THE NEW LAW IN ITALY ON ARBITRATION

Pursuant to Law no. 25 of 5th January 1994, the Italian law on arbitration has recently undergone extensive reform which should, inter alia, facilitate international arbitration proceedings. The above law both modified a number of the existing articles of the code of civil procedure and added a whole new chapter relating to international arbitration (articles 832 - 838). For the purposes of Italian law, an arbitration is considered "international" when, at the moment of signature of the arbitration clause, at least one of the parties is resident, or has its principal place of business, abroad, or when a considerable part of the contractual obligations in question are to be performed abroad. Amongst specific points of interest introduced by the new law is the fact that no specific approval is required for an international arbitration clause, unlike in relation to a "national" one. Arbitrators in "international" proceedings are also now to be permitted to make their award in the course of a conference held by video-telephone. One of the most important innovations of the new law, however, lies in the fact that a stream-lined procedure has been created for the recognition and execution in Italy of foreign arbitration awards. In this case an application must be made directly to the President of the Court of Appeal who will merely check compliance with a number of formalities before issuing an order for recognition and execution. The only pre-requisites for the latter are that the dispute relates to a subject matter that may be considered by way of arbitration in Italy, and that the award does not contain provisions which are contrary to "public policy".

It should, however, be noted that in the event of a successful challenge to such an order, the case will proceed by way of ordinary civil proceedings. In addition to the provisions relating to international arbitrations, changes have also been made in relation to the law governing arbitration in general. An arbitration agreement may now, for example, be entered into by way of telex or telegraph, and, more importantly, the arbitration clause may be contained in a separate document to the contract itself. Moreover, the validity of the arbitration clause can be considered separately from the rest of the contract, meaning that the arbitrators will now be able to act in cases where the validity of the contract itself is at issue. One of the most significant changes in the law, however, is the fact that jurisdiction in arbitration proceedings will no longer be excluded merely by the fact that proceedings are pending in the courts in relation to a case which is "connected" to the subject- matter of the arbitration. Previously, case law reflected the tendency for arbitration cases to be "drawn" before the courts in such circumstances, and which was often used as a tactical manoeuvre to delay the duration of a dispute.

The parties may now also agree that in the event that the Court of Appeal should declare the arbitration award invalid, the case will be submitted back for a second arbitration on the merits, unlike the previous practice, which was for the Court of Appeal to proceed to hear the case on the merits once it had decided that the award was null and void.

A number of other new provisions have been introduced, with the result that the conduct of arbitration, or the enforcement of arbitration awards, in Italy should now be considerably more appealing than in the past.

Milano, October 1994.