Enforcement of Judgments 2019

Last Updated August 07, 2019

Italy

Law and Practice

Authors



Batini Traverso Grasso & Associati is an Italian firm with a robust international background and 30 lawyers spread across the six Italian offices, plus a London office. Practice areas are international law, litigation and arbitration, marine and non-marine insurance (all classes), shipping and transport, shipping finance, yachting and ship building. The firm assists regularly international clients in the enforcement of foreign judgments and arbitration awards in Italy, related to shipping or any other commercial dispute.

According to article 2740 of the Italian Civil Code, a debtor is liable for the performance of his obligations, to the extent of all his present and future property. Limitations of such liability are not allowed, except in the cases set forth by the law. 

The following assets may be subject to an enforcement procedure:

  • movable property;
  • immovable property;
  • the debtor’s claims; and
  • shares in companies.

In order to identify the debtor’s assets in Italy, the following are publicly available:

  • land registries, which provide information on the owners of immovable property;
  • Pra (pubblico registro automobilistico: public register of vehicles), which provides information on the owners of vehicles;
  • ship registries, which provideg information on the owners of ships (merchant and pleasure vessels); and
  • company registries, which are administered by the Chambers of Commerce under the supervision of a judge and the Ministry of Economic Development, and provide access to public documents concerning companies, including lists of shareholders.

The so-called “sequestro conservativo” (precautionary seizure or arrest) is the most similar to a freezing order, being aimed at freezing the debtor’s property whenever there is a justified risk that the assets could be dissipated during the ordinary course of a judicial proceeding. The clamant is required to give evidence to the court of the existence of both the fumus boni iuris (prima facie case) and the periculum in mora (risk of assets dissipation). However, in order to proceed to the seizure, the goods must be identified by the claimant.

In Italy there is nothing similar to an asset disclosure order.

The law has recently changed so that the court of the debtor’s place of permanent or temporary residence, domicile or head office may, at the creditor’s request, authorise the property for attachment to be pursued using electronic methods (Article 492-bis of the Code of Civil Procedure, as amended by Decree-Law No 83 of 27 June 2015 – converted, with amendments, by Law No 132 of 6 August 2015). However, in order to start such a procedure, the creditor must have an enforceable title and must have already served the “Precetto” (Final Payment Notice) upon the debtor (see 2.3 Costs and Time Taken to Enforce Domestic Judgments).

This procedure is quite new and so far has not yet been widely applied.

Under domestic law, a judgment is a decision issued by a judge exercising his/her decisional powers granted by the law. In order to be considered a decision, a judgment must comply with the requirements set out in Article 132 of the Italian Code of Civil Procedure. Most first instance judgments (including money judgments or judgments ordering or prohibiting the doing of acts) are enforceable, even if appealed, unless the court of appeal has suspended enforcement.

A judgment can be obtained in default (contumacia) if the defendant failed to submit defences and is held in default of appearance. Such judgments are enforceable as above.

Declaratory judgments are enforceable only when they have final and conclusive effect (res judicata).

The following orders are provisionally enforceable even if they are technically not “decisions” as above:

  • ex parte orders for the payment of sums of money or for the transfer of movable assets (articles 642 and 648, Civil Procedure Code), provided they are declared temporarily enforceable either by the judge or after 40 days from its service failing the debtor’s opposition;
  • notices to vacate or notices of eviction related to overdue payment under a lease contract (articles 657 et seq., Civil Procedure Code);
  • notices of repossession upon the expiry of a rental agreement or in the case of late payment of rent, when such notices are confirmed by a court order;
  • orders issued in the course of proceedings for the payment of sums (article 186 bis, ter and quater, Civil Procedure Code);
  • conciliation reports settling employment disputes; and.
  • orders issued to employers to pay sums of money to unlawfully fired workers.

