Litigation 2019 Second Edition

Last Updated December 05, 2019

Italy

Law and Practice

Authors



Legance - Avvocati Associati was founded in 2007, by a group of acclaimed partners who began their careers in the same law firm, Legance distinguishes itself in the legal market as a point of reference for both clients and institutions. Legance’s rapid growth is indisputable evidence of its strength in legal services, and its achievements are the result of a consistent strategy focused on creating value around the institutional nature of the firm. Legance, thanks to the firm’s constant attention to its clients’ needs, and an unconventional approach, has positioned itself at the top of the national and international market. Legance, thanks to a strong international practice, can support clients from several different geographical areas, and organise and co-ordinate multijurisdictional teams.

The Italian legal system is ultimately based upon the Roman legal tradition, thus it can be included among the continental civil law systems.

Italian civil courts follow a model which cannot be considered as purely adversarial, nor purely inquisitorial; but rather a mixed one. Indeed, Italian judges do not play a strong, active role in civil proceedings. Parties are free to introduce their claims in the manner, and to the limits, they deem fit – unless public interests are involved, in which case the Public Prosecutor is also allowed to submit a civil claim – and the judge is then bound by these limits. The mixed nature of the procedural model can also be seen in the taking of evidence phase, where, as a general rule, the burden to submit the evidence which is necessary to support their claims lies entirely upon the parties. Unlike in purely civil and commercial matters, in labour law proceedings the rules governing the taking of evidence follow more of an inquisitorial model, where the judge has broader discretion in acquiring evidence on his or her own motion. 

According to the Italian civil procedural rules, civil cases are dealt with primarily through the exchange of written submissions and oral discussion during public hearings.

The Italian Constitution provides for an autonomous and independent judiciary, which is formed by ordinary (full-time) judges and honorary judges.

The Italian civil judiciary system is divided into: Courts of First Instance, Courts of Appeal and the Supreme Court.

All civil courts are national courts. Courts of First Instance and Courts of Appeal are located in court districts through the entire Italian territory; the Supreme Court has a sole location in Rome. The jurisdiction of Courts of First Instance is selected on the basis of the Italian civil procedural law criteria for the selection of territorial jurisdiction.

Courts of First Instance are split into small claim courts (giudici di pace) and District Courts (Tribunali).

Honorary judges preside over small claim courts. Their jurisdiction is limited to minor claims over specific matters (eg, claims on real estate boundaries or minor rental and co-habitation disputes) and claims which have a value up to EUR5,000. In the case of claims relating to damage caused by motor vehicles or boats, the maximum claim value is up to EUR20,000. Starting from 2021 these threshold claim values will be increased to EUR30,000 and EUR50,000, respectively.

District Courts are presided over by ordinary judges. All the claims which do not fall within the jurisdiction of lower courts are to be dealt with before District Courts. Depending on the complexity of the matter discussed, judges in District Courts sit either solo or as a panel of three.

Judgments rendered by lower courts are appealed before District Courts. Judgments rendered by District Courts are appealed before the Courts of Appeal. Court of Appeal judgments are appealed, solely under a limited number of procedural grounds, before the Supreme Court.

The Supreme Court (Corte Suprema di Cassazione) is the highest appellate court in Italy. Its main task is to protect the correct and uniform application of the law, thus the focus of Supreme Court review is the lawful application of law.

The establishment of extraordinary or special judges is forbidden by the Italian Constitution. Nevertheless, within the ordinary jurisdictional bodies specialised divisions dealing with specific matters have been established (eg, labour or family law divisions; or enterprises divisions (Tribunali delle Imprese) which were established in 2012 with jurisdiction over certain corporate claims and intellectual property rights).

Administrative Courts – having jurisdiction over claims between citizens and public entities – are split between Administrative Regional Courts (Tribunale Amministrativo Regionale) and the Administrative Appellate Court (Consiglio di Stato).       

The Constitutional Court only deals with matters concerning breaches of the Italian Constitution and the compliance of ordinary laws and regulation with the Constitution.

Court filings, judgments and proceedings, in general, are open to the public. The public can therefore apply to have access to documents which are deposited within the court clerk's office.

Court hearings are similarly public as a general rule. Also, when the public disclosure of a judgment can amount to the reparation of damage, the court can order that the judgment is published on websites and/or in newspapers.

Upon a specific interest to preserve confidentiality or secrets, however, parties can request that the court render an order to secure confidentiality and protect proceedings or particular documents from public disclosure.

Rules on data protection and privacy govern the treatment of parties' data enclosed in court filings. Parties are allowed, at any time, to request that the court conceal their names and personal data before the issuance of a judgment.

As a general rule, only attorneys admitted to practice in Italy can represent parties and attend hearings before Italian courts; with the sole exception of small claims courts for claims up to a value of Euro5,000, where parties can attend in person, without the need of attorney representation. Representation before the Supreme Court is reserved to a limited number of authorised senior attorneys.

Also, in application of a European directive, lawyers who are admitted to practice in another EU member state are allowed to appear before Italian courts along with an Italian attorney. In order to do so, the foreign lawyer has to be first registered in the national bar registry as an avvocato stabilito. In order to appear before the Italian Supreme Court, the avvocato stabilito is also requested to prove that he or she has at least 12 years of experience.

There are no specific rules governing third-party funding in Italy. While third-party funding is attracting more and more Italian companies involved in international litigation and arbitration proceedings, it is still debatable whether third-party funding agreements, as conceived of in common law jurisdictions, could be so construed under Italian law and fully enforceable in our jurisdiction.

Not applicable, see 2.1 Third-Party Litigation Funding.

Not applicable, see 2.1 Third-Party Litigation Funding.

Not applicable, see 2.1 Third-Party Litigation Funding.

Not applicable, see 2.1 Third-Party Litigation Funding.

Not applicable, see 2.1 Third-Party Litigation Funding.

Not applicable, see 2.1 Third-Party Litigation Funding.

Italian law imposes mandatory mediation before allowing the initiation of court proceeding in a number of matters:

  • condominium;
  • property rights (including usufruct, mortgage, pledge and the right to live in a house);
  • division of joint properties;
  • inheritance;
  • agreements made by the owner of a company or a business to transfer his or her shares in the company, or the entire business, to one or more of his or her heirs (so-called patti di famiglia);
  • lease claims including business lease agreements;
  • tort claims deriving from medical and health liability, or defamation perpetrated through the media or other public means; and
  • insurance, financial and bank contracts.        

If the parties fail to comply with the mandatory mediation requirement the judge will defer the hearing to allow them to perform mediation first. Moreover, if a party refuses to take part in the mediation process, without any justification, the judge can take this behaviour into account and infer circumstantial evidence from it. This conduct can also be sanctioned by the judge by ordering the abstaining party to pay a fine equal to the upfront court tax (contributo unificato).

Since 2014, in disputes related to damages arising from motor vehicles or boats, and in all monetary claims for a value up to EUR50,000, the plaintiff has been required to first attempt to settle the claim through assisted negotiation (negoziazione assistita).

In all other matters there is no pre-action conduct required.

