This country-specific Q&A provides an overview of the legal framework and key issues surrounding arbitration law in Italy.
This Q&A is part of the global guide to Arbitration.
For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/arbitration/
What legislation applies to arbitration? Are there any mandatory laws?
The Italian rules governing arbitration proceedings are mainly provided for by Articles 806 to 840 of the Italian Code of Civil Procedure (“CCP”). These provisions apply to arbitral proceedings having their seat in Italy (Article 816 CCP), without prejudice to international conventions in force. For the most part, they operate insofar as the disputing parties have not adopted other specific rules.
Is the country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?
Italy is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Italy did not formulate any reservation to the general obligations of the Convention.
What other arbitration-related treaties and conventions is the country a party to?
Italy is also a party to the following arbitration-related treaties: (i) the 1927 Geneva Convention on The Execution of Foreign Arbitral Awards, (ii) the 1961 European Convention on International Commercial Arbitration, and the 1965 Washington Convention on the Settlement of Investment Disputes Between States and Nationals of Other States.
Is the law governing international arbitration based on the UNCITRAL Model Law? Are there significant differences between the two?
Italian rules concerning arbitration matters are not based on the UNCITRAL Model law, but they do not materially differ from it.
Are there any impending plans to reform the arbitration laws?
Under a legislative point of view, the latest relevant development is the arbitration reform enacted in 2006. For the time being, no relevant innovation to the actual arbitration law is foreseeable in the immediate future.
What arbitral institutions (if any) exist? Have there been any amendments to their rules or are there any being considered?
In Italy there are over a hundred arbitration institutions, which have been established by local Chambers of Commerce, professional orders, trade associations, etc. However, numerous institutions are almost inactive. The most active is the Milan Chamber of Arbitration (“CAM”), a branch of the local Chamber of Commerce, which has gained an international reputation. Also the Italian Arbitration Association (“AIA”) based in Rome is a very active.
What are the validity requirements for an arbitration agreement?
Pursuant to Articles 807 and 808 CCP, an arbitration agreement is null and void if not made in writing. An agreement to arbitrate may be in the form of a specific agreement entered into by the parties once a dispute has arisen, or of an arbitration clause contained in a contract. In addition, in the case of an agreement to arbitrate a dispute that has already arisen, the parties must specify the object of the dispute (Article 807 CCP).
Are arbitration clauses considered separable from the main contract?
As a general rule, pursuant to 808 CCP, arbitration clauses are considered separable from the main contract. The fact that the contract is void does not in itself affect the validity of the arbitration clause contained therein.
Is there anything particular to note in your jurisdiction with regard to multi-party or multi-contract arbitration?
There are no peculiar rules involving third-party and/or multi-contract arbitration in Italy.
Article 816-quater CCP provides for the admissibility of a single arbitration proceedings among two or more parties bound by the same arbitration agreement only if: (i) the arbitration agreement provides for the appointment of the arbitral tribunal by a third party; (ii) all the parties agree on the appointment of the arbitrator(s); or (iii) the respondents agree to appoint an equal number of arbitrators as the claimants or agree to the appointment of their arbitrators by a third party. If this mechanism fails, the claimant must initiate separate arbitration proceedings against each respondent.
Pursuant to Article 816-quater CCP, second paragraph, if the mechanism fails with respect to a proceedings where the participation of multiple parties is required by law, the arbitration agreement becomes inoperative and the parties must bring their dispute to national courts.
How is the law applicable to the substance determined?
The substantive law of the dispute is determined according to the parties’ express choice. Absent any indication, arbitral tribunals sitting in Italy follow different approaches, including relying on the conflict of rules of the forum.
Are any types of dispute considered non-arbitrable? Has there been any evolution in this regard in recent years?
Pursuant to Article 806 CCP all disputes are arbitrable under Italian law, except those concerning non-arbitrable rights such as criminal and certain family law matters. Employment disputes can be referred to arbitration only if so provided by the law or by national collective employment agreements. Also, disputes between private parties and public administrations acting as a public entity are non-arbitrable.
