The Court of Justice of the European Union (CJEU) has concluded that national legislation imposing mandatory mediation as a pre-condition to litigation is not precluded by the EU ADR legislative framework, provided that the parties are not prevented from exercising their rights of access to the judicial system.  

However, to the extent that such a pre-condition required consumers to be assisted by a lawyer in the mediation process, or penalised them for withdrawing from the mediation without good grounds, it would be contrary to the Consumer ADR Directive (2013/11/EU):  Menini and another v Banco Popolare Società Cooperativa (Case C-75/16) (14 June 2017).  

We previously reported on the Advocate-General's opinion to the CJEU in this case, which had been referred to the CJEU by an Italian court.

Italy is one of a small number of jurisdictions where a substantial proportion of disputes are legally required to be referred to mediation before being brought before the courts.  In Menini, two Italian consumers seeking to appeal a judgment objected to being forced to attempt mediation as a pre-condition to the appeal and the Italian court requested a preliminary ruling from the CJEU as to whether the relevant Italian law was incompatible with either the Consumer ADR Directive (particularly the provision specifying that mediations covered by the Directive must be voluntary) or the earlier EU Mediation Directive (2008/52/EC) (although it was common ground that the Mediation Directive did not directly apply in this case as it did not concern a cross-border dispute).

The CJEU observed that the voluntary nature of mediation under the various EU legislation lies not in the freedom of the parties to choose whether or not to use that process but in the fact that "the parties are themselves in charge of the process and may organise it as they wish and terminate it at any time". Accordingly, what is important is not whether the mediation system is mandatory or optional, but the fact that the parties’ right of access to the judicial system is protected.

The court accepted that, by making recourse to mediation a pre-condition to commencing litigation, the Italian legislation introduced an additional step to be overcome before parties could exercise their right to access the judicial system.  However, it noted that was settled EU law that "fundamental rights do not constitute unfettered prerogatives and may be restricted", provided that the restrictions are consistent with the public policy behind the measures and that they do not involve "a disproportionate and intolerable interference" with the very substance of the rights guaranteed.

Applying that to this context, and broadly following the Advocate-General's opinion, the Court concluded that requiring parties to undertake a mediation procedure as a pre-condition to litigation may be compatible with protecting the right of access to justice, provided that the procedure:

  • does not result in a decision that is binding on the parties; 
  • does not cause a substantial delay in the ability to commence legal proceedings (and suspends any limitation period);
  • does not give rise to costs – or gives rise to very low costs – for the parties;
  • can be accessed by means other than purely electronic means; and 
  • does not prevent interim measures being sought from a court in cases of urgency.

While the Italian legislation was said to meet those requirements, it was for the referring Italian court to determine whether it did so.

However, answering further referred questions about specific aspects of the Italian procedure, the CJEU concluded that the Italian legislation would be inconsistent with the EU legislation to the extent that it either:

  • required the parties to be legally assisted in the mediation; or
  • penalised the parties for withdrawing from the mediation without valid grounds (unless the concept of "valid grounds" includes the party simply being dissatisfied with the ADR procedure).

With regard to the latter, we note that the nature of a standard mediation process might make it difficult to delineate at what point a party has met its obligation to participate in the process and has reached the point where it has the right to 'withdraw'.   Could a party simply agree to mediate and participate in the 'process' of setting up the mediation but then 'withdraw' from the process before any discussions?  The CJEU did not address this issue in detail but, in its discussion of the need to preserve a party's right to "withdraw",  did appear to suggest that the permissible system it was contemplating was one in which a party was not entitled to bring the process to an end without penalty until "immediately after the first meeting with the mediator." 

The case has been referred back to the Italian courts to apply the CJEU's findings.