Out-Law Guide 6 min. read
23 Aug 2023, 9:25 am
The Chamber of Commerce of Milan (CAM) is Italy’s first national arbitration centre and has promoted arbitration nationally and internationally with great success.
According to the CAM’s annual report (23 pages / 1.42MB PDF), the institution registered 131 requests for arbitration in 2022 with the number of cases expected to grow in 2023. The arbitrations, which have an average amount in dispute of €1.6 million, are mainly seated in Milan.
Recent legislative reforms in Italy, known as the ‘Cartabia reforms’, allowed parties to give the arbitral tribunal jurisdiction to issue interim measures, and had a huge impact on the arbitration on the work of the CAM.
In 2023, the CAM published its new rules (31-page / 478KB PDF) which adapted to these reforms, modernising the institution and making it more attractive to foreign investors. The new rules are a modern and flexible tool, and apply to proceedings beginning on or after 1 March 2023.
The simplified procedure has been in place since July 2020 and is used for proceedings with a value of less than €250,000, or in proceedings without any economic value limit if the parties expressly request it. The average duration of simplified proceedings in 2022 was six months.
The CAM’s fair conduct rules stipulate that the Chamber of Arbitration, experts, arbitrators, parties and their counsel must act in good faith during any phase of proceedings. The arbitral tribunal has the power to sanction any breach of its decisions and any unlawful conduct that is contrary to good faith. The tribunal takes into account the conduct of the parties when allocating costs.
An example of how fair conduct operates is that if parties want to raise a jurisdictional objection they have to do so as soon as possible or else this right is considered waived. Similarly, any objection to the existence, validity or effectiveness of the arbitration agreement or lack of jurisdiction of the arbitral tribunal must be raised in the first brief – or at the first hearing following the claim to which the objection relates – or the tribunal deems it to be waived. Attendance at a hearing can be organised by any appropriate means and virtual hearings are allowed and often used. The tribunal is responsible for the conduct of the proceedings and the evaluation of evidence. It can appoint experts or hear experts and witness presented by the parties.
The CAM provides for the usual rules on constitution, which include the possibility to have the dispute solved by a three-member arbitral tribunal or a single arbitrator. The CAM does, however, favour sole arbitrators unless otherwise agreed by the parties or unless the dispute is particularly complex.
The rules allow proceedings to be consolidated if all the parties agree, or if the arbitration agreements are the same or at least have arbitration agreements as for the way of appointment of the arbitrators and seat of arbitration. In multi-party arbitrations, the CAM may disregard the parties’ agreement and appoint the arbitrators directly. This is a very pro-efficiency standpoint.
Prospective arbitrators must disclose in writing any circumstances that may give rise to a doubt as to their independence and impartiality. Parties can challenge the appointment of arbitrators and apply for their removal in cases of breach of their obligation of independence and impartiality.
Notably, the CAM has issued a Code of Ethics of Arbitrators. The code imposes on the arbitrators the duty to perform their task with the necessary competence; devote the necessary time and attention to the arbitration and perform and complete its tasks expeditiously, diligently and efficiently as possible; and to be impartial and independent. The code also applies to experts who give evidence to the tribunal. Arbitrators can be replaced if they breach this code. This is a very innovative rule, and one that has been pioneered by only a few institutions.
Awards are issued by a majority decision and are signed by the arbitrators with the indication of place and time. In contrast to other institutions, scrutiny is not mandatory but is performed upon request of the arbitrators to the CAM. The secretariat indicates to the arbitrators a time limit for the submission of the draft award and verifies its compliance with the formal requirements under the rules.
The tribunal must file the final award within six months from its constitution unless otherwise agreed by the parties. The secretariat of the CAM can extend the time limit if necessary. Tribunals can issue partial and interim awards. Parties can apply for a correction of clerical or counting errors 30 days after the issuance of an award.
The costs of the proceedings, including the fees of the CAM and of the arbitral tribunal and expenses, depend on the value of the dispute, on the basis of which the Arbitral Council determines the amount of fees to be paid.
Once the time limit to file the reply to the request for arbitration expires, the secretariat might direct the parties to make an advance on costs. Advance payments are usually requested in equal shares unless otherwise decided by the secretariat, which has the power to request advance payments based on the value of each party’s claims. However, the parties remain jointly liable for the payment of the costs of the proceedings.
Should one party fail to pay the advance, the secretariat of the CAM will direct the other party to pay or decide separate provisions for each party’s claims. Should the other party fail to pay, the CAM secretariat will put an end to the arbitration or the claims to which the unpaid advance relate.
At the end of the arbitration, the CAM Arbitral Council determines the costs of the arbitration. Arbitrators’ fees are primarily calculated on the basis of performance. The secretariat then asks for the parties to pay a final deposit before the award is issued. The CAM rules provide that parties have an obligation to disclose the use of a third-party funder in order to ensure compliance with rules on conflicts of interest.
The most significant amendment to the CAM arbitration rules concerns the power of the arbitral tribunal to issue provisional measures. Before the Cartabia reform, the CAM rules already allowed the arbitral tribunal to order any kind of interim measures, unless the parties agreed otherwise, though this power was subject to strict limits set forth by Italian law.
The recent arbitration law reform now allows parties to grant the arbitral tribunal with the power to issue interim measures modernising Italian arbitration law and reinforcing the attractiveness of the CAM rules. Indeed, Italian law now provides that arbitral tribunals can order interim measures as soon as they are duly constituted, as long as parties expressly agree to that power. This agreement can be explicit or can take the form of an implicit agreement, through a reference in the arbitration clause to the arbitration rules.
Once constituted, the arbitral tribunal has exclusive jurisdiction over the dispute and therefore courts cannot issue interim measures. A party can only challenge an interim measure order for lack of jurisdiction or if it breaches public order. Interim measures orders are directly enforceable. This is an important step in the modernisation of Italian arbitration law aligning Italy with all other arbitration-friendly jurisdictions.
Emergency arbitration rules were first introduced in 2019 to align with other major arbitral institutions. Under the rules, a party can request the appointment of an emergency arbitrator to order and grant urgent and provisional measures of protection, including those of an anticipatory nature.
A reasonable challenge can be filed to the CAM secretariat within three days of the reception of the statement of independence, or from the date when parties become aware of grounds for challenge. The Arbitration Council decides on the challenge. Once appointed, the emergency arbitrator has 15 days to issue the emergency order sought, by way of procedural order. The order can include an allocation of costs.
In some instances, the emergency arbitrator can issue rules without hearing the counterpart, if it ensures the efficiency of the measure ordered and safeguards the applicant’s interests. In these situations, the emergency arbitrator can schedule a hearing within 10 days of the emergency order with all the parties and then issue, within five days of the hearing, an order confirming or revoking the initial order.
Emergency arbitration is not independent from the arbitration on the merits of the dispute, and the applicant must introduce a request for arbitration within 60 days of the emergency arbitration application – or any shorter time to be set by the emergency arbitrator.
The CAM’s arbitrations are confidential by principle. There is an exception when parties need to use the award to protect their rights or if the law provides for the arbitration to be disclosed. In addition, the CAM can publish orders and awards for academic purposes unless one of the parties refuses such publication within 30 days of the issuance of the award or order.
Co-written by Laura Izzo and William Brillat-Capello of Pinsent Masons.