Waiver of the right to arbitrate

The Court of first instance of Rome (decision no. 19215 of 28 September 2015, Italian text available here) ruled in a complex case concerning the relationship between a limited liability company and its former director. First of all, the company sued the former director before the Court, claiming his liability. In a second case (the case of the decision at hand), the former director requested the Court to issue a payment order against the company, in order to obtain the amounts allegedly owed to him. The parties did not take into account the arbitration clause stipulated in Article 26 of the Articles of association. This provision notes that “all controversies arising among the quotaholders or among the quotaholders and the company, the directors, liquidators and statutory auditors shall be settled by a sole arbitrator appointed by the President of the Certified Public Accountants Register of the place where the company has its registered office (….).” In the judicial proceedings commenced by the company, the former director objected that the Court did not have jurisdiction, due to the above mentioned arbitration clause. On its turn, the company raised this objection when challenging the payment order issued in favour of the former director.

Did the parties waive their right to arbitrate, by initiating Court proceedings?

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Once again, on arbitration and insolvency

Two recent rulings of the Italian Supreme Court analysed the relationship between arbitration and insolvency proceedings.

The first ruling (decision no. 13089 of 24 June 2015 of the of the I Civil Chamber of the Supreme Court, Italian text available here) established that “claims against a bankrupt party may not be brought before an Arbitral Tribunal.  Indeed, the jurisdiction of the arbitrators is in any case prevented due to the prevailing jurisdiction of the Insolvency Courts on such claims.” 

The second ruling is more interesting (decision no. 15200 of 21 July 2015 of the Supreme Court sitting en banc, Italian text available here). This judgment focused on the issue of the relationship between arbitration and insolvency when an arbitration procedure is pending abroad and therefore EC Regulation no. 1346 of 29 May 1999 concerning insolvency proceedings applies.

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Arbitration and shareholders’ loan

If an arbitration clause is stipulated in the company’s Articles of association, disputes between a former shareholder and the company, concerning the repayment of a shareholders’ loan, shall be referred to an Arbitral Tribunal. This is, in a nutshell, the rationale of decision no. 18316 of 17 September 2015 of the Third Civil Chamber of the Court of first instance of Rome (the Italian full text is available here).

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Construction of arbitration clause

The wording of the arbitration clause should be carefully selected, as it constitutes the basis of the jurisdiction of the Arbitral Tribunal.  A possible wrong wording will not always be emended, once the dispute has arisen.

Nevertheless, it is commonplace that due attention is not devoted to this clause, either because it is inserted at the last minute in an agreement (known as the “midnight clause” effect), or because the agreement is reached after long negotiation on its commercial terms, underestimating the risk of a possible dispute.

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Arbitration in Italy

Arbitration in Italy was founded in 2015 by Roberto Oliva as a blog.

The underlying idea was that of spreading arbitration culture in Italy and, in that way, boosting arbitration practice in our country.

Over the years, various issues were addressed, and approximately 100 articles were published.

The visitors of the blog have steadily increased over time, and Arbitration in Italy gained the trust of numerous readers.

As of 2020, Arbitration in Italy has become a journal. Or rather, two journals: Arbitration in Italy, the English version (ISSN 2732-5687), and Arbitrato in Italia, the Italian version (ISSN 2732-5695).

The purpose did not change: we always intend to publish accurate – but still understandable even for the layman – articles on arbitration and thus contribute to its spread.