On 24 April 2020, with Law No. 27 (the "Conversion Law") the Italian Parliament converted into law the Law Decree No. 18 of 17 March 2020 ("Cura Italia Decree") adopted by the Italian Government in the aftermath of the COVID-19 outbreak.
The Conversion Law, among other things, extended the emergency measures introduced for judicial proceedings with the Cura Italia Decree to arbitrations governed by the Italian Code of Civil Procedure, "to the extent compatible".
These emergency measures notably include the suspension of all procedural deadlines until 11 May 2020 and affect the conduct of arbitration hearings until 30 June 2020, including with respect to the possibility to hold virtual hearings.
The choice to retroactively extend the emergency measures to arbitration "to the extent compatible" at this late point in time raises several questions, particularly with respect to (i) the practical implications of such extension, (ii) its interplay with the principle of party autonomy and (iii) the impact that such extension may have on the enforceability and the validity of awards issued in Italy under the new legal framework.
With the Conversion Law, the Italian Parliament retroactively extended to arbitration, "to the extent compatible" ("in quanto compatibili"), the emergency measures introduced for judicial proceedings with the Cura Italia Decree since March 2020 (Art. 83, paragraph 21 of the Conversion Law).1
The Conversion Law fills the gap concerning the applicability of such emergency measures to arbitration proceedings seated in Italy, which had generated uncertainties, particularly in the context of ad hoc arbitrations. The silence as to the applicability of the emergency measures to arbitration was particularly problematic in light of the 240-day deadline for issuing the award set forth in Article 820 of the Italian Code of Civil Procedure.2
Nonetheless, the impact of the Conversion Law on pending arbitrations raises new questions and concerns. Set forth below is a brief assessment thereof, particularly with respect to: (i) the suspension of procedural deadlines; (ii) the postponement of hearings and the recourse to virtual hearings; (iii) the impact that the Conversion Law may have on the enforceability and validity of awards issued under the new emergency legal framework; and (iv) the applicability of other provisions of the Cura Italia Decree to arbitration "to the extent compatible".
Suspension of procedural deadlines
Article 83, paragraph 2, of the Cura Italia Decree suspended all procedural deadlines, with very limited exceptions, for proceedings pending before Italian courts from 9 March 2020 until 15 April 2020.3 As a result of an amendment introduced by Law Decree No. 23 of 8 April 2020, the suspension was extended until 11 May 2020.
With the Conversion Law, the suspension until 11 May 2020 is now retroactively extended to arbitral proceedings, which until the present day have continued unaltered, with limited exceptions.
Indeed, in response to the COVID-19 emergency, the general trend among arbitral institutions has been to ensure continuity of pending cases from their inception to the issuance of the award, including by promoting case management techniques and the virtual conduct of arbitral proceedings.4 In this context, the Milan Chamber of Arbitration (Italy's main arbitral institution) adopted a prudential approach, consistent with the measures introduced by the Cura Italia Decree and with the severe situation affecting the Milan area in particular: it suspended all procedural deadlines, including deadlines for issuing awards, until 11 May 2020, subject to an agreement to the contrary by the parties and the arbitral tribunal.5
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1 The wording of this provision as a result of the Conversion Law may leave room for a narrow interpretation, pursuant to which the emergency measures set forth in the Cura Italia Decree would only be extended to "judicial proceedings relating to [...] arbitration", i.e., to those cases in which Italian courts act in support of arbitrations (e.g., to appoint an arbitrator absent agreement by the parties), rather than to arbitral proceedings tout-court. This reading is problematic, considering that such judicial proceedings were presumably already covered by the general provisions of the Cura Italia Decree applying to all judicial proceedings before civil courts.
2 Under Article 820 of the Italian Code of Civil Procedure, unless otherwise agreed by the parties, the award shall be issued within 240 days from the arbitrators' acceptance of their appointment. The deadline may be extended under certain circumstances set forth in the same provision. Failure to comply with this deadline constitutes a ground for setting aside the award under Article 829, paragraph 1, No. 6, of the Italian Code of Civil Procedure. However, these provisions are rarely of relevance in practice, as deadlines for issuing the award are routinely extended by the parties, and the possibility to obtain an annulment of the award for failure to respect such deadlines is limited, including because pursuant to Article 821 of the Italian Code of Civil Procedure, a party may only invoke this ground for annulment if it expressly notified to the other party and the tribunal its intention to do so prior to the tribunal's deliberations.
3 The Cura Italia Decree extended to 15 April 2020 the suspension of procedural deadlines from 9 March to 22 March 2020 previously introduced by the Law Decree No. 11 of 8 March 2020.
4 See, e.g., the joint statement by major arbitral institutions respecting the conduct of international arbitration in times of COVID-19 dated 16 April 2020: https://iccwbo.org/content/uploads/sites/3/2020/04/covid19-joint-statement.pdf. See also ICC Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic dated 9 April 2020: https://iccwbo.org/publication/icc-guidance-note-on-possible-measures-aimed-at-mitigating-the-effects-of-the-covid-19-pandemic/.
5 See CAM communication dated 14 April 2020: https://www.camera-arbitrale.it/it/news/arbitrato-sospensioni-dei-termini.php?id=930.
Originally published May 5, 2020.
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