banner

Author Archive %s hbladmin

Third party enforcement in Italy

Procedural steps

Article 543 of the Italian civil procedure code (‘c.p.c.’) deals with the attachment by a judgement creditor of assets that belong to the judgment debtor and that are in the possession of a third party and also with the attachment of debts owed by a third party to the judgment debtor.

As we explained in a separate article available at the following link https://www.hanoverbondlaw.com/2021/03/making-a-uk-money-judgment-enforceable-in-italy/, the last step that precedes the enforcement in Italy of a money judgment is the service on the debtor of the ‘atto di precetto’, essentially a final request by the creditor to pay the judgment debt within 10 days. Notably the atto di precetto expires after 90 days.

It is worth noting that the Agenzia delle Entrate (the Italian equivalent of the Inland Revenue in the UK) keeps a register of all bank accounts held by individuals and companies in Italy.  After the atto di precetto has been served upon the judgment debtor, the judgment creditor can apply with the court to obtain that a court official performing the function of bailiff (unlike in the UK, in Italy bailiffs are not private individuals/companies) accesses the register to search for the debtor’s bank account.

If the judgment debtor fails to make the payment then the creditor can proceed serving upon both the judgment debtor and the third party the ‘atto di pignoramento’ which contains the warning pursuant to Art. 492 c.p.c. not to dispose of the assets or credits.

This marks significant departure from the way this kind of enforcement is carried out in the UK, where the judgment creditor applies with court for an interim third party debt order that, when granted, is served upon the third party and the judgment debtor.

The atto di pignoramento also specifies the sums or assets that are being attached and provides the debtor with the creditor’s contact information, including his certified registered email address and the place in the competent court district where the creditor has elected his domicile for the purpose of the enforcement proceedings (this is usually the address of a local lawyer).

Finally, the document must contain the summons of the debtor to appear before the competent court, setting the date of the hearing after at least 10 days, the invitation to the third party to provide the judgment creditor with the declaration in writing pursuant to Art. 547 c.p.c. (more on this below) with the warning that caveat that otherwise that same declaration will have to be made by the third party during a special hearing and that if the third party does not attend the hearing or it attends the hearing but does not make the declaration, then the debt or assets stated to be held by the third party in the atto di pignoramento are deemed to be acknowledged by the third party.

Once the atto di pignormento has been served upon the debtor and third party, the original of the summons that have in the meantime been filed with the court will be handed to the creditor by the court’s bailiff without delay.

The judgement creditor must within 30 days of being handed the summons file with the court the ‘nota di iscrizione a ruolo’ (the formal entry of the enforcement proceedings into the court’s registry).

Obligations of the third party

In accordance with Art. 547 c.p.c., the third party must render a declaration to the creditor in which it specifies which assets of the debtor it is in possession of  or what sums it owes the debtor. The third party must also state if other enforcement actions have been previously made against the debtor and whether it consented to the release of assets or assignment of debts to other judgment creditors of the debtor.

If disputes arise on the declaration or if, as a result of the third party’s failure to make such declaration, it is not possible to identify exactly the debtor’s credit or assets, the court shall, on application by the creditor issue an order compelling the third party to provide such information after having ensured that the third party and the debtor were put in the condition to put forward their arguments.

From the moment that it is put on notice of the atto di pignoramento, the third party is required to comply with the obligations imposed by law to a custodian in respect of the assets or credits of the debtor that, by value, equal one and a half the amount of the credit the enforcement of which has been sought. The increase by one half is there to offer security for the costs of enforcement.

Credits that cannot be attached

Certain categories of debts of the third party towards the debtor cannot be attached.

These include maintenance payments (e.g. resulting from divorce proceedings) unless it is the actual maintenance payment that has been defaulted under forcing the payee to seek enforcement of the court order providing fur such payment.

Payments due on account of grants or subsidies to indigent individuals (there exists a register of officially poor people in Italy) or in respect of maternity leave, or on gifts made by charities or by funeral plans can also not be attached at all.

