Arbitration under Italian Law

Arbitration is an alternative method of dispute resolution (ADR), which consists of private and extra-judicial resolution by an independent third party.      
In Italy, arbitration is becoming increasingly widespread and a common tool in international transactions. It is normal that the parties attribute their disputes to an arbitral tribunal, instead of state courts.
In fact, arbitrators are typically pro-settlement and more efficient than court proceedings.

Advantages:

1. Specialization of the arbitrators;
2. Efficiency and duration;
3. Language flexibility;
4. Confidentiality of the dispute.

Disadvantages:

1. Higher costs;
2. No interim relief (except corporate matters).

Legal Framework:  
In Italy arbitration is governed by the Code of Civil Procedure, Articles 806 – 840. These rules apply to all arbitral proceedings, both domestic and international.
Generally, all the rules are mandatory, but the parties can decide the applicable procedure and its language, as long as the parties have the same rights to defend themselves (due process principle).
Italy ratified the New York Convention, hence it provides enforcement to international arbitration awards. 

General Principles:
The Italian Law provides some general principles about arbitration:

• Due process: the parties must be equal, giving them the same opportunity to defend themselves within an impartial arbitration; 
• Autonomy: the parties are generally free to determine the main structure of the arbitration (e.g. arbitrator, language, applicable law etc.);
• Non-intervention by the courts: national courts cannot intervene in arbitration;

As a general principle, the parties can submit any dispute to arbitration. Nevertheless, the Italian Law provides some exceptions:

1. Non-disposable rights: i.e. constitutional, status, family rights etc.;
2. Employment disputes: unless an arbitration agreement is included in the contract or collective agreement;
3. Special laws: the parties cannot dispose of certain disputes provided by special laws (e.g. tax issues, administrative courts matter etc.). 

According to Italian Law, arbitrations concerning these disputes are subject to annulment and their awards enforcement and recognition may be refused by courts.

Requirements:
The arbitration agreement can be in the form of a clause within a contract or a stand-alone agreement. In order to be valid and enforceable in Italy, nonetheless, the agreement must be in writing and contain the subject of the dispute.          
The agreement can arise from different documents, as long as the parties are aware of it, and it is considered independent: the invalidity of a contract, thus, does not cause the arbitration clause void.
Therefore, oral arbitration agreements are considered null and void under Italian Law.
In order to get the award automatically recognized, it must meet specific requirements of Art. 823 of C.P.C. In fact, the award must be in writing, signed and decided by the majority of the arbitrators, including a summary of the reasoning. Otherwise, the award is null and void.

The Arbitral Tribunal:      
The parties are free to determine the number of arbitrators, fixed to three if an agreement on this matter is missing.    
Once the arbitrator is chosen, he cannot withdraw from his office without good reason and he must respect some legal duties. In fact, he must perform his work with impartiality and independence, and he must render the award within the time limit set by the parties.
If the arbitrator fails to perform his duties, he may be replaced by agreement of the parties and may be held for any damages suffered by them in certain cases.
When the award is issued, it has the same effect as a judgement between the parties. From the notification of the award, the parties have 90 days to file an appeal with the Court of Appeal where the arbitration has its seat.

Arbitration Organizations:           
Italy has different arbitrations institutions. The main ones are:

1. National and International Chamber of Arbitration of Milan (CAM);
2. Italian Association of Arbitration (AIA); 
3. Arbitral Chamber of the Chamber of Commerce of Rome (CCIAA).

Corporate Arbitration:      
The Legislative Decree no. 5/2003 introduced a new procedural law to be applied to company disputes.                  
In this case, the arbitration clause may be included in the memorandum of the company, concerning disputes which may arise between the shareholders or the company and its shareholders.
The main feature is represented by the mandatory appointment of all arbitrators by a third party unconnected with the company, which represents a special guarantee of impartiality and fairness in the arbitration proceedings. Moreover, the arbitrators can suspend the effects of shareholder resolutions as a preventive measure.         

In closing, arbitration is a useful tool becoming more and more efficient and essential to resolve international disputes. Nonetheless, VGS Lawyers can advise you on eventual drawbacks and guide you through your specific circumstances and needs.  

For further information please contact info@vgslawyers.com or leave your details on the Contact Form and you will be contacted within 24 hours.