THE AUTHORS:
Letizia Ceccarelli, Senior Associate at Squire Patton Boggs
Hoda Ghassabian, Trainee Lawyer at Squire Patton Boggs
Introduction
National courts play a fundamental role in giving effect to arbitral awards by providing the legal framework necessary for the recognition and enforcement of foreign decisions. However, nothing occurs in a vacuum: geopolitical developments can significantly impact recognition and enforcement proceedings before national courts. This article examines the practical steps taken by Italian courts in supporting arbitral decisions, the impact of the Cartabia Reform (Legislative Decree No. 149/2022), and the challenges posed by geopolitical events to recognition and enforcement proceedings in Italy.
The New Italian Arbitration Era following the Cartabia Reform
Under Article III of the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) – to which Italy is a signatory – national legislations shall not impose substantially more onerous conditions or higher fees for recognition and enforcement of foreign awards than those required for domestic awards. Prior to the Cartabia Reform, the immediate enforceability of Italian courts’ decisions regarding the recognition of foreign awards was ambiguous, potentially creating additional requirements compared to those provided for domestic awards. Accordingly, Article 829 of the Italian Code of Civil Procedure (“ICCP”) was reformed to crystalize the immediate enforceability of the Decree issued by Italian courts granting recognition and enforcement to foreign arbitral awards (i.e., exequatur). This amendment, among others, brought Italy closer to a more uniform application of the provisions of the New York Convention. It is in this context that parties must become aware of the required practical steps to efficiently and effectively obtain recognition and enforcement of arbitral awards in Italy.
Practical Steps to Recognize and Enforce Foreign Arbitral Awards in Italy
Articles 839–840 ICCP, and the New York Convention, establish the necessary requirements to seek recognition and enforcement of foreign awards in Italy. In practice, recognition and enforcement proceedings can be summarized as follows:
- Filing the Application. Pursuant to Article 839 ICCP – which includes a verbatim adoption of Article IV of the New York Convention – the award creditor seeking to recognize and enforce the award against the award debtor shall file an ex parte application before the President of the Court of Appeal where the award debtor is domiciled or, if not domiciled in Italy, before the President of the Rome Court of Appeal (the “Court”).
- Documentation Requirements. The application must include the original or certified copies of both the arbitral award and the arbitration agreement, along with certified Italian translations thereof if provided in any other language than Italian.
- Review by the Court. The Court will verify the formal validity of the award. It may ex officio reject the application if (i) the subject matter of the dispute was not arbitrable pursuant to Italian law, or (ii) the award provides for an order contrary to Italian public policy, including any non-compliance with the principle of adversarial proceedings in the arbitration.
- Issuance of the Court Decision. Upon review of the above, the Court may (i) issue an exequatur decree granting recognition and enforcement of the award, or (ii)reject the ex parte application. There is no established time frame within which the Court is required to issue its decision on the recognition and enforcement proceedings. The exequatur decree, duly served to the award debtor, may be challenged within 30 days, pending which the award is enforceable, unless otherwise decided by the Court. If the exequatur is challenged, inter partes adversarial proceedings are initiated. The exequatur may be challenged pursuant to the grounds provided in Article 840 ICCP, which substantially mirror Article V of the New York Convention (i.e., the invalidity of the arbitration agreement or incapacity of the parties thereto; the lack of proper notice regarding the constitution of the arbitral tribunal or the commencement of the arbitration proceedings, thereby prejudicing the right of a party to present its case; an excess of authority of the arbitral tribunal beyond the scope of the arbitration agreement; serious procedural irregularities; partial annulments or pending proceedings, or a violation of public policy).
- Request for Provisional Measures. To reduce the risk of asset dissipation following the issuance of the award, and during the review of the ex parte application for the recognition and enforcement of the award, the award creditor may request for provisional measures. In order to request provisional measures, the award creditor must demonstrate (i) fumus boni iuris, signifying a plausible legal basis for the claim, and (ii) periculum in mora, showing that any delay in preserving the award debtor assets would result in a serious and irreparable harm to the award creditor. These provisional measures may consist of attachment orders (sequestro conservativo) under Article 671 et. seq. ICCP, or urgent injunctions (provvedimenti d’urgenza) under Article 700 ICCP.
- Initiation of Enforcement Proceeding. Once the exequatur decree is granted, the award creditor may initiate enforcement proceedings by serving the award and a writ of enforcement to the award debtor. The award creditor may seek fulfilment of its credit also by summoning a third party creditor of the award debtor. The writ of enforcement may consist of the attachment of immovables, movables, or assignment of receivables; however, the writ must state the form of enforcement requested.
When Arbitration Meets Geopolitics: Sanctions and Enforcement Issues
The intersection of arbitration and geopolitics presents a host of legal and political complexities, as economic sanctions have become an increasingly common tool in international politics, particularly in the context of trade wars and geopolitical tensions. These economic sanctions have had a tangible impact on the recognition and enforcement of foreign arbitral awards. While the New York Convention provides for a clear and predictable system whereby arbitral awards issued in one country can be recognized and enforced in other countries, domestic enforcement mechanisms are increasingly challenged by the geopolitical landscape as economic sanctions come into play.
