The Joint Sections of the Court of Cassation about the compensation for damages claimed by the public shareholder.

It is still early after last September 28, when the IV section of the Criminal Court of Rome condemned the former Alitalia’s Executives for bad managment from 2001 to 2007.

The specific charge were fraudulent bankruptcy due to money dissipation and stock manipulation.

The numbers were and still are considerably high, even though the compensation of 355 million of Euro is nothing in comparison with the suffered losses, equal to 4 mio of Euro, as the result of Alitalia collapse.

On this subject, the Joint Sections of the Court of Cassation stated about the division of jurisdiction between themselves and the Court of Auditors, with reference to the compensation claimed by the public shareholder because of bad management.

The statement takes the step from the action brought by the Ministry of Economy and Finance, in its capacity of public shareholders of Alitalia, against the Executives of the latter; the request was to sentence compensation for damage suffered as losses from 2002 to 2008.

The defendants appealed for regulation of jurisdiction, in order to prove the lack of power of the Court of Auditors.

The Joint Sections, after the reunion of the proceedings, stated all those principles already set out about the regulation of jurisdiction in the compensation field, making a distinction between the following cases:

a) if the company is characterized by legal and patrimonial autonomy with respect to the public shareholders, in the absence of any service relationship, the Civil Court shall have jurisdiction;

b) if the damage has been suffered directly by the public shareholder without just reflecting a loss, because of bad management, the Court of Auditors shall have jurisdiction.

However the Court of Cassation stated that there are particular cases in which, regardless of the latter cases, the Court of Auditors has jurisdiction. They are the compensations due to bad management, claimed by Rai - Radio Televisione Italiana S.p.A., Enav S.p.A., and in house companies.

In all the cases above, in fact, the articles of Incorporation clearly show the deep connection between the company and its public shareholder, in so far as the latter is nothing more than a longa manus of the first.

 

Now, the question is: why does Alitalia not fall within such particular cases?

The answer issued by the Joint Sections is based on the following historical events: the liberalisation process in transport, that beginning in 80’s age has been concluded with the opening up of a transport single market; the consideration for which the financing provided by public shareholders are not public aids, just representing contributions.

These elements preclude the jurisdiction of the Court of Auditors in the specific action brought by the Ministry of Economy and Finance, who can not claim for a damage directly suffered on its public shareholding, as the damage is only the result of the misleading conduct in respect of which the loss risk has been accepted as in normal share holding