Arbitration clause and general terms and conditions

A recent decision issued by the Italian Supreme Court (decision No. 20078 of 24 July 2019, Italian text available here) addresses the issue of the wording of an arbitration clause contained in general terms and conditions.

I recently examined this issue (in this post), commenting on a decision of a lower Court. The decision of the Supreme Court gave me the chance to further elaborate on that topic.

The case heard by the Supreme Court concerned a leasing contract, and the claimant claimed that this contract was null and void. The Court of First Instance of Siena granted the claimant’s claim and, in order to do so, it also rejected the defendant’s objection to its jurisdiction, based on the arbitration clause contained in the leasing contract.

The defendant challenged the first instance decision and the Court of Appeal of Florence held that the jurisdiction lies with the arbitral tribunal provided for in the arbitration clause.

This decision was appealed before the Supreme Court, which held that the arbitration clause is unenforceable.

The Supreme Court noted that the text of the contract had been drafted by a party (that is to say, the case falls within the scope of application of Article 1342 of the Italian Civil Code).

As a consequence of the above, under Article 1341, par. 2, of the Italian Civil Code, the arbitration clause had to be specifically approved in writing.

As a matter of fact, there was a specific approval in writing. However, this specific approval referred to an article of the contract (Article 8) containing the arbitration clause, and also a number of diverse provisions, under the heading "various clauses".

In the light of the above, the Supreme Court held that there was no specific approval in writing, due to the fact that the approval of Article 8 of the contract, considering its content, could not be "specific".

At the end of the day, the Supreme Court upheld a well-established doctrine, whereby the law requires that contractual clauses are drafted in a manner that attracts the attention of the weaker contractual (see, for instance, Italian Supreme Court, VI Civil Chamber, decision No. 20606 of 12 October 2016, Italian text available here). This doctrine also applies to arbitration clauses.

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