1.1 Describe the prevalence of commercial arbitrations as a method of settling disputes, both domestic and international.
According to statistics, in Italy, from 1997 onwards, parties have increasingly resorted to arbitration as a method of settling disputes. This phenomenon is due to the rapidity, economic efficiency, and reliability of this procedure as shaped in legal reforms which have been introduced over the course of the years and the services provided thereunder, not only by highly professional arbitrators but also by such a specialised institution as the Milan Arbitration Chamber mentioned below. This is particularly true in sectors and regions of our country where social and economic development tends to create a virtuous circle between demand and supply with regard to this method of ‘private’ justice.
However the simplification, rationalisation, modernisation and internationalisation of arbitration proceedings is a target which has been more and more kept in mind by Italian legislators and, therefore, within this context, a further initiative has been taken, aiming at reforming the matter again. This resulted in the enactment of Law No 80 dated 14 May 2005, which, among other purposes, was intended to change different sets of legal provisions and rules, including those governing arbitration. In this way the Parliament and Government clearly showed the purpose of allowing Italy to better compete also in this respect as in other legal fields such as corporate law, which was recently largely reformed, with the legal systems of the most advanced countries.
With relation to arbitration, Law No 80 sets forth guidelines on the basis of which a bill has been prepared and is currently under the examination of the government. This bill is expected to be finally approved, and come into force with or without amendments by the end of January 2006. As a consequence of this bill, the provisions which currently regulate arbitration will undergo considerable changes. At the time of writing this chapter, we are still not aware which provisions of the reform will come into force and from what date and under which conditions they will become formally applicable. However, since we know that the reform will be accomplished, for practical reasons we will consider that the provisions of the existing bill will come into force as they stand and, accordingly, we will use these together with the existing body of rules, which will not be changed, as the legal basis for our comments herein below.
* The author acknowledges Federico Busatta and Cristina Minelli for their co-operation.
2.1 What are the principal sources of law and regulation relating to domestic and international arbitration? (Describe the role of federal or state laws and relevance of court decisions.)
Italy is a civil law country. This means that the laws and regulations enacted by the legislative bodies pursuant to the Constitution play a fundamental role in the regulation of the relationships between citizens, firms, and institutions. With regard to justice, including arbitration, a key and exclusive role is played by the laws and regulations that are enacted by Parliament, or the government upon delegation of Parliament, in order to bring the procedural institutes in line with the variable social and economic needs. The legislative bodies operating at regional and/or local level play no role in this respect.
This is confirmed by the fact that the main Italian source of law and regulation which governs arbitration is the Italian Code of Civil Procedure. In addition to numerous provisions regarding civil proceedings before ordinary judicial bodies, the Code of Civil Procedure also contains all the provisions regulating both domestic and international arbitration (art 806ff). The decisions made by the Courts of Appeal and the Italian Supreme Court (Corte di Cassazione) also play a key role in relation to the interpretation of the provisions of law, although they are not as strictly binding as is in common law systems. The decisions made by the Courts of Appeal, which are required to adjudicate in the case that arbitration awards are challenged, are not binding upon other courts required to adjudicate on the same matters. Conversely, the decisions made by the Supreme Court assume greater importance since the Supreme Court acts not only as an appellate court, but also as the guarantor of the correct interpretation of the rules (nomophilachia).
A key role is also played by doctrine, which has contributed, over the years and to a considerable extent, to publicising arbitration and making it the subject of study, thereby permitting its broader diffusion among scholars, lawyers, and economic operators.
Another important source of law and regulation concerning arbitration is represented by the arbitration rules adopted by institutions specialising in the provision of this types of service, such as the Arbitration Chambers. Arbitration rules are usually defined as an ‘indirect source of law’ regulating arbitration, since they only regulate the arbitration procedure in so far as the parties to the arbitration proceedings and the arbitrators specifically appointed make reference to the said rules (known as ‘administered arbitration’ as opposed to ‘ad hoc arbitration’).
2.2 List and briefly describe relevant arbitration statutes, international treaties and conventions.
The provisions of the Italian Code of Civil Procedure (art 806ff), which specifically regulate arbitration, have been amended and supplemented by numerous subsequent laws, as a result of, among other things, the proposal of reform prepared pursuant to Law no 80 dated 14 May 2005, as mentioned above.
By way of Legislative Decree no 5 dated 17 January 2003, for the first time rules have been set out in order to regulate the possibility of resorting to arbitration also in the case of disputes arising between businesses, in relation to financial, banking, and credit intermediation, as was done in the past, through Presidential Decree no 1063 dated 16 July 1962, in relation to disputes concerning building contracts relating to public works and infrastructure.
In addition, Italy has executed numerous international Conventions regarding arbitration. These multilateral Conventions include, inter alia, the Convention on Recognition and Enforcement of Arbitration Awards, signed in New York on 10 June 1958, and the European Convention of Geneva of 21 April 1961 on International Commercial Arbitration.
