General terms and conditions

Arbitration clause provided for by general terms and conditions: is it enforceable? The issue was recently addressed in a decision issued by the Court of first instance of Brindisi (decision No. 1077 of 8 July 2019, Italian text available here).

The case heard by the Court of Brindisi concerned a contract for the supply of industrial equipment. The claimant was the purchaser of this equipment, which was never delivered, therefore claiming the return of the paid advance, and damages.

The defendant, amongst other things, objected to the Court’s jurisdiction, on the basis of the arbitration clause contained in the contract.

The Court of Brindisi rejected the objection, as it held that the arbitration clause was unenforceable.

In fact, under Article 1341 of the Italian Civil Code, arbitration clauses are characterised as unfair terms, that is to say, clauses that shall be specifically approved in writing if they are contained in general terms and conditions.  Otherwise, lacking such approval, they are unenforceable.

The case law of the Italian Supreme Court provides a narrow interpretation of the said provision, for the purpose of facilitating arbitration.  Indeed, under the Supreme Court’s doctrine, only clauses contained in contractual documents intended to regulate an indefinite series of relationships (proper general terms and conditions) require specific approval in writing.  On the contrary, this specific approval is not required in the case, which is materially different, of a party drafting a contractual document, approved by the other party, with respect to a specific relationship (in this respect, see for instance Italian Supreme Court, I Civil Chamber, decision No. 12153 of 23 May 2006, Italian text available here).

The Court of Brindisi maintained that, in the case at hand, Article 1341 of the Italian Civil Code applies, and therefore that the arbitration clause was unenforceable. Unfortunately, it is not possible to understand whether this conclusion is right, ie whether the arbitration clause was actually contained in general terms and conditions (drafted by a party to regulate an indefinite series of relationships) or in a contractual text, drafted by a party, but only with respect to that specific relationship.

It could happen that I will re-examine the topic, in case of appeal to the decision of the Court of Brindisi, when the decision of the competent Court of Appeal of Lecce will be issued.

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