The ordinary statute of limitations for civil lawsuits is ten years, starting from the day on which the right can be exercised. The law establishes a shorter statute of limitations for tort claims, which is five years starting from the day on which the unlawful fact occurred.

Shorter statutes of limitations (of one or two years) are also provided by Italian civil law in further specific cases, such as for claims related to insurance agreements, or claims for payment of amounts due in instalments or related to specific contracts.

Under Italian law statutes of limitations are interrupted by the filing of the initial complaint; also, upon the occurrence of certain events, statutes of limitations are stayed for a specific period of time. In the case of an interruption as a consequence of the filing of the initial complaint, the statute of limitations will start to run again upon the issuance of the final judgment.

As a general rule, Italian courts have jurisdiction over individuals and entities who are resident or domiciled in Italy, or when they have a legal representative in Italy with the authority to appear in court. Italian courts' jurisdiction is denied in cases of claims involving immovable assets located outside the Italian territory.

Further to the above, all jurisdiction criteria provided for by the Brussel I recast EU Regulation apply to Italian courts. 

Moreover, Italian courts also have jurisdiction if the parties have mutually agreed to submit their lawsuit to the jurisdiction of the Italian courts and in cases where the defendant appears before an Italian court without challenging the relevant jurisdiction.

Legal proceedings before the Italian court are generally commenced by the plaintiff serving upon the defendant a writ of summons (atto di citazione). The main content of the writ of summons is the following:

  • the mention of the competent court;
  • the parties’ and the relevant legal representatives' personal data (necessary to identify them);
  • a description of the claims raised;
  • a complete explanation of the facts from which the dispute has arisen and the legal reasons supporting the claims;
  • a list of the forms of evidence and of the documents offered by the plaintiff; and
  • the summons to the defendant to appear before the court, on a specified date, for the first hearing; with the warning that a full defence must be offered by filing the statement of defence no later than 20 days in advance of that hearing date.

Once the writ of summons is served upon the defendant (service of process shall not include the documents attached thereto), the plaintiff shall file it with the court and the proceedings are commenced.

The plaintiff cannot amend the initial complaint once filed, but only supplement it within certain boundaries. In particular, the claims raised in the writ of summons cannot be substantially amended, nor supplemented with new claims after the writ of summons; rather, they can only be clarified, or better detailed, within the first defensive brief following the first hearing. Forms of evidence and supporting documents can be supplemented and added to, up to the second written defensive brief the parties are allowed to file after the first hearing. After this time limit expires, the plaintiff has the right to present new evidence only in reply to the counterparty's evidence and it was not available before, provided that the court will ascertain that that justification is grounded.

The same conditions apply, mutatis mutandis, to the defendant; to the objections, arguments and counterclaims raised in the statement of defence; and to the evidence supporting them.

In certain proceedings the initial complaint is slightly different and is made through an application which is first filed with the court, for the court to schedule the first hearing. Once the first hearing is scheduled, the plaintiff will perform service of process upon the defendant with the application and the court order scheduling the first hearing.

The procedure to inform the defendants that they have been sued is to serve them with the initial complaint (writ of summons, see 3.4 Initial Complaint). Generally, service of process is the responsibility of the plaintiff and is performed either by the court's process server officers (upon the plaintiff’s instructions), or by the plaintiff’s lawyer, if authorised to do so.

Service of process within the Italian territory can be performed by hand delivery, delivery via postal service, or delivery via certified electronic mail (solely upon defendants, such as companies, who are provided with a certified electronic mail address). Lawyers can perform service of process only via postal services or certified electronic mail.

Specific rules apply where defendants cannot be located or are located outside the Italian territory.

As far as service of process abroad is concerned, the Italian system follows the rules provided for service of process by the relevant EU regulations or by relevant international conventions (eg, The Hague Conventions of 1954 and of 1965). As a residual means of service of process, service upon a defendant domiciled or resident outside Italy can be carried out through registered letter with acknowledgment of receipt (raccomandata con ricevuta di ritorno) and by delivering a copy of the initial complaint to the Public Prosecutor's office which shall take care of the transmission to the Foreign Office of the defendant's country.

In the event a defendant, duly served with the initial complaint, does not respond to a lawsuit and fails to appear at the first hearing, the court will declare that the defendant is in absentia (contumacia), provided that no irregularity in the service occurred. In the event service of process was not performed properly, the court orders the service of process to be performed again, and schedules a new first hearing. If the defendant fails to appear at the second hearing, then the court will decide the case in absentia.

The defendant is allowed to appear until the final hearing and keeps the right to reply to the plaintiff’s claims. However, the declaration of absentia entails the inability to file counterclaims and to raise objections (both procedural and substantial) which cannot be raised by the court of its own motion. If the defendant appears in the proceedings and proves that it couldn’t have appeared before because of irregularities in the service of process, the defendant will be allowed to produce evidence even beyond the expiration of the evidentiary time limits.

Italy opened up to class actions for the first time in 2009, introducing the option for consumers (ie, individuals who are acting for purposes not related to their business or profession) or end users (consumatori finali) to bring claims through associations or committees (these organisations must be aiming to protect consumers’ and end users’ rights and they are required to be registered in a public list held by the Ministry of Justice) against companies or public organisations. Such actions are permitted in order to obtain a declaration of liability and an order for damage compensation and restitution.

In Italy, consumer class actions are provided on an opt-in basis: consumers who have interests similar to those of the plaintiffs have the right to join the class action within a mandatory deadline (which is, at the most, 120 days from the filing of the initial complaint).

It is important to highlight that, at the time of writing (October 2019), the provisions currently governing consumer class actions will soon be replaced. The provisions providing for the new class action, under Articles 840-bis – 840-sexies of the Italian Civil Code, will enter into force on 19 April 2020.

According to Italian law, lawyers must provide the client with a cost estimate encompassing all the fees and expenses (depending on the complexity of the claim) which can be foreseen at the time of the engagement. If requested to do so by the client, the lawyer shall also provide the above cost estimate in written form, detailing the expected legal fees, litigation expenses and any other costs.

The Italian legal system does not provide for a pre-trial phase per se in the context of a civil lawsuit. However, each party can ask the judge to grant precautionary measures, before the discussion of the merits of the case, whenever the expected duration of the process is likely to prove detrimental to its rights.

In some cases, specifically provided for by the law, some parts of a civil dispute can be decided by means of an early judgment which can be either final or non-final. For instance, according to the Italian civil procedural law, early judgments can be issued on single claims or parts of a claim when they are severable, or a single part of a claim. Early judgment for a general order of payment or liability, leaving the quantification of that payment or liability for a second phase is also possible. Also, Italian courts can issue early judgment for an order of payment regarding unchallenged amounts due, or for injunctive relief in respect of the specific payment of delivery obligations.

Under the Italian Code of Civil Procedure, a party cannot, under any circumstances, apply for the other party’s case to be struck-out before the substantive hearing of the claim has been held.

In the Italian legal system, there are no dispositive motions that are commonly raised before trial.

There are multiple ways for a party, which is not named as plaintiff or defendant in the initial complaint but nevertheless has a material interest in the dispute, to join the lawsuit.

