Danieli Successfully Challenges Recognition of Foreign Award in Italy

August 7, 2023

Cleary Gottlieb represented Danieli & C. Officine Meccaniche S.p.A. (Danieli) in obtaining an important decision issued on August 7, 2023, by the Trieste Court of Appeals.

The Court of Appeals granted Danieli’s requests and denied recognition and enforcement in Italy of a foreign award under the NY Arbitration Convention.

The award, which was rendered in 2019 in a Singapore-seated ICC arbitration, ordered Danieli to pay over €77 million to a Malaysian company as a result of the annulment of certain agreements relating to the construction of a hot-rolled steel coils manufacturing plant in Malaysia.

While the NY Convention recognition and enforcement proceedings were pending in Italy, the Singapore Court of Appeals set aside a portion of the award for breach of natural justice due to the “flexible approach” adopted by the Arbitral Tribunal in the quantification of alleged damages, while upholding the validity of the remainder of the award.

The Trieste Court of Appeals accepted Danieli’s position and denied recognition of the award in Italy as a result of its partial setting aside in Singapore, including with respect to the portions of the award that had not been set aside. Specifically, consistently with Italian Supreme Court precedents, the Court of Appeals found that it had no authority perform any assessment of the merits of the foreign set aside judgment, which would enable it to distinguish between the foreign court’s reasons for setting aside the award or a portion thereof.

The judgment is particularly significant both because denials of recognition and enforcement of foreign awards in Italy are rare (including due to the limited grounds available under Italian rules implementing the NY Arbitration Convention to challenge recognition of a foreign award) and because it is one of the very few judgments addressing recognition in Italy of partially set-aside foreign awards.