Before starting an enforcement procedure, the creditor must obtain a copy of the judgment bearing a special stamp called “formula esecutiva” (order to the bailiff to enforce the judgment), from the judge’s clerk. The claimant is then required to serve the debtor with a formal request (precetto), warning the debtor to comply with the court's decision within a deadline of at least ten days. Such notice is to contain a warning that failure to comply with the decision will lead to the decision being finally enforced.

In the case of non-compliance within the above deadline, the creditor can start enforcement proceedings. There are different methods of enforcement, governed by differents set of rules, depending on the type of asset to which enforcement is directed. All enforcement procedures are directed by a judge.

If the assets are movable or immovable, they shall be sold at an auction under the judge’s directions, and the claimant’s claim shall be satisfied through the auction proceeds.

If the debtor’s funds and/or claims are enforced, the judge shall allocate them to the enforcing creditor. 

Insolvency proceedings are provided only for companies or sole traders, defined in the Italian Civil Code (Article 2082) as any company or individual whose main activity consists of the production or trade of goods and services. Small traders, as defined under article 2083 of the Italian Civil Code, are exempt. The most important law setting out the rules governing insolvency procedures (“procedure concorsuali”) in contained in Royal Decree No 267 of 16 March 1942 (the “Bankruptcy Law”), according to the provisions of which a trader is insolvent when he is no longer able to regularly meet his obligations.

Currently, under Italian law, the insolvency procedures (“procedure concorsuali”) for the rehabilitation or liquidation of a company are as follows:

  • bankruptcy (“fallimento”);
  • pre-bankruptcy composition (“concordato preventivo”);
  • in-bankruptcy composition (“concordato fallimentare”);
  • debt restructuring arrangements and certified turnaround plans (“accordi di ristrutturazione dei debiti e ‘piani attestati di risanamento”);
  • extraordinary administration of large enterprises in a state of crisis (“amministrazione straordinaria delle grandi imprese in stato di crisi”); and
  • forced administrative liquidation (“liquidazione coatta amministrativa”).

Bankruptcy is the primary procedure and is aimed at assessing the debtor’s liabilities, selling all his assets and distribute the proceeds among the creditors.

Insolvency proceedings require the involvement of courts and/or other public authorities, regardless of the size of the bankruptcy estate.

Since such procedures were frequently quite long and sometimes ineffective, a reform has very recently been enacted (Legislative Decree No 14/2019), which is due to come into force 18 months after its publication in the Official Gazette (ie, on 15 August 2020), except for a few provisions. 

The law is divided into four parts. The first contains the new insolvency law composed of 390 articles; the second part includes a few amendments to the Italian Civil Code; the third contains amendments to Law No. 122/05 (safeguards for purchasers of real estate under construction); and the fourth details its entry into force.

The approach of such law is quite different to the “old” bankruptcy law, since the liquidation of a company should be the last option, with the continuation of business being the primary aim. 

As a general principle, the losing party must pay all the costs of the winning party. The court awards the costs of the proceedings in its judgment, determining which party must bear the costs and to what extent. Legal costs are usually liquidated by the court in accordance with a ministerial regulation assessing legal fees due for each phase of the proceedings on the basis of the value of the dispute.

Enforcement costs are to be anticipated by the enforcing creditor and then recovered through the enforcement proceeds. The court is also to award such enforcement costs. 

Costs vary according to the type of enforcement, with enforcement regarding immovable assets being the most expensive, as experts are to be appointed to assess the value of the goods and auctions are to be organised. For these reasons, this kind of procedure is usually quite long (at least a few years).

The speed of an enforcement procedure varies dramatically from court to court.

Please see article 492-bis of the Code of Civil Procedure, referred to under 1.1 Options to Identify Another Party's Asset Position, above.

Enforcement proceedings are adversarial.

All enforcement procedures are directed by a judge; therefore, a person against whom enforcement is sought can appeal to the court to oppose the enforcement procedure.

