In general terms, after some initial reticence, the Italian legislator nowadays looks at international arbitration as a viable alternative to State justice, both in domestic and transnational cases. This is testified by the several amendments to the Eight book of the Italian Code of Civil Procedure (“ICPC”), dealing with arbitration (“Italian Arbitration Law”), that have been implemented over the last years and that are all aimed at ensuring that arbitral proceedings are equalized to judicial proceedings (with regard to aspects such as due process and taking of evidence) and that arbitral awards have the same force and effects of judicial decisions.
The reform of 2022 clearly follows this trend, as confirmed by the newly enacted rules on: (i) the relationship between arbitral and State Court proceedings; (ii) the disclosure of causes possibly affecting arbitrators’ impartiality and independence; and (iii) the possibility for arbitrators to issue provisional measures.
In respect of the first aspect, the Italian Constitutional Court already envisaged the possibility of transition of ongoing proceedings (so-called translatio iudicii) from national courts to arbitration (and vice-versa) with the possibility to save the effects of all acts and documents produced in the proceedings before State courts in the subsequent arbitration proceedings (and vice-versa). In this regard, the amendment to the Italian Arbitration Law occurred in 2022 finally gave legislative force to such a rule originated in case law. The new art. 816-bis ICPC expressly states that the notice of arbitration produces exactly the same effects of a summons before national courts and, according to new art. 819-quater ICPC, when a State Court declines its jurisdiction in favour of arbitration, the national proceedings may continue directly before the Arbitral Tribunal. The same applies in the opposite scenario where arbitrators decline their jurisdiction in favour of national Courts, and the evidence assumed by arbitrators may work as indicia for the national court where the case is reinstated and vice-versa. The regulation of relationships between arbitral and Court proceedings is completed by art. 819-ter ICPC, which provides that (in presence of an arbitration agreement) arbitral jurisdiction is not precluded by the existence of parallel judicial proceedings and that, pending arbitration proceedings, it is not possible to bring before national courts any claim concerning the invalidity and/or ineffectiveness of the arbitration agreement. This is a clear application of the negative effect of the kompetenz-kompetenz principle, in accordance to which national courts shall refrain from judging on arbitration clauses until arbitrators did not do so.
As to the second aspect - concerning the disclosure by arbitrators of the causes that might affect the perception of their impartiality and independence -, just like domestic judges, arbitrators are burdened by a duty of transparency, which involves stringent pre-trial disclosure requirements. When accepting their appointment, arbitrators shall issue a declaration concerning the existence of any relevant circumstance that might trigger their challenge. In the lack of such a declaration, arbitrators’ acceptance is to be considered as null and void. The circumstances to be disclosed are listed by art. 815 ICPC and include (1) the lack of the qualities foreseen by the parties in their agreement; (2) the existence of a direct interest in the case by the arbitrator or by any entity he / she runs; (3) the existence of family relationships between the arbitrator and the parties or their lawyers; (4) the existence of hostility between the arbitrator (or his/her partner) and one of the parties or their respective lawyers; (5) the existence of a link (including continuous professional relationships) between the arbitrator and one of the parties; (6) arbitrator’s previous assistance to one of the parties; (6-bis) the existence of other significant reasons to be disclosed (this open rule is aimed at answering to some criticisms whereby the previous lines of art. 815 ICPC actually appeared less stringent than other similar provisions, such as the IBA guidelines on impartiality, independence and disclosure). The challenge of arbitrators is decided by the court of the seat and, unless the arbitral tribunal decides otherwise, the existence of a challenge does not cause the suspension of the ongoing arbitration proceedings. In this regard, it is to be finally noted that, apart from the cases of challenge, arbitrators may resign for “significant reasons of convenience” which may affect the perception of their independence and impartiality.
As to the third aspect, this is certainly the most important novelty of the 2022 reform and concerns the possibility for arbitrators to issue provisional measures. As well known, Italy was among the few countries in the world (and the only one among the largest economies) prohibiting arbitral interim measures. This circumstance isolated Italy in the landscape of arbitral seats and allegedly precluded the real development of arbitration in Italy.
The new provision of art. 818 ICPC overcomes this scenario and, quite the contrary, if the parties allow the arbitrators to do so (expressly or by referring, in the arbitration agreement, to a set of arbitral rules envisaging arbitral interim measures), is extremely permissive in allowing arbitrators to issue each kind of provisional measures and in safeguarding the exclusivity of arbitral power in this regard. Such exclusivity begins from the moment of the acceptance of the appointment (in the case of a single arbitrator) or the constitution of the arbitral tribunal (in case of a tribunal composed of three or more members). Before this moment, any request for interim measures shall be brought – according to the wording of art. 818 II para., ICPC - before the court that would have been competent to hear the merits of the case, if any (which does not necessarily coincide with the seat of arbitration).
Arbitral provisional measures may be challenged before the Court of appeal of the judicial district of the seat of arbitration, while the enforcement of provisional measures - regulated by art. 818-ter ICPC - shall take place under the control of the court of the seat of arbitration (if it is in Italy) or of the place where the enforcement of the interim order shall take place (if the seat is abroad). This circumstance confirms that Italian judges shall enforce (and ensure the enforcement of) also interim measures issued abroad.
It also comes as a consequence that the enforcement of seizures ordered by arbitrators (which is usually complex due to the arbitrators’ lack of coercive powers) shall be ensured by domestic judges.
Next steps
No doubts: the reform of the Italian arbitration law significantly strengthens, at least from an abstract point of view, the position of Italy as a valuable seat for international arbitration. This consideration mainly applies to the possibility to issue interim measures, which was one of the main gaps of the previous regulation of arbitration in Italy but it can also be inferred by the general perception that Italy actually considers arbitration as a valuable alternative to proceedings before domestic courts. The Italian legislator’s intention is clearly to align Italy to other popular arbitration seats as to powers and duties of Arbitral Tribunals but the wording of the arbitration agreement is still of essence. Arbitral Tribunals’ power to issue interim measures is subject to the will of the parties, as expressed in the arbitration agreement, which companies should now check – and revise if needed - in order to take advantages of these new provisions.
Authored by Andrea Atteritano and Giovanni Zarra.
