Italian Supreme Court: US punitive damages are no obstacle to recognition and enforcement.

Thank you Francesca PetronioFabio Cozzi & Francesco Falco for flagging the Italian Supreme Court’s judgment no. 16601/2017 of 5 July last. Thank you also to professor Marta Requejo for sending me copy of the judgment.

In what is suggested to be a Copernican revolution, the Supreme Court has dropped the Italian legal order’s fundamental objection to punitive damages, which made it near-impossible to obtain recognition and enforcement of in particular US judgments containing such damages. The judgment not surprisingly contains a number of conditions in particular on the excessive nature of such damages.

The judges seem to have been swayed by developments both in Italy (statutory law in places allowing for more than simple compensation of material loss) and US law (truly excessive punitive damages having been reigned in).

Punitive damages are the one example always identified as one of the core applications of ordre public in European recognition and enforcement law. After the Italian example surely this may now be less obvious in many jurisdictions.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.16.

 

 

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  1. #1 by Cedric Vanleenhove on 26/07/2017 - 5:26 PM

    Thanks for flagging this, Geert.

    Indeed a Copernican revolution in a country that has always been at the forefront of the resistance against punitive damages.
    I am pleased to see that the Italian Supreme Court has dropped its objections as to the concept of punitive damages and has now turned to an excessiveness analysis of the amount granted by the U.S. court.
    The approach taken is completely in line with what I suggested in my PhD (http://intersentia.com/en/punitive-damages-in-private-international-law-lessons-for-the-european-union.html) and in this article in the Vermont Law Review (http://lawreview.vermontlaw.edu/wp-content/uploads/2017/01/06-Vanleenhove.pdf).

    By the way, the judgment is available here: http://www.aneis.it/download/professione_patrocinatore/sentenze_commenti/sentenza_n_16601-_2017_danno-punitivo.pdf

    • #2 by Geert van Calster on 28/07/2017 - 8:28 AM

      Thnak you Cedric for sharing both your comments, source and the link to the judgment!

  2. #3 by Ennio Piovesani on 24/10/2017 - 6:10 PM

    Dear all,

    as the Full Court of the Court of Cassation assessed, the requested judgment did not concern punitive damages and much of the judgment rendered by the court is obiter. In its long obiter, the court has raised two main limitations to the recognition of foreign judgments awarding punitive damages that, IMHO – unsurpisingly, or better unfortunately – may not spark a “Copernican revolution”. In fact, a part from adopting the proportionality test (of French origins), in essence, the Supreme Court has held that judgments awarding punitive damages may be recognized and enforced as far as the awarding of such punitive damages is governed by a statutory rule of the State of origin (in the disputed case such rule was found in a Floridian statute).

    Below is an excerpt of a wider comment I wrote on the judgment and which I hope may be of your interest.

    Best regards,

    Ennio Piovesani

    P.S.: This being my first comment here, I would like to congratulate Prof. van Claster for keeping this webpage so lively and updated.

    ***

    “The ground for appeal was dismissed and though the enforced decision did not award punitive damages, yet the Full Court moved on by addressing the issue whether the Italian law system admits judgments awarding punitive damages.

    Firstly, the Full Court examined that, few years earlier, in line with the Constitutional Court’s case law, the Court of Cassation had embraced the sc. multifunctional doctrine of compensation: in the Italian law system, tort law pursues, a part from the one of compensation, also a punishing objective. Furthermore, the Supreme Court (Italian Court of Cassation, Full Court, n. 15/9100) had also specified that the punishing objective may be pursued as far as a statutory rule so expressly provides, in accordance with the principle by which punishment is allowed only where it is provided by statute (sc. riserva di legge) under Article 25(2) Italian Constitution (and Article 7 ECHR). Moreover, as stressed in court order n. n. 16/9978, the Full Court underlines that, actually, the Italian law system provides tort law instruments that pursue, among the rest, a punishing objective (for instance, the well known legal instrument provided for in Article 96(3) of the Italian Civil Procedure Code, on contempt of court).

    Hence, whilst the punitive nature of compensation is being recognized in the Italian law system, that nature is slowly disappearing in North American countries. The Full Court in fact considered that the United States Supreme Court has taken a contrary position against grossly excessive compensations, and has also held that the punishing objective may not exceed the compensatory one (Exon case). Moreover, the judges from piazza Cavour have also considered that in certain North American countries – amongst which Florida – punitive damages are governed by statute.

    In essence, the court has held that judgments rendered in North American countries that award punitive damages are not contrary to public policy, since the punishing objective they pursue is common to the Italian tort law system, provided that they are grounded on a statutory provision, as required by Article 25(2) of the Italian Constitution.

    Thus, the Italian judge is not exempted from assessing whether or not similar judgments may be recognized and enforced. In fact, the Full Court conclusively states that, a part from the requirement of a statutory ground as per Article 25(2) of the Italian Consistution: “the recognition of a punitive compensation must in any case by assessed in view of the effects that the decision of the foreign judge may have in Italy, by the broad assessment that must be made, in case of foreign decisions, when implementing an unknown legal instrument though not incompatible, in general, with the legal system”.

    Before coming to the merits of the decision, it must be said that, actually, in the Italian law system a provision concerning the recognition and enforcement of foreign judgments awarding punitive damages already exists. This is a private international law provision which is often forgotten – as the Full Court has –., possibly due to its meagre practical interest: Article 11(1) of the 2005 Hague Convention on choice of court agreement (that has been ratified only by the European Union, Mexico and Singapore). The article provides: “Recognition or enforcement of a judgment may be refused if, and to the extent that, the judgment awards damages, including exemplary or punitive damages, that do not compensate a party for actual loss or harm suffered”. Therefore, if a requested judgment awarding punitive damages were ever rendered by a Mexican or Singaporean judge – having jurisdiction by virtue of an exclusive choice of court agreement compliant with the requirements provided for in the Convention –, the provision would entitle the Italian requested judge to refuse recognition. It is thus clear that this is a quite unlikely case… In any case, furthermore, Article 11 of the Convention has been maintained in Article 9 of thel 2016 Judgments Project Preliminary Draft, that is the treaty on the recognition and enforcement of foreign judgments that is being at present negotiated at the Hague Conference on Private International Law.

    Article 11 of the Hague Convention and 9 of the draft convention, are the result of the continuing reluctance raised by certain law systems – and, in particular, European ones – against the legal instrument arriving from the United States, which embodies the punitive objective of tort law; and perhaps the appellant could have mentioned them to back his arguments before the judges of the Court of Cassation.

    Finally, coming to the merits of the Full Court’s decision, foreign judgments awarding punitive damages are not per se contrary to the concept of public policy provided for in art. 64 Law n. 218/1995, since the punishing objective of tort law is acknowledged also in the Italian law system. Nevertheless, this does not mean that similar judgments may be automatically accepted in the Italian law system. On the contrary, the Full Court provides the requested judge with ample discretion to refuse recognition. In fact, the latter may determine – according to his own discretion and under his own rules – whether damages awarded are punitive or not. Therefore, whenever the Italian judge deems the award as being punitive, the related judgment may enter the Italian law system only if it is based on a statutory rule of the foreign State. In essence, a part from raising the limit of the statutory ground, the Full Court introduces in the Italian law system the solution that has already been introduced in France, that is the proportionality test, which implies, necessarily, on the one hand an in depth examination of the requested judgment, and on the other hand the requested judge’s ample discretion.”

    • #4 by Geert van Calster on 25/10/2017 - 8:54 AM

      Thank you very much indeed, Ennio, both for your kind words on the blog, and the excellent info re the Italian judgment.

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