Alessandro Villani is a partner and head of Linklaters’ dispute resolution practice in Milan. He has a wealth of experience in a broad range of dispute resolution areas, including corporate, banking, bankruptcy and insolvency litigation, regulatory investigation and arbitration. His client base includes high-profile Italian and international organisations and he has worked on some of the largest litigation disputes in Italy, including acting for Barclays Bank, Santander Consumer Bank, Morgan Stanley, UniCredit, GE Capital Interbanca, BBVA, ING Bank, Glencore and others.
Loris Bovo is a counsel in Linklaters’ dispute resolution department in Milan. He specialises in banking, corporate and commercial litigation, in both ordinary and urgent proceedings, and has significant experience in domestic and international arbitrations, and in debt restructurings. Loris is also experienced in the NPL sector; he advises financial institutions in the context of investigations initiated by regulatory authorities and also advises clients on real estate and leasing matters in the renewable energy sector. He regularly advises leading Italian and international clients.
Manuela Caccialanza is a managing associate in the dispute resolution department at Linklaters in Milan. She specialises in banking, corporate and commercial litigation, in both ordinary and urgent proceedings, as well as in domestic and international arbitrations. In 2014, she was twice appointed as arbitrator by the Milan Chamber of Arbitration. She has also acquired noteworthy experience in insolvency procedures and debt restructuring matters. She regularly advises leading Italian and international clients.
GTDT: What are the most popular dispute resolution methods for clients in your jurisdiction? Is there a clear preference for a particular method in commercial disputes? What is the balance between litigation and arbitration?
Alessandro Villani, Loris Bovo and Manuela Caccialanza: In Italy, ordinary litigation is arguably the predominant dispute resolution technique. However, in recent years there has been a growing tendency towards mediation. In fact, in the banking and finance sector especially, there is an obligation to attempt to resolve disputes through mediation prior to embarking on litigation.
GTDT: Are there any recent trends in the formulation of applicable law clauses and dispute resolution clauses in your jurisdiction? What is contributing to those trends? How is the legal profession in your jurisdiction keeping up with these trends and clients’ preferences? Does Brexit continue to affect choice of law and jurisdiction?
AV, LB & MC: The choice of applicable law depends on a number of variables, notably the type of transaction the parties intend to implement and their nationality. The same goes for jurisdiction and arbitration clauses, although in recent years there has been a trend in favour of ordinary litigation in the Court of Milan, likely because of its efficiency and professional competence. As to arbitration clauses, there is a trend in favour of the Chamber of Arbitration of Milan, which on several occasions has shown a great deal of efficiency and professionalism.
Choice of law and jurisdiction is a key element of any transaction, as in the case of a dispute it may favour one of the parties over the other. International law firms are well equipped to provide their clients with a full advice from a multi-jurisdictional perspective.
Although we expect that Brexit may bring some consequences and affect choice of law and jurisdiction, we will have to wait for the entire process to be implemented in order to understand exactly what implications (and to what extent) Brexit will entail. However, we also expect that law firms based in the United Kingdom that have offices in all the main EU member states may be able to offer wider, more efficient assistance to their clients during the coming transitional phase.
GTDT: How competitive is the legal market in commercial contentious matters in your jurisdiction? Have there been recent changes affecting disputes lawyers in your jurisdiction? How is the trend towards ‘niche’ or specialist litigation firms reflected in your jurisdiction?
AV, LB & MC: The legal market in Italy is extremely competitive in commercial contentious matters, especially with respect to ordinary litigation matters. The liberalisation of legal fees in recent years has certainly contributed to this increase in competition in the sector. However, in the event of disputes that are particularly complex or involve multi-jurisdictional aspects and as such require cross-border advice, there is still a limited number of law firms capable of offering proper assistance.
GTDT: What have been the most significant recent court cases and litigation topics in your jurisdiction?
AV, LB & MC: One of the most significant recent court decisions relates to a banking litigation. In December 2017, the Supreme Court of Cassation, United Divisions, found the potential nullity of all ‘omnibus personal guarantees’, containing:
- waiver of defences relating to the unenforceability, illegality or invalidity of any guaranteed obligations;
- waiver of defences relating to the insolvency or similar proceedings involving the debtor; and
- waiver of any of the terms envisaged in article 1957 of the Italian Civil Code (which states that the guarantee survives the expiry of the guaranteed obligations only where the guarantor calls under the guarantee within two or six months, depending on the circumstances, of the expiry), executed on the basis of the standard form guarantee prepared by the association of Italian banks (ABI).
The Italian Competition Authority had challenged the ABI form, claiming that the inclusion of the mentioned clauses in that form represented a restrictive practice that infringed Antitrust Law No. 287/90. The Supreme Court stated that all omnibus personal guarantees executed after the entry into force of the Antitrust Law must be regarded as possibly null and void, even if they were executed prior to the investigations carried out by the Italian Competition Authority.
GTDT: What are clients’ attitudes towards litigation in your national courts? How do clients perceive the cost, duration and the certainty of the legal process? How does this compare with attitudes to arbitral proceedings in your jurisdiction?
AV, LB & MC: While it is recognised that costs are generally lower than in jurisdictions such as the United States or the United Kingdom, Italian litigation has traditionally been criticised for being overly protracted and burdensome. However, there have been significant reforms in recent times that have drastically reduced both the waiting times for hearings and the length of ordinary proceedings.
A significant decrease in the length of proceedings is also being recorded as to proceedings of second instance, owing to an improving organisation of resources.