The Italian Code of Civil Procedure provides for three different cases of voluntary joinder of an interested third party in a civil lawsuit:

  • the so-called intervento litisconsortile, by which the interested party can claim a right, which is related to and dependent on the subject of the dispute, towards only some of the parties;
  • the so-called intervento principale, by which the interested party can claim a right, which is related to and dependent on the subject of the dispute, towards all the parties; and
  • the so-called intervento adesivo (ad adiuvandum intervention), whereby the party joins the lawsuit only to support the allegation of another party, with no autonomous interests.

In all these cases the third-party joinder can be performed until the final hearing.

In addition, a third party can be also summoned to the proceeding by one of the parties (due to a general connection of the position of the third party to the matter in dispute or in light of a warranty relationship), or by the judge.

Applications for security for costs are not expressly provided for by the Italian Code of Civil Procedure.

Please see 4.1 Interim Applications/Motions.

Please see the answer provided in 4.1 Interim Applications/Motions.

Discovery is not provided in Italian civil proceedings. Nevertheless, under Italian law, upon the request of either party to the proceedings, the judge can order each party, or a third party, to produce one or more specific documents (a so called exhibition order), provided that they are identified in detail by the requesting party and that they are relevant to the dispute.

See 5.1 Discovery and Civil Cases.

When ordering the submission of a document from a third party, the judge has to weigh the interests of the proceeding against the rights of the requested third party.

In the event that the requested third party does not comply with the exhibition order, and this is without justification, the judge can charge him or her with a fine (ranging between EUR250-1,500).

No information has been provided for this jurisdiction.

The evidence gathering in Italian civil proceedings is managed differently depending on the forms of evidence in question.

As a general rule, parties are responsible for filing and gathering all forms of evidence that they wish to present to support their case, whereas the judge does not have, in principle, investigatory powers (see 1.1 General Characteristics of Legal System). Nevertheless, the judge retains some discretion in requiring the production of documents from the public administration and to seek clarifications from witnesses and parties’ representatives.

As far as documentary evidence is concerned, documents do not require any particular form in order to be filed with the Court; parties shall only have to file documentary evidence within the time limits provided for evidentiary allegations.

Any other forms of evidence (the hearing of factual witnesses, expert reports, document production, inspection, formal examination of party representatives) shall be authorised by the court before being included in the case file. To do this, the parties shall raise their evidentiary requests within the deadline set forth for this purpose by the Code of Civil Procedure and afterwards, a hearing will be scheduled for the judge to assess and decide upon these evidentiary requests. Afterwards, the judge will also set the procedural calendar for the evidence gathering phase.

Attorney-client legal privilege in Italy is a confidentiality rule that covers all information, correspondence and documents exchanged between a party and its lawyers, to the extent that they are related to the proceedings and the relevant engagement. According to the legal privilege rules, a lawyer is authorised to refuse to comply with a court order – to produce specific documents or to provide answers to a witness examination – when it concerns documents or information covered by legal privilege (see 5.2 Discovery and Third Parties).

Attorney-client legal privilege applies only to lawyers enrolled in the bar registry, not to in-house counsel. 

Under Italian law, legal privilege also covers correspondence exchanged between parties’ counsel, and correspondence and documents concerning settlement negotiations.

When discussing legal privilege, however, it must be taken into account that the Italian system does not provide for the common law concept of “privilege”, pursuant to which privileged documents can never be presented in court. Italian legal privilege rules only bind attorneys; therefore, as a general rule, legal privilege is not enforceable toward a third party in possession of a privileged document.

Where documents are not covered by attorney-client legal privilege (see 5.5 Legal Privilege) or by any legal secret, a party cannot refuse to disclose them, if ordered to do so by the court. Not complying with this order means that the judge is allowed to infer elements of proof from this behaviour. Regarding the consequence for a non-complying third party, please see 5.2 Discovery and Third Parties.

The Italian Code of Civil Procedure provides for different ways to obtain injunctive relief.

Italian law provides for several types of precautionary procedure, all commonly intended to protect the plaintiff’s claims from any damages that may arise from the duration of the ordinary proceedings on the merits.

Italian law provides for typical and atypical precautionary measures.

In the first place, the Italian Code of Civil Procedure sets forth the so-called misure di istruzione preventiva, aimed at granting the early acquisition of evidence and, by doing so, ensuring the fundamental right to evidence belonging to each party in a proceeding.

In the second place, Italian law provides for two different forms of seizure:

  • judicial seizure – aimed at seizing the asset, which is the object of the dispute over the title of ownership, and at granting custody to a neutral third party; and
  • conservative seizure – aimed at freezing all or part of the debtor’s rights and assets in order to ensure the satisfaction of the credit claim of the plaintiff.

Among the atypical measures, mention must be made of the provision set forth by Article 700 of Italian Code of Civil Procedure, which allows the judge to grant any urgent precautionary protection of the applicant's case and right to evidence by ordering any measures, the contents of which are discretionary and decided from time to time by the judge in light of the circumstances of the case.

Aside from the above, Italian law does not provide for injunctive relief for preventing parallel proceedings in another jurisdiction; rather, this matter is regulated by the applicable legal provisions on lis pendens.

The time needed for a precautionary measure to be granted by the judge is extremely variable and is influenced by several factors: the caseload of the competent court, the danger of delay and the likelihood of the application’s success (periculum in mora and fumus boni iuris), the degree of urgency of the application and the complexity of the main dispute.

The Italian legal system does not provide for “out of hours” judicial service; all disputes are therefore discussed and decided only during ordinary working hours.

According to the provision set forth by Article 669-sexies, paragraph 2 of the Italian Code of Civil Procedure, a precautionary measure can be obtained on an ex parte basis whenever the summoning of the defendant might damage the execution of the precautionary measure. However, even in this case, the judge is still required to schedule a hearing of the parties within the following fifteen days at the latest and the applicant must perform service of process upon the defendant within a compulsory deadline of eight days. At this hearing, the measure granted ex parte can be confirmed, modified or revoked.

The applicant can be held liable, under the provision set forth by Article 96, paragraph 2 of Italian Code of Civil Procedure, when the applicant, acting without the due professional diligence required, obtains and execute a precautionary measure related to a right that, after the final judgment, is decided to be non-existent or ungrounded.

Pursuant to Article 669-undecies of the Italian Code of Civil Procedure, the judge can impose a security upon the plaintiff in connection with the possible damages related to the execution of the precautionary measure.

Generally speaking, injunctive relief over the defendant's assets, such as seizure orders, are not ordered with regard to single assets, but rather with regard to all the assets of the defendant party, up to a specific seized amount, irrespective of where they are located. As a consequence, for this type of injunctive relief to be enforced abroad, the relevant court order should be first recognised and enforced in the state where the relevant assets are located.

Only in a very few, and exceptional, cases can injunctive relief be obtained against third parties. More precisely, seizure orders can be enforced against third parties, but only in respect of goods and assets belonging to the defendant, and not the third party itself.

