A recent decision by the Supreme Court (Joint Divisions 16601/17 July 5 2017) provided an important clarification on punitive damages and public order.

The Supreme Court ruled that damages in tortious and contractual actions seek not only to restore the position of the damaged party as it was before the wrongful action or breach of contract, but also to serve as a punishment and deterrent.

Therefore, foreign awards on punitive damages can be enforced in Italy provided that they are rendered in accordance with rules (set forth by the relevant foreign legal system) ensuring the predictability of the award, even in terms of quantum.

This important decision was rendered on the basis of the following considerations:

  • The public order cannot be interpreted as an absolute obstacle for a foreign decision to be enforced in Italy, but as an instrument for promoting the identification of common principles of law.
  • The deterrent and punitive nature of civil damages no longer conflicts with the general principles of Italian law as has been the case in recent years.
  • A foreign decision awarding punitive damages can be enforced in Italy if the foreign law system provides for specific rules regarding the requirements for the award, the kind of damages and the quantum of damages.
  • Foreign decisions awarding excessive damages which are not proportionate relative to the given circumstances remain unenforceable.

While the Supreme Court decision should not lead to a general increase in the quantum of damages awardable by the Italian courts, third-party liability insurers should focus on policy wording to ensure that punitive damages are properly considered and handled.

For further information on this topic please contact David Maria Marino at DLA Piper Italy by telephone (+39 02 80 61 81) or email ([email protected]). The DLA Piper Italy website can be accessed at www.dlapiper.com.