ITALY
Lorenzo de Martinis, Silvia Picchetti and Gaetano Iorio Fiorelli
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), which has been significantly impacted and amended by the reform enacted with Law no. 80/2005 and Legislative Decree no. 50/2005.[1] Specifically, domestic and international arbitration are regulated by articles 806 to 832 ICCP, while the recognition and enforcement of foreign awards are governed by articles 839 and 840 ICCP.
A wide reform of arbitration in Italy may be expected in future years. In January 2017, a draft proposal was issued by the Commission for the Reform of Arbitration chaired by Professor Guido Alpa, acting on the basis of a request of the Ministry of Justice.[2] Although the draft law was submitted by the Alpa Commission in 2017, the project did not register significant developments and it is still hard to foresee whether any reform will be enacted in the coming years.
A.1.1 Arbitration and COVID-19
Since the very beginning of the pandemic, the Italian government has issued a number of exceptional measures to fight the COVID-19 emergency.
Among these, it is worth mentioning the Law Decree no. 18 of 17 March 2020 (“Cura Italia Decree“) which addresses the fundamental aspects of the Italian economy and provides for the suspension of most of the pending and court lawsuits during the period between 9 March and 15 April (later postponed to 11 May 2020). With Law no. 27 of 24 April 2020, the abovementioned provisions on the suspension of court litigations were extended to the arbitration proceedings.
In addition to the above, by the Law Decree no. 137 of 28 October 2020 (article 23 paragraph 10), the Italian Government extended to arbitration the provisions allowing judges to order a hearing to take place via a videoconferencing link, provided that both parties have consented to it (to the exclusion in any case of the hearings for taking witness evidence).
A.2 Institutions, rules and infrastructure
Although several local arbitration institutions are operating in Italy, institutional arbitration is mainly handled by the Milan Chamber of Arbitration (CAM) with respect to both domestic and international disputes has assumed a leading role.
A.2.1 The 2020 Arbitration Rules of the CAM and the COVID-19 measures
On 1 March 2019, the new Arbitration Rules of the Milan Chamber of Arbitration (“CAM Rules 2019“) entered into force and applied to all proceedings commenced from that date until 30 June 2020.[3] On 1 July 2020, a new reviewed version of the Arbitration Rules of the Milan Chamber of Arbitration (“CAM Rules 2020“) entered into force; it includes a new Simplified Arbitration Procedure (“Simplified Rules“) and new Model Clauses for the Contractual Determination, Administration of the Proceedings and Costs (“New Model Clauses“).
While presented as a COVID-19 related measure, the Simplified Rules introduced with the CAM Rules 2020 are designed to be an enduring alternative to ordinary proceedings. In fact, its enactment follows a global trend to provide expedited and less expensive solutions for conducting small and medium arbitration. The relevant provisions are set forth in a new Appendix D to the CAM Rules 2020.
Pursuant to article 1 of Appendix D, the Simplified Rules govern: (i) all the arbitrations proceedings with a claim value not exceeding EUR 250,000 (approximately USD 297,000), unless one of the parties objects to such application; and (ii) any other arbitration, if the parties agree to it. In any case, the CAM Arbitral Council may decide that the Simplified Rules do not apply to highly complex disputes.
Pursuant to article 3, paragraph 1, of Appendix D the arbitral tribunal will be composed by a sole arbitrator, even if the parties agreed in their arbitration agreement to a different number.
The Simplified Rules introduce a number of provisions aimed at minimizing the duration of the arbitration. In particular, the time limit for issuing the final award is three months (instead of the ordinary six months) from the constitution of the arbitral tribunals.
The fees of Simplified Rules arbitrations are approximately 30% lower than the fees of ordinary proceedings.
Along with the Simplified Rules, in order to facilitate the renegotiation of many contracts in the wake of the COVID-19 pandemic, the CAM Rules 2020 introduce two new model clauses that parties can use to defer the determination of one of the elements of their contract to an expert (as envisaged by article 1349 of Italian Civil Code). In the first model, the parties agree that the CAM acts as appointing authority. In the second model, the parties agree that their contractual determination procedure will be administered by the CAM and regulated by the 2020 CAM Rules.
With reference to COVID-19 and virtual hearings, both the CAM Rules 2019 and the CAM Rules 2020, under article 27, paragraph 2, provide that: “The Arbitral Tribunal may grant the attendance [of the parties at the hearing] by any appropriate means,” thus also by virtual means.
A.2.2 The Italian Arbitration Association in Rome
The Italian Arbitration Association in Rome (AIA) was another prominent arbitration institution, which played an important role in the interaction with many international arbitration institutions, such as ICC and AAA.
From September 2020, AIA ceased its activity as an arbitral institution. From 21 October 2020 all the arbitration proceedings and/or arbitration clause/agreement making reference to AIA and to its arbitration rules will be administered by the CAM and its Rules.
AIA still provides academic guidance through the editing of the most important Italian arbitration law review (Rivista dell’Arbitrato).
B. CASES
B.1 Arbitrators’ fees and non-ritual arbitration
According to the Court of Pisa, article 814 ICCP shall not apply to non-ritual arbitration. Therefore, in the case of a dispute, the arbitrators’ fees cannot be determined by Decree of the President of the Court, but shall be determined by means of ordinary proceedings.
The principle at stake has been stated by the President of the Court of Pisa as a justification for rejecting the request of an arbitrator to obtain the determination of their fees on the grounds of article 814 ICCP and with reference to their activity in a non-ritual arbitration.
Under Italian law, a relevant distinction amongst types of arbitration is the one between (i) ritual, which leads to directly enforceable arbitral awards having the same effect of a court judgment, and (ii) non-ritual, which leads to informal arbitral awards, having contractual nature and unsuitable to became an enforceable title (but useful for requesting an order of payment at court).