Are there any restrictions in the appointment of arbitrators?
Pursuant to Article 812 CCP, parties are free to appoint as arbitrator the individual of their choice, provided that the appointed individual has the legal capacity to act.
Are there any default requirements as to the selection of a tribunal?
The default appointment procedure is provided by Articles 809 to 811 CCP. In particular: (i) the arbitral tribunal shall be composed of three individuals, (ii) each party to the dispute shall appoint one arbitrator, and (iii) the party-appointed arbitrators shall appoint the third arbitrator to act as president of the arbitral tribunal.
Can the local courts intervene in the selection of arbitrators? If so, how?
Local courts can be involved if parties elect them as appointing authority for one or all members of the arbitral tribunal.
Also, unless the parties have identified a specific method of appointment of the arbitrator(s) in the arbitration agreement, pursuant to Article 810 CCP (the default rule), if one party fails to appoint an arbitrator, or if the two party-appointed arbitrators fail to reach an agreement on the presiding arbitrator, the appointment will be made by the President of the Court of First Instance at the seat of arbitration.
Can the appointment of an arbitrator be challenged? What is the procedure for such challenge? Has there been an increase in number of challenges in your jurisdiction?
Under Italian law, a party may challenge an arbitrator if any of the circumstances enumerated in Article 815 CCP is met. For example in the arbitrator: (i) lacks the qualifications indicated by the parties, (ii) has a direct or indirect interest in the matter at dispute, (iii) has a qualified relationships with either party, or (iv) has previously provided professional advice, legal aid or defense in favor of either party.
A party may challenge the arbitrator that itself has appointed only for reasons that such party becomes aware of after the appointment has been made.
If the parties fail to replace the arbitrator by mutual agreement, the President of the Court of First Instance at the seat of arbitration will proceed to make the appointment.
We are not aware of any statistic on the number of challenges brought before national courts.
What happens in the case of a truncated tribunal? Is the tribunal able to continue with the proceedings?
Pursuant to Article 811 CCP, an absentee arbitrator shall be substituted in accordance with the procedure established by the parties in the arbitration agreement or, lacking any indication therein, in accordance with Article 810 CCP.
Only upon replacement of the absentee arbitrator, proceedings should continue. In general, the prevailing view is that all the activities – including any partial award – carried out before his/her replacement maintain their validity.
Are arbitrators immune from liability?
Pursuant to Article 813-ter CCP, arbitrators may be held liable for damages suffered by the parties in the event of: (i) fraudulent or grossly negligent omission or delay in the procedure; resignation without a proper cause; or (ii) fraudulent or grossly negligent omission or delay in issuing the award.
Each arbitrator is only liable for his/her own actions. Where the proceedings are pending, an action for damages can be brought only on the ground sub (i) above. In the absence of fraud, compensation for damages cannot exceed three times the arbitrators’ fees. Further, if an appointed arbitrator is held to be liable, the parties do not have to pay that arbitrator’s fees (Article 813-ter, para. 3-4, CCP).
Except for the cases outlined above, arbitrators enjoy the same immunity from liability in tort or gross negligence as national judges—i.e., liability cannot arise from either the interpretation of the regulations or the evaluation of the facts or the evidence, see Article 813-ter, para. 2, CCP and Article 2, paras. 2 and 3 of Law No. 117 of April 13, 1988.
Is the principle of competence-competence recognised? What is the approach of local courts towards a party commencing litigation in apparent breach of an arbitration agreement?
Pursuant to Article 817 CCP, it is for the arbitral tribunal to rule upon its own jurisdiction and decide on the validity, scope and content of the arbitration clause. Any objection to the validity of the arbitration agreement must be raised in the first brief after the appointment of the arbitral tribunal.
In accordance with Article 819-ter CCP, when arbitration proceedings are pending, national courts must refrain from deciding on the validity of the arbitration agreement.
