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Court of Justice of European Union Rules on Mandatory Mediation before Court Proceedings involving Consumer Claims

  • 16/06/2017
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On 14 June 2017, the Court of Justice of the European Union (the "ECJ") handed down a judgment interpreting, in the light of Directive 2013/11/EU of 21 May 2013 on alternative dispute resolution for consumer disputes ("Directive 2013/11/EU"), the conditions under which mandatory out-of-court mediation should take place before a consumer can initiate court proceedings against a trader.

In the case at hand, Livio Menini and Maria Antonia Rampanelli, two Italian nationals, had brought proceedings before the Verona District Court against a bank in order to have a loan repayment order set aside. However, under Italian law, such an application had to be preceded by a mediation procedure under which the parties had to be accompanied by a lawyer and were only allowed to withdraw from the process if they put forward a valid justification.

Uncertain as to whether those requirements complied with Directive 2013/11/EU – which aims to ensure that consumers can, on a voluntary basis, submit complaints against traders to alternative dispute resolution procedures, provided that such procedures are independent, impartial, transparent, effective, fast and fair – the Verona District Court referred the matter to the ECJ for a preliminary ruling.

In reaching its judgment, the ECJ found that the requirement under Italian law that mandatory out-of-court mediation be initiated before bringing court proceedings may be compatible with the principle of effective judicial protection provided that such mediation (i) does not result in a binding decision on the parties; (ii) does not cause substantial delay; (iii) does not suspend the period for the time-barring of claims; and (iv) does not give rise to high costs. In addition, urgent interim measures should be possible.

The ECJ also noted that the contested Italian legislation could not require a consumer taking part in an alternative dispute resolution procedure to be assisted by a lawyer. In addition, the ECJ found that the Italian requirement that a consumer need demonstrate a valid reason before withdrawing from the mediation procedure violated Directive 2013/11/EU.

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