In a recent Basilicata Regional Administrative Court decision the Italian public administration was ordered to pay material damages to a company for unlawfully ordering the suspension of activities of an energy recovery incinerator.(1) Such a decision is unusual in Italian jurisprudence; the courts rarely award damages in similar circumstances.
On November 4 2014 reddish fumes were observed emanating from the chimney of the rotating drum furnaces of the claimant's plant. The Basilicata Regional Agency for Environmental Protection (ARPAB) staff immediately intervened to inspect the site; they subsequently asked the claimant to produce diverse documentation on the furnaces' operation. Later, other inspection visits were conducted and further documentation was required. On November 9 2014 the Basilicata regional authorities adopted a resolution ordering the suspension of all activities concerning the furnaces.
The plant manager brought an action against this decision, pledging infringement and misapplication of the law and misuse of power. More specifically, the claimant invoked the violation of Decree-Law 52/2006(2) arguing that the suspension of activities can be ordered only in case of hazard or damage to the environment, or if violations are repeated at least twice in one year. In the claimant's opinion, neither of these events had occurred.
The judge agreed with the claimant and upheld the pleas on the following grounds:
- The law had not imposed any limit on iodine emissions – which had caused the reddish fumes – and the licence did not require the claimant to control these emissions;
- The event had occurred only once during 2014; therefore, there was no ground to order the suspension of activities.
- The regional authorities' resolution had failed to specify a maximum term for the suspension of activities or an expiry date.
- The plant manager had cooperated fully with the public administration and authorities.
The court also considered the action for damages that was brought by the claimant to be well founded. It stated that: "the financial damage alleged by the applicant is caused by the contested unlawful measures, which have caused material damage to the claimant's asset. The material damage can be ascribed, on the subjective side, to the fault of the public administration." Therefore, public authorities were responsible for material damages under the principle of non-contractual liability.(3) The judge condemned the regional authorities and ARPAB to pay compensation equivalent to the loss actually suffered by the claimant, quantified on the basis of the actual loss it suffered as a direct consequence of the order to suspend the activities, plus the damages caused by the retention of the waste in storage tanks, including any penalty.
In this judgment the Basilicata Regional Administrative Court adopted a new point of view on the issue of non-contractual liability of public administrations in cases where the authorities have caused damage to a company by means of an unlawful act. Traditionally, the courts have been reluctant to award damages in similar cases.
For further information on this topic please contact Luciano Butti at B&P Avvocati by telephone (+39 045 8012901) or email (email@example.com). The B&P Avvocati website can be accessed at www.buttiandpartners.com.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.