This case relates to the issue of the validity of a contract between two parties involved in an international arbitration under the arbitration rules of the Milan Chamber of Arbitration.
In the case, the Claimant filed for a request for arbitration before the Chamber of Arbitration in Milan seeking damages for the termination of the contract.
The Claimant argued that there was a valid contract between the parties, even if the initial offer was unsigned, since the parties had performed their contractual obligations. It also argued that there was a valid cession of the contract to the Respondent in the arbitration proceeding, which terminated the contract for assistance services, and that this termination caused losses to Claimant and entitled it to obtain damages.
The Respondent disagreed, arguing that the Respondent could not be a party as it had not consented to the cession of the contract. In addition, the Respondent argued that the Arbitral Tribunal lacked jurisdiction because the dispute was governed by the Respondent’s Terms of Service, which provided for the exclusive jurisdiction of the local courts in Lugano, Switzerland.
The Arbitral Tribunal ruled that it lacked jurisdiction in the absence of valid and binding arbitration agreement.
The Tribunal first observed that it had the competence to determine its own competence, as recognized in Italian arbitration law.
Then, it explained that in the absence of agreement by the parties, the law of the seat of arbitration was usually applicable to determine the existence and validity of an arbitration agreement. Here, the seat of arbitration was in Italy, thus Italian law was found to apply:
“This subject matter is widely discussed in doctrine and jurisprudence. However, it is most commonly held – an opinion that the Arbitrator shares – that lacking a choice by the parties, the law of the state where the arbitration has its seat (lex arbitri) applies.”
The Tribunal underlined the fact that an arbitration agreement was not concluded between the parties directly and thus could not bind the parties. As it explained, the offer was conditional on formalities to be performed by the accepting party, performance by the person to whom the offer was addressed was required, and payment was to be made on a monthly basis:
“Rather, the contrary appears from the Year X Offer’s formulation: the offeror conditioned the provision of the service to several formalities to be performed by the accepting party, including the filling in and signing of certain documents – ‘When accepting the service the Customer shall fill in and sign … (b) the following forms that are necessary for the provision of the service’ – and only after performance of these formalities and evaluation and acceptance of the Customer by the offeror, Company Acme ‘would commence providing the service’. Such formal requirements are not only completely incompatible with the cases foreseen in Art. 1327 CC: they can also be considered suspensive conditions for the overall conclusion of the contractual relationship. Further, they clearly do not prove an interest of the offeror in the immediate performance under the Offer.
Further, ‘the performance meant by Art. 1327 CC for the purpose of identifying the moment in which the contract is concluded is not the performance by the person who has already expressed his intention, the offeror, but rather the performance by the person to whom the offer is addressed’ (see, among many others, Supreme Court (Civil), First Section, 26 October 1977, no. 4592) – here, Company XYZ. Hence, the sole performance to which the offeror could theoretically prove that it had an interest would be the payment for the service. However, according to Art. 9 of the Year X Offer and p. 11 of the attached General Conditions, payment was to be made monthly against submission of an invoice by the service provider.
Hence, leaving aside other considerations (see also below), we do not find that Art. 1327 CC applies here in respect of the conclusion of the contract to which the Year X Offer between Company Acme and Company XYZ refers.”
It also pointed out that the cession never made reference to the original offer. Therefore, the arbitration agreement was not binding by way of cession.
Finally, in rejecting jurisdiction, the Tribunal ruled that, in any event, the arbitration clause did not comply with the formal requirements of Italian law and the 1958 New York Convention, since the arbitration clause was in a separate document without any specific reference to it:
“Both international treaties and Italian arbitration law require the written form for the valid conclusion of an arbitration agreement. According to Art. II(1)-(2) of the [1958] New York Convention,
(1) Each Contracting State shall recognize an agreement in writing….
(2) The term “agreement in writing” shall include an arbitral clause in a contract …, signed by the parties or contained in an exchange of letters or telegrams.’
According to Art. 808[(1)] CCP, the choice to refer controversies arising out of a contract to arbitrators must result from a written agreement:
‘The parties may establish, in their contract or in a separate document, that disputes arising out of the contract be decided by arbitrators, provided such disputes may be made subject to an arbitration agreement. The arbitration clause must be contained in a document meeting the form required for a submission agreement by Article 807.’
And according to Art. 807 CCP,
‘(1) The submission to arbitration must, under sanction of nullity, be made in writing and must indicate the subject matter of the dispute.
(2) The written form requirement is considered complied with also when the will of the parties is expressed by telegram, telex, telecopier or telematic message in accordance with the legal rules, which may also be issued by regulation, regarding the transmission and receipt of documents which are teletransmitted.’ …
Lacking any written form (which written form is determinative for the validity of a clause for domestic or international rituale arbitration), there is no need to examine whether the failure of the alleged original contracting parties (Company Acme and Company XYZ) to comply with the Art. 1341 CC requirement to approve the arbitration clause by a double signature can be invoked only by the adhering party or by anyone having an interest thereto or also ex officio.”
