November 10th, 2011

Continental European Legislative and Judicial Trends: Obligatory Mediation in Italy: An Opportunity or Threat for Insurers?

Posted at 1:00 AM ET

David Lewin, Managing Director


Italy has recently enacted a statute (D.Lgs.28/2010) introducing mediation as a means to resolve the controversies arising from insurance contracts and some other specific matters. The main features of the mediation procedure are the following:


The mediator is the person who carries out the activity of mediating the controversies brought by interested parties.  Mediators operate within specific Mediation Chambers registered in a specific register kept by the Ministry of Justice. Mediators must guarantee their independence from the interested parties.

Types of Mediation

  • Facultative - Used when the parties so decide. In fact, every controversy relating to matters that can be deferred to arbitration can also be resolved through mediation, upon agreement of the parties.
  • Deferred - Used in situations where a judge invites the parties to try to solve the matter through mediation. In this case, a judge orders that the case must stay until the controversy has been settled through mediation. If mediation ultimately fails, the judicial proceeding is continued.
  • Mandatory - In certain matters, the parties are not entitled to start litigation in court unless they have previously carried out a mediation proceeding.

The Mediation Proceeding Has Been Made Obligatory for Certain Matters

  • Rights concerning title on land
  • Severance of commonly owned properties
  • Severance of inherited patrimonial assets
  • Marriage agreements
  • Lease and rental contracts
  • Free lending
  • Rental of business
  • Compensation of damages deriving from medical malpractice or libel
  • Insurance, banking and financial contracts
  • Motor insurance claims and controversies related to the reciprocal rights of the members of a “condominium.” (Note: Mediation procedure is applicable to these two categories effective March 21, 2012.)

In simple terms, all disputes relating to insurance contracts (with the exceptions of those relating to motor insurance, as specified above) cannot be brought before the courts unless the parties have previously undergone a mediation procedure. Exceptions are cases in which the plaintiff is entitled to demand ad interim injunctions or to  start special and urgent proceedings. Examples of these situations include payment injunctions, seizure of goods or urgent or provisional orders in matter of lease.

It should be noted that the controversies subject to the stated preliminary procedure are those that originate from a contract of insurance. However, the ones related to issues that are only consequent or ancillary to a contract of insurance, such as subrogated claims or recourses between insurance companies, should not be subject to mediation procedure.

Another interesting issue concerns the case of performance guarantee, or performance bonds, issued by insurance companies. This situation is unusual because from a legal standpoint, these contracts can be construed as contracts of guarantee rather than contracts of insurance. However, generally, these types of contracts should be considered as “contracts of insurance” for the purpose of the application of D.LGs n.28/2010, given that they are issued by insurance companies and that they are managed through actuarial techniques.

Basic Steps of the Mediation Proceeding

  • In order for the mediation proceedings to begin, the counterparty must be served with a notice of the invitation to take part in the mediation before a specific Mediation Chamber. The chamber is chosen by the claimant from a list of chambers registered as mediators in a registrar that is held by the Ministry of Justice. The defendant must reply within the period of time fixed by the claimant, communicating whether or not it is willing to participate in the proceeding. The defendant is entitled to refuse participation in mediation when the refusal is justifiable. Justification may be scrutinized by a judge in subsequent litigation.
  • After receiving the reply, the Mediation Chamber Secretary appoints the mediator, who will carry out the mediation activity and communicate such appointment to the parties, together with the date scheduled for the first meeting.
  • During the meeting, the mediator solicits the parties to reach an agreement for the settlement of the controversy. The law  specifies the use of a particular type of alternative dispute resolution (ADR) procedure, leaving the individual Mediation Chambers to adopt the kind of mediation they prefer. The general rules governing such options, as well as the other details of the proceedings, are set out in the regulation that every chamber must adopt.
  • As a result of mediation sessions, the parties may agree to settle the dispute, or they may not.
  • If the parties agree to settle the controversy before the mediator, then the mediator writes and signs the minutes of the settlement and the parties sign it for acceptance. I n case the liable party does not comply with the terms of the agreement, the other party may have the settlement agreement formally endorsed by the judge and thus rendered enforceable.
  • If the parties do not settle, the mediator, upon the request of both parties, can suggest a fair and equitable solution of the controversy, and the proposal can be written into the minutes of the meeting. Upon the request of only one of the parties, the proposal can only be made by the mediator if regulations of the Mediation Chamber authorize the mediator to do so. Should the judge’s decision be the same as the proposal made by the mediator, the party who rejected the proposal is charged with the entire costs of the litigation borne by both parties.
  • The duration of the mediation proceeding is fixed by law at a period of a maximum of four months. This period may be extended only in very exceptional circumstances.

Position of Insurers

Since D.Lgs n.28/2010 was enacted, insurers have asked the legislature to turn the obligatory mediation in insurance matters into a mere facultative mediation, or to delay the entry into force of the whole legislative decree. To date, the insurers’ lobbies obtained a one-year delay for enforcing obligatory mediation only for controversies relating to motor insurance and condominium relationships. This becomes effective on March 21, 2012.

Insurers have not welcomed the introduction of obligatory mediation. They believe that this preliminary step is likely to increase claims handling costs without a substantive benefit for the insured parties.