The potential consequences of a respondent’s non-compliance are regulated by Article 388 of the Italian Criminal Code, according to which the breach of a judicial order is punishable with the penalty of imprisonment for up to three years or with a fine from EUR103 to EUR1,032.

Civil proceedings in Italy are conducted mainly through the exchange of written pleadings. However, in complex cases, or when many evidentiary requests are raised, the evidence gathering phase may take place through a number of oral hearings, as per the procedural calendar which shall be ordered by the judge.

As a general rule Italian civil proceedings are structured as follows:

  • before the first hearing the plaintiff serves the writ of summons providing a first description of the claims, and the defendant (if duly served) submits its full statement of defence;
  • at the first hearing the judge assesses and resolves any preliminary and procedural issues, in the event that one (or more) procedural requirements is not met, the first hearing is rescheduled, and the parties are ordered to rectify and procedural gaps;
  • upon the request of at least one party, the judge grants a new exchange of three defensive briefs where both parties shall raise all evidentiary requests and put forward all of their allegation and objections;
  • a further hearing follows for the judge to render a decision on the evidence requests filed by the parties, on this occasion the judge may also decide, on his or her own motion, to appoint a court-appointed expert to assist him or her in technical determinations;
  • if any evidence request is upheld, the judge schedules further hearings for the evidence gathering (please see 7.5 Expert Testimony);
  • at the end of the evidence gathering phase the judge sets the final hearing where the parties summarise their conclusions, in this hearing the parties are prevented from introducing new facts, although they can raise new legal reasons to prove their claims; and
  • finally, a double round of written conclusive briefs takes place before the judge reserves the case for the issuance of the final judgment.

Italian civil procedural law does not provide for pre-defined case management hearings in civil proceedings. Usually, case management decisions are taken by the judge at any hearing, depending on the specific needs of the particular case. When there are numerous evidentiary requests, the hearing scheduled for the admission of evidence requests is also dedicated to the definition of the procedural calendar for the evidence gathering phase.

There are no juries in Italian civil proceedings.

The rules governing the admission of evidence vary depending on the forms of evidence considered.

Parties are freely allowed to submit any documentary evidence they deem fit, and there are no specific rules for their admission; apart from legal privilege, trade secrecy and the evidentiary time limits to be complied with.

Witness testimony shall be requested by a party by identifying the witness offered, and detailing each of the questions that the party wishes to raise to that witness. In this respect it is important to highlight that under Italian law only leading questions can be raised to witnesses (the traditional formula being “Is it true that…”) and they cannot concern negative circumstances. Witness examination is rendered under oath, and it is governed by the judge while parties’ lawyers, as a general rule, cannot raise questions directly to the witness.

Each party has the right to request the formal examination of the other party in order to obtain a confession. As with witness testimony, the judge can admit this examination to the extent that it relates to specific circumstances which are relevant to the decision; such circumstances must be indicated by the requesting party. The formal examination, if admitted, is always conducted by the judge.

The judge has the power to order the parties, or a third party, to produce documents which are considered to be relevant to the proceedings (see 5 Discovery).

Please see 5.4 Alternatives to Discovery Mechanisms for the rules governing the admission of evidence.

In Italian civil proceedings expert testimony is traditionally rendered through a court-appointed expert (consulente tecnico d’ufficio). Parties can file expert reports as documentary evidence, but they are not granted the same evidentiary value as those in common law jurisdictions are. When, instead, a court-appointed expert is appointed by the judge, each party can appoint its own expert who shall attend the expert meetings and investigations and who shall render comments on the draft expert report to be filed by the court-appointed expert with the court.

Following the filing of the expert report with the court, the court-appointed expert can be heard by the judge for clarification or for supplementary investigation.

As a rule, hearings are public. The hearing records, which are not a verbatim transcription, are enclosed in the judge’s order and, upon a specific request, can be accessed by the public.

The main role of the judge in civil trials is to govern the proceedings, to evaluate and weigh the evidence offered, assess its admissibility and relevance to the case. The judge has also some discretion to further investigate the evidence offered and to request further evidence. 

Judgments are seldom rendered directly at the hearing. The general rule is that the final judgment is issued following the final hearing and the final two rounds of conclusive written briefs. However, upon a party's request, or even on his or her own motion, a judge can decide to issue the final judgment orally after the oral discussion of the case.

Any decisions other than the final judgment, can be delivered at any time – during a hearing or outside a hearing – with an order which is notified to the parties by the court clerk's office.

The duration of legal proceedings is very much dependent on the workload capacity of the relevant court, since there can be an appreciable difference, in terms of lengthiness, among the various Italian courts. On average, before the most efficient courts, legal proceedings encompassing a standard taking of evidence phase can last around one to two years in the first instance, and around two to three years for the appeal proceedings. Ordinary proceedings before the Supreme Court, instead, last, on average, around three years.

The Italian legal system and the Italian Code of Civil Procedure allow parties to settle any lawsuit without court approval.

The settlement negotiation correspondence is confidential under the Italian Lawyers Bar Code of Ethics. Furthermore, settlement agreements have traditionally included confidentiality clauses, which are enforceable under Italian law.

Settlement agreements are enforceable contracts. Therefore, enforcement is primarily granted through the co-operation of the parties; when such co-operation is lacking and one party is in breach, the other party must activate the relevant dispute resolution clause as provided in the settlement agreement or commence ordinary court proceedings, as the case may be, or it may also proceed for direct enforcement, depending on the contents of the settlement agreement.

A settlement agreement can be set aside in a number of cases set forth by the applicable provisions of the Italian Civil Code including, but not limited to, cases in which:

  • the parties did not have the capacity to dispose of the rights under the settlement or when those rights were not legally disposable by the parties;
  • one of the parties acted in bad faith in signing the agreement;
  • the settlement concerns a void contract;
  • the settlement is based on false documents;
  • the relationship that is the subject of the agreement is regulated by a previous judgment issued by a court of which the parties were not aware; or
  • one of the parties fails to comply with a material provision of the settlement agreement.

The awards available to a successful litigant are divided into the following three main categories:

  • an award ascertaining the existence of the right claimed by the plaintiff and their entitlement to it;
  • an award ascertaining the existence of a breach and ordering a party to perform, or not to perform, an action, or to pay a certain amount of money; and
  • an award creating, modifying or extinguishing a right, interest or legal position.

The compensation of damages can derive from breach of a contract or a tort.

Damage compensation for contractual liability:

  • must cover the actual loss and the loss of profit, if these losses are directly consequential to the breach of contractual obligation;
  • is quantified ex aequo et bono by the judge, if it is impossible to assess a specific damage figure; and
  • is limited to foreseeable damages when the liability is based on negligence.

The compensation for tort liability is limited to the direct economic damage. In certain specific circumstances, Italian law also allows compensation for non-economic (moral) damage.

Punitive damages are not provided by Italian civil law. Nevertheless, for commencing a judicial action in bad faith or defending a judicial action in bad faith, the judge can order the losing party to pay damages, even in the absence of a party’s request, up to an amount that can be discretionally assessed by the judge.

