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New Developments in Arbitration Introduced by the Cartabia Reform

30 Jan 2024 - International Arbitration - Min Read 5 min
New Developments in Arbitration Introduced by the Cartabia Reform

Arbitration in Italy has reached a significant turning point with the enactment of Legislative Decree 149/2022 on February 28, 2023, implementing the so-called Cartabia Reform

Alongside the reform of the civil process, there have indeed been significant innovations for Arbitration, aiming to modernize this institution in Italy.

The ability to resolve disputes outside the traditional judicial system is one of the main advantages of arbitration, offering greater flexibility and speed in conflict resolution.

The New Developments for Arbitration in Italy Introduced by the Cartabia Reform

The Cartabia law, namely law no. 134 of September 27, 2021, has brought significant changes to the Italian arbitration regime. 

Primarily, it is important to emphasize how the historical prohibition for arbitrators based in Italy to grant precautionary measures has been lifted, thanks to the Cartabia Reform.

In summary, the new developments include:

  • Precautionary power to arbitrators.
  • Translatio iudicii.
  • Disclosure obligations.
  • Choice of procedural rules and applicable laws.
  • Effectiveness of provisional measures issued abroad.
  • Reduction of the term for annulment.
  • Corporate arbitration.

To understand the extent of the new developments, let’s analyze them point by point:

Precautionary Power to Arbitrators

A pivotal moment for arbitration in Italy marked by the Cartabia Reform has been the introduction of the possibility for arbitral tribunals based in Italy to issue provisional measures.

The absence of this power differentiated our arbitral tribunals from almost all foreign ones, limiting the choice of Italy as an arbitral seat.

The implementation of provisional measures is subject to certain conditions, namely, arbitrators can implement provisional measures, but only if this is the will of the parties and if it is provided for by the arbitration rules and in the arbitration agreement. In practice, the arbitrator will have precautionary competence if the parties refer to an arbitral regulation that provides for the assignment of such power.

Translatio iudicii

The “translatio iudicii” refers to the fact that the request for arbitration can produce the same substantive effects as a judicial claim.

A judgment can become an arbitration and an arbitration can become a judgment, and the evidence collected in the process before the judge or arbitrator declared incompetent can be evaluated as evidence in the subsequent process.

Where the competence of a judge in favor of an arbitrator or an arbitrator in favor of a judge is denied, to maintain the substantive and procedural effects of the claim, the parties must arrange within three months (from the final judgment of the first-degree ruling that declines competence) all the necessary activities for the establishment of the process.

The possibility of transferring competencies between a regular judge and an arbitrator places the arbitration request and the judicial request on the same level, making arbitration more effective and efficient as an alternative dispute resolution tool.

Disclosure Obligations

Arbitrators have the obligation to disclose any circumstances that might compromise their objectivity with respect to the proceedings.

The disclosure obligations for arbitrators are enacted at the time of acceptance of the appointment, when, to demonstrate their impartiality and independence, they are required to sign a declaration that contains all relevant circumstances that suggest their freedom of judgment.

It is primarily up to the arbitrators themselves to clarify their detachment from the dispute for which they are called upon to decide. If they do not, the acceptance is null.

The obligation of disclosure remains throughout the duration of the arbitration proceedings, in anticipation that reasons that may compromise the judgment of the arbitrators may subsequently emerge.

For this reason, additional declarations are envisaged and not only in the initial phase of the appointment of the arbitrator.

In case of an omitted declaration by the arbitrator, or should information emerge that legitimizes their challenge, the party may request, within ten days of acceptance or from the discovery of the prejudicial circumstances, the decay of the arbitrator.

 According to the new discipline, an arbitrator can be challenged precisely for “serious reasons of opportunity.”

Choice of Procedural Rules and Applicable Laws

As is already common practice internationally, parties are granted the freedom to choose the procedural rules governing the dispute and the laws applicable to the arbitration.

Such choices should be specified in the arbitration agreement.

If there are no indications on the matter, the arbitral rules and laws applicable will be those in force at the seat of the arbitration.

 In fact, the Cartabia Reform confirms a practice already established in the arbitral field.

Effectiveness of Provisional Measures Issued Abroad

A further effect of the Reform is the possibility of immediately enforcing in Italy provisional measures issued by arbitral tribunals located abroad. Judicial decrees that recognize foreign arbitral awards must be immediately enforceable.

Before the clarifications of the Reform, doctrine and jurisprudence were not in agreement on whether the decree recognizing foreign awards conferred executive effectiveness to the award itself, or whether the award, to become enforceable, had to await the expiry of the term for opposition, or even the possible rejection of such opposition.

The President of the competent Court of Appeal, once the formal regularity of the foreign award is verified, will be able to issue an exequatur (a judicial procedure that serves to recognize in a certain country a judgment issued by the judicial authority of another state) by decree, attesting to the immediately enforceable effectiveness of the award itself.

Opposition to the decree recognizing the effectiveness of the foreign award may lead to the suspension of execution.

Reduction of the Term for Annulment

The term for filing an application for annulment has been reduced from one year to six months when the award has not been notified to the appealing party.

The annulment of the arbitral award can be requested for various reasons, including the absence of a valid arbitration agreement, the violation of the parties’ right to defense, or the lack of motivation for the decision.

The Reform has shortened the so-called long term for filing an application for annulment from one year to six months from the date of the last signature of the award being challenged.

The so-called short term remains ninety days from the notification of the award.

The duration of the long term is the same as that provided for the challenge of judgments by the ordinary judge.

Corporate Arbitration

With the Cartabia law, corporate arbitration has also been reformed, through the simplification of the legislation and, above all, by its introduction into the Code of Civil Procedure.

Arbitrators in the field of corporate arbitration can issue orders suspending the effectiveness of shareholders’ meeting resolutions in disputes regarding their validity, where such a possibility was expressly excluded before the Reform.

Thanks to the innovations introduced by the Cartabia Reform, Italy has progressed towards alignment with international standards in arbitration.

Time will tell if the innovations introduced have been sufficient to improve the quality of arbitration in Italy, considering that many Italians turn to international arbitration tribunals located abroad every year.

For clarifications and information on arbitration matters, do not hesitate to contact the lawyers of the International Commercial Arbitration Department of Boccadutri Law Firm.

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Calogero Boccadutri

Calogero Boccadutri is the Managing Partner of Boccadutri International Law Firm. He has trial experience in Forex, Personal Injury and Administrative litigation.

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