In particular, the main criticisms raised by insurers are:

  • Participation in numerous mediation procedures requires the presence of an insurer proxy with sufficient power of attorney to be able to freely negotiate the resolution of a dispute. Insurers need to create and train special mediation teams for dispatch each time a mediation procedure is begun.
  • The legislative decree does not state any specific forum for mediation, which enables the claimant to summon an insurance company before a mediator who, for example, may have a pro-consumer reputation. The mediator may also be located far from both parties.
  • The legislative decree provides very low requirements for professional experience and skills for mediators. Insurers are concerned that they will be summoned before a mediator who has poor knowledge of the questions at issue and the relevant rules of law.
  • Insurers generally attempt to settle claims before claims payment is denied. Consequently, they feel that obligatory mediation will often result in delays and wasted energies. However, facultative mediation may be useful, depending on the specific circumstances of the case.

After obtaining the delay in implementation of obligatory mediation for motor insurance, insurers focused on trying to find effective business solutions for coping with the expected massive recourse to mediation in the field of motor insurance. Very few actions were taken regarding obligatory mediation in matters other than motor insurance litigation.

When mediation commences:

  • Insurers must decide whether to take part in the proceeding or to decline the invitation to appear before the mediator.
  • If insurers decide to participate, they generally entrust a lawyer to provide them with general instructions. Very often, the procedure is adjourned two or three times before it reaches a stage where effective mediation activities can begin.

Currently, insurers tend to attempt participation in the mediation, rather than reject the summon of the claimant before the mediator. Unjustified refusal to take part in a mediation proceeding allows the judge to consider the defendant’s position less favorably. Insurers have been trying to create a general agreement on basic rules governing mediation. The goal is to engage as many mediation bodies and insurers as possible in the agreement to maximize the common agreement’s applicability. The aim is to allow the parties to be able to select a mediator who works within the signed agreement. This process was begun to sustain the impact of obligatory mediation for motor insurance claims, which becomes effective on March 21, 2011.

Position of the Insured

The aim of the legislature in enacting obligatory mediation was essentially two-fold:

  • To offer claimants a solid opportunity to see their demands examined in an efficient and simple procedure before a  third party, whose mission is to help the parties solve the disputes in an alternative mechanism.
  • As a consequence of mediation, the number and the duration of civil cases brought before courts would be drastically reduced.

Both of these targets favor the clients of insurers. The expectation was that the new legislation would satisfy the needs of a large number of litigants.

The new provisions on mediation are still far from welcomed by many observers, especially the professional law groups. The reasons for these critical views are, in summary:

  • The legislative decree does not provide that mediators be required to have a minimum degree of knowledge about law, nor does it mandate specific professional standards or requirements, other than those of being “reliable” and “efficient.” No guarantee exists that claimants will be properly guided by mediators to reach a fair and reasonable agreement in a specific case.
  • According to the legislative decree, there is no requirement that the parties be assisted by an attorney, which may be detrimental to claimants.
  • If recourse through mediation is compulsory, for example, in insurance-related matters, claimants are prevented from going before a judge to exercise their rights of defense, which are guaranteed by the Constitution.
  • Compulsory mediation requires that the claimant take an additional step in the claims process, with no guarantee that the claim will be settled. If needed, after the mediation, a proper judicial proceeding must be commenced and completed. This may cause the claimant to bear more legal costs and extends the length of the whole process.

These concerns regarding the key aspects of the newly introduced mediation proceedings requirements have brought several legal professional groups and associations, along with some individual lawyers, to challenge the legitimacy of the latest rules.  They have begun a lawsuit before the Administrative Court of Rome (T.A.R. Lazio) against the Ministry of Justice regarding the rules enacted for the application of the legislative decree n.28/2010. The aim is to annul some of the most important rules of the decree.

On March 11, 2011, the T.A.R. Lazio issued an order to stay the case and address the Constitutional Court the questions of the legitimacy of the rules, providing that:

  • In the matters subject to obligatory mediation, the claimant is unjustifiably prevented from bringing a lawsuit before the judge in order to protect his or her rights.
  • The requirements stated for being appointed as mediator are not sufficient to guarantee the necessary competence for the position.

The grounds for such a decision are based on various issues encompassing the alleged lack of legislative power of the Ministry because of the limits of the delegating statute, as well as some general principles stemming from the European Union (EU) Directive on Mediation.

With these points in mind, it is likely that future appointments of mediators will be subject to more stringent professional requirements, and that mediation procedures will be left either to the option of the parties or to the  discretion of judges following a proper court case.


Despite all of the criticism raised against D.Lgs.28/2010, the need to reduce the duration of civil litigation in Italy is a priority, and the attempt to introduce obligatory mediation should be welcomed in matters in most of the currently pending court cases.

However, mediation may not be the only, or most appropriate, way to solve the problem. A better court office organizational structure, an increase in the number of judges operating in the territory and an effective reform of the enforcement of judicial decisions may have changed the scenario. But at present, obligatory mediation in insurance contract litigation is a fact, and insurers should use mediation as a means of avoiding long lasting litigation. This may be achieved through comprehensive and objective preliminary analysis of claims, carried out in preparation of the mediation, so that only cases worthy of defense are litigated.

Of course, insurers must prevent the possible abuse of mediation. The abuse could happen if certain Mediation Chambers used a hostile approach to insurers and gained reputations for being “convenient forums” of mediation for insurers’ clients.

For controversies other than those relating to motor insurance, the attitude of the insured may be more positive than expected. Indeed, a client that has suffered a material loss to industrial or private property, or a building contractor who wants to establish whether some event is covered by a policy, has the same goal as the insurers. They want to avoid long-lasting litigation, and they are not interested in wasting time before a mediation body that is not competent on the matter at stake.

Moreover, insurers may find some common ground with a claimant when a mediation procedure must be commenced, and the two parties can agree upon a reliable Mediation Chamber. Certainly, a good effort can be made by the same parties to make efficient use of mediation sessions in an attempt to reach a fair settlement and to avoid a costly and lengthy litigation process.

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