Claims for payment of amounts of money which are immediately collectable accrue default interest at a legal interest rate, which applies starting from the day after which payment is due, and until the day of payment. Default legal interest also accrues after a judgment is rendered, at the same interest rate. The legal interest rate is established each year by the Ministry of Economics and Finance; this rate applies unless the parties have agreed otherwise.

A specific and higher legal interest rate applies during judicial proceedings and in relation to commercial claims. 

The winning party has the right to start enforcement proceedings (esecuzione forzata) if the losing party refuses or fails to comply voluntarily with the judgment. These enforcement measures include:

  • attachment over movable or immovable assets, or over third-party claims or bank accounts; and
  • specific means of enforcement of an obligation to perform or to act, including the possibility of having a substitute perform the debtor’s obligation and the debtor paying the cost for performance.

Unless a specific convention is in force between Italy and the state where the foreign judgment has been rendered, Article 64 of the Law No 128 of 1995 applies. According to Italian law, foreign judgments are automatically recognised in Italy provided that the following requirements are met:

  • the foreign court had jurisdiction, according to Italian civil procedural law;
  • the writ of summons was served in compliance with the applicable foreign law and the fundamental rights;
  • the parties appeared before the foreign court in accordance with that country’s procedural rules, or – in cases of absentia – the declaration of absentia was rendered pursuant to the applicable procedural rules;
  • the judgment cannot be challenged anymore before an ordinary appellate court according to the foreign procedural rules;
  • the judgment is not inconsistent with a judgment rendered by an Italian court;
  • there are no proceedings between the same parties and relating to the same matter pending before an Italian court and commenced before the foreign proceedings; and
  • the foreign decision is not contrary to Italian public policy.

In order to be enforced, the Court of Appeal (of the district where the foreign judgment has to be enforced) has to deliver a judgment in which it ascertains whether the aforementioned requirements are met. The judgment can be appealed before the Supreme Court.

The Italian legal system provides for various mechanisms ensuring a full review of judgments of first instance.

All decisions rendered by the Courts of First Instance can be appealed before the Courts of Appeal (save for decisions issued ex aequo et bono pursuant to Article 114 of the Italian Code of Civil Procedure and cases of revisio per saltum according to Article 360 of the Italian Code of Civil Procedure).

Decisions by the Courts of Appeal, unique level judgments and, in general, all decisions other than formal judgments, which nevertheless decide on subjective rights and are not otherwise subject to review, can be challenged before the Supreme Court.

Any decisions of first instance or appeal, under certain limited extraordinary circumstances (including, but not limited to, the case in which the decision is the consequence of fraud of one of the parties; the case in which the decision is issued on the basis of false evidence or the case in which the decision is the consequence of factual errors) are also subject to revocation and third-party opposition, as the case may be.

Decisions concerning procedural issues of jurisdiction and competence can be challenged separately in this respect before the Supreme Court with an ad hoc challenge.

Appeal against first instance judgments is always allowed, save for a few exceptions expressly provided by the law. The fundamental requirement for successfully filing an appeal is that the appealing party is the total or partial loser in the judgment of first instance and that the appeal complaint identifies the sections of the first instance judgment that are challenged. The appeal shall also overcome an admissibility test whereby the Court of Appeal, at the first hearing, can dismiss appeals if they do not have any reasonable prospect of success.

The procedure for appealing a decision of first instance is regulated by the applicable provisions set forth by the Italian Code of Civil Procedure under Articles 339 et seq.

The term for filing an appeal is two-fold: if the decision of first instance was served by the winning party, the losing party has a short term of 30 days from the service to appeal; if the first instance judgment was not served, the losing party can appeal within the longer term of six months, starting from the date of issuance of the judgment.

Under Italian law the appeal consists of a so-called impugnazione devolutiva, which means that the object of the appeal is not a mere review of the judgment of first instance, but rather a complete review of the proceedings and the rendering of a new decision in the dispute. However, this feature of the appeal is not without limits: indeed, in light of the prohibition on filing new forms of evidence, the review of the dispute is limited to the issues expressly brought before the Court of Appeal and it is forbidden for the parties to introduce new elements not already introduced and discussed during the judgment of first instance.

Courts cannot impose any conditions on the granting of an appeal.

Upon the filing of an appeal against a first instance judgment, the court can either reject the appeal (on procedural reasons or on the merits) or grant it. In this second instance, the decision issued by the Court of Appeal fully replaces the decision of first instance, save for a few cases in which the judgment of the Court of Appeal sets aside the judgment of first instance and return the parties and the dispute to the first instance judge for a new decision (so-called appello rescindente).

In exceptional circumstances, the Court of Appeal is also entitled to order the total or partial renewal of the acquisition of evidence pursuant to Article 356 of the Italian Code of Civil Procedure.

The plaintiff has to pay the upfront court tax (the so-called contributo unificato) at the time of filing the initial complaint. The value of the upfront court tax depends on the value of the claim and it is doubled when the lawsuit is brought in second instance or before the Supreme Court. In fast-track proceedings and in labour disputes, the upfront court tax is reduced by half.

Litigation costs are traditionally settled according to the “losing party rule”: within the final judgment the judge orders the losing party to pay the court’s expenses and the attorney’s fees (ie, the litigation costs) in favour of the winning party. Nonetheless, the judge has a wide discretion in the allocation of costs and, therefore, in specific circumstances, he or she can decide to set off the litigation costs or can allocate costs according to a different ratio.

The recoverable costs encompass the expenses and the costs borne by the parties during the proceeding and the lawyers’ fees. The recoverable lawyers’ fees are not assessed on the basis of hourly rates but on the basis of the standard quantification of attorney’s fees as provided in a Decree of the Ministry of Justice.

The decision on costs can be appealed.

The judge establishes the amount of costs to be awarded on the basis of the value and the complexity of the claim, as well as on the basis of what the parties have declared in the note on costs and their procedural behaviour, making reference to rules and parameters established by the Ministry of Justice.

If the judge assesses that some of the costs and expenses faced by the successful party are redundant or unnecessary, these costs will not be recoverable.

According to recent case law, legal interest also accrues on litigation costs, starting from the date on which the judgment becomes final.

In recent years the Italian legislature has shown a growing interest in the use of alternatives to the ordinary proceedings set out by the Code of Civil Procedure, in order to resolve civil or commercial disputes. Even if court litigation remains the most frequent channel to decide a dispute, the described trend has led to the proliferation of many laws opening up the possibility of ADR. For instance, mediation, as established by Legislative Decree 28/2010; assisted negotiation procedure, introduced by Law 162/2014; and compulsory attempt at conciliation in the medical field, introduced by Law 24/2017.

Though ADR procedures form part of the legal system, in the majority of cases they are not compulsory. However, in some cases, ADR tools are mandatory (for instance, ex lege mediation, the assisted negotiation procedure related to disputes regarding the payment of sums of money smaller than EUR50,000, and the compulsory conciliation in matters of medical liability, see 3.1 Rules on Pre-action Conduct) and in these cases the consequences of non-compliance with the ADR requirements are mainly represented by the inadmissibility of the claim before the ordinary court.

