Arbitration clause and payment order

It is quite usual that, when inserting an arbitration clause in an agreement, a party would like to preserve its right to file with the Court a request for a payment order (which is an ex parte order). The purpose would be to attain a temporarily enforceable payment order, since it would be an effective and fast solution to protect its rights.

Nonetheless, the outcomes of such choice could be different from those expected. The VI Civil Chamber of the Supreme Court, in its order no. 21666 of 23 October 2015 (Italian text available here), analysed the possible consequences.

A dispute arose between an association and a member thereof.  The member did not wait for the association to file its claim. Indeed, he requested the Court to declare that the association’s claim was ungrounded.

The association objected that the jurisdiction rested with an Arbitral Tribunal. To be more precise, the association claimed that Article 36 of its Articles of association included an arbitration clause.

The Court of first instance granted the objection and declared its lack of jurisdiction.

The member appealed this decision before the Supreme Court. 

He pointed out that another provision of the Articles of association (the last paragraph of Article 10) excluded proceedings for the recovery of membership fees from the scope of application of the arbitration clause. Such exception would not only apply to the judicial recovery of membership fees, but all the disputes concerning the membership fees – that is, also the case at hand, where the claimant requested the Court to declare that the association’s claim was ungrounded.

The Supreme Court confirmed the ruling of the Court of first instance, whereby the latter stated that the jurisdiction rested with the Arbitral Tribunal, pursuant to the Articles of association.

First, the Supreme Court stated that the arbitration clause stipulated in the Articles of association was clear as to the will of the parties to refer any dispute to an Arbitral Tribunal.

It is not possible to reach a different conclusion, even if the arbitration clause excludes from its scope of application the judicial recovery of membership fees. According to the Supreme Court: “the rationale of this limitation is based upon the important role played by the membership fees, which are the main financial source of the association. Therefore the association needs to be able to recover these fees as soon as possible, also requesting a payment order, which cannot be obtained in arbitration proceedings. If the association is prevented from using such mechanism, it would suffer a damage, even if the existence and amount of its credit are undisputed.” The Supreme Court also ruled that “the above does not mean that the Arbitral Tribunal does not have jurisdiction at all. The jurisdiction to issue a payment order rests with the Court, but the ordered party is allowed to challenge the payment order and request the Court to set aside it, also objecting the jurisdiction of the Arbitral Tribunal.

It seems to me that the reasoning of the Supreme Court is not entirely right.

First, the Court is prevented from declaring the jurisdiction of the Arbitral Tribunal if the parties did not timely raise the relevant objection. Consequently, the stipulation of an arbitration clause does not prevent the issuance of a payment order.  Thereafter, the ordered party is entitled to challenge the order, objecting that the Court does not have jurisdiction. The Supreme Court had previously ruled on similar matters and the relevant decisions were also referred to in the ruling at hand (decision no. 5265 of 4 March 2011 of the II Civil Chamber of the Supreme Court, Italian text available here; and decision no. 8166 of 28 June 1999 of the I Civil Chamber of the Supreme Court).

In other words, even when the contract establishes that the possible disputes between the parties shall be settled by an Arbitral Tribunal, the parties are entitled to request the Court to issue a payment order, without the need of any additional agreement. Therefore, when such additional agreement is stipulated, it would be important to construe the actual intention of the contracting parties.

Leave a Reply

Your email address will not be published. Required fields are marked *