Preventive evidentiary assessment and arbitration: Is there a compatibility issue?

Evidence (eg witness evidence or a technical appraisal) sometimes has to be collected before proceedings on the merits begin. In Italian procedural law, this is known as a “preventive evidentiary assessment.” They are regulated by Articles 692 to 698 of the Italian Code of Civil Procedure (CCP).

Preventive evidentiary assessments can be allowed by the court without prejudice to the subsequent decision on their admissibility or relevance in the proceedings on the merits.

Historically, under Italian procedural law, arbitrators were not entitled to order preventive evidentiary assessments and precautionary measures. That was until the 2022 Reform of the Italian CCP. See here for more information on the recent changes to the arbitrators’ powers to grant interim measures.

Because there was no specific procedural provision in the CCP, it was debated how arbitration might work with preventive evidentiary assessments. And whether these dispute resolution methods were compatible. When a contract provides for an arbitration clause, can technical issues connected to the performance of the contract be assessed by a court-appointed expert in the context of the technical appraisal’s procedure set out in the CCP? Or will the technical issue be referred to arbitration in conformity with the arbitration clause?

 

The ‘precautionary’ nature of preventive evidentiary assessments

With the 1990 Reform of the CCP, the Italian legislator, in Article 669-quaterdecies CCP, made the provisions relating to general precautionary proceedings (Articles 669-bis to 669-quaterdecies CCP) inapplicable to the remedies of preventive evidentiary assessments (Articles 692 to 698 CCP). The only exception was Article 669-septies, which provides for the possibility to re-submit the application for precautionary measures, even if it was previously dismissed or there was a lack of jurisdiction. The judge can also order payment of legal costs and expenses for an application for precautionary measures ante causam (ie before the subsequent proceedings on the merits start).

However, in its decision No. 26/2010 (available here), the Italian Constitutional Court declared Article 669-quaterdecies CCP unconstitutional as it excluded the applicability of Article 669-quinquies CCP to preventive evidentiary assessments and to the relevant adopted measures. Article 669-quinquies CCP states that “If the dispute is the subject of an arbitration agreement or is referred to arbitration, including ‘arbitrato irrituale,’ or if arbitration proceedings are pending, the application is submitted to the court that would have had jurisdiction to hear the case on the merits.”

The Italian Constitutional Court considered that, since the general precautionary proceedings and the preventive evidentiary assessments are fully equivalent in terms of purposes and effects, if Article 669-quinquies CCP were not applicable to preventive evidentiary assessments in disputes referred to arbitration, a gap would be created in safeguarding the right to evidence. The Italian Constitutional Court concluded that “the exclusion [in this regard] of the preventive technical assessment from the scope of application defined by Article 669-quaterdecies of the Code of Civil Procedure with the consequent inapplicability of Article 669-quinquies does not pass the scrutiny of reasonableness, with reference to Article 3, first paragraph, of the Constitution” and it is contrary to Article 24 of the constitution.

The Italian Constitutional Court’s decision originates from a judgment in which the issue of the alleged incompatibility (given the inapplicability of Article 669-quinquies CCP as provided for in Article 669-quaterdecies CCP) between preventive evidentiary assessments and arbitration was raised in relation to a case of domestic arbitration.

But the hypothesis in which the merits of a dispute were to be referred to foreign arbitration was not expressly addressed. So, even in the aftermath of the decision, there were still doubts as to the interplay between preventive evidentiary assessments and foreign arbitration.

 

Foreign arbitration: A different approach?

In a recent decision of July 14, 2019 (available here), the State Court of First Instance of Genoa had to determine the admissibility of a Preventive Technical Assessment (PTA) under Article 696 CCP. It was ancillary to proceedings on the merits to be referred to foreign arbitrators, and not, as in the case that gave rise to the Italian Constitutional Court, to domestic arbitrators. The party against which the PTA was sought objected to the possibility to apply for a PTA when the dispute is referred to foreign arbitrators.

In its decision, the State Court of First Instance of Genoa dismissed the objection, holding that Article 669-quinquies CCP now applies as a rule of jurisdiction not only for general precautionary proceedings but also for preventive evidentiary assessments pursuant to Articles 692 to 698 CCP, whenever the proceedings on the merits is to be referred to arbitration. Inferring from the fact that Article 669-quinquies CCP does not distinguish between domestic or foreign arbitration, the court established that preventive evidentiary assessments before state courts and foreign arbitrations are fully compatible.

Scholars have observed that the court’s decision only reinstated a principle that was already implied in the system.

