The ride of punitive damages. Punitive damages land on the Italian legal system, escorted by the Supreme Court

fotolia_113273995By decision n. 16601 of 5 July 2017, the Joint Sections of the Italian Civil Supreme Court, addressed the complex issue of the recognition (delibazione) of a foreign judgment awarding punitive damages.

The Supreme Court judges recognized that civil liability has a deterrent and punitive purpose that is in addition to its broadest function of restoring the damage unfairly suffered by a legal person.

 

In light of the Joint Sections’ statements, the recognition of a foreign judgement awarding punitive damages is no longer categorically inadmissible in the Italian legal system: under certain circumstances, identified in the aforesaid decision, an order to pay punitive damages can be recognized under domestic law.

 

To put an end to the contrasts arisen in the past amongst the decisions rendered by the different sections of the Supreme Court[1], the Supreme Court judges have applied to civil liability the concept of public order which, apart from encompassing the fundamental principles of the Italian Constitution, must also be extended to higher forms of protection other than those provided for by the ordinary law.

The function of public order is therefore to preserve domestic law, by strengthening interpretations that are consistent with the fundamental principles of the Italian Constitution the evaluation of which is to be made in  harmony with the principles set out by the international community.

 

The Joint Sections require the judge in charge of recognizing a foreign judgment to actually verify the consistency of the foreign rule on which the award of punitive damages is grounded, with the values of the Italian Constitution and of the European and international principles rather than with the Italian law (this would in fact be impossible because the purpose of civil liability is not punitive).

Aside from verifying the consistency of the foreign judgment with public order, actions must also be taken in order to ensure that no rules in the Italian legal system contrast or are in conflict with the foreign rule from which the order to pay originated.

 

In recognizing a foreign judgment, the Italian judge is also required to verify that the issuance of the judgment by the foreign judge was done in compliance with the laws of the country by which the latter is bound. In other words, the requirements of typicality and foreseeability of the alleged awards of damages must be met at all times and in any place. From such perspective, the object of a recognition shall only be the effects of the foreign judgement and its consistency with domestic public order.

 

In the decision under review, the Joint Sections have broadened the concept of civil liability, by making reference to the multi-functionality of the institute.  The function of damage compensation, in fact, is not only  restoring the prejudice suffered by the damaged party because when the judge considers the order to pay, apart from its main restoring function, must also consider the conduct of the infringer.

In light of the Supreme Court judges’ affirmations, compensation for the damages has also a deterrent and punishing function (in a word, it is multifunctional).

 

Nonetheless, the multi-functionality pointed out by the Supreme Court must have a legal temperament because the rules applicable to compensation and quantification of the damages, by which the Judge is bound, prevent him/her from “impressing a subjective emphasis on the damages that are being liquidated “.

As the same Supreme Court has stressed, recognizing a foreign judgment that awards punitive damages is not, in fact, the same as introducing a new type of punishment applicable to compensation for the damages.

[1] See, amongst the others, decision No 1183 rendered on 19 January 2007 by the Third Section of the Italian Civil Supreme Court, and decision No 1781 rendered on 8 February 2012 by the First Section of the same Court. On those occasions in fact, the judges reached contrary conclusions on the possibility to recognize punitive damages in the Italian legal system holding that the right to receive compensation for the damages suffered as a result of the infringement of a subjective right, is not recognized by way of characteristics and purposes of a punitive nature.

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