Furthermore, it is also worth mentioning the European Directive 93/13/EEC of 5 April 1993, ratified in Italy through Law no 52 dated 6 February 1996, which has widened the scope of application of arbitration to include disputes arising from agreements entered into with consumers.
3.1 What are/describe the principal institutions and/or government agencies that assist in the administration or oversight of international and domestic arbitrations?
‘Administered’ arbitration proceedings are mainly managed by specific bodies, called ‘Arbitration Chambers’, which are set up within the Chamber of Commerce. They are located throughout the entire Italian territory. The most important of these bodies is undoubtedly the National and International Arbitration Chamber of Milan. It was founded in 1986 and has its own Arbitration Rules governing both domestic and international arbitration. These Rules were amended in 1996 and subsequently revised once again. The Arbitration Rules dated 1 January 2004 are currently in force. The correctness of the choices made upon enacting the revised Arbitration Rules, which, in many respects, have anticipated the changes made by Law no 80 dated 14 May 2005 seems to be confirmed by statistical figures. These figures show that 105 new applications for arbitration were filed before the Arbitration Chamber of Milan in 2004 (ie a further ten with respect to the previous year). This rising trend was also recorded in the first months of 2005.
Another important body acting in this sector is the Italian Arbitration Association (IAA – Associazione Italiana dell’Arbitrato, AIA), which enacted its own Arbitration Rules in 1994. Unlike the Arbitration Chamber of Milan, the Arbitration Chamber of the IAA applies two different and separate sets of Arbitration Rules, one for domestic and the other for international arbitration.
4.1 What is the relationship between agreements to arbitrate and access to the courts? Is there a presumption of arbitrability/policy support for arbitration? Will the courts stay court actions in favour of agreements to arbitrate?
According to certain decisions issued by the Italian Supreme Court, upon choosing to arbitrate a dispute, the parties waive their right to bring a legal action and choose to only resolve the dispute at a private law level, through the judgment of certain individuals, ie the arbitrators, who cannot be considered to be jurisdictional bodies due to the fact that their powers and authority derive from their having been appointed by the parties.
Consequently, to establish whether a dispute has to be defined by an ordinary court or by arbitrators is not a question of jurisdiction in a technical sense (which presupposes the existence of a conflict between two jurisdictional bodies). It is a mere question concerning the merits of the case and, in particular, the existence and validity of an agreement to arbitrate or of an arbitration clause.
Therefore, in the case that a conflict arises between the parties in relation to the arbitrator’s authority to resolve the dispute, the remedies provided for by Italian law in relation to preliminary issues will not apply. Consequently, a stay of proceedings will not be ordered. Should the state court which is in charge of ruling on a certain dispute find that an objection raised in connection with the existence of an arbitration clause is grounded, the state court shall not have the authority to adjudicate on the merits of the case.
The courts’ stance described above has been basically confirmed by the recent reform concerning arbitration. According to the new text of art 819 ter of the Italian Code of Civil Procedure, in the case that an action is pending before an ordinary court, the same action may also be submitted to arbitration.
4.2 May an arbitral tribunal rule on a party’s challenge to its own jurisdiction (‘competence-competence’)? Need a tribunal suspend its proceedings if a party seeks to test jurisdiction in the courts?
The statutes concerning arbitration provide that arbitrators shall directly rule on their own jurisdiction when the validity, content or scope of the arbitration convention, or the valid establishment of the arbitral tribunal, is challenged in the course of arbitration proceedings (art 817 of the Italian Code of Civil Procedure). In such a case the party shall have the burden to claim that arbitrators lack jurisdiction in its first defence deed subsequent to the acceptance of the arbitrators; should it fail to do so, the award may no longer be challenged alleging that the arbitrators lack jurisdiction. Notwithstanding the foregoing, the award may be challenged where it is concerned with a matter that cannot be decided by way of arbitration and for any other reason admitted by law. Finally, for the sake of completeness, it must be emphasised that, according to a very dated approach of the courts (which is hardly compatible with the recent evolution of the laws and case law concerning arbitration), ordinary courts would undisputedly have jurisdiction to adjudicate on the jurisdiction of an arbitral tribunal if this issue arises prior to the establishment of the arbitral tribunal (Cima v Cima, Supreme Court, decision dated 27 July 1955, no 3167).
5.1 Provide a selected bibliography of the most influential publications in or relied upon in the jurisdiction – books, journals, newsletters and pamphlets.