Pursuant to Article V of the New York Convention, recognition and enforcement of arbitral awards may be refused if, inter alia, the subject matter of the dispute is not arbitrable or if enforcement would be contrary to the public policy of the country where enforcement is sought. Although there is consensus that the New York Convention has construed the public policy exception narrowly, it is arguable whether courts may refuse enforcement under the public policy exception if the arbitral tribunal failed to consider overriding mandatory provisions of law, including economic sanctions, of the enforcing State. Notably, national courts have taken different approaches when reviewing arbitral awards involving sanctioned parties. Courts tend to give effect only to sanctions reflecting international consensus (e.g., those imposed by the United Nations or the European Union) and often disregard unilateral sanctions, such as those imposed by the United States—except in U.S. courts, where such measures are fully enforceable.
In particular, in 2020, the Paris Court of Appeal (“Court”) in annulment proceedings brought by TMC FR S.A. (“TMC”) to the TMC FR S.A. v. Natural Gas Storage Company (“NGSC”) award issued in favour of NGSC, explicitly differentiated between internationally and unilaterally imposed sanctions. In its decision (Paris Court of Appeal, 19/07261, 3 June 2020), the Court stated that “international sanctions resulting from the United Nations Security Council resolutions, insofar as they imposed on the Member States and therefore on France, may be assimilated to foreign mandatory laws and/or really international mandatory law”. The Court further concluded that sanctions taken by the European Union through Council Regulations, which are directly transposed in the French national legal order, “may be assimilate to French mandatory laws, [and] they must also be integrated in the French concept of international public policy […] which the French legal order cannot disregard.” With respect to U.S. sanctions, by contrast, the Court noted that “unilateral sanctions taken by the American authorities against Iran cannot be considered as the expression of an international consensus,” since a foreign mandatory law may fall under French international public policy “only insofar as it carries the values and principles that cannot be disregarded by this international public policy even in an international context.” Accordingly, the Court rejected TMC’s challenge to annul the arbitral award.
Italian courts have historically interpreted public policy exceptions narrowly, taking a pro-enforcement stance. Nevertheless, when enforcement involves parties or assets subject to the United Nations or European Union sanctions, courts must take into consideration overriding public international law and EU regulations, which are directly enforceable in Italy as an EU Member State. Accordingly, Italian courts may refuse to recognize and enforce an arbitral award if they conclude that enforcing such an award could constitute a violation of Italy’s public policy, which includes international and EU sanctions, even if the arbitral process otherwise complies with the requirements of the New York Convention. However, Italian courts have consistently affirmed that a violation of public policy should be assessed based on the concrete consequences of enforcing the arbitral award. In particular, a violation of public policy must be found within the decisum of the arbitral tribunal, and although the court is permitted to examine the content of an award, such examination cannot give rise to a review of the grounds or merits of the underlying dispute.
Conclusion
The recognition and enforcement of foreign arbitral awards in Italy is firmly rooted in a legal framework shaped by the New York Convention, and the Cartabia Reform has significantly enhanced the efficiency of the recognition and enforcement proceedings in Italy. Nonetheless, bringing arbitral awards to life in the enforcing state remains a complex, multi-step process that demands procedural precision and strategic foresight—especially when provisional measures or enforcement against third-party debtors are involved. Furthermore, layers of complexity are introduced to the enforcement process by the growing influence of geopolitical factors, particularly international sanctions. While Italian courts continue to adopt a pro-enforcement stance, they are also obligated to uphold public order, requiring a careful balancing exercise: protecting the integrity of arbitration while ensuring that enforcement does not contravene overriding mandatory norms.
As international arbitration continues to intersect with geopolitics, the adaptability and legal clarity of national judicial systems in relation to recognition and enforcement proceedings will become increasingly pivotal in safeguarding the effectiveness and legitimacy of international arbitration.
ABOUT THE AUTHORS
Letizia Ceccarelli is an Italian-qualified Senior Associate in the International Dispute Resolution Practice at Squire Patton Boggs based in Milan and Geneva offices. She has experience in investor-state arbitrations under the ICSID, LCIA, and UNCITRAL Rules. She has also acted for private companies in international commercial arbitral proceedings conducted under the rules of the LCIA and the Milan Chamber of Arbitration (CAM Milan). Her cases have involved a wide range of sectors, including oil and gas, mining, construction and infrastructure, aerospace, and telecommunications. Letizia has also assisted both Italian and international companies in commercial litigations before the Italian courts, with a particular focus on contract and bankruptcy disputes.
Hoda Ghassabian is a Trainee Lawyer in the International Dispute Resolution Practice Group at Squire Patton Boggs based in Milan, Italy. She is regularly involved in commercial and investor-state arbitrations, with experience with arbitrations conducted under the ICSID, LCIA, UNCITRAL, and ICC rules. Hoda’s practice focuses on disputes related to international investment and commercial arbitration, particularly in the oil and gas, energy, natural resources, and telecommunications sectors. She also has experience in public international law, including matters related to climate change and its impacts on human rights before the International Court of Justice and the Inter-American Court of Human Rights.
*The views and opinions expressed by authors are theirs and do not necessarily reflect those of their organizations, employers, or Daily Jus, Jus Mundi, or Jus Connect.
