The case of the additional preposition

A recent judgment of the Supreme Court (decision no. 18707 of 22 September 2015, Italian text available here) dealt with a very peculiar case. A party objected that an arbitration clause was unenforceable, since it included an additional preposition (more precisely the preposition “di”, which in Italian means “of”).

In this case, the Supreme Court, as well as the Court of first instance, avoided a formalistic excess. The Court did not repeat the old case, referred to by Gaius, in which a party lost the case due to a lexical mistake.

In 2009 two companies entered into an agreement and they also stipulated that any dispute concerning the validity, construction and fulfillment of such agreement shall be settled by an institutional arbitration under the rules of the Arbitration Chamber of Padua, which is part of the Chamber of Commerce of Padua.

The only problem is that the Arbitration Chamber of Padua (Camera Arbitrale di Padova) did not exist, as it had merged with the Arbitration Chamber of Veneto on 1 January 2004.  The resulting entity is the Padua Arbitration Chamber (Camera Arbitrale Padova, without the preposition “di”).

Moreover, the rules of the latter (Padua Arbitration Chamber) state that any arbitration clause stipulated after the merger, providing for an arbitration administered by one of the merged institutions, shall not be construed as providing for an arbitration administered by the Padua Arbitration Chamber (Camera Arbitrale Padova, without “di”) . This provision is contained in the preamble of the current rules of the Padua Arbitration Chamber (Section “On the Arbitration Chamber”, Article 2; “La camera arbitrale” in Italian).

Under these circumstances, a party to the agreement requested and obtained a payment order against the other party. The latter challenged the order, objecting to the Court’s jurisdiction, due to the arbitration clause. The claimant replied to that objection alleging that the arbitration clause was unenforceable, because it referred to the Court of Arbitration of Padua with the preposition “di” (Camera Arbitrale di Padova). The Chair of the Padua Arbitration Chamber (Camera Arbitrale Padova) also supported this view in a letter in which he claimed that the arbitration clause at hand was void.

Nevertheless, the Court of first instance of Padua ruled that the jurisdiction rested with the Arbitral Tribunal.

The Court’s ruling was appealed before the Supreme Court, which confirmed it.

First of all, it is unlikely that the parties chose an arbitral institution which ceased to exist in 2003, given that the agreement was stipulated in 2009. The preposition “di” (“of” in English) only seems a typing mistake.

The intention of the parties to refer their disputes to an arbitration administered by an existing arbitration institution, and not by an institution discontinued in 2003, seems clear from the arbitration clause. Indeed, in such clause the parties even referred to the “rules of the arbitration chamber in force when the claim is brought.” 

As to the different construction of the Padua Arbitration Chamber, that construction cannot lead to the conclusion that the arbitration clause is unenforceable. Indeed, article 832 of the Italian Code of Civil Procedure states that “Should the arbitral institution decline to administer the arbitration, the arbitration agreement shall remain effective (…)”.

Despite its particular features, the case confirms the need to carefully draft the arbitration clause.