Corporate arbitration: the doctrine is (finally) right, its application is wrong

Corporate arbitration is a major topic for Italian arbitration practitioners.  The Italian Supreme Court developed a doctrine and laid down principles not entirely right.  Some lower Courts tried to take a more appropriate approach, but to no avail (I discussed this issue, for instance, in this post).

A recent decision issued by the Court of first instance of Bologna (No. 1378 of 13 June 2019, Italian text availabe here) ostensibly applied the right doctrine (or the doctrine I deem right); nonetheless, it came to the wrong conclusion.

The case heard by the Court of Bologna concerned some resolutions of a limited company. 

The claimant’s case was that these resolutions were null and void since they were aimed at circumventing several law rules on corporate governance. 

The respondent, amongst other things, objected to the jurisdiction of the State Court, because of the stipulation of an arbitration clause in the company’s articles of association.

The Court rejected the objection to its jurisdiction, stating that that particular dispute cannot be referred to arbitration.

Under Italian law, corporate disputes are capable of arbitration if they concern negotiable rights (Art. 34.1 of Legislative Decree No. 5 of 17 January 2003).

What is the meaning of "negotiable rights"?

The Court of Bologna referred to the Supreme Court case law holding that "the disputes that cannot be referred to an arbitral tribunal are only those concerning non-disposable rights and therefore disputes concerning an absolute nullity" (Italian Supreme Court, decision No. 15890 of 20 September 2012, Italian text available here).

The doctrine is right.

Under this doctrine, in corporate matters the sole disputes that cannot be referred to an arbitral tribunal are those concerning corporate resolutions whereby the corporate purpose was changed to an impossible or unlawful purpose.  Indeed, Italian law only provides for an absolute nullity with respect to these resolutions (Article 2479(c).3 of the Italian Civil Code).

The Court of Bologna misapplied the right doctrine.

As said, in the proceedings before the Court of Bologna the claimant claimed that some resolutions of a limited company were null and void since they were aimed at circumventing a number of law rules on corporate governance and therefore they were unlawful.  Under Italian law, the Court, on its own motion, may declare these resolutions null and void.  Nonetheless, any claim concerning these resolutions is time-barred after three years of their adoption.  This implies that Italian law does not provide for an "absolute nullity" and therefore that the relevant dispute may be referred to arbitration.

I trust that in the (hopefully, near) future, I will discuss a decision that, on the basis of the right doctrine, would come to the right conclusion.

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