A. LEGISLATION AND RULES
Arbitration in Italy is governed by articles 806 to 840 of the Italian Code of Civil Procedure (ICCP). In more detail, domestic and international arbitration are regulated by ICCP articles 806 to 832, while the recognition and enforcement of foreign awards are governed by ICCP articles 839 and 840.
On 10 October 2022, Legislative Decree no. 149 of 2022 (“Decree”) was enacted by the Italian Government, delegated by the Italian Parliament with Law no. 206/2021. The Decree is part of a broader civil trial reform called the ‘Cartabia Reform,’ and amends the Italian discipline of arbitration in several respects. Its goal is to conform the rules to case law as well as to make the institution more attractive and accessible.
The new discipline shall apply to arbitral proceedings initiated after 28 February 2023, but the possibility of a postponement of its entry into force cannot be ruled out.
The major innovations of the Decree concern the impartiality and independence of arbitrators and the power of arbitral tribunals to order interim measures.
Namely, the principle of impartiality and independence of arbitrators is strengthened by introducing the recusal for “serious reasons of convenience” under ICCP article 815. In addition, under ICCP article 813, a mandatory duty of disclosure for arbitrators is provided with respect to the circumstances that might justify a recusal.
As to the power to issue interim measures, ICCP article 818 is amended to the effect that the parties may grant arbitrators with such a power (this may also happen through reference to arbitration regulations, e.g., the rules of a chamber of arbitration), making it no longer mandatory to apply to state jurisdiction for interim measures; the ordinary jurisdiction’s control over such measures remains with the procedure for the challenge of measures ordered by the arbitrator(s) (ICCP article 818-bis) and the control over implementation (ICCP article 818-ter).
Further changes include the following:
- Equating the substantive effects of arbitration claims with those ones pending before state courts (ICCP article 816-bis)
- Providing more efficient mechanisms to reinstate before state courts the proceedings wrongly initiated before arbitral tribunals, and vice versa (ICCP article 819-quater)
- The shortening of the time limit for appealing arbitral awards before state courts from one year to six months (ICCP article 828)
- The provision that the exequatur decree of an arbitration award is immediately enforceable (ICCP article 839)
Finally, the discipline of the corporate arbitration is amended and transferred into the ICCP, under newly introduced articles 838-bis to 839-quinquies. To this regard, one of the most significant innovations lies with the enabling of arbitrators to stay the effectiveness of shareholders’ resolutions, in the arbitral proceedings concerning the validity of those resolutions.
A.2 Institutions, rules and infrastructure
Although several local arbitration institutions are operating in Italy, the Milan Chamber of Arbitration (CAM) plays a leading role with respect to both domestic and international disputes.
The Arbitration Rules of the Milan Chamber of Arbitration were recently amended to take into account the novelties of the Decree. The new Rules (“CAM Rules 2023”) entered into force on 1 March 2023.
As for interim relief, article 26 of the CAM Rules 2023 provides that unless otherwise agreed by the parties, at request of a party, the arbitral tribunal has the power to grant all urgent and provisional measures of protection, also of anticipatory nature, that are not barred by mandatory provisions applicable to the proceedings, including without notice to the other party if such notice may seriously harm the applicant’s interests. In this case, with the decision granting the application, the arbitral tribunal schedules a hearing within 10 days of the decision in order to discuss the case with the parties and set deadlines for the submission of briefs, if any. At the hearing, or in any case within 5 days of the hearing, the arbitral tribunal, having heard the parties, issues an order confirming, modifying or revoking the measure already granted. The arbitral tribunal may order the party requesting an interim measure to provide appropriate security for costs as a condition to issue the measure. Any request for interim measures made by a party to a judicial authority does not imply any waiver of the effects of the arbitration agreement or of the request for arbitration, if any.