Wages can be attached by up to one fifth, unless the claim that is being enforced is for maintenance payment in which case it is at the court’s discretion what proportion of the wage can be attached.

Pension payments can only be attached to the extent that they exceed the minimum state pension, and any such excess can only be attached up to one fifth, as with wages.

In the event that wages or pension payments have been credited to the judgement debtor’s bank account prior to the enforcement, such sums can only be attached if they exceed three times the minimum state pension.

This article was published on 21 March 2021. The law may change after that date and we may or may not revise this article to reflect such changes. This article does not in any way constitute legal advice and the reader should nor rely on it as such. If you need advice in relation to any of the issues dealt with by this article please contact Avv. Luca Salerno on ls@hanoverbondlaw.com or on +44 (0)20 3031 6647. Luca speaks English fluently.

 

Brexit and Jurisdiction: The return of anti-suit injunctions

The anti-suit injunction is a permanent injunction that blocks a party from litigating in a foreign jurisdiction. In foreign court proceedings, an anti-suit injunction prohibits the infringing party from issuing or, as is more common, continuing with court proceedings.

An anti-suit injunction is legally binding on the respondent party against whom the injunction is granted. The injunction itself is not binding on the foreign court, however, the granting of an anti-suit injunction is likely to impact the decisions of the foreign court.

If a respondent party against whom the injunction is made, breaches the anti-suit injunction by issuing or continuing to bring proceedings in a foreign court, such breach is deemed contempt of court, sanctionable by imprisonment, asset seizure or fines.

Prior to the UK exiting the EU, the Brussels Convention and the Brussels Regulation (Recast) had prevented the English courts from issuing anti-suit injunctions in respect of proceedings taking place before the courts of EU member states.

Article 29(1) of the Brussels Regulation (Recast) provided that if a court of a Member State is seised first and the court of another Member State has been seised second, the latter court must of its own motion stay proceedings until such time as the jurisdiction of the court first seised is established.

Article 29(1) stamped out on the practise of bringing tactical proceedings issued in EU member states where delay is commonplace, and costs can escalate considerably. This is the case, for example in Italy, so much so that the practice of instigating proceedings in a foreign jurisdiction for dilatory purposes has been dubbed “Italian torpedo”.

On the other hand, Article 29(1) created a “race to seise first” and, with it, situations where the winner of such race would succeed by default in seising the court of a jurisdiction that possibly had a more tenuous link with the dispute than England. This would be a disadvantage for a defendant wanting to litigate in England. This would more often than not be the English litigant in a dispute with a foreign entity.

Since the 1st of January 2021, England is no longer bound by the Brussels Regulation (Recast) and the binding decisions of the CJEU such as Turner v Grovit (2004) and Allianz SpA v West Tankers (2009) which previously prevented the English courts from issuing anti-suit injunctions in proceedings of EU member states no longer apply.

From a legal standpoint, now the UK has withdrawn from the EU, the English courts should once again have authority to grant anti-suit injunctions. This authority is yet to be confirmed in a decision of the English court however, and may be subject to UK’s applied accession to the Lugano Convention. Switzerland, Norway and Iceland have all signalled their backing to the UK’s accession, but the EU has until 8th April 2021 to give its ruling.

What does the return of the anti-suit injunction mean for litigants?

The prospect of the returning anti-suit injunction to the English courts brings a number of implications for litigants involved in proceedings that straddle England and Member States..

There are many benefits to the applicant of pursuing an anti-suit injunction which will be revealed in this article, but it is important to note that the English courts can only grant an anti-suit injunction when an application has been brought by an English party on one of the two following grounds;

  • where an exclusive jurisdiction clause in a binding contract has been breached by proceedings being issued in a foreign court; and
  • where, in absence of a contract with an exclusive jurisdiction clause, the English applicant can show that proceedings have been issued overseas in an abusive, oppressive and vexatious manner.

Cases where a contractual right exists not to be sued abroad

One potential advantage applies in respect of cases where a party has a contractual right not to be sued in a foreign court, a right which is usually conferred by a contractually agreed exclusive jurisdiction provision in favour of the English court or by an arbitration agreement with seat in the United Kingdom.

