ITALY: An Introduction to Dispute Resolution

CHAMBERS – overview on Italian civil litigation framework 

ITALY: AN INTRODUCTION TO DISPUTE RESOLUTION 

Italy: an ever-evolving system 

Following the disruptive impact of the COVID-19 pandemic Italy is currently experiencing a “fresh start” and a season of reformation in several strategic areas, including the justice sector.

Since the beginning of the epidemiological emergency, the Italian legislature was forced to intervene by passing certain measures on containment and management of pandemic emergencies in order to ensure the efficiency of its judicial system. These measures were particularly aimed at strengthening the use of technology in State Court proceedings.

To date, the season of reform – which for various reasons had begun even before the pandemic for certain matters – is still ongoing. The Italian judicial system is reportedly one of the key targets of Italy’s recovery and resilience plan (PNNR). The Italian Parliament is currently addressing a reform of the justice sector based on the Italian Minister of Justice's proposal, which aims at speeding up trials as well as limiting the duration of appeal proceedings.

Regardless of the Italian legislature’s will to implement the current judicial system, the Italian legal system is undoubtedly very favourable for foreign investors, as it provides for a set of judiciary tools that ensure investment protection.

Taking inspiration from certain sectors to which we dedicate ourselves on a daily basis, we hereby provide a brief overview of the main institutions available within the Italian legal system that have been consolidated in recent years.

Reform of class actions 

The latest and most exciting development in recent years is the reform of class actions.

Through Law no. 31/2019, published in Official Gazette no. 92 of April 18, 2019, class actions were completely reformed in Italy. The previous legal framework – dedicated to consumer protection – was largely amended, removed from the Consumer Code and placed in the Italian Code of Civil Procedure (see new 15 Articles from no. 840-bis to 840-sexiesdecies of the Italian Code of Civil Procedure), thus becoming a general instrument that is also available to non-consumers. This new legal framework, which also includes new rules for injunctive orders, applies to all claims brought against any illicit behaviour engaged in after May 2021.

Unlike the narrow “Consumers Act”, which dates back to 2005, this new Class Action provisions benefit from a groundbreaking and innovative scope since there is no subjective or objective limitation or restriction to its applications. Indeed, this sort of collective action can now be brought by any party (even non-consumers) against companies or public utility service providers relating to acts and practices adopted in the context of their respective activities. Moreover, the new Class Action is particularly wide-ranging as it can be applied to any contractual or tort claim, thus overcoming the limitations of consumer relations, producer liability and unfair commercial practices.

Specialized Courts dealing exclusively with international commercial disputes

A further implementation to ensure protection for foreign investments was addressed in recent years over claims involving foreign companies.

In 2003, the Italian lawmaker established special commercial chambers within the first-instance and appeals courts located in 12 major cities (Bari, Bologna, Catania, Florence, Genoa, Milan, Naples, Palermo, Rome, Turin, Trieste and Venice), with exclusive competence over disputes concerning IP (trademarks, patents, copyrights; and unfair competition interfering with IP rights). The aim of the Italian lawmaker’s intervention was to ensure that these highly technical commercial disputes were adjudicated only by specialised judges.

In 2013, a noteworthy reform was implemented in the Italian legal system by establishing a special competence over claims involving foreign companies. The Italian legislature selected 11 special commercial chambers among those established in 2003 and provided them with mandatory competence over foreign companies cases (including those foreign companies with a secondary office or a permanent establishment in Italy) concerning IP law, antitrust and corporate-related matters. The commercial chambers selected are currently located in Bari, Cagliari, Catania, Genoa, Milan, Naples, Rome, Turin, Venice, Trento and Bolzano.

The 2013 reform was aimed at attracting foreign investment by granting a highly technical set of commercial chambers across the country a strong expertise in commercial disputes involving foreign companies.

However, foreign investors that want to bring a claim related to IP law, antitrust and corporate-related matters within the Italian judicial system have to carefully identify the court with competence over foreign-defendant cases, which may not be an easy task. It is therefore advisable to rely on expert counsel to select the correct chambers in order to be granted with significant expertise of the Courts in deciding the dispute and to avoid any potential counterpart’s objection on exclusive competence of the Courts.

Mediation, a viable method of alternative dispute resolution

Another implementation set out by the Italian legal system concerned Alternative Dispute Resolution (ADR) mechanisms, as they play an important role in out-of-court settlements of disputes.

One of the most relevant ADR mechanisms embedded in the Italian legislation is the mandatory Mediation procedure in civil and commercial disputes, which was introduced by the Italian legislature in 2010 for certain specific matters.

Mediation is not the only ADR mechanism embedded in the Italian legislation. In 2014, the Italian legislature introduced a procedure of Assisted Negotiation as a prerequisite to judicial proceedings for payment requests of up to 50,000 euros, or compensation requests for damages caused by vehicles or vessels.

Parties involved in commercial disputes that are not subject to compulsory Mediation may still consider initiating Mediation as an optional tool to obtain good results in a short amount of time, as well as to receive fiscal and economic benefits. Indeed, in the case that the parties reach a settlement agreement by means of Mediation, they would benefit from a tax credit as property transfer taxes (when applicable) are waived.

Due to the reasonable amount of time required for reaching an agreement by means of Mediation, as well as the fiscal and economic benefits, use of Mediation has been increasing in recent years.

Third-party litigation funding: an appealing outlook for foreign investors

Litigation funding is one of the areas where we expect a particular rise in activity in the short and medium term.

COVID-19 has increased the request for third-party financial support for high level litigation. This trend has continued in 2021 and is expected to constantly increase over the next few years, even due to the class action reform.

As of today, the most appealing disputes for private funds and investors are mainly arbitrations, claims brought against the State, debt collection from bankrupt companies and enforcements of foreign decisions.

Contributors:
Professor Silvio Martuccelli, Partner
Andrea Bernava, Partner
Massimo Proto, Of Counsel
Andrea Costa, Senior Associate
Stefano Passeri, Senior Associate