CJEU Rules on Mandatory Mediation before Court Proceedings in Consumers Claims
On 14 June 2017, the Court of Justice of the European Union (the CJEU) handed down a judgment interpreting, in 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, Mr Livio Menini and Ms Maria Antonia Rampanelli, two Italian nationals, brought proceedings before the Verona District Court against a bank in order to have a loan repayment order set aside. However, under the relevant national Italian law, such an application brought before a court 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 at ensuring that consumers can, on a voluntary basis, submit complaints against traders to alternative dispute resolution procedures, providing that such procedures are independent, impartial, transparent, effective, fast and fair – the Verona District Court referred the matter to the CJEU for a preliminary ruling.
In reaching its judgment, the CJEU 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) did not result in a binding decision on the parties; (ii) did not cause substantial delay; (iii) did not suspend the period for the time-barring of claims; and (iv) did not give rise to high costs. In addition, urgent interim measures should be possible.
The CJEU, however, 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 CJEU also found that the requirement, under the Italian legislation, that a consumer should demonstrate a valid reason before withdrawing from the mediation procedure violated Directive 2013/11/EU.