Arbitration and statute of limitations

The First Civil Chamber of the Supreme Court requested the First President of the Court to transfer to the Supreme Court sitting en banc a case concerning the relationship between arbitration and the limitation period provided for by a specific statue of limitations. The dispute concerned Article 2527(3) of the Italian Civil Code, which states that the member excluded from a cooperative company is entitled to challenge the relevant resolution within 30 days of its communication. The current rule in force is Article 2533(3) of the Italian Civil Code, which extended the limitation period to sixty days, the same limitation period provided for by Article 2287(2) of the Italian Civil Code with respect to partnerships. The Italian full text of the order no. 20101 of 7 October 2015 is available here.

A remarkable line of cases of the Supreme Court considers that the above mentioned limitation period does not apply in arbitration proceedings (in particular, taking into account the timing required for the constitution of the Arbitral Tribunal). Therefore, the referral of any dispute (including those concerning an exclusion resolution) to an Arbitral Tribunal, by virtue of an arbitration clause stipulated in the Articles of association, would imply that the time-limit is lifted (in this respect, the order at hand refers to several precedents, such as decision no. 2084 of 30 March 1984 of the I Civil Chamber of the Supreme Court, decision no. 2657 of 7 March 1995 of the I Civil Chamber of the Supreme Court and decision no. 11436 of 12 November 1998 of the I Civil Chamber of the Supreme Court).

According to the Court this line of cases should be thoughtfully examined.

First, it is difficult to justify that the statute of limitation applies (or does not apply), depending on the method chosen by the parties to settle their disputes (an Arbitral Tribunal instead of the Court).

Moreover, the Court considered that the jurisdictional nature of arbitration proceedings must be taken into account.

Indeed, the request for arbitration tolls the statute of limitations, as per Article 2943(4) of the Italian Civil Code, amended by article 25 of Law no. 25 of 5 January 1994. Furthermore, it also has the effect of suspending the period of limitations, which is a typical effect of judicial proceedings, according to Article 2945(4) of the Italian Civil Code.

To this respect, the Supreme Court also took into account a decision of the Constitutional Court (decision no. 223 of 19 July 2013, Italian text available here), which ruled that Article 819/ter(2) of the Italian Code of Civil Procedure is constitutionally unlawful. More specifically, the Constitutional Court ruled that it was unlawful to exclude the application of Article 50 of the Italian Code of Civil Procedure to the relationship between arbitration and judicial proceedings (the so-called “translatio iudicii”). In other words, the Constitutional Court ruled that, as to their effects, there is no difference between a claim filed in arbitration and a claim filed in Court.

The Supreme Court concluded that the short time-limit provided for by Article 2527(3) (now 2533(3) and 2287(2) of the Italian Civil Code) could also apply in arbitration proceedings. Indeed, it is wrong to regard the constitution of the Arbitral Tribunal as the activity to be timely performed in order to avoid the time limitation. This activity, in fact, is the service on the other side of the request for arbitration.

A further issue, which was not addressed by the Supreme Court in the ruling at hand, is whether it is possible to issue interim measures in favour of the excluded partner before the constitution of the Arbitral Tribunal. In my view, the Court is allowed to issue interim measures, as in any case of challenge of a resolution. Among the several rulings concerning this topic, the decision of 28 February 2014 of the Court of first instance of Milan (Italian text available here in the website of Giurisprudenza delle Imprese) is particularly interesting. This ruling rejected the application by analogy to limited liability companies of the time-limit set in Articles 2287 and 2544 of the Italian Civil Code. Conversely, the Court of first instance of Milan stated that the only applicable limitation period is that in article 2479/ter(1) of the Italian Civil Code. This limitation period is 90 days of the registration of the resolution in the company’s books. However, several Italian Courts do not support this view.