Arbitration is the standard way to resolve high-value commercial and cross-border disputes: a confidential, binding decision rendered by expert arbitrators rather than a national court. Damiani & Damiani is an international law firm based in Palermo, Italy, advising businesses on arbitration clauses, representing them in national and ICC international arbitration, and enforcing awards — in Italy and, under the New York Convention, abroad. This guide explains how arbitration works, the choices that shape it, and how an award is enforced.
What is arbitration and when to choose it
Arbitration is a method of resolving disputes in which the parties entrust the decision to one or more arbitrators instead of the ordinary courts; in Italy it is governed by Articles 806 and following of the Code of Civil Procedure. It suits technical or international disputes of significant value, where a confidential and binding decision by experts is preferable to a court ruling — typically in commercial contracts and corporate matters. It requires an arbitration agreement: an arbitration clause in the contract (Article 808) or a submission agreement made after the dispute arises (Article 807). Matters concerning non-waivable rights are not arbitrable.
Ritual and non-ritual arbitration: an Italian distinction that matters
Italian law knows two forms. Ritual arbitration (arbitrato rituale) ends in an award that has the effect of a judgment (Article 824-bis c.p.c.) and, after the court’s enforceability decree, becomes an enforceable title. Non-ritual arbitration (arbitrato irrituale, Article 808-ter) produces an award of purely contractual value: binding as an agreement, but not directly enforceable. The choice is made when drafting the clause; absent a clear indication, the law presumes ritual arbitration. For international parties this distinction is easy to overlook and decisive for how the award can be used.
Administered (ICC) vs ad hoc arbitration
In administered arbitration the proceedings are run by a permanent institution — such as the International Chamber of Commerce (ICC) in Paris — which provides rules, a secretariat, criteria for appointing the arbitrators and a fixed cost scale. In ad hoc arbitration the parties define the procedure themselves. Administered arbitration offers greater predictability and is preferred in complex international disputes; ad hoc arbitration is more flexible and can be cheaper in lower-value disputes between cooperative parties. The clause must state precisely which applies, and, for administered arbitration, name the institution and its rules.
The arbitration clause and the seat
The arbitration clause is the foundation of the whole procedure: it should fix the institution and rules, the seat of arbitration, the language, the number of arbitrators and the applicable law. The seat is not merely a venue — it determines the procedural law and the courts that supervise the arbitration and hear any challenge to the award. A poorly drafted clause is the most common cause of avoidable disputes, so we draft and review these clauses at the contract stage.
Appointing the arbitrators
Arbitrators are appointed under the clause: usually each party appoints one and the two appoint the president, in an odd number (Article 809 c.p.c.). If a party fails to act, the appointment is made, on request, by the president of the competent court (Article 810) or, in administered arbitration, by the institution under its rules. Arbitrators must be independent and impartial and must disclose anything affecting their impartiality; otherwise they may be challenged. Correct constitution of the tribunal is essential, since defects in appointment are grounds to set the award aside.
Time and cost
In Italian ritual arbitration, unless the parties agree otherwise, the award must be rendered within 240 days of the arbitrators’ acceptance (Article 820 c.p.c.), extendable in the cases provided. An international ICC arbitration lasts on average 12 to 24 months. Costs comprise the arbitrators’ fees, any institutional fees and the lawyers’ fees; under the ICC scale these are calculated on the value of the dispute and are predictable from the outset. Against a higher initial cost than court litigation, arbitration delivers a final decision faster and in a single instance.
The award: legal value and enforcement
An Italian ritual award has the effect of a judgment from the arbitrators’ final signature (Article 824-bis c.p.c.). To be enforced it must obtain the exequatur: the court of the seat declares it enforceable by decree after checking its formal regularity (Article 825). Internationally, an award is recognised and enforceable in more than 170 states under the New York Convention of 1958 — the mechanism that makes arbitration so effective across borders. We handle both the Italian exequatur and cross-border enforcement.
Challenging an award
Challenge is available only in exhaustively listed cases. The main remedy is an application to set the award aside before the Court of Appeal (Articles 827–829 c.p.c.), for defects such as an invalid arbitration agreement, an improperly constituted tribunal, the tribunal exceeding the limits of the agreement, or breach of the right to be heard. There is, as a rule, no review of the merits: arbitration is a single instance. Time limits are short and run from service of the award, so a prompt assessment of the prospects is essential.
Enforcing a foreign award in Italy
A foreign award is recognised and enforced in Italy under the New York Convention of 1958. The party files an application with the competent Court of Appeal, enclosing the award and the arbitration agreement (Articles 839–840 c.p.c.); the president declares it effective by decree unless one of the Convention’s limited grounds for refusal applies, such as an invalid arbitration agreement or conflict with public policy. Once recognised, the foreign award has the same value in Italy as a domestic enforceable title.
Why Damiani & Damiani
Based in Palermo with an international network and working in English, Italian and Spanish, we advise on arbitration clauses, represent clients in national and ICC international arbitration, and enforce awards in Italy and abroad. Every matter begins with a preliminary assessment of the dispute, the clause and the enforceability of any award in the debtor’s country. Request an assessment of your dispute, or see our guides to international commercial mediation and debt collection in Italy.
