ITALY Law and Practice Contributed by: Maria Chiara Malaguti, Filippo Rossi and Roberto Longhi, PedersoliGattai
been given and it is made available on the ICSID web- site (Arbitration Rule 62 (3)).
tion for the delay in payment, essentially “curing” the claimant’s inconvenience in waiting for the money. The entitlement to interest arises once a sum is in arrears, and the defaulting party is given formal notice of the default, even if the underlying obligation is unliquidat- ed or the exact sum of damages is not yet determined. 8.4 Mitigation of Damages Italian law imposes a duty on an investor to mitigate its losses. This is a general principle of law that requires the aggrieved party to take reasonable steps to mini- mise the damage resulting from a breach or wrongful act, with the aim that unmitigated losses will not be recoverable in damages. This principle is recognised internationally in agreements such as the UNIDROIT Principles, and its application in the Italian legal sys- tem results in a reduction of the compensation award- ed to a party that fails to take reasonable steps to reduce their loss. As indicated in 1.2 Arbitrations Conventions , Italy is party to both the ICSID Convention and the New York Convention. The ICSID Convention (Article 54) oblig- es all contracting states to recognise ICSID awards as binding and to enforce the pecuniary obligations within them. National courts cannot refuse to rec- ognise and enforce an award on any grounds other than those related to the sovereign immunity of states from execution. This means that domestic courts are not permitted to scrutinise ICSID awards in the same manner as is allowed under Article V of the New York Convention. Non-ICSID awards are instead covered by the New York Convention. Article V of the New York Convention sets forth the grounds on which recog- nition and enforcement of an arbitral award may be refused. These include: • the incapacity of a party or invalidity of the arbitra- tion agreement; • the violation of due process; • the arbitral tribunal exceeding its authority; • the improper constitution of the arbitral tribunal or procedural irregularities; and 9. Enforcement of Awards 9.1 Enforcement Procedure
8. Damages and Valuation 8.1 Remedies
Limits do exist, as Italian law generally disallows puni- tive damages for arbitration due to public policy, while injunctions and rectification are permitted under pub- lic policy principles. Foreign awards including punitive damages may not be enforceable in Italy on these grounds. The primary limit on remedies is Italian public policy, which prohibits punitive damages as the Italian legal system does not recognise them, though this is a complex and evolving area of law. Other remedies – such as declaratory relief, specific performance and termination orders – are allowed. Injunctions are permitted as they are considered a necessary remedy to prevent harm and ensure a just outcome, provided they comply with public policy. Rectification is admissible when ordered by a state court or an arbitral tribunal as a remedy for breach of contract. Tribunals may then issue declaratory relief to clarify the legal relationship between the parties. Finally, specific performance and termination orders are allowed as remedies for breach of contract. 8.2 Methodologies for Quantum Assessment In Italy, as in many other jurisdictions, common valu- ation methodologies for quantifying damages include the discounted cash flow (DCF) method and the mar- ket approach, alongside cost-based methods. 8.3 Recovering Interest and Legal Costs Italian arbitration law contains no specific rule on cost allocation. If the arbitration agreement is silent in that respect, arbitrators generally apply the “costs follow the event” rule, which also applies to ordinary court proceedings. In Italy, a civil law jurisdiction, courts are generally obligated to award interest on monetary claims if the claimant has placed the debtor in default through proper notice. This interest serves as compensa-
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