Cassazione Civile, judgement n.16601: on punitive damages in Italy

With the judgment of July 5th 2017, no. 16601, the Italian Supreme Court in plenary session (Sezioni Unite), declared enforceable, in the Italian legal order, three judgements pronounced in the United States of America that recognized the punitive damages to a motorcyclist who had suffered damages due to a helmet defect produced by a company based in Italy.

Punitive damages, of Anglo-Saxon origins, consist in the recognition of an additional amount, on top of what required to compensate for the suffered damage - the so called compensatory damages - in the event of the infringing party had acted with gross negligence or malice.

In the present case, the damages were paid by the helmet-distributing and importing company, which however requested and obtained from the US judges that the same amount was paid to the company by the helmet manufacturer, which is based in Italy.

The Italian company appealed the Court’s decision, claiming that the institute of punitive damages is incompatible with Italian public order.

In Italy, in fact, the prevailing case law so far has been in the sense of the non-recognition of foreign judgments punishment by laying  down punitive damages.

The Supreme Court ruled under art. 363, paragraph 3 c.p.c., stating that civil liability is not given the sole duty of restoring the property sphere of the subject who has suffered the injury, but it also has a deterrent and sanctioning function.

It has been a few years since Sezioni Unite believe that the sanctioning function of damages is no longer incompatible with the general principles of Italian law. However, it is specified that the recognition of a foreign judgment of that kind must meet the condition that it has been rendered in a foreign country on the grounds of a law which guarantees '’the peculiarity of conviction hypothesis, its predictability and the quantitative limits, so that the Italian Judge will only rule solely on the effects of the foreign act and on their compatibility with public order ''.

In order to acknowledge the US judgments, the court also had to elaborate a new definition of public order. Public order today is no longer defined as a “complex of fundamental principles that characterize the ethno-social structure of the national community in a given historical period, and in the imperative principles inherent in the most important legal institutions”; instead, it is defined as ‘’a system of safeguards for the fundamental rights of the Charter of Nice, raised at the level of the founding Treaties of the European Union by art. 6 TEU. ''

After establishing that the three US judgments are not in contravention of the Constitution and the Charter of Fundamental Rights of the European Union, the Cassation has, in the present case, recognised punitive damages.

Although this judgment did declare enforceable the foreign judgments that recognized the punitive damages in Italy, it also specifies that any provision of punitive or deterrent nature cannot be imposed by the Italian court without express legal provisions, and that, for a condemnation of punitive damages to be executed in Italy, a foreign law must always be the source of such judgement.