Books
M Rubino-Sammartano Il diritto dell’arbitrato (Padova: Cedam, 2005)
C Cecchella L’arbitrato (Torino: UTET, 2005)
F a cura di Carpi Arbitrato societario. Commento al D.Lgsl. 17 Gennaio 2003, n.5 (rettificato e modificato dal D.Lgsl. 6 Febbraio 2004, n. 37) (Bologna: Zanichelli, 2004) M Vaccarella Arbitrato e giurisdizione amministrativa (Torino: Giappichelli, 2004) A Pizzoferrato Giustizia privata del lavoro (Padova: Cedam, 2003) A Marinelli La natura dell’arbitrato irrituale. Profili comparatistici e processuali (Torino: Giappichelli, 2002)
F Vismara Le norme applicabili al merito della controversia nell’arbitrato
internazionale (Milano: Giuffrè, 2001) P Bernardini L’arbitrato commerciale internazionale (Milano: Giuffrè, 2000) C Punzi Disegno sistematico dell’arbitrato (Padova: Cedam, 2000) vols I and II A Briguglio L’arbitrato estero. Il sistema delle convenzioni internazionali (Padova: Cedam, 1999) G a cura di Alpa L’arbitrato. Profili sostanziali (Torino: UTET, 1999) vols I and II
S La China L’arbitrato: il sistema e l’esperienza (Milano: Giuffrè, 1999)
E Fazzalari L’arbitrato (Torino: UTET, 1997)
G Tarzia, R Luzzatto and E F Ricci Legge 5 gennaio 1994, n. 25. Nuove
disposizioni in materia di arbitrato e disciplina dell’arbitrato internazionale (Padova: CEDAM, 1995) E F Ricci La prova nell’arbitrato rituale (Milano: Giuffrè, 1974)
Journals
C Consolo ‘Deleghe processuali e partecipazione alla riforma della
cassazione e dell’arbitrato’ [2005] 9 Corriere Giuridico 1189
C Punzi ‘Ancora sulla delega in tema di arbitrato: riaffermazione della natura privatistica dell’istituto’ [2005] 3 Rivista di diritto processuale 963 E F Ricci ‘La delega sull’arbitrato’ [2005] 3 Rivista di diritto processuale 951 F Carpi ‘Profili dell’arbitrato in materia di società’ [2003] 3 Rivista dell’arbitrato 411 F Carpi ‘Profili del contraddittorio nell’arbitrato’ [2002] 1 Rivista dell’arbitrato 1 R Caponi ‘L’arbitrato amministrato dalle Camere di Commercio in Italia’ [2000] 4 Rivista dell’arbitrato 663 F P Luiso ‘La Camera Arbitrale per i lavori pubblici’ [2000] 3 Rivista dell’arbitrato 411 E Fazzalari ‘Una vicenda singolare, l’arbitrato in materia di opere pubbliche’ [1998] 8 Rivista dell’arbitrato 813 G Alpa ‘La clausola arbitrale nei contratti dei consumatori’ [1997] 4 Rivista dell’arbitrato 657
A Berlinguer ‘A proposito della compromettibilità delle controversie in materia di lavori pubblici, della nomina di arbitri per relationem, di requisiti di forma ex art. 1341 ed altro ancora’ [1997] 4 Rivista dell’arbitrato 761
M Taruffo ‘Note sull’imparzialità dell’arbitro di parte’ [1997] 3 Rivista dell’arbitrato 4812 G Tarzia ‘Assistenza e non interferenza giudiziaria nell’arbitrato internazionale’ [1996] 3 Rivista dell’arbitrato 473 A Briguglio ‘La nuova disciplina dell’arbitrato internazionale’ [1994] II Giustizia Civile 98 C Punzi ‘I principi generali della nuova normativa sull’arbitrato’ [1994] Rivista di diritto processuale 331 F Carpi ‘Il procedimento nell’arbitrato irrituale’ [1991] Rivista Trimestrale di Diritto e Procedura Civile 394 Several issues at the Arbitration Chamber of Milan website: www.cameraarbitrale.com
6.1 Are there form and/or content requirements for an enforceable agreement to arbitrate? How may they be satisfied?
For the purpose of any arbitration proceedings, the arbitration clause or the agreement to arbitrate must be in writing subject to nullity (ad substantiam). However, a substantial change was introduced by way of the 2005 reform, which states that the arbitration clauses set forth in general contractual conditions or in agreements entered into by way of any forms do not require any specific approval in writing, previously provided for by arts 1341 and 1342 of the Italian Civil Code. Such provisions still apply only in the case of termination clauses set forth in agreements with consumers.
Article 808 bis of the Italian Code of Civil Procedure authorises the arbitration clause outside the contractual scope. In this case, the written clause must necessarily relate to any future disputes deriving from relationships to be identified and specified at the time when the clause is executed.
As regards the compulsory content of an arbitration clause or of the agreement to arbitrate, it is necessary to refer, first, to the express intention of the parties to submit the dispute to arbitrators. Secondly, the dispute to which the arbitration clause or the agreement to arbitrate refers must be specified, in which case it may even be future or, if it is not specified, the details that permit its identification must be specified. The parties are not required to indicate the number and the appointment of the arbitrators. In fact, the absence of any express agreements in this respect shall imply the application of the legal provisions providing for the appointment of one or more arbitrators (in an odd number) on the part of the President of the Court of the place that is the seat of arbitration.