How are arbitral proceedings commenced? Are there any key provisions under the arbitration laws relating to limitation periods or time bars of which the parties should be aware?
Unless otherwise agreed by the parties, arbitral proceedings are commenced by written notice containing the appointment by the claimant of its arbitrator and the invitation to the respondent to designate its arbitrator. Pursuant to Article 810 CCP if the respondent fails to designate its arbitrator within 20 days after the receipt of the claimant’s notice, the claimant may request to the President of the Court of First Instance at the seat of the arbitration to proceed with the appointment in the place of the respondent.
The limitation periods to bring a claim in arbitration are the same applicable to proceedings before national courts. Generally, the relevant period is 10 years from accrual of the cause of action with respect to contractual claims and 5 years with respect to tortious claims.
What happens when a respondent fails to participate in the arbitration? Can the local courts compel parties to arbitrate? Can they order third parties to participate in arbitration proceedings?
If a respondent fails to participate in the arbitration the proceedings will continue provided that the claimant has duly served the notice of appointment of its party-appointed arbitrator on the (inactive) respondent.
As seen above (see question No. 14), if a party fails to participate to the appointment of the arbitral tribunal, the President of the Court of the First Instance at the seat of the arbitration makes the appointment.
As to third-parties, the general rule is that they cannot be compelled to participate to arbitration proceedings if they are not bound by an arbitration agreement. Italian courts have not upheld the various doctrines elaborated by other jurisdictions, such as the veil-piercing and the group of companies’ doctrine, yet. Nevertheless, some national courts have extended arbitration agreements to non-signatories in cases of third-party beneficiaries and assignment of contracts.
Pursuant to Article 816-quinquies, para. 2, CCP, any third party who has an interest in the dispute has the right to voluntarily intervene in pending proceedings in support of one of the party’s defense or to join as a legally necessary co-party, without the consent of either the parties or of the arbitrators being required.
In what circumstances is it possible for a state or state entity to invoke state immunity in connection with the commencement of arbitration proceedings?
If a state or a state entity has accepted the jurisdiction of a tribunal it is in principle not possible for such state or state entity to raise a defense of state or sovereign immunity in connection with the commencement of arbitration proceedings. The prevailing view is that the acceptance of an arbitration agreement is tantamount to a waiver of immunity from jurisdiction.
In what instances can third parties or non-signatories be bound by an arbitration agreement or award?
See question No. 20 above.
What interim measures are available? Will local courts issue interim measures pending the constitution of the tribunal?
Pursuant to Article 818 CCP, arbitral tribunals cannot grant provisional measures, unless the law provides otherwise. Therefore, parties may only seek the assistance of the national courts, which have the power to issue interim relief before and after the constitution of the arbitral tribunal.
Are there particular rules governing evidentiary matters in arbitration? Will the local courts in your jurisdiction play any role in the obtaining of evidence?
Unless otherwise agreed by the parties, pursuant to Article 816-bis CCP the arbitral tribunal has the power to conduct the arbitral proceedings in the manner that it deems the most appropriate, including with regard to evidentiary matters.
Under Article 816-ter CCP, if a witness refuses to appear before them, the arbitrators may seek an order from the President of the Court of First Instance at the seat of the arbitration. Courts may also grant evidentiary assistance before the commencement of the arbitration, for example, ordering the collection of evidence in case of urgency.
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings?
Counsel and arbitrators that are admitted to the Italian Bar are bound by Code of Ethics of the Italian Bar Association. Furthermore, also foreign lawyers who practice in Italy shall abide by those rules (article 3 of the Code of Ethics). According to the Code of Ethics, lawyers shall comply with the duties of independence, honesty, integrity, probity, dignity, decorum, diligence and competence (article 9 of the Code of Ethics). Article 61 of the Code of Ethics sets out specific duties of impartiality and independence for lawyers acting as arbitrators.
In addition, arbitrators appointed in proceedings under the CAM Regulation shall comply with the rules of ethics set out in the CAM “Arbitrator Ethical Code”.
