Challenge of shareholders’ resolutions

Order no. 17283 of 28 August 2015 of the Italian Supreme Court affirmed the jurisdiction of an Arbitral Tribunal on the challenge of certain shareholders’ resolutions, pursuant to the arbitration clause stipulated in the company’s Articles of associations. The clause at hand only referred to the arbitrators “all disputes which may arise between the company and any shareholder or among the shareholders (…) concerning the company’s activities.” The Italian full text of the order is available here.

Two minority shareholders of the company challenged before the Court of first instance of Rome two resolutions of the general meeting. The first one approved the company’s financial statements, which in the claimants’ opinion were drafted in breach of the valuation criteria in Article 2426(1)(8)/bis of the Italian Civil Code. The second resolution increased the share capital and, in the claimants’ opinion, it was unlawful since the majority shareholder abused the majority rule.

The company (and the shareholder allegedly abusing the majority rule) appeared in Court, objecting to the  jurisdiction of the Court of first instance of Rome, pursuant to Article 23 of the company’s Articles of association, whereby “disputes which may arise between the company and any shareholder or among the shareholders (…) concerning the company’s activities” should be settled by an Arbitral Tribunal.

The Court of first instance of Rome partially upheld the objection. The Court affirmed the jurisdiction of the Arbitral Tribunal on the challenge of the resolution increasing the share capital. With respect to the challenge of the resolution approving the company’s financial statements, the Court followed the guidance of the Supreme Court. According to the case law of the latter, the challenge of a resolution approving the financial statements may not be referred to an Arbitral Tribunal, if the claim concerns substantial errors of the financial statements (in this respect, see decision no. 13031 of 10 June 2014 of the VI Chamber of the Supreme Court, Italian text available here, and my comments in this post).

The claimants referred the case to the Supreme Court, claiming that the decision of the Court of first instance of Rome was wrong. In their opinion, the disputes concerning the challenge of shareholders’ resolutions might be referred to arbitration only if the arbitration clause expressly provided for the jurisdiction of the Arbitral Tribunal on these disputes. If such a clause does not exist, as it happened in the case at hand, jurisdiction would rest with the Court.

On this point, the Supreme Court noted that “there is no reason (neither literal, nor substantive in nature) whereby it may be inferred that the law precludes the jurisdiction of the Arbitral Tribunal (…) on the disputes concerning the challenge of shareholders’ resolutions (…) provided that these resolutions concern negotiable rights.” The Supreme Court expressly upheld the reasoning of the Court of first instance of Rome, according to which “the challenge of a company’s resolution is nothing more than a dispute between one or more shareholders and the company” and therefore rejected the appeal and confirmed the jurisdiction of the arbitrators.