In a recent decision, the United Sections of the Supreme Court of Cassation found that:

"the 30-day forfeiture term to appeal a decision that excludes the partner of a cooperative as provided for in Article 2527(3) of the Civil Code, in the version preceding the modification introduced by Article 8 of Decree-Law 6/2003, is applicable even in the presence of an arbitration clause in the articles of association."(1)

Facts

With Decision 13722/2016, the United Sections of the Supreme Court of Cassation addressed a case concerning a cooperative that had been sued before an arbitral tribunal by three partners who alleged that their exclusion, which the company had approved, had been illegitimate.

The arbitral tribunal had accepted the partners' challenge on the assumption that it had not been provided with definitive evidence concerning the non-fulfilment which had caused the claimants' exclusion.

The losing party appealed the decision before the Aquila Court of Appeal for different reasons – in particular, claiming that the appeal of the exclusion decision did not respect the 30-day deadline provided for by Article 2527(3) of the Civil Code.

The court rejected the appeal, emphasising that the 30 days prescribed by law could be waivered and that, in the case at hand, the waiver was implicit in the acceptance of the arbitration clause, given the incompatibility of the clause and the forfeiture term.

The losing party appealed the decision before the Court of Cassation on the grounds of violation and false application of Article 2527(3) of the Civil Code, on the assumption that the incompatibility between the arbitration clause and the forfeiture term had been erroneously stated.

The First Section of the Court of Cassation followed the applicability of the previous formulation of Article 2527(3) of the Civil Code – before the modification introduced by Decree-Law 6/2003 – emphasising that the court of appeal decision was grounded on case law which regarded Article 2287 of the Civil Code with reference to simple partnerships, but should also be applied to cooperatives.(2)

The court observed that these principles were not obvious and consequently asked the court president to pass the question to the United Sections of the Supreme Court of Cassation.

Decision

The United Sections of the Supreme Court of Cassation stated that the temporal rule provided in Article 2527(3) of the Civil Code should be applied and not the rule provided in Article 8(1) of Decree-Law 6/2003, now fixed by Article 2533 of the Civil Code.

The Court of Appeal had ruled out the possibility for the partners to appeal the decision, even if the appeal was proposed years after the communication of the decision that had excluded them. This decision drew on previous case law (Court of Cassation, November 12 1998, 1998; March 30 1984, 2084), according to which Article 2527(3) of the Civil Code should be considered object of a waiver only in the presence of an arbitration clause.

The United Sections of the Supreme Court of Cassation stated that this argument should be reconsidered for the following reasons:

  • It is conciliatory that the action provided for by Article 2527 of the Civil Code constitutes the only remedy for an excluded partner, given the difference between the traditional remedies provided for by Articles 2377 and 2379 of the Civil Code.
  • During an opposition, the judge should verify only the existence of the charges against a partner and the possibility of including them among the causes for exclusion, without judging the suitability of the deliberation.
  • Ritual arbitration has a judicial nature and consequently "with relation to the prescription, the "novum" is constituted… from the attribution… to the notification of the arbitration request, of the effect of interruption/suspension… that characterized only the judicial proceedings". Further:

"only the recognition of the "jurisdictional character" of the arbitral proceedings, permit to extend the interruption effect to the forfeiture term, even in that vast field where the forfeiture is excluded after a proceeding is commenced."

  • The argument on which the appealed decision was based excluded that the 30-day term provided for by Article 2287 of the Civil Code is incompatible with arbitral proceedings given that:

"the arbitrators, if their appointment is not contained in the clause, should be nominated by the parties and, in some cases, the appointment requires the intervention of the President of the Tribunal… with technical timing longer that 30 days."

In this regard, the United Sections of the Supreme Court of Cassation decision stated that arbitral proceedings must start with the notification of the request, which is not compromised by the temporal aspects of subsequent obligations.

Comment

The United Sections of the Supreme Court of Cassation underlined the first mistake on which the Aquila Court of Appeal's decision had been based: the court of appeal had correctly stated that the question, which was subsequently referred to the united sections, should have been declared inadmissible as it concerned a judicial error (and not a procedural error) and should therefore have been expressly provided for by the parties as a reason to nullify the award. However, the court of appeal decision had decided on the merits of the dispute, claiming the expiry of the 30-day term.

The United Sections of the Supreme Court of Cassation stated that:

  • the existence of the cooperative's implicit waiver of Article 2527(3) of the Civil Code could not be considered; and
  • the aforesaid term is applicable even in arbitral proceedings, as they are judicial proceedings equal to court proceedings.

In closing, the United Sections of the Supreme Court of Cassation stated that the arbitral tribunal had been referred to only as a third choice, thus applying the general principle according to which: "when the party commenced against the defendants themselves an action before the ordinary judge with, totally or partially, the same object, this behaviour was intended as an implicit waiver of the arbitration clause".(3)

For further information on this topic please contact Costanza Mariconda at Mariconda e Associati by telephone (+39 02 795 212) or email (costanza.mariconda@studiomariconda.com). The Mariconda e Associati website can be accessed at www.studiomariconda.com.

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Endnotes

(1) Court of Cassation, July 6 2016, 13722.

(2) Court of Cassation, November 12 1998, 11436; March 7 1995, 2657.

(3) Court of Cassation, July 15 2004, 13121.