Article 44 of the CAM Rules 2023 on the appointment of an emergency arbitrator was modified to provide that unless otherwise agreed by the parties, prior to the constitution of the arbitral tribunal any party may file an application, even without notice to the other party, for the appointment of a sole emergency arbitrator in order to grant urgent and provisional measures of protection, also of an anticipatory nature, that are not barred by mandatory provisions of the law applicable to the proceedings. As soon as possible, and in any event within 5 days of receipt of the file, the CAM appoints the emergency arbitrator and collects their acceptance and statement of independence. Within 15 days from receiving the file, having heard the parties and having adopted the most appropriate measures, the emergency arbitrator issues the requested interim, urgent and provisional measures by way of a procedural order. At the request of the applicant, within 5 days of receipt of the file, the emergency arbitrator may issue the procedural order without notice to the other party, if such notice would seriously prejudice the applicant’s interests. In this case, with the decision granting the application, the emergency arbitrator schedules a hearing within 10 days of the decision to discuss the case with the parties and set deadlines for the submission of briefs, if any. At the hearing, or in any case within the following 5 days, the emergency arbitrator, having heard the parties, issues an order confirming, modifying or revoking the measure already granted. The order of the emergency arbitrator may provisionally allocate the costs of the proceedings determined by the CAM and the legal costs borne by the parties, without any prejudice to the decision made by the arbitral tribunal in the award. The emergency arbitrator may subject the granting of any interim relief to the provision of an adequate guarantee. The order can be amended and revoked before the Arbitral Tribunal once constituted. Until the Arbitral Tribunal is constituted, the emergency arbitrator remains competent for any request for amendment or revocation of the order. Where needed, the request for arbitration shall be filed within the Secretariat within the mandatory time limit of 60 days from the filing of the application, or within the time limit set by the emergency arbitrator that in case can not be shorter that 15 days.
CAM carried out some relevant initiatives throughout 2022.
CAM further expanded its area of influence by entering into cooperation agreements with other Italian local chambers. On 15 November 2022, it signed an agreement with the Padua Chamber of Commerce, according to which the CAM Rules 2020 and CAM’s fee schedule also apply if the parties in the arbitration clause refer to the Padua Chamber of Commerce. A similar agreement was then executed with Curia Mercatorum, Center of Mediation-Arbitration promoted by Treviso-Belluno and Venezia Rovigo Chambers of Commerce.
Moreover, CAM acted jointly with the Arbitration Institute of the Stockholm Chamber of Commerce (SCC), Vienna International Arbitration Center (VIAC), Arbitration Institute of Finland Chamber of Commerce (FAI), German Arbitration Institute (DIS) and the Swiss Arbitration Centre, in order to receive clarification on the scope of the EU’s 4th sanctions package (Council Regulation (EU) 2022/428 amending Regulation No 833/2014) against the Russian Confederation, due to the concerns on its potential negative repercussions on access to arbitral proceedings. On 21 July 2022, the EU adopted a 7th package of sanctions (Council Regulation (EU) 2022/1269), which expressly exempts from the sanctions regime “transactions which are strictly necessary to ensure access to judicial, administrative or arbitral proceedings in a Member State, as well as for the recognition or enforcement of a judgment or an arbitration award rendered in a Member State and if such transactions are consistent with the objectives of this Regulation and Regulation (EU) No 269/2014.” Therefore CAM, together with the FAI, SCC, VIAC, DIS and the Swiss Arbitration Centre, published a joint declaration in order to welcome such clarification.
B.1 Contrast with public policy of the decisum of the arbitral award
The Court of Cassation clarified that the conformity to public policy of an arbitration award, required under ICCP article 840(5)(2) and article 5(2)(b) of the New York Convention (made enforceable in Italy by Law No. 72 of 1968), must be ascertained with reference only to the ruling part, i.e., the decisum.
The Republic of Kazakhstan had challenged the enforceability in Italy of an arbitration award held in Stockholm, sentencing Kazakhstan to pay significant damages. The main grounds of the appeal laid with the fact that the award was allegedly rendered upon false evidence and testimonies, thus making the award contrary to Italian public policy principles. Based on the same falsity, moreover, the Republic of Kazakhstan had appealed the award before the Stockholm Court of Appeal and the Swedish Supreme Court, which had rejected the appeal.
