The Italian arbitration reform
15 February 2023 | Applicable law: Italy | 5 minute read
On 10 October 2022, the Italian Government enacted Legislative Decree No 149/2022 ("D. Lgs. 149/2022"), which implemented Delegated Act No. 206 of 26 November 2021. The latter amended, among others, the Italian Code of Civil Procedure ("ICCP") in order to achieve the goals, set forth in the National Recovery and Resilience Plan.
In the context of such a broad reform, the amendments to the rules on arbitration deserve special attention. The Government sought to enact changes to enable Italy to become an appropriate venue for international arbitrations, matching the standards of major international arbitration hubs. Equally, D. Lgs. 149/2022 seeks to make arbitration a more user-friendly and accessible tool for the resolution of civil and/or commercial disputes having both national and international nature.
The Italian arbitration reform is about to come into force. The Italian Budget Law, adopted on 29 December 2022, established that the reformed provisions of the ICCP – including those relating to arbitration – will be effective as of 28 February 2023, and apply to proceedings brought on or after 1 March 2023.1
The Litigation and Arbitration Department of Withers proposes four Insights focusing on the arbitration reform, aiming to provide a quick overview of the main changes. The four Insights will consider the following topics in turn: (i) the general framework of the reform; (ii) the newly conferred arbitral power to grant interim measures; (iii) the revised independence and disclosure duties of appointed arbitrators; and (iv) the updates on translatio iudicii and enforcement of arbitration awards.
Within the present Insight, we outline the new key developments in the regulation of arbitration in Italy provided by D. Lgs. 149/2022:
Arbitral tribunals' power to grant interim measures
It is undeniable that one of the main updates of the Italian arbitration reform is arbitral tribunals' power to grant interim measures. The latest Arbitration Rules of the Chamber of Arbitration of Milan (in force from 1 July 2020) had already set out – at Article 26 – the possibility "at request of a party, the Arbitral Tribunal may issue all urgent and provisional measures of protection, also of anticipatory nature, that are not barred by mandatory provisions applicable to the proceedings". However, this rule remained a dead letter in the case of arbitrations seated in Italy since arbitral tribunals were not allowed to issue interim measures under Article 818 ICCP before D. Lgs. 149/2022.
Article 26 of the CAM Arbitration Rules 2020 will be applicable also to arbitral proceedings seated in Italy provided that (i) the parties have conferred this power on the arbitrators, and (ii) D. Lgs. 149/2022 is already enforceable and applicable to the arbitral proceedings. Similarly, the new arbitration rules under the ICCP will also apply to ad hoc arbitrations or arbitral proceedings administered under other arbitration rules when an arbitration is seated in Italy.
This amendment is most definitely positive and ground-breaking. However, it is yet to be seen whether it will provide adequate solutions as to the effectiveness of this change.
Substantive effects of a request for arbitration
With a view to increasingly incentivising and promoting arbitration as a means of dispute resolution, now the substantive effects resulting from filing a request for arbitration are identical to those deriving from filing a claim before courts.
Impartiality and independence of arbitrators
To make arbitration more 'transparent', Articles 813 and 815 ICCP have been amended in relation to disclosure duties and the guarantee of independence of arbitrators, with the precise goal of 'reinforcing confidence in the institution among potential users and those who intend to turn to it'.2 Amended Article 813 ICCP provides that the acceptance of an appointment by arbitrators is "accompanied, on penalty of nullity, by a declaration stating any relevant circumstances pursuant to article 815, or the non-existence thereof [...] the arbitrator must renew the declaration in the presence of circumstances that have arisen".
In the event of an omitted declaration, the acceptance shall be considered null and void. In situations where the declaration has been made but may lack information with respect to relevant circumstances, the party concerned may challenge the arbitrator's appointment according to Article 813 bis ICCP.
Relationship between courts and arbitral tribunals
Article 819 quater ICCP governs the phenomenon of the transfer of proceedings from a court to an arbitral tribunal or vice versa, following a decision of either a judge or arbitrator firstly seized which has declined its jurisdiction ("translatio iudicii").
If the authority seized first denies jurisdiction, the substantive and procedural effects of the claim are unaffected and, in particular, the evidence gathered in arbitral or court proceedings may be used as evidence in reinstated proceedings.
Immediate effectiveness of the presidential decree of recognition and/or enforcement of a foreign arbitral award
With a view to speeding up and making a foreign arbitral award easier to enforce in Italy, the new Article 839 ICCP provides for the immediate enforceability of the foreign arbitral award following the presidential exequatur decree.
Reduction of so-called "long-time limit" for challenging an award
D. Lgs. 149/2022 has eliminated a discrepancy present in the Italian legal system. This as done by equating the so-called "long term" for challenging an award provided for by Article 828 ICCP with the term set for challenging court rulings, thus halving the term from one year to six months.
Law applicable to the merit of the dispute
New Article 822 ICCP provides for the possibility for the parties to choose the law applicable to the merits of the dispute in the arbitration agreement or by written agreement prior to the commencement of arbitration proceedings.
D. Lgs. 149/2022 proceeds in the right direction to align the Italian legal system with the principles of speed, transparency and efficiency of arbitration proceedings. When the reform comes into effect, Italy may start to be considered a more fertile ground for international arbitration. It may also encourage Italy to host an increasing number of international arbitrations, in much the same way as other major arbitration friendly jurisdictions worldwide.
2 - See Explanatory Report to D. Lgs. 149/2022.