The so-called incidental elements of the arbitration clause, or of the agreement to arbitrate, include the authorisation, for arbitrators, to rule ‘according to equity’, the procedural rules governing the development of arbitration (in the case of the so-called ‘ad hoc arbitration’), and the provision of a term, if any, for the definition of the arbitration and the issuance of the award.
Furthermore, the interpretation and performance of the arbitration clause is also governed by some rules. On the one hand, such rules provide that, in the case of any doubts, the arbitration clause must be regarded as being related to all of the disputes deriving from the contract or from the relationship to which it refers (art 808 quater). On the other hand, in the case that no decision is made on the merits of the dispute through arbitration, then the arbitration clause shall continue to be effective vis-à-vis the parties (art 808 quinquies).
The fact of resorting to arbitration is the result of a voluntary and free arrangement between the parties. No ‘compulsory’ arbitration exists or is admissible in Italy. Moreover, ‘compulsory’ arbitration would be constitutionally unlawful (in this respect, cf well-established case law stances relating to the Ministero Marina Mercantile v Soc Navigazione Toscana case, decision no 1112 issued by the Corte di Cassazione on 24 February 1981, in Archivio giuridico delle oo pp 1981, II, p 90; the Soc Acqua Potabile Desio v Comune di Desio case, decision no 5 issued by TAR of Lombardy on 4 January 1986, in Trib Amm Reg 1986, 1, 1024; the Sacchetti v Sariscreen case, decision no 127 issued by the Corte Costituzionale on 14 July 1977, in Foro Italiano, 1977, I, 1949; the Regione Sardegna v Passino case, decision no 488 issued by the Corte Costituzionale on 18 December 1991, in Giurisprudenza Italiana 1993, I, 772).
It is worth emphasising that if the deed of incorporation of a company contains an arbitration clause, pursuant to law all the arbitrators must be appointed by a party who is unrelated to the company; otherwise their appointment will be null and void.
7.2 Is arbitration prohibited for certain types of dispute (restraints of fundamental public policy)?
Article 806 of the Italian Code of Civil Procedure states, in general, that the disputes that may be settled by way of arbitration are those falling within the free disposition of the parties, ie those issues of which the parties may dispose of freely, except for the prohibitions expressly provided for by law. This means that the disputes that may be settled by way of arbitration include all of the disputes deriving from commercial and contractual relationships in general. There are also issues to be regarded as ‘non-debatable’ pursuant to law, such as those relating to the state, to the separation of spouses or the issues in which the freedom of individuals is limited by provisions of public law and in the public interest. For example, it is acknowledged that disputes concerned with any rights that may not be waived, transferred or subject to any time bar may not be settled by way of arbitration (Istituto biochimico Lorenzini v Madaus, Court of Appeal of Milan, 13 September 2002, in Corriere Giuridico 2003, p 1626).
However, in the last few years Italian courts have tended increasingly to rely upon arbitration as a means of resolving dispute, thereby offering new scope to arbitration. Consider eg the relationship between arbitration and bankruptcy. Traditionally, bankruptcy and arbitration were considered to be incompatible. Today, according to a recent stance of the Italian Supreme Court, if a receiver intends to claim rights arising from an agreement which contains an arbitration clause, the said receiver will be required to claim the said rights in the course of arbitration proceedings.
Furthermore, the scope of arbitration has also been broadened in order to include disputes concerning contracts for public works (Law no 109 dated 11 February 1994 and, subsequently, Law no 415 dated 18 November 1998, the so-called Merloni-Ter concerning contracts for public works). An ‘Arbitration Chamber for Public Works’ has been set up and specific arbitration rules have been set out to regulate this type of dispute, to the extent that it is acknowledged that ‘a special legal framework governing arbitration concerning public contracts’ is developing.
Conversely, the parties may rely upon the common legal framework governing arbitration in the case of disputes concerning strategic infrastructure of a national interest (Legislative Decree no 190 dated 20 August 2002), except for some restrictions, based on which the third arbitrator must be appointed by an administrative or accounting judge or by a government lawyer, in the absence of any agreement between the parties in this respect.
8.1 May an arbitral clause be considered valid even if the rest of the contract in which it is embedded is invalid?
Article 808 of the Italian Code of Civil Procedure states that the arbitration clause must be considered separately from the agreement to which it refers, which means that it shall remain valid and binding upon the parties although the agreement to which it refers is invalid or ineffective. Separability formed the object of a wide theoretical debate in the past. Some argued that the clause was ancillary to the agreement, whilst some denied its ancillary nature and deemed that the arbitration clause was autonomous with respect to the agreement. Prior to the introduction of the above-mentioned art 808, which was part of a 1994 reform of arbitration, case law stances had already widely acknowledged the ‘autonomous’ character of the arbitration clause (cf Tramvie Provincia di Napoli v Manicone, Court of Appeal of Naples, 22 July 1950, in Foro Italiano, 1950, I, 1407; Tematex v Roberts, decision no 2803 issued by the Supreme Court on 5 August 1968, in Foro Italiano 1969, I, 445; Soc Evoluzione v Società Sistema Italia 93, decision no 8376 issued by the Supreme Court on 20 June 2000, in Giustizia Civile 2001, I, 1327). In view of this characteristic, arbitrators shall be authorised to declare the nullity and/or ineffectiveness of the contract in which the arbitration clause is set forth.