How are the costs of arbitration proceedings estimated and allocated?
There is no specific rule for arbitration proceedings concerning the costs—i.e., arbitrator’s fees, institutional administrative expenses (if any), and counsel’s fees.
Usually, arbitral tribunals in domestic arbitrations tend to follow the so-called “costs follow the event” rule—i.e., the losing party should bear the costs of the arbitration proceedings. However, the arbitral tribunal may allocate and/or apportion the costs between the parties differently, by providing appropriate reasoning.
Can pre- and post-award interest be included on the principal claim and costs incurred?
The arbitral tribunal can award interest and compound interest. Every year the Minister of Finance determines the applicable interest rate. Parties may agree on a different rate within the limit established by Italian usury legislation.
What legal requirements are there for the recognition of an award?
Recognition of an award is a legal activity that concerns “foreign” awards only. An arbitral award is deemed “foreign” if it was rendered by an arbitral tribunal seated outside Italy.
The purpose of the recognition stage is to verify the suitability of the foreign award to be given effect in the Italian legal system.
According to Article 839 CCP, in order to obtain the recognition of a foreign award, the party that was in whole or in part successful in the arbitration proceedings shall institute ex parte proceedings by filing a petition with the President of the Court of Appeal of the district in which the other party is resident. If the other party is not resident in Italy, the Court of Appeal of Rome has jurisdiction.
The request for recognition shall be filed with the original award—or a certified copy thereof—and the original arbitration agreement— or any equivalent document. If any of the document is not in Italian, a certified translation is required.
The President of the Court of Appeal is then required to ascertain: (i) the compliance of the award with formal requirements (which are the same as those for the enforcement of domestic awards), (ii) that the subject matter of the dispute could be submitted to arbitration under Italian law, and (iii) that the award does not breach “international” public policy.
If all the above requirements are met, the President of the Court of Appeal declares the recognition of the foreign award.
Does the law impose limits on the available remedies? Are some remedies not enforceable by the local courts?
The Italian CCP does not contain provisions regarding the type of remedies available to the parties in arbitration. The only limitation is that arbitral tribunals cannot issue orders for seizure of property or other interim measures, unless expressly provided for by law (see question No. 21 above).
Can arbitration proceedings and awards be appealed or challenged in local courts? What are the grounds and procedure?
The Italian CCP provides three actions for challenging an arbitral award (Article 827 CCP):
A. set aside;
B. revocation; and
C. third-party challenge.
Challenges to arbitral awards shall be brought before the Court of Appeal of the place of the seat of arbitration.
Challenges to arbitral awards do not stay the enforcement proceedings. However, upon request of one party, the Court of Appeal may stay the enforcement if there are serious grounds for doing so.
As to the action under (A.) above—i.e., the action to set an arbitral award aside—Article 829 CCP sets and exhaustive list detailing twelve grounds. The list contains challenges such as the invalidity of the arbitration agreement, breach of due process, irregularity in the compositions of the arbitral tribunal, etc.
A party is precluded from raising grounds for setting aside an award if it contributed to cause such ground or it had waived the right to challenge the award for such ground. A party is also precluded from raising grounds concerning violation of procedural rules if had failed to timely raise an objection in that regard as soon as it had the opportunity to do so.
An award cannot be appealed or challenged for reasons concerning the merits of the dispute, unless:
(a) parties had agreed to such appeal;
(b) an appeal is provided for by the applicable law—e.g., in case of arbitration concerning labor disputes; or
(c) the arbitral tribunal ruled on a preliminary issue that was not arbitrable.
The action to set an award aside shall be instituted within 90 days from the service of the final award or, if has not been served, within 1 year from the date of the last signature of the arbitrator(s). A notification of the award made by an arbitral tribunal or an institution administering the proceedings does not trigger the 90-day time limit.
