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?

The Court of first instance of Rome referred to the settled case law according to which the stipulation of an arbitration clause does not preclude the jurisdiction of the Court to issue a payment order (which, under Italian law, is an ex parte order). Consequently, it is the burden of the ordered party to timely object that the jurisdiction rests with the Arbitral Tribunal (if the arbitration clauses provides for the regular arbitration procedure which results in an enforceable award: the so-called “arbitrato rituale”), or the inadmissibility of the claim (if the arbitration clause provides for an alternative arbitration procedure which does not result in an enforceable award: the so-called “arbitrato irrituale”). It is a consequence of the “non ultra petita” principle: the Court is not allowed to declare its lack of jurisdiction (or the inadmissibility of the claim), if the concerned party fails to timely raise the relevant objection (among the many examples, see decision no. 3246 of 9 July 1989 of the I Civil Chamber of the Supreme Court; decision no. 8166 of 18 July 1999 of the I Civil Chamber of the Supreme Court; decision no. 12684 of 30 May 2007 of the the I Civil Chamber of the Supreme Court; decision no. 5265 of 4 March 2011 of the the II Civil Chamber of the Supreme Court).

Furthermore, the Court stated that the parties did not waive their right to arbitrate even if they brought a counterclaim in judicial proceedings (a counterclaim would entail that the Court has jurisdiction over the claim) or they commenced proceedings in Court with respect to a different dispute concerning the same relationship. In this case: “there is no waiver (implicit or explicit) of the right to arbitrate, due to the fact that a counterclaim was brought and other proceedings in Court were commenced.” In this respect, the Court referred to a recent ruling of the Supreme Court (decision no. 3463 of 20 February 2015 of the II Civil Chamber, Italian text available here). This ruling states that “in an arbitration case, the arbitration clause may refer to arbitration all civil and commercial disputes concerning the negotiable rights arising from the contract in which the clause is stipulated. However, the waiver of the right to arbitrate with respect to a certain dispute arose between the parties does not entail the waiver of the right to arbitrate with respect to any future dispute. The only possible exception is an agreement between the parties, whereby they explicitly waive their right to arbitrate (…).

Therefore, the Court ruled that the parties did not waive their right to arbitrate and, thereafter, decided upon the issue of the arbitrability of the dispute.

The Court ruled that the dispute was arbitrable, although its reasoning seems to mistake the concept of the non-negotiability of rights with the imperative nature of the relevant law rules. The Court ruled: “it is necessary to examine on a case-by-case basis every situation according to the scope of the dispute, the negotiability or non-negotiability of a given right, and checking if the given right may be waived or not according to the applicable rules. It is also important ascertaining whether the violation of a certain rule determines a Courts’ reaction without the need of any initiative by the parties. It seems clear that the case at hand concerns a dispute that the parties may freely regulate or settle by concluding agreements thereof (…).” I already analysed this issue in this article.

The Court of first instance of Rome set aside the payment order and declared that the former director’s claim was inadmissible. The reason was that the arbitration clause provided for the so-called “arbitrato irrituale” (that is, an alternative arbitration procedure which does not result in an enforceable award). Therefore, the court re-carachterised the objection raised by the company aiming at “declaring the Court’s lack of jurisdiction”. On the other hand, the Court did not set a time-limit to re-commence the proceedings before the Arbitral Tribunal, ruling that article 819/ter of the Italian Code of Civil Procedure did not apply. In fact, by virtue of the decision no. 223 of 19 July 2013 of the Constitutional Court (Italian text available here),  a claim brought in Court may be transferred to an Arbitral Tribunal (and vice versa) only if the arbitration clause provides for the so-called “arbitrato rituale” (that is, the regular arbitration procedure which results in an enforceable award).

Leave a Reply

Your email address will not be published.

