I. Premises.

On 21 September 2013, will (re)enter into force the so-called “mandatory mediation” in Italy.

The Italian Government, following the declared unconstitutionality of Legislative Decree no. 25/2010 (“Decree 25/10”) in the section introducing the institution of the so-called “mandatory mediation” (Constitutional Court decision no. 272/2012), has reintroduced such procedure, even though partially amended, by mean of Law Decree no. 69/2013 (“Decree 69/13”) on “Urgent dispositions to relaunch the economy”.

Such amended and reintroduced civil and commercial mediation will be mandatory for an experimental period of four years, during which the Ministry will have to carry out a follow up on the results concretely detected in the praxis.

The Decree contains rules regulating and promoting the use of mediation in civil and commercial disputes in Italy. What is most novel and noteworthy about the Decree 69/13 is its (re)introduction of mandatory mediation to the Italian legal system and also, depending on the results of the mandatory mediation, the arrangements for judicial expenses.

The Decree was enacted with the goal to ease the overwhelming caseload in the Italian courts and also to prevent additional delays in Italian judicial proceedings.

Except as otherwise already provided for in the Italian legal system, the Decree 25/10 provided for three different types of mediation:

1. voluntary mediation, when mediation is freely chosen by the parties;

2. judicial mediation, when the judge invites, at any stage but before the last hearing, the parties to attempt to resolve the disputed issue through mediation;

3. mandatory mediation, when it is imposed by law.

The Decree 25/10 defined mediation as an activity carried out by a neutral and impartial third party - the mediator - with the goal to assist two or more individuals in reaching an amicable agreement and a resolution to a dispute.

In order to reach an agreement between the parties, under the Decree 25/10, the mediation must be carried out by professional and independent institutions that are devoted to providing mediation services. These institutions are listed in a registry duly maintained by the Italian Ministry of Justice. The Decree 25/10 provided that these bodies shall include, as of right, mediation agencies set up by the Italian Chambers of Commerce. Furthermore, it confirmed the existing right of bar councils and professional bodies to set up their own mediation institutions (attached either to the courts or to the relevant professional council, respectively).

II. Mandatory Mediation.

According to the implemented legislation, disputes in the following categories are subject to mandatory mediation: condominium and real rights; division proceedings; hereditary succession; family agreements; lease; gratuitous bail; business leasing; compensation for damages deriving from medical liability and defamation through the press or other means of publicity; insurance, banking and financial agreements (any dispute in the aforementioned categories, a "Mandatory Mediation Dispute").

Compared to the previous (unconstitutional) legislation, the cases related to the compensation for damage caused by the traffic of vehicles and boats, as well as the procedures of prior technical advice for the settlement of the dispute provided by Article 696-bis of the Italian Code of Civil Procedure are excluded.

The parties involved in any Mandatory Mediation Dispute must first attempt to resolve their differences through a mediation proceedings before they are able to avail themselves of the Italian court system. In the event a party first brings a Mandatory Mediation Dispute before a judicial court (without first having going through the mediation process), a judge in such court proceedings would suspend the case and would invite the claimant to start an out of court mediation proceedings.

III. The procedure.

First of all, in order to commence a mediation procedure, parties must be assisted by a practising lawyer (responding parties have not the same duty).

At the preliminary meeting, which has to be held not later than thirty days from the filing of the mediation petition, the mediator shall verify the possibility to continue the mediation.

From the absence of a party on unjustified grounds, the Judge may gather evidence as provided for by Article 116, Italian Code of Civil Procedure, and condemn such party to the payment of a sum equal to the contribution due for the filing of a petition.

In case of negative outcome of the first mediation meeting, i.e. without the reaching of any agreement, the condition of admissibility is to be considered as satisfied and no compensation is due to the mediation body. No compensation is due, in any case, by any party who is eligible for the free legal aid in accordance with Article 76, para. 1, of the Presidential Decree dated May 30, 2002 no. 115.

The proceedings for a mandatory mediation, which can last for a maximum of three months, are described as follows:

• After a mediation petition has been submitted, a qualified professional and independent institution designates a mediator and arranges for an initial meeting between parties in order to evaluate the possibility to reach an amicable agreement;
• Thereafter, two possible scenarios follow:

i. If an agreement is able to be reached between the parties, the mediator drafts the minutes of the meeting which then must be signed by the parties and by the lawyers. In this case the minutes will become immediately enforceable. If the parties are not assisted by lawyers, the minutes must be homologated by the President of a court established in the district of the seat of the qualified professional and independent institution (the one that designated the mediator) in order to become enforceable. Based on the approved minutes of the mediation, a winning party in such mediation is then able to file a judicial lien (“ipoteca giudiziale”) with the proper local authorities against the defeated party for an amount not to exceed the amount awarded in the approved minutes.

ii. If no agreement is reached between the parties after the initial consultation with the mediator, the mediator may propose a solution which the parties may choose to accept or refuse. If the parties refuse the mediator's proposal for a solution, the parties are then able to commence a lawsuit. In this case, if the judgement issued in such subsequent court proceedings is the same as the mediator's recommendation, such a ruling may affect the allocation of judicial expenses between the parties, as further explained immediately below.

IV. Judicial expenses.

Pursuant to the implemented laws, the court can refuse to award the costs and expenses to the winning party if the winning party had previously rejected the mediator's recommendation. In fact, what is noteworthy is that under such circumstances, the court may even order the winning party to pay the losing party's costs and court fees.

V. Confidentiality.

All mediators shall keep confidential any information arising out of or in connection with the mediation, including the existence of a mediation (whether the mediation is to take place or has taken place). The mediator cannot be called as a witness in any subsequent court proceedings, to the extent there are subsequent court proceedings. In the event that the parties do not come to an agreement during mediation and the parties proceed with a subsequent court proceedings, the Decree clarifies that under such circumstances, the parties would not be able to utilize any of the representations made and any information collected during the mediation proceeding in the subsequent court proceedings.

VI. Duty to inform.

Pursuant to the enacted laws, before the commencement of any legal action or lawsuit, all lawyers licensed to practice in Italy now have an affirmative obligation to inform their clients about the option of approaching the various mediation institutions and settling the dispute through a mediation proceeding.

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In conclusion, lengthy civil proceedings can be a drag on economic activity. A well-functioning judicial systems play a crucial role in determining economic performance, for these reasons the Italian Government reintroduced the mandatory mediation in civil and commercial disputes, namely to make the Italian judicial system more efficient and competitive.