New conflict resolution method, in addition to the already existing mediation, through settlement negotiation before referring disputes to Courts has been recently introduced in the Italian legal system.
13.12.2014 - With Decree no. 132/2014 the Italian Government has enacted specific provisions in order to reduce the workload of the Italian civil courts mainly through (i) the right of the parties to refer a pending Court proceeding to arbitration and (ii) the power of the parties to proceed with an amicable attempt to settle their dispute which should work as a conflict resolution method before referring the matter to Court.
The already existing mediation has not been modified by the mentioned Decree.
In respect of the power of the parties to refer the dispute (already pending before Court) to arbitration see our previous note.
Conflict resolution through settlement negotiation with the assistance of lawyers (before referring the dispute to Courts) will be dealt with by the present note.
Invitation to attempt the dispute resolution
Conflict resolution method introduced by Decree no. 132/2014 provides that each party is entitled to invite the other to attempt an amicable settlement of the dispute (provided that the dispute does not concern rights that cannot be freely disposed of by the parties or employment matters).
In particular, one party will invite the other to enter into an agreement the purpose of which is to bind the parties to seek in good faith to resolve amicably their dispute (the "conflict resolution attempt agreement").
The invitation to seek the settlement must contain:
- the matter object of the dispute;
- the warning that failure to reply to the invitation to settle (or the refusal to enter into the conflict resolution attempt agreement) may have an impact on the allocation of costs if the matter will be referred to Court.
The "Conflict Resolution Attempt Agreement"
The conflict resolution attempt agreement, if entered into by the parties, must contain:
- the term within which the parties will attempt the dispute resolution. The term cannot be shorter than 1 month and cannot be longer than 3 months (eventually the latter can be extended by further 30 days);
- the matter object of the dispute.
The conflict resolution attempt agreement must be in writing and be entered into with the assistance of lawyers who will certify the signature of the parties.
The Decree provides that the conflict resolution attempt agreement is mandatory in certain limited cases (such as in respect of request for damages arising out of car accident and for collection of money up to the amount of euro 50,000) and if one party starts a legal proceeding before the Court without having attempted the amicable settlement the Court will grant a suspension of the proceeding during which the parties must attempt to solve their dispute amicably. However, even in cases where the conflict resolution attempt is mandatory, neither party shall be prevented to apply to the Court to obtain interim measures.
The invitation to enter into a conflict resolution attempt agreement or the signature of the conflict resolution attempt agreement will interrupt any statute of limitation.
If the settlement will succeed and the parties will solve their dispute by negotiation, the relevant agreement will have the effect of an executive title and the parties will be entitled to start any necessary enforcement procedure in case of failure to comply with the agreement.
Information obtained during the conflict resolution attempt discussions
The Decree provides that, should the conflict resolution attempt fail, any declaration or information obtained during the conflict resolution attempt phase cannot be used in the following Court proceeding with the same object matter.
This is a highly sensitive matter since the parties, during the settlement discussions, must attempt to solve their dispute in good faith. This means that the parties shall exchange several information in order to solve (or at least to seek to solve) their dispute in good faith. It is clear that if the declaration and/or information exchanged during the settlement discussion cannot be used in the following Court proceeding, each party will be tempted to disclose the minimum amount of information in order to avoid jeopardising its position in the following Court case. In other words such provisions will prejudice the effectiveness of the good faith negotiation between the parties.
Despite the new provisions are to be considered as a way to solve partially the well-known tardiness of the Italian judicial system, it remains unclear why the Italian Government has decided to introduce a new alternative dispute resolution method instead of improving the currently in force mediation procedure. It must in fact be stressed that the mediation is already provided by Italian Law but it is still subject to many criticisms.
On the one side it can be said that, if the settlement will succeed, the winning party will have an executive title but this is actually the limit of the settlement negotiation since, it is understandable, no party shall accelerate the process through which an enforcement procedure can be started against itself.
In other words, several doubts remain in respect of the effectiveness of the new provisions which, apparently, can still be used by a party with the only purpose to delay an enforceable decision.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.