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Summary
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A Kuwaiti company, B.M.A.A.B. & Sons International Contracting Company, (“BMAAB”) subcontracted with an Italian company (“C.G. Impianti”) for the installation of electrical wiring on petroleum platforms in the Persian Gulf. The contract contained a clause referring disputes between the parties to an arbitral tribunal seated in Kuwait and composed of three arbitrators. A dispute arose between the parties with BMAAB alleging that C.G. Impianti's delays in performing its obligations eventually caused the main contractor (“KJO”) to terminate the main construction contract with BMAAB. BMAAB initiated arbitration against C.G. Impianti, seeking to obtain a termination of the subcontract and an award of damages. An award was rendered in Kuwait holding that C.G. Impianti was mostly liable for the delays, while holding BMAAB liable for up to 17% of the damages. C.G. Impianti filed an action to set aside the award, which was denied by both the Kuwaiti First Instance Court and Court of Appeal. BMAAB obtained an ex parte order (decreto) from the President of the Corte di Appello di Milano (Milan Court of Appeal) to enforce the award in Italy. C.G. Impianti filed a petition against the enforcement order under Article 840 of the Italian Code of Civil Procedure (opposizione), arguing that the award was contrary to public policy as (i) the arbitrators had failed to assess evidence and to reason logically and without contradiction, and as (ii) they had shown partiality in favor of BMAAB both during the course of the proceedings and in the reasoning of the award, in breach of fundamental principles of the Italian legal system, such as due process and neutrality of the adjudicator.
The Corte di Appello di Milano dismissed C.G. Impianti’s action and confirmed enforcement. It held that C.G. Impianti's action implied a review of the merits of the award, which the enforcement courts were precluded from undertaking. It further noted that even with respect to domestic awards, Article 829, which provides for the nullity of domestic awards containing contradictory provisions, does not apply to mere “errors in iudicando” where the judge misinterpreted the law or the facts. A contradiction in the reasoning may be taken into account for the annulment of domestic awards only when it touches various elements of the dictum of the decision or when it is totally impossible to follow the logical and legal development of the decision. The Corte di Appello di Milano held that this was not the case here and that, in any case, defects in the arbitral tribunal’s reasoning do not constitute grounds for refusing enforcement of a foreign award. The Corte di Appello di Milano held that C.G. Impianti failed to demonstrate any fact that would make enforcement of the award contrary to public policy as per Article 840 of the Italian Code of Civil Procedure and Article V NYC. It noted that under its current and most widely accepted definition, international public policy, which must be examined only in the dictum and not in the reasons of the award, covers all the fundamental principles and values of a legal system (starting from constitutional values). According to the Corte Suprema di Cassazione, these include the principles characterizing the ethical and social structure of the international community at a given historical moment and the principles emanating from the most fundamental legal institutions that should not be violated, and that, in substance, constitute the cornerstone of the concept of law in most legal systems. It added that such principles correspond, in great part, to the list of inviolable human rights. The Corte di Appello di Milano further stated that such a definition fully conforms to the notion of international public policy contained in case law and in other legal instruments, such as inter alia Article V(2)(b) NYC, Article 36 of the UNCITRAL Model Law on Arbitration, Article 34.1 of EC Regulation n°44/2011 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters, Article 26 of EC Regulation No. 1346/2000 on insolvency proceedings and Article 16 of the Rome Convention on the law applicable to contractual obligations. Finally, the Corte di Appello di Milano dismissed C.G. Impianti’s arguments that it had been discriminated in the arbitration and that its due process rights were violated, finding that the arguments were too abstract and were unsupported by evidence.
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Refine your searchItaly / 29 April 2009 / Corte di Appello di Milano / C.G. Impianti SpA v. B.M.A.A.B. and Sons International Contracting Company WLL
