Setting aside of arbitral awards

A recent decision delivered by the Court of Appeal of Brescia (decision no. 71 of 19 January 2017, Italian text available here) lets us briefly examine Italian rules on setting aside of arbitral awards and, in particular, the grounds for setting aside under Article 829 of Italian Code of Civil Procedure.

First of all, it should be noticed that the Court rejected the request for setting aside and even blamed the claimant for filing a petition whereby, in essence, it requested a new decision on the merits of the dispute, although it has formally referred to the grounds for setting aside under Article 829 of Italian Code of Civil Procedure.  In other words, the claimant was seeking for a new decision on the merits by the State Court, irrespective of the validity/invalidity of the award. 

In this respect, the Court of Appeal stated that “the proceedings for setting aside of arbitral awards are not appellate proceedings.  In the proceedings for setting aside of arbitral awards, the Court of Appeal has to (…) ascertain whether the award (…) is invalid due to a reason provided for by Italian law.  Indeed, the Court of Appeal may only set aside an arbitral award if it is satisfied that it is invalid due to a reason provided for by Article 829 of Italian Code of Civil Procedure (…).”   

In other words, the proceedings for setting aside are proceedings on points of law: as a general rule (subject to limited exceptions) the State Courts cannot ascertain the relevant facts, nor deliver a new decision on the merits.

These proceedings are two-stage ones: if the State Court set aside the award, and only if it does so, the second stage commences, where the Court re-examine the merits.  Anyway, such a stage could be missing, even if the Court sets aside the award: for instance, if the Court finds that the arbitral tribunal does not have jurisdiction over the case, the judge having jurisdiction issues its decision on the merits.  Moreover, in the case of international arbitration (that is, if the arbitration proceedings also involved at least an overseas party), a new arbitral tribunal has to be appointed to deliver a new award on the merits (Article 830(2) of Italian Code of Civil Procedure). 

The decision at hand also contains interesting references to the case law concerning a specific ground for setting aside: that provided for by Article 829(1)(11) of Italian Code of Civil Procedure (“if the award contains inconsistent provisions“). It is settled case law of the Italian Supreme Court that such ground for setting aside refers to an inconsistency in the operative part of the award (“dispositivo“) or between the reasons (“motivazione“) and the operative part of the award (Supreme Court, I Civil Chamber, decision no. 3768 of 21 February 2006, Italian text available here) – although some lower Courts maintain that a mere inconsistency between reasons and operative part of the award does not entail its invalidity – whereas an inconsistency in the reasons for the award, that is between statements contained therein, does not allow the Court to set aside the award, unless the actual reasons for the decision issued by the Arbitral Tribunal are incomprehensible by any rational person (in such a case, indeed, it could be stated that there are no reasons for the decision at all). As a consequence, the Court of Appeal ruled that “the Court cannot set aside the arbitral award if it is satisfied that a quid minimum of reasons was given by the Arbitral Tribunal.” 

At the end of the day, the decision of the Court of Appeal of Brescia is a clear example of the attitude of Italian State Courts towards arbitration: they are supportive of arbitration and reject requests for setting aside whereby the claimants are seeking a new trial on the merits.