The Court of Cassation, while affirming that the New York Convention takes precedence over article 840, said that in this case too, the contrariety to public policy must be evaluated on the basis of the ruling part of the award.
It is true, on the one hand, that if there are neutral adjudications such as the payment of a sum of money in the decisum, these must be interpreted in relation to their cause, and a simple payment may be contrary to public policy if, for example, it sentences a party to the pay a compensation for the killing of a person. So the content of the ruling part can be filled with meaning by looking at the expository part — the grounds of the award — but there it should stop.
This is in compliance with the New York Convention, which introduces a recognition-execution mechanism aimed at facilitating the circulation of foreign awards, and for this reason allows the judge only an extrinsic check, which can never result in a full review of the grounds of the decision.
Therefore, contrariety to public policy must emerge immediately from the reading of the ruling part in the overall light of the award, not instead ‘mediately’ from the comparison between the award and the preliminary material, or between the award and the factual elements (which in the present case the arbitrators did not have), or considering errores in iudicando or in procedendo committed by the arbitrators.
The Court of Cassation found that the review sought by the Republic of Kazakhstan was not admissible in that it would have led to use the public policy limit in order to convey an impermissible review of the merits of the arbitral award.
Therefore, the Court of Cassation confirmed the correctness of the interpretation made by the Court of Appeal which, when confronted with a decisum that contained an order to pay a sum of money (neutral in itself), reconstructed its legitimacy in the context in which it was pronounced, affirming that such an order constituted compensation for damages resulting from the breach of a specific obligation. This analysis was sufficient and could not legitimately go any further.
B.2 The arbitrator may, and under certain circumstances must, detect ex officio the nullity of the contract
On the subject of nullity of contracts, it is worth mentioning two significant rulings of the Court of Cassation.
A first judgment stated that arbitrators may proceed ex officio to detect the nullity of the contract in all cases of contractual disputes, even if the invalidity is different from the one envisaged by the parties, with the only limitation being that of the res judicata. In the case at hand, the arbitrator had legitimately found on their own initiative that certain clauses were null and void due to vagueness or indefiniteness, being irrelevant that this circumstance had not been raised by the parties.
Particularly notable (though so far isolated) is another ruling which stated that arbitrators are obliged to inform the party of the existence of the so-called protective nullities; if the arbitrators fail to make such an indication, the information must be given by the state court hearing the appeal of the award, and in any case, the failure to inform about the protective nullity results in the nullity of the award for violation of EU public policy.
Two parties — one of which a consumer — had entered into a contract including a clause which, by express provision of law, was unlawful, implying the nullity of the whole contract. This nullity, similarly to many invalidities provided for by consumer law, constitutes a so-called ‘protective nullity’, to the benefit of weak parties deserving special protection.
In the case at hand, the ‘protected’ party complained, for the first time in the appeal proceedings, that the contract was null and void. The Court of Appeal rejected the plea, arguing that this circumstance, being a protective nullity, should have been alleged in the (previous) arbitration proceeding.
The Court of Cassation, however, criticized this reasoning. In fact, the EU Court of Justice, in a case discussing nullity and voidance for the protection of consumers (Judgment 26 October 2006, C168/05, Mostaza Clara), affirmed that the national court, called upon to rule on the appeal of the arbitration award, may annul the award even if the consumer has raised no specific objection in the arbitration proceedings. This is in order to guarantee effective protection for the weaker party, taking into account in particular the risk that they may be unaware of their rights or encounter difficulties in exercising them.
Thus, the arbitrators are obliged to inform the plaintiff of the existence of the protective nullity, and if this is not done then the party can challenge the award under ICCP article 829 co. 3, i.e., on the grounds of contrariety to public policy. In fact, the Court of Justice (in the case quoted before) states that the violation of EU rules protecting weak contractors, as having purposes of EU public interest, justifies a nullity for contrariety to public policy.