Pursuant to article 814 ICCP, the arbitrator determines his/her fees at the moment of the award. The determination is not binding on the parties, which may refuse it. In that case, it is the right of the arbitrator to file an application before the President of the competent court and ask for the quantification of the due fees through special (and expedited) court proceedings.
According to the Court of Pisa, this special proceeding is not applicable to non-ritual arbitration for two reasons: (i) the non-ritual award does not have the value of a judgment, and (ii) the fees due for the activity of the arbitrator qualify as contractual fees and not as an arbitral cost. On this ground, the contract being silent, the Court further argued that in order to determine the fees of an arbitrator in a non-ritual arbitration the parties must initiate an ordinary civil proceeding.
The decision is consistent with the (strongly criticized) case law of the Court of Cassation (enshrined, among other cases, in case no. 4469/2019) and imposes a higher burden on arbitrators appointed in non-ritual proceedings, as the ordinary proceedings are longer and more complex than proceedings under article 814 ICCP.[4]
B.2 Arbitration clauses and preliminary agreements
The Court of Cassation (“Court“) stated that the arbitration clause contained in a preliminary agreement remains valid and applicable also when the clause has not been reproduced in the final contract.
The Court upheld the decision of the Court of Appeal, which sentenced that the arbitral clause contained in the preliminary agreement was applicable to the dispute brought before it after the execution of the final agreement.
The decision of the Court was mainly based on the following two reasons.
On the one hand, in light of the fact of the cases, the Court highlighted that it was proved that the parties were willing to maintain in effect the arbitral clause contained in the preliminary agreement and that the dispute concerned a matter covered by the arbitration clause.
On the other hand, in more general terms, the Court restated the principle of autonomy of the arbitration clause. So, the Court stated that the replacement of the preliminary agreement by a final agreement does not affect the arbitral clause contained in the former.
The interpretation provided by the Court of Cassation to the principle of autonomy of the arbitration clause is based on article 808 ICCP and is consistent with the case-law of the Court.[5]
B.3 Drafting of the arbitration clause and invalidity
The Court of Milan held that the arbitration clause, contained in the company’s by-laws, and designating an institutional arbitration, needs to clearly indicate the competent arbitral institution. When it is not possible to identify the competent institution (or the institution appointed does not exist), the arbitration clause is invalid.
The issue brought before the Court of Milan concerned the invalidity of an arbitration clause contained in a company’s by-laws, which provided for arbitration by referring to an inexistent authority, the Camera Arbitrale promossa da Confcooperative – Unione Provinciale di Milano. In particular, the defendant argued in favor of the validity of the arbitration clause by stating that the parties by indicating the Camera Arbitrale promossa da Confcooperative – Unione Provinciale di Milano were instead appointing the (existing) Camera arbitrale e di conciliazione della cooperazione.
The Court of Milan did not share the views of the defendant as it believed that, with reference to arbitration clauses contained in the company’s by-laws, it is not possible to provide for an integrative interpretation of the parties’ obligations. In fact, this would be in conflict with the fact that the statutory clauses are, by their nature, addressed to an open number of potential parties and, therefore, need to be clear and defined.[6]
B.4 Public administration and non-ritual arbitration
The Court of Cassation held that the Public Administration cannot make use of the non-ritual arbitration in the disputes with private parties.
The Court argued that, while the Public Administration is capable of operating on the basis of private law and on equal grounds with private parties, this shall not mean that the Public Administration should be considered as a private entity. Indeed, the Public Administration represents public interests, which it shall pursue.
On the grounds of this reasoning, the Court concluded that non-ritual arbitration cannot be used by public entities. In fact, this type of arbitration is not subject to pre-determined procedural rules and lacks adequate guarantees, in terms of transparency and publicity. These features are incompatible with the public nature of the entities at stake and, thus, with public interest.[7]
B.5 Arbitration clause and tort liabilities
The Court of Milan held that the arbitration clause included in a contract automatically extends its effects to any tort claim relating to or connected with the contract.
The dispute brought before the Court of Milan concerned multiparty litigation, where one of the defendants challenged the competence of the Court by claiming the application of an arbitration clause. In turn, the plaintiffs contested this allegation by arguing that the arbitration clause did not make any reference to tort claims connected to the contract.
The point of law addressed by the Court of Milan concerns the interpretation of articles 808bis (arbitration of claims in torts) and 808quater (interpretation of contractual arbitration clauses) ICCP.
According to the Court of Milan, article 808bis ICCP does not establish that a contractual arbitration clause must make express reference to tort claims in order to extend its application to this form of liability. On the contrary, the article at stake serves only as a basis for lawfully permitting arbitration on tort-based claims.
In case of uncertainty on the scope of application of a contractual arbitration clause, it is instead necessary to make reference to article 808quater ICCP. This provision sets forth that, in case of lack of clarity and vagueness, the scope of application of the arbitration clause covers any dispute relating to and/or connected with the relevant contract or relationship.
So, the Court of Milan held that if the arbitration clause does not make express reference to claims in tort connected with the contract, it shall be intended as extending its effect also to such claims.[8]
[1] See International Yearbook 2016-2017, pages 243-244, for the relevant analysis.
[2] See International Yearbook 2018-2019, pages 163-165, for the relevant analysis.
[3] See International Yearbook 2019-2020, Section Italy, for the relevant analysis, https://www.globalarbitrationnews.com/iayearbook2020/#.
[4] Court of Pisa, Order dated February 17, 2020.
[5] Court of Cassation, Order no. 1439/2020.
[6] Court of Milan, Judgement no. 1212/2020.
[7] Court of Cassation, Judgement no. 77598/2020.
[8] Court of Milan, Judgment dated January 8, 2020.
