility to conduct distant meetings through video-calls. This is particularly important for those parties that cannot be physically present at the meeting either because they have health impediments or because they reside in a foreign country.
Outcome of the mediation procedure
If the parties are not able to settle, an agreement might be proposed by the mediator. An agreement is also proposed if both parties request it. In both cases, the parties have seven days to communicate in writing whether they agree or refuse the proposed agreement. If the ADR procedure fails, the mediator forms the minutes of the procedure in which it is specified if a proposal was made or if one of the parties failed to participate at the meetings.
If the parties reach an agreement, autonomously or based on the proposal made by the mediator, the copy of agreement is attached to the minutes of the mediation procedure which are then signed by all parties. The so formed document can be enforced by the non-defaulting party without delay.
Introduced in 2014, the “negotiation assisted by one or more lawyers” (assisted negotiation, in short) is an alternative dispute resolution mechanism that shares the same goals with the mediation. The law (Law Decree n. 132/2014) specifies that the assisted negotiation is a prerequisite to initiate a judicial proceeding when the dispute refers to a:
payment requests of up to € 50.000 in instances where mediation does not apply;
compensation requests for damages caused by vehicles or vessels.
It differs from the mediation in that it is conducted, as the name might suggest, entirely by the lawyers of the parties to the dispute.
The lawyer has to inform its client of the possibility to initiate negotiations with the counterparty to reach a negotiation agreement which ultimately is a contract between the parties.
Invitation to participate to the assisted negotiation
The procedure begins with the invitation the claimant makes to its counterparty to amicably solve a dispute with their lawyers’ assistance. The invitation must specify the subject-matter of the dispute upon which the parties are willing to reach an agreement.
An explicit refusal to participate or failure to reply to the invitation will lead to negative consequences for the party that did not take part. Indeed, the judge could condemn the party to pay the expenses of the judicial proceeding, but most importantly if the claimant files for an injunction, the judge might concede the immediate enforceability.
The law provides that the duration of the negotiation procedure is agreed between the parties, but it specifies that it shall be no less than 30 days and no more than three months. It also provides that, if needed, parties can extend the duration of the negotiations for up to 30 days if they so convene.
Procedure and outcome
There are no particular specifications as to the procedure the negotiating parties must follow. This is to offer the maximum flexibility needed to reach an agreement. Parties are assisted by their lawyers who are also responsible to certify their clients’ signature to the agreement and ensure it is compliant with the law. If the parties are able to reach an agreement, this ought to take a written form. Such agreement is immediately enforceable, and the non-defaulting party has the right to initiate the foreclosure procedure without any delay in case of non-compliance.
If an agreement is not reached either because the negotiations fail or 30 days have expired without any reply, the claimant could go to court or initiate an injunction procedure.
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