 

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Browsing this website you accept the use of cookies. more info

PRIVACY POLICY
The following information is provided in accordance with Article 13 of Regulation (EU) 679/2018 ("GDPR"), to users who access the services available at https://www.arbitratoinitalia.it (“Site”). When consulting the Site, information concerning users may be collected that constitutes personal data under the Privacy Code. This information is provided exclusively for the Site and does not affect any other web sites accessible by the user through links provided on the same.
DATA CONTROLLER AND DATA PROCESSOR
Data Controller (Titolare del trattamento) is Arbitration in Italy Ltd, a company incorporated under English law, registered at No. 12459814, with registered office in 61 Bridge Street, Kington, HR5 3DJ, UK ("Company"). Data Processor (Responsabile del trattamento) is the Company's present legal representative.
PLACE OF DATA PROCESSING
The processing of data related to the web services on this Site is carried out at the premises of the Company set out above and is performed by internal personnel duly appointed as Persons in charge of processing (Incaricati del trattamento).
TYPES OF DATA PROCESSED
Surfing Data
During the normal operation, the computer systems and software procedures used to operate the Site acquire some personal data whose transmission is implicit in the communication protocols of the Internet. This information is not collected to be associated with identified persons, but by its very nature could, through processing and association with data held by third parties, allow identification of users. This category of data includes IP addresses or domain names of computers used by users who connect to the Site, URI (Uniform Resource Identifier) of requested resources, the time of the request, the method used to submit the request to the server, the size of the file obtained in reply, the numerical code indicating the status of the response from the server (successful, error, etc.) and other parameters regarding the operating system and computer environment. These data are used only to obtain statistical information about the site and its use and to check its correct functioning and are deleted immediately after processing. The data could be used to ascertain responsibility in the event of possible computer crimes committed against the Site: except in this case, the data on web contacts are kept for a maximum period of seven days.
Data provided voluntarily by the user
The sending of optional, explicit and voluntary e-mails to addresses shown on this Site, and the filling in of forms specifically provided involve the subsequent acquisition of the sender’s e-mail address and the additional personal data provided in the electronic communication, together with the sender/user’s data necessary to respond to requests as well as to provide the service. Specific summary information will be provided in relation to specific services.
COOKIES
Cookies are data files which some websites, while visited, can send to the user with the scope of tracing its path inside the site and collect data in anonymous form, in order to enhance the offer and the use of the site. The Company does not use information technology for the direct acquisition of personal data by which the user can be identified. Cookies for the transmission of personal information or systems for the tracing of users are not used. The Company uses so-called technical cookies only with the scope of rendering browsing the Site possible and to make it possible for the user to use its functions. Some technical cookies are necessary in order to optimize the use and have the user accredit itself with the Site, for example in order to enter a restricted area (so-called browser cookie). The browsing cookies are session cookies and are deactivated automatically once the browser is closed. For the installation of these cookies it is not necessary to collect the consent of the user. The Company uses furthermore analytic cookies of thirds parties by which information on the interaction of the visitor with the content of the Site is obtained (most frequently used pages, time of use, etc.) and which thereby provide statistic information which makes it possible to optimize the Site and to enhance its use.
OPTIONAL DISCLOSURE OF DATA
Unless specified for surfing data, the user is free to provide personal information in the application forms or otherwise indicate them in order to request any information packs or other communications. Failure to provide personal information may, however, make it impossible to fulfill the request.
MODALITY OF PROCESSING
Personal data are processed by automated tools for the time necessary to achieve the purposes for which they were collected. Specific security measures have been taken to prevent loss of data, unlawful or incorrect use and unauthorized access.
PURPOSE OF PROCESSING - COMMUNICATION AND DISSEMINATION OF DATA
The personal information provided by users who request dispatch of information packs or rendering of services is used only to provide the service requested and may be disclosed to Company’s employees and consultants, duly appointed as Persons in charge of processing, as well as third parties that render ancillary or instrumental services to the activity of the Company and which are appointed as Data Controllers. There will not be any other communication of data to third parties, except upon request of public authorities. The data collected will not be disseminated.
RIGHTS OF DATA SUBJECTS
Data subjects are entitled, pursuant to Article 12 of the GDPR, to obtain, at any time, confirmation of the existence of the data and to know their origin, verify their accuracy or request their integration, updating or correction. Pursuant to this article data subjects shall have the right to request cancellation, anonymization or blocking of data processed in violation of the law, and in any case, to object on legitimate grounds to their processing. Requests should be sent to the Data Processor, at the above address or by email to privacy@arbitratoinitalia.it.

Close