In accordance with the proposal contained in the report prepared by the Commission chaired by Prof. Luiso, Article 1(15)(g) of Delegated Act No. 206 of 26 November 2021 gives the legislator the task of "regulating the translatio iudicii between arbitral and ordinary proceedings and between ordinary and arbitral proceedings." Put simply: this reform concerns the coordination between State court proceedings and arbitration and the parties' possibility to switch from one dispute resolution method to the other.

The proposal reads as follows:

"In accordance with the delegation of power referred to in paragraph 1, the decree or decrees legislative decree(s) amending the rules on arbitration [...] regulate the translatio iudicii between arbitral and ordinary proceedings and between ordinary proceedings and arbitration proceedings;"

This is a reforming intervention of considerable systematic importance. The fact that it's possible to switch from arbitration to State court litigation and vice versa, as the Constitutional Court has ruled, testifies to the fact that both these dispute resolution methods are part of one single system.

When requested to assess the conformity to the Italian Constitution of Article 819 ter, paragraph II, of the Code of Civil Procedure excluding the applicability to arbitration proceedings of the rules governing the resumption of State court proceedings, the Italian Constitutional Court ruled that "in a legal system that expressly recognises that the parties may also protect their rights by resorting to arbitrators, whose decision (where taken in compliance with the rules of the Code of Civil Procedure) has the effectiveness of court rulings; the error made by the plaintiff in identifying the judge rather than the arbitrator as having jurisdiction must not prejudice its possibility of obtaining, from the body having actual jurisdiction, a decision on the merits of the dispute, while the rule censured, by not allowing the applicability of art. 50 c.p.c., prevents the case from continuing before the competent arbitrator or judge and, consequently, precludes the preservation of the procedural and substantive effects of the claim." (Constitutional Court, Judgment no. 223 of 19 July 2013).

The intervention of the delegated legislator cannot be limited to a mere reference to the law provisions that, within State Court jurisdiction, govern the translatio iudicii. In fact, in the event of a denial of jurisdiction; as the two procedural spheres differ significantly from each other the reforming law cannot to be reduced to a simple reference to the resumption from one judicial body to the other. Resuming State Court proceedings before arbitral tribunal (or viceversa) would entail the applicability of law provisions concerning two very different legal frameworks.

What are the routes available to a party wishing to proceed before a State Court in the event an arbitral tribunal dismiss its jurisdiction? Shall said party "resume" the proceedings or shall it be compelled to submit again its claim as if it was a totally new claim before the competent State Court?

The option of resuming the proceedings does not seem to be pursuable considering the significant differences between the State Court proceedings and the arbitral proceedings.

As a matter of fact, resuming proceedings in conformity with art. 50 of the Code of Civil Procedure entails a continuation of the proceedings ("If the proceedings are resumed before the Court declared competent within the time limit set by the Court in its order, or in the absence thereof within three months after the communication of the regulation order or of the order declining jurisdiction, the proceedings shall continue before the new Court. If the resumption is not carried out within the time limit indicated above, the proceedings shall be extinguished"). In other words: it implies a procedural identity that's not applicable to arbitral proceedings. Indeed, not only the commencement of the dispute but also its relevant management are regulated under very different terms and conditions in State court litigations and arbitral proceedings.

The truth is that the concept of translatio between different proceedings seems to imply the need to prevent that the error in the choice of the competent court produces irreparable consequences. However, in order to do so, it would be sufficient that the procedural effects of the application to the "wrong" Court would be preserved in the event of timely application to the correct body. By doing so, there would be no need to imagine any continuation of proceedings that have no procedural identity.

Furthermore, speaking of resumption entails the need to consider the system of preclusions, i.e. the system that art. 50 of the Code of Civil Procedure is founded.

In the resumption from the arbitral tribunal to State Courts, it's difficult to envisage a mandatory preclusion mechanism as it happens within State Court proceedings. In fact, "arbitrators have the power to conduct the proceedings as they see fit" (art. 816-bis para. 1, Code of Civil Procedure).

Yet, also in the opposite direction (i.e. in the context of the resumption of the proceedings from the State Court to the arbitrators) the application of a strict preclusion mechanism would not make much sense in an arbitration proceedings which is freely regulated under the parties' autonomy principle. Furthermore, the breach of purely procedural provisions could not be relied upon to challenge the award, in light of the limitation of the formal nullities to the "forms prescribed by the parties under express penalty of nullity" (art. 829 no. 7 of the Code of Civil Procedure).

