Under Italian law, the parties to a contract – both being private legal entities – are generally free to agree upon the court having jurisdiction on any disputes that may arise from such contract.
However, although such clauses are valid, their enforceability can be limited by certain formal requirements, which should be taken into account.
Curiously enough, such requirements are often stricter when both parties are based in Italy, looser when one of them is based abroad, particularly in another EU country.
Nevertheless, considering the current uncertainties in case law, a cautious approach in contract drafting is justifiable in any case.
Exclusive or non exclusive forum?
Let’s consider for example the following clause in a commercial contract between two private companies: “Competent court – The courts of Milan shall be the competent forum on any dispute“.
This clause apparently does not raise any doubts. However, it has recently held by the Italian Supreme Court (“Corte di Cassazione”) to be unenforceable, particularly from the point of view of its non-exclusivity ( Supreme Court Civil Section (Cass. Civ. Sez.) VI-3, order 25.1.2018 n. 1838).
In that case, an Italian company had the other party (another Italian company) sign its general contract terms containing the above mentioned clause. Notwithstanding that, the first company was then served with a payment order (“decreto ingiuntivo”) issued by the Court of Siena, where the second company had started lawsuit despite having approved the forum clause.
The first company was not successful in opposing against the payment order by raising the argument of the lack of jurisdiction of the Siena Court. In fact, it could not enforce the forum clause included in its general contract terms because the clause did not specify that the courts of Milan were the “exclusive” forum.
Therefore, to the opinion of our Supreme Court (actually confirming its own previous case law) in order for that clause to be enforceable as desired, it should have read: “The courts of Milan shall be the exclusively competent forum on any disputes”.
It is noteworthy, though, that the same general contract terms, if signed by a company based in another EU country different from Italy (e.g. France), could have successfully prevented the French company from starting lawsuit in France, even if the forum clause did not specify its exclusivity.
That is because Article 25 of EU Regulation n°1215/2012 expressly states that the “prorogation of jurisdiction” clause “shall be exclusive unless the parties have agreed otherwise”.
This was also confirmed by the Italian Supreme Court as well (see for example the decision n°3624 of 8.3.2012).
Now, what happens if the contractual partner of the Milan company is a company based in a non-EU country not bound by international treaties on the subject? For example, a U.S. company?
Would the clause “The courts of Milan shall be the competent forum on any dispute” be considered as exclusive or not, from the perspective of an Italian court?
Article 6 of Regulation 1215/2012 should lead the Italian court to interpret that clause as exclusive pursuant to Article 25 of the same Regulation. However, in similar cases in the past, Italian courts have considered such clauses as non-exclusive by applying the domestic rules of private international law (art. 4 of Law 218/95) and interpreting them in line with Article 29, second paragraph, of the Civil Procedure Code (see for example Tribunale of Milan, 11.12.1997). As a consequence, in the case described above, if the U.S. company despite the above clause starts a lawsuit in its country, the decision issued in the U.S. may be recognized in Italy.
The Hague Convention of 30.6.2005 on forum selection agreements should solve the above and other issues, as it states (just like the European Regulation) that the chosen forum is exclusive except for an express agreement on the contrary. However, such Convention at the moment is in force only in a very limited number of countries (European Union, Mexico, Singapore).
In such an uncertain situation, if one wants the chosen forum to be exclusive regardless of where the other party is based, the most prudent approach under Italian law is certainly to specify exclusivity in the clause.
“Special approval” of unfair terms (art. 1341 of the civil code)
Another precondition of enforceability of forum selection clauses under Italian law, is the requirement of “special approval” of such clauses, if included in general contract terms. Pursuant to Article 1341, second paragraph, of the Civil Code, certain types of “unfair” clauses in general contract terms are unenforceable unless “specially approved” in writing. Such “unfair terms” include also arbitral and forum selection clauses, if favorable to the party drafting the general contract terms.
According to the standing jurisprudence of our Supreme Court, such “special approval” in practice occurs by putting a second signature on the contract, which has to be autonomous and separated from the signature that normally is placed to approve the contract in its entirety. Also, such second approval must expressly refer to each single unfair term, by citing number and heading of each such clause.
However, the special approval requirement for the forum choice clauses only applies to contracts between Italian parties, not to international contracts.
In particular, whenever EU Regulation 1215/2012 applies, the less stringent formal requirements set forth by Article art. 25 have to be complied with, even when the forum clause is part of general contract terms. In such a case, it is necessary and sufficient for the contract signed by the parties to include an express reference to the general terms containing the forum clause (see for example Cass. Sez. Un. 6.4.2017 n.8895). In case of general contract terms in a sale contract concluded electronically, a forum choice clause (again under the EU Regulation) can be validly accepted by a “click” (see EUCJ decision n.322 of 21.5.2015).
Even applying the Italian domestic rules in private international law (article 4, Law 218/95) – that is, essentially, in matters involving non-EU (or non-EEA/EFTA) parties – the “special approval” condition is not required for forum selection clauses, because such requirement is not expressly provided for by Article 4, and also by way of interpretation (Constitutional Court 18/10/2000, n. 428).
Notwithstanding the above, however, it has not yet been finally clarified whether or not the “special approval” requirement per Article 1341 of the Civil Code should also apply to international contracts (if governed by Italian laws) as a condition to enforce the other clauses that the law provision considers as “unfair”, such as for example limitation or exclusion of liability clauses.
Therefore, it is still very common in Italy to draft general contract terms, also for international contracts, providing for the other party’s second signature for special approval of the unfair terms.
All this, hoping for the Italian jurisprudence to develop a more modern and international approach in the future.