The institutions that provide ADR services are well organised in the Italian legal system. The main institutions are the mediation institutes within the Chambers of Arbitration at the Chambers of Commerce located throughout the Italian territory and the heterogeneous category of further private organisations that manage mediation procedures.

Under Italian law arbitration is regulated under Articles 806 et seq of the Italian Code of Civil Procedure. The applicable provisions have been modified most recently by Legislative Decree 40/2006. Arbitration in Italy is either ritual (and the arbitral award has the same value as a court’s ruling) or non-ritual (where the arbitral decision is, instead, of a contractual nature).

In the Italian legal system, all civil and commercial disputes are capable of being referred to arbitration, with the exception of the following matters: disputes concerning non-disposable rights; employment disputes except for cases in which arbitration is permitted pursuant to the applicable collective bargaining agreements; family law disputes; criminal proceedings; tax disputes; disputes concerning the status and capacity of persons; and disputes in which the presence of the Public Prosecutor is required.

The circumstances that allow a party to challenge an arbitral award before a domestic court differ depending on the nature of the arbitration.

In cases of ritual arbitration, the grounds for challenging the arbitral award are set out in Article 829 of the Code of Civil Procedure. These include (but are not limited to) cases in which the arbitration award is void; the arbitrator appointment is void; the arbitration award goes beyond the scope of the arbitration agreement; the arbitration award is issued beyond the agreed deadline; or there is non-compliance with the adversarial principle during the arbitration proceeding.

In cases of non-ritual arbitration, the grounds for a challenge are set forth by Article 808-ter of the Code of Civil Procedure. These include cases in which the arbitration agreement is void or the arbitration award goes beyond the limits set out in the arbitration agreement; the arbitrators are not appointed pursuant to the provision set forth by the agreement; the award is issued by someone who cannot be legally appointed as arbitrator; the arbitrators fail to comply with a compulsory provision set out by the parties in the arbitration agreement; or in cases of non-compliance with the adversarial principle during the arbitration proceedings.

In all the above case, the arbitration award cannot be challenged on points of law, save for the case in which the parties expressly provided for such a challenge.

With regard to the enforcement of domestic arbitration awards, ritual arbitral awards have the same value as court’s judgments, and therefore, to be enforced they shall simply be filed with the court to obtain the enforcement seal. In the event of non-ritual arbitration, non-compliance with the arbitral award requires the other party to start ordinary proceedings before a judicial court of first instance to obtain enforcement.

As far as the enforcement of foreign arbitral awards is concerned, the procedure is set forth by Articles 839 and 840 of Italian Code of Civil Procedure, which is an exact transposition of the relevant provisions of the New York Convention of 1958.

Legance - Avvocati Associati

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Trends and Developments


A New Class Action for Italian Consumers

In April 2018, the Italian parliament passed a law shaping a new procedure for class actions. The law will come into force 12 months after its publication in the Official Journal of the Republic; thus, the provisions we examine below will not become applicable before 19 April 2020. This new law entirely replaces the previous regime, which was enacted in 2008 and never really worked.

Under the previous law, only consumers and “users” were allowed to start an action, whereas the possibility of commencing a class action has been expanded under the new law. That possibility will now be granted to whoever intends to assert a claim for damages against a company or public service corporation, either in contract or in tort, due to the violation of “homogeneous individual rights” (diritti individuali omogenei). 

Any member of the “class” will be entitled to file a claim, and the same right to commence the class action will also be granted to non-profit organisations and associations which aim to protect “homogeneous individual rights”. Such associations must be enrolled in a specific register, to be instituted and held by the Ministry of Justice. 

The Tribunal of Enterprises, which is the division of the tribunal specialised in company matters and IP law, will have exclusive jurisdiction in class actions. The venue will be that of the registered office of the defendant.

As with the previous law, the proceedings are separated into two different stages: the assessment of the admissibility of the action; and the preliminary activities and the decision of the case.

The recent law also provides for a third stage, dedicated to subscription to the action of members of the class who have not previously joined the class action. Indeed, the third stage represents one of the most significant changes: any person who is entitled to participate in the action may adhere to the claim even after the court has delivered its judgment. 

If the court upholds the claim, the judgment will only establish the defendant’s liability. The amount of damages will be determined at the end of the third stage of the proceedings. The court, in its judgment, will appoint a representative of the class, who will be entitled to act on behalf of the whole class, including any claimant who joins the action in the third stage. Moreover, the representative is the only person entitled to enforce the judgment, should the defendant fail to pay the amounts due.

Another significant modification entails the possibility for the court, in the second stage of the proceedings, to suggest a settlement proposal to the parties. The same right is granted to the representative during the third stage.

The new law aims to make class actions easier to institute and more widespread by facilitating the procedure and enlarging the area of potential class claimants. Indeed, the previous mechanism was not successful, as only a few class actions have been declared admissible by the relevant courts, and even fewer have been upheld.

Nonetheless, critics argue that the new set of rules appears to be “punitive” for businesses and, in general, defendants, as “homogeneous individual rights”, as defined, seem vague and open to unintended claims.

In addition, the rules on evidence will be different for class actions and more favourable to the class: the court may order the defendant to discover all documents significant to the case, a radical innovation in the Italian legal system, which provides for very limited discovery.

Furthermore, the law provides that the unsuccessful defendant will have to pay the representative a specific fee, in addition to the amounts granted to each member of the class. Such fee will be a percentage of the amounts granted to the class. Also, the losing defendant will have to pay a success fee to the class attorneys, in addition to legal costs. 

Most importantly, the opportunity granted to the members of a class to adhere to the action not only during the proceedings but also during the determination of damages phase (ie, the third stage), though aimed at ensuring the largest adhesion to the class by anyone entitled to it, may result in companies being unable to evaluate the risks related to the action in advance. Therefore, a defendant may be unable to evaluate the opportunity of a settlement agreement. 

Lastly, the fact that the tribunal will also make preliminary rulings on the admissibility of the action in the new regime, may hinder the success of the new law, as this mechanism has already caused most class actions brought in the past to fail. Also, taking into consideration the high complexity of the proceedings, particularly in the third phase, many doubts have been raised as to whether things really will become easier. As usual, only time will tell.

Main Issues on the Reform of Medical Liability

In March 2017, at the end of a long process, the Italian parliament approved Law No 24/2017, reforming the rules governing medical malpractice and liability. The law is widely known in Italy as the “Gelli-Bianco law”, named after Federico Gelli and Amedeo Bianco, doctors and members of parliament, who were its main promoters. 

The reason why we are examining a law enacted more than two years ago is that many of its provisions have not yet come into force, as the Italian parliament and government have not issued some of the decrees necessary to implement all its technical aspects. Therefore, while many provisions are already applicable, some are not and will not be for some time, leading to several grey areas which will have to be solved by the courts.

