Those who were unlucky enough to deal with civil litigation in Italy surely know that it is a Kafkaesque nightmare: endless delays, unavoidable procedural hurdles, counterintuitive decisions are an everyday disappointment to Italian lawyers. This is even more true for second instance tribunals: the Court of Appeals of Bologna is currently scheduling hearings in the year 2020, without anything really happening for three to six years after the appeal is lodged.
The Italian legislator first envisaged a rather sophisticated scheme to cope with the enormous backlog of work troubling our courts: hiring more judges.
Such a brilliant solution, however, immediately appeared to conflict with the Ministry of Justice’s chronical scarcity of funds. I like to believe that the best legal minds of the nation were entrusted with the task of finding a solution to this problem. And a solution they found indeed, a very ingenious one: recruiting people who are willing to be paid close to nothing for their services.
While recruitment is on-going (and it seems that applications were submitted by the thousands), Renzi’s government came up with a second solution, which the Parliament ratified just yesterday (making only a few amendments to the original draft). A new, unheard of before, kind of arbitration was created: the “continuation” arbitration. In a nutshell, the parties to an already pending proceeding are now given the option to jointly request that their case be transferred to an arbitral tribunal. It is as simple as that; the case is removed from the court’s docket and assigned to the arbitrators, who must deliver the award within 120 to 240 days, depending on the status of the procedure. The case is transferred “as is”, in that the parties would not enjoy the benefit of revising their strategy, amending their pleadings, etc.: the arbitrators pick up from where the judge left, and the proceeding merely “continues” before an arbitral tribunal.
To those who are not familiar with the Italian civil procedure, this may appear to be somewhat odd. Who could possibly be willing to replace the judge with an arbitrator half-way down the line, or maybe close to the end of the proceeding? As a matter of fact, this may be less nonsensical than it seems. Indeed, the trial of cases in Italian courts is chiefly a written exercise; most of the times, hearings take place just to acknowledge what the parties have done that far, but they rarely offer a chance of really presenting the parties’ arguments to the judge. Even witness testimony may be collected in writing beforehand, and being the lawyers prevented from talking to the witnesses (let alone cross-examining them), hearings are frequently a mere pretence of what they ought to be. Under these premises, if record of everything that happens is neatly kept of, as it should, it would not be too difficult for the arbitrators to complete their task. And should they disagree with some procedural decision taken by the judge, they would have the authority to reverse it. So, this “continuation” arbitration may not be as bad as it looked. The parties are given a chance to speed up a great deal the process of getting to a decision (just as we said, some Court of Appeals take five to six years to render a decision, whereas the arbitrators will have to meet a 120 day deadline), without necessarily disrupting the decision making process. This having been said, a couple of remarks are due.
If the parties wish to continue their case before an arbitral tribunal, they have no chance to select the appointing authority (which can only be the Consiglio dell’Ordine, i.e. the BAR association) and they are subject to significant limitations when jointly appointing the arbitrators. In fact, “continuation” arbitration panels may only be composed of licensed attorneys, either Italian or foreign, who are enrolled in the local BAR association. Whilst it does not seem too hard to guess who lobbied for this particular feature of the newly enacted rules, the impossibility of having non-lawyer arbitrators does appear to be quite a limitation to the parties’ rights. If they want to have an architect, or an accountant, or a medical doctor sitting in the arbitration panel, their only option is to drop the court case and start anew with an ordinary arbitration (which means signing an agreement for either ad hoc or administered arbitration). Clearly, the chance of dropping the court case and submitting to arbitration has always been available, even before this piece of legislation was enacted. By doing so, however, the parties would cancel everything they had done in the proceeding, and possibly gain an opportunity to revise strategies, and correct mistakes. This may be the reason why it very seldom happened that parties availed themselves of this option, which leads to my second observation.
When the law calls for the case to continue before the arbitrators “as is”, it expressly makes clear that estoppels and time bars may not be revisited. For example, if a party forgot timely to file a document with the court, the arbitrators would have no power to authorize a late filing (whereas if the filing was timely requested, and the judge denied such request, the arbitrators would have a chance to let the document in question into the proceeding). This particular aspect of “continuation” arbitration marks the most significant trait of novelty: both parties can rely on the guarantee that bringing the case to arbitrators would give no unfair advantage to their opponent, and neither would it be detrimental to either one of them. Quite the opposite, both parties would benefit from getting to a decision within a more acceptable timeframe. And speaking of timeframes, another remark comes to mind.
In theory, we could all agree on considering a six year trial, with just two hearings held and three pleadings filed, nothing short of a flagrant example of malfunctioning justice. In reality, however, when this very topic is looked into by the losing party’s attorney, the feeling of being deprived of our constitutional right to a fair trial may not emerge quite so openly. Experience tells us that, more often than not, there is one party to a proceeding that rejoices in its exasperating duration: that is the same party who anticipates a defeat, and just enjoys every minute spent waiting for an adverse decision to come. So, the question is how to get those parties to agree to transfer the case to arbitration, cutting off years of pointless court activity and getting to a final decision in four months. The law undoubtedly calls for a joint request of the parties (except when civil services are involved, where a “silent consent” mechanism is provided for), leaving no room for unilateral resolutions of the party anticipating a triumphant victory over his opponent. A few weeks ago, when the decree was passed pending the Parliament’s approval, I suggested that an unreasonable refusal to transfer the case to arbitration be sanctioned by the court (for Italian speaking readers, see “Arbitrato di prosecuzione e negoziazione assistita: le nuove frontiere dell’ADR in Italia”). This tool was used to persuade parties not to boycott pre-trial settlement discussions: an unreasonable refusal to join the negotiations, after having been invited to do so, results in higher legal fees and damages being awarded in favour of the prevailing party. Most likely, the choice of not providing for a similar rule in the case of arbitration stems from the constitutional right to have controversies resolved by a state court. Nevertheless, without going so far as to establish a sort of mandatory arbitration (which would clearly be unconstitutional), the legislator should have been more daring at dealing with this issue.
The final aspect that is worth mentioning is that of costs. A Minister of Justice’s decree will soon set forth tariffs applicable to these arbitrations, and the only hint offered in yesterday’s law is that arbitrators’ fees are to be “reduced”. Having lawyers tariffs been abolished, I am not sure what the starting point for any such reduction could be. The only certainty is that “continuation” arbitration is going to be inexpensive: if the benchmark is set by the recruitment of people willing to be paid a 200.00 €uros flat fee for writing a Court of Appeals judgement, we should expect arbitrators’ fees to be very much lower than in the rest of the civilized world.
To draw up a conclusion, if you have clients swamped in the endless ordeal of an Italian civil lawsuit be prepared to suggest them a viable, time-efficient and very cheap alternative thereto: your key problem is just convincing your opponent to join forces in this respect.