May the parties derogate both general and special jurisdiction in Italy?
IBA Litigation Committee newsletter
13 May 2019
Pavia Ansaldo, Rome
Pavia Ansaldo, Rome
Pavia Ansaldo, Rome
Any lawyer dealing with international contracts knows that reaching an agreement on the jurisdiction clause may be quite a difficult task, because each party generally feels more comfortable knowing that disputes arising out of the contract will be referred to a court system it is familiar with. Any such lawyer also knows that the bargaining strength of the parties is only one of the factors to be taken in consideration in negotiating these clauses and is possibly not the key one.
The first issue to consider carefully is whether the clause is valid and effective under the laws of the party that agreed, under an international contract, to be sued before a court of a foreign country. In particular: what happens if the defendant sues before a domestic court challenges the clause claiming that a foreign court is to have jurisdiction? The Italian Corte di Cassazione (Court of Cassation) has recently handed down two interesting judgments on these issues.
The defendant’s domicile or residence in Italy is the general criterion for the jurisdiction of the Italian courts (the citizenship being a connecting factor only in some residual matters).
The parties may conventionally accept the jurisdiction of a foreign court in writing; lacking such an agreement, the Italian defendant may sue before a foreign court can object to the lack of jurisdiction in its first defence.
European Union Regulation no. 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the ‘Regulation’) also provides the criterion for the domicile of the defendant as the general criterion for the attribution of jurisdiction.
According to such Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State. The defendant’s domicile criterion may be waived in cases of special jurisdiction because of: (1) the particular subject matter of the proceedings (ie, in case of contractual obligations, civil claims for damages, trusts); or (2) other procedural features (ie, in case of several defendants and closely-connected claims, action on a warranty or guarantee, counter-claims).
The Regulation also provides for an exclusive jurisdiction, regardless of the domicile of the defendants, in disputes regarding real estate, company law, trademarks and other specific matters. Moreover, if the parties have agreed that the courts of a Member State are to have jurisdiction to settle any dispute which may arise in connection with a particular contract, those courts shall have exclusive jurisdiction unless the parties have agreed otherwise, regardless the domicile of the defendant.
This notwithstanding, the issue of forum-selection clauses has been debated in Italy for quite some time.
Recent case law
By judgment no. 20349 of 31 July 2018, the Italian Court of Cassation recognises that parties’ agreements may derogate both ordinary and special jurisdiction.
According to the Court, when the parties (pursuant to the Regulation) assign to a foreign judge the exclusive jurisdiction on disputes arising from a specific legal relationship, the agreement prevails not only on the general criterion of jurisdiction, but also on the special ones.
The decision of the Court of Cassation is consistent with the literal interpretation of the Regulation. Indeed, if on the one hand the Regulation makes the parties free to agree on the court having jurisdiction over their dispute, on the other hand the parties are not given the same right with respect to matters falling in the exclusive jurisdiction provisions. The statement of the Court of Cassation is quite important because it implies that – outside those cases in which the exclusive jurisdiction is set by the same Regulation – the parties are free to waive both the general and special criteria to assess the jurisdiction.
Such statement is even more remarkable because the same Court of Cassation, by a judgment (no 22433/2018) handed down a few weeks later, took a step further. In its judgment, the Supreme Court recognised that, at the outset of the proceedings, the defendant domiciled in Italy may refer the matter to the Court of Cassation in order to exclude the jurisdiction of the Italian Courts. In other words, the Court of Cassation extends the range of instruments the parties are granted to assert the existence of an agreement upon jurisdiction. It changed its previous opinion, whereby it had previously considered requests for a preventive regulation to exclude the Italian jurisdiction proposed by the defendant domiciled in Italy to be inadmissible.
As the Court observes, the previous restrictive, absolute and binding interpretation would be inconsistent and wrongly penalising for those who, in their contractual activity, chose a form of judgment other than the ordinary state jurisdiction (ie, an arbitration). Indeed, in the case considered by the Court of Cassation, the claimant had been sued before an Italian court, although it had agreed with the defendant that any dispute arising from their contract should have been referred to foreign arbitration. Accordingly, the Court of Cassation stated that the parties have recourse to the preventive regulation of jurisdiction even in relation to a foreign arbitration clause.
The Court of Cassation specified that the claimant/defendant, either citizen or foreign and domiciled in Italy, must attach and demonstrate a specific interest in excluding the domestic jurisdiction in force of a different and exclusive criterion of jurisdiction.
The Italian legal system provides wide autonomy to parties in the choice of jurisdiction and can waive the jurisdiction of the Italian courts in favour of a foreign judge or an arbitrator. The Court of Cassation grants the defendant sued before a domestic court the right to challenge the clause, claiming that a foreign court is to have jurisdiction. In particular, the defendant sued before the Italian court can submit the matter of the jurisdiction to the Court of Cassation, even before a judgment on the merits of the case is handed down.
This article was first published in the IBA Litigation Committee newsletter in May 2019, and is reproduced by kind permission of the International Bar Association, London, UK. © International Bar Association.
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