Setting aside of a partial award

If the Arbitral Tribunal issued a partial award on jurisdiction, should the parties immediately request its setting aside or may they await the issuance of the final award? A recent decision of the Italian Supreme Court sitting en banc (decision no. 23463 of 18 November 2016, Italian text available here) maintains that the request for setting aside of such a partial award shall be filed together with the request for setting aside of the final award.

In a nutshell, the case heard by the Supreme Court is as follows.

The claimant, a contractor, commenced the arbitration proceedings provided for by the arbitration clause contained in the contract for works.

The case was somewhat peculiar since the contractor who entered into the contract for works was a sole trader; on the other hand, the contractor which performed the works and commenced the arbitration proceedings was a company, to which the sole trader transferred its business before the stipulation of the contract for works.

The Arbitral Tribunal issued two awards: in 2007, a partial award on jurisdiction, and in 2008 the final award on the merits.

The respondent, that is the principal of the contract for works, requested the setting aside of both awards and they were actually set aside by the Court of Appeal of Naples.  The Court, indeed, upheld the respondent’s objection that the claimant (contractor-company) is other than the party who entered into the arbitration clause (contractor-sole trader) and therefore the Arbitral Tribunal does not have jurisdiction over the disputes between the principal and the contractor-company.

The claimant appealed to the decision of the Court of Appeal on two grounds.  The second one referred to the construction of the contract for works (and I do not examine it here).  As far as the first ground for appeal is concerned, it referred to the request for setting aside of a partial award on jurisdiction.  Indeed, in the opinion of the claimant, the request for setting aside of such an award should be immediately filed under Article 827(3) of Italian Code of Civil Procedure (whereby “The award which decides partially the merits of the dispute may be challenged immediately (…)“.)

That issue entails two questions.  The first question is whether the request for setting aside of a partial award may only be filed if the partial award decides on a claim (this is the doctrine of Supreme Court, I Civil Chamber, decision no. 4790 of 26 March 2012, Italian text available here) or also if the partial award decides on particular issues, such as on jurisdiction or the statute of limitations (as stated by Supreme Court, I Civil Chamber, decision no. 5634 of 6 April 2012, Italian text available here).  Moreover, the second question is whether the decision on jurisdiction is a decision on the merits (as stated by Supreme Court, I Civil Chamber, decision no. 5634 of 6 April 2012) or a decision on a procedural matter (this is the doctrine of Supreme Court sitting en banc, decision no. 24153 of 25 October 2013, Italian text available here).

The answer to the second question is that already provided by the Supreme Court sitting en banc: the issue concerning the jurisdiction of the Arbitral Tribunal is an issue on a procedural matter.

As far as the first question is concerned (that is, whether the request for setting aside of a partial award on jurisdiction may – and therefore shall – be immediately filed), the decision at hand is not crystal clear. Nonetheless, its conclusion is clear: the parties shall immediately request the setting aside of a partial award on liability (as already stated by Supreme Court, I Civil Chamber, decision no. 2715 of 7 February 2007, Italian text available here) or a partial award only deciding on some claims while the arbitration proceedings continue with respect to other claims.  On the contrary, the parties cannot immediately request the setting aside of a partial award on jurisdiction nor a partial award on preliminary issues (such as the statute of limitations).