In light of the above, the delegated legislator will have to disregard the preclusion system. All the more so, if considering that in arbitration Counsel representation is not mandatory and that arbitrators appointed are often accountants, engineers, architects, surveyors, chemists, physicians or other specialized professionals that might be less familiar with legal concepts.

Having said the above, the only acceptable solution seems to preserve the procedural effects of the first application if, in a given time period after the judicial authority's decision has been communicated, one party formally resorts to arbitration in accordance with the relevant applicable rules. Viceversa, the same would also apply if in the same time period from the award dismissing the arbitral jurisdiction one party serves the judicial application or files the appeal to promote the action already exercised.

Resuming proceedings before the State Court will be relatively easy: the appropriate statement of claim or recourse will preserve the substantive effects of the original application submitted to the wrong tribunal.

When proceedings shall be resumed before the arbitral tribunal, a number of variables shall be considered. First, the form of the request for arbitration could be established in the arbitration agreement (and could therefore vary in relation to the number and appointment mechanism of the arbitrators: see art. 809 of the Code of Civil Procedure).

There are different ways of commencing arbitration proceedings (also depending on the nature of the arbitration, whether administered by an arbitral institution or ad hoc). This gives the delegated legislator a choice: either considering that the burden of resuming the proceedings is complied with the generic "submission of the request for arbitration" and, therefore, defer to the multifaceted experience of the arbitral procedure, or to impose a standard of conduct which express the parties' intention to enjoy the translating effect.

In any event, it is to be established a certain starting term (i.e. dies a quo) and give the parties a reasonable time limit for the new commencement of the proceedings.

Finally, it cannot be overlooked that a denial of jurisdiction is always subject to appeal from whichever body it has been issued.

In proceedings before State courts, the denial of the arbitral jurisdiction can be challenged through a specific procedural tool called "regolamento di competenza" (art. 819-ter Code of Civil Procedure). In arbitration proceedings, the award denying the arbitral jurisdiction in favour of State court's jurisdiction can be challenged (by no later than one year from its last signature or by no later than 90 days from its service on the parties) only for causes of nullity pursuant to nos. 1 and 4 of Art. 829 Code of Civil Procedure (i.e. an appeal for nullity is admissible, amongst the others, in the following cases: 1) if the arbitration agreement is invalid, 4) if the award has been rendered outside the limits of the arbitration agreement).

As things stand today, the resumption before the arbitral tribunal does not prevent one party from challenging the judgement declining the jurisdiction. Similarly, the "resumption" before State courts does not preclude an appeal against the award that has upheld the challenge to the arbitral jurisdiction.

The transfer of the claim before the judicial body identified as competent, gives rise to a choice which can be disproven by the outcome of the proceedings challenging both the denial of jurisdiction pronounced by the State Court or by the arbitral tribunal. Therefore, the precautionary interruption of the time limit provided for in arts. 353 par. 3 and 354 par. 3 of the Code of Civil Procedure seems to be justified. It would mean that if the award is challenged on the grounds of nullity, or the jurisdiction established by the decision of the State Court is challenged, the time limit for the re-submission of the application remains suspended until the conclusion of the appeal. And it will start running again when the decision confirming the jurisdiction will become final and binding.

If the transfer of the claim (translation) has meanwhile taken place, it will always remain possible to apply for the enforcement's suspension of the judgment pursuant to art. 337 para. 2 of the Code of Civil Procedure.

Finally, the proceedings before State Courts concerning the challenge of jurisdiction is not subject to further appeal, thus it excludes further uncertainties. In contrast, the proceedings concerning the challenge of the arbitral award for nullity is subject to an additional recourse before the Court of Cassation. The resumption phase must take into account also this material difference.

Serious problems should not arise in the case of interim measures that have already been issued (or in relation to proceedings in progress). So far, the change of the court of the merits does not alter the jurisdiction of the state court, which normally is not affected by the powers to one or the other decision body. The survival of the suspension of a company's shareholders' resolution issued by the arbitral tribunal in corporate arbitrations which is followed by a denial of jurisdiction seems to be a merely theoretical issue (mostly because it is unlikely that the event takes place). The reform on the powers granted to arbitrators to issue interim measures will certainly affect also this topic.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.