Under the Brussels Regulation (Recast), the English courts did not have jurisdiction to issue an anti-suit injunction to prevent parties from litigating in an EU member state in contravention of such agreements.

Article 31(2) of the regulation had placed the onus on the foreign jurisdiction to stay its proceedings until the English Court had determined whether it had jurisdiction under the agreement.

This onus caused problems for the English parties, particularly in cases where the foreign party disputed the existence of an English jurisdiction agreement in the foreign court. Similarly, Article 31(2) provided no solution in cases where a foreign court’s decision to stay its proceedings was challenged or where a decision in the foreign jurisdiction was appealed once proceedings were stayed.

Consequently, parties endured considerable delay and expense in being forced to engage in a forum that was not the forum of choice. As such, parties to jurisdiction agreements had no certainty of protection from the risk of pre-emptive actions brought in an EU member state in contravention of an English jurisdiction agreement.

Today, with the UK no longer bound by the Brussels Regulation (Recast), in cases of exclusive jurisdiction agreements in favour of the English courts, the parties have certainty that if proceedings are brough outside of the English courts in breach of those agreements, issuing an anti-suit injunction is an effective remedy. This is the case provided that the case does not fall into a rare category of cases where a respondent can demonstrate strong reasons to oppose the injunction.

Cases where abusive, vexatious and oppressive proceedings in a foreign court have been issued

In cases where no exclusive jurisdiction or arbitration agreement in favour of the English courts exists,  an anti-suit injunction can be sought  where a party files proceedings in a foreign court in an abusive or oppressive manner in attempt to undermine the English proceedings. An example of this is where a party contractually submits to English court’s jurisdiction but subsequently issues proceedings in the courts of an EU member state. This is the “Italian torpedo” referred to above.

As before 1 January 2021 when Brussels Regulation (Regulation) applied to the UK, the only real option available to a party subject to such abusive conduct was to seek a form of stay of proceedings before the foreign court.

Parties in England can now attempt to restrict such abuse of proceedings by applying for an anti-suit injunction in the England court. However, it should be noted that the threshold for granting an anti-suit injunction in such cases of abusive conduct is not as easily met as it is in exclusive jurisdiction and arbitration cases. The applicant will have to persuade the English courts that England is appropriate forum for resolution of the dispute. The applicant will also have to demonstrate that the ends of justice necessitate the issuing of the anti-suit injunction in the circumstances with particular regard to comity, a legal doctrine under which courts recognize and enforce each others’ legal decisions as a matter of courtesy, or based on the need for reciprocity (which is a foundation of international public law), but not necessarily as a matter of law.

The double-edged sword

On the one hand, the anti-suit injunction is the perfect defence for an English litigant – usually the plaintiff – against an “Italian torpedo” fired at it. On the other hand, the return of the anti-suit injunction presents the potential for a double-edged sword. When ‘Turner’ and ‘West Tankers’ applied to the UK, whilst the English Courts were prevented from issuing anti-suit injunctions against proceedings in other EU member states, EU member states were similarly prevented from issuing anti-suit injunctions in the English Courts. Now that the UK is no longer bound by Brussels Regulation (Recast) and Turner and Westers do not apply to the UK, there is now also the potential for an EU member state to issue an anti-suit injunction against proceedings in the English courts. This is a potential downside to English litigants to the return of anti-suit injunctions and something that English litigants should also be mindful of.

Possible effect of the Hague Choice of Court Convention on anti-suit injunctions

An important factor to be cognisant of is that along with all EU member states, Singapore, Mexico and Montenegro, the UK is now a contracting state of the Hague Convention on choice of court agreements.

The Hague Convention enforces exclusive jurisdiction agreements designating the courts of contracting states.

Although the Hague Convention is unlikely to have any effect on the granting of an anti-suit injunction, Article 6 of the Hague Convention lays down that proceedings issued in a contracting state which contravene an exclusive choice of court agreement in favour of another contracting state will be dismissed unless the choice of court agreement is unenforceable, or its outcome would be contrary to the public policy of the state of the court seized.

