Italy has recently introduced new legislation requiring parties to civil and commercial disputes to attempt to resolve their differences through mediation before the matter can be heard before a judge in a civil court of law.

This will have important consequences for the insurance industry, as the mediation procedure is mandatory for disputes arising from insurance contracts. The new law will enter into force in March 2011.

Key points are:

  • Mediation will become mandatory for civil or commercial disputes arising out of an insurance contract. The mediation requirement will also apply to other types of disputes, for example, medical malpractice.
  • The mediation process will be limited to a four-month period and must be carried out by an independent and professional body, set up and registered with the Italian Ministry of Justice for this specific purpose.
  • If the dispute is resolved by the mediation process, the parties draft a settlement agreement. If the parties do not reach a settlement, the mediator must draft a settlement proposal which the parties are required to consider. If the parties agree to the proposal, a settlement agreement is drafted accordingly.
  • In both cases, the agreement, as long as it is compliant with Italian legislation, can be validated by the President of the Court in which the mediation body is registered and will become fully enforceable.
  • If the settlement proposal is not accepted, then either party can commence proceedings. The party that brings the action, however, will not be allowed to claim for their costs of bringing the action and will be liable for the other party's costs in the event that the court decision is the same (or similar) to the rejected proposal.

It is anticipated that the introduction of compulsory mediation will provide a commercially realistic alternative for insurers 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.

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The original publication date for this article was 19/03/2010.