Punitive damages in Italy: admitted by Supreme Court

Legal — By on July 7, 2017 at 2:34 PM

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Decision no. 16601 issued on 5 July 2017

This is an unforgettable time. This is a historic decision. Punitive damages have been just admitted by Joint Sessions of the Italian Supreme Court (Corte di Cassazione – Sezioni Unite).

Three decisions rendered by US Courts (Florida) from September 2008 to October 2010 concerning a motorcycle accident have been definitely enforced by Italian Supreme Court.

The US decisions were rendered against AXO Sport S.p.A, the Italian producing company of helmets, sued by NOSA Inc., the US importer entity. The Italian company was sentenced by US Courts to pay the figure of about USD 1.4 mln, plus further USD 115k as costs, legal fees and interests.

In January 2014 NOSA Inc obtained by Court of Appeal of Venice the enforcement of the above three decisions under Article 64 of Law 31 May 1995 no. 218 (Italian Statute on Private International Law). The decision was appealed by AXO Sport S.p.A. before the Supreme Court.

The Joint Sessions of the Supreme Court (after an interim decision rendered by First Branch of the Court in May 2016)  held that in the current Italian legal system civil liability is not only confined to compensate patrimonial damages suffered by the injured party. Indeed, the legal system is also focused on the deterrent and sanctioning functions against the liable party.

As a result, “the US punitive damages are not ontologically inconsistent with the Italian legal system.

However, according to the Italian Supreme Court the enforcement of a foreign decision based on such principles (punitive damages) is subject to the following conditions:

  • the decision to be enforced has to have been rendered in compliance with the foreign legal framework;
  • the foreign legal framework is called to guarantee
  • the typicality of the cases of condemnation (i.e. knowing in advance under which circumstances punitive damages may apply);
  • the predictability of such cases; and
  • the limits of the quantum of such damages.

Once such conditions are met, the Italian Court is called to consider the effects of the foreign decision and its compliance with domestic public order only.

This is a groundbreaking decision which could definitively change the Italian civil liability system, so far based on the compensatory damages only.

Punitive damages go beyond what is necessary to compensate the injured party and the aim of this type of compensation is to punish the liability party. Conversely, compensatory damages are awarded as a compensation for what the injured party suffered or lost as consequence of an act or omission of the liability party.

Until now our Courts considered punitive damages contrary to the public order.

The decision no. 16601 issued on 5 July 2017 refers to a new concept of a public order: the international public order. A wider concept where public order is no longer limited to the domestic legal framework, but it has to be referred to the complex of fundamental rights which are shared and protected by the entire international community.

As a result, punitive damages are no more considered contrary to the public order under Italian law if all conditions pointed out by the Supreme Court are satisfied.

A new era is approaching: foreign decisions granting punitive damages shall be enforceable in Italy!

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