By Enzo Bacciardi and Gianluca Bastianelli – International Litigation and Arbitration Area

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Reform of the Italian civil process (so-called Cartabia reform) and the arbitrators' precautionary power_Bacciardi Partners

The recent so-called ‘Cartabia Reform’ of the Italian civil process introduced, with regard to domestic arbitration, the arbitrators’ precautionary power as of 28 February 2023.

Attribution of precautionary power to arbitrators

Article 3, paragraph 52, of Legislative Decree 149/2022 amended Article 818 of the Italian Code of Civil Procedure by attributing to arbitrators, for the first time in our legal system, general precautionary powers, authorizing them to grant both typical precautionary measures, such as seizures, and atypical measures, such as injunctions and other urgent measures pursuant to Article 700 of the Italian Code of Civil Procedure.

In this respect, already Article 35 of Legislative Decree 5/2003, which regulated corporate arbitration, attributed limited precautionary powers to arbitrators, but only to temporarily suspend the effectiveness of shareholders’ resolutions challenged in arbitration.

The so-called Opt-in mechanism and the Provisions of the Rules of the Milan Chamber of Arbitration

The so-called Cartabia Reform, however, did not go so far as to provide that arbitrators always have precautionary powers, but rather chose an opt-in mechanism, whereby arbitrators will be granted the power to issue precautionary measures only upon an express statement of the parties in the arbitration agreement.

Arbitrators will be empowered to issue precautionary measures even when the parties, in the arbitration agreement, have referred to arbitration rules that grant precautionary powers to arbitrators, such as the Rules of the Milan Chamber of Arbitration (‘CAM Rules’).

In this regard, it should be pointed out that the same article 26 of the CAM Rules also recognizes the parties’ right to exclude the arbitrators’ precautionary powers by means of an express clause included in the arbitration agreement that refers to the CAM Rules.

The parties, by mutual agreement, may also amend arbitration agreements entered into between themselves prior to the coming into force of the so-called Cartabia Reform, in order to provide for the attribution of precautionary powers to the arbitrators, thus exploiting the amended regulatory framework.

In any event, irrespective of whether new arbitration agreements should be entered into or pre-existing ones amended, the parties and their respective counsels should carry out, on a case-by-case basis, an appropriate assessment as to whether arbitrators should be granted with precautionary power and, therefore, whether or not to rely on the new instrument provided by the so-called Cartabia Reform

Italy’s path towards an arbitration-friendly Jurisdiction

The removal of the arbitrators’ limitation on the possibility of granting precautionary measures had been waited and hoped for a long time, as such limitation provided for by the former Article 818 of the Italian Code of Civil Procedure represented an anachronistic constraint and, most importantly, an obstacle to Italy’s suitability as a seat for arbitration proceedings, especially international ones. In fact, countries such as, for instance, the United Kingdom, Germany, Switzerland, Hong-Kong, Singapore, etc., have introduced already while ago arbitrators’ precautionary power.

The new provisions introduced by the so-called Cartabia Reform, briefly illustrated here, enable Italy to comply with the best practices adopted in arbitration matters by the majority of foreign legal systems, thus allowing Italy to be increasingly considered and perceived as an arbitration-friendly jurisdiction and, therefore, to attract arbitration proceedings.