A recent decision issued by the Court of first instance of Vicenza (Court of first instance of Vicenza, decision No. 1102 of 27 June 2022, Italian text available here) is of great interest for the unprecedented conclusion reached by the Court.
The matter was quite simple.
A party, alleging that the other party owed it a sum of money, requested and obtained an order for payment.
However, the claim was based upon a contract containing an arbitration clause.
Therefore, the alleged debtor appealed the order for payment and objected to the jurisdiction of the State Court on the grounds of the said arbitration clause.
According to settled case-law, an arbitration clause does not prevent State Courts from issuing an order for payment. However, if the alleged debtor appeals to the order and objects to the Court’s jurisdiction, as the dispute has to be referred to an arbitral tribunal, the Court must repeal the order.
Taking this settled case-law as a starting point, the Court of Vicenza takes a step forward. It notes that an order for payment may be repealed, as the parties entered into an arbitration agreement, only if there is an actual dispute between the parties. Otherwise, repealing the payment order would put into practice (with the Court’s assistance) a delaying tactic.
In the case at hand, the defendant contested the claimant’s claim only in highly general terms. Consequently, the Court rejected the objection: in other words, it held that there was no dispute and that, therefore, no dispute could (and therefore should) be referred to arbitration.
This approach appears to be unprecedented in Italian jurisdiction. Indeed, if a party objects to their jurisdiction and the objection is grounded, State Courts repeal the orders for payment. At most, it can be debated whether the claimant must bear the Court’s costs and fees or whether it is possible (and in some cases even reasonable) to offset them, despite the strict wording of article 92 of the Italian Code of Civil Procedure.
However, the principles laid down by the decision of the Court of Vicenza are not unknown to the arbitration community, at least overseas.
For example, in Singapore. The Arbitration Act 2001 (which applies to domestic arbitrations only) provides, in short, that the State Court may stay the proceedings, in case its jurisdiction is contested, only if there are insufficient grounds to hold that the matter should not be referred to arbitration. Singapore Courts use the power they are granted and reject applications for stay if they consider that there is no genuine dispute, as the applicant has no defence on the merits, and therefore the said application amounts to a delaying tactic.
Under Italian law, as it currently stands, State Courts cannot reject an objection to their jurisdiction based on an arbitral agreement if the objecting party did not indicate its defences on the merits. In many cases, such defences will be pleaded, but if they are not, as the objecting party solely relied on its objection, the latter if indeed grounded, must be upheld.
Nor does it seem appropriate to introduce in the Italian jurisdiction principles which are indeed applied elsewhere, but only in some instances, and which in any case create unpleasant uncertainties (when can a dispute actually be said to exist?).
Although moved by a laudable intent (that of preventing delaying tactics), the decision of the Court of Vicenza seems erroneous, and it is hoped that it will be challenged and repealed.