Oppositions can be filed by the debtor objecting to the right to proceed to enforcement, or by any party suffering prejudice as a result of the creditor’s actions (for example, a third party claiming to be the owner of the assets subject to enforcement). Oppositions can also be filed where certain acts of the enforcement procedure contain formal irregularities.

If the debtor seeks a stay of enforcement pending an appeal, a specific application asking the court to suspend the enforceability is to be submitted by the appellant. The court must see evidence of very serious reasons for this, both on the grounds of the application (fumus boni iuris) and on the risks of serious damages to the debtor associated with the enforcement (periculun in mora). 

The following types of judgments are not enforceable:

  • decisions that are not final;
  • judicial decisions not declared by law to be “enforceable”;
  • judgments where the content of the decision does not refer to a claim that is “certain, determined in its amount and overdue”; 
  • preliminary/provisional orders, unless declared to be enforceable by law; and
  • declaratory judgments that do not have final and conclusive effect (res judicata).

There is no central register of this kind.

Italy is a party to the following conventions and regulations:

  • the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention);
  • the European Convention on International Commercial Arbitration 1961 (Geneva Convention);
  • the HCCH Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters 1965 (Hague Service Convention);
  • the HCCH Convention on the Taking of Evidence Abroad in Civil and Commercial Matters 1970 (Hague Evidence Convention).
  • EFTA Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters 1988 (Lugano Convention);
  • Regulation (EC) 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Recast Brussels Regulation);
  • Regulation (EC) 1393/2007 on the service in the member states of judicial and extrajudicial documents in civil or commercial matters (Service of Documents Regulation);
  • Regulation (EC) 1896/2006 creating a European order for payment procedure; and
  • Regulation (EC) 805/2004 creating a European enforcement order for uncontested claims.

The law governing enforcement EU judgments is the Recast Brussels Regulation, which replaced Regulation (EC) 44/2001 (Brussels Regulation). Certain matters are excluded from the scope of the Recast Brussels Regulation (Article 1, Recast Brussels Regulation).

Article 39 of the Recast Brussels Regulation excludes the necessity of a declaration of enforceability for all civil EU judgments sought to be enforced in another EU country. Accordingly, an EU judgment can be enforced in another EU country by filing a copy of the judgment and a certificate from the court where the judgment was issued, on the basis of a template attached to the Recast Brussels Regulation.

Under the Recast Brussels Regulation, “judgment” means any judgment given by a court or tribunal of a Member State, regardless of the name given to it, including a decree, order, decision or writ of execution, as well as a decision on the determination of costs or expenses by an officer of the court.

”Judgment” includes provisional measures (including protective measures) ordered by a court or tribunal that has jurisdiction over the substance of the matter in accordance with the Recast Brussels Regulation. 

For non-EU judgments, the principle is that any judgment issued by a foreign court is automatically recognised in Italy without need for a court order (Italian International Private Law 218/1995), unless the recognition of the foreign judgment is denied or objected to by the person against whom it is issued, or where it is necessary to proceed to enforcement of the judgment. 

The enforcement of non-EU judgments is governed by the Italian International Private Law (Law 218/1995), which provides that a foreign judgment must meet the requirements of the Italian judicial system in order to be recognised. The Italian International Private Law does not include a definition of “judgment”, but does provide that a judgment must be delivered by a judge of competent jurisdiction, and must be final and binding in order to be recognised (Article 64).

The procedure does not differ depending on the nature of the judgment to be enforced, but on the nature of enforcement.

A declaration of enforceability is only required for non-EU judgments (Article 67, International Private Law 218/95). According to Article 30 provisions supplementing the Code of Civil Procedure (Law 150/2011), the court of appeal of the place in which the judgment must be enforced has jurisdiction in this case. For non-EU judgments, a declaration of enforceability can be appealed before the Italian Supreme Court (Article 67, Italian Private International law (218/1995)). To be enforceable, non-EU judgments must be final and binding.

