If the Articles of Association of a company contain an arbitration clause, does that clause apply to disputes concerning the transfer of shares? This topic was recently discussed in the Court of first instance of Catania (decision no. 3127 of 7 June 2016, Italian text available here), which has replied negatively to this question.

The case ruled by the Court of Catania can be summarised as follows.

Two companies have concluded a preliminary contract (that is to say, a kind of agreement to agree which is enforceable under Italian law) whereby the respondent undertook to sell to the claimant shares representing 100% of the corporate capital of a target company.

The preliminary contract was in part fulfilled (indeed, 49% of the target company’s corporate capital was actually transferred).

The claimant therefore sued the respondent so as to obtain the transfer of the remaining 51% of corporate capital by way of a Court’s decision pursuant to Article 2932 of Italian Civil Code (whereby “If a party bound to execute a contract does not fulfil this obligation, the other party (…) may obtain a judgment producing the same effects of the non-executed contract“).

The respondent appeared in Court and, prior to any defence on the merits, objected to the jurisdiction of the State Court, noting that Article 24 of the Articles of Association of the target company contained an arbitration clause, with reference to “disputes that may arise between the shareholders and the company or amongst the shareholders, in relation to these Articles of Association and the company’s management“.

However, the Court of Catania, as mentioned, rejected that plea.

It noted, in fact, that: “a literal construction of the clause leads (…) to the conclusion that it does not apply to this case, which is not a dispute between the company and the shareholders, or between the shareholders. In other words, that dispute is unrelated to the Articles of Association as well as to the management of the company.” The Court of Catania also added that: “in this case (…) the Articles of Association are a precondition of the dispute, but the scope of the arbitration clause contained thereto does not include disputes referring to another contract.“

The same approach is shared by the Supreme Court, whose rulings are in fact referred to by the Court of Catania: “The clause (…) of the Articles of Association whereby an Arbitral Tribunal has jurisdiction on ‘any dispute amongst shareholders’, in the absence of any express contrary intention, shall (…) be construed as meaning that the jurisdiction rests with the Arbitral Tribunal with respect to (all the) disputes relating to the corporate relationship and whose cause of action arises out of the Articles of Association (…). In this case, the Articles of Association are a precondition of the claim, but they are not the cause of action of the claim. Indeed, the alleged breach to the preliminary agreement would allow the innocent party to terminate the contract and does not amount to a breach to the Articles of Association containing the arbitration clause and which were even executed before the execution of the preliminary agreement” (Supreme Court, II Civil Chamber, decision no. 7501 of 31 March 2014, Italian text available here; see also Supreme Court, I Civil Chamber, decision no. 17328 of 25 June 2008, Italian text available here).

I am not aware of case-law on a different case; that is to say, the case where the arbitration clause contained in the Articles of Association explicitly also refers to disputes between shareholders relating to the sale and purchase of shares. I suspect that such a clause is extremely rare, or even unknown: perhaps because the parties seek to avoid further complications, also in the light of the divergent case law in the matter of corporate arbitration; perhaps because they would rather appoint the Arbitral Tribunal (whereas in the case of corporate arbitration the Arbitral Tribunal has to be appointed by a third-party).