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