Therefore, if the arbitrators do not share such information, it must be done by the Court of Appeal, and is a sufficient ground for challenging the award for contrariety to public policy under Italian arbitration law.
B.3 Scope of arbitration clauses on contract’s validity and interpretation
The Court of Cassation clarified the scope of an arbitration clause concerning the validity and interpretation of the contract in two rulings.
The first case concerned the payment of rents for a business branch, as prescribed by a contract which contained a clause whereby any dispute with reference to the validity and interpretation of the contract should be referred to an arbitrator.
The Court of Cassation stated the principle that in case of doubt as to the scope of the arbitration clause, the interpretative option that restricts its scope to matters relating to those expressly contemplated should be preferred, as the state jurisdiction should be considered prevalent. Thus the court, having found that in the discussed case the clause made reference to disputes relating to the validity and interpretation of the contract, and not to disputes arising in the execution phase, rejected arbitration jurisdiction.
In another case concerning an arbitration clause on contractual interpretation, with a slightly different approach, the Court of Cassation held that if there is an arbitration clause on contract interpretation, termination and compensation also fall within the jurisdiction of arbitrators, if (and because) the determination of these elements requires the analysis and interpretation of contract clauses.
The two parties had entered into a preliminary contract for the sale of a real estate already in the possession of the prospective buyers, with payment of an amount at the signing, the remainder to be paid upon the closing of the final contract. The selling party made a serious default so the other party started a legal proceeding before the ordinary court seeking termination of the contract for breach, restitution of the amount paid, and damages. The first instance court upheld these claims, and the judgment was confirmed by the Court of Appeal, which rejected the defendant’s objection concerning the lack of state court jurisdictions, given the presence of an arbitration clause devolving to arbitrators any dispute on the interpretation of the contract (“any dispute regarding the interpretation of said writing would be resolved by an arbitrator”), on the assumption that the issue at stake was not “interpretation” but “validity.”
The Court of Cassation overruled the appealed judgment, since, in order to decide on the compensation, it was necessary to interpret the clauses of the original contract in which the buyer committed themselves to pay certain sums for the temporary use of the property, and to decide whether these were to be considered as a down payment, rather than the price balance. In addition, the interpretation of the same clause had been used by the court to decide on termination for non-performance. This implies that these pleadings also fell under arbitration jurisdiction.
B.4 Arbitration clauses in contracts do not extend their scope to tort liability, unless expressly agreed upon
The case concerned a clause providing that any dispute arising in connection with the contract, whether over its interpretation or its performance, shall be decided by arbitrators. The Court of Cassation held that this rule should be interpreted to mean that all disputes having their causa petendi (i.e., the legal title underlying the claim) in the contract should be decided by arbitrators. If, on the other hand, the claim is not legally focused on the contract (which for example is a mere historical premise for the claim), then there is no arbitral jurisdiction.
In the case at hand, damages were sought under Italian Civil Code article 1669 for serious defects affecting a building. As this is considered to be a source of tort liability, the arbitration clause was found not to be applicable, as it did not extend to torts in the absence of an express intention of the parties, even if the claim was somehow connected with the contract.
B.5 Proposal and acceptance of the arbitration clause do not require to be included in the same document
The Court of Cassation, in its most authoritative composition (the so-called Sezioni Unite), clarified that arbitration clauses require the written form based on ICCP articles 897 and 808, but not that the proposal and acceptance are to be included in the same document, since it is well possible to execute a valid arbitration clause by means of an exchange of proposals/acceptances included in different letters. Moreover, the request for arbitration by a party and its acceptance by the other can be interpreted as a sign of concordant willingness to defer the dispute to arbitrators.
In the case at issue, one of the parties had proposed a foreign arbitration clause in the context of a sale of a property. The other party had subsequently accepted the above proposal by a separate letter.