According to the Recast Brussels Regulation, upon application, the recognition of an EU judgment can be refused based on the grounds provided under Article 45, as follows: 

  • if such recognition would be manifestly contrary to public policy in the Member State addressed;
  • if the judgment was given in default of appearance or if the defendant was not served with the document that instituted the proceedings or with an equivalent document in sufficient time and in such a way as to enable him to arrange for his defence, unless the defendant failed to commence proceedings to challenge the judgment when it was possible for him to do so;
  • if the judgment is irreconcilable with a judgment given between the same parties in the Member State addressed; 
  • if the judgment is irreconcilable with an earlier judgment given in another Member State or in a third state involving the same cause of action and between the same parties, provided that the earlier judgment fulfils the conditions necessary for its recognition in the Member Atate addressed; and 
  • if the judgment conflicts with: 
    1. sections 3, 4 or 5 of Chapter II of the Recast Brussels Regulation where the policyholder, the insured, a beneficiary of the insurance contract, the injured party, the consumer or the employee was the defendant; or 
    2. section 6 of Chapter II of the Recast Brussels Regulation.

According to Article 47 of Law 150/2011, first instance courts (tribunals) have jurisdiction in this case. 

EU judgments are enforceable in Italy if they are enforceable according to the place of issue or delivery, including EU decisions granting provisional measures, EU judgments made without notice (ex parte)/awards, and EU declaratory judgments.

Because Italy is a party to the regulations mentioned under 3.1 Legal Issues Concerning Enforcement of Foreign Judgments, the following decisions are enforceable in Italy:

  • a European order for payment under Regulation (EC) 1896/2006 creating a European order for payment procedure; and
  • a European enforcement order for undisputed claims under Regulation (EC) 805/2004 creating a European enforcement order for uncontested claims.

For non-EU judgments, decisions that are not final and do not have conclusive effect are not enforceable, including preliminary/provisional orders.

For EU judgments, the applicant must provide the enforcement authority (bailiff) with a copy of the judgment, and a document certifying that the judgment is enforceable, containing an extract of the judgment and the relevant information on costs and interest.

Certified translations of the above are not mandatory but are highly recommended. 

No legalisation or other similar formality is needed for documents issued in an EU country.

For non-EU judgments, unless there is an applicable convention, the applicant must apply to the competent court of appeal to verify whether the requirements for enforcement are satisfied (Article 67, International Private Law).

The following documents are required:

  • power of attorney;
  • a certified copy of the declaration of enforceability of the foreign judgment, issued by the competent Italian court of appeal;
  • a certified copy of the foreign judgment; and
  • a certified translation of the foreign judgment.

Such documents must be legalised, depending on the applicable international convention. 

The applicant must apply to the competent court of appeal to verify the following requirements for enforcement: 

  • whether the judgment was delivered by a judge who had jurisdiction over the matter in accordance with the relevant Italian principles;
  • whether the original summons or claim has been served on the defendant in compliance with the laws of the state in which the trial took place, and the fundamental rights of the defence have not been violated;
  • for a judgment in default, whether the procedure that was followed complied with local laws and regulations;
  • whether the foreign judgment is final and binding according to the law of the jurisdiction in which it was issued;
  • that the foreign judgment does not conflict with any final judgment issued by an Italian court;
  • that no proceedings are pending before any Italian court in connection with the same subject matter and between the same parties; and
  • that no conflict with Italian public policy exists.

Recognition shall be denied if any of above is missing.

The above provisions do not apply if there is a specific convention in force between Italy and the state in which the judgment was issued.

The length and cost of enforcement of a foreign judgment do not differ from the enforcement of a domestic judgment.,

For non-EU judgments, the time for obtaining a declaration of enforceability is to be added to the timeframe. Such timing depends on the specific court of appeal before which enforcement is requested (between one and three months).

The debtor can challenge the recognition of an EU judgment in the cases provided by article 45 of the Recast Brussels Regulation (see 3.2 Variations in Approach to Enforcement of Foreign Judgments, above). The court or authority before which a judgment given in another Member State is enforced can suspend the proceedings, in whole or in part, if the judgment is challenged in the Member State of origin (Article 38, Recast Brussels Regulation).

