Constitutional Issues in Formal Arbitration Proceedings

Originally published February 2002

Under Italian law, questions regarding the constitutional legitimacy of legislation that arise in the course of proceedings before a "judicial authority" must be referred to the Constitutional Court,(1) which alone has jurisdiction to decide such issues.(2) In other words, in Italy it is legally impossible for the court adjudicating a dispute to ignore or abrogate applicable legislation in the matter at hand because it conflicts with the Constitution, nor for the court itself to challenge directly the constitutionality of a legal provision. The interested party must raise the issue of an alleged conflict of any provision relevant to the case during proceedings. If it does not consider the issue frivolous or prima facie without merit, the court must stay the proceedings and refer the issue to the Constitutional Court.

In this context, there have been doubts as to whether the panel of arbitrators in an arbitration qualifies as a 'judicial authority'. The Corte di Cassazione (the approximate equivalent to the House of Lords in the United Kingdom) recently observed since arbitrators are not ordinary judges, they have no delegated power to exercise the functions of the state judiciary.(3)

However, the Constitutional Court has now confirmed that in arbitrations, the arbitrators form part of the "judicial organs of the constitutional order" by virtue of the function they perform as decision-makers within a quasi-judicial process.(4) As such, the court confirmed that arbitrators have both a power and a duty to refer matters concerning the unconstitutionality of legislation to the Constitutional Court - they cannot opt either to apply or to disapply relevant legislation in cases where doubts as to its constitutionality arise.

This decision can been seen as judicial support for the continuing trend towards the narrowing of the practical distinction between arbitrators and judges; indeed, the Constitutional Court made specific reference to the fact that arbitration awards in formal arbitrations are equivalent in nature to ordinary judgments. Thus, arbitrators are now clearly subject to the same duty and obligations as members of the judiciary when faced with questions of constitutionality, and this in turn provides further protection to those who use formal arbitration as an alternative to conventional legal proceedings. It may also serve to encourage more use of the system of arbitration. The decision can further...