As part of Italy’s National Recovery and Resilience Plan, the Italian Council of Ministers have approved Legislative Decree No. 149/2022 (the “Decree”) to amend the Italian Code of Civil Procedure (“ICCP”).^[1]   The Decree has been introduced to reform the entire Italian civil justice system in a bid to address a number of concerns in relation to the length of judicial proceedings and an ensuing backlog of cases.  The Decree also includes numerous reforms to arbitration laws that will govern applicable arbitrations commenced after 30 June 2023.

The key amendments seek to bring Italy in line with other major arbitration jurisdictions and relate to: (a) the impartiality and independence of arbitrators, (b) arbitrators’ duties of disclosure, (c) provisional measures in arbitration and (d) the migration of proceedings from the Italian courts to arbitration and vice versa.

(a) Impartiality and independence of arbitrators

The impartiality of arbitrators is necessary to obtain the fair and expeditious resolution of arbitral disputes.  Moreover, parties must be confident that arbitrators can be trusted to preside over an arbitration in an objective and impartial manner.  Prior to the Decree, under Italian arbitration arbitrators could (and still can) be disqualified for lack of independence, including where they have: (i) a lack of the qualifications expressly agreed between the parties; (ii) an interest in the relevant case, (iii) a personal, family, employment, professional or financial relationship with one of the parties, or (iv) a serious enmity towards one of the parties.^[2]

In accordance with other leading jurisdictions, Italy has now crystallised the express duty for arbitrators to remain impartial and independent.  The grounds for the disqualification of arbitrators have been broadened to include “other serious reasons of convenience such as they affect the impartiality and independence of the arbitrator.”^[3]

This is currently a hot topic in arbitration due to the increasing number of challenges being seen.  It will be interesting to watch this space and see what approach the Italian courts take to this issue.

With particular regard to the broad ground for disqualification introduced by the Decree, it can be expected that Italian courts will define clear and more predictable boundaries, also through consideration of the case law of the other major arbitration jurisdictions applying international standards, namely the IBA Guidelines on Conflicts of Interest in International Arbitration.

(b) Arbitrators’ duty of disclosure

The primary national and international arbitration rules in Italy—the Arbitration Rules of the Milan Chamber of Arbitration—provide for arbitrators’ specific disclosure duties.  However, prior to the Decree, ad hoc arbitrations did not impose a comparable duty of disclosure upon arbitrators.  Therefore, in a bid to enhance uniformity in this regard (and dovetailing with the express duty of impartiality), the Decree has introduced new express disclosure obligations.

For example, upon accepting their appointment, arbitrators must provide a statement declaring all the relevant circumstances that may give rise to challenging their appointment.  Consequently, from the outset, arbitrators are now obliged to declare any factual circumstances that may be seen to impugn their ability to adjudicate the dispute in an impartial and independent manner.^[4] However, in light of the new wording added in Article 815(6-bis) ICCP which broadly refers to any “other serious reasons of convenience which could impair the arbitrator’s impartiality and independence”, grounds for the possible disqualification of an arbitrator may end up including all that, in the parties’ views, may bring doubt on the arbitrator’s impartiality and independency.

Notably, the duty of disclosure is an ongoing one, and arbitrators must renew their declaration to the extent relevant circumstances change following their appointment.  If an arbitrator fails to comply with their duties of disclosure, it will constitute a ground for disqualification.^[5]

The enhanced duties of disclosure should serve to ensure parties’ trust in arbitrations seated in Italy.  In addition, the requirement to disclosure potential conflicts upon appointment will improve the efficiency of arbitral proceedings.  As such, the proposed changes will likely reduce the strain on the Italian judiciary and bring ad hoc Italian arbitrations in line with other major international arbitral institutions.

This change is similar to changes being posited in other jurisdictions, in particular the question of arbitrators’ ongoing disclosures is part of the wide-ranging consultation on the Arbitration Act in England. 

