Italy is moving towards being a more popular arbitral seat thanks to the upcoming abrogation of the legislative prohibition of provisional measures issued by arbitrators, which was considered the main factor for the scarce popularity of Italy as a seat for international commercial arbitration. This post analyses the main features and issues of the Italian law providing for the criteria which will inspire the new regulation on arbitral interim measures in Italy, arguing that the new scenario will certainly make Italy an interesting seat for international arbitration and ease the enforceability of interim measures issued by Arbitral Tribunals seated abroad.

The current regulation of provisional measures in Italy

Obtaining interim measures (i.e. temporary orders which preserve a legal or factual scenario pending the resolution of a dispute) in a swift and effective manner is sometimes of extreme importance for the parties involved in international arbitration, in order to safeguard either the profitability of the future award or the integrity of the arbitral process (e.g. evidence). It is not by chance, indeed, that — starting from an initial reluctance (in particular by states) in allowing arbitrators to issue provisional measures —, this is today common practice. Only few domestic arbitral statutes do not provide for the arbitrators’ power to issue provisional measures. Among these, it is possible to mention Thailand, Peru, Argentina and, surprisingly, Italy.

Indeed, it is well known that art. 818 of the Italian Code of Civil Procedure (“ICPC”) expressly forbids the issuance of arbitral interim measures, except for some limited exceptions, especially with reference to corporate arbitrations and temporary stay of companies’ bodies’ resolutions. This provision is normally considered to be one of the main reasons (possibly the main reason) for the underdevelopment of arbitration in Italy and the rationale behind the enactment of such (obsolete) rule was the alleged public character of interim protection.

Hence, provisional measures issued by arbitral tribunals seated in Italy certainly are not judicially enforceable (neither in Italy nor abroad, at least where the law of the seat is taken into account in the enforcement of provisional measures), and it is debatable if Italian courts would enforce arbitral interim measures issued abroad. In this regard, while the positive answer would be clearly preferable, the prohibition of arbitral provisional measures is currently used by the resisting party as a tool for opposing the enforcement of foreign interim orders in Italy.

Law 206 of 2021 and the upcoming amendment of the existing law

The Italian Parliament has finally realised that the prohibition of provisional measures issued by arbitrators is outdated and, by means of Law n. 206 of 26 November 2021, it has delegated the Government to enact a new regulation of the subject through the adoption of a legislative decree.

According to art. 1, par. 15, letter c), of Law n. 206 of 2021, arbitrators will be empowered to issue provisional measures in all cases where the parties so provide. Should this be the case, domestic courts will only be entitled to issue provisional measures until arbitrators accept their mandate and, afterwards, they will be only entitled to enforce arbitral interim measures or revise them should a party file a challenge.

This provision is a significant improvement of the Italian arbitration law and clearly shows a new pro-arbitration tendency of the Italian legislator, willing to affirm Italy as a popular arbitration seat.

It is not by chance that experts in international arbitration welcomed this innovation very warmly.

Comment

Apart from the obvious advantages of the new Italian approach to provisional measures, there are certain aspects that would need some clarification in the upcoming legislative decree or in the case law related to it. Below is a list of the key issues.

First of all, like in the vast majority of domestic laws, it is not clear whether ex parte provisional measures will be allowed. In this regard, it would be in our view advisable to rely on the practice of other countries, where a pragmatic approach based on a balance of interests has been taken and endorsed: while in general due process is to be respected prior to the issuance of provisional measures (thus imposing that both parties are heard before the issuance of interim measures), there are certain cases where it is necessary that the interim order comes as a surprise, e.g. when it is likely that the asset which is the subject of the arbitration is going to be sold. In these exceptional cases it can be sufficient that the initial lack of due process is subsequently rectified: a party may be informed of the interim order contextually with its issuance and can immediately have the possibility to contest it and obtain its deletion or rectification. In some cases, Arbitral Tribunals adopted the escamotage of recurring to “temporary restraining measures” granted “pending further determination of a request for interim measures”. This seems a good way of balancing the opposing needs outlined above and, indeed, could be a valuable solution aimed at avoiding that a party nullifies the effects of provisional measures prior to their issuance.

Another critical aspect concerns the formal requirement that the parties expressly provide for the arbitrators’ power to issue provisional measures. While a literal interpretation of this provision seems to require that the arbitral power to issue provisional measures is set forth in the arbitration agreement, a reasonable (and up to date) interpretation of this wording should allow arbitrators to issue interim measures in all cases where the parties provide for the application of arbitration rules which refer to such a power.

Moreover, it will need to be ascertained whether the arbitrators’ exclusive power to issue interim measures will be interpreted in a strict way, i.e. including also those provisional measures which necessarily imply the imperium of domestic courts, such as assets freezing. In this regard, as it happens in the vast majority of foreign countries, the most likely solution is that – at least with regard to interim measures requiring the cogent powers of state judges – domestic courts will have concurrent powers to issue interim measures.

Finally, the upcoming legislative decree will have to clarify if Italian courts will have to enforce arbitral provisional measures on the basis of an exequatur (i.e. directly conferring binding force to the measures) or will have to issue a separate order reproducing – and if necessary amending – the content of arbitral provisional measures. It is anyway beyond doubts that the new legislative provision overcomes all possible arguments against the enforceability of provisional measures issued in arbitrations seated abroad (especially when the arbitral clause set forth such a power, either directly or by referring to arbitral rules which so provide).

Next steps

The legislative decree regulating the subject of arbitral provisional measures in Italy is expected to be published shortly. Thanks to this new regulation, Italy will, finally, be able to be an attractive seat for arbitration proceedings.

It is, anyway, advisable that clients drafting their contracts are careful in making the right choices with regard to the applicable arbitration rules and to the main aspects of the arbitration proceedings.