DISPUTE RESOLUTION: An evolution in dispute resolution

There are many things that contribute to Italy’s status as an attractive destination for inward investment. Chief among those is its position at the heart of the European Union (EU), both geographically and economically. As the EU has evolved, so has Italy and its institutions, becoming more business friendly and welcoming to inward investment.

One of the key changes seen during the last twenty years is in the legal sphere, specifically the complexity of dispute resolution proceedings. The ability to resolve a dispute easily and fairly is a major concern for any foreign investor. The last thing they want is to be mired in a costly dispute for years, while they need to focus on expanding their business.

This was previously a problem in Italy, but things have now changed, and the general trend shows that the number of cases which are decided each year exceeds those newly instituted, thus suggesting an acceleration of the speed of proceedings. According to official figures, the number of pending court proceedings has been reduced in the last ten years by about 30 per cent. In major courts such as Milan, the economic capital of the country, proceedings are solved quicker than before. In addition to this, documents in English, unless challenged by the counterparty, are often accepted with a simple translation and, in certain cases, even without it.

Mediation and arbitration

If these improvements are deemed insufficient by investors, there is also a much improved mediation and arbitration process in Italy. No other country in the EU has seen more mediations attempted and successfully concluded than Italy, in fact all the other EU member states together cannot compete with Italy in this arena.

Mandatory mediation in certain sectors has helped to strengthen this phenomenon. When the parties agree to sit down and discuss the situation during mandatory mediation, the majority of attempts end up with an agreement, which is a win-win solution. When mediation is not appropriate, the easiest way to overcome the problem is arbitration. This may resolve the dispute in a satisfactory manner, limiting, to the maximum extent possible, interference from local courts.

Thanks to the New York Convention, an arbitral award can often be enforced even more easily than a court judgment. This entirely depends on identifying one’s priorities very clearly from the very beginning, selecting the right arbitrator and the right Counsel and the arbitral institution to administer the arbitral proceedings. The right arbitration rules may allow arbitrators to be much more effective than the large majority of other arbitral proceedings in terms of duration, quality and costs.

The Italian way

The great majority of arbitral proceedings in Italy are decided within 12 months, which is the time limit. Each party does not need to appoint its own arbitrator, except in very large disputes, therefore a sole arbitrator – if properly selected – may have a constructive dialogue with the counsel of both parties. This avoids the risk of having two partial arbitrators out of three and reduces the costs by about two thirds.

Clear provisions as to the evidence are to be stated in the rules. In order to benefit from a full review of the merits, the seat of the arbitration and the basic procedural law of another arbitration friendly country must be carefully selected. The final and main point is the selection of a good arbitrator.

The greatest attention and close cooperation from all interested parties, is then a must.

These basic premises set Italy apart from other jurisdictions, and can contribute to the country’s attractiveness to investors. It is, however, still important is to watch the conduct of the proceedings carefully.

There are three areas which are critical to every dispute;

1. The drafting of the dispute resolution clause

2. The negotiation of a possible solution before the dispute

3. The strategy at the beginning of the litigation mechanism.

The ultimate goal for the client is to win and to be able to obtain what it claims. There are many factors to be taken into account and the selection of people with a significant experience at an international level may help the client to make good choices. No case is the same and the expectations from clients from different jurisdictions also vary, based on their legal tradition.

Our firm has assisted foreign clients in Italy and Italian clients abroad for many decades. This double experience helps us to understand the mentality of all the actors within an international dispute in a better way. We devote great attention to strategy and cost-benefit analysis, enabling us to give clients the best possible advice, and to help them make the right decisions at an early stage of any investment. This should ensure they enter into a good business relationship with reliable people.