Once again, on arbitration and statute of limitations

The Supreme Court sitting en banc (decision no. 13722 of 6 July 2016, Italian text available here) resolved the question of law (previously discussed in this post) concerning the relationship between arbitration and the limitation period provided for by a specific statute of limitations, that is to say by Article 2527(2) of Italian Civil Code (Article 2533(3) of Italian Civil Code currently in force).

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Once again, on the relationship between arbitral and judicial proceedings

A recent ruling of the Court of first instance of Rome (decision no. 4216 of 1 March 2016 of the III Civil Chamber of the Court of first instance of Rome, Italian text available here) goes trough the issue of the relationship between arbitral and judicial proceedings. In particular, the ruling considers whether it is possible to order the stay of proceedings pending in Court, while awaiting the decision in other proceedings pending before an Arbitral Tribunal. This is an issue I already analysed on this post.

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Relationship between arbitration and judicial proceedings

The relationship between arbitration and judicial proceedings was the topic of a ruling of the Italian Supreme Court (order no. 783 of 19 January 2016 of the III Civil Chamber, Italian text available here). In this ruling, the Supreme Court came to the right conclusion that it is not allowed to order the stay of proceedings pending before a Court while awaiting the decision in proceedings pending before an Arbitral Tribunal. However, the Supreme Court’s reasoning is not entirely correct. This is the reason why I would like to briefly discuss its ruling.

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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.

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Waiver of the right to arbitrate

The Court of first instance of Rome (decision no. 19215 of 28 September 2015, Italian text available here) ruled in a complex case concerning the relationship between a limited liability company and its former director. First of all, the company sued the former director before the Court, claiming his liability. In a second case (the case of the decision at hand), the former director requested the Court to issue a payment order against the company, in order to obtain the amounts allegedly owed to him. The parties did not take into account the arbitration clause stipulated in Article 26 of the Articles of association. This provision notes that “all controversies arising among the quotaholders or among the quotaholders and the company, the directors, liquidators and statutory auditors shall be settled by a sole arbitrator appointed by the President of the Certified Public Accountants Register of the place where the company has its registered office (….).” In the judicial proceedings commenced by the company, the former director objected that the Court did not have jurisdiction, due to the above mentioned arbitration clause. On its turn, the company raised this objection when challenging the payment order issued in favour of the former director.

Did the parties waive their right to arbitrate, by initiating Court proceedings?

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