ITALY: An Introduction to Dispute Resolution
Among the dispute resolution trends in Italy, the growing deployment of artificial intelligence (AI) in the legal profession and the increasing recourse to arbitration stand out as particularly significant.
It is now beyond doubt that AI is significantly transforming professions and social relations more generally. In this regard, major driving forces are generative AI systems, such as ChatGPT and Gemini, which have made AI usage increasingly widespread around the globe. These advancements have helped people to grasp the full extent of an innovation that, just a few decades ago, seemed almost unimaginable.
The research published by Stanford University in December 2024 shows that the use of AI systems is still relatively limited in Italy. Compared to other countries analysed, Italy ranks at the bottom in terms of AI system usage among the population.
One key factor contributing to this lag is undoubtedly the fear of the potential complications entailed by AI adoption. To address risks like these and encourage a conscious usage of AI, on 13 June 2024 the European Union passed Regulation No 2024/1689 (the “AI Act”). The AI Act aims to tackle the main challenges linked to AI, such as bias, discrimination and accountability gaps, while simultaneously promoting and encouraging the uptake of AI within the EU.
As in almost every sector, AI is significantly impacting lawyers’ tasks. Legal professionals have started using AI tools in their daily work, especially for repetitive and less strategic tasks. At the same time, AI entails several challenges for legal professionals, who increasingly find themselves advising companies whose business models depend on AI.
In this context, the responsibility for legal professionals is twofold: responding to the need for these innovations and ensuring that the legal profession’s ethical and deontological principles remain uncompromised.
To regulate the usage of AI in the legal field, in December 2024 the Milan Bar Association (one of the largest in Italy in terms of membership) introduced the Charter of Principles for the Conscious Use of AI Systems in the Legal Field (HOROS).
The Charter’s ten key principles aim to establish appropriate boundaries for AI use, stressing the necessity to maintain the centrality of human decision-making in the legal profession.
To address one of the main concerns of the use of AI in the legal sector, namely that lawyers’ assistance may be replaced entirely by AI, the Charter requires lawyers to understand both the functionalities and limitations of the AI tools they employ while safeguarding client and third-party data. Lawyers must avoid relying solely on automatically generated outcomes, inform clients when AI has been used and be prepared to explain how AI tools have influenced their work.
These initiatives are not unique within Europe. In June 2023, the European Bars Federation published its Guidelines on “how lawyers should take advantage of the opportunities offered by large language models and generative AI”.
The Guidelines seek to regulate the applications of large language models and generative AI tools to maintain ethical standards, protect client confidentiality and ensure responsible and informed usage of these systems.
Overall, the Charter, the Guidelines and the AI Act strive to strike a balance between the need to implement AI in the legal profession on the one hand, and the concern to make AI usage safe and conscious on the other.
While the concerns raised by these regulations are well-founded, AI must be understood as just one of the many tools at the disposal of lawyers. Lawyers will have to learn to ask the right questions and critically assess AI-generated results to provide sound legal advice.
Increasing Use of Arbitration as a Method of Dispute Resolution
The second trend is the uptick in the resolution of disputes thorough arbitration, which will continue to play a pivotal role in 2025.
Recent studies and pieces of legislation suggest that the recourse to arbitration has significantly increased and is expected to keep growing. As a result, arbitration is likely to rival litigation even more in the near future.
To better understand how this trend will evolve in Italy it worth starting with the annual report published in 2024 by the Milan Chamber of Arbitration, which offers a detailed analysis of the most relevant statistics for 2023.
Firstly, arbitration remains the preferred dispute resolution method for solving corporate disputes, which saw a 59% increase compared to the previous year. Supply disputes also rose significantly (27.3%), while new industries, including telecommunication, agency and franchising, have turned to arbitration for the first time.
It is also worth mentioning that the recently enacted Legislative Decree No 215 of 2024 dated 6 November 2024 has introduced arbitration as a dispute resolution method for insurance disputes, including claims for compensation for damages arising out of life insurance policies. These disputes will be administered by, the Italian Institute for the Supervision of Insurance (IVASS), which will implement measures to enforce the new legislation soon.
Secondly, the simplified arbitration procedure has become quite popular (increasing by 25%), making arbitration more accessible for low-value disputes. Notably, two aspects stand out: the average duration of a simplified procedure is only five months and the average value of claims equals approximately EUR60,000.
Finally, regarding international disputes, in 2023 5.1% of the parties engaging in arbitration came from non-EU countries and 22.5% of the proceedings administered in 2023 were international (up by 47.6% compared to the previous year).
Whether a dispute should be resolved before a court or an arbitral tribunal depends on many factors, but the discussion normally boils down to two key criteria: the duration of the proceedings and their costs. It is no coincidence that the study by the SDA Bocconi School of Management focuses its analysis on the most effective dispute resolution method based on these criteria.
In short, the study suggests the following.
The average duration of an (ordinary) arbitral proceeding ranges from one year to a year and a half, depending on the complexity and nature of the case (ie, whether domestic or international). This is about half the duration of an ordinary first-instance proceeding before the court of Milan (approximately two years).
The total cost for the entire proceeding (ie, when the dispute is resolved on the merits with the issuance of the final award) is approximately EUR61,000. However, this drops down to a relatively low EUR13,000 if the disputed amount falls within the most common range (EUR52,000 to EUR260,000), which is still considerably higher than the cost of court proceedings.
Clearly, these figures do not provide a definitive answer to the question of which dispute resolution method is better. The shorter duration is a clear incentive to opt for arbitration (particularly when considering that the award, unlike a court judgement, is not subject to appeal). At the same time, the costs associated with arbitral proceedings are considerably higher and therefore may not be easy to accept, particularly when the disputed amount is low. In this respect, the study also encourages the reader to consider “immaterial” factors, such as the value of resolving a dispute quickly, the arbitrators’ expertise and the confidentiality of the arbitral proceeding.
Conclusion
In conclusion, AI and arbitration will undoubtedly maintain a central role in 2025 and continue to represent valuable allies for facing the new challenges posed by the resolution of disputes in Italy.