(c) Provisional measures in arbitration

Provisional measures are invoked to preserve the parties’ rights pending the arbitral tribunal’s final decision on merits, including freezing injunctions to preserve evidentiary rights or maintain the status quo between the parties.

Prior to the Decree, the ICCP expressly precluded a tribunal from issuing “freezing orders, or other interim measures unless provided by law”.^[6]   However, the Decree has been updated to include an opt-in mechanism to allow parties to agree, in the arbitration agreement or in a written agreement prior to the arbitration proceedings, to confer upon the arbitrators the power to issue provisional measures.^[7]   The parties’ consent to opt-in can also be derived by reference to the underlying institutional rules agreed upon by the parties.  

The tribunal’s power to issue provisional measures is exclusive.^[8]  Therefore, once the tribunal has been granted jurisdiction to issue provisional measures, the Italian judiciary will not possess any concurrent jurisdiction to issue interim relief.  In other words, subject to limited exceptions, only the tribunal shall have the authority to issue provisional measures in the relevant proceedings.  The domestic courts may however intervene with provisional measures (a) prior to the constitution of the tribunal, or (b) to ensure that the provisional measures ordered in the arbitration are properly enforced.

Where a tribunal issues provisional measures, the party/ies against which these measures are issued may challenge them before the Court of Appeal of the judicial district in which the arbitration is seated. 

By allowing tribunals to award provisional measures, the Decree has bolstered the legitimacy and competitiveness of arbitrations as an alternative to dispute resolution in Italy; as such, this reform is likely to ease the backlog of cases currently faced by the country’s judiciary.

It will be interesting to analyse in practice the coordination between arbitral tribunals and courts, with particular regard to those measures such as attachments which need State’s power (imperium) in order to function.

(d) The migration of proceedings between arbitral proceedings and ordinary proceedings (“translatio iudicii”)

The Decree also expressly recognises the prior practice^[9] of permitting parties to transfer proceedings from the courts to arbitral proceedings where the court lacks jurisdiction to preside over the dispute.  In addition, proceedings may be transferred from arbitral proceedings to the Italian courts where the arbitral tribunal does not possess the necessary jurisdiction.   

In circumstances where proceedings are transferred from one institution to another, the receiving institution will preserve any substantive and procedural decisions determined in the original proceedings.  The migration of proceedings will therefore have the benefit of safeguarding a parties’ rights vis-à-vis any statute of limitations relating to their claim.  In addition, it will enhance efficiency and reduce time and costs as the parties will not be required to retake the procedural steps already completed in the original proceedings. 

(e) Conclusion

The changes outlined bring Italian arbitrations in line with many leading arbitration jurisdictions, particularly in relation to the duties of disclosure, independence and impartiality.  Furthermore, by providing for the power of arbitral tribunals to issue provisional measures, the Decree will promote the effectiveness of Italian arbitrations and enhance the efficiency of country’s civil justice system.  We may therefore see an uptick in Italian arbitrations as Italy moves to gain a foothold in the arbitration industry.

^[1] The Legislative Decree No. 149 of 10 October 2022.

^[2] ICCP, Article 815(1)-(6).

^[3] ICCP, Article 815(6-bis).

^[4] ICCP, Article 813(1).

^[5] ICCP, Article 813(1): “[i]n the event of a failure to issue the declaration of independence or to highlight circumstances that constitute ground for challenging the arbitrator, the interested party may request, within ten days after acceptance or finding of said circumstances, the disqualification of the arbitrator.”

^[6] ICCP, Article 818 (before amendment).

^[7] ICCP, Article 818: “the parties, also through reference to arbitral rules, may empower the arbitrators to issue provisional measures in writing prior to the commencement of the arbitration proceedings.” 

^[8] ICCP, Article 818: “the power to issue provisional measures attributed to the arbitrators shall be exclusive.”

^[9] Judgment no. 223/2013.