Alternative dispute resolution (“ADR”) refers to any other form of dispute resolution mechanism which does not involve a court of law. However, generally speaking, we are referring to the mechanisms of mediation and arbitration. Before outlining the main aspect of Italian Mediation or Arbitration, it is important to highlight that certain disputes are excluded from extra judicial procedures. In fact, certain disputes may only be decided by a court of law, for instance: dissolving marriage or status and evictions.
One the one hand, within the Arbitration procedure the arbitrator is called to decide a dispute with a sentence-like decision named arbitration award. On the other hand, in the context of mediation scheme, the mediator is not called to take any decision or judgement. In fact, he/she works with the parties with the purpose of reaching an agreement.
According to Italian Law, arbitrators must render the award within 240 days of their appointment. However, in presence of certain circumstances, the term is automatically extended by a further 180 days.
The use of arbitration in Italy causes the following advantages:
– Expertise – Arbitration Clauses are mostly used for complex disputes that may require an expertise and know-how around a certain discipline;
– The ability to appoint arbitrators – Arbitrator appointment is perceived as a guarantee that each party’s argument will be taken into consideration;
On the other hand, disadvantages connected to arbitration are:
– Costs – Given arbitrators’ expertise and experience in dealing with complex disputes, arbitration costs are higher compared to standard court fees;
According to the last report of Milan Chamber of Arbitration, corporate disputes are the most arbitrated. After that, we find construction dispute and then, disputes around rental, sale and purchase of company assets or branches. Again, banking, trade and insurance matters are also often arbitrated.
Through mediation, parties agree to appoint a mediator that resolves the dispute by parties’ mutual agreement. In particular the mediator seeks to highlight the common interest arising from the disputes. Unlike arbitration, mediation requires all parties’ consent and participation to the procedure. Similarly to the Arbitration procedure, mediation is characterised by following advantages:
– Successfulness – According to last reports, 86% of mediation procedure ends with an agreement between the parties;
– Parties’ Power – Parties may exercise control towards the whole procedure. They decide if an agreement can be reached
The importance of mediation procedure has been recognised by Italian Law. In fact, there are three different types of mediation procedure:
– Mandatory Mediation – During a corporate or civil disputes, parties might be forced to reach an agreement before starting a lawsuit before the Court. The mediation attempt constitutes a precondition to have access to ordinary dispute resolution;
– Voluntary Mediation;
– Judicial Mediation – In the context of a traditional dispute, the very Judge may invite the parties to reach an agreement via mediation procedure.
VGS Lawyers have assisted various clients in the context of corporate and civil disputes. When possible, VGS professionals encouraged our clients to proceed with the drafting of arbitration or mediation clauses into contractual agreements. Given the well-known extended timeframe of Italian Justice, Arbitration and Mediation clauses may help individuals to manage and drive their business in a more efficient manner.