Originally from American Review of International Arbitration - ARIA

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Recent decisions of the Italian Court of Cassation have profoundly altered the system governing challenges of awards in formal arbitration (“arbitrato rituale”)1 provided by the Italian Code of Civil Procedure, and have created an immediate and absolute need for legislative action. This article addresses these cases, and their impact on the homologation (exequatur) and challenge of international and domestic arbitral awards in Italy.

I.

The 1942 Code of Civil Procedure (the “Code”) provided that an arbitral award had to be presented to a local court (a “Pretura”)2 within five days of its issuance in order for the court to review and confirm the award. Only after an exequatur was issued did the award become binding upon the parties, and therefore subject to challenge, execution through forced liquidation (“esecuzione forzata”), etc.3 The requirement that an arbitral award be deposited immediately was considered detrimental to arbitration. In fact, the entire system of governmental control over the challenge process was considered to be excessive, and one of the least internationally oriented aspects of Italian arbitration.4

In 1983, the Code was amended in order to accommodate domestic and international arbitration to the needs of practice and the requirements of the various arbitral conventions to which Italy is a signatory.5

Articles 823—25 of the Code now provide that an arbitral award becomes binding upon the parties immediately upon its signature. It follows that the award would thus be immediately subject to recognition abroad, within the meaning of Article V of the New York Convention.6

In addition, the period of time for homologation was enlarged from five days to one year. Homologation is no longer obligatory, but optional, and is necessary only if a party wishes to execute the award by means of the forced liquidation of assets in Italy (art. 825 of the Code). If the winning party does not, for whatever reason, wish to execute the judgment in this way, it need not go through the process of obtaining an exequatur.

Deposit and homologation were considered to be independent of the right granted to the losing party to challenge the award in court.