Firstly, the law states the principle that health is a right which is granted not only for the benefit of individuals but also for the community as a whole. In this respect, the law acknowledges that such goal may also be reached by implementing all of the activities aimed at preventing and managing all of the risks connected to medical services. To this end, the law provides for:

  • activities for monitoring medical risks, accidents and litigation on a regular basis;
  • the appointment of monitoring institutions;
  • the transparency of data relating to services offered for all public and private healthcare facilities;
  • the obligation for all medical professionals to follow specific guidelines; and
  • further obligations for healthcare facilities, the most significant being the fact that insurance for medical risks will become compulsory. 

In light of the above, one of the most significant changes to the previous regime brought by the recent law is the identification of different types of liability: healthcare facilities will be considered liable in contract, while medical professionals will be accountable in tort. In other words, healthcare facilities, both public and private, will be held accountable under the agreement entered into with their patients and will also be accountable for the medical professionals that they employ. Conversely, the same medical professionals will be liable in tort, unless they have entered into a specific agreement with the patient. 

This implies a remarkable difference in relation to when patients’ rights to compensatory damages, in cases of medical liability, are statute-barred: for ten years in the case of damages incurred by contract and for five years in the case of damages incurred by tort. Furthermore, the difference in liability also affects the regime of burden of proof: the patient acting against the healthcare facility will only need to give evidence of the agreement, but, should the same patient take action against the medical professional only, the evidence to be given shall also include the harm suffered, the fact that such harm was a direct consequence of the conduct of the medical professional, and most importantly, the fault or negligence of the latter. 

Furthermore, and as provided for by the new law, the conduct of the medical professional must comply with the specific guidelines to be enacted by private and public medical entities appointed by the Ministry of Health. Since no such guidelines have been issued so far, the only reference point is still, two years after the enactment of the recent law, "good" medical practices, as was the case under the previous regime.

Other significant innovations have been provided for in relation to the civil procedure, such as the compulsory attempt to settle the case before commencing legal action by way of a technical assessment (accertamento tecnico preventivo) and mandatory mediation, which are both, in the law’s provisions, conditions precedent to the legal action. 

Furthermore, and as anticipated, the recent law provides that healthcare facilities, either public or private, will be required to enter into an insurance policy covering risks for third-party liability, including all damages caused by medical professionals working in the said healthcare facilities, no matter what their assignments (therefore including those who take care of professional trading, or who are dedicated to experimentation and clinical research). Such compulsory policy insurance will be added to the insurance policy of the medical professional who enters a specific contractual relationship with the patient.

The minimum prerequisites for such insurance – as provided for by the recent law – were supposed to be issued within 120 days from the law’s enactment, but such decrees have not so far been issued. As a result, the rules relating to insurance policies for medical liabilities remain, two years after Law No 24/2017 was passed, ineffective and still waiting for the necessary technical decrees for their implementation. 

In relation to insurance policies, one of the most innovative provisions by the recent law concerns the possibility, for the patient, to directly sue the insurance company with whom the healthcare facility and/or the medical professional have entered into an insurance policy, for any (alleged) misconduct of the facility or professional. This provision will also come into force after the issuing of the technical decrees establishing the prerequisites of insurance policies. For now, the provision – which was intended to ease claims for damages by patients – remains inapplicable. 

In conclusion, the Gelli-Bianco law, anticipated as the law which would finally be able to clarify the main issues relating to medical liability, is still largely ineffective and inapplicable. Legal and medical professionals therefore expect that legal practice will offer many challenging topics and that case law will provide noteworthy developments.

Litigation Funding

People willing to start a lawsuit are often prevented either by fear of losing or lack of economic resources: many legal tools have thus been implemented to relieve actors from part of the risk connected to their judicial action. "Third-party litigation funding" – a mechanism which enables a financing party, unrelated to the dispute, to bear the costs and subsequently receive a percentage of the outcome – is one of these. 

This contractual scheme first became popular in common law countries and was then exploited in many non-common law territories, such as Germany, Switzerland and Hong Kong. However, Italy has not yet adopted this practice.

The origins of "third-party litigation funding" can be traced back to Ancient Greece, where technical assistance was entirely unknown and facing judgment meant bearing the costs for the multiple subjects who cumulatively carried out the activities of a modern lawyer. Ancient Romans, on the other hand, were strangers to the concepts of "absentia" and "judgment by default": therefore, they needed to pay to ensure the appearance of the other party in court. 

For this reason, in Ancient Greece and Rome respectively, the so-called sykophantes and calumniatores were very popular. These subjects, usually of high social status, bore the expenses and burdens of the dispute, in exchange for a percentage of the victorious outcome.

In medieval England, it was common for a third party to finance someone else’s dispute: the "champerty" contract, which attributed a portion of the disputed land to the financer, was rife. 

However, since both the champerty contract and "maintenance" (the conduct of favouring others in initiating a dispute) allowed local feudatories to maintain a portion of their power and to interfere with the administration of justice, in 1275 King Edward I forbade them. As colonialism took English legislation beyond its original borders, these activities were forbidden and excluded, until the first half of the 1990s, from third-parties’ dispute financing in all common-law countries.

The "third-party litigation funding" contract is signed after due diligence is carried out by either the backer or a lawyer. This due diligence usually involves: an assessment of the admissibility of the dispute; various disclosure obligations of the lender; and the obligation of the parties to maintain confidentiality with regard to the acquired information.

The funding contract usually obliges the financed party to: regularly inform the funder on the development of the lawsuit; pay the funder a percentage of the outcome, in the event of victory; and keep all information concerning the proceedings confidential. Moreover, in day-to-day contractual practice, other clauses are added: it is quite common, in Germany, to assign the disputed right to the investor before the lawsuit is instituted; in England, the actor often stipulates that an insurance policy should cover the costs deriving from the prospective loss.

The question is, whether any professional conduct provisions preclude third-party litigation funding from being successful in Italy. Three provisions must be considered:

  • the prohibition of all "agreements whereby the lawyer receives a portion of the goods that are the object of the dispute";
  • the prohibition of assigning “contentious claims”, sanctioned by Article 1261 of the Italian Civil Code, by virtue of which "[...] lawyers, patrons and notaries may not, even through third parties, become assignees of the rights on which a dispute has arisen before the judicial authority"; and
  • the duty of secrecy and confidentiality on the part of the lawyer, enshrined in the Lawyers’ Ethics Code.

None of these provisions, which were dictated to protect a lawyer’s professional decorum and the client’s privacy, prevent the development of litigation funding in Italy.

Could investors be scared by other law provisions? Under the Banking Act, all financial intermediaries, in order to negotiate with the public, must obtain special authorisation from the Bank of Italy. Ministerial Decree No 153 of 2015 extends said provision to all European Union intermediaries. Legislative Decrees No 91 of 2014 and No 18 of 2016 regulate the financial activities of monetary funds, respectively allowing Italian and European Union funds to negotiate with the public.

Since the law says nothing about extra-EU funds, it could be concluded that they are not allowed to negotiate with citizens on Italian territory. However, different conclusions can be reached if the presence in the territory of the company that carries out the soliciting activity is taken into consideration.

The application of this criterion would lead, on the one hand, to the exclusion of the territorial nature of the activity whenever the Italian borrower takes the initiative (reverse solicitation); on the other hand, the territorial nature of the activity should be presumed if the extra-EU fund offers a large number of loans to Italian residents over a limited period of time. 

