International corporate arbitration: when the arbitration clause in a corporation’s bylaws fixes the seat of arbitration in a different country than the one of its incorporation

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Author: Stefano Castoldi*

National Legislation


The arbitrability of corporate disputes (i.e., disputes among the “internal” stakeholders of a corporation, such as shareholders, directors and the corporation itself) varies from country to country. While some countries prohibit intra-corporate disputes from being arbitrated claiming public policy concerns and the consequent need to subject them to the exclusive jurisdiction of state courts,[1] most of the countries are permissive, with some limitations. A common limitation which is found in many national legislations allowing corporate disputes to be arbitrated, pertains to public companies. Indeed, the latter are generally forbidden from adopting an arbitration clause in their charter or bylaws.[2] This is not always the case: a famous example of a public company including an arbitration clause in its Articles of association is Royal Dutch Shell, plc.[3]

On the other end of the spectrum, some countries not only authorize, but even mandate that corporate disputes be settled by arbitration in certain circumstances. Notably, Brazil requires corporations to adopt an arbitration clause in their charter or bylaws as a prerequisite for registering on certain segments of the Brazilian Stock Exchange.[4]

Notwithstanding the wide variety of approaches that countries have toward the arbitrability of corporate disputes and toward the procedural rules applicable to such arbitrations, a clear international trend is identifiable in the sense that corporate disputes in closely-held corporations are arbitrable.

Another common trend among the countries which deem corporate disputes to be arbitrable is that their arbitration laws do not contain special sets of rules that govern corporate arbitration. Rather, they apply general arbitration laws to arbitration agreements contained in corporate charters and to the related arbitral proceedings. As a consequence, these countries leave the peculiar aspects of this subject – such as the formal validity of the arbitration clause in the company’s charter or bylaws, its effects on new and dissenting shareholders, the modality of appointment of arbitrators in case of a multi-party proceedings – to be shaped by arbitral tribunals and courts, which have to interpret and apply the same rules applicable to “ordinary” commercial arbitrations.

Italy is an exception with this regard since, in 2003, it enacted a special set of rules designed to govern (i) the adoption of arbitral clauses in the company’s charter and bylaws and (ii) corporate arbitrations (D.Lgs. n. 5/2003, arts. 34-36)[5]. This regulation, in particular, governs issues such as the special arbitrability criteria for corporate disputes, the express exclusion of public companies from corporate arbitrations, the modality of appointment of the arbitral tribunal, the subjects which are bound by arbitration clauses in corporate charters and bylaws and various other procedural aspects of corporate arbitrations (such as third-party intervention and joinder, interim measures and the procedure to set aside awards).[6]


One issue of corporate arbitration which is not expressly addressed by D.Lgs. n. 5/2003 and which may arise in any country which allows its companies to arbitrate their internal dispute is that of international corporate arbitrations. In other words, can a corporation adopt an arbitration clause in its charter or bylaws providing that the seat of the arbitral proceedings shall be in a different country than the one in which it is incorporated?

Indeed, D.Lgs. 5/2003 features certain procedural rules which would be applicable only to domestic arbitration, and this gave rise to doubts as to the possibility for an Italian corporation to arbitrate its internal dispute abroad.

The majority of Italian commentators, however, concluded the opposite, i.e. that Italian corporations can adopt an arbitral clause providing for a foreign seat of the arbitration.[7] The reason for that is that Italian private international law allows private parties to depart from Italian jurisdiction by written agreement when the dispute involves disposable rights.[8]Since neither D.Lgs. n. 5/2003 nor any other Italian legislative provision provides differently, arbitration clauses in corporate charters or bylaws should be deemed to be written agreements and corporate disputes (within the arbitrability limits of D.Lgs. n. 5/2003, art. 34) should be deemed to pertain to disposable rights.

In addition, as it has been noted by Born, “a provision that certain disputes (e.g., consumer disputes or claims against a bankrupt company) were not arbitrable abroad, although arbitrable domestically, would be contrary to the [New York Convention]. Neither of these types of nonarbitrability rules would be consistent with the Convention’s basic premise that international arbitration agreements will be treated no less favorably than domestic agreements.[9]


The issue above was expressly addressed for the first time by an Italian Court in a recent decision of the Genoa Court of Appeal.[10]

Ferretti S.p.A. (“Ferretti”), a yacht manufacturer, commenced an ICC arbitration in Geneva, Switzerland, against its former CEO, Ferruccio Rossi. Ferretti relied on the arbitration clause contained in its bylaws, which provided that – inter alia – all disputes between the corporation and its directors would be settled under the ICC Arbitration Rules by an arbitral tribunal seated in Geneva. Notwithstanding Rossi’s objections to the validity of Ferretti’s arbitration clause, the arbitral tribunal issued an interim award on its jurisdiction (upholding the validity of the clause) and a final one ruling partially in favor of Ferretti (both unpublished).

Rossi then challenged the recognition and enforcement of the award before the Genoa Court of Appeal. He argued, in particular, that recognition and enforcement of the award should have been denied because the arbitral clause was invalid pursuant to art. 840(3), n. 1 of the Italian Code of Civil Procedure (“ICCP”) and pursuant to art. V.1(a) of the New York Convention.

The Court argued that an arbitration clause in a corporation’s charter or bylaws is a contractual agreement and thus its validity should be assessed according to the law applicable to the merits of the dispute (lex causae), which was Italian law in the present case. It also found that the only relevant substantial provision in Italian law that had to be taken into account in order to evaluate the substantial validity of the arbitration clause in Ferretti’s bylaws was art. 34(2) D.Lgs. n. 5/2003. This mandates that the arbitral tribunal in corporate arbitrations must be appointed by a third-party subject (external to the corporation), identified in the arbitration clause adopted by the corporation.[11] Ferretti’s arbitration clause satisfied such requirement.

