Italy enters new era of arbitration 'friendliness'

Until 1 March 2023, the Italian Code of Civil Procedure (ccp) did not allow arbitrators to grant interim measures. According to the former article 818 of the ccp: "The arbitrators cannot grant attachments or other interim measures, except if otherwise provided by the law". 

The main reasons behind this prohibition were firstly, unlike national courts, the arbitral tribunal lacked imperium – namely, the power to use coercive power to enforce their order in case of non-compliance – and, secondly, politicians  did not trust arbitration, as it was considered a type of "private justice": they always tried to preserve the jurisdiction of state’s courts.

The reforms put forward in legislative decree no. 149, of 10 October 2022, which  implemented the enabling act no. 206, of 26 November 2021, have made major changes to Italian arbitration law, the most relevant of which directly concerns the provisions on interim measures and makes a long-awaited modification by both practitioners and scholars.

Power to grant interim measures

According to the new arbitration law, arbitrators may have the power to issue interim measures. In particular, the reformed article 818 of the ccp states that the parties may provide that arbitrators have the power to issue provisional measures. 

The attribution of this power can be pursued via three different schemes: by referring to it in the arbitration clause; by referring to it in a separate agreement signed before the arbitral proceedings; and by referring to certain arbitral institution rules that refer to the arbitrator's power to issue interim measures. In each of these cases, the jurisdiction of arbitrators to issue interim measures is exclusive, thus "stripping" state courts of such power. 

Competence and proceedings 

According to article 818, paragraph 2 of the ccp, prior to the acceptance of the sole arbitrator or the constitution of the arbitration panel, the interim application is proposed to the court that would have had competence to hear the case on the merits.

Before the constitution of the arbitral tribunal, the interim proceedings ("procedimento cautelare") – before state's courts – is governed by article 669 bis – 669 quaterdecies of the ccp.

In practice, judges after hearing the parties and omitting any formality not essential to the "principle of the right to be heard", proceed as it deems most appropriate with the acts of investigation indispensable in light of the premises and the purposes of the measure requested, and then, by order ("ordinanza"), grant or refuse the application. 

On the other hand, after the constitution of the arbitral tribunal, the interim proceedings could be conducted in different ways and under the rules:

• of an arbitral institution, if the parties refers to them (see, as example, article 26 of Milan Arbitration Chamber rules);
• laid down by the parties in the arbitration agreement or in a separate written document drafted before the commencement of the proceeding (see article 816 bis, paragraph 1, first period of the ccp);
• set out by the arbitrators, in absence of any choices by the parties (see article 816 bis, paragraph 1, second period of the ccp).

Appeal and enforcement

Pursuant to article 818 bis of the ccp, a party can challenge the decision granting or denying the interim measures requested. The competent court is the Court of Appeal in which district the arbitration proceedings is seated. The appeal is admissible only for the reasons stated in article 829 of the ccp  – that regulates the cases of nullity of the award – and in the case it's contrary to the public order.

Article 818 ter of the ccp governs the enforcement phase of interim measures granted by arbitrators. The provisions recalls article 669 duodecies and article 677of the ccp – the latter applicable in case of the enforcement of seizures – and states that this phase has to be run under the control of the state's courts (the court of first instance) in which district the arbitration is seated or, alternatively, in the case the seat of arbitration is not in Italy, the court where the interim measures has to be enforced.  

Article 669 duodecies of the ccp governs three different hypothesis.

Firstly, the enforcement of provisional measures concerning sums of money shall be carried out according to articles 491 and those following. Briefly, in this scenario, the bailiff will issue an injunction to the party to refrain from any act aimed to remove its assets from the security of the credit of the other party.

Secondly, the enforcement of seizures is regulated by article 677 and following of the ccp. These provisions govern the enforcement of the two types of seizures provided for by Italian law, which are "sequestro giudiziario" and "sequestro conservativo". The first is a provisional measure whose purpose is to ensure that certain assets are preserved and made unavailable to the parties, until the dispute has been settled; the latter is a measure that aim at preserving the creditor's asset security, anticipating the effects of the attachment.

And the enforcement of provisional measures concerning obligations to deliver, release, do or refrain from doing shall be carried out under the control of the judge who shall determine the manner of enforcement.

Foreign award enforceability

In addition to the attribution to arbitrators of the power to grant interim measures, another major change provided by the new arbitration law is the immediate enforceability - pursuant to the reformed article 839, paragraph 4 of the ccp - of a foreign award following  the presidential decree of exequatur. 

In Italy, the recognition and enforcement of foreign awards is governed by the 1958 New York Convention and by articles 839 and 840 of the ccp which entirely reflect the provisions set out in the convention.

Enforcement proceedings for foreign awards are initiated through the filing of a petition to the president of the Court of Appeal of the debtor's residence. 

The petition must be filed together with an original or a certified copy of the award and an original or a certified copy of the arbitration agreement. In case the mentioned documents are not in Italian, a certified translation into Italian must also be filed. 

The Court of Appeal, after a formal review and control of the award, declares the immediate enforceability by decree (that is, the exequatur decree) unless either: the dispute could not be referred to arbitration or the award is in breach of public policy rules (article 839 of the ccp). 

As a general remark, it should be noted that Italian courts apply the NY Convention in line with international standards and practice, and adopt a favourable approach towards recognition and enforcement of foreign awards. 

Osborne Clarke comment 

The amendments of Italy's arbitration law were long awaited. It was considered as an "archaic island" not very attractive for international business and international litigators. The reform brings Italy on the same playing field of other countries. Today, in fact, Italy's jurisdiction is levelled to most jurisdictions. The power to grant interim measures is provided, for example, in the UK by the Arbitration Act 1996, section 38(1); in France by article 1468 of the ccp; in Germany, section 1041 paragraph 1 of the ccp; in Spain, by article 23 of the Arbitration Act number 60/2003; and, finally, also in the Italian Code of Civil Procedure.

As from 1 March 2023, parties have the opportunity to rely on arbitrators in most of the phases of the dispute. Such aspect together with the average length – one year – of arbitration proceedings, the narrow limits to challenge the award (article 829 of the Italian ccp), and the immediate enforceability of the exequatur decree related to foreign award (article 839 of the Italian ccp) definitely make Italy much more arbitration friendly as it becomes a jurisdiction more attractive for international businesses and a more favourable seat for arbitration proceedings.