A. LEGISLATION AND RULES
A.1 Legislation
Arbitration in Italy is governed by Articles 806 to 840 of the Italian Code of Civil Procedure (ICCP). In particular, 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 instrument of arbitration more attractive and accessible.
The new set of rules shall apply to arbitral proceedings initiated after 30 June 2023, while pending arbitrations continue to be governed by previous provisions.
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 such a power (this may also happen through reference to arbitration regulations, such as 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 pending before state courts (ICCP Article 816-bis.1)
- 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 corporate arbitration is amended and transferred into the ICCP under newly introduced Articles 838-bis to 839-quinquies. In 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 CAM 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 the 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 ten 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 five 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 five 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 applicant’s request, within five 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 five 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, which in any case cannot be shorter than 15 days.
B. CASES
B.1 Role and functions of arbitral institutions
The Court of Cassation clarified that arbitral institutions, while vested with the authority to appoint arbitrators and administer proceedings, do not have the power to adopt jurisdictional rulings or otherwise decide on issues constituting the subject matter of the dispute between the parties, as these powers pertain exclusively to the arbitrators.[1]
In the case at hand, the defendant challenged the arbitral award on the ground of alleged flaws that occurred in the preliminary phase of the proceedings before the arbitral institution. In particular, the defendant complained that the institution had improperly declared the validity of the arbitration clause, allowing proceedings to move forward with the appointment of the sole arbitrator and the commencement of the proper arbitration phase.
By applying the above principles, the Supreme Court declared the defendant’s plea inadmissible and found that alleged flaws relating to the preliminary stage before the arbitral institution could not be reflected in the subsequent arbitration proceedings and ultimately affect the arbitral award, whose validity could only be impaired by flaws concerning the proceedings before the arbitrators and the arbitration clause itself.
B.2 Scope of arbitration clauses on settlement agreements and on contract’s validity and interpretation
The Court of Cassation clarified the scope of arbitration agreements with two interesting rulings.
In the first case,[2] two companies entered into a trademark sublicensing business contract, which contained a clause submitting controversies arising therefrom to arbitration. As disputes arose over the fulfillment of the contract, the parties reached a settlement agreement to solve their controversy. When the settlement agreement went sour, the non-breaching party commenced court litigation against the other party, invoking the latter’s breach of the settlement agreement. To hinder the plaintiff’s action, the defendant challenged the court’s jurisdiction to hear the case on the ground of the arbitration clause contained in the original contract.
When faced with the issue, the Court of Cassation stated that the arbitration clause set forth in a contract is unsuitable to give arbitrators jurisdiction over disputes arising out of the settlement agreement, which the parties had concluded to solve controversies arising from the original contract. To ground this conclusion, the court argued that while parties can resort to the arbitration clause to solve disputes concerning the original contract, the arbitration clause is unavailable with respect to disputes arising from subsequent contracts, such as the settlement agreement.
The second case concerns the scope of a clause submitting any disputes concerning the interpretation and implementation of a contract to arbitration.[3] In particular, the issue of whether the arbitration clause could also encompass a claim of compensation for damages resulting from a party’s non-compliance with the arbitral award that had been issued on the basis of the arbitration clause arose between the parties.
The Court of Cassation stated that an arbitration clause referring to “any disputes concerning the interpretation and implementation of the contract” could not be interpreted as also encompassing damage compensation claims based on a party’s non-fulfillment of the arbitral award. This is because despite the breadth of its wording, the arbitration clause still refers to the “contract” and not to the award, which is a substantially different and autonomous title.
B.3 Autonomy of the arbitration clause
On the subject of autonomy of the arbitration clause, two significant rulings of the Court of Cassation are worth mentioning.
In the first judgment, the court stated that since the arbitration clause is autonomous from the container contract and is not an ancillary covenant thereof, disputes arising after the termination of the container contract may nonetheless fall within the scope of the arbitration clause if they concern facts occurred prior to the contract termination.[4] By virtue of this principle, the court ruled that the termination of the relationship that binds a director to the company is not apt to exclude the application of the arbitration clause (which had been stipulated to solve disputes between the company and its internal bodies) to disputes concerning facts that have arisen while the relationship was pending.
In the second case, the court ruled that the ineffectiveness of a contract caused by a lack of representative authority in the head of the person who signed it on behalf of the (allegedly) represented entity extends to the arbitration clause set forth therein, making it ineffective.[5] In so ruling, the court identified an exception to the autonomy principle whereby the invalidity or ineffectiveness of the container contract does not normally affect the validity or effectiveness of the arbitration clause.
[1] Court of Cassation, sec. I, 23 January 2023, no. 1999.
[2] Court of Cassation, sec. III, 2 October 2023, no. 27707.
[3] Court of Cassation, sec. III, 7 August 2023, no. 24060.
[4] Court of Cassation, sec. VI, 2 March 2023, no. 6221.
[5] Court of Cassation, sec. I, 3 March 2023, no. 6477.
