Lack of decision: no annulment of the vitiated award if the disregarded claim should still be rejected

The recent judgment rendered by the Supreme Court of Cassation no. 32796 dated 8th November 2022 (Italian text available here) resolved a delicate procedural issue, ruling that the following principle of law is also applicable to the appeal proceedings against the arbitration awards “the principles of economic and reasonable duration of the proceedings (…) and in accordance whit a constitutional interpretation set out in art. 384 cod. proc. civ., inspired by these principles, once verified the lack of ruling on a ground of appeal, the Supreme Court can omit a referral decision on the appealed decision and may give a final judgment on the merit of the case, when the question of law referred to that ground results unfounded, so the final decision confirms the ruling of the judgement of appeal (consequently it is useless to return to the merit phase), unless the matter needs further factual findings”.

Therefore, it is necessary to verify, starting from the present case, whether the Supreme Court’s conclusion may be shared or not.

The arbitration Panel ascertained and declared O.P. Apol Industriale S.C.A. (hereinafter referred to as “APOL”) in breach of the contract, for having delivered to Solana S.p.A. a quantity of tomatoes considerably lower than the local average, stating a penalty of € 248.354,00 upon APOL and in favor of Solana S.p.A. However, in the arbitration award, the arbitrators failed to rule on the counterclaim filed by APOL, aimed to obtain the charge of the penalty upon Solana, for not having collected the quantity of tomatoes offered by APOL. Therefore, the latter filed the appeal against the Arbitration award alleging its nullity for lack of decision on this counterclaim.

The Milan Court of Appeal, although acknowledged that arbitration award did not rule on the counterclaim, dismissed the appeal, considering – wrongly – that the request had been waived because it was not reproposed in the conclusions. The Court of Appeal considered that the assessment in the award of the APOL’s breach was in logical-legal contradiction with the counterclaim proposed by itself.

APOL filed a Cassation appeal against that judgment, alleging the violation of art. 112 of the Italian Code of Civil Procedure, and art. 829, para. 1 no. 12 Italian Code of Civil Procedure.

In this case, under the first ground the claimant pointed out that the rule of law contained in the judgment, related to the implied decision to reject any claim or objection incompatible with logical – legal guideline confirmed by the decision on the claim or objection explicitly decided – may be applied only when there is no explicit decision on the claim and/or objection which has not been examined. In fact, only in this case we can presume that the judge, even though he did not evaluate that claim/objection, intentionally ignored it, having decided explicitly over other claims/objections inconsistent under a logical-legal perspective whit those which have not been object of an explicit decision. On the contrary, the Arbitration award did not fail to rule on the counterclaim aimed to obtain an order for Solana’s to pay the penalty, but has taken a motivated decision specifically declaring that the claim was waived. This was the reason why the Arbitrators did not rule on the counterclaim, and not because of the implied dismissal deriving from the granting of the main application.

The second ground raised the defect of the judgment for having considered implicitly rejected the APOL’s counterclaim, due to logical legal incompatibility with the Solana’s granted claim, notwithstanding the award stated the waiver of the counterclaim.

The Supreme Court, considering that both grounds were unfounded, dismissed the appeal and ordered just to amend the grounds of the judgement, according to art. 384 last paragraph, of the Italian Code of Civil Procedure. Indeed, while agreeing with the appellant «that the reason why the arbitration panel did not rule on the counterclaim lies not so much in the unquestionable logical-legal incompatibility of the latter with the main claim, as in the erroneous belief that this counterclaim had been waived, on the other hand, it is not, however, in any case conceivable to refer it back to the Court of Appeals». And this because of its “uselessness” because the referring court could only reject (due to its indisputable groundlessness) the claim for which there had been a failure to rule (by reason of its logical-legal incompatibility with the main claim already granted by a now res judicata ruling).

Those new guidelines, aimed at reducing the referral judgments by Court of Cassation, extended to all jurisdictional decision, including also the arbitration award, may be shared, because they are compatible whit the principles of economic and reasonable duration of proceedings, according to art. 111, para. 2 of the Italian Constitution.

In our procedural system the referral judgment is a residual hypothesis. It is a way to take when there are no other choices.

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