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21 March 2019
A recent Supreme Court of Cassation decision affirmed that:
the party alleging the nullity of the arbitral award for late delivery of the decision has the burden of notifying its will to the other parties and to the arbitrators before the deliberation of the award according to art. 821 of the code of civil procedure, but, after this has no further burden of objecting to this nullity before any other defences in the arbitral proceedings.(1)
With Decision 21942 /2018, the Supreme Court of Cassation accepted an appeal filed against a Catania Court of Appeal decision, which had rejected an appeal for nullity of an arbitral award due to the late delivery of the decision pursuant to Article 829(1)(6) of the Code of Civil Procedure.(2)
The Catania Court of Appeal had found that, pursuant to Articles 821 and 829 of the Code of Civil Procedure, the party alleging the nullity of the arbitral award should have notified the other parties and the arbitrators in this regard and raised its nullity claim during the first hearing and before any other defence in the arbitral proceedings, given the general principle that the party alleging nullity must raise any violation of procedural rules during the first defence and the omission of any such reference implies a waiver to any such objection.
The losing party appealed the Catania Court of Appeal decision to the Court of Cassation for violation of Articles 821 and 829(2) of the Code of Civil Procedure and deficient contradictory reasoning.
The Supreme Court of Cassation accepted the appeal. It stated that the party alleging nullity of the arbitral award for the late delivery of the decision must notify the other parties and arbitrators before deliberation of the award pursuant to Article 821 of the Code of Civil Procedure. Further, the court set out that the party alleging nullity has no further burden in this regard before any other defence in the arbitral proceedings.
The Supreme Court of Cassation's decision strongly reaffirms a general principle of primary importance regarding arbitration. Article 829(1)(6) of the Code of Civil Procedure enables parties to claim nullity of arbitral awards for the late delivery of a decision.
However, Article 821 of the Code of Civil Procedure states that the expiration of a deadline may not be invoked as a reason for nullity of an award if the objecting party "had not notified the other parties and the arbitrators of the document containing its will" before the decision was deliberated.
According to case law, a combined reading of Articles 821 and 829(1)(6) of the Code of Civil Procedure is structured around the will of the objecting party to invoke the failure to observe the deadline, which constitutes a proper obligation, and not the mere expiration of the deadline, which constitutes a factual precondition.(3)
Further, the notification of the will of the party alleging nullity to invoke the failure to observe the deadline "does not constitute an ordinary objection to be proposed during the arbitration proceedings, but an imperative deed… failing which it is not possible to invoke the nullity of the arbitral award".
As stated in the Supreme Court of Cassation's recent decision, the fulfilment of this obligation entails "a provision that implies also effects of a substantial nature" and the "notification requirement guarantees the certainty, even in relation to the time, of the knowledge of the interested parties, of the will to invoke the failure to observe the deadline".(4)
The Supreme Court of Cassation clarified that the expiration of a deadline, as indicated in Article 820 of the Civil Code of Procedure, cannot be invoked as a cause of nullity of an arbitral decision if the party (according to Article 821 of the Civil Code of Procedure) had failed to notify the other parties and arbitrators before the deliberation of the decision of the document containing its will to invoke the failure to observe the deadline, making it a case of relative invalidity.
The abovementioned decisions clarify the formal importance of fulfilling the requirements of Article 821 of the Civil Code of Procedure, which requests notification "by a bailiff", and underline the strict interpretation of this requirement.
The Supreme Court of Cassation's decision did not limit itself to reaffirming a general principle, but also affirmed that:
the abovementioned principle must be supplemented with the specification that, as the notification may not be replaced by the mere party's objection, as it is an obligation as provided for by law, similarly this objection cannot be imposed to the party as a burden additional to the notification ex art. 821 c.p.c.
Therefore, the will to invoke the expiration of a deadline as the reason for nullity of an arbitral award must be formally stated by notification to the other party and arbitrators.
In order to verify whether a notification can result in the expiration of a deadline as a reason of nullity of an arbitral award, it is necessary to verify if the notification occurred before the deliberation of the decision without the need to verify whether the party had objected to the nullity before any other defence in the arbitral proceedings.
For further information on this topic please contact Costanza Mariconda at Mariconda e Associati Studio Legale by telephone (+39 02 795 212) or email (firstname.lastname@example.org). The Mariconda e Associati Studio Legale website can be accessed at www.studiomariconda.com.
(2) Article 829(1)(6) of the Code of Civil Procedure states that "the appeal for nullity is permitted, notwithstanding any previous waiver, in the following cases: 6) if the arbitral award has been given after the expiration of the established deadline".
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