21 August 2022 • 5 minute read

The possible reform of corporate arbitration in Italy

Article 1(15)(f) of Enabling Act 206 of 26 November 2021 focuses on corporate arbitration.

It says the law reform should aim at:

2) “providing, in this context, the appealability of the order deciding on the request for the suspension of the shareholders’ resolution” currently regulated by article 35(5) of the Legislative Decree.

As of today, and given the current government crisis, it is hard to predict whether the enabling act will succeed in its scope of work.

The guidelines of the enabling act are very general.

Recent comments on the enabling act have highlighted certain peculiar features of corporate arbitration and their possible relationship with the general arbitration rules.

The inclusion of the rules on corporate arbitration in the Italian Code of Civil Procedure

Corporate arbitration is a peculiarity of Italian law.

Although some provisions concerning corporate arbitration have been included in the corporate law reform embedded in the Legislative Decree, the latter did not establish an organic corporate arbitration regulation.

Corporate arbitration involves mainly corporate disputes that are submitted to the arbitral jurisdiction through arbitration clauses usually contained in companies' bylaws. This excludes listed companies, which have stricter compliance requirements.

The Legislative Decree currently outlines, among others, these characteristics of corporate arbitrations:

The arbitrators shall be appointed by a third party unrelated to the company or, if the third party does not comply with the appointment duty, by the president of the court of the place where the company has its registered office.
Statutory arbitration clauses can be introduced or removed with a two-thirds majority of the shareholders.
The arbitration request shall be filed in the companies’ register.
Special rules on third-party intervention apply to corporate arbitrations.
Ordinary rules on the interaction between arbitration and civil proceedings established by article 819 of the Code of Civil Procedure ((i) “The arbitrators shall resolve all issues relevant to the decision of the dispute without res judicata authority, even if they relate to matters that cannot be the subject of an arbitration agreement, unless they must be decided as res judicata by law; (ii) At the request of a party, preliminary issues shall be decided as res judicata if they relate to matters that may be the subject of an arbitration agreement...[…]”) do not apply.
Contrary to the law provisions for ordinary arbitrations, arbitrators are vested with powers to issue precautionary measures, including the power to suspend shareholders’ resolutions by way of a non-appealable order.
The relevant award shall be appealed pursuant to Art. 829 para. 1 (challenge for nullity of the award) and Art. 831 of the Code of Civil Procedure (reversal of the award and opposition by the third party).\
The necessary decision as a matter of law in connection with challenges to shareholders’ resolutions and cases where incidental questions arise that are not arbitrable.

It is unclear to what extent the inclusion in the Code of Civil Procedure of the rules specifically envisaged for corporate arbitrations in the Legislative Decree will also lead to an override of all or some of the special provisions above.

It seems some provisions would be maintained, such as those related to the appointment of arbitrators or to the filing of the request for arbitration in the commercial register.

But in other cases, the incorporation of the provisions on corporate arbitrations in the Code of Civil Procedure should help to overcome certain peculiarities that have no reason to exist.

For example, the exception to the application of article 819 of the Code of Civil Procedure, and thus the power also for arbitrators to hear incidentally and without suspension issues submitted to ordinary courts, and the provisions related to the duration of arbitration in the case of request for the joinder or intervention of a third-party.

More generally, two issues could benefit from incorporating the rules on corporate arbitration in the Code of Civil Procedure.

The first is the admissibility of arbitrato irrituale, which has sometimes been challenged in light of the lack of organicity and inconsistency of Legislative Decree. This could, instead, be definitively considered admissible through the inclusion of the corporate arbitration legislation within the Code of Civil Procedure.

Secondly, the incorporation of the legislative provisions on corporate arbitration in the Code of Civil Procedure could finally give the green light, already envisaged by the case law, to the admissibility of an “international” corporate arbitration seated abroad.

Precautionary powers in corporate and ordinary arbitration

The issue on which commentators have focused the most concerns the arbitrators' powers to issue precautionary measures.

The enabling act aims to extend to ordinary arbitrations the discipline specifically envisaged for corporate arbitrations.

But the discipline of corporate arbitrations will be much closer to the ordinary one by providing that interim orders issued by arbitrators will be subject to appeal.

The jurisdiction of the ordinary courts for interim measures before the arbitration on the merit is commenced is still in place.

Including the legislative corporate arbitration provisions in the Code of Civil Procedure might allow an extensive interpretation of the kind of decisions and resolutions that can be challenged through arbitration. This might give rise to opening up to a number of additional potential disputes, not limited to the challenge of the decisions and resolutions adopted in shareholders' meetings, as the current arbitration corporate provisions set forth.

We’ll provide more updates as the law reform progresses.