Challenge to the shareholders’ meeting resolution and arbitrability

The Court of Milan reaffirms, in a recent decision (No. 8411 of 26 October 2022, Italian text available here), the broad applicability of the arbitration clauses contained in the Articles of Association, also with respect to the challenge to the shareholders’ meeting resolutions, with the sole exception of so-called irremediable nullity.

The claimant, in particular, who was the coheir of a deceased shareholder and was excluded from the shareholding by reason of the exercise of an approval clause by the surviving shareholders, brought an action against the company for the court to overrule the resolution for the exclusion and the consequent accretion of the share of the non-admitted shareholder to the other shareholders.

The company objected that the matter should be dealt with by arbitration due to a provision in the Articles of Association that referred all disputes between the company and its shareholders to arbitration. The claimant, however, argued that the raised claim concerned so-called irremediable nullities since they relate to the violation of inalienable rights. The claimant therefore argued that the arbitral tribunal does not have jurisdiction according to established case law. The claimant also argued that the claimed invalidity was irremediable, asserting that the heir of the deceased shareholder was not enabled to call the shareholders’ meeting because of a lack of authorisation from the community of heirs created by the death of the deceased. The claimantwent on to assert that, in any event, the acknowledgement of the exclusion and the resulting accretion should first have been entered in the companies’ register.

On the basis of these assumptions, the claimant asserted that such resolutions were contrary to mandatory rules and public policy and, therefore, it should be held that the relevant issues could not be heard by arbitrators.

The Court, finding that the case fell within the broad scope of the arbitration clause, based its decision on an analysis of the dispositive or non-dispositive nature of the matters invoked by the claimant, observing that the aforesaid objections in fact concerned matters extraneous to public policy, explaining that were inherent to strictly individual matters of the would-be shareholder. With regard to the lack of a summons or calling of the company meeting, the criticism was in fact confined to the qualities and powers of the summoning heir and thus to the mere succession (or community) relationship between natural persons, which obviously remains a matter outside the scope of the corporate contract.

While with reference to the exercise of the approval clause, the Court observes that it can only be of a purely internal company matter, and there is no room for objection in this regard since the position of a natural person who aspired to become a shareholder after the death of the deceased shareholder is what is at issue here. The Court therefore found no obstacles to the disposability of the rights at issue and thus to the deferability to arbitration, and this also by virtue of the reference to Article 34, para 3, of Legislative Decree No. 5/2003 according to which the arbitration clause “shall be binding on the company and all shareholders, including those whose membership is in dispute“. Having ascertained the strict reference to the complainant’s individuality of the rights claimed by him and therefore their disposability, the court of Milan could not fail to uphold its own previous view according to which: “the only limit to the arbitrability of disputes also based on corporate relationships is the non-disposability of rights they involve, now limited to cases of violation of mandatory rules of law placed to protect interests superordinate to those of the company and its shareholders” (Court of Milan, decision No. 4594 of 23 April 2018). This view has moreover been unanimously adopted by case law (ex multis: Italian Supreme Court, decision No. 14340 of 25 June 2014, and Court of first instance of Venice, decision No. 35 of 08 January 2015). Therefore, the Court rejected the claimant’s claims, declaring its lack of jurisdiction and finding for that of the arbitrators.

As an aside, it is interesting that the court did not consider verifying why the dispute in question could be considered to have arisen between the company and the shareholder, (viz member) as actually provided for in the clause in question (the arbitration reservation referred all disputes between the company, shareholders, directors and liquidators to arbitrators). Indeed, the claimant, having been affected by the ‘disfavour‘ of the surviving shareholders, does not appear to have ever assumed the status of shareholder and, therefore, it did not seem so clear that he could be included in the list of persons covered by the text of the arbitration clause. The judge probably decided not to dwell on the potentially ambiguous aspect concerning the word “shareholder (/member)” absorbing this into the established case law view that: “the articles of association of the company, as a deed of negotiation, must be interpreted according to the hermeneutic canons provided for by articles 1362 et seq. of the Italian Civil Code, inquiring into what was the common will of the parties without limiting itself to the literal meaning of the words and that article 808 quater of the Code of Civil Procedure provides that in case of doubt the arbitration agreement must be interpreted in the sense that the arbitration jurisdiction extends to all disputes arising from the contract or relationship to which the agreement refers” (ex multis, Court of first instance of Turin, decision No. 1012 of 17 June 2021; Court of Appeal of Naples, decision No. 3718 of 09 September 2022). A similar conclusion was moreover reached, for example, by the Court of Venice (decision No. 2178 of 16 August 2016), which, holding that it lacked jurisdiction, stated that “a clause in the articles of association providing that ‘disputes that may arise between the company and the shareholders, directors and liquidators under these articles of association shall be decided by a board of three arbitrators appointed by the President of the Court of Treviso’ must be interpreted as meaning that the board of arbitrators has jurisdiction over all disputes arising from the company’s relationship (within the limits of their arbitrability, according to the rules set forth in Article 34 of Legislative Decree no. 5/2003), including disputes arising from the company’s relationship with the shareholders, directors and liquidators, and from the liquidators’ relationship with the company. 34 D.Lgs. no. 5/2003), including disputes concerning the challenge of shareholders’ meeting resolutions“.

Leave a Comment

Your email address will not be published. Required fields are marked *


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