Frequently asked questions about ICC and international arbitration
What is arbitration and when should you choose it?
Arbitration is a method of resolving disputes in which the parties entrust the decision to one or more arbitrators instead of the ordinary courts; in Italy it is governed by Articles 806 and following of the Code of Civil Procedure. It is worth choosing where a confidential decision is needed, rendered by experts in the field and faster than the ordinary courts — particularly in commercial contracts and corporate or international disputes. It requires an arbitration agreement: an arbitration clause in the contract (Art. 808) or a submission agreement made after the dispute arises (Art. 807). Not all matters are arbitrable: those concerning non-waivable rights are excluded.
What is the difference between ritual and non-ritual arbitration in Italy?
Ritual arbitration (Articles 806 ff. c.p.c.) ends in an award that, from the date of the arbitrators’ final signature, has the effect of a judgment (Art. 824-bis) and, after the court’s enforceability decree, becomes an enforceable title. Non-ritual arbitration (Art. 808-ter) instead produces an award of purely contractual value: it binds the parties like a negotiated agreement but does not have the effect of a judgment and is not directly enforceable. The choice must be made when drafting the clause: if there is no clear indication, Italian law presumes ritual arbitration. It is a distinction specific to Italian law that greatly affects the practical effects of the award.
What is the difference between administered (e.g. ICC) and ad hoc arbitration?
In administered arbitration the proceedings are run by a permanent institution — such as the International Chamber of Commerce (ICC) in Paris — which provides rules, a secretariat, criteria for appointing the arbitrators and a fixed cost scale. In ad hoc arbitration the parties themselves define the procedural rules and organise the appointment of the arbitrators, without an institution’s support. Administered arbitration offers greater predictability and is preferred in complex international disputes; ad hoc arbitration is more flexible and can be cheaper in lower-value disputes between cooperative parties. The contract clause must state precisely which of the two applies.
How are the arbitrators appointed?
Arbitrators are appointed by the parties according to the arbitration clause: usually each party appoints one and the two appoint the president of the panel, which must be an odd number (Art. 809 c.p.c.). If a party fails to act or the parties cannot agree, the appointment is made, on request, by the president of the competent court (Art. 810) or, in administered arbitration, by the arbitral institution under its rules. Arbitrators must be independent and impartial and must disclose any circumstance affecting their impartiality; otherwise they may be challenged. Correct constitution of the panel is essential, because defects in appointment are grounds to set the award aside.
How long does an arbitration take?
In Italian ritual arbitration, unless the parties set a different term, the arbitrators must render the award within 240 days of accepting their appointment (Art. 820 c.p.c.), a term extendable in the cases provided by law. An international arbitration, typically administered under the ICC Rules, lasts on average from 12 to 24 months, depending on the complexity of the dispute, the number of arbitrators and the evidentiary phase. In both cases arbitration is generally faster than ordinary court proceedings, which across first instance and appeals can last several years. A well-drafted clause and the parties’ cooperation are what most affect the actual timing.
How much does arbitration cost?
The cost of an arbitration consists essentially of the arbitrators’ fees, any fees of the administering institution and the lawyers’ fees. In ICC administered arbitration, fees and administrative expenses are calculated on the value of the dispute according to a published scale, which makes costs predictable from the outset. In ad hoc arbitration the arbitrators’ fees are agreed between the parties or set by the applicable scales. Against an initial cost that is often higher than court litigation, arbitration delivers a final decision more quickly and in a single instance, with an overall saving to be assessed case by case according to value and complexity.
What is the legal value of an arbitral award and how does it become enforceable?
An Italian ritual arbitral award has, from the date of the arbitrators’ final signature, the same effect as a judgment of the court (Art. 824-bis c.p.c.). To be enforced, however, it must obtain the exequatur: the court of the district where the arbitration has its seat declares it enforceable by decree, after checking its formal regularity (Art. 825). From that moment the award is an enforceable title in every respect, like a judgment. Internationally, the award is recognised and enforceable in more than 170 states thanks to the New York Convention of 1958. A non-ritual award, by contrast, binds only as a contractual agreement.
How can an arbitral award be challenged?
Challenging a ritual award is allowed only in exhaustively listed cases. The main remedy is an application to set the award aside before the Court of Appeal (Articles 827–829 c.p.c.), for defects such as the invalidity of the arbitration agreement, the improper constitution of the panel, the arbitrators exceeding the limits of the arbitration agreement, or breach of the right to be heard. Revocation and third-party opposition are also available in the cases provided. A review of the merits is not, as a rule, possible: arbitration is generally a single instance. Time limits are short and run from service of the award, so a prompt assessment of the prospects of a challenge is essential.
How do you enforce a foreign arbitral award in Italy?
A foreign arbitral award can be recognised and enforced in Italy thanks to the New York Convention of 1958, ratified by more than 170 states. The interested party files an application with the competent Court of Appeal, enclosing the award and the arbitration agreement (Articles 839–840 c.p.c.); the president declares it effective by decree, unless one of the limited grounds for refusal under the Convention applies, such as the invalidity of the arbitration agreement or conflict with public policy. Once recognised, the foreign award acquires in Italy the same value as a domestic enforceable title. This mechanism makes arbitration particularly effective in international commercial disputes.