In light of all this, the current regulatory framework seems to be within the reach of Italian, European and extra-EU professional operators. 

But is it realistic to envisage the spread of litigation funding in Italy? The answer is affirmative.

From a legal point of view, litigation funding is different from a mortgage: while the first does not require the borrower to pay back the lender, the latter does. It is thus an atypical contract. For the interests pursued, it would surely pass the “merit” test of Article 1322 of the Italian Civil Code. 

Besides, the new Arbitration Rules of the Chamber of Arbitration of Milan expressly take litigation funding into consideration. Indeed, they require the beneficiary of any such operation to disclose both its existence and the identity of the funder.

Lastly, from a practical point of view, it must be observed that investors are already interested in the Italian judicial system. The duration of commercial disputes, which places it within the European average, is financially attractive. In addition, the variety of available legal procedures would allow investors to choose from a wide span of possibilities: they could easily finance civil and commercial procedures, anti-trust litigations and class actions.

In conclusion, we expect litigation funding to become widespread and successful in Italy.

Company Directors’ Liability

The legal framework of corporations was recently modified by Legislative Decree No 14 of 12 January 2019, which rejuvenated and consolidated the bankruptcy laws into a “Crisis Code”. This Legislative Decree will come into force on 14 August 2020, except for a few provisions which are already in force. Article 378 of the Crisis Code, “Directors’ Liability”, is one such provision. 

Article 378 amended Article 2486 of the Italian Civil Code by introducing a third paragraph that regulates the quantification and proof of the harm resulting from directors’ unlawful conduct upon the occurrence of a cause for dissolution of the company. Indeed, the new paragraph provides that “when the liability of the directors pursuant to this article is ascertained, and unless a different amount is proven, the indemnifiable damage is presumed to be equal to the difference between the net assets at the date on which the director ceased to hold office or, in the event of the opening of insolvency proceedings, at the date of the opening of such proceedings, and the net assets determined at the date on which a cause for dissolution occurred, pursuant to Article 2486, paragraph 3, of the Italian Civil Code […]”. Through the introduction of this new provision, which translated into law a criterion adopted decades before by the jurisprudence, the burden of proof for the plaintiff became much easier. 

Before Article 378 of the Crisis Code came into force, the jurisprudence had elaborated two main presumptive criteria, in order to calculate the amount of the damages in the above-mentioned cases of directors’ misconduct: the criterion of the “difference between assets and liabilities in bankruptcy” and the "difference of net assets” criterion.

While the first criterion matched damages with the difference between the assets and the liabilities resulting from the bankruptcy procedure, the second criterion matched the damages to the difference between the assets of the company when the cause of dissolution occurred, and its assets at the beginning of the bankruptcy procedure. 

The second criterion was, by far, the most popular. It was, however, applied with a few corrections:

  • the time necessary to ascertain the existence of a cause of dissolution was taken into account when calculating the commencement date;
  • the assets at the time of the cause of dissolution were calculated from a bankruptcy perspective; and
  • the costs that the company would have to afford – even if the director had adopted the appropriate measures – were deducted from the assets of the company.

The new Article 2486 of the Civil Code should be interpreted in light of these criteria.

Some commentators fear that the application of the new Article may result in punitive action against the directors, forcing them to pay more than they should. This fear may well be unjustified, however: the “principle of full restoration of harm”, while requiring that the prejudice is entirely repaired, also implies that nobody should pay more than necessary. Although this principle is not enshrined in the constitution, it can still be qualified as both a public order provision and as the "heart" of the Italian compensation system.

But what impact will Article 378 of the Crisis Code have on proceedings initiated after 16 March 2019?

Two different approaches to the question may be adopted:

  • a “procedural” approach, that would make Article 378 applicable to all cases instituted on or after 16 March 2019, regardless of the date of the alleged violations;
  • a “substantive” approach, which would limit the application of said Article only to legal actions concerning violations which occurred after that date.

Since the substantive approach would delay the application of the reform, the procedural approach seems more consistent with the intention of the legislators, who chose to let this provision come into force before most of the others. Therefore, all actions instituted as from 16 March 2019 should be regulated by the new Article 2486, regardless of the date of the contested violations.

We must now add some thoughts about the impact of Article 378 of the Crisis Code on proceedings already pending at the date when it came into force.

In this regard, two principles must be taken into consideration: 

  • the “tempus regit actum” principle, which orders that each act of the proceedings is subject to the law applicable at the time of its occurrence; and
  • the “tempus regit processum” principle, which implies that the entire proceedings must be regulated by the law in force at the time of its commencement.

The Supreme Court stated that, although there is no place for the tempus regit processum principle in the Italian system, the tempus regit actum principle must be interpreted in such a way as to give adequate relevance to the principle that no law can be retro-active. Therefore, the interpretation must consider the expectations of those who, having chosen to promote a judgment in accordance with the rules in force, see their chances of either winning or successfully resisting the claim reduced because of the entry into force of a new law. 

This interpretation of the principle applies to this case, as the new Article 2486 – by making it more difficult for directors to resist the claims – would significantly affect their procedural position, imposing on them a heavier burden of proof. In light of all the above, it seems that the new Article 2486 of the Civil Code is only applicable to cases commenced after 16 March 2019, regardless of the date when the alleged violations occurred.

LCA Studio Legale

Via della Moscova, 18
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Lombardy
Italy

+39 02 7788751

+39 02 76018478

milano@lcalex.it www.lcalex.it
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Law and Practice

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Legance - Avvocati Associati was founded in 2007, by a group of acclaimed partners who began their careers in the same law firm, Legance distinguishes itself in the legal market as a point of reference for both clients and institutions. Legance’s rapid growth is indisputable evidence of its strength in legal services, and its achievements are the result of a consistent strategy focused on creating value around the institutional nature of the firm. Legance, thanks to the firm’s constant attention to its clients’ needs, and an unconventional approach, has positioned itself at the top of the national and international market. Legance, thanks to a strong international practice, can support clients from several different geographical areas, and organise and co-ordinate multijurisdictional teams.

Trends and Development

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LCA Studio Legale is an independent law firm with offices in Italy (Milan, Genoa and Treviso) and in the UAE, where it operates in international partnership with IAA Law Firm. It is active in all main areas of commercial, corporate, banking, finance, restructuring, tax, criminal, real estate and labour law, and, more generally, in all aspects of business law – including IP, new technologies, transportation, art and food law – and in the protection of family assets. LCA’s over 120 professionals mainly serve corporate and financial clients and work for industrial, financial and insurance groups, investors and banks, as well as SMEs, family businesses and individual entrepreneurs. The firm has always adopted an international approach, advising Italian companies in their internationalisation processes, and foreign corporations interested in investing or expanding in Italy, as well as multinational corporations involved in multi-jurisdictional transactions. LCA represents clients in court proceedings, arbitrations and alternative dispute resolution, especially in the areas of corporate and commercial law. The firm aims to define the best strategy to combine the effective protection of clients’ rights with the need to efficiently resolve commercial disputes.

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