B.6 The arbitral clauses contained in contracts in favor of a third party apply to such third parties
Under Italian law, it is possible to enter into a contract with benefits in favor of a third party, who automatically acquires rights against the promisor. When the third party then declares their intention to accept the benefits, the acceptance becomes irrevocable under Italian Civil Code article 1411.
The Court of Cassation, in a case that concerned a non-ritual arbitration but setting a general principle, clarified that if the original contract includes an arbitration clause, and the third party (in whose favor the contract was stipulated) shows their intention to take advantage of the contract, then the arbitration clause also binds the third party.
The rationale lies with the fact that the willingness to take advantage of the contract manifested by the third party cannot but affect all contractual clauses as a whole.
B.7 An arbitration clause contained in a contract between a consumer and a professional (within the meaning of Directive 2011/83/EU of the European Parliament and of the Council) can be valid, if subjected to specific negotiations
An arbitration clause executed between a consumer and a professional is valid, upon the condition that the parties actually negotiated it, the burden of proof of such a negotiation being on the professional.
In the case at hand, a professional and a consumer had stipulated a contract containing an arbitration clause, which was not even expressly and separately approved by the consumer. The arbitral court, considering such clause as unfair, declared its lack of competence, and such a decision was confirmed by the Court of Appeal on the ground that the arbitration clause was null and void for its unfairness (“vessatorietà”). The professional appealed in front of the Court of Cassation, which stated that the Court of Appeal’s judgment had to be overruled, as the Court of Appeal decided without even assessing the merits of the defense’s finding on the existence of a specific negotiation between the parties.
In fact, an arbitration clause inserted in a contract between a consumer and a professional is perfectly valid if it follows a specific negotiation between the parties. Moreover, this also applies outside the general consumer law framework with regard to Italian Civil Code article 1341, which imposes a burden of specific/express written approval of unfair terms inserted in contracts that are drafted by only one of the parties (i.e., not negotiated) and aiming at regulating an indefinite series of relationships. Such a rule does not apply to contracts entered into by two contracting parties in relation to a single, specific bargaining affair, with respect to which the other party may request and make the necessary amendments after freely appreciating its content.
In this latter case, both pursuant to consumer law and general civil law (i.e., Italian Civil Code article 1341) matters, express/specific approval in writing of the arbitral clause is not required.
B.8 The arbitration clause contained in a company’s bylaws applies to disputes concerning shareholder’s withdrawal
An arbitration clause included in the bylaws of a company includes the disputes over withdrawal and exclusion, thus also applying to former shareholders.
A company had withdrawn from a consortium, and acted in court to get its share of liquidation on profits (allegedly) obtained by the consortium. The Court of Cassation held that such a demand falls within the scope of applicability of the arbitration clause contained in the consortium’s bylaws, providing that “any dispute arising between the members and the consortium shall be referred to a panel of three arbitrators.”
This is based on the fact that all legal positions pertaining to the company life fall under the scope of the arbitration clause, with regard not only to the internal governance events, but also in relation to individuals/shareholders’ positions, even if “no longer” or “not yet” in progress.
Thus, whenever the causa petendi of the dispute is based on the associative relationship, the arbitral tribunal is competent (as it was in this case, which concerned a pecuniary right relating to the participation in the company).
 Court of Cassation, sec. I , February 2, 2022 , n. 3255
 Court of Cassation, sec. I, April 12, 2022, n. 11807
 Court of Cassation, sec. II , May 6, 2022 , n. 14405
 Court of Cassation, sec. VI, April 13, 2022, n. 12068
 Court of Cassation, sec. II, January 14, 2022, n. 1061
 Court of Cassation, sec. I , October 24, 2022 , n. 31350
 Court of Cassation, sec. un., May 17, 2022 , n. 15713
 Court of Cassation, sec. I, February 10, 2022, n. 4338
 Court of Cassation, sec. I , December 31, 2021 , n. 42091
 Court of Cassation, sec. VI – 1, June 1, 2022, n. 17823