For non-EU judgements, a challenge of enforcement must show that any one or more of the requirements listed under 3.4 Process of Enforcing Foreign Judgments is missing. 

In particular, there is wide debate concerning the possibility of the enforcement of a judgment being refused on the grounds of public policy. The concept of public policy is not defined under the law. Domestic public policy is usually considered as the high standard of morality and social conduct in domestic society. International public order/policy is regarded as protecting the fundamental principles of the international community and the most fundamental legal principles in a civilised country.

“Punitive damages” were usually considered contrary to Italian public order. However, on 5 July 2017, the Joint Divisions of the Italian Court of Cassation ruled, for the very first time, in favour of the enforceability in Italy of foreign decisions granting the payment of so-called punitive damages, even though the Supreme Court decision clearly indicated certain pre-conditions (mainly legality, typicality/predictability and proportionality) to grant enforcement in Italy.

An arbitral award is the decision taken after an arbitration proceeding (Article 824 bis, Italian Code of Civil Procedure), and has the same legal effects as a civil judgment.

Enforcement proceedings for domestic awards are initiated through the filing of a request with the court of the relevant seat, together with an original or a certified copy of the award, as well as an original or a certified copy of the arbitration agreement. After a formal review of the award, the court declares the enforceability by decree.

To enforce an arbitral award, it is necessary to file an application with the competent court (relevant to the place of the arbitration proceeding), asking for the declaration of enforceability (exequatur proceeding).

An original or a certified copy of the award and an original or a certified copy of the arbitration agreement are to be submitted to the court, which shall declare the enforceability by decree after a formal review of the arbitral award, according to article 825 of the Italian Civil Code. 

After having obtained the exequatur from the competent court and after the service of the precetto (notice of payment), the plaintiff can proceed to enforcement.

With reference to foreign awards, Italy is a party to the following international treaties:

  • the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention); and
  • the European Convention on International Commercial Arbitration 1961 (Geneva Convention). 

According to Article III of the New York Convention, “each Contracting State shall recognise arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory when the award is relied upon, under the conditions laid down in the following articles. There shall not be imposed the substantially more onerous conditions or higher fees or charges on the recognition or enforcement of arbitral awards to which this Convention applies than are imposed on the recognition or enforcement of domestic arbitral awards.” 

Until 1994, where the enforcement of a foreign arbitral award was sought in Italy, a civil procedure was to be started before the Court of Appeal of the place where execution was to be levied, serving a writ of summons onto the defendant and substantially waiting for the average period of time under Italian practice (usually at least three or four years) to have the award declared enforceable. 

In 1994, new rules were added under law no. 25 (articles 839-840, Civil Procedure Code), modelled on that contained (at that time) in the 1968 Brussels Convention. 

Accordingly, the party wishing to enforce a foreign award in Italy shall file a petition with the president of the court of appeal of the district in which the other party has his domicile; if that party has no domicile in Italy, the court of appeal of Rome shall have jurisdiction. 

The president of the court of appeal enforces the foreign award in the Republic by decree, if he ascertains that the award meets all formal requirements.

The enforcement of arbitral awards is excluded wherethe merits of the case cannot be referred to arbitration under Italian law, and the content is contrary to Italian public policy (Article 839, Code of Civil Procedure).

The enforcement decree can be opposed before the same court within 30 days of the service of the decree.

If the enforcement is denied by decree, the procedure provided under Article 840 of the Code of Civil Procedure shall apply.

The same opposition procedure provided under article 840 is to be started by the defendant when enforcement is granted, asking the decree to be revised by the Court of Appeal.

The procedure is the same for all arbitration awards.

Since an arbitral award has the same legal effects as a civil judgment, the same limits for enforceability of a civil judgment apply.