Although it is possible that the Hague Convention may request that the English courts do not exercise their discretion in granting the application of an anti-suit injunction in relation to proceedings brought before the courts of a contracting state, Article 7 of the convention explicitly states that nothing in its articles ought to stop a contracting state from granting protective interim measures. As such, it is somewhat improbable that the English courts would determine anti-suit injunctions as incompatible with the Hague Conventions which contains no articles to that effect.

The future of the anti-suit injunction

While the UK awaits the EU’s decision next month on its proposed accession to the Lugano Convention, the potential effect of the UK’s accession to the Lugano Convention places the future of anti-suit injunctions being granted in the English courts in respect of proceedings in EU member states in a situation of uncertainty.

It may be the case that the UK’s accession to the Lugano Convention eradicates all prospects of the anti-suit injunction remaining an option for the English courts as ‘Turner’ and ‘West Tankers’ are binding on counties subject to the Lugano Convention. The Lugano Convention contains no rules with the effect of staying proceedings issued in Lugano countries where proceedings have breached an exclusive jurisdiction agreement. The potential ramification to English parties in the event of proceedings issued in Lugano countries is that there would be no protection to English parties against proceedings brought in an oppressive and vexatious manner.

However, it is also a possibility that the UK’s accession to the Lugano Convention as a non-EU state would mean that the English courts are not bound by the decisions of the CJEU such as ‘Turner’ and ‘West Tankers’ and would only be required to acknowledge the CJEU’s case law with no mandatory obligations.

The impact of the Lugano Convention on the English courts’ authority to grant anti-suit injunctions remains to be seen, although the answer may soon be on the horizon.

For now it is worth being aware of the potential advantages that the protection of anti-suit injunctions may bring to English litigants whilst the future is pending. In summary, these advantages may be:

  • Ensuring that a contract setting out exclusive jurisdiction of English courts cannot be circumvented or undermined.
  • Preventing abusive and vexatious proceedings from being issued or continued in a foreign court.
  • The substantive and procedural advantages to the applicant of litigating in the English Courts.
  • Avoiding the substantive and procedural disadvantages of litigating abroad.
  • Avoiding the extensive time and costs associated with litigating abroad.
  • Enabling a pre-emptive strategic move of preventing enforcement of an overseas judgement.

This article was published on 20 March 2021. The law may change after that date and we may or may not revise this article to reflect such changes. This article does not in any way constitute legal advice and the reader should nor rely on it as such. If you need advice in relation to any of the issues dealt with by this article please contact Avv. Luca Salerno on ls@hanoverbondlaw.com or on +44 (0)20 3031 6647. Luca has co-authored this article with Anthony Buswell of the London office of Hanover Bond Law.

Making a UK money judgment enforceable in Italy

The impact of “Brexit” on the legal framework

As of 31 December 2020, the United Kingdom is no longer an EU Member State. This means that the United Kingdom is a third country for the purpose of the Brussels Recast Regulation 1215/2012 (Brussels Recast).

The EU-UK Trade and Cooperation Agreement establishing the terms of UK’s ‘so called Brexit deal’ does not include any provisions at all on jurisdiction and enforcement of judgments in civil cases.

It had generally been anticipated that the Brexit deal might provide for the UK’s accession to the Lugano Convention 2007 to be completed in time for the end of the Brexit transition period. The Lugano Convention 2007 is very similar to Brussels Recast but the latter has the advantage of dispensing with formalities that are necessary to make the foreign judgment enforceable. The UK applied to join the Lugano Convention 2007 on 8 April 2020, but so far, the EU (which has a veto over the UK’s accession) has not approved the application.

