Italy’s Supreme Court has finally granted full recognition to corporate arbitration with foreign seats. In judgment no. 8911 of 4th April 2025 (Italian text available here), the Supreme Court ruled that corporate articles of association may validly include arbitration clauses providing for arbitral proceedings abroad, provided they meet the substantive requirements under special legislation.
This decision caps a jurisprudential journey that began with Genoa Court of Appeal judgment no. 649/2020 (the first comprehensive ruling on this matter) and represents a watershed moment for international corporate arbitration practice.
We must first clarify what “international corporate arbitration” means in this context. The Supreme Court explained that this case involved arbitration seated abroad but governed substantively by Italian law, since it concerned disputes involving an Italian company. This does not qualify as “international” arbitration under traditional subjective or objective internationality criteria, but rather as “foreign” arbitration solely because of where the proceedings take place.
Legal scholars had long been divided on this issue. One school of thought insisted that corporate arbitration’s special regime applied—and corporate arbitration was therefore permissible—only when two conditions coincided: the company’s registered office in Italy and the arbitration seat in Italy. Under this view, either condition’s absence would render the special regime inapplicable and, for Italian companies, invalidate the arbitration agreement.
A second, “internationalist” school argued that Legislative Decree 5/2003 contained no prohibition against fixing arbitral seats abroad. This approach relied on Article 4(2) of Law 218/1995, which permits conventional derogation from Italian jurisdiction in favour of foreign arbitrators, and contended that Articles 35 and 36 of Legislative Decree 5/2003, though characterised as mandatory, applied only to domestic arbitration—that is, arbitration seated in Italy.
A third position sought to reconcile respect for the special regime with the possibility of foreign arbitration through compatibility testing between foreign lex arbitri and Legislative Decree 5/2003 provisions.
The Supreme Court resolved this dispute by drawing a fundamental distinction between substantive and procedural rules within the special regime.
Substantive rules govern the conclusion, modification, and binding effects of statutory arbitration clauses: Article 34(1) (excluding listed companies), Article 34(2) (third-party arbitrator appointment), Articles 34(3) and (4) (clause’s binding effects), Article 34(6) (deliberative quorum), and Article 35(1) and (5-bis) (filing obligations).
Procedural rules govern how proceedings unfold: arbitrability criteria (Articles 34(1) and (5)), supplementary appointment mechanisms (Article 34(2), second part), procedural provisions in Article 35(2)-(5), and all of Article 36.
Despite these clear principles, the judgment leaves several significant practical questions unanswered.
The Court of Cassation sidesteps how to fulfil Article 35(1)’s filing obligations under Legislative Decree 5/2003 when arbitration occurs abroad in a non-Italian language.
Even setting aside whether these obligations are substantive or procedural (they appear primarily procedural, aimed at publicising procedural acts), this problem is far from trivial: must translations accompany foreign-language procedural documents? Who bears translation costs? What happens if documents aren’t translated—does this affect filing validity and shareholder access under the statute?
Equally problematic is coordinating Article 35(2), which governs third-party intervention in corporate arbitral proceedings, with various foreign lex arbitri.
Whilst generally sound, the Court’s substantive/procedural distinction creates interpretive grey areas. Consider Article 35(1), which the Court classified as substantive: the Supreme Court judgment focuses on arbitration clause validity but doesn’t explore implications for award recognition. Particularly unclear is how Article 840(3)(1) of the Civil Procedure Code will work practically when foreign lex arbitri significantly diverge from Articles 35 and 36 of Legislative Decree 5/2003.
For instance, if Swiss arbitration doesn’t require the “decision according to law” mandated by Article 36 of Legislative Decree 5/2003, can one challenge the arbitration clause for violating substantive rules? The Court provides no clear criteria for distinguishing violations that matter for recognition from those that don’t.
The Court states that Legislative Decree 5/2003’s procedural rules lack public policy foundations but offers no precise criteria for determining when foreign lex arbitri might be incompatible with Italian legal system fundamentals.
Generic references to the New York Convention prove insufficient: many corporate arbitration specifics (arbitrator interim powers, shareholder resolution procedures) find no Convention coverage and would require case-by-case analysis that the judgment doesn’t provide.
Despite these unresolved issues, this decision has immediate positive practical effects, undiminished by the fact that the Legislative Decree 5/2003 provisions it references are no longer in force. These have been essentially transferred to the Civil Procedure Code (Article 838-bis ff.) with modifications irrelevant here.
Italian companies can now validly include arbitration clauses in their articles of association providing for foreign arbitral seats, provided they comply with third-party appointment requirements.
However, prudence counsels waiting for lower court jurisprudence to develop before understanding how practice will resolve the numerous unaddressed application issues. Legal practitioners must pay special attention when drafting arbitration clauses, precisely specifying how they intend to coordinate Italian substantive requirements with different foreign lex arbitri.
The path towards truly international corporate arbitration has begun, but considerable work remains before it becomes fully operational in daily practice.
