Cookies on Pinsent Masons website

Our website uses cookies and similar technologies to allow us to promote our services and enhance your browsing experience. If you continue to use our website you agree to our use of cookies.

To understand more about how we use cookies, or for information on how to change your cookie settings, please see our Cookie Policy.

CJEU: National legislation can require mediation in consumer disputes

EU member states can require mediation before court proceedings in consumer disputes, but consumers can withdraw from that mediation at any time and without giving reasons, the Court of Justice of the European Union (CJEU) has said.15 Jun 2017

Verona District Court had asked the CJEU, Europe's highest court, whether Italian legislation was compatible with the EU directive on consumer disputes.

Two Italian nationals had brought proceedings before the Verona Court against the bank Banco Popolare over the repayment of a loan. Under Italian legislation, the action was inadmissible without a prior out-of-court mediation procedure. Under the Italian law consumers must go through this mediation, must be represented by a lawyer, and cannot withdraw from the mediation without a valid reason.

In its judgment the CJEU said that the objective of the directive is to enable consumers to voluntarily submit complaints against traders using alternative dispute resolution (ADR) procedures. It was for the Italian court to decide whether the mediation procedure could be regarded as ADR, it said.

The directive applies when an ADR procedure meets three conditions, the CJEU said. It must have been initiated by a consumer against a trader concerning contractual obligations arising from a sales or service contract, it must be independent, impartial, transparent, effective, fast and fair and it must be passed to an entity from a special list held by the European Commission.

ADR procedures are voluntary, but that freedom does not allow parties to choose whether or not to use them, the CJEU said. Instead it puts them in charge of the process and allows them to organise it as they wish and terminate it at any time.

"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 maintained," it said.

Therefore, a requirement for mediation procedures before court proceedings may be compatible, it said. However, the procedure must not result in a decision that is binding, must not cause a substantial delay, must suspend the period for time-barring of claims, and must not lead to high costs. The requirement does not hold if the settlement procedure can only be accessed by electronic means, or if urgent interim measures are not possible, it said.

While the Italian procedure is therefore compatible with the EU directive, Italian legislation cannot require that a consumer be assisted by a lawyer.

The consumer must take part in an initial mediation meeting but can withdraw at any time after that without giving any reason, and that withdrawal must not have any unfavourable consequences later in the dispute, the CJEU said.

Consumer law expert Rami Labib of Pinsent Masons, the law firm behind said: "UK consumer law takes a different approach to the Italian equivalent as consumers can in certain circumstances refer disputes for alternative dispute resolution, but there is no obligation on them to do so. The focus in the UK is upon empowering the consumer and giving them options. There are different requirements for different types of traders, but where alternative dispute resolution is on offer, whilst the courts may expect the consumer to have considered it, ultimately it is up to the consumer whether they want to use it.”