It is uncertain whether the UK is still a party to the Brussels Convention 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters, the 1971 Protocol to that Convention, and certain related Accession Conventions. On 29 January 2021, the British government informed the European Council of its view that the Convention has ceased to apply to the UK and Gibraltar with the expiry of the transition period on 1 January 2021. The communication merely reflects an opinion by the British government, which as such is of no legal consequence. The Vienna Convention on the Law of Treaties enumerates the cases in which an international convention is terminated. A unilateral denunciation is not among them. Absent an impossibility of performance, a fundamental change of circumstances or a breach by one party, an agreement by the parties is required to suspend the operation of a treaty. It appears that, as is the case with the Lugano convention, the EU is ultimately the arbiter of whether the Brussels Convention 1968 ceases to apply to the UK. This may actually not be a bad thing pending the accession by the UK to the Lugano Convention, accession that the EU can block indefinitely.

The reason why the Lugano Convention 2007 is considered by the UK as the “lesser evil” compared with the Brussels Convention 1968 is that the European Court of Justice has jurisdiction on interpretative matters relating to the latter but not the former.

The Hague Convention 2005 has continued to apply from 1 January 2021. The Hague Convention 2005 requires the courts of contracting states to uphold exclusive jurisdiction clauses, and to recognise and enforce judgments given by courts in other contracting states that are designated by such clauses.

The contracting states include the UK and the EU. Hence, the Hague Convention 2005 can be relied upon when seeking to enforce in Italy a judgment given by a British court with exclusive jurisdiction.

To complete the overview of EU law that provided for direct enforceability in Italy of a decision of UK court concerning the payment of money, one ought to mention the European Small Claims procedure (for cross-border claims of up to € 5,000) of Regulation (EC) No. 861/2007, the European Order for Payment procedure (for undisputed commercial money claims) of Regulation (EC) 805/2004. Neither such Regulation applies any longer as far as the UK is concerned.

Recognition in Italy of foreign judgments from outside the EU

Law 218/1995 is the Italian statutory instrument that deals with the enforcement of foreign judgments. EU law’s Brussels regime (of which Brussels Recast is the latest iteration) has been applying instead of Law 218/1995 as far as the enforcement of judgments from other EU Member States is concerned.

Law 218/1995 has continued to apply to foreign judgments originating from outside the EU and it is therefore the internal legal framework that applies to UK judgments after Brexit.

Article 64 of Law 218/1995 states as follows: “The foreign judgment is recognized in Italy without the need of any procedure where: a) the judge making the judgment could be invested of the lawsuit in accordance with the principles of jurisdiction of Italian law b) the claim form was brought to the attention of the defendant in accordance with the law of the place where the proceedings took place and the essential rights of the defence were not infringed; c) the parties made an entry of appearance in accordance with law of the place where the proceeding took place or the absentia has been declared in accordance with that law; d) the judgment has become final in accordance with the law of the place where it was given; c) the judgment is not contrary to another judgment handed down by an Italian court and which has become final; f) there are no pending legal proceedings before an Italian court in connection with the same subject matter and between the same parties (as that of the judgment), which began before the foreign proceedings; g) what the judgment provides for shall not have an effect that is contrary to public policy.”

It is worth pointing out that “public policy” referred to by Art. 64 relates strictly to rules and principles of Italian civil procedure, not of Italian substantive law.  By way of example, the Italian Supreme Court found a judgment formed in a jurisdiction that does not afford a system of appeal to be in breach of the public policy requirement.

There are limited circumstances in which the Italian judicial authority can be invested with the ascertainment of the compliance with the requirements set out in Article 64. Such circumstances are set out in Art. 67 of Law 218/1995 which states that in the event of non-compliance with or challenge to the recognition of the foreign judgment or other judicial decision, or when it is necessary to proceed with the enforcement of the judgment, anyone who has an interest may ask the Court of Appeal of the place where the judgment is to be complied with, to ascertain the fulfilment of said requirements. Art. 67 goes on to say that the foreign judgment or other judicial decision, together with the Court of Appeal’s decision referred to above, shall combinedly constitute what is to be complied with or can be enforced in Italy.

Steps that are necessary to make a money judgment enforceable in Italy

The fact that a foreign judgment form outside the EU is automatically recognized in Italy (subject to challenge on the limited grounds set out above) does not mean that it can be enforced there in its original state.