The fact that the choice of Switzerland as the venue of the arbitration (and, consequently, of Swiss procedural law as the lex arbitri) precluded the application of some procedural rules contained in the D.Lgs. n. 5/2003 was not an obstacle. Indeed, as the Court noted, under Italian private international law principles, Italian procedural rules are applicable only to procedures taking place in the Italian territory.[12] As a consequence, the fact that Swiss procedural law contained different provisions to the Italian ones did not imply the invalidity of the arbitration clause adopted by Ferretti. The Court, in an obiter dictum, also took into account the relevant features of Swiss procedural law in order to demonstrate that – in any case – the rights and safeguards granted by Italian procedural rules applicable to corporate arbitrations are not violated nor diminished by the application of the Swiss procedural law.

Consequently, the Court upheld the validity of the Ferretti’s arbitration clause and rejected Rossi’s opposition to the recognition and enforcement of the Swiss award.


The ruling of the Genoa Court of Appeal clarifies an important principle which is also valid for non-Italian corporations adopting arbitration clauses in their charter or bylaws: the seat of the arbitration does not necessarily need to be in the same country as the place of incorporation.

Corporations may want to subject their disputes to the jurisdiction of an arbitral tribunal seated outside of their place of incorporation. This choice may be determined by several reasons, such as the difference of nationalities among the shareholders and their consequent inclination to have their disputes decided through an arbitration taking place in a neutral country; the need to subject the corporate disputes of a target company or of a newco to the same arbitral clause contained in the relevant merger, acquisition or joint venture agreement entered into by the investors; or simply to go forum shopping.

When corporations adopt an arbitration clause, for whatever reason, they should consider the opportunity to fix the seat of the arbitration abroad as long as the clause is valid pursuant to the applicable substantial law.

[1] As it was put by an author discussing arbitration of public company disputes in the U.S., the common concerns toward corporate arbitration can be summed up as follows: “the use of arbitration as a means of resolving governance disputes in public corporations promises to stir substantial legal controversy. Arbitration is a private means of settling differences that places concerns for equity and efficiency above strict observance of legal norms. Judicial involvement in the arbitration process is minimal, and judicial review of arbitration awards is limited. Arbitration thus attenuates the connection between the state and the corporation in a way that will alarm many.” G. Richard Shell, Arbitration and Corporate Governance, 67 N.C. L. Rev. 517, 519 (1989).

[2] Such limitation is found, for example, directly or implicitly in France (see T. Alexander Brabant et al., Arbitration and Company Law in France, 12 Eur. Co. L. 144, 150 (2015)), Italy (D.Lgs n. 5/2003, art. 34(1)), the Netherlands (see generally Harmen de Mol van Otterloo, Arbitration and Company Law in the Netherlands, 12 Eur. Co. L. 160 (2015)) and Russia (see Rustem Karimullin, The Reform of the Russian Arbitration Law: the Arbitrability of Corporate Disputes, Kluwer Arb. Blog (Oct. 21, 2015),

[3] Articles of Association of Royal Dutch Shell plc, art. 138 (2019), See also Gerard Meijer & Josefina Guzman, The International Recognition of an Arbitration Clause in the Articles of Association of a Company, in Onderneming en ADR 117, 121 (Carla Klaassen et al. eds., 2011); Christos Ravanides, Arbitration Clauses in Public Company Charters: an Expansion of the ADR Elysian Fields or a Descent Into Hades?, 18 Am. Rev. Int’l Arb. 371, 404 (2007); Perry Herzfeld, Prudent anticipation? The arbitration of public company shareholder disputes, 24 Arb. Int’l 297, 297 (2008); Gary B. Born, International Commercial Arbitration 1030 n.478 (2d ed. 2014) (all commenting on such a clause).

[4] See Patricia Gil Lemstra & Joseph A. McCahery, Mandatory Arbitration of Intra-Corporate Disputes in Brazil: A Beacon of Light for Shareholder Litigation?, in Cambridge International Handbook of Class Actions (Brian Fitzpatrick & Randall Thomas eds., forthcoming 2020),

[5] An unofficial English translation of D.Lgs. n. 5/2003, arts. 34-36 can be found in Diego Corapi, Arbitration and Company Law in Italy, 12 Eur. Co. L. 154, 158-59 (2015).

[6] See Valerio Sangiovanni, Current Development: Some Critical Observations on the Italian Regulation Of Company Arbitration, 17 Am. Rev. Int’l Arb. 281 (2006).

[7] Laura Salvaneschi, La Costituzione dell’Organo Arbitrale e il Procedimento nell’Arbitrato Societario Italiano, 2017 Rivista dell’Arbitrato 245, 250 (2017); Massimo Benedettelli, Sull’Arbitrato Societario “Internazionale”, 2017 Rivista dell’Arbitrato 299, 315-24 (2017).

[8] L. n. 218/1995, art. 4(2).

[9] Born, supra note 3 at 615-16.

[10] App. Genova, 9 luglio 2020, n. 649, available at

[11] In most cases, the subject chosen in corporate charters or bylaws to appoint the arbitral tribunal is the arbitral institution administering the arbitration (if any) or the president of the Tribunal which would be competent to hear the dispute in the absence of the arbitration clause.

[12] L. n. 218/1995, art. 12.

*Stefano Castoldi is an Italian lawyer and a current LL.M. candidate at Columbia Law School. He is also a student editor for the American Review of International Arbitration and took part to the XXII edition of the Vis Moot.