9. QUALIFICATION/APPOINTMENT/LIABILITY OF ARBITRATORS
9.1 Are there specific provisions regulating the qualifications of arbitrators? Are there requirements (including disclosure) for ‘impartiality’ and ‘independence’, and do such requirements differ as between domestic and international arbitrations?
Pursuant to art 812 of the Italian Code of Civil Procedure, anyone may be an arbitrator, without distinction in terms of nationality. However, any arbitrator must be of age 18 and must not be either incapacitated or disqualified.
No legal provision exists which expressly imposes on arbitrators any specific disclosure obligation for the purpose of guaranteeing their impartiality and independence. However, in the Italian legal system impartiality and independence are among principles of public policy.
However, the main arbitration institutions have taken the issue into consideration. For example, the ‘Arbitrator’s Code of Conduct’ adopted by the Arbitration Chamber of Milan provides that, in order to be allowed to perform his assignment, an arbitrator shall:
9.2 Are there provisions governing the challenge or removal of arbitrators? Do the courts or other jurisdictions play/have a role in any such challenge?
Pursuant to art 815 of the Italian Code of Civil Procedure, either party may challenge the arbitrator appointed by the other party in the following specific cases:
– in the case that the arbitrator has provided consultancy, assistance or defence services to one of the parties prior to the dispute or has given evidence as a witness.
Courts have broadened the scope of art 815 by also awarding parties to a dispute the right to challenge their own arbitrator in the above-listed cases provided that the said party becomes aware of the cause of challenge after the appointment of the challenged arbitrator.
The chief judge of the court of the district in which arbitration takes place shall rule on the challenge within ten days from the service of the notice of appointment, or from the date on which the reasons for the challenge became known. The chief judge of the court shall decide as to the costs of the challenge and may order the party which has filed the challenge to pay a sum of money to the other party, should it be ascertained that the challenge is blatantly inadmissible or groundless.
With reference to administered arbitration, the new text of art 832 of the Italian Code of Civil Procedure provides that arbitration rules may contemplate additional cases of replacement and challenge of arbitrators in addition to the cases provided for by law. The rules of the major Italian Arbitration Chambers provide for specific internal procedures and bodies in charge of ruling on challenges of arbitrators. For example, pursuant to art 20 of the Rules of the Arbitration Chamber of Milan, each party may file a justified motion for challenge of the arbitrators for any reason suitable to question the arbitrators’ independence or impartiality. The Arbitral Board is the internal body in charge of ruling on such a motion.
9.3 Does legislation govern, or have the courts developed rules regarding the liability of arbitrators for acts related to their decision-making function?
Article 813 ter of the Italian Code of Civil Procedure specifically governs the liability of arbitrators in the case of any damages caused in the course of arbitration. The arbitrator shall be liable for the damages suffered by the parties as a consequence of:
In general, arbitrators shall be immune from any liability relating to the construction of the law as well as to the assessment of facts and evidence.
Any arbitrator who is declared liable due to fraud or negligence on his or her part shall compensate for the damages caused to the parties, and neither fees nor reimbursement of expenses shall be payable to him or her. In the case of liability of the arbitrator due to reasons other than fraud, a maximum amount of compensation is provided for, which shall in no way exceed the tripled fee provided for the arbitrator or, in any case, the fees applicable pursuant to law.
10. PARTY REPRESENTATION
10.1 Are there particular qualification requirements for representatives (‘counsel’) appearing in the jurisdictions?
Article 816 bis, introduced by the reform, is innovative as it expressly states that the parties are entitled to be represented by counsel during the arbitration proceedings (in compliance with usual practice). The compliance with the rules applicable to admission to the legal profession, or with the rules otherwise acknowledged with reference to foreign citizens, is required for the purpose of acting as counsel within arbitration proceedings. The criteria for admission to the legal profession required under the laws of the state applicable to the arbitration proceedings, if any, shall apply in the case of international arbitration.
11. PLACE OF ARBITRATION/PROCEDURES
11.1 Are there provisions governing the place (seat) of arbitration, or any requirement for arbitral proceedings to be held at the seat?
The seat of arbitration is governed by art 816 of the Italian Code of Civil Procedure. In general, the parties shall be free to choose any place within the territory of the Italian Republic as the seat of arbitration. In the absence of any determination by the parties in this respect, the seat of arbitration shall be chosen by the arbitrators. Should the arbitrators fail to do so, the seat of arbitration shall be the place where the arbitration clause was entered into. If the arbitration clause was entered into abroad, the arbitration shall take place in Rome. These rules shall apply to all types of arbitration, including national and international arbitration, without prejudice, in the case of international arbitration, to any other provisions set forth in international agreements or foreign laws otherwise applicable to arbitration proceedings. These rules shall not prevent arbitrators from taking certain actions within the proceedings (including actions relating to hearings, preliminary investigations and even the issuance and the execution of the award) in places other than the seat of arbitration, even abroad, unless the parties have provided otherwise in the arbitration clause.