Art. 474, the first paragraph of the Italian civil procedure code provides that the ‘esecuzione forzata’ (literally ‘forced execution’ which broadly corresponds to ‘enforcement’ in English) can only be pursued where there is a ‘titolo esecutivo’ (literally an ‘executable title’), the subject matter of which is a legal right that is certain, liquidated (i.e. expressed as monetary amount) and due.

Titolo esecutivo is broadly divided into the following two categories: judicial decisions ordering the payment of money being one and private law instruments such as debentures.

In order to become enforceable, the titolo esecutivo must be served upon the judgment debtor in Italy alongside the ‘atto di precetto’, a formal warning that is prepared by the lawyers of the creditor who is seeking to enforce.

Italian law does not specify what a titolo esecutivo is by reference to a foreign judgment. However, according to Art. 31 of the Brussels Convention 1968 “a judgment given in a Contracting State and enforceable (‘esecutiva’ in the Italian text, TN) in that State shall be enforced in another Contracting State when, on the application of any interested party, the order for its enforcement has been issued there”.

Hence, what needs to be served upon the judgment debtor in Italy alongside the atto di precetto is the English judgment together with declaration of enforceability of the English judgment. Such declaration is issued by the Court of Appeal that is territorially competent in Italy (there is a Court of Appeal in every Regional capital). The Court of Appeal that is territorially competent is that of where the judgment debtor is domiciled or, if the judgment debtor is domiciled outside of Italy, the Court of Appeal of where the enforcement is to take place (e.g. the location where the defendants Italian assets are located).

Art. 46 provides the party seeking recognition or applying for enforcement of a judgment shall produce a copy of the judgment which satisfies the conditions necessary to establish its authenticity and, in the case of a judgment given in default, the original or a certified true copy of the document which establishes that the party in default was served with the document instituting the proceedings.

Art. 47 provides that a party applying for enforcement shall also produce documents which establish that, according to the law of the State in which it has been given, the judgment is enforceable and has been served.

The judgment debtor can, within a month of service, file with the Court of Appeal an opposition to the decision on enforceability. The term to file the opposition is two months if the judgment debtor is domiciled outside of Italy.

In the case of English immediately enforceable judicial decisions granted ex parte, the actual enforceability in Italy is, pursuant to Art. 38, suspended for as long as the decision in question can be challenged or, if the decision has been challenged, until the challenge is ruled upon by the competent home court. Whilst the enforceability is suspended, protective measures can be taken against the property of the party against whom enforcement is sought.

The Lugano Convention 2007 has similar provisions. It does not particularly matter whether the United Kingdom remains a party to the Brussels Convention 1968 or accedes to the Lugano Convention 2007. The important thing is that it is party to either of them. Unfortunately, at the moment, it is not clear if that is the case at that may create problems when it comes to enforcing a UK money judgment in Italy.

To summarise, when we are providing assistance in connection with the enforcement of a UK money judgment in Italy we:

  • prepare a certified true copy (in accordance with Italian law requirements) of the English judgment;
  • have an Italian translation of the English judgment prepared by a sworn translator;
  • if the judgment was given in default, prepare a certified true copy of the certificate of the proof of service of the document instituting the proceedings;
  • apply to the territorially competent Court of Appeal for a declaration of enforceability.
  • prepare the atto di precetto;
  • if no opposition to the declaration of enforceability is filed by the judgment debtor, serve upon the judgment debtor the atto di precetto and the English judgment, its Italian translation together with the declaration of enforceability issued by the Court of Appeal.

Service of the atto di precetto is considered the last step prior to enforcement proper.

We discuss in a separate article the ways in which a money judgment can be enforced in Italy.

This article was published on 9 March 2021. The law may change after that date and we may or may not revise this article to reflect such changes. This article does not constitute legal advice in any way and the reader should nor rely on it as such. If you need assistance in connection with the enforcement of a UK money judgment in Italy please contact Avv. Luca Salerno on ls@hanoverbondlaw.com or on +44 (0)20 3031 6647. Luca has written this article and speaks English fluently.