Article 10 of the Italian International Private Statute of May 31, 1995, No. 218 (Law No. 218/1995) states that “in matters of precautionary measures, Italian courts have jurisdiction when the [precautionary] measure must be executed in Italy or when Italian courts have jurisdiction on the merits.” This provision, which mirrors Article 35 of Regulation (EU) No 1215/2012 of the European Parliament and of the Council of December 12, 2012 (Brussels I Recast), does not distinguish between precautionary proceedings and preventive evidentiary assessments, so was understood to be referring to both.

So, in the context of preventive evidentiary assessments, Italian state courts’ jurisdiction is grounded on two alternative criteria:

• if they have jurisdiction on the merits (irrespective of the place of execution of the measure of preventive evidentiary assessment); or
• if the preventive evidentiary assessment will be performed in Italy (irrespective of which jurisdiction – of state courts or arbitral tribunals – applies on the merit of the case).

The general provisions for precautionary proceedings cover both hypothesis:

• In the first scenario, Article 669-quinquies CCP would apply. As mentioned above, this article, without distinguishing between foreign and domestic arbitration, identifies the competent court as the one that would have had jurisdiction on the merits for subject matter, value of the dispute and territory, without an arbitration agreement.
• In the second scenario, Article 669-ter (3) CCP would apply. According to Article 669-ter (3) CCP, “if the Italian court does not have jurisdiction to hear the case on the merits, the application is brought before the court, which would have jurisdiction on the basis of the subject matter or of the value of the dispute, of the place where the precautionary measure is to be enforced.” In this case, the place of execution of the precautionary measure will determine the competent Italian court.

With reference to preventive evidentiary assessments:

• In the first scenario, Articles 693 (1) and 669-quinquies CCP would apply, and the competent court would be the court that would have had jurisdiction on the merits for subject matter, value of the dispute and territory, in the absence of an arbitration agreement.
• In the second scenario, however, if the merits of the dispute may not even abstractly or virtually fall under Italian jurisdiction, there’s no provision that indicates the competent Italian court. The State Court of First Instance of Genoa established that even though the Italian Constitutional Court declared Article 669-quaterdecies CCP unconstitutional only in the part where it did not provide for the applicability of Article 669-quinquies CCP to preventive evidentiary assessments, without any reference to Article 669-ter CCP, this is only a “gap that can be filled by interpretation.” Accordingly, Article 669-ter CCP should be applied extensively, in appropriate cases, to preventive evidentiary assessments, on the basis of a hermeneutic reasoning based on the principles set forth by the Constitutional Court.

 

The PTA under Article 696-bis CCP and arbitration

Although the Italian Constitutional Court’s decision of 2010 removed any doubts (if any) as to the compatibility between arbitration and preventive evidentiary assessments in general, some doubts remained among Italian courts as to the compatibility with arbitration of the peculiar instrument provided for in Article 696-bis CCP, ie a PTA that might be requested even if there is no urgency or a purpose of conciliation between the parties.

Some courts have held that this instrument does not have a “precautionary” nature, as it focuses on the conciliation between the parties, so Article 669-quinquies CCP should not apply. A few Italian state courts (decision of the State Court of First Instance of Milan, April 24, 2012, available here; decision of the State Court of First Instance of Pisa, 2 November 2020, available here) concluded that:

• arbitration is incompatible with a PTA under Article 696-bis CCP;
• the application for a PTA under Article 696-bis CCP implies the waiver of the arbitration agreement.

But these are isolated decisions. Most Italian courts have no doubts as to the precautionary nature of any preventive evidentiary assessment, including the one set forth in Article 696-bis CCP, and its consequent full compatibility with arbitration. The decision of State Court of First Instance of Trani of December 29, 2021, No. 2230available here) is emblematic in this respect.

The issue of the compatibility of arbitration and the PTA under Article 696-bis CCP has mostly given rise to doubts with regards to the hypothesis of arbitrato irrituale (contractual arbitration, ie a type of arbitration proceedings which ends with an unenforceable award, but with contractual force between the parties). It has been observed that arbitrato irrituale is not compatible with a preventive technical assessment with a purpose of conciliation between the parties, by considering both instruments as mutually exclusive. Moreover, it was held that the application for a PTA under Article 696-bis CCP in presence of an arbitration agreement for arbitrato irrituale would entail a waiver of the arbitration agreement itself.

This issue in relation to the arbitrato irrituale is unsettled among Italian courts.

However, the Court of Appeal of Brescia (decision No. 87 of January 29, 2021, available here), recently excluded that the preventive assessment implies “a waiver of the procedural obligation arising from the arbitration agreement.”

In conclusion, upon the decision of the Italian Constitutional Court (decision No. 26/2010) and the subsequent interpretation of the relevant principles set forth therein by Italian state courts the issue of compatibility between, on the one hand, preventive evidentiary assessments (including the PTA under Article 696-bis CCP) and arbitration (whether ‘irrituale’ or not; whether domestic or foreign) seems to be settled.