Commentary on Judgment No. 8718 of 2024: Public Order in the Challenge of Arbitral Awards

Judgment No. 8718 of April 3, 2024, represents an important clarification in the field of arbitration and the challenge of arbitral awards, particularly addressing the concept of public order as provided for by Article 829, paragraph 3, of the Code of Civil Procedure (c.p.c.). This ruling emphasizes the need for a restrictive interpretation of this concept, limiting its scope to the fundamental and mandatory rules of the legal system.

The Case: Legal References and Underlying Facts

In the case at hand, a public works contract for the management of municipal lighting services was the subject of an arbitral decision that declared a clause for price adjustment null and void. This nullity was based on the violation of two articles of Legislative Decree No. 163 of 2006, specifically Articles 7 and 115, which govern fundamental aspects of public contracts.

The Court of Cassation, in rejecting the appeal, stated that the arbitral decision did not constitute a violation of public order, as the violated norms were considered merely mandatory rules. This means that, although these rules are fundamental, they cannot be interpreted as violations of public order in the strict sense.

Public order referred to in Article 829, paragraph 3, c.p.c. - Notion - Reference to the set of mandatory rules of the legal system - Exclusion - Specific case. In the context of challenging an arbitral award, the reference to the public order clause by Article 829, paragraph 3, c.p.c. must be interpreted restrictively, as a reference limited to the fundamental and mandatory rules of the legal system, excluding, in principle, an "attenuated" notion of public order, which coincides with the so-called domestic public order, i.e., with the set of mandatory rules. (In this specific case, the Supreme Court stated that an arbitral decision declaring the nullity of a price adjustment clause for violation of Articles 7 and 115 of Legislative Decree No. 163 of 2006, in relation to a public works contract for the maintenance and management of the municipal lighting system, did not constitute a violation of public order, as these were simply mandatory rules. However, the appeal was rejected because res judicata had been established on the issue of the award's challengeability).

Interpretation of Public Order and Practical Implications

The decision of the Court of Cassation highlights how public order, in arbitration, must be understood restrictively, reducing the risk of abuse in challenging arbitral awards. This interpretation takes into account the need for certainty and stability in arbitral decisions, which are fundamental elements for the proper functioning of the arbitration system.

The practical implications of this judgment are manifold:

• Limitation of grounds for challenging arbitral awards, reserved for cases of violation of fundamental rules.
• Increased confidence in the arbitration system, reducing the risk of endless legal disputes.
• Strengthening the validity of arbitral decisions, which can be considered final except in cases of serious legal violations.

Conclusions

Judgment No. 8718 of 2024 makes an important contribution to jurisprudence on arbitration and public order. With its restrictive interpretation, the Court of Cassation not only protects the integrity of arbitral decisions but also offers greater certainty to parties involved in arbitration proceedings. In an ever-evolving legal landscape, it is crucial for legal professionals to closely follow such developments to ensure the correct application of established rules and principles.