The enforcement of a foreign arbitral award is excluded wherethe merits of the case cannot be referred to arbitration under Italian law, and the content is contrary to Italian public policy (article 839, Code of Civil Procedure).

In order to start the enforcement of a domestic award, the claimant is to obtain the exequatur (see 4.1  Legal Issues Concerning Enforcement of Arbitral Awards), and then serve the final notice of payment to the debtor (precetto) as in all enforcement procedures.

In the case of a foreign award, it is necessary to obtain the Court of Appeal enforcement order as above (Article 839, Code of Civil Procedure), and then serve it to the debtor, who has 30 days to oppose the order; failing opposition, the notice of payment (precetto) can be served upon the debtor.

Obtaining an enforceability order can take a few weeks.

However, in the case of opposition to the enforcement decree, the proceedings can last significantly longer (up to a few years).

Costs vary, of course, increasing in case of an opposition.

The opposition procedure provided under article 840 is to be started by the defendant in the case of granted enforcement, asking the decree to be revised by the Court of Appeal.

Following such opposition, the proceedings shall be held according to articles 645 ff of the Italian Code of Civil Procedure, insofar as they are applicable, which means that an average judicial proceeding is started.

The court of appeal shall render a judgment, which may be appealed before the Supreme Court. 

The court of appeal shall deny recognition or enforcement of the foreign award if the party against whom the award is invoked furnishes proof in the opposition proceedings of the existence of one of the circumstances listed in article 830, as follows:

  • the parties to the arbitration agreement were, under the law applicable to them, under some incapacity, or the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the State where the award was made; 
  • the party against whom the award is invoked was not informed of the appointment of the arbitrator or of the arbitration proceedings, or was otherwise unable to present his case in the proceedings; 
  • the award decides a dispute not contemplated by the arbitration agreement or clause, or not within the terms of the arbitration agreement or clause; however, if the decisions in the award on matters submitted to arbitration can be separated from those not submitted, the former may be recognised and enforced; 
  • the composition of the arbitration tribunal or the arbitration proceedings was not in accordance with the agreement of the parties or, failing such agreement, with the law of the place where the arbitration took place; or
  • the award has not yet become binding on the parties or has been set aside or suspended by a competent authority of the State in which, or under the law of which, it was made.

As indicated above, recognition or enforcement of the foreign award shall be denied if the court of appeal finds that the dispute could not be the subject of an arbitration agreement under Italian law. or the award contains provisions that are contrary to public policy. 

The provisions laid down in international conventions shall apply in any case. If an application for the setting aside or suspension of the effects of the award has been made to the competent authority indicated under e) above, the court of appeal may adjourn the decision on the recognition or enforcement of the award; on the request of the party seeking enforcement it may, in the case of suspension, order the other party to give suitable security. 

The NY Convention does not provide for a definition of public policy.

The concept of public policy, or public order, or ordre public, differs in civil law systems from the concept in common law, even if the meaning of this expression is to some extent vague and indistinct. Both article 16 of the 1980 Rome Convention on the law applicable to contractual obligations and article 27 of the Brussels Convention make reference to “public policy” or public order; in particular, the latter article states that a “judgement shall not be recognised: 1. if such recognition is contrary to public policy in the State in which recognition is sought (omissis).”

Usually a distinction is made between domestic public order and international public order/policy (see above). 

Batini Traverso Grasso & Associati

Via Camperio 9
20123 Milan
Italy

+39 348 7902191

+39 348 7902191

a.batini@btglegal.it www.btglegal.it
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Law and Practice

Authors



Batini Traverso Grasso & Associati is an Italian firm with a robust international background and 30 lawyers spread across the six Italian offices, plus a London office. Practice areas are international law, litigation and arbitration, marine and non-marine insurance (all classes), shipping and transport, shipping finance, yachting and ship building. The firm assists regularly international clients in the enforcement of foreign judgments and arbitration awards in Italy, related to shipping or any other commercial dispute.

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