Italian legislative reform: The groundbreaking choice to bet on (international) arbitration

Italian Law No. 206/2021, published November 26, titled “Delega al Governo per l’efficienza del processo civile e per la revisione della disciplina degli strumenti di risoluzione alternativa delle controversie e misure urgenti di razionalizzazione dei procedimenti in materia di diritti delle persone e delle famiglie nonché in materia di esecuzione forzata” (the “Law”), introduced major changes to Italian civil proceedings and the justice system, including, inter alia,[1] a groundbreaking innovation in arbitration: the opportunity to grant arbitrators the power to issue interim or provisional measures within “binding” arbitrations (“arbitrati rituali”).

Specifically, para. 15 (c) of section one of the Law provides that the Legislative Decree(s) that implement the Law shall “provide arbitrators in regular proceedings with the power to issue interim measures if the parties expressly agree to do so in the arbitration agreement or in a subsequent written deed, unless otherwise provided by law; in these cases, to keep the power to issue interim measures assigned to the ordinary judge only when a request is made prior to the arbitrators’ acceptance; to resolve any claim against interim measures before the ordinary judge for the reasons mentioned in article 829, first paragraph, of the Code of Civil Procedure and for contrariety to public order; to regulate the methods of implementing the interim measures under the oversight of the ordinary judge.

Of note, the provision responded to widespread urging from authors and arbitration experts on both a national and international level to deal with the general prohibition previously set forth by Section 818 of the Italian Code of Civil Procedure (“CCP”), which prevented arbitrators from issuing any interim measures “unless provided by the law.” Section 818 CCP already contemplated the possibility of exceptions to this “general” prohibition, which the Italian legislature regulated, to some extent, with reference to company arbitrations, with Section 35 of Legislative Decree No. 5/2003. That allowed arbitrators to suspend performance of a meeting’s resolutions.

Nonetheless, the prohibition pursuant to Section 818 CCP was perceived as one of the major downsides for foreign investors considering Italy as a seat of arbitration, compounded by the fact that that choice did not align with the choices of other European (and extra-EU) legislatures. The rationale behind Section 818 CCP was even considered outdated at the national level, as it stemmed from the principle according to which only the judicial authority, as an extension of the State, could exercise binding and precautionary powers, especially in summary proceedings.

Thus, the Law is designed to promote arbitration and to incentivize choosing Italy as a seat of international arbitration.

Clearly, it still leaves room for some uncertainty, and there are issues that aren’t covered and remain unregulated. The Law fails to specify certain important aspects as to how, in practice, the parties would be able to grant such power (leaving it up to the forthcoming Legislative Decree(s) to address that in detail).

Nonetheless, the Law is to be welcomed as a refreshing and long-sought change in the Italian civil system. It is a clear expression of the Italian legislature’s intention to invest in the ADR (alternative dispute resolution) system and to render Italy a(n even) more appealing seat of arbitration worldwide.

[1] In addition to ADR, the Law established greater warranties of arbitrators’ impartiality and extended the field of application for assisted negotiation.

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