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Source: US Global Legal Monitor

(Dec. 15, 2020) On September 24, 2020, a panel of the Italian Supreme Court of Cassation (SCC) asked that a case involving the time limit for requesting nullification of an arbitral award be elevated to the SCC’s highest level (the Court’s United Sections) due to the complexity and importance of the issue. (Decision No. 20104 of September 24, 2020 (Decision).)

Background of the Case

Within the SCC, in cases of particular relevance and complexity, a panel may request the court’s first president, who is the chief officer of the court, to refer a case to a broader panel of nine judges known as the United Sections, which is responsible for ruling on matters of high importance.

The case concerns whether the one-year term to challenge an arbitral award, as established in article 828 of the Civil Procedure Code (CPC), starts to run not from the signing of the award by the arbitrators, but from the communication to the parties of the resolution enforcing such arbitral award.

The SCC panel reviewed a request for appeal filed against a decision of the Appellate Court of Bologna that on its own initiative had rejected as untimely a challenge to an arbitral award. (Decision, considerations of fact § 1, para. 3.)

The claimant before the SCC panel invoked articles 3, 24, and 111 of the Italian Constitution (English translation) on equality before the law, due process, and other procedural guarantees. (Considerations of fact § 2.1, para. 1.) The claimant noted that the current text of CPC article 828, as amended in 1994, provides that a party’s right to request nullification of an arbitral award ended one year from the last subscription of the award, while the original text of article 828 the one-year term expired from the date of the resolution enforcing the award. (Considerations of fact § 2.1, para. 2.) The claimant argued that starting the limitation period on the date of signature of the award rather than the date the award is communicated to the parties violates constitutional guarantees, including due process. (Considerations of fact § 2.1, paras. 3–4.)

Reasoning of the Court

The SCC panel noted the complex history of the statute. It observed that the underlying arbitral case was commenced in 2005, and that a transitory provision of Legislative Decree No. 40 of February 2, 2006, which had amended CPC article 828, provided that the amendment would apply to arbitral procedures “in which the request for arbitration was filed after the entry into force of this decree (March 20, 2006).” (Considerations of law § 2.) The SCC noted that in the original version of article 828, the limitation period for requesting nullification of an arbitral award was 30 days from the date of its notification, and in any case one year from the date of the resolution declaring the enforceability of the award. (Considerations of law § 2.1.) After a 1994 amendment , the period to file was raised to 90 days from its notification. (Considerations of law § 2.2, para. 1.)

The court thus observed that there are two periods within which to challenge an award: a short term of 30 days running from the date of notification of the award, and a longer term counted from the date of the last signature of the award by the arbitrators. (Considerations of law § 3.1, para. 2.)

The court noted the unreasonableness of requiring that a party challenge an award before the award is communicated to the party. (Considerations of law § 5.1 para. 1.) The court considered that the parties to an arbitral procedure have no possibility of knowing when an arbitral decision is issued or deposited absent a formal notification to them. (Considerations of law § 5.3.)

Holding of the Court 

The court recognized the complexity and relevance of the questions posited on this case, in particular whether the one-year term established to challenge an arbitral award starts from the date on which such award is communicated to the parties. (Considerations of law § 5.4.) In light of these considerations, the SCC declined to decide the case and instead referred it to the court’s first president to determine whether to elevate the case to the United Civil Sections of the SCC for final resolution.