Nevertheless, arbitral proceedings continue to be considered swifter and more efficient but with higher costs than traditional contentious proceedings. The type of arbitration, whether international or local, also has a bearing on the cost.
GTDT: Discuss any notable recent or upcoming reforms or initiatives affecting court proceedings in your jurisdiction.
AV, LB & MC: Over the course of 2019, a significant reform of bankruptcy legislation is going to be implemented in Italy. The impending reform is aimed at creating a more debtor-oriented environment, by replacing the traditional bankruptcy procedure with a ‘judicial liquidation of assets’ procedure. The main goal of the new regime is to set up a preliminary non-judicial phase aimed at detecting possible insolvency situations at an early stage, so that enterprises should be able to access restructuring solutions with no delay. Such a non-judicial phase may be activated by the entrepreneur or by courts upon the reporting of any qualified entity or individual (even the Italian Tax Authority). Throughout this phase, the entrepreneur will be assisted by a body specialised in management of financial crisis, which will be established with every Chamber of Commerce in Italy. If, after a six-month period, an agreement is not reached, the competent body shall report the situation to the public prosecutor for the possible commencement of insolvency procedure (aimed at liquidating the business’ assets). Creditors’ procedures are going to be heavily affected by this incoming reform.
GTDT: What have been the most significant recent trends in arbitral proceedings in your jurisdiction?
AV, LB & MC: There has been a debate in Italy on the possibility of extending arbitrators’ powers, notably allowing them to authorise interim and emergency measures. However, arbitrators have still not been given the power to issue interim measures, with the exception of certain specific kinds of measures expressly provided for by the law. Accordingly, the party seeking a remedy of this kind would be compelled to make an application to the ordinary courts, even pending arbitration proceedings, to obtain urgent relief against the other party. If the current debate were to result in an actual enhancement of arbitrators’ powers, such a change might well have a significant impact on the growth of arbitration as a mechanism for dispute resolution in Italy. The necessity for parallel ordinary proceedings is, without doubt, one of the factors preventing arbitration from gaining ground in Italy.
The current Arbitration Rules of the National and International Chamber of Arbitration of Milan, in force from 1 March 2019, provide that, unless otherwise agreed by the parties, the Arbitral Tribunal always has the power to adopt any determination of provisional nature with binding contractual effect upon the parties, therein widening the traditional powers of arbitrators to issue interim and urgency measures, even if devoid of legal binding effects and endowed only by binding contractual effects on the parties (therefore not per se directly enforceable as a court ruling).
Although treaty claims have been progressively increasing in number over recent years, the fresh yet already well-known decision given by the Court of Justice of the European Union on 6 March 2018 in the Achmea v Slovakia case may bring in a significant change in the treaty claims inside the European Union, drastically reducing (not to say nullifying) the effectiveness of intra-EU treaties’ protection. In particular, as the court has found that arbitration clauses included in intra-EU treaties are not compatible with EU law, this ruling may actually result in the disappearance of treaty claims brought by EU investors against a member state. However, as the Achmea decision is destined to raise a number of issues, under many points of view, it is too early at this stage to predict how exactly such decision will affect intra-EU treaty claims.
GTDT: What are the most significant recent developments in arbitration in your jurisdiction?
AV, LB & MC: There have been no significant developments in arbitration in recent years. The landscape has remained largely unchanged since 2006, when Italian arbitral proceedings were brought in line with international proceedings. As a result of the changes then implemented, arbitral decisions became immediately binding and non-appealable unless the parties agreed otherwise.
GTDT: How popular is ADR as an alternative to litigation and arbitration in your jurisdiction? What are the current ADR trends? Do particular commercial sectors prefer or avoid ADR? Why?
AV, LB & MC: Since 2010, a preliminary attempt at mediation has been a mandatory requirement for any litigant who intends to bring a court claim regarding certain kind of disputes, such as disputes in banking, financial and insurance sectors. However, the percentage of attempts at mediation that end up successfully is very low and usually claimants initiate a mediation proceeding only in order for the civil action to be admissible before the courts. Likewise, also in those sectors where no attempt at mediation is required by law, mediation (as well as other ADR) is not popular in the Italian jurisdiction, as it has proven to not quite be a effective dispute resolution route so far.
The Inside Track
What is the most interesting dispute you have worked on recently and why?
We have been assisting two major Italian banking institutions in a dispute before the Court of Milan regarding the validity of certain financial participative instruments that were converted into shares of an Italian company in the context of its restructuring process. The case has generated a great deal of interest as there are no precedents in the matter, so the decision determining the case will be the first ruling on those issues given in Italy.
Describe the approach adopted by the courts in your jurisdiction towards contractual interpretation: are the courts faithful to the actual words used, or do they seek to attribute a meaning that they believe the parties actually intended?
Italian contract law provides that in interpreting contracts courts cannot simply rely on the literal meaning of the words used in the contract but must investigate the mutual intention of the parties, also assessing the parties’ behaviour even after the execution of the contract. Such principle is usually implemented by Italian courts.
What piece of practical advice would you give to a potential claimant or defendant when a dispute is pending?
There is no general practical advice that can be given without distinction in every situation; any piece of advice must be based on a case-by-case analysis. However, we always recommend our clients to carefully evaluate the trade-off benefits and costs prior to commencing any litigation. When a litigation is still pending, such evaluation has to consider also the court’s orientation on similar cases (if available).
Alessandro Villani, Loris Bovo and Manuela Caccialanza
Linklaters Studio Legale Associato in association with Linklaters LLP