Italy: extending mediation proceedings of business-to-business contracts
Marco Lantelme assesses the implications of Italy’s reforms of the Alternative Dispute Resolution.
On 25 November 2021, the Italian Parliament approved Delegation Law No. 1162/2021 concerning the efficiency of civil proceedings, the revision of Alternative Dispute Resolution (ADR) and urgent measures in order to rationalise rights and enforcement procedures for families and people.
Its main objective is to comply with the recommendations issued by the European Commission and the European Council in 2018, wherein Article 2 entails Italy should “reduce the duration of civil proceedings, while ensuring compliance with procedural law.” According to figures from the Court of Cassation, civil law proceedings in Italy last on average for 1,800 days. A 40 per cent reduction within five years is expected to be achieved following the final approval of this reform.
According to Article 5, paragraph 1-bis, of Legislative Decree No. 28/2010, as modified by Law Decree No. 69/2013, mediation proceedings are mandatory in the Italian legal system for a number of disputes. These include condominium matters, property rights, inheritance and division matters, family covenants, tenancy contracts, business leasing, compensation for damages by vehicles and vessels, medical responsibility and defamation.
In such cases, a mediation proceeding should be carried out before going to court, regardless of whether an agreement is reached upon mediation. Moreover, according to Law No. 24/2017, mediation proceedings are also mandatory when addressing healthcare professionals’ responsibility.
The application of the current rules in mandatory mediation has, in practice, forced parties to seek an agreement in pending litigations, thereby reducing the outstanding potential flow of litigation to court proceedings.
A reformed framework
Article 2 of the reform, pursuing the objective of reducing civil proceedings duration, provides for a broader use of ADR – and, for the scope of this analysis, of mediation.
In particular, mandatory mediation will be introduced for a number of business-to-business contracts, which were previously excluded from the scope of Article 5, paragraph 1-bis, of Legislative Decree 28/2010. Thus, the following shall also be subject to mandatory mediation: participation agreements, joint ventures, consortia, franchising agreements, contract for services, net agreements, management contracts, partnership agreements and subcontracting.
Such amendments are part of a wider set of rules aimed at incentivising the use of mediation and using more effective procedures when carrying out mediation, such as increasing the use of remote or distance communication following the covid-19 pandemic.
In this new framework, whenever it is provided at law for a dispute concerning one of such contracts to be resolved with an ADR method different from mediation (i.e., arbitration, negotiation and collaboration or family law), mediation does not apply. In other words, mandatory mediation ends up being applied only in a residual way, when no other ADR method is required by a different provision.
The introduction of mandatory mediation for disputes concerning business-to-business contracts is also driven by the results of an analysis of the data collected by the Ministry of Justice on mandatory mediation in 2020. Mediation proceedings usually start when necessary (under Article 5, paragraph 1-bis, of the Legislative Decree No. 28/2010).
The results show that 87.1 per cent of 2020 mediation proceedings started because they concerned the matters listed in Article 5, while only 12 per cent of the mediation proceedings started because of a decision of the parties. The percentage of agreements reached through mediation is around 28 per cent, with an average duration of 175 days.
According to the data, the widening of mandatory mediation through the inclusion of business-to-business contracts could well improve the efficiency of civil proceedings, even though a period of at least five years is necessary before the benefits of the reform will become noticeable.
The delegation law is expected to be published in Italy’s official gazette soon. Upon its publication, in order to implement the delegation law, the Italian government will adopt one or more legislative decrees on civil proceeding rules and ADR for simplifying and speeding up the system.
Marco Lantelme is a partner at BSVA Studio Legale Associato bsva.it