Pursuant to Article 830 CCP, the Court of Appeal, once set in whole or in part the final award aside, remands the dispute to arbitration in case the action was based on the grounds under (i), (ii), (iii), (iv), and (x) shown above.
If the award was set aside on other grounds, the Court of Appeal also decides the merits of the disputes, unless the parties agreed otherwise. However, if one of the parties resided abroad when it entered into the arbitration agreement, the Court of Appeal may not decide the merits of the dispute, unless the parties agreed otherwise.
With regard to the actions under (B.)—i.e., the action for revocation—and (C.)—i.e., the third-party challenge—above, Article 831 CCP provides for extraordinary grounds for challenge.
In particular, the action for revocation can be instituted in case of fraud by a party or an arbitrator, discovery of forged evidence, or discovery of crucial documents concealed by a party during the arbitration proceedings.
Also, third parties can oppose an arbitral award if such award undermines their rights.
Can the parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitration clause)?
Parties cannot agree to waive any ground for challenge provided for by Article 827 CCP.
To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
A state or a state entity is allowed to raise a defense of state or sovereign immunity at the enforcement stage. Italian courts usually distinguish between sovereign and non-sovereign assets. An award is likely enforced only against non-sovereign assets, that is to say, assets that do not fulfill a sovereign function.
To what extent might a third party challenge the recognition of an award?
See question No. 30 above.
Have there been any significant developments with regard to third party funding recently?
The concept of third party funding has only recently attracted the attention of the Italian arbitration community. To date, there is no regulation of third-party funding in Italy. Also, it is our understanding that Italian courts have not been called to decide on funded matters yet.
Is emergency arbitrator relief available? Is this frequently used?
As seen in question No. 23 above, in Italy arbitrators are not allowed to issue interim relief.
Are there arbitral laws or arbitration institutional rules providing for simplified or expedited procedures for claims under a certain value? Are they often used?
There are no laws providing for simplified or expedited arbitration procedures. We are not aware of any Italian arbitration institutional offering such set of rules.
Have measures been taken by arbitral institutions to promote transparency in arbitration?
In line with other leading international arbitral institutions, the CAM periodically: (i) publishes a chart with the names of appointed arbitrators, (ii) releases its decisions on arbitrator challenges, which are made by the same council that makes appointments, and (iii) publishes final awards in a sanitized format, in accordance with the arbitration rules and the guidelines drawn up by the CAM itself in collaboration with LIUC — University of Castellanza, Italy.
Is diversity in the choice of arbitrators and counsel (e.g. gender, age, origin) actively promoted? If so, how?
The CAM is actively involved in promoting women’s participation in arbitration. According to the data released by the CAM, among the 193 women appointed between 2011 and 2016, 60% of them were appointed by the CAM, whereas only 28,5% by the parties.
Both CAM and AIA are among the signatories of the Equal Representation Arbitration Pledge.
Have there been any developments regarding mediation?
In Italy mediation has become a crucial step in certain judicial proceedings. In particular, mediation is a (compulsory) pre-condition to file a lawsuit with respect to some civil and commercial disputes, specifically listed by the law (i.e., joint ownership; rights in rem; division; inheritance; family agreements; renting; commodatum; rent of company; damages arising from medical and healthcare liability; defamation through the press or by other means of advertising; insurance, banking and financial contracts).
Furthermore, national courts—taking into consideration the nature of the proceedings, the phase of the process and the behavior of the parties—can order the recourse to mediation irrespective of the subject matter.
Have there been any recent court decisions considering the setting aside of an award that has been enforced in another jurisdiction or vice versa?
Italian courts tend to adopt a rather restrictive interpretation on the grounds for refusing enforcement. Enforcement is therefore generally granted without any particular problem.
Article 840 CCP does not allow the enforcement of a foreign award set aside by the courts at the place of arbitration. To date, we are not aware of any domestic case law discussing this matter. However, it could be argued that the enforcement of a foreign award could be granted if the foreign judgment setting such award aside was rendered on grounds that would make such judgment unenforceable in Italy.