11.2 Are specific procedures mandated in particular cases, or in general?
According to the provisions regulating arbitration, the parties to a dispute shall be totally free to choose which procedural rules will be applied, provided that they comply with the audi alteram partem principle. Should the arbitrators fail to comply with this principle, the award may be challenged due to nullity (art 829 of the Italian Code of Civil Procedure).
The parties’ full freedom is expressly provided for by art 816 bis of the Italian Code of Civil Procedure. Pursuant to art 816 bis, the parties may provide for the rules that arbitrators will apply and observe during arbitration proceedings as well as for the language of arbitration, either in the arbitration clause or by way of a separate deed to be executed prior to the commencement of arbitration. Should the parties fail to do so, the arbitrators shall proceed in the way that they deem most appropriate provided, however, that they comply with the audi alteram partem principle and grant to the parties reasonable and equal possibilities to submit defence arguments.
In practice, the parties usually exercise their freedom to choose which procedural rules to apply, by making reference to the rules of an arbitration chamber.
The recent reform of arbitration has regulated, for the first time, the case where a conflict arises between the provisions of an agreement to arbitrate and the arbitration rules referred to in the said agreement. In the case of such a conflict the provisions set forth in the agreement to arbitrate shall prevail over the arbitration rules.
12. EVIDENCE GATHERING
12.1 What is the general approach to the gathering and tendering of evidence at the pleading stage and at the hearing stage (production, discovery, privilege, use of witness statements etc)? Are there differences between domestic and international arbitrations?
According to usual practice, the parties have always benefited from broad possibilities to produce and request the admission of means of evidence, without prejudice for the right of arbitrators to fix specific terms, including mandatory terms, for filing documents, within their right/duty to regulate proceedings and provided that the audi alteram partem principle is complied with.
Furthermore, the recent reform concerning arbitration has introduced specific provisions relating to the preliminary investigative phase, which were previously non-existent, regarding the possibility, for the arbitration panel, of delegating the power to take certain preliminary investigative actions to an individual arbitrator, the possibility of hearing a witness directly in his or her house or office (provided that the witness consents to this) or the possibility of requesting that witness evidence be provided in writing (so-called affidavits) by way of replies to questions prepared by the arbitrators within a term established by them. Court-appointed expert assessments are admitted within arbitration and both individuals and entities may be appointed as experts.
The Italian procedural system does not provide for the discovery phase.
Finally, in relation to the preliminary investigative phase, Italian law does not expressly provide for any differences between domestic and international arbitration, which ensures very versatile practice.
12.2 What powers of compulsion or court assistance are there for arbitrators to require attendance of witnesses or production of documents, either prior to or at the substantive hearing? Is there a difference between domestic and international tribunals or as between parties and non-parties? Do special provisions exist for arbitrators appointed pursuant to international treaties (ie bilateral or multilateral investment treaties)?
According to the recent reform concerning arbitration, arbitrators may be assisted by the court in the case that a witness summoned by them refuses to enter an appearance and give his or her evidence. In these cases, the arbitrators, if they deem it appropriate, may request the President of the Court of the place where the arbitration takes place to order the witness to appear within the arbitration proceedings to give evidence. Should the arbitrators avail themselves of this possibility, the term for issuing the award is suspended until the hearing fixed for witness examination.
However, in general, the orders to produce documents, issued by an arbitration panel (which, among other things, are neither provided for nor forbidden under the legal provisions governing arbitration) remain incoercible.
Finally, it is confirmed that the Italian procedural system does not provide for the discovery phase.
13. INTERIM MEASURES/ROLE OF THE TRIBUNAL
13.1 Are there special provisions relating to the granting of interim and preliminary relief? Have the courts recognised and/or limited any such authority? Do the courts themselves play a role in interim relief in arbitration proceedings?
According to art 818 of the Italian Code of Civil Procedure, arbitrators may not issue any interim or preliminary relief. Such measures may only be issued by the judicial authority.
Conversely, it is generally acknowledged that arbitrators may issue so-called ‘partial’ awards within arbitration proceedings, whenever they provide for a prior definition of an undisputed matter between the parties and then continue proceedings to define the rest. Partial awards shall be as effective as final awards and subject to the same rules applicable to final awards for the purpose of filing and subsequent enforcement. According to part of the relevant legal theory, arbitrators may also provide for a prior definition of undisputed situations through the prior issuance of orders that, however, shall not have any enforcement effectiveness against the parties, as only partial awards shall have enforcement effectiveness.
14. TAXATION OF ARBITRATORS’ FEES
14.1 Does the state, or any of its sub-divisions, purport to tax domestically the fees of foreign arbitrators conducting hearings in the state? Is there a difference if the arbitration is ‘seated’ in the state or elsewhere?
Italian laws provide for the taxation of income from self-employment earned in the territory of the state, regardless of whether or not income is earned by foreign individuals who do not reside in Italy. Therefore, the condition for taxation consists of the performance of the working activity in the territory of the state.
The tax is applied to aggregate income regardless of how it is earned. This is without prejudice to the cases in which international Conventions ‘against double taxation’ apply to exempt the foreign individual from the taxes applicable in the country where income was earned, unless he or she has a ‘fixed establishment’ in that country. In this case, any foreign arbitrator performing an activity in Italy would be subject to taxation according to Italian laws only if he or she has a ‘permanent establishment’ in Italy. This requires a case-by-case assessment.
15. DEFAULT PROCEEDINGS
15.1 Are there provisions governing a tribunal’s ability to determine the controversy in the absence of a party who, on appropriate notice, fails to appear at or seek adjournment of the arbitral proceedings?
The rule of ‘non-appearance’ of one of the parties is inapplicable to arbitration. As a result, any party who, though duly notified, fails to appear in the course of arbitration, shall be declared ‘absent’ (Vacchelli v Bruder Grossing, Cassazione, decision no 465 dated 19 January 1984). It is believed that the rules protecting the party declared absent within ordinary proceedings, according to which the deeds of the case must also be notified to the party who has failed to enter an appearance, should also apply to arbitration. Obviously, the failure of a party to appear in the course of arbitration shall not prevent arbitrators from bringing arbitration to an end and settling it through the issuance of the award.
16. THE ARBITRAL AWARD
16.1 Must an award take any particular form, eg in writing, signed, dated, place, the need for reasons, delivery etc?
According to the provisions governing arbitration set forth in the Italian Code of Civil Procedure, the award must be in writing and must contain:
Such provisions refer to awards issued within national arbitration proceedings and international proceedings taking place according to the provisions set forth in the Italian Code of Civil Procedure.
The arbitrators shall draft the award in one or more originals and deliver one of such originals or a certified copy thereof to each of the parties or their representatives. The award may also be delivered by way of registered mail. The award shall be notified within ten days from execution.
16.2 Are there limits on arbitrators’ powers to fashion appropriate remedies, eg punitive or exemplary damages, rectification, injunctions, interest and costs?
Unlike state courts, arbitrators are not empowered to issue injunctions. Like state courts, arbitrators are not even empowered to order payment of punitive or exemplary damages if such an order conflicts with the principle of public policy. With this respect, there has been a recent decision denying enforcement in Italy to a judgment issued by a US court awarding punitive damages to the claimant (Parrot v Fimez, Appeal Court of Venice, 15 October 2001, in Nuova giurisprudenza Civile Commentata, 2002, I, 765).
Conversely, arbitrators may order reimbursement of costs (within reasonable limits) and payment of capital interest (in compliance with the laws on usury).
17. RECOURSE FROM AN AWARD
17.1 Are there provisions governing modification, clarification or correction of an award?
Article 826 of the Italian Code of Civil Procedure governs the correction of awards.
Each of the parties may ask the arbitrators to correct the award within a year from notification. The corrections may relate to material errors or calculation mistakes and omissions, including mistakes and omissions regarding inconsistencies between the various counterparts or arbitrators’ signatures. The request for correction may also involve some elements relating to the content of the award, including the indication of the parties or the name of arbitrators, the indication of the agreement to arbitrate or of the arbitration clause, the reasons and the award. The arbitrators shall proceed with correction after having heard the parties, within 60 days from the receipt of the request for correction. If the arbitrators do not proceed with any corrections, the parties may ask the court of the place where the award was filed to so proceed. The court before which the award has been challenged may also proceed with correction.
17.2 May an award be appealed to or set aside by the courts? If so, on what grounds and by what procedures?
An award may be appealed to in three ways: through an appeal for nullity, revocation or challenge by a third party.
The appeal for nullity shall be filed within 90 days from the notification of the award or within no later than a year from the date of the latest execution on the part of arbitrators. The Court of Appeal of the place corresponding to the seat of arbitration shall adjudicate over the appeal. The nullity of the award shall be declared in the cases provided for by art 829 of the Italian Code of Civil Procedure. Such cases relate to reasons in point of both fact and of law (nullity of the agreement to arbitrate, breach of the rules governing the appointment of arbitrators, the fact that the award may have exceeded the limits of the agreement to arbitrate or of the arbitration clause or that it may have failed to adjudicate over some issues contemplated thereby, breach of the rules governing the content of the award, late issuance of the award after the terms specified by the parties or the law, breach of the audi alteram parte principle or the presence of contradictory provisions). The Court of Appeal asked to rule on the nullity of the award may also issue a decision in relation to the merits of the dispute.
The award may be revoked if it was issued as a result of fraud on the part of any of the parties, if new documents are found, if it was issued based on evidence subsequently ascertained as false, or if it was issued as a result of fraud on the part of an arbitrator.
The award may be challenged by third parties when it prejudices their rights or when it has been issued as a result of fraud, to their detriment.
The Court of Appeal of the place corresponding to the seat of arbitration shall have jurisdiction to issue a decision in the cases of revocation and challenge on the part of a third party.
Pursuant to art 808 ter of the Italian Code of Civil Procedure, any ‘contractual award’, ie any award issued upon completion of a procedure – called amicable arbitration – that, by way of a specific written provision, the parties have elected to be defined by arbitrators through a ‘contractual’ decision, ie an award which shall not act and produce the same effects as a court judgment, may be declared null and void by the state court having jurisdiction (pursuant to the ordinary rules concerning jurisdiction) in any of the following cases: (i) if the agreement to arbitrate is invalid or the arbitrators have ruled on issues which are beyond their powers and a relevant objection has been raised in the course of the arbitration proceedings; (ii) if the arbitrators have not been appointed in compliance with the procedures and formalities provided for by the agreement to arbitrate; (iii) if the award has been issued by a person who was not qualified to be appointed as arbitrator pursuant to art 812 of the Italian Code of Civil Procedure; (iv) if the arbitrators have failed to comply with the specific rules compliance with which has been made by the parties a necessary condition for the validity of the award; or (v) if the audi alteram parte principle has not been complied with in the course of the arbitration proceedings.
18. ENFORCEMENT OF AWARD
18.1 What are the procedures and standards for enforcing an award? Is there a difference between ‘domestic’ and ‘non-domestic’ awards?
Pursuant to art 824 bis of the Italian Code of Civil Procedure, the award shall produce the same effects as a court judgment starting from the date of the last signature.
However, pursuant to art 825 of the Italian Code of Civil Procedure, in order to enforce an award issued within the context of arbitration proceedings conducted in Italy, the interested party will be required to file the original or a certified copy of the award, along with a motion for enforcement, before the court of the place where the arbitration took place. The court will simply assess whether or not the award was duly issued and, upon completion of the said assessment, it will declare it enforceable.
Article 808 ter of the Italian Code of Civil Procedure expressly provides that art 825 of the Italian Code of Civil Procedure shall not apply in the case of a ‘contractual award’, ie the award mentioned above. Therefore, in the case at issue where the parties have decided to resort to amicable arbitration, the award shall not be in any way coercively enforced pursuant to art 825.
In order for an award issued within the context of arbitration proceedings conducted abroad to be enforced, the procedure described above shall apply with the only differences being that: (i) the judicial body having jurisdiction is the Court of Appeal; and (ii) the court shall make sure that the subject of the award is one or more issues which may be arbitrated pursuant to the principles of Italian law and, in any event, that the award does not contain any provision in contrast with the public policy.
19. CONFIDENTIALITY OF PROCEEDINGS
19.1 What are the confidentiality requirements of the arbitral process, ie existence of the arbitration, pleadings, documents produced, hearing, award?
Arbitration proceedings shall be subject to the confidentiality obligation as they are ‘private’ proceedings. This obligation is usually guaranteed by the Rules of the Arbitration Chambers (art 8 of the Rules of the Arbitration Chamber of Milan). Any breach may result in the commencement of actions seeking a declaration of liability in contract and in tort. A debate is open as to the possibility of limiting confidentiality in relation to awards subject to disclosure for reasons connected with the protection of the parties’ rights, in particular when enforcement is necessary. This matter is resolved through the provision of a quittance of the parties, based on which the parties authorise the publication of the award (art 8 of the Arbitration Rules of the Arbitration Chamber of Milan).
20.1 Is there any particular aspect of the approach to arbitration in the jurisdiction which bears special mention?
As we have tried to outline in these brief notes, the most important single issue regarding arbitration in Italy is presently the recent reform and its contents. Indeed, as we highlighted in the paragraphs of this work, almost all the relevant aspects of arbitration proceedings have been touched by this reform, with the purpose of further broadening the use of this form of dispute resolution. To reach such a goal, the Italian statutes have been amended so that: (a) other kinds of disputes can be decided by arbitrators (for example, actions in tort); (b) arbitration clauses regarding administered arbitration are specifically considered and have a distinctive (although limited) ruling; (c) differences between arbitration and similar proceedings such as the so-called arbitrato irrituale are also formally recognised; (d) responsibilities/powers of arbitrators are wider and better set; (e) the award (should) become more easily enforceable; (f) finally, the grounds upon which an arbitral award can be appealed against are also enhanced.
It should additionally be considered, as highlighted in the paragraphs above, that other statues passed recently and ruling specific fields – such as administrative and corporate/business law – have touched also the matter of arbitration (setting rules regarding disputes on public works and making mandatory the appointment of arbitrators by a third party in certain corporate litigation).
As with all reforms of such importance, it will now be interesting to see the real impact of the new rules and principles on arbitration proceedings in Italy. However, it is already possible to state that the reform will change the approach to and the perception of arbitration in the Italian jurisdiction, making it a more ‘